The Issue The issues in this case are whether the Agency for Health Care Administration (AHCA) should grant Hospice Integrated’s Certificate of Need (CON) Application No. 8406 to establish a hospice program in AHCA Service Area 7B, CON Application No. 9407 filed by Wuesthoff, both applications, or neither application.
Findings Of Fact Hospice Hospice is a special way of caring for patients who are facing a terminal illness, generally with a prognosis of less than six months. Hospice provides a range of services available to the terminally ill and their families that includes physical, emotional, and spiritual support. Hospice is unique in that it serves both the patient and family as a unit of care, with care available 24 hours a day, seven days a week, for persons who are dying. Hospice provides palliative rather than curative or life- prolonging care. To be eligible for hospice care, a patient must have a prognosis of less than six months to live. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. At that time, there was more information available to establish a prognosis of six months or less for these patients. Since that time, the National Hospice Organization (“NHO”) has established medical guidelines which determine the prognosis for many non-cancer diseases. This tool may now be used by physicians and hospice staff to better predict which non- cancer patients are eligible for hospice care. There is no substitute for hospice. Nothing else does all that hospice does for the terminally ill patient and the patient’s family. Nothing else can be reimbursed by Medicare or Medicaid for all hospice services. However, hospice must be chosen by the patient, the patient’s family and the patient’s physician. Hospice is not chosen for all hospice-eligible patients. Palliative care may be rejected, at least for a time, in favor of aggressive curative treatment. Even when palliative care is accepted, hospice may be rejected in favor of home health agency or nursing home care, both of which do and get reimbursed for some but not all of what hospice does. Sometimes the choice of a home health agency or nursing home care represents the patient’s choice to continue with the same caregivers instead of switching to a new set of caregivers through a hospice program unrelated to the patient’s current caregivers. There also is evidence that sometimes the patient’s nursing home or home health agency caregivers are reluctant, unfortunately sometimes for financial reasons, to facilitate the initiation of hospice services provided by a program unrelated to the patient’s current caregivers. Existing Hospice in Service Area 7B There are two existing hospice providers in Service Area 7B, which covers Orange County and Osceola County: Vitas Healthcare Corporation of Central Florida (Vitas); and Hospice of the Comforter (Comforter). Vitas Vitas began providing services in Service Area 7B when it acquired substantially all of the assets of Hospice of Central Florida (HCF). HCF was founded in 1976 as a not-for-profit organization and became Medicare-certified in 1983. It remained not-for-profit until the acquisition by Vitas. In a prior batching cycle, HCF submitted an application for a CON for an additional hospice program in Service Area 7B under the name Tricare. While HCF also had other reasons for filing, the Tricare application recognized the desirability, if not need, to package hospice care for and make it more palatable and accessible to AIDS patients, the homeless and prisoners with AIDS. HCF later withdrew the Tricare application, but it continued to see the need to better address the needs of AIDS patients in Service Area 7B. In 1994, HCF began looking for a “partner” to help position it for future success. The process led to Vitas. Vitas is the largest provider of hospice in the United States. Nationwide, it serves approximately 4500 patients a day in 28 different locations. Vitas is a for-profit corporation. Under a statute grandfathering for-profit hospices in existence on or before July 1, 1978, Vitas is the only for-profit corporation authorized to provide hospice care in Florida. See Section 400.602(5), Fla. Stat. (1995). HCF evaluated Vitas for compatibility with HCF’s mission to provide quality hospice services to medically appropriate patients regardless of payor status, age, gender, national origin, religious affiliation, diagnosis or sexual orientation. Acquisition by Vitas also would benefit the community in ways desired by HCF. Acquisition by Vitas did not result in changes in policy or procedure that limit or delay access to hospice care. Vitas was able to implement staffing adjustments already contemplated by HCF to promote efficiencies while maintaining quality. Both HCF and Vitas have consistently received 97% satisfaction ratings from patients’ families, and 97% good-to- excellent ratings from physicians. Initially, Vitas’ volunteer relations were worse than the excellent volunteer relations that prevailed at HCF. Many volunteers were disappointed that Vitas was a for-profit organization, protested the proposed Vitas acquisition, and quit after the acquisition. Most of those who quit were not involved in direct patient care, and some have returned after seeing how Vitas operates. Vitas had approximately 1183 hospice admissions in Service Area 7B in 1994, and 1392 in 1995. Total admissions in Service Areas 7B and 7C (Seminole County) for 1995 were 1788. Comforter Hospice of the Comforter began providing hospice care in 1990. Comforter is not-for-profit. Like Vitas, it admits patients regardless of payor status. Comforter admitted approximately 100 patients from Service Area 7B in 1994, and 164 in 1995. Total admissions in Service Areas 7B and 7C for 1995 were 241. For 1996, Comforter was expected to approach 300 total admissions (in 7B and 7C), and total admissions may reach 350 admissions in the next year or two. As Comforter has grown, it has developed the ability to provide a broader spectrum of services and has improved programs. Comforter provides outreach and community education as actively as possible for a smaller hospice. Comforter does not have the financial strength of Vitas. It maintains only about a two-month fiscal reserve. Fixed Need Pool On February 2, 1996, AHCA published a fixed need pool (FNP) for hospice programs in the July 1997 planning horizon. Using the need methodology for hospice programs in Florida found in F.A.C. Rule 59C-1.0355 (“the FNP rule”), the AHCA determined that there was a net need for one additional hospice program in Service Area 7B. As a result of the dismissal of Vitas’ FNP challenge, there is no dispute as to the validity of the FNP determination. Other Need Considerations Despite the AHCA fixed need determination, Vitas continues to maintain that there is no need for an additional hospice program in Service Area 7B and that the addition of a hospice program would adversely impact the existing providers. Essentially, the FNP rule compares the projected need for hospice services in a district using district use rates with the projected need using statewide utilization rates. Using this rule method, it is expected that there will be a service “gap” of 470 hospice admissions for the applicable planning horizon (July, 1997, through June, 1988). That is, 470 more hospice admissions would be expected in Service Area 7B for the planning horizon using statewide utilization rates. The rule fixes the need for an additional hospice program when the service “gap” is 350 or above. It is not clear why 350 was chosen as the “gap” at which the need for a new hospice program would be fixed. The number was negotiated among AHCA and existing providers. However, the evidence was that 350 is more than enough admissions to allow a hospice program to benefit from the efficiencies of economy of scale enough to finance the provision for enhanced hospice services. These benefits begin to accrue at approximately 200 admissions. Due to population growth and the aging of the population in Service Area 7B, this “gap” is increasing; it already had grown to 624 when the FNP was applied to the next succeeding batching cycle. Vitas’ argument ignores the conservative nature of several aspects of the FNP rule. It uses a static death rate, whereas death rates in Service Area 7B actually are increasing. It also uses a static age mix, whereas the population actually is aging in Florida, especially in the 75+ age category. It does not take into account expected increases in the use of hospice as a result of an environment of increasing managed health care. It uses statewide conversion rates (percentage of dying patients who access hospice care), whereas conversion rates are higher in nearby Service Area 7A. Finally, the statewide conversions rates used in the rule are static, whereas conversion rates actually are increasing statewide. Vitas’ argument also glosses over the applicants’ evidence that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B (regardless whether the new entrant improves upon the marketing efforts of the existing providers), and that increased awareness will result in higher conversion rates. It is not clear why utilization in Service Area 7B is below statewide utilization. Vitas argued that it shows the opposite of what the rule says it shows—i.e., that there is no need for another hospice program since the existing providers are servicing all patients who are choosing hospice in 7B. Besides being a thinly-veiled (and, in this proceeding, illegal) challenge to the validity of the FNP rule, Vitas’ argument serves to demonstrate the reality that, due to the nature of hospice, existing providers usually will be able to expand their programs as patients increasingly seek hospice so that, if consideration of the ability of existing providers to fill growing need for hospice could be used to overcome the determination of a FNP under the FNP rule, there may never be “need” for an additional program. Opting against such an anti-competitive rule, the Legislature has required and AHCA has crafted a rule that allows for the controlled addition of new entrants into the competitive arena. Vitas’ argument was based in part on the provision of “hospice-like” services by VNA Respite Care, Inc. (VNA), through its home health agency. Vitas argued that Service Area 7B patients who are eligible for hospice are choosing VNA’s Hope and Recovery Program. VNA’s program does not offer a choice from, or alternative to, hospice. Home health agencies do not provide the same services as hospice programs. Hospice care can be offered as the patient’s needs surface. A home health agency must bill on a cost per visit basis. If they exceed a projected number of visits, they must explain that deviation to Medicare. A home health agency, such as VNA, offers no grief or bereavement services to the family of a patient. In addition to direct care of the patient, hospice benefits are meant to extend to the care of the family. Hospice is specifically reimbursed for offering this important care. Hospice also receives reimbursement to provide medications relevant to terminal illnesses and durable medical equipment needed. Home health agencies do not get paid for, and therefore do not offer, these services. It is possible that VNA’s Hope and Recovery Program may be operating as a hospice program without a license. The marketing materials used by VNA inaccurately compare and contrast the medical benefits available for home health agencies to those available under a hospice program. The marketing material of VNA also inappropriately identify which patients are appropriate for hospice care. VNA’s Hope and Recovery Program may help explain lower hospice utilization in Service Area 7B. Indeed, the provision of hospice-like services by a non-hospice licensed provider can indicate an unmet need in Service Area 7B. The rule does not calculate an inventory of non-hospice care offered by non-hospice care providers. Instead, the rule only examines actual hospice care delivered by hospice programs. The fact that patients who would benefit from hospice services are instead receiving home health agency services may demonstrate that existing hospice providers are inadequately educating the public of the advantages of hospice care. Rather than detract from the fixed need pool, VNA’s provision of “hospice-like” services without a hospice license may be an indication that a new hospice provider is needed in Service Area 7B. Although a home-health agency cannot function as a hospice provider, the two can work in conjunction. They may serve as a referral base for one another. This works most effectively when both programs are operated by the same owner who understands the very different services each offers and who has no disincentive to refer a patient once their prognosis is appropriate for hospice. The Hospice Integrated Application Integrated Health Services, Inc. (IHS), was founded in the mid-1980’s to establish an alternative to expensive hospital care. Since that time it has grown to offer more than 200 long term care facilities throughout the country including home health agencies, rehabilitative agencies, pharmacy companies, durable medical equipment companies, respiratory therapy companies and skilled nursing facilities. To complete its continuum of care, IHS began to add hospice to offer appropriate care to patients who no longer have the ability to recover. IHS is committed to offering hospice care in all markets where it already has an established long-term care network. IHS entered the hospice arena by acquiring Samaritan Care, an established program in Illinois, in late 1994. Within a few months, IHS acquired an additional hospice program in Michigan. Each of these hospice programs had a census in the thirties at the time of the final hearing. In May of 1996, IHS acquired Hospice of the Great Lakes. Located in Chicago, this hospice program has a census range from 150 to 180. In combination, IHS served approximately 350 hospice patients in 1995. In Service Area 7B, IHS has three long-term care facilities: Central Park Village; IHS of Winter Park; and IHS of Central Park at Orlando. Together, they have 443 skilled nursing beds. One of these—Central Park Village—has established an HIV spectrum program, one of the only comprehensive HIV care programs in Florida. When the state determined that there was a need for an additional hospice program in Service Area 7B, IHS decided to seek to add hospice care to the nursing home and home health companies it already had in the area. Since Florida Statutes require all new hospice programs in Florida to be established by not-for-profit corporations (with Vitas being the only exception), IHS formed Hospice Integrated Health Services of District VII-B (Hospice Integrated), a not- for-profit corporation, to apply for a hospice certificate of need. IHS would be the management company for the hospice program and charge a 4% management fee to Hospice Integrated, although the industry standard is 6%-7%. Although a for-profit corporation, IHS plans for the 4% fee to just cover the costs of the providing management services. IHS believes that the benefits to its health care delivery system in Service Area 7B will justify not making a profit on the hospice operation. However, the management agreement will be reevaluated and possibly adjusted if costs exceed the management fee. In return for this management fee, IHS would offer Hospice Integrated its policy and procedure manuals, its programs for bereavement, volunteer programs, marketing tools, community and educational tools and record keeping. IHS would also provide accounting, billing, and human resource services. Perhaps the most crucial part of the management fee is the offer of the services of Regional Administrator, Marsha Norman. She oversees IHS’ programs in Illinois and Missouri. Ms. Norman took the hospice program at Hospice of the Great Lakes from a census of 40 to 140. This growth occurred in competition with 70 other hospices in the same marketplace. While at Hospice of the North Shore, Ms. Norman improved census from 12 to 65 in only eight months. Ms. Norman helped the Lincolnwood hospice program grow from start up to a census of 150. Ms. Norman has indicated her willingness and availability to serve in Florida if Hospice Integrated’s proposal is approved. IHS and Ms. Norman are experienced in establishing interdisciplinary teams, quality assurance programs, and on-going education necessary to provide state of the art hospice care. Ms. Norman also has experience establishing specialized programs such as drumming therapy, music therapy for Alzheimer patients and children’s bereavement groups. Ms. Norman has worked in pediatric care and understands the special needs of these patients. Ms. Norman’s previous experience also includes Alzheimer’s care research conducted in conjunction with the University of Chicago regarding the proper time to place an Alzheimer patient in hospice care. Through its skilled nursing facilities in Service Area 7B, IHS has an existing working relationship with a core group of physicians who are expected to refer patients to the proposed Hospice Integrated hospice. Although its skilled nursing homes account for only six percent of the total beds in Service Area 7B, marketing and community outreach efforts are planned to expand the existing referral sources if the application is approved. IHS’ hospices are members of the NHO. They are not accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO). Hospice Integrated would serve pediatric patients. However, IHS’ experience in this area is limited to a pilot program to offer pediatric hospice care in the Dallas/Ft. Worth area, and there is little reason to believe that Hospice Integrated would place a great deal of emphasis on this aspect of hospice care. The Hospice Integrated application proposes to provide required grief support but does not include any details for the provision of grief support groups, resocialization groups, grief support volunteers, or community grief support or education activities. In its application, Hospice Integrated has committed to five percent of its care for HIV patients, 40% for non-cancer patients, ten percent for Medicaid patients, and five percent indigent admissions. These commitments also are reflected in Hospice Integrated’s utilization projections. At the same time, it is only fair to note that IHS does not provide any charity care at any of its Service Area 7B nursing home facilities. The Hospice Integrated application includes provision for all four levels of hospice care—home care (the most common), continuous care, respite care and general inpatient. The latter would be provided in one of the IHS skilled nursing home facilities when possible. It would be necessary to contract with an inpatient facility for acute care inpatient services. The federal government requires that five percent of hospice care in a program be offered by volunteers. With a projected year one census of 30, Hospice Integrated would only require 3-4 volunteers to meet federal requirements, and its year one pro forma reflects this level of use of volunteers. However, Hospice Integrated hopes to exceed federally mandated minimum numbers of volunteers. The IHS hospice programs employ volunteers from all aspects of the community, including family of deceased former hospice patients. Contrary to possible implications in the wording of materials included in the Hospice Integrated application, IHS does not approach the latter potential volunteers until after their bereavement has ended. The Wuesthoff Application Wuesthoff Health Services, Inc. (Wuesthoff) is a not- for profit corporation whose sole corporate member is Wuesthoff Health Systems, Inc. (Wuesthoff Systems). Wuesthoff Systems also is the sole corporate member of Wuesthoff’s two sister corporations, Wuesthoff Memorial Hospital, Inc. (Wuesthoff Hospital) and Wuesthoff Health Systems Foundation, Inc. (Wuesthoff Foundation). Wuesthoff Hospital operates a 303-bed acute care hospital in Brevard County. Brevard County comprises AHCA Service Area 7A, and it is adjacent and to the east of Service Area 7B. Wuesthoff Hospital provides a full range of health care services including open heart surgical services, a Level II neonatal intensive care unit and two Medicare-certified home health agencies, one located in Brevard and the other in Indian River County, the county immediate to the south of Brevard. Wuesthoff Foundation serves as the fundraising entity for Wuesthoff Systems and its components. Wuesthoff currently operates a 114-bed skilled nursing facility which includes both long-term and short-term sub-acute beds, as well as a home medical equipment service. Wuesthoff also operates a hospice program, Brevard Hospice, which has served Brevard County residents since 1984. Over the years, it has grown to serve over 500 patients during 1995. Essentially, Wuesthoff’s application reflects an intention to duplicate its Brevard Hospice operation in Service Area 7B. It would utilize the expertise of seven Brevard Hospice personnel currently involved in the day-to-day provision of hospice services, including its Executive Director, Cynthia Harris Panning, to help establish its proposed new hospice in 7B. Wuesthoff has been a member of the NHO since the inception of its hospice program. It also had its Brevard Hospice accredited by JCAHO in 1987, in 1990 and in March, 1996. As a not-for-profit hospice, Wuesthoff has a tradition of engaging in non-compensated hospice services that benefit the Brevard community. Wuesthoff’s In-Touch Program provides uncompensated emotional support through telephone and in-person contacts for patients with a life-threatening illness who, for whatever reason, are not ready for hospice. (Of course, Wuesthoff is prepared to receive compensation for these patients when and if they choose hospice.) Wuesthoff’s Supportive Care program provides uncompensated nursing and psychosocial services by hospice personnel for patients with life-threatening illnesses with life expectancies of between six months and two years. (These services are rendered in conjunction with home health care, which may be compensated, and Wuesthoff is prepared to receive compensation for the provision of hospice services for these patients when they become eligible for and choose hospice.) Wuesthoff’s Companion Aid benefits hospice patients who lack a primary caregiver and are indigent, Medicaid-eligible or unable to pay privately for additional help in the home. If approved in Service Area 7B, Wuesthoff would hope to duplicate these kinds of outreach programs. For the Supportive Care program, that would require its new hospice program to enter into agreements with home health agencies operating in Service Area 7B. While more difficult an undertaking than the current all-Wuesthoff Supportive Care program, Wuesthoff probably will be able to persuade at least some Service Area 7B home health agencies to cooperate, since there would be benefits to them, too. Wuesthoff proposes to use 38 volunteers during its first year in operation. As a not-for-profit organization, Wuesthoff has had good success recruiting, training, using and retaining volunteers in Brevard County. Its experience and status as a not-for-profit organization will help it meet its goals in Service Area 7B; however, it probably will be more difficult to establish a volunteer base in Service Area 7B than in its home county of Brevard. Wuesthoff’s proposed affiliation with Florida Hospital will improve its chances of success in this area. Key to the overall success of Wuesthoff’s proposed hospice is its vision of an affiliation with Florida Hospital. With no existing presence in Service Area 7B, Wuesthoff has no existing relationship with community physicians and no existing inpatient facilities. Wuesthoff plans to fill these voids through a proposed affiliation with Florida Hospital. In existence and growing for decades, Florida Hospital now is a fully integrated health care system with multiple inpatient sites, including more than 1,450 hospital beds, in Service Area 7B. It provides a full range of pre-acute care through post-acute care services, including primary through tertiary services. Approximately 1,200 physicians are affiliated with Florida Hospital, which has a significant physician-hospital organization. Wuesthoff is relying on these physicians to refer patients to its proposed hospice. Florida Hospital and Wuesthoff have signed a letter of intent. The letter of intent only agreed to a forum for discussions; there was no definite agreement concerning admissions, and Florida Hospital has not committed to sending any particular number of hospice patients to Wuesthoff. However, there is no reason to think that Wuesthoff could not achieve a viable affiliation with Florida Hospital. Wuesthoff has recent experience successfully cooperating with other health care providers. It has entered into cooperative arrangements with Jess Parrish Hospital in Brevard County, with Sebastian River Medical Center in Indian River County, and with St. Joseph’s Hospital in Hillsborough County. Wuesthoff’s existing hospice provides support to children who are patients of its hospice, whose parents are in hospice or whose relatives are in hospice, as well as to other children in the community who are in need of bereavement support services. Wuesthoff employs a full-time experienced children’s specialist. Wuesthoff also provides crisis response services for Brevard County Schools System when there is a death at a school or if a student dies or if there is a death that affects the school community. Camp Hope is a bereavement camp for children which is operated by Wuesthoff annually for approximately 50 Brevard children who have been affected by death. Wuesthoff operates extensive grief support programs as part of its Brevard Hospice. At a minimum, Wuesthoff provides 13 months of grief support services following the death of a patient, and more as needed. It employs an experienced, full- time grief support coordinator to oversee two grief support specialists (each having Masters degree level training), as well as 40 grief support volunteers, who function in Wuesthoff’s many grief support groups. These include: Safe Place, an open grief support group which meets four times a month and usually is the first group attended by a grieving person; Pathways, a closed six-week grief workshop offered twice a year primarily for grieving persons three to four months following a death; Bridges, a group for widows under age 50, which is like Pathways but also includes sessions on helping grieving children and on resocialization; Just Us Guys and Gals, which concentrates on resocialization and is attended by 40 to 80 people a month; Family Night Out, an informal social opportunity for families with children aged six to twelve; Growing Through Grief, a closed six-week children’s grief group offered to the Brevard County School System. Wuesthoff also publishes a newsletter for families of deceased hospice patients for a minimum of 13 months following the death. Wuesthoff also participates in extensive speaking engagements and provides seminars on grief issues featuring nationally renowned speakers. Wuesthoff intends to use the expertise developed in its Brevard Hospice grief support program to establish a similar program in Service Area 7B. The Brevard Hospice coordinator will assist in implementing the Service Area 7B programs. In its utilization projections, Wuesthoff committed to seven percent of hospice patient days provided to indigent/charity patients and seven percent to Medicaid patients. Wuesthoff also committed to provide hospice services to AIDS patients, pediatric patients, patients in long-term care facilities and patients without a primary caregiver; however, no specific percentage committments were made. In its pro formas, Wuesthoff projects four percent hospice services to HIV/AIDS patients and approximately 40% to non-cancer patients. The narrative portions of its application, together with the testimony of its chief executive officer, confirm Wuesthoff’s willingness to condition its CON on those percentages. In recent years, the provision of Medicaid at Brevard Hospice has declined. However, during the same years, charity care provided by Brevard Hospice has increased. In the hospice arena, Medicaid hospice is essentially fully reimbursed. Likewise, the provision of hospice services to AIDS/HIV patients by Brevard Hospice has declined in recent years—from 4.9% in 1993 to 1.4% in 1995. However, this decline was influenced by the migration of many AIDS patients to another county, where a significant number of infectious disease physicians are located, and by the opening of Kashy Ranch, another not-for-profit organization that provides housing and services especially for HIV clients. Financial Feasibility Both applications are financially feasible in the immediate and long term. Immediate Financial Feasibility Free-standing hospice proposals like those of Hospice Integrated and Wuesthoff, which intend to contract for needed inpatient care, require relatively small amounts of capital, and both applications are financially feasible in the immediate term. Hospice Integrated is backed by a $100,000 donation and a commitment from IHS to donate the additional $300,000 needed to open the new hospice. IHS has hundreds of millions of dollars in lines of credit available meet this commitment. Wuesthoff questioned the short-term financial feasibility of the Hospice Integrated proposal in light of recent acquisitions of troubled organizations by IHS. It recently acquired an organization known as Coram at a cost of $655 million. Coram recently incurred heavy losses and was involved in litigation in which $1.5 billion was sought. IHS also recently acquired a home health care organization known as First American, whose founder is currently in prison for the conduct of affairs at First American. But none of these factors seriously jeopardize the short-term financial feasibility of the Hospice Integrated proposal. Wuesthoff also noted that the IHS commitment letter is conditioned on several “approvals” and that there is no written commitment from IHS to enter into a management contract with Hospice Integrated at a four percent fee. But these omissions do not seriously undermine the short-term financial feasibility of the Hospice Integrated proposal. Hospice Integrated, for its part, and AHCA question the short-term financial feasibility of the Wuesthoff proposal, essentially because the application does not include a commitment letter from with Wuesthoff Systems or Wuesthoff Hospital to fund the project costs. The omission of a commitment letter is comparable to the similar omissions from the Hospice Integrated application. It does not undermine the short-term financial feasibility of the proposal. Notwithstanding the absence of a commitment letter, the evidence is clear that the financial strength of Wuesthoff Systems and Wuesthoff Hospital support Wuesthoff’s hospice proposal. This financial strength includes the $38 to $40 million in cash and marketable securities reflected in the September 30, 1995, financial statements of Wuesthoff Systems, in addition to the resources of Wuesthoff Hospital. Hospice Integrated also questions the ability of Wuesthoff Systems to fund the hospice proposal in addition to other planned capital projects. The Wuesthoff application indicates an intention to fund $1.6 million of the needed capital from operations and states that $1.4 million of needed capital in “assured but not in hand.” But some of the projects listed have not and will not go forward. In addition, it is clear from the evidence that Wuesthoff Systems and Wuesthoff Hospital have enough cash on hand to fund all of the capital projects that will go forward, including the $290,000 needed to start up its hospice proposal. Long-Term Financial Feasibility Wuesthoff’s utilization projections are more aggressive than Hospice Integrated’s. Wuesthoff projects 186 admissions in year one and 380 in year two; Hospice Integrated projects 124 admissions in year one and 250 in year two. But both projections are reasonably achievable. Projected patient days, revenue and expenses also are reasonable for both proposals. Both applicants project an excess of revenues over expenses in year two of operation. Vitas criticized Hospice Integrated’s nursing salary expenses, durable medical equipment, continuous and inpatient care expenses, and other patient care expenses as being too low. But Vitas’ criticism was based on misapprehension of the facts. The testimony of Vitas’ expert that nursing salaries were too low was based on the misapprehension that Hospice Integrated’s nursing staffing reflected in the expenses for year two of operation was intended to care for the patient census projected at year end. Instead, it actually reflected the expenses of average staffing for the average patient census for the second year of operation. Vitas’ expert contended that Hospice Integrated’s projected expenses for durable medical equipment for year two of operation were understated by $27,975. But there is approximately enough overallocated in the line items “medical supplies” and “pharmacy” to cover the needs for durable medical equipment. Vitas’ expert contended that Hospice Integrated’s projected expenses for continuous and inpatient care were understated by $23,298. This criticism made the erroneous assumption that Hospice Integrated derived these expenses by taking 75% of its projected gross revenues from continuous and inpatient care. In fact, Hospice Integrated appropriately used 75% of projected collections (after deducting contractual allowances). In addition, as far as inpatient care is concerned, Hospice Integrated has contracts with the IHS nursing homes in Service Area 7B to provide inpatient care for Hospice Integrated’s patients at a cost below that reflected in Hospice Integrated’s Schedule 8A. Vitas’ expert contended that Hospice Integrated’s projected expenses for “other patient care” were understated by $19,250. This criticism assumed that fully half of Hospice Integrated’s patients would reside in nursing homes that would have to be paid room and board by the hospice out of federal reimbursement “passed through” the hospice program. However, most hospices have far fewer than half of their patients residing in nursing homes (only 17% of Comforter’s are nursing home residents), and Hospice Integrated made no such assumption in preparing its Schedule 8A projections. In addition, Hospice Integrated’s projections assumed that five percent of applicants for Medicaid pass-through reimbursement would be rejected and that two percent of total revenue would be lost to bad debt write-offs. Notwithstanding Vitas’ attempts to criticize individual line items of Hospice Integrated’s Schedule 8A projections, Hospice Integrated’s total average costs per patient day were approximately the same as Wuesthoff’s--$19 per patient day. Vitas did not criticize Wuesthoff’s projections. On the revenue side, Hospice Integrated’s projections were conservative in several respects. Projected patients days (6,800 in year one, and 16,368 in year two) were well within service volumes already achieved in hospices IHS recently has started in other states (which themselves exceeded their projections). Medicaid and Medicare reimbursement rates used in Hospice Integrated’s projections were low. Hospice Integrated projects that 85% of its patients will be Medicare patients and that ten percent will be Medicaid. Using more realistic and reasonable reimbursement for these patients would add up to an additional $74,000 to projected excess of revenue over expenses in year two. Wuesthoff also raised its own additional questions regarding the long-term financial feasibility of the Hospice Integrated proposal. Mostly, Wuesthoff questioned the inexperience of the Hospice Integrated entity, as well as IHS’ short track record. It is true that the hospices started by IHS were in operation for only 12-14 months at the time of the final hearing and that, on a consolidated basis, IHS’ hospices lost money in 1995. But financial problems in one hospice inherited when IHS acquired it skewed the aggregate performance of the hospices in 1995. Two of them did have revenues in excess of expenses for the year. In addition, Hospice of the Great Lakes, which was not acquired until 1996, also is making money. On the whole, IHS’ experience in the hospice arena does not undermine the financial feasibility of the Hospice Integrated application. Wuesthoff also questioned Hospice Integrated’s assumption that the average length of stay (ALOS) of its hospice patients will increase from 55 to 65 days from year one to year two of operation. Wuesthoff contended that this assumption is counter to the recent trend of decreasing ALOS’s, and that assuming a flat ALOS would decrease projected revenues by $262,000. But increasing ALOS from year one to year two is consistent with IHS’ recent experience starting up new hospices. In part, it is reasonably explained by the way in which patient census “ramps up” in the start up phase of a new hospice. As a program starts up, often more than average numbers of patients are admitted near the end of the disease process and die before the ALOS; also, as patient census continues to ramp up, often more than average numbers of patients who still are in the program at the end of year one will have been admitted close to the end of the year and will have been in the program for less than the ALOS. Finally, while pointing to possible revenue shortfalls of $262,000, Wuesthoff overlooked the corresponding expense reductions that would result from lower average daily patient census. It is found that both proposals also are financially feasible in the long term. State and Local Plan Preferences Local Health Plan Preference Number One Preference shall be given to applicants which provide a comprehensive assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas. Such assessment shall include but not be limited to: A projection of the number of Medicare/Medicaid patients to be drawn away from existing hospice providers versus the projected number of new patients in the service area. A projection of area hospice costs increases/decreases to occur due to the addition of another hospice provider. A projection of the ratio of administrative expenses to patient care expenses. Identification of sources, private donations, and fund-raising activities and their affect on current providers. Projection of the number of volunteers to be drawn away from the available pool for existing hospice providers. Both applicants provided an assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas (although both applicants could have provided an assessment that better met the intent of the Local Health Plan Preference One.) There was no testimony that, and it is not clear from the evidence that, one assessment is markedly superior to the other. There also was no evidence as to how the assessments are supposed to be used to compare competing applicants. Both applicants essentially stated that they would not have an adverse impact on the existing providers. The basis for this assessment was that there is enough underserved need in Service Area 7B to support an additional hospice with no adverse impact on the existing providers. Vitas disputed the applicants’ assessment. Vitas presented evidence that it and Comforter have been unable, despite diligent marketing efforts, to achieve statewide average hospice use rates in Service Area 7B, especially for non-cancer and under 65 hospice eligible patients, that the existing hospices can meet the needs of the hospice-eligible patients who are choosing hospice, and that other health care alternatives are available to meet the needs of hospice-eligible patients who are not choosing hospice. Vitas also contended that the applicants will not be able to improve much on the marketing and community outreach efforts of the existing providers. In so doing, Vitas glossed over considerable evidence in the record that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B regardless whether the new entrant improves upon the marketing efforts of the existing providers, and that increased awareness will result in higher conversion rates. Vitas’ counter-assessment also made several other invalid assumptions. First, it is clear from the application of the FNP rule that, regardless of the conversion rate in Service Area 7B, the size of the pool of potential hospice patients clearly is increasing. Second, it is clear that the FNP rule is inherently conservative, at least in some respects. See Finding 24, supra. The Vitas assessment also made the assumption that the existing providers are entitled to their current market share (87% for Vitas and 13% for Comforter) of anticipated increases in hospice use in Service Area 7B and that the impact of a new provider should be measured against this entitlement. But to the extent that anticipated increased hospice use in Service Area 7B accommodates the new entrant, there will be no impact on the current finances or operations of Vitas and Comforter. Finally, in attempting to quantify the alleged financial impact of an additional hospice program, Vitas failed to reduce variable expenses in proportion to the projected reduction in patient census. Since most hospice expenses are variable, this was an error that greatly increased the perceived financial impact on the existing providers. While approval of either hospice program probably will not cause an existing provider to suffer a significant adverse impact, it seems clear that the impact of Wuesthoff’s proposal would be greater than that of Hospice Integrated. Wuesthoff seeks essentially to duplicate its Brevard Hospice operation in Service Area 7B. Wuesthoff projects higher utilization (186 admissions in year one and 380 admissions in year two, as compared to the 124 and 250 projected by Hospice Integrated). In addition, Wuesthoff’s primary referral source for hospice patients—Florida Hospital—also is the primary referral source of Vitas, which gets 38% of its referrals from Florida Hospital. In contrast, while also marketing in competition with the existing providers, Hospice Integrated will rely primarily on the physicians in Orange and Osceola Counties with whom IHS already has working relationships through its home health agencies and skilled nursing facilities. Hospice Integrated’s conservative utilization projections (124 admissions in year one and 250 in year two) will not nearly approach the service gap identified by the rule (407 admissions). In total, Hospice Integrated only projected obtaining 6% of the total market share in year one and 12% in year two, leaving considerable room for continued growth of the existing providers in the district. The hospice industry has estimated that 10% of patients in long-term care facilities are appropriate for hospice care. IHS regularly uses an estimate of five percent. Common ownership of skilled nursing facilities and hospice programs allows better identification of persons with proper prognosis for hospice. These patients would not be drawn away from existing hospice providers. In addition to the difference in overall utilization projections between the applicants, there also is a difference in focus as to the kinds of patients targeted by the two applicants. The Hospice Integrated proposal focuses more on and made a greater commitment to non-cancer admissions. In addition, IHS has a good record of increasing hospice use by non-cancer patients. In contrast, Wuesthoff’s proposal focuses more on cancer admissions (projecting service to more cancer patients than represented by the underserved need for hospice for those patients, according to the FNP rule) and did not commit to a percentage of non-cancer use in its application. For these reasons, Wuesthoff’s proposal would be expected to have a greater impact and be more detrimental to existing providers than Hospice Integrated. Hospice Integrated also is uniquely positioned to increase hospice use by AIDS/HIV patients in Service Area 7B due to its HIV spectrum program at Central Park Village. It focused more on and made a greater commitment to this service in its application that Wuesthoff did it its application. To the extent that Hospice Integrated does a better job of increasing hospice use by AIDS/HIV patients, it is more likely to draw patients from currently underutilized segments of the pool of hospice-eligible patients in Service Area 7B and have less impact on existing providers than Wuesthoff. Vitas makes a better case that its pediatric hospice program will be impacted by the applicants, especially Wuesthoff. Vitas’ census of pediatric hospice patients ranges between seven and 14. A reduction in Vitas’ already small number of pediatric hospice patients could reduce the effectiveness of its pediatric team and impair its viability. Wuesthoff proposes to duplicate the Brevard Hospice pediatric program, creating a pediatric program with a specialized pediatric team and extensive pediatric programs, similar to Vitas’ program. On the other hand, Hospice Integrated proposes a pediatric program but not a specialized team, and it would not be expected to compete as vigorously as Wuesthoff for pediatric hospice patients. The evidence was not clear as to whether area hospice costs would increase or decrease as a result of the addition of either applicant in Service Area 7B. Vitas, in its case-in- chief, provided an analysis of projected impacts from the addition of either hospice provider. As already indicated, Vitas’ analysis incorporated certain invalid assumptions regarding the fixed/variable nature of hospice costs. However, Vitas’ analysis supported the view that Wuesthoff’s impact would be greater. Wuesthoff’s ratio of administrative expenses to patient care expenses (24% to 76% in year one, dropping to 22% to 78% in year two) is lower than Hospice Integrated’s (26% to 71%). Wuesthoff also appears more likely to compete more directly and more vigorously with the existing providers than Hospice Integrated for private donations, in fund-raising activities, and for volunteers. Local Health Plan Preference Number Two Preference shall be given to an applicant who will serve an area where hospice care is not available or where patients must wait more than 48 hours for admission, following physician approval, for a hospice program. Documentation shall include the number of patients who have been identified by providers of medical care and the reasons resulting in their delay of obtaining hospice care. There was no direct evidence of patients who were referred for hospice services but failed to receive them. Local Health Plan Preference Number Three Preference shall be given to an applicant who will serve in addition to the normal hospice population, an additional population not currently serviced by an existing hospice (i.e., pediatrics, AIDS patients, minorities, nursing home residents, and persons without primary caregivers.) State Health Plan Factor Four Preference shall be given to applicants which propose to serve specific populations with unmet needs, such as children. State Health Plan Preference Number Five Preference shall be given to an applicant who proposes a residential component to serve patients with no at- home support. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. Although use of hospice by non-cancer patients has increased to 40% statewide, it lags behind in Service Area 7B, at only 27%. Both applicants will serve non-cancer patients. But Hospice Integrated has made a formal commitment to 40% non-cancer patient days and has placed greater emphasis on expanding the provision of hospice services for non-cancer patients. The clinical background of employees of IHS and Hospice Integrated can effectively employ NHO guidelines to identify the needs of AIDS patients and other populations. In its other hospice programs, IHS has succeeded in achieving percentages of non-cancer hospice use of 60% and higher. Wuesthoff projects over 40% non-cancer patient days, and is willing to accept a CON condition of 40% non-cancer patient days, but it did not commit to a percentage in its application. In Service Area 7B, there are 1,200 people living with AIDS and 10,000 who are HIV positive. Both applicants would serve AIDS/HIV patients, but Hospice Integrated has demonstrated a greater commitment to this service. Not only does IHS have its HIV spectrum program at Central Park Village, it also has committed to five percent of its care for HIV patients. Wuesthoff has agreed to serve AIDS/HIV patients, projects that about four percent of its patient days will be provided to AIDS/HIV patients, and would be willing to condition its CON on the provision of four percent of its care to AIDS/HIV patients. But Wuesthoff did not commit to a percentage in its application. Both applicants will serve children, but Wuesthoff has demonstrated greater commitment and ability to provide these services. Ironically, Wuesthoff’s advantage in the area of pediatric hospice carries with it the disadvantage of causing a greater impact on Vitas than Hospice Integrated’s proposal. See Findings 101-102, supra. While neither applicant specifically addressed the provision of services to minorities, both made commitments to provide services for Medicaid patients and the indigent. Hospice Integrated’s commitment to Medicaid patients is higher (ten percent as compared to seven percent for Wuesthoff). But the commitment to Medicaid patients is less significant in the hospice arena because Medicaid essentially fully reimburses hospice care. Meanwhile, Wuesthoff committed seven percent to indigent/charity patients, as compared a five percent commitment to the indigent for Hospice Integrated. But there was some question as to whether Wuesthoff was including bad debt in the seven percent. Both applicants will provide care for patients without primary caregivers. Earlier in its short history of providing hospice, IHS required patients to have a primary caregiver. However, that policy has been changed, and IHS now accepts such patients. Wuesthoff has long provided care for patients without primary caregivers. Local Health Plan Preference Number Four Preference shall be given to an applicant who will commit to contracting for existing inpatient acute care beds rather than build a free-standing facility. State Health Plan Preference Number Six Preference shall be given to applicants proposing additional hospice beds in existing facilities rather than the construction of freestanding facilities. Neither applicant plans to build a free-standing facility for the provision of inpatient care. Both plan to contract for needed inpatient acute care beds, to the extent necessary. IHS’ common ownership of existing skilled nursing facilities in Service Area 7B allows Hospice Integrated access to subacute care at any time. However, not all physicians will be willing to admit all hospice patients to skilled nursing facilities for inpatient care, and Hospice Integrated also will have to contract with acute care facilities to cover those instances. Wuesthoff relies on its proposed affiliation with Florida Hospital for needed inpatient care for its proposed Service Area 7B hospice. State Health Plan Preference Number Two Preference shall be given to an applicant who provides assurances in its application that it will adhere to the standards and become a member of the National Hospice Organization or will seek accreditation by the JCAHO. Both applicants meet this preference. Wuesthoff’s Brevard Hospice has JCAHO as well as membership in the National Hospice Organization (NHO). IHS’s hospices are NHO members, and Hospice Integrated’s application states that it will become a member of the NHO. Wuesthoff’s JCAHO accreditation does not give it an advantage under this preference. Other Points of Comparison In addition to the facts directly pertinent to the State and Local Health Plan Preference, other points of comparison are worthy of consideration. General Hospice Experience Wuesthoff went to great lengths to make the case that its experience in the hospice field is superior to that of Hospice Integrated and IHS. Wuesthoff criticized the experience of its opponent as being short in length and allegedly long on failures. It is true that IHS was new to the field of hospice when it acquired its first hospice in December, 1994, and that it has had to deal with difficulties in venturing into a new field and starting up new programs. Immediately after IHS acquired Samaritan Care of Illinois, Martha Nickel assumed the role of Vice-President of Hospice Services for IHS. After several weeks in charge of the new acquisition, and pending the closing of the purchase of Samaritan Care of Michigan from the same owner set for later in 1995, Nickel uncovered billing improprieties not discovered during IHS’ due diligence investigations. As a result, IHS was required to reimburse the Health Care Financing Administration (HCFA) approximately $3.5 million, and the purchase price for Samaritan Care of Michigan was adjusted. After this rocky start, IHS’ hospice operation settled down. Hospice Integrated’s teams have completed five to seven start up operations and understand what it takes to enter a new market, increase community awareness, and achieve hospice market penetration. Personnel who would implement Hospice Integrated’s approved hospice program have significant experience establishing new hospice programs, having them licensed and receiving accreditation. Without question, IHS’ Marsha Norman has the ability to start up a new hospice program. In contrast, Wuesthoff has operated its hospice in Brevard County since 1984. It is true that Wuesthoff’s Brevard Hospice appears to have been highly successful and, compared to the IHS experience, relatively stable in recent years. But, at the same time, Wuesthoff personnel have not had recent experience starting up a new hospice operation in a new market. Policies and Procedures A related point of comparison is the status of the policies and procedures to be followed by the proposed hospices. Wuesthoff essentially proposes to duplicate its Brevard Hospice in Service Area 7B and simply proposes to use the same policies and procedures. In contrast, IHS still is developing its policies and procedures and is adapting them to new regulatory and market settings as it enters new markets. As a result, the policies and procedures included in the Hospice Integrated application serve as guidelines for the new hospice and more of them are subject to modification than Wuesthoff’s. Regulatory Compliance A related point of comparison is compliance with regulations. Wuesthoff contends that it will be better able to comply with Florida’s hospice regulations since it already operates a hospice in Florida. In some respects, IHS’ staffing projections were slightly out of compliance with NHO staffing guidelines. However, Ms. Norman persuasively gave her assurance that Hospice Integrated would be operated so as to meet all NHO guidelines. One of IHS’ hospice programs was found to have deficiencies in a recent Medicare certification survey, but those deficiencies were “paper documentation” problems that were quickly remedied, and the program timely received Medicare certification. In several respects, the policies and procedures included in Hospice Integrated’s application are out of compliance with Florida regulations and will have to be changed. For example, the provision in Hospice Integrated’s policies and procedures for coordination of patient/family care by a social worker will have to be changed since Florida requires a registered nurse to fill this role. Similarly, allowance in the policies and procedures for hiring a lay person in the job of pastoral care professional (said to be there to accommodate the use of shamans or medicine men for Native American patients) is counter to Florida’s requirement that the pastoral care professional hold a bachelor’s degree in pastoral care, counseling or psychology. Likewise, the job description of social worker in the policies and procedures falls below Florida’s standards by requiring only a bachelor’s degree (whereas Florida requires a master’s degree). Although IHS does not yet operate a hospice in Florida, it has three long-term care facilities and two home health agencies in Service Area 7B, as well as 25 other skilled nursing facilities and several other new home health care acquisitions in Florida. Nationwide, IHS has nursing homes in 41 different states, home health care in 31 different states, and approximately 120 different rehabilitation service sites. Through its experiences facing the difficulties of entering the hospice field through acquisitions, IHS well knows federal regulatory requirements and is quite capable of complying with them. IHS also has had experience with the hospice regulations of several other states. There is no reason to think that Hospice Integrated will not comply with all federal and state requirements. Wuesthoff now knows how to operate a hospice in compliance with federal and state regulatory requirements. But, while Wuesthoff’s intent was to simply duplicate its Brevard Hospice in Service Area 7B, that intention leads to the problem that its board of directors does not have the requisite number of residents of Service Area 7B. Measures will have to be taken to insure appropriate composition of its board of directors. 140. On balance, these items of non-compliance are relatively minor and relatively easily cured. There is no reason to think that either applicant will refuse or be unable to comply with regulatory requirements. Not-for-Profit Experience Wuesthoff clearly has more experience as a not-for- profit entity. This includes extensive experience in fund- raising and in activities which benefit the community. It also gives Wuesthoff an edge in the ability to recruit volunteers. See Findings 56-58, supra. Ironically, Wuesthoff’s advantages over Hospice Integrated in these areas probably would increase its impact on the existing providers. See Finding 105, supra. Presence and Linkages in Service Area 7B Presently, Wuesthoff has no presence in Service Area 7B. As one relatively minor but telling indication of this, Wuesthoff’s lack of familiarity with local salary levels caused it to underestimate its Schedule 8A projected salaries for its administrator, patient coordinator, nursing aides and office manager. IHS has an established presence in Service Area 7B. This gives Hospice Integrated an advantage over Wuesthoff. For example, its projected salary levels were accurate. Besides learning from experience, Wuesthoff proposes to counter Hospice Integrated’s advantage through its proposed affiliation with Florida Hospital. While IHS’ presence and linkages in Service Area 7B is not insignificant, it pales in comparison to Florida Hospital’s. To the extent that Wuesthoff can developed the proposed affiliation, Wuesthoff would be able to overcome its disadvantage in this area. Wuesthoff also enjoys a linkage with the Service Area 7B market through its affiliate membership in the Central Florida Health Care Coalition (CFHCC). The CFHCC includes large and small businesses, as well as Central Florida health care providers. Its goal is to promote the provision of quality health care services. Quality Hospice Services Both applicants deliver quality hospice services through their existing hospices and can be expected to do so in their proposed hospices. As an established and larger hospice than most of IHS’ hospices, Brevard Hospice can provide more enhanced services than most of IHS’. On the other hand, IHS has been impressive in its abilty to expand services to non-cancer patients, and it also is in a better position to provide services to AIDS/HIV patients, whereas Wuesthoff is better able to provide quality pediatric services. Wuesthoff attempted to distinguish itself in quality of services through its JCAHO accreditation. Although Hospice Integrated’s application states that it will get JCAHO accreditation, it actually does not intend to seek JCAHO accreditation until problems with the program are overcome and cured. Not a great deal of significance can be attached to JCAHO hospice accreditation. The JCAHO hospice accreditation program was suspended from 1990 until 1996 due to problems with the program. Standards were vague, and it was not clear that they complied with NHO requirements. Most hospices consider NHO membership to be more significant. None of IHS’s new hospices are even eligible for JCAHO accreditation because they have not been in existence long enough. Bereavement Programs Wuesthoff’s bereavement programs appear to be superior to IHS’. Cf. Findings 44, and 63-64, supra. To some extent, Wuesthoff’s apparent superiority in this area (as in some others) may be a function of the size of Brevard Hospice and the 14-year length of its existence. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement are cursory and sparse. IHS relies on individual programs to develop their own bereavement policies and procedures. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement include a statement that a visit with the patient’s family would be conducted “if desired by the family and as indicated by the needs of the family.” In fact, as Hospice Integrated concedes, such a visit should occur unless the family expresses a desire not to have one. Continuum of Care One of IHS’ purposes in forming Hospice Integrated to apply for a hospice CON is to improve the continuum of care it provides in Service Area 7B. The goal of providing a continuum of care is to enable case managers to learn a patient’s needs and refer them to the appropriate care and services as the patient’s needs change. While IHS already has an integrated delivery system in Service Area 7B, it lacks hospice. Adding hospice will promote the IHS continuum of care. Since it lacks any existing presence in Service Area 7B, granting the Wuesthoff application will not improve on an existing delivery system in the service area. I. Continuous and Respite Care Though small components of the total hospice program, continuous or respite hospice care should be offered by every quality provider of hospice and will be available in IHS’ program. Wuesthoff’s application failed to provide for continuous or respite hospice care. However, Wuesthoff clearly is capable of remedying this omission. Result of Comparison Both applicants have made worthy proposals for hospice in Service Area 7B. Each has advantages over the other. Balancing all of the statutory and rule criteria, and considering the State and Local Health Plan preferences, as well as the other pertinent points of comparison, it is found that the Hospice Integrated application is superior in this case. Primary advantages of the Hospice Integrated proposal include: IHS’ presence in Service Area 7B, especially its HIV spectrum program at Central Park Village; its recent experience and success in starting up new hospice programs; its success in expanding hospice to non-cancer patients elsewhere; Hospice Integrated’s greater commitment to extend services to the underserved non- cancer and AIDS/HIV segments of the hospice-eligible population; and IHS’ ability to complete its continuum of care in Service Area 7B through the addition of hospice. These and other advantages are enough to overcome Wuesthoff’s strengths. Ironically, some of Wuesthoff’s strengths, including its strong pediatric program and its ability (in part by virtue of its not- for-profit status) and intention generally to compete more vigorously with the existing providers on all fronts, do not serve it so well in this case, as they lead to greater impacts on the existing providers.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the AHCA enter a final order approving CON application number 8406 so that Hospice Integrated may establish a hospice program in the AHCA Service Service Area 7B but denying CON application number 8407 filed by Wuesthoff. RECOMMENDED this 6th day of May, 1997, at Tallahassee, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax FILING (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 6th day of May, 1997. COPIES FURNISHED: J. Robert Griffin, Esquire 2559 Shiloh Way Tallahassee, Florida 32308 Thomas F. Panza, Esquire Seann M. Frazier, Esquire Panza, Maurer, Maynard & Neel, P.A. NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301 Richard Patterson Senior Attorney Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403
The Issue Whether the certificate of need (“CON”) applications filed by Cornerstone Hospice & Palliative Care, Inc. (“Cornerstone”); Suncoast Hospice of Hillsborough, LLC (“Suncoast”); and VITAS Healthcare Corporation of Florida (“VITAS”), for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A (Hillsborough County), satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications, on balance, best meets the applicable criteria for approval.
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing, and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA AHCA is designated as the single state agency for the issuance, denial, and revocation of CONs, including exemptions and exceptions in accordance with present and future federal and state statutes. AHCA is also the state health planning agency. See §§ 408.034(1) and 408.036, Fla. Stat. In addition, AHCA is the agency designated as responsible for licensure and deficient practice surveys for health facilities, including hospices. See ch. 408, Part II and § 400.6005-.611, Fla. Stat. Pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), the Agency established a numeric formula for determining when an additional hospice program is needed in a service area. The Agency's need formula determined a need for one new hospice program in SA 6A in the application cycle at issue. That determination is unchallenged. None of the applicants argued that more than one new hospice program should be approved for Hillsborough in this cycle. Suncoast The Hospice of the Florida Suncoast (“Suncoast Pinellas”) was founded in 1977, and was one of the first hospices in Florida, and in the nation. Although it operates only in Pinellas County, Suncoast Pinellas has grown to become one of the largest nonprofit hospices in the country. Suncoast Pinellas is a subsidiary of Empath Health (“Empath”), which also provides a number of non-hospice services. As discussed further below, Empath is currently undergoing a merger with Stratum Health System (“Stratum”), which operates Tidewell Hospice in Sarasota and Manatee Counties. The Chief Executive Officer (“CEO”) of Empath and Suncoast Pinellas is Rafael Sciullo. Mr. Sciullo was recruited to be CEO of Suncoast Pinellas in 2013, where he has served ever since. When Mr. Sciullo arrived at Suncoast Pinellas, the company operated a human immunodeficiency virus (“HIV”) testing and treatment program, a PACE program, a home health program, and a palliative care program. Mr. Sciullo became concerned that patients in the HIV, PACE, and home health programs were not comfortable hearing the word “hospice,” as those patients did not view themselves as hospice patients. Mr. Sciullo reorganized Suncoast Pinellas by creating Empath in order to alleviate this concern with a more inclusive and mission directed organization. Empath is an administrative services provider that provides support to its affiliates, which include Suncoast Pinellas, Empath Partners in Care (“EPIC”),2 Suncoast PACE, Suncoast Hospice Foundation, and programs for palliative care, pharmacy, durable medical equipment (“DME”), and infusion services. Through its affiliates, Empath already provides several services within Hillsborough, including EPIC HIV services and support, and palliative care. The federal definition of hospice care requires a prognosis of a six- month or less life expectancy. However, Florida’s definition permits patients with a 12-month prognosis. Under its supportive care program, Suncoast Pinellas offers hospice services to patients with a prognosis of six to 12 months. As one of the largest not-for-profit hospices in the nation, Suncoast Pinellas offers specialized programs for veterans, the Jewish population, African Americans, the Hispanic population, and disease groups such as heart failure, Alzheimer’s, and COPD. The applicant entity for the CON is Suncoast Hospice of Hillsborough, LLC. If approved, Suncoast will appear beside Suncoast Pinellas in Empath’s organizational chart, operating as a subsidiary under the Empath Health, Inc., family of companies. Empath has entered into a Memorandum of Understanding with Stratum to merge the two organizations. The merger has not yet been accomplished; the companies are currently in the process of conducting due 2 Empath’s EPIC program provides programs and services to persons impacted by HIV and AIDS throughout the Tampa Bay area. diligence. However, the two companies have already agreed that if the merger is consummated, Mr. Sciullo will serve as the CEO of the merged entity, and will be in charge of both original entities after the merger. According to Mr. Sciullo, the merger will not distract or otherwise serve as an impediment to Suncoast’s plans to implement its new hospice program in Hillsborough. Cornerstone Cornerstone is a 501(c)(3) community-based, not-for-profit entity, founded in 1981 by compassionate nurses in Eustis, Florida, to care for patients during their last days of life. Licensed in 1984, Cornerstone (formerly, Hospice of Lake and Sumter, Inc.) has since grown to serve three hospice service areas (3E, 6B, and 7B) which encompass seven central Florida counties, including Polk County, which is contiguous to Hillsborough. Cornerstone has spent more than 35 years serving tens of thousands of patients and their loved ones in the Central Florida region. As a local, not-for-profit hospice, Cornerstone’s governing body is comprised of leaders from the communities it serves, and its board would be expanded to include new members from Hillsborough. This fosters local accountability to the populations Cornerstone serves. Due to its not-for-profit status, Cornerstone is also legally and ethically bound to benefit its communities, and its earnings are reinvested locally rather than inuring to the benefit of private owners. The Cornerstone Hospice Foundation is an independent, 501(c)(3), nonprofit foundation led by community volunteers. The purpose of the Foundation is to raise money for Cornerstone’s community programs, hospice houses, and for people with no method of paying for hospice. Cornerstone Health Services, LLC, is an affiliated entity which provides non-hospice palliative care services to patients. Cornerstone also includes Care Partners, LLC, which is a consulting and group purchasing organization that provides information and materials to other hospices and group purchasing options. Cornerstone leadership has extensive experience in hospice, including development and expansion of new programs in Florida and elsewhere. Cornerstone has achieved significant growth and expansion within its existing service areas in recent years, led largely by the team that would lead Cornerstone’s expansion into Hillsborough. Cornerstone serves all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, disability, military status, marital status, pregnancy, or other protected status. Hospice and palliative care are the only healthcare services Cornerstone provides. This focus assures that Cornerstone is committed to providing high quality care to meet the needs of hospice patients and their families. VITAS VITAS Healthcare Corporation (“VITAS Healthcare”), the corporate parent of VITAS, is the largest provider of end-of-life care in the nation. VITAS Healthcare was initially founded in 1978 in South Florida. At that time, its leaders helped organize bipartisan legislative efforts to establish the state and federal regulatory mechanisms that guide the provision of hospice services today. Upon its inception, VITAS programs in Dade and Broward Counties participated in a federal demonstration project that resulted in the development of model clinical protocols and procedures used by hospice programs across the country. In 2018, VITAS Healthcare served 85,095 patients and maintained an average daily census of 17,743 patients among its 47 hospice programs in 14 states and the District of Columbia. As of 2018, VITAS Healthcare employed 12,176 staff members, including over 4,700 nurses nationwide. VITAS currently serves 46 of Florida’s 67 counties, which covers about 72% of Florida’s population. VITAS serves 16 of AHCA’s 27 hospice service areas under three separate licenses. VITAS successfully operates 34 satellite offices in Florida and provides facility-based care through freestanding inpatient units as well as its contracts with hospitals and nursing homes. In Florida in 2018, VITAS served over 36,000 patients, providing 3.3 million days of care with an average daily census of 9,028 patients. This was no aberration—at the time of the filing of its 6A CON application, VITAS had admitted over 35,000 patients in Florida during 2019. In addition to providing the four required levels of hospice care (see ¶ 35), VITAS also provides a full continuum of palliative and supportive care, and additional unreimbursed services that are beneficial to the hospice population it serves. VITAS has over 40 years of experience as a hospice provider, and has developed comprehensive outreach, education, and staff training programs and resources designed specifically to address the unique needs of a wide range of patient types, communities, and clinical settings. Similarly, VITAS recognizes that the needs of Florida patients vary between service areas, and it has endeavored to provide programs and services tailored to meet the needs of each community. In its Florida programs, VITAS provides complete hospice care, including medications, equipment and supplies, expert nursing care, personal care, housekeeping assistance, emotional counseling, spiritual support, caregiver education and support, grief counseling, dietary, physical, occupational and speech therapy, and volunteer support. VITAS has a long history of providing significant levels of care to all patients without regard to the ability to pay, as well as a demonstrated commitment to underserved populations such as the homeless, veterans, AIDS population, and minorities. VITAS provided almost $7 million in charity care in Florida in 2018, and $7.25 million in 2019 at the time it submitted its CON application. VITAS ensures that anyone who is appropriate for hospice services has the right to access them. VITAS is committed to giving back to the communities it serves through meaningful donations. It accomplishes this goal through VITAS Community Connections, a nonprofit organization, which makes donations and grants to local organizations and families. In 2018, VITAS made over $161,000 in charitable contributions to organizations in Florida. In that same year, VITAS contributed over $700,000 to sponsoring Florida community events. At the time of filing its Hillsborough application, VITAS employed nearly 5,500 persons in Florida, 2,235 of which are nurses. VITAS encourages and assists its nurses in obtaining board certification in hospice and palliative care through training, compensation incentives, and support. Due to VITAS Healthcare’s multi-state operations, VITAS can readily recruit staff to Florida from other markets. VITAS also relies on volunteers in a variety of roles to enhance patient care. In 2018, VITAS used 1,165 active volunteers in Florida, who provided over 145,054 volunteer hours. VITAS is led by an extremely experienced and highly qualified leadership team, many of which have long and successful tenures with the company. Hospice Care Generally Hospice refers both to care provided to terminally ill patients and the entities that provide the care. Hospice care is palliative care. Palliative care relieves or eliminates a patient's pain and suffering and helps patients remain at home. It differs from curative care, which seeks to cure a patient's illness or injury. 42 C.F.R. § 418.24(d); §§ 400.6005 and 400.601(6), Fla. Stat. Hospices provide physical, emotional, psychological, and spiritual comfort and support to patients facing death and to their families. The Medicare and Medicaid programs pay for the vast majority of hospice care. The services those programs require hospices to offer and the services the programs will pay for have become, de facto, the default definition of hospice care, the arbiter of hospice services, and the decider of when a patient is terminally ill. Florida requires a CON to establish a hospice program and regulates hospices through licensure. §§ 400.602 and 408.036(1)(d), Fla. Stat. Florida considers a patient with a life expectancy of one year or less to be terminally ill and eligible for Medicaid payment for hospice care. § 400.601(10), Fla. Stat. To be eligible for Medicare payment for hospice services, a patient must have a life expectancy of six months or less. 42 C.F.R. § 418.20; 42 C.F.R. § 418.22(b)(1). A hospice must provide a continuum of services tailored to the needs and preferences of the patient and the patient’s family delivered by an interdisciplinary team of professionals and volunteers. §§ 400.601(4) and 400.609, Fla. Stat. Hospice programs must provide physical, emotional, psychological, and spiritual support to their patients. A hospice must provide physician care, nursing care, social work services, bereavement counseling, dietary counseling, and spiritual counseling. 42 C.F.R. § 418.64; § 400.609(1)(a), Fla. Stat. In Florida, hospices must also provide, or arrange for, additional services including, but not limited to, “physical therapy, occupational therapy, speech therapy, massage therapy, home health aide services, infusion therapy, provision of medical supplies and durable medical equipment [DME], day care, homemaker and chore services, and funeral services.” § 400.609(1)(b), Fla. Stat. Federal requirements are similar. 42 C.F.R. § 418.70. Hospices are required to provide four levels of care. The levels are routine home care, general inpatient care, crisis care (also called continuous care), and respite care. Since hospice’s goal is to support a patient remaining at home, hospices provide the majority of their services in a patient’s home. Routine home care is the predominant form of hospice care. Routine care is for patients who do not need constant bedside support. A hospice may provide routine care wherever the patient lives. The location could be a residence, a skilled nursing facility (SNF), an assisted living facility (ALF), some other residential facility, or a homeless camp. Continuous care, sometimes called crisis care, may also be provided wherever the patient resides. It is more intense services for a short period of time. Continuous care supports a patient whose pain and symptoms are peaking and need quick management. With continuous care, unlike routine care, a nurse may be at a patient’s bedside 24 hours a day, seven days a week. Continuous care is an option allowing a patient to avoid admission to an inpatient facility. Hospices provide general inpatient care in a hospital, a dedicated nursing unit, or a freestanding hospice inpatient facility. To qualify for inpatient care, a patient must be acutely ill and need immediate assistance and daily monitoring to the extent that they cannot be cared for at home. Hospices must offer around-the-clock skilled nursing coverage for patients receiving general inpatient care. Respite care is caregiver relief. It allows patients to stay in an inpatient setting for up to five days in order to provide caregivers respite. Florida law requires hospices to accept all medically eligible patients. Each hospice must make its services available to all terminally ill persons and their families without regard to age, gender, national origin, sexual orientation, disability, diagnosis, cost of therapy, ability to pay, or life circumstances. A hospice may not impose any value or belief system on its patients or their families, and must respect the values and belief systems of its patients and their families. § 400.6095(1), Fla. Stat. Hospices frequently offer additional, uncompensated services that are not required by Florida licensure laws or federal Medicare requirements. Pre- hospice care and community counseling are two examples. Hospices often establish programs to meet the needs of particular populations, such as the Hispanic, African American, Jewish, veteran, and HIV/AIDS communities. Cornerstone, Suncoast Pinellas, and VITAS provide the hospice services required by state laws and funded by the Medicare benefit. All three providers also offer services beyond those required by, or paid for by, government programs. The Fixed Need Pool and Preliminary Agency Decision Pursuant to its rule-based numeric need methodology, AHCA determined and published a fixed need for one new hospice program in SA 6A, Hillsborough, in the second batching cycle of 2019. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. In this instance, the difference between projected hospice admissions and current admissions in SA 6A was 863, and therefore a numeric need for an additional hospice program exists in Hillsborough.3 In addition to the three litigant applicants, three other entities filed applications seeking approval for the new program. Those three applications have been deemed abandoned and are not at issue herein. On February 21, 2020, the Agency published its preliminary decision to award the hospice CON to Suncoast, and to deny the remaining applications. Thereafter, Cornerstone and VITAS both filed timely petitions for formal administrative hearing contesting the Agency’s preliminary decision. On April 1, 2020, Suncoast filed a “Cross Petition, Notice of Related Cases and Notice of Appearance” in support of the Agency decision on the competitively reviewed applications. None of the applicants petitioning for 3 According to AHCA’s need methodology, absent a showing of “not normal” circumstances, only one new hospice program may be approved for a SA at a time, regardless of the multiples of 350 “need” that may be shown. Fla. Admin. Code R. 59C-1.0355(4)(c). hearing alleged “special circumstances” or “not normal” circumstances in their application. Service Area 6A: Hillsborough County As can be seen by the map below, Hillsborough is located on the west coast of Florida along Tampa Bay. It includes 1,048 square miles of land area and 24 square miles of inland water area. Hillsborough is home to three incorporated cities: Tampa, Temple Terrace, and Plant City, with Tampa being the largest and serving as the county seat. The county is bordered by Pasco County to the north, Polk County to the east, Manatee County to the south, and Pinellas County to the west. (Source: Google Maps) According to AHCA’s Florida Population Estimates 2010-2030, published February 2015, Hillsborough’s total population as of January 2020 was estimated to be 1,439,041. Hillsborough’s total population is expected to grow to 1,557,830 by January 2025, or 8.25% over that five-year period. In 2020, 14% of Hillsborough’s population was aged 65 and older. According to the 2010 U.S. Census, 35.4% of the county population age 65 and older has a disability, and 17.2% of the county population is below the poverty level, compared to 12.2% statewide. The Hillsborough County Department of Health (“HCDOH”) reports that the county has a diverse mix of residents, with 52% White, 16% African American, 26% Hispanic, and 5% other races. Of the Hillsborough households living below the poverty level, 23.73% are Hispanic/Latino and 31.07% are African American. Nearly 10% of Hillsborough residents report not speaking English “very well.” The most recent U.S. Census indicates that the median income for households in Hillsborough is $54,742, considerably below the national average, with 17.2% reported below poverty level. A larger percentage of the county’s residents (3.3%) received cash assistance than did the state’s residents (2.2%), and a larger percentage (15.7%) received food stamp benefits than is the case for the state overall (14.3%), as reported by HCDOH. Hillsborough is currently served by two hospice providers: Lifepath Hospice (“Lifepath”); and Seasons Hospice and Palliative Care of Tampa, LLC (“Seasons”), a for-profit company. Following approval after an administrative hearing, Seasons was newly licensed to begin operations in Hillsborough in December 2016. Florida’s hospice CON rule prevents need for a new program from being shown for a period of two years following the addition of a new program to a service area. The purpose of the two-year forbearance is to allow new programs to gain a foothold in the market, and to potentially avoid a repeated need determination in future batching cycles. Hospice admissions at Lifepath for the period of July 1, 2018, through June 30, 2019, were 6,195, and for Seasons were 601. The addition of Seasons to the service area was not successful in deterring the need for yet another new program in Hillsborough. The Application Proposals and CON Conditions Suncoast Suncoast recently applied for approval for a hospice program in neighboring Pasco County, but, after a DOAH hearing, that application was denied in favor of another applicant. From that experience, Suncoast determined to better identify local needs before applying for approval in Hillsborough. Upon learning that a fixed need pool would be announced for Hillsborough, Mr. Sciullo directed his team of executives and staff over a series of strategy meetings to conduct an independent community needs assessment of Hillsborough. Mr. Sciullo tasked Kathy Rabon to oversee the development of a community needs assessment of Hillsborough to identify potential needs of Hillsborough residents, based on key informant surveys and other assessment tools. Ms. Rabon has significant experience in conducting feasibility studies for capital projects funded by the Suncoast Hospice Foundation, which she leads. Ms. Rabon began by reviewing existing community needs assessments of the county. Those assessments identified the health needs of Hillsborough’s underserved patients, and identified community leaders that informed the assessments. Ms. Rabon then contacted many of those key informants. At hearing, Ms. Rabon described the process she used to develop a community needs assessment for Hillsborough as follows: Q. When tasked with doing an assessment for Hillsborough's hospice, where did you start? What documents did you first review? A. A community needs assessment can take quite a while when you engage focus groups and need to meet with stakeholders. We didn't have the luxury of a lot of time. We also had the luxury of knowledge that other hospitals in Hillsborough County that are not-for-profit have to periodically do a community needs assessment. So rather than start from a blank piece of paper, I turned to those community needs assessments and I began compiling and gathering as many as I could that I felt were relevant to, A, the geographic boundaries of the entire county, which some did not, but B, also were timely. And I found that the Department of Health had done a very comprehensive community needs assessment in 2015-16 that had been updated in March of 2019 that I felt would provide a lot of good information. * * * I was responsible for identifying need and, if possible, identifying perhaps solutions that could be developed as a result of a partnership or a relationship or an engagement or a future plan that we could put together that would help solve a need in Hillsborough County relative to chronic and advanced illness. In addition to the HCDOH needs assessment and update, Ms. Rabon also obtained quantitative information for her assessment from the following sources: Community Health Improvement Plan 2016- 2020, Florida Department of Health in Hillsborough County, Revised January, 2018; Moffitt Cancer Center Community Health Needs Assessment Report 2016; Florida Hospital Tampa Community Needs Assessment Report 2016; Florida Hospital Carrollwood Community Needs Assessment Report 2016; South Florida Baptist Hospital 2016 Community Needs Assessment Report; Tampa General Hospital; Community Health Needs Assessment 2016; and Community Needs Assessment St. Joseph’s Hospitals Service Area 2016. Ms. Rabon also developed a key informant survey tool to elicit qualitative information regarding the healthcare needs of Hillsborough residents. The survey specifically asked about the strengths and weaknesses of the community for treatment of persons with chronic or advanced illness, and other pressing issues relating to end of life care. Those survey questions included, among others: What is your role, and responsibilities within your organization? What do you consider to be the strengths and assets of the Hillsborough community that can help improve chronic and advanced illness? What do you believe are the three most pressing issues facing those with chronic or advanced illness in Hillsborough County? From your experience, what are the greatest barriers to care for those with chronic or advanced illness? What are the strategies that could be implemented to address these barriers? Once meetings with key informants were complete, and 25 key informant surveys were returned, Ms. Rabon summarized her findings in a final Community Needs Assessment Summary. Ms. Rabon’s findings were consistent with assessments conducted by other organizations, including HCDOH, and local hospitals. The results of the Community Health Needs Assessments, Suncoast Key Informant Surveys, and detailed letters of support, identified the following gaps in end-of-life care for residents of Hillsborough: Need for Disease-Specific Programming: High cardiovascular disease mortality rates (higher than the state average and the highest of the six most populous counties in Florida) and low percentage of patients served by existing hospice providers. Other areas where there appears to be a gap in specific end-of-life programming and a large need in terms of Hillsborough resident deaths include: Alzheimer's Disease and Chronic Lower Respiratory Disease, both of which are in the top 5 leading causes of death in the county. Need for Ethnic Community-Specific Programming Nearly 30 percent of the Hillsborough population is Hispanic, with 19 percent of the county's 65+ population falling into the Hispanic ethnic category. The concentration of 65+ Hispanic residents in Hillsborough is higher than the state average. Surveys and assessments indicate a lack of knowledge in the Hispanic/Latinx[4] community in Hillsborough regarding end-of-life care. Many of these residents speak Spanish at home and/or have limited English proficiency. Hillsborough Hispanic population has low utilization of hospice due to factors including lack of regular physician and medical care, lack of information and cultural barriers. Lack of Available Resources for Homeless and Low-lncome Populations With the 5th largest homeless population in the state, Hillsborough has 1,650 homeless residents as of a Point in Time Count conducted in February 2019. Nearly 60 percent of the area’s homeless population is considered ‘sheltered’, yet there are no resources for end-of-life care for these patients where they live, whether it be an emergency shelter, safe haven or transitional housing. Additionally, 17.2 percent of the Hillsborough population lives below the poverty level and has limited access to coordinated care, including end-of- life services. Largest Veteran Population in Florida Requires Special Programming and Large Number of Resources More than 93,000 veterans currently reside in Hillsborough, with more than one-third over the age of 65. 4 Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States. The ?-x? suffix replaces the ?-o/-a? ending of Latino and Latina that are typical of grammatical gender in Spanish. See “Latinx,” Wikipedia (last visited March 19, 2021). While most hospice programs provide special services for veterans, Suncoast Pinellas has obtained Partner Level 4 certification by We Honor Veterans, a program of the National Hospice and Palliative Care Organization (“NHPCO”) in collaboration with the Department of Veterans Affairs (“VA”). Lack of Specialized Pediatric Hospice Program in the Area Pediatric hospice programming in Hillsborough is limited, as there are no specialized pediatric hospice providers in the county. Hillsborough is home to approximately 338,000 residents ages 0-17 in 2020, and is projected to increase to more than 368,000 by 2025. The pediatric utilization rate of hospice services in Hillsborough is low compared to the general population. For the year ended March 31, 2019, there were only five pediatric patients discharged from the hospital setting to home hospice or an inpatient hospice facility, while 106 pediatric patients died in the hospital. Absence of Continuum of Care Navigation Navigation of the healthcare system was highlighted as a key driver that will bring positive improvements to overall continuum of care in Hillsborough. Hillsborough residents are not accessing hospice services at a rate consistent with the rest of the state, and either access hospice programs very late in the disease process, or not at all. Transportation Challenges for Rural Areas of the County Transportation challenges as a deterrent to seeking medical care, particularly in rural areas of Hillsborough. Approximately one-third of the Hillsborough population is considered “transportation disadvantaged” meaning they are unable to transport themselves due to disability, older age, low income or being a high-risk minor/child. Suncoast retained David Levitt and his firm as its healthcare consultant and primary drafter of its CON application. To develop Suncoast’s application, Mr. Levitt utilized numerous reliable data sources and worked with Suncoast Pinellas’s staff. Mr. Levitt credibly confirmed the need for an additional hospice program in Hillsborough based on reliable healthcare planning data. AHCA’s CON application form, adopted by rule, requires applicants to submit letters of support with their CON applications. Suncoast complied with this requirement and included numerous letters of support from the Hillsborough community. One of the key informants identified by Ms. Rabon was Dr. Douglas Holt of the HCDOH. Dr. Holt agreed to meet with Mr. Sciullo and ultimately agreed to provide a letter of support, which was included with the Suncoast application. Mr. Sciullo also personally met with Dr. Larry Fineman, the regional medical director of HCA West Florida, who provided a letter of support. HCA West Florida hospitals are key referral sources of Suncoast Pinellas’s current hospice admissions. In addition to HCA West Florida, Suncoast Pinellas has an existing relationship with other Hillsborough hospitals: St. Joseph’s, Moffitt Cancer Center and Tampa General Hospital. Suncoast received letters of support from St. Joseph’s and Tampa General. The Agency’s witness, James McLemore, testified that letters from such referral sources were highly persuasive to the Agency, as they indicate the likelihood of successful operations. Suncoast’s witness, Dr. Larry Kay, credibly testified that he obtained letters of support from Dr. Howard Tuch, Director of Palliative Medicine at Tampa General Hospital; Dr. Larry Feinman, Chief Medical Officer at HCA West Florida; and Dr. Harmatz, the Chief Medical Officer at Brandon Regional Hospital, an HCA hospital within HCA West Florida. Those letters were included with the Suncoast application. Suncoast Pinellas currently has working relationships with BayCare, HCA, AdventHealth West Florida, Tampa General, and Moffitt hospital systems. Suncoast submitted letters from BayCare and HCA, which were included with its application. Suncoast received letters specifically related to partnering with Suncoast for inpatient services from St. Joseph’s (BayCare) and Brandon Regional (HCA). Suncoast also received a letter of support related to partnering with Suncoast for inpatient services from the Inn at University Village, a long- term care facility in Hillsborough; and support from a pediatric hospitalist who provides care to terminally ill and medically fragile children at St. Joseph’s Children’s Hospital and Johns Hopkins All Children’s Hospital. Suncoast also received letters of support from numerous community organizations, including Balance Tampa Bay and The AIDS Institute. Also included with the Suncoast application were several letters of support from [Remainder of page intentionally blank] the veterans’ community, including one from the Military Order of the World Wars.5 After considering Ms. Rabon’s Community Needs Assessment, and input from key informants, Suncoast developed programs and plans to meet each of the needs identified above. Suncoast conditioned the approval of its CON on the provision of those services. In all, Suncoast offered 19 conditions in its CON application intended to meet the unique needs of Hillsborough. Condition 1: Development of Disease Specific Programing: Suncoast is committed to providing disease-specific programming in Hillsborough: Empath Cardiac CareConnections, Empath Alzheimer’s CareConnections, and Empath Pulmonary CareConnections. Dr. Larry Kay and Dr. Janet Roman credibly testified that Suncoast will fulfill Condition 1 for disease specific programming. To fulfill Condition 1, Suncoast will provide Empath Cardiac CareConnections in Hillsborough. Dr. Roman designed and currently runs the CardiacCare Connections program in Pinellas County. Dr. Roman is a national expert in developing programs across the continuum of care to assist heart failure patients. Although Suncoast Pinellas has always treated patients with heart failure, since Dr. Roman’s arrival, cardiologists have been referring patients to Suncoast Pinellas earlier than before. Dr. Roman has trained Suncoast Pinellas’s nurses in all advanced heart failure therapies, including IV inotropes, and mechanical circulatory 5 As correctly noted by Cornerstone in its Proposed Recommended Order, letters of support included in the three applications, unless adopted by the sponsoring author at hearing or in sworn deposition received in evidence, are uncorroborated hearsay, and the contents therein may not form the basis of a finding of fact. However, the letters are not being received for the truth of the matters set forth therein, but rather the number and types of support letters included in the applications are relevant generally as a gauge of the level of community support for the proposals. The Hospice of the Fla. Suncoast, Inc. v. AHCA and Seasons Hospice and Palliative Care of Pasco Cty., DOAH Case No. 18-4986 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 15, 2019) (“In a broad sense, comparison of each applicant's letters of support illuminates the differences between each applicant's engagement with the community.” FOF No. 127.). supports such as left ventricular assist devices (“LVAD”) and artificial hearts. Dr. Roman’s program has been successful at reducing hospital readmissions. Suncoast’s application provided significantly more detail about the operations of its heart program than either Cornerstone or VITAS. Cornerstone and VITAS’s descriptions of their heart programs do not reach the level of specificity of operation as Suncoast’s and are not backed up with a measure of success such as a reduction in readmissions. In furtherance of Condition 1, Suncoast will also offer Empath Alzheimer’s CareConnections. Suncoast Pinellas has already created the foundation for Empath Alzheimer’s CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. As part of Empath Alzheimer’s CareConnections, Suncoast will deploy a Music in Caregiving program for Hillsborough hospice patients, including those suffering from Alzheimer’s Disease. Suncoast will also offer Empath Pulmonary CareConnections in Hillsborough. Suncoast Pinellas has already created the foundation for Empath Pulmonary CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. Suncoast Pinellas already has several respiratory therapists full time caring for COPD and asthma patients. In Hillsborough, Suncoast plans to engage a pulmonologist as a consultant and to hire dedicated respiratory therapists as volume increases in Hillsborough. Condition 2: Development of Ethnic Community-Specific Programming Suncoast conditioned its CON application on the purchase of a mobile van staffed by a full-time bilingual LPN and a full-time bilingual social worker to discuss advanced care planning and education, and increase access to care to diverse populations. The van will operate eight hours a day, five days a week, and drive to areas in Hillsborough that have a need for the services offered by Suncoast and Empath. This outreach is intended to enhance access to care to diverse communities. The van will spend time at the HCDOH and its satellite clinics, and use Metropolitan Ministries as a resource for identifying additional locations that could benefit. The van will also visit key Latinx community locations within Hillsborough and offer Spanish language assistance. The van will be equipped with telehealth technology capabilities to link the LPN and social worker to the care navigation office to further enhance the care navigation function of the mobile van. The purpose of the mobile outreach van is to build relationships with, and trust in, the community, enhance visibility, and bring care navigation to areas of Hillsborough that may not typically access it. Suncoast Pinellas’s EPIC program has significant experience operating a mobile outreach unit. EPIC currently operates a mobile outreach and testing unit that provides HIV testing and sexually transmitted infection testing in the community. Condition 3: Development of Resources for Homeless and Low-Income Populations Suncoast conditioned its application on the development of resources for homeless and low-income populations. Under this condition, Suncoast will provide up to $25,000 annually for five years to Metropolitan Ministries. Metropolitan Ministries is a leading community-based organization in Hillsborough that serves homeless and low-income individuals. Christine Long, Chief Programs Officer for Metropolitan Ministries, provided a letter of support which was included in Suncoast’s CON application. Condition 4: Development of Specialized Veterans Program Suncoast conditioned its CON application on the development of a specialized veterans program, which includes a dedicated Veterans Professional Relations Liaison to collaborate with the local VA hospital, outpatient clinics, and veterans organizations. Suncoast Pinellas provides a wide range of specialized care for veterans, through its Empath Honors program, including Honor Flight and pinning ceremonies. Additionally, Suncoast Pinellas holds a Level 4 Certification from We Honor Veterans, a national program through the National Hospice and Palliative Care Organization (“NHPCO”) whose mission is to honor military veterans in hospice care. The NHPCO recently added a new Level 5 Partnership, for which Suncoast Pinellas has already applied for its Pinellas hospice program. Suncoast will also pursue a Level 5 Certification in Hillsborough, if awarded the CON. Condition 5: Development of Specialized Pediatric Hospice Program in Hillsborough County Suncoast will also develop a specialized pediatric hospice program in Hillsborough. Dr. Stacy Orloff started the Children’s Hospice Program at Suncoast Pinellas in 1990 and has been with Suncoast Pinellas for 30 years. Dr. Orloff helped draft the first waiver that the State of Florida submitted to CMS for approval to operate a PIC/TFK program. Once the PIC/TFK waiver was approved, Ms. Orloff led Florida’s PIC/TFK steering committee for 12 years. PIC/TFK is a Medicaid waiver program that provides palliative care services for children with a risk of a death event by age 21, and also provides counseling support for family members who lived at the child’s home, such as parents, siblings, and grandparents. A PIC/TFK provider must be a licensed hospice provider in the service area. Suncoast Pinellas has operated a PIC/TFK program in Pinellas since 2004, utilizing a pediatric interdisciplinary team to provide its PIC/TFK services. Suncoast Pinellas’s PIC/TFK program averages a census of approximately 40 children. Combining the PIC/TFK patients with pediatric patients, Suncoast Pinellas’s census averages approximately 50 children. Suncoast Pinellas has already received acknowledgment from Children’s Medical Services to permit it to operate a PIC/TFK program in Hillsborough if awarded the hospice CON. Initially, pediatric patients will be serviced by the Suncoast Pinellas pediatric staff. Suncoast Pinellas currently has sufficient staff availability to service Hillsborough at the commencement of the program. Suncoast anticipates that by the second year, the Hillsborough pediatric program will have a sufficient census to have a staff that serves only Hillsborough. VITAS’s regional Medical Director, Dr. Leyva, acknowledged that a pediatric patient will receive better care from a care team with pediatric expertise than with an adults-only team. Of the three applicants, Suncoast has demonstrated the most experience providing care to pediatric patients.6 In addition, Suncoast Pinellas has longstanding relationships with the local children’s hospitals, St. Joseph’s Children’s Hospital, and Johns Hopkins All Children’s Hospital. Concurrent care is a benefit created as part of the Affordable Care Act that allows children admitted to hospice care to continue to receive their curative care. Although all applicants have proposed providing concurrent care, only Suncoast has proposed a PIC/TFK program. Suncoast is the only applicant currently operating a perinatal loss program and miscarriage at home program. Dr. Orloff credibly confirmed that Suncoast will implement the perinatal loss program if approved in Hillsborough. Condition 6: Development of Continuum of Care Navigation Program Suncoast’s Community Needs Assessment identified that Hillsborough lacks effective access to the full continuum of healthcare services. Suncoast 6 AHCA’s witness, James McLemore, credibly testified that this is an area where Suncoast enjoys an advantage over the other applicants because “Suncoast went with an entire pediatric program.” Pinellas operates an entire care navigation department that can address any inquiry or referral regarding hospice and Empath’s other services, in order to direct that patient to the right care at the right time. All services offered by Empath, including hospice, palliative care, home health, EPIC, and PACE are available to individuals who call the Care Navigation Center. Care Navigation staff can also assist existing patients with questions involving, for example, DME. Suncoast Pinellas’s care navigation center is available 24 hours a day, 7 days a week, 365 days a year. If its application is approved, Suncoast will also offer its Care Navigation Department in Hillsborough. Condition 7: Development of a Program to Address Transportation Challenges for Rural Areas Suncoast has conditioned its application on developing a program to address transportation challenges for rural areas in Hillsborough. As part of this condition, Suncoast will provide up to $25,000 annually in bus vouchers for the first five years to current hospice patients and their families, as well as non-hospice patients. Critics of Suncoast’s plans to offer bus vouchers claimed that Hillsborough’s bus system does not reach all areas within the county. However, Suncoast has also conditioned its application on the provision of funds that may be used to purchase transportation, including ridesharing providers such as Uber. Condition 8: Interdisciplinary Palliative Care Consult Partnerships Suncoast will implement interdisciplinary palliative care partnerships with hospitals, ALFs, and nursing homes located in Hillsborough. Suncoast has already identified potential partnerships, including with Dr. Harmatz at Brandon Regional Medical Center, to launch the program. Condition 9: Dedicated Quality-of-Life Funds for Patients and Families Suncoast is committed to providing quality of life funds as described in Condition 9 in Suncoast’s CON application. Suncoast Pinellas has extensive experience with providing each interdisciplinary team with $1,200 of quality of life funds to be used to facilitate a safe environment for its patients, such as paying rent, getting rid of bedbugs, paying utilities such as electricity for air conditioning, and to power specialized medical equipment. On occasion these funds are also used to provide meaningful patient experiences, similar to the Make-a-Wish programs. Conditions 10 – 13: Development of Advisory Committees and Councils Suncoast has committed to establishing care councils and advisory committees to learn firsthand the needs and concerns of the community. A care council is made up of members from a particular community who provide input regarding the needs of the community. Suncoast Pinellas offers similar councils and committees in Pinellas County. These groups are critical to the success of Suncoast Pinellas’s mission. Condition 14: Development of Open Access Model of Care Suncoast has committed to implementing an open access model of care in Hillsborough. This condition recognizes that while some patients may be receiving complex medical treatments that may lead some to question whether the patient is terminal, those treatments are actually required for palliation and the patient’s comfort. Under this condition, Suncoast promises to admit these patients and provide coverage for their treatments. Condition 15: SAGECare Platinum Level Certification Joy Winheim testified at the final hearing regarding the HIV positive community and the LGBTQ community. Over her many years working with the HIV/AIDS community, Ms. Winheim has built lasting relationships with community partners in the Tampa Bay area, including HCDOH and the Pinellas County Health Department. Empath’s EPIC program has a permanent staff member housed within the HCDOH, and the HCDOH has physicians housed in EPIC’s Tampa office to provide medical care to EPIC’s clients. Ms. Winheim has built lasting relationships with community partners in the Tampa Bay LGBTQ community, including Metropolitan Community Church, an LGBTQ friendly church; the Tampa Bay Gay and Lesbian Chamber of Commerce; and Balance Tampa Bay. SAGE is a national organization dedicated to improving the rights of LGBTQ seniors by providing education and training to businesses and non- profits. The platinum level of SAGECare certification is the highest level and indicates that 80% of an organization’s employees and 100% of its leadership have been trained by SAGE. Leadership training is in the form of a four-hour in-person training. Employee training is in the form of a one-hour training conducted either in person or web-based. All of Empath’s entities are SAGECare certified at the platinum level. Although the platinum level certification requires only 80% of its employees to receive training, Empath Health required that 100% of its employees attend the training. SAGECare certification makes a difference to members of the LGBTQ community choosing a healthcare provider. Suncoast is committed to fulfilling this condition. Condition 16: Jewish Hospice Certification Suncoast Pinellas has a specialized Jewish Hospice Program and holds a Jewish Hospice Certification from the National Institute of Jewish Hospices. Suncoast has conditioned its CON application on achieving this same certification in Hillsborough by the end of year one. Condition 17: Joint Commission Accreditation The Joint Commission on Accreditation of Healthcare Organizations (“Joint Commission”) accreditation is the “gold standard” for hospitals, nursing homes, hospices, and other healthcare providers. Suncoast is currently accredited by the Joint Commission, and if approved, is committed to achieving Joint Commission accreditation for its Hillsborough program. Condition 18: Provision of Value-Added Services Beyond Medicare Hospice Benefit Suncoast has committed to provide its integrative medicine program in Hillsborough. Suncoast Pinellas’s existing integrative medicine program is staffed by an APRN who is also certified in acupuncture. Suncoast Pinellas’s integrative medicine program is a holistic approach for helping patients manage their symptoms with such therapies as acupuncture, Reiki,7 and aromatherapy. Suncoast Pinellas recently established a Wound, Ostomy, and Continence Nurse Program in Pinellas County to provide expertise in end-of- life wounds and incontinence issues in long-term care settings, particularly smaller ALFs that may not have the necessary staffing. Suncoast will also offer this program in Hillsborough. [Remainder of page intentionally blank] 7 Reiki (??, /'re?ki/) is a Japanese form of alternative medicine called energy healing. Reiki practitioners use a technique called palm healing or hands-on healing through which a “universal energy” is said to be transferred through the palms of the practitioner to the patient in order to encourage emotional or physical healing. Condition 19 – Limited Fundraising in Hillsborough County Suncoast has committed to limiting fundraising activities in Hillsborough. Ms. Rabon credibly testified that Suncoast can, and will, fulfill this condition.8 Suncoast’s PACE Program In addition to its conditions, Suncoast’s proposal also includes several other non-hospice services that will be made available in Hillsborough. For example, Suncoast Pinellas operates a PACE program. The PACE program provides everything from medical care to transportation for medical needs and adult daycare services, as well as respite services for caregivers. The overall goal of the PACE program is to reduce unnecessary hospital visits and nursing home placement and keep elderly participants at home. Suncoast Pinellas’s PACE program currently operates at capacity, with 325 participants enrolled. Over the last four years, Suncoast Pinellas PACE has referred 175 people to Suncoast Pinellas. And although there are approximately 14,000 eligible PACE participants in Hillsborough, there is not a PACE provider in the county. In recognition of this unmet need, Suncoast Pinellas is currently in the process of expanding PACE services to residents of Hillsborough. Suncoast’s PACE program distinguishes Suncoast from Cornerstone and VITAS, neither of which currently operates a PACE program in any of their service areas. Suncoast’s Volunteer Program Under the Medicare Conditions of Participation, hospice programs must use volunteers “in an amount that, at a minimum, equals 5 percent of 8 Both Suncoast and Vitas condition their applications on eschewing fundraising activities in SA 6A, apparently in an effort to minimize adverse impact on the two existing providers in the service area. However, neither Lifepath nor Seasons participated as a party to this litigation, or presented evidence at hearing as to revenues received through their fundraising activities. Thus, it is impossible to determine whether the conditions proposed by Suncoast and VITAS would have a material impact on either of the existing providers. the total patient care hours of all paid hospice employees and contract staff.” 42 C.F.R. § 418.78(e). Suncoast Pinellas regularly exceeds that 5% requirement and, in fact, reached 12% in the last fiscal year. Suncoast Pinellas currently has over 1,000 volunteers who support the hospice program by assisting with palliative arts, including Reiki and aromatherapy, Lifetime Legacies, pediatric patients, and transportation. Suncoast Pinellas’s volunteers also assist with Suncoast’s Pet Peace of Mind Program, for which Suncoast Pinellas won the inaugural award for program of the year in 2019. Suncoast is the only applicant that operates a teen volunteer program. Suncoast Pinellas’s teen volunteer program was established in 1994 and was the first of its kind in the entire country. In 1998, it was awarded the Presidential Point of Light award. Suncoast Pinellas’s Volunteer Services Director, Melissa More, regularly consults with hospices across the country on the development of teen volunteer programs. Ninety of Suncoast Pinellas’s 1,000 volunteers currently live in Hillsborough, but travel to Pinellas to volunteer at Suncoast Pinellas. Nine of those volunteers submitted letters of support for Suncoast’s CON application to serve Hillsborough. Doctor Direct Program Suncoast Pinellas’s existing Doctor Direct Program enables physicians in the community and their ancillary referral partners to contact a Suncoast Pinellas physician 24/7, who can answer any questions about a patient they think might be eligible for hospice, and questions related to other Suncoast Pinellas programs. Suncoast will provide its Doctor Direct Program in Hillsborough. Plan for Inpatient Services Suncoast received letters of support from hospitals and a nursing home indicating a willingness to enter into a contract for inpatient services with Suncoast. Suncoast intends to offer both inpatient units and “scatter- bed” arrangements with these providers. Suncoast received letters specifically related to potential partnerships with St. Joseph’s (BayCare) and Brandon Regional (HCA) for the provision of inpatient hospice services. Suncoast also received a letter related to a potential partnership with the Inn at University Village, a long-term care facility in Hillsborough, for the provision of inpatient services. Telehealth Suncoast Pinellas offers telehealth services using CMS and HIPAA- approved software so that patients can keep meaningful connections with their family and friends, regardless of ability to travel. In Hillsborough, Suncoast will provide nurses, social workers, and chaplains with traveling technology for use in the patient’s home to connect with family and friends. Utilizing telehealth in this way will help to minimize emergency room visits and hospitalizations. Suncoast will be prepared to implement its telehealth program in Hillsborough on day one of operation if awarded the CON. Outreach Efforts to Diverse Communities Suncoast is committed to, and has a proven track record of, community outreach efforts to diverse communities. As part of its outreach efforts in Hillsborough, Empath’s Vice President of Access and Inclusion, Karen Davis-Pritchett, met with the Executive Director of the Hispanic Service Council, Maria Pinzon, to discuss the organization’s outreach efforts and gain insight into the Hispanic community in Hillsborough. Ms. Davis- Pritchett learned that the Hispanic community in Hillsborough differs from the Hispanic community in Pinellas, in that Hillsborough has a large and spread out migrant population. Ms. Davis-Pritchett and Ms. Pinzon also discussed the transportation issues facing residents of Hillsborough. To address these transportation issues, Suncoast conditioned its CON application on the purchase and use of a mobile outreach van with bilingual staff to conduct outreach to the Hispanic and other diverse communities. Suncoast also conditioned its application on the provision of vouchers that may be used for buses or ride-sharing services. Ultimately, Suncoast obtained a letter of support from Ms. Pinzon, which was submitted with its CON application. Additionally, Suncoast conditioned its application on recruiting four community partnership specialists, who will conduct outreach to the African American community, the Hispanic community, the Veterans community, and the Jewish community, and six professional liaisons who will conduct outreach to clinical partners in Hillsborough. All of these positions will be dedicated to Hillsborough and be filled by individuals who are connected to these communities, and understand the importance of access to hospice care. Suncoast’s proposal includes a bilingual medical director, Dr. Jerez- Marte, for its Hillsborough program. Dr. Jerez-Marte regularly speaks Spanish with patients and staff, which would be a benefit to Hispanic patients in Hillsborough. Mr. Sciullo credibly testified that Suncoast will offer high quality hospice services in SA 6A, and will fulfill the 19 conditions proposed in its application. Cornerstone Based on its review of data and analytics that Cornerstone relies upon and conducts as part of its ongoing operations in Florida, Cornerstone recognized in the second quarter of 2019, long before AHCA published its need projections, that there was need for an additional hospice program to enhance access to hospice services in Hillsborough. Regardless of the service area, Cornerstone offers quality hospice care through consistent policies, protocols, and programs to ensure that patients are getting the highest quality care possible. Cornerstone will bring all aspects of its existing hospice programs and services to Hillsborough, including all of the programs and services described throughout its application. However, Cornerstone recognizes each service area is different in terms of the needs and access issues patients face, whether based on demographics, geography, infrastructure, a lack of information about hospice, or other factors. When looking to enter a market, Cornerstone conducts a detailed community-oriented needs assessment to determine the specific needs of the community with regard to hospice to best understand how to enhance access to quality hospice services. Cornerstone explores each potential new area to identify the cultural, ethnic, and religious makeup of the community, the current providers of end- of-life care in the community, and the unmet needs and gaps in care, which is critical to understanding where issues may lie. This allows Cornerstone to build and develop an appropriate operational plan to meet the needs identified in a particular market. Cornerstone conducted this type of analysis for its recent successful expansion in Marietta, Georgia, and has had success expanding access to hospice in its existing markets through ongoing similar analyses. Cornerstone conducted an analysis of Hillsborough similar to those it conducts in its existing markets and in expansion efforts outside its existing markets. In its assessment of Hillsborough, Cornerstone relied, in part, on the extensive knowledge of its senior leaders and outreach personnel, many of whom live and previously worked in Hillsborough, with regard to the population characteristics and needs of the Hillsborough area. This experience in the target service area affords Cornerstone’s team a detailed knowledge of the hospice-related needs of the county. Mr. D’Auria, who conducted much of the analytics internally for Cornerstone, also oversaw a team of Cornerstone staff who spent several weeks canvassing Hillsborough at a grassroots level. The Cornerstone team spoke to residents, medical professionals, community leaders, SNFs, ALFs, and hospitals, among others, on the local experience of hospice care, to identify any areas of concern regarding unmet needs or perceived improvements necessary relative to the provision of hospice care by the current providers. Cornerstone’s retained health planning experts, Mr. Roy Brady and Mr. Gene Nelson, further undertook an extensive data-driven analysis of Hillsborough’s health-related needs to explore the access issues and service gaps identified in Cornerstone’s analytics, knowledge of and discussions in the local community, as well as the issues raised in community health needs assessments,9 letters of support, and other resources. Together, the team concluded that quality hospice services are available in Hillsborough County through existing providers LifePath and Seasons Hospice. That care is available to patients of all ages and demographic groups with virtually any end-stage disease process. Yet some patients simply are not accessing hospice services at the expected rate in Hillsborough. For example, Cornerstone’s analyses identified specific unmet community need among particular geographic areas, as well as among persons with a diagnosis other than cancer, particularly those under age 65, persons with end-stage respiratory disease, the Hispanic and African American communities, migrant communities, residents of smaller ALFs, and veterans. Based upon its analysis of the healthcare needs of Hillsborough, Cornerstone included multiple conditions intended to address those needs. In 9 Cornerstone considered the health needs assessments released by Tampa General Hospital and the Moffitt Cancer Center, both published in 2019. Cornerstone also considered the health needs assessment prepared by HCDOH issued on April 1, 2016, as updated, including the March 2019 update. all, Cornerstone proposed 10 conditions in its CON application targeted to meet the hospice needs of Hillsborough: Licensure of the Hospice Program: Cornerstone commits to apply for licensure within 5 days of receipt of the CON to ensure that its service delivery begins as soon as practicable to enhance and expand hospice and community education and bereavement services in SA 6A; Hispanic Outreach: Cornerstone commits to provide two full-time salaried positions for bilingual staff as part of its Community Education Team. These Community Education Team members will be responsible for the development, implementation, coordination and evaluation of programs to increase community knowledge and access to hospice services, particularly designed to reach the Hispanic community in Spanish. Bilingual Volunteers: Cornerstone commits to recruit bilingual volunteers. Patients’ demographic information, including other languages spoken, is already routinely collected so that the most compatible volunteer can be assigned to fill each patient’s visiting request. Offices: Cornerstone commits to establish its first program office in the Brandon area (zip code 33511 or 33584) during the first year of operation. Cornerstone commits to establish a satellite office in the Town & Country area (zip code 33615 or 33634) during the second year of operations. Complimentary Therapies: Cornerstone conditions its application on offering alternative therapies to patients that may include massage therapy, music therapy, play therapy, and holistic (non-drug) pain therapy. These complimentary therapies are not generally considered to be part of the hospice's core services, but are enhancements to the patient’s care which often have a marked impact on the quality of life during their last days. Veterans: Cornerstone commits to providing services tailored to the military veterans in the community. Cornerstone will immediately upon licensure expand its existing We Honor Veterans Level 4 program to serve Hillsborough and will provide the same broad range of programs and services to veterans in Hillsborough as it currently provides in its existing service areas. Bereavement Counseling for Parents: Cornerstone will implement a program in its second year of operation which will provide outreach for bereavement and anticipatory grief counseling for parents of infants who have died. The Tampa area has several hospitals which provide high-level newborn and infant services such as Level III NICU and other programs, consequently there is a higher than average infant mortality rate due to this concentration of high-level services. Cornerstone will work with the local hospitals which provide high-level neonatal intensive care to develop and carry out this program. Cooperation with Local Community Organizations: Cornerstone commits to donate at least $25,000.00 for four years to non-profit community organizations focused upon providing greater healthcare access, disease advocacy groups and professional associations located in SA 6A. These donations will be to assist with their core missions, which foster access to care, and in collaboration with Cornerstone to provide educational content on end-of-life care. Separate Foundation Account: Cornerstone will donate $25,000.00 to a segregated account for SA 6A maintained and controlled by the Cornerstone Hospice Foundation. Additionally, all donations made to Cornerstone or the Foundation from SA 6A, or identified as a gift in honor of a patient served in the 6A program, shall be maintained in this segregated account and only used for the benefit of patients and services in Hillsborough. This account will be used to meet the special needs of patients in Hillsborough which are not covered under the Medicare hospice benefit and cannot be met through insurance, private resources, or community organization services or programs. Continuing Education Programming (CEUs): Cornerstone will commit to extending free CEU in- services to the healthcare community in Hillsborough. Topics will cover a wide range of both required and pertinent subjects and will include information on appropriate conditions and diagnoses for hospice admission, particularly for non-cancer patients. A minimum of 10 in-services will be offered in a variety of healthcare settings during each of the first five years. Additional CEU will be provided on an ongoing basis. In addition to formulating CON conditions, Cornerstone used information gleaned from its community exploration to develop an operational plan detailing the number and type of staff to hire, which programs to offer, and how to tailor its outreach and education to best enhance access to hospice services in Hillsborough to meet the unmet need. Given Cornerstone’s existing outreach to area providers in Hillsborough, such as Moffitt, Tampa General Hospital, and the VA, which already discharge patients to Cornerstone in neighboring service areas, Cornerstone fully expects that it will receive referrals to its hospice from providers throughout Hillsborough upon the initiation of operations in the county. Cornerstone will provide hospice services to those and any other patients throughout Hillsborough from day one. However, when seeking to expand access in new or existing markets, Cornerstone focuses not on taking patients from existing providers but on enhancing access to groups and populations that have been overlooked, or whose needs are not otherwise being met by existing hospices. Cornerstone therefore developed a phased operational plan to focus its outreach and education efforts on areas where there are barriers to access, rather than simply scattering their efforts haphazardly or concentrating on areas that already have a heavy hospice presence. Phase One of Cornerstone’s operational plan will begin immediately upon licensure and continue through the first six months of operation. During this time, Cornerstone will focus outreach and education efforts heavily on the underserved southeast portion of Hillsborough, including Plant City, Valrico, Brandon, Riverview, Mango, and Sun City Center. Phase One includes 68 ALFs, six SNFs, and four hospitals. Almost one-third of the population of Hillsborough resides in this area, and an estimated 28 percent of the residents are Hispanic, and 14 percent are African American. There is also a large, underserved migrant population in this area. Cornerstone conditioned its application on opening an office in Brandon during this initial phase in the first year of operation. Phase Two will expand Cornerstone’s targeted outreach efforts into the southwest quadrant of Hillsborough, including the Apollo Beach, Ruskin, Gibsonton, Progress Village, and Palm River areas. While the population of this phase is smaller than Phase One, the two areas combined make up almost a third of the county’s Hispanic population, and a fourth of the county’s African American population. Phase Three will reach into the broader Tampa area, including towns such as Temple Terrace, Pebble Creek, University, Ybor City, and Carrollwood. This is the largest and most populated of the four phases; however, it is also currently the most hospice-penetrated area of the county as the two existing providers, LifePath and Seasons, each have offices in Phase Three. There is also a hospice house and two hospice inpatient units in the area as well. Because this area already has better hospice visibility and access, and to avoid siphoning patients from existing providers, Cornerstone will focus on this area after Phases One and Two. Cornerstone will ramp up its outreach staffing consistent with the increased area, facilities, and population added during Phase Three. Combined, the first three phases of the operational plan will offer enhanced outreach and education to 90% of the Hillsborough population starting at the beginning of year two operations. Phase Four will encompass the remainder of the county to the west of Tampa in the Town ‘n’ Country area. While this area represents only about 10% of the county’s population, Phase Four has no hospice visibility currently in the form of hospice offices, hospice houses, or hospice inpatient units. Cornerstone has conditioned its application on establishing an office in the Town ‘n’ Country area within project year two to enhance hospice visibility and access in this area of the county. Upon implementation of Phase Four, Cornerstone’s targeted outreach and education will be fully integrated throughout the county. Cornerstone’s application included more than 174 letters of support for its proposal. The letters of support are from a broad range of individuals and facilities located within and outside Hillsborough, including families, SNFs, ALFs, hospitals, vendors, and local charitable organizations, among others. Cornerstone presented testimony from three authors of letters of support, Andrea Kowalski, Eric Luetkemeyer, and Colonel (Ret.) Gary Clark. Ms. Kowalski is an employee benefits coordinator for USI Insurance Representatives in Tampa who works with Cornerstone to build benefits programs for its employees. In addition to authoring her own letter of support, Ms. Kowalski also assisted in gathering approximately 40 additional letters of support for Cornerstone from her colleagues in Hillsborough. Ms. Kowalski strongly supports Cornerstone’s approval and indicated the community would benefit not only from enhanced access to Cornerstone’s excellence and expertise in caring for those with advanced illness, but also from the addition of a highly-regarded employer, which will provide additional options for healthcare workers and financial benefits as Cornerstone reinvests in the community. Mr. Leutkemeyer is the COO for Spectrum Medical Partners (“Spectrum”), the largest privately-held hospitalist group in Florida. Spectrum manages roughly 400 providers across the state, the majority of which (85%) are medical doctors or doctors of osteopathic medicine, either in hospital or post-acute settings, and sees roughly 2,000 patients per day. Spectrum’s footprint includes coverage in Hillsborough for entities such as Simply or Humana with which Spectrum contracts statewide. Spectrum is looking to expand its footprint and services in Hillsborough in the near future. As detailed in his letter, Mr. Luetkemeyer supports Cornerstone’s efforts to establish a hospice program in Hillsborough, indicated a desire to work with Cornerstone in the county if awarded, and believes the community would benefit from the additional resources and quality care that Cornerstone would provide. Colonel Clark, who retired from the United States Air Force in 1993, is co-founder and current Chairman of the Polk County Veterans Council, a volunteer organization of individuals interested in assisting veterans. Colonel Clark is also affiliated with, and participates in, a number of veterans organizations in Hillsborough, including as an adviser to the Mission United Suncoast Chapter in Hillsborough, which primarily assists veterans in transitioning from service to the civilian world. He also serves on the management advisory committee of James A. Haley Veterans’ Hospital in Tampa, which provides a broad spectrum of hospital-based care to area veterans. Colonel Clark has significant experience with Cornerstone through its participation in the Polk County Veterans Council, including on the Council’s committee for the Flight to Honor program, which provides veterans a flight to Washington D.C. to visit war memorials. If a veteran is unable to make the flight, a virtual flight and tour, as well as ceremonies or presentations, are provided by Cornerstone to veterans enrolled in hospice. Cornerstone is heavily involved in the Council’s Flight to Honor program— participating on the committee, recruiting volunteers, working with local schools to gather letters for the veterans on the flights, arranging for orientation prior to the flights, and putting on the virtual flights for those Veterans unable to make the flight due to various disabilities. Colonel Clark is also familiar with Cornerstone’s efforts to support veterans at James A. Haley Veterans’ Hospital in Tampa. Colonel Clark described Cornerstone’s support not only for veterans but for the community overall as “magnificent,” and detailed his support for Cornerstone’s application in a letter of support that is included in Cornerstone’s application. Cornerstone is well-positioned to quickly establish a successful hospice program to enhance access in Hillsborough, and its proposal is a carefully considered, long range plan that would bring its established and proven processes, procedures, and programs to the residents of the county. Cornerstone also posits that its existing presence nearby in Lakeland will enhance its ability to topple barriers to care and serve patients in adjacent SA 6A immediately. For example, Cornerstone has existing relationships with veterans groups that serve both Polk and Hillsborough, and will utilize those relationships to enhance access to the large veteran population in Hillsborough, as highlighted through Cornerstone’s condition to provide services tailored to the veteran community. VITAS VITAS, which operates a hospice program in adjacent SA 6B, proposes to expand into SA 6A under its existing license. This will allow VITAS to begin serving patients quickly without creating an entirely new administrative infrastructure for the opening. Although VITAS provides many of the same core programs in each of its service areas, it also recognizes that each community is different. VITAS performed a qualitative and quantitative assessment that examined the specific needs of Hillsborough regarding hospice care and services. Through its consultants and internal team, VITAS identified several communities, patient types, and clinical settings that are underserved in SA 6A. These include: the African American, Hispanic, and migrant communities, particularly those age 65 and older; impoverished, food insecure and homeless communities; patients with non-cancer diagnoses such as pulmonary disease, cardiac disease, Alzheimer’s Disease, and patients with sepsis; cancer patients in need of palliative care; high acuity patients in need of complex services and those needing admissions during evenings and weekends; patients requiring admission after hours and on weekends; and patients who reside in nursing homes and small ALFs. To understand the hospice needs within Hillsborough, VITAS conducted a two-step review—(1) analyzing data from a wide variety of sources including Medicare, AHCA, Florida Department of Elder Affairs, Florida CHARTS, and demographic and socioeconomic data; and (2) meeting with some healthcare and social service providers in Hillsborough. Key members of VITAS’s leadership team, including Patty Husted, Mark Hayes, and Dr. Shega, conducted an assessment in Hillsborough to identify the unmet need within the community and underserved populations. VITAS’s needs assessment team physically went into Hillsborough to visit nursing homes, ALFs, hospitals, and physicians to determine the unmet need and how to achieve greater access to hospice services for the residents of Hillsborough. VITAS’s team spent a significant amount of time conducting hospice outreach and education in Hillsborough in furtherance of the needs assessment. Specifically, VITAS’s team met with hospitals including H. Lee Moffitt Cancer Center, Baptist Health, BayCare, St. Joseph’s, and Brandon Regional; nursing homes, such as Hudson Manor, Ybor Health and Rehabilitation Center; and physician and nurse practitioner groups. VITAS’s needs assessment team also participated in physician advisory council meetings as part of its needs assessment for Hillsborough. During these meetings, VITAS gained perspective from these local physicians regarding the challenges faced by patients in need of hospice services in SA 6A, as well as insight as to what VITAS could bring from its existing programs to fill the unmet needs. VITAS also drew on the knowledge of the 18 VITAS employees currently living in Hillsborough. To address the needs it identified in SA 6A, VITAS proposes a broad array of programs and services to be offered in Hillsborough which are specifically targeted to increase the availability and accessibility of hospice services for underserved groups and Hillsborough residents more broadly. To demonstrate its commitment, VITAS conditioned its CON application on providing the following 20 programs and services in SA 6A: VITAS Pulmonary Care Program. VITAS Cardiac Care Program. Clinical research and support for caregivers of patients with Alzheimer’s and dementia. VITAS Sepsis Care Program. Veterans programs, including achieving Level 4 commitment to the We Honor Veterans program within the first two years of operation in SA 6A. Bridging-the-Gap Program and Medical/Spiritual Toolkit, which is an outreach and end-of-life education tool for African American and other minority communities. ALF Outreach and CORE Training Program. Palliative care resources and access to complex and high acuity services, including engaging area residents with serious illness in advance care planning and goals of care conversations, as well as offering palliative chemotherapy, inotrope drips and radiation to optimize pain and symptom management as appropriate. Provider clinical education programs for physicians, nurses, chaplains, HHA’s and social workers. Quality and Patient Satisfaction Program, including hiring a full-time Performance Improvement Specialist within the first six months of operation dedicated to supporting quality and performance improvement programs for the 6A hospice program. VITAS staff training and qualification, ensuring the medical director covering SA 6A will be board-certified in hospice and palliative care medicine. Hospice office locations. Deployment of a mobile van to increase access and outreach to rural counties. VITAS will not solicit donations. Outreach and end-of-life education for 6A residents experiencing homelessness, food insecurity, and limited access to healthcare, including advanced care planning for area homeless shelter residents and a partnership to provide a grant for housing and food assistance with a community organization. $5,000 will be distributed during the first two years to the Hispanic Services Coalition or similar qualified organization for promoting academics, healthy communities and engagement of Latinos. Outreach program for underserved residents of SA 6A. Educational grant, to the University of South Florida Foundation including $250,000 for fellowships, scholarships, education and workforce development as well as $20,000 for diversity initiatives. Inpatient hospice house and shelter for natural disasters and hurricanes. Medicaid Managed Care education Services beyond the hospice benefit, including, among others: 24/7 Telecare Program and access to admission on evenings and weekends, including outreach and end-of-life education for residents experiencing poverty, food insecurity, homelessness and/or food insecurity, including nutrition services, advanced care planning for shelter residents, and housing assistance. Hospice Education and Low Literacy (HELLO) Program. Multilingual education materials in several languages including Spanish, Chinese, Korean, Portuguese, Russian, Vietnamese and Creole. CAHPS Ambassador Program to generate interest, awareness and encourage ownership by team members of their team’s performance on CAHPS survey results. Community outreach and education programs. Partnership with a local college for fellowships, scholarships, education and workforce development and diversity initiatives. VITAS’s application contains approximately 50 letters supporting its proposed program, the vast majority of which are from hospitals, nursing homes, ALFs, physicians, and community organizations in Hillsborough County with direct hospice experience. VITAS obtained these letters of support as part of its community-oriented needs assessment, and they attest to the community’s confidence in VITAS’s ability to meet hospice care needs in Hillsborough. Included are letters of support from Cynthia Chavez, Executive Director at Hudson Manor Assisted Living; Brian Pollett, Administrator at Ybor Health and Rehabilitation Center; and Dr. Jorge Alfonso, Regional Chief Medical Officer at Dedicated Senior Medical Center. All three providers expressed a local need to address high acuity patients, including greater access to continuous home care. Statutory and Rule Review Criteria The review criteria are found in sections 408.035, 408.037, and 408.039, and rules 59C-1.008 and 59C-1.0355. (Prehearing Stipulation). Section 408.035(1) - Need for the health care facilities being proposed There are currently two licensed hospice programs in hospice SA 6A, and a need for one additional hospice program, as calculated using the need methodology found in rule 59C-1.0355(4), and published by AHCA, without challenge. AHCA’s need calculation compares reported hospice admissions during the base year with projected admissions in the horizon year and finds need if the difference between base and horizon year admissions exceeds 350, assuming there are no recently-licensed or CON-approved hospice programs in the service area. In this case, AHCA’s calculation revealed a net need of 863 hospice admissions for the January 2021 planning horizon. Each Applicant has put forth a proposal to meet the calculated need for one additional hospice program in Hillsborough. None of the applicants are advocating the approval of more than one new program. Section 408.035(2) – Availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district. It is undisputed that quality hospice services are available in Hillsborough today through existing providers LifePath and Seasons, including for patients of all ages and with essentially all end-stage disease processes, as well as for patients of all demographic groups. Relevant data demonstrates discharges to hospice in Hillsborough for a wide range of diagnoses and demographic groups, including African American and Hispanic patients, non-cancer and cancer patients, both over and under age 65; patients with end-stage cardiac disease; end-stage pulmonary disease and dementia, including Alzheimer’s disease, among others. However, despite the availability of quality hospice services, some patients simply are not accessing hospice services at the rate expected in SA 6A, as reflected by low penetration rates and low discharge-to-hospice rates, particularly within certain major disease categories and demographic groups, including Hispanic and African American residents. All three applicants agreed that the underutilization is concentrated among certain patient populations, including demographic groups and disease groups. Generally, all three applicants agreed that the Hispanic, African- American, veteran, and homeless populations are currently underserved in Hillsborough. In addition, Suncoast points to the need for a specialized pediatric hospice program in SA 6A; Cornerstone argues that non-cancer patients younger than age 65 are in need of enhanced access, as are residents of smaller ALF’s; and VITAS asserts that patients with respiratory, sepsis, cardiac, and Alzheimer’s diseases are underserved, as are patients requiring continuous care and high acuity services, such as high-flow oxygen. VITAS’s argument is based largely on a claim that the existing providers are not providing “any measurable continuous care,” as well as hearsay reports from area hospitals indicating a lack of high-acuity services available through existing hospice providers. However, VITAS’s health planning expert conceded that, in fact, existing providers are offering continuous care, and she was unable to quantify any purported dearth of continuous care in Hillsborough as compared to other providers or the statewide average. The record establishes that continuous care is part-and- parcel of the hospice benefit, and there was no evidence presented at final hearing to support the claimed lack of availability of that service from existing providers. Based on the foregoing, the evidence tended to show quality hospice care is available in SA 6A, that it is underutilized, and that the underutilization is driven by accessibility challenges among particular patient groups, and supports AHCA’s determination that another hospice program is needed in Hillsborough. Section 408.035(3) - Ability of the applicant to provide quality ofcare and the applicant’s record of providing quality of care Cornerstone is the only applicant accredited by the Joint Commission, which is a national symbol of quality that reflects its commitment to meeting high quality performance standards. Cornerstone’s Joint Commission accreditation, which was just recertified in 2020, and the accompanying high standards of quality care, will carry over to its new SA 6A program. As a new entity, Suncoast is not Joint Commission accredited, but conditions its application on achieving such accreditation by the end of year two. Suncoast Pinellas is Joint Commission accredited, and indeed, is one of only a handful of hospices nationwide, along with Cornerstone, to hold Joint Commission accreditation and/or certification. While VITAS represents that some affiliated VITAS hospice programs are Joint Commission accredited, VITAS, the applicant here, is not accredited by the Joint Commission, and makes no representation that it will seek or attain such accreditation for its new hospice program in SA 6A. There are two universal metrics codified in federal law that are used as a proxy for assessing the quality of care offered by hospice programs— Hospice Item Set (“HIS”) scores and Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) survey scores. See 42 C.F.R. § 418.312; see also § 400.60501, Fla. Stat. (2020). CAHPS surveys are a subjective metric sent to family members and other caregivers months after a patient's death. The survey asks respondents to provide ratings like: “would definitely recommend,” “would probably recommend,” “would probably not recommend,” and “would definitely not recommend.” It also seeks yes or no responses to statements like: the hospice team “always communicated well,” “always provided timely help,” “always treated the patient with respect,” and “provided the right amount of emotional and spiritual support.” It also asks if the patient always got the help they needed for pain and symptoms, and if “they” received the training they needed. The CAHPS survey was created by CMS in conjunction with the Agency for Healthcare Research and Quality to measure and assess the care experience provided by a hospice. The purpose of the Hospice Compare Website is to allow the public to compare quality scores for CAHPS among different hospice providers. CAHPS scores are one measure of quality that is intended to allow for comparison across hospice programs. Significant time at final hearing was dedicated, through multiple witnesses, to discussing the strengths and weaknesses of CAHPS scores as a measure of quality. Ultimately, the greater weight of the evidence supports that CAHPS scores are an indicator of quality, but are not the only consideration, and suffer from limitations that prohibit drawing distinctions from minor differences in scores. The three applicants’ CAHPS scores are summarized in this chart: (Suncoast Ex. 42, BS p. 12203) While it is true that Suncoast Pinellas’s scores on all CAHPS measures are higher than those of Cornerstone, the slight difference between Suncoast Pinellas and Cornerstone is not significant given the subjective nature of the survey instrument. However, both Suncoast Pinellas and Cornerstone do score significantly higher than VITAS on most measures. Cornerstone’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to three points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. As a new entity, Suncoast does not have CAHPS scores. Suncoast Pinellas’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to two points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. In contrast, VITAS’s CAHPS scores fall below the state average on all eight metrics, fall five to seven points below the state average on seven of the eight metrics, and its average CAHPS score for all measures combined falls five points below the state average. Cornerstone and Suncoast Pinellas are within one to three points of each other on every CAHPS metric. The difference in scores between Cornerstone and Suncoast Pinellas is not statistically significant or meaningful, particularly given the shortcomings of CAHPS scoring. VITAS’s CAHPS scores are below both Cornerstone and Suncoast Pinellas, falling six and eight points below Cornerstone and Suncoast Pinellas, respectively, on the average of all CAHPS metrics. This difference is meaningful, particularly when viewed in the context of VITAS’s history of substantiated complaints discussed below. HIS scores, which assess documentation of various items, are more a process or compliance measure than a quality measure. Suncoast Pinellas’s HIS scores exceed the state and national average on all metrics, albeit most scores are within two points of the state average. Cornerstone’s HIS scores are on par with state averages on most metrics and meet or exceed the national average on every metric, except Pain Assessment. Cornerstone has worked to substantially improve its Pain Assessment score through better documentation protocols, raising its score from 52.1 to 89.1 in the last few years, and is implementing a new Electronic Records Management system to further improve its scores. VITAS’s HIS scores are on par with state averages on most metrics, and meet or exceed the national average on all metrics except Visits When Death Imminent. VITAS scores 68.4 on Visits When Death Imminent compared to the state and national averages of 83.2 and 82.4, respectively. As measured by the HIS scores, there was no credible, persuasive testimony establishing a meaningful difference among the three applicants. In contrast to CAHPS and HIS scores, the number and substance of complaints substantiated against each applicant by AHCA is a more direct indicator of quality of care. Suncoast has no prior hospice operations history, and therefore no prior substantiated complaints. Suncoast Pinellas has had only three substantiated complaints since 2008, and none since 2013. Cornerstone has only two substantiated complaints since 2008, and only one since Mr. Lee took over as CEO of Cornerstone in late 2012. VITAS has 73 substantiated complaints since 2008, including 10 substantiated complaints in the three years ending November 20, 2019, just prior to submission of the CON application at issue here. Between November 20, 2019, and June 17, 2020, VITAS had five additional substantiated complaints. VITAS’s health planning expert, Ms. Platt, also considered all AHCA survey deficiencies, whether based upon a complaint, life safety survey, or otherwise. Ms. Platt’s analysis demonstrates that VITAS had 80 such surveys with deficiencies since 2012, including 26 between January 2018 and June 2020. VITAS argues that its greater number of substantiated complaints are the consequence of higher patient volumes than Suncoast and Cornerstone. However, even taking into consideration the greater number of patient days provided by VITAS, VITAS had infinitely more surveys with deficiencies in 2019 than Cornerstone, which had zero. And VITAS had five times as many surveys with deficiencies for 2018 and 2019 as Cornerstone. A comparison of VITAS to Suncoast Pinellas yields similar results, with VITAS having significantly more surveys with deficiencies than Suncoast Pinellas, even when taking into consideration the greater number of patient days provided by VITAS. Complaints substantiated against VITAS demonstrate failures in many areas of patient care, including some of the specific aspects of hospice care at which VITAS claims to excel beyond other providers, such as after- hours care, the provision of continuous care, and care to patients wherever they live, including smaller ALFs. For example, a substantiated complaint against VITAS in November 2019 included a finding of “immediate jeopardy”—the most severe level of deficiency possible—for a patient who failed to receive proper care after-hours at end-of-life, resulting in a particularly painful death for the patient, and an excruciating experience for the patient’s daughter who witnessed her mother’s painful death, unaccompanied by hospice personnel. Two additional substantiated complaints from January and February 2020 found deficiencies in VITAS’s care to patients on continuous care, including one where the VITAS nurse had headphones in and was not paying attention when the patient fell. Indeed, VITAS’s own internal review of the substantiated complaint involving the patient who fell confirmed an upward trend in falls among VITAS patients. And, as recently as June 2020, a separate substantiated complaint found that VITAS abandoned a patient on continuous care, requiring the patient to be transferred to the hospital rather than continue to receive care in the “small ALF” where the patient resided. VITAS acknowledged the patients at issue in the substantiated complaints discussed at final hearing did not receive quality hospice care. Those five examples are only a sampling of the complaints substantiated against VITAS, and the others demonstrate similar quality deficiencies. The number of substantiated complaints weighs in favor of Cornerstone and Suncoast, and heavily against VITAS with regard to record of providing quality of care. There is no meaningful difference between Cornerstone and Suncoast in regard to substantiated complaints, and neither is entitled to preference in this regard. On balance, among the three applicants, the quality of care provided by Suncoast and Cornerstone is on equal footing, with both having a distinct advantage over VITAS. Section 408.035(4) - Availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Section 408.035(6): The immediate and long-term financial feasibility of the project The parties stipulated that each of the applicants have available funds for capital and operating expenditures in the short term for purposes of project accomplishment and operation. Suncoast demonstrated that it has the resources to accomplish its proposed project. Suncoast provided detailed descriptions of the personnel that would be required to successfully implement its proposed program. Suncoast has reasonably projected the types of staff necessary to operate Suncoast in year 1 and 2 of operation. At hearing, Suncoast witnesses credibly described the roles of the staff contained in Suncoast’s Schedule 6, including the roles of administrator, care team manager, administrative assistant, regional hospice scheduler, business development liaisons, physicians, program director, nurses, hospice aides, respiratory therapists, staff for the mobile van in Condition 2 of its application, community partnership specialists, social workers, patient social team lead, chaplain, volunteer coordinator, and senior staff nurse. Suncoast’s financial expert, Armand Balsano, testified that part of his role in preparing Suncoast’s CON application was working with Suncoast Pinellas’s Chief Financial Officer, Mitch Morel, to develop Suncoast’s financial projections that were included on Schedules 1 through 8 of the application. Mr. Balsano, in collaboration with Mr. Morel, utilized Suncoast Pinellas’s internal financial modeling system to develop the financial schedules and financial narrative for the application. Mr. Balsano credibly testified that financial Schedules 1 through 8 are accurate and reasonable. Suncoast projects admissions of 460 patients for project year one and 701 patients for project year two. Suncoast’s health planner, David Levitt, developed Suncoast’s projected admissions based on experience of other providers entering a market with two existing providers. Suncoast’s projected number of admissions for years one and two are reasonable projections of admissions for a new hospice program in Hillsborough. Suncoast was criticized as having a lackluster record for admissions in its existing Pinellas hospice. While it is true that Suncoast Pinellas’s admissions declined slightly from 2013 to 2014, the overall trend has been one of increasing admissions. For example, based on Medicare claims data, from 2005 to 2019, Suncoast Pinellas’s admissions grew from 4,679 to 6,534.10 Financial feasibility may be proven by demonstrating the expected revenues and expenses upon service initiation, and determining whether a shortfall or excess revenue results. The projection of revenue is not complicated for hospice services. The vast majority of hospice care, more than 90%, is funded by the Medicare Program which pays uniform rates to all hospice providers. Mr. Balsano testified that Suncoast’s projected revenues in Schedule 7 are based on the revenues that are currently realized for the various payer categories, including Medicare, Medicaid, Commercial, and self-pay. Mr. Balsano credibly testified that the assumptions reflected on Schedule 7 of Suncoast’s CON application are reasonable and appropriate. 10 Suggestions by VITAS and Cornerstone that Suncoast’s internal data indicate a history of low utilization or inaccurate reports to AHCA are without merit. Mr. Sciullo credibly testified that the data reported to AHCA is the most accurate admissions data. Mr. Sciullo further credibly testified that the Utilization Trend Reports contained in Cornerstone’s exhibits 82 through 88, relied on by VITAS and Cornerstone, contain duplicate hospice admissions and admissions from non-hospice programs such as Suncoast’s home health program. Mr. Sciullo also credibly testified that the most accurate admissions numbers reported to AHCA are not generated from the Utilization Trend Reports. Rather, the admissions numbers reported to AHCA are produced by Suncoast’s reimbursement department. Mr. Sciullo’s testimony under cross examination demonstrated a confident and credible understanding of the nuances of the Utilization Trend Reports. Additionally, the suggestion that Suncoast would intentionally under-report admissions to AHCA lacks credibility because hospice providers in Florida are incentivized to report higher numbers of admissions. In Year 2, Suncoast projects net operating revenue of $7,138,000, which breaks down to approximately $172 per day of overall net revenue per patient day. Mr. Balsano’s credibly testified that this is a reasonable forecast of net operating revenue. Projected expenses were also reasonably projected by Suncoast. Mr. Balsano testified that Suncoast’s projected income and expenses in Schedule 8A includes salaries and wages, fringe benefits, medical supplies and ancillary services, and approximately 1.5% of inpatient days. Suncoast also included a separate allowance for administrative and overhead cost. Suncoast also allocated $752,000 in management fees to account for “back office services” and other support services that would be provided to the Hillsborough program through the Empath home office. Mr. Balsano arrived at this number by determining that a reasonable assessment would be the cost per patient day of $18, as reflected on Schedule 8 for year two. Mr. Balsano credibly testified that, for a startup program, it is appropriate to include the costs associated with services provided by the corporate office because one must be cognizant of what services are provided locally, and what services will be provided through the corporate office. Mr. Balsano further testified that it would not be reasonable to assume that 100% of the costs associated with corporate services to a new hospice program would be fixed. As Mr. Balsano explained, the variable costs must be accounted for as well. Mr. Balsano credibly testified that Suncoast’s net profit in year two as reflected in Schedule 8A is $615,416. It is found that Suncoast has reasonably projected the revenues and expenses associated with its proposed hospice, and that Suncoast’s proposal is financially feasible in the long term. Cornerstone projected admissions of 448 patients in year one, and 819 patients in year two, for the highest year two admissions of the three applicants. In comparison, Suncoast projected admissions of 460 patients in year one and 701 in year two, while VITAS projected 491 patients in year one and just 593 in year two. Cornerstone’s projected admissions were developed by health planning experts Roy Brady and Gene Nelson based on the experience of recent new hospice programs in the state of Florida, were discussed and confirmed by Cornerstone personnel prior to being finalized, and are a reasonable projection of admissions for years one and two of operations in Hillsborough. Despite the highest anticipated year two admissions, Cornerstone’s projection still fell below the SA 6A service gap of 863 patients and therefore did not, standing alone, establish any greater adverse impact on area providers than Suncoast or VITAS. Cornerstone emphasized its mission as an organization, and intent for this proposal, to expand penetration by resolving unmet need as opposed to capturing patients already served by existing providers. The adverse impact analysis in Cornerstone’s application therefore represents a worst-case scenario by assuming all of its patients otherwise would be served by existing providers, a premise undercut by the substantial published need. Using this approach, Cornerstone anticipated that LifePath would bear the overwhelming burden of its entry into Hillsborough, with a projected adverse impact on LifePath of 408 patients in year one, and 747 in year two. Cornerstone anticipated adverse impact to Seasons of 39 patients for year one, and 72 patients for year two. Even in this worst-case scenario, existing [Remainder of page intentionally blank] providers’ volumes in Cornerstone project years one and two exceed their historical volumes.11 Cornerstone has available health personnel and management personnel for project accomplishment and operation. Cornerstone’s existing staff, as well as its projected incremental staff for the new program, is reflected in schedule 6A of its application. The projected incremental staff shown in schedule 6A is based on established ratios and methodologies Cornerstone uses in its existing hospice programs. The projected incremental staff is all the incremental staff Cornerstone will need to establish the new program in Hillsborough, and combined with its existing personnel, are sufficient to achieve program implementation as proposed in the application. Both Suncoast and VITAS criticized Cornerstone’s financial projections as flawed because they did not present the fully allocated costs of the project. According to Mr. Balsano, Cornerstone’s projected profit margin is unreasonable and, in fact, is “an extreme outlier.” As he explained, Cornerstone’s financial schedules make no allocation of shared service costs for critical services to be provided by the home office. According to Suncoast and VITAS, this omission is unreasonable when viewed in context with Cornerstone’s Schedule 6, which does not allocate any FTEs to back office support services. Not shown are the expenses Cornerstone will incur for finance, billing, revenue cycle, accounts receivable, payroll, human resources, 11 Relative adverse impact on existing hospice programs of competing applicants has been used as a dispositive factor for favoring one applicant over another. See, Hospice of Naples, Inc. v. Ag. for Health Care Admin., DOAH Case No. 07-1264, ¶ 274 (Fla. DOAH Mar. 3, 2008; Fla. AHCA Jan. 22, 2009) (“One factor outweighs all others, however, in favor of VITAS. VITAS's application will have much less impact on HON and its fundraising efforts and in turn on the high-quality services that HON presently provides in Service Area 8B.”). However, as noted here, neither of the existing providers presented evidence as to the relative impact that any of the applicants would potentially have on its existing operations, or whether such impacts would be material. Accordingly, there is no evidentiary basis for providing an advantage to one or another of the applicants based upon consideration of adverse impact. and contract negotiations, among others. Notably, hospice providers include home office costs as part of their Medicare cost reports filed with CMS.12 Because Cornerstone did not allocate home office costs in its application, its profit margins are substantially higher than all other applicants for the October 2019 Batching Cycle. While most applicants fall within the $100,000 – $500,000 range, Cornerstone projected a staggering $4.9 million profit margin. There is nothing in the CON application form or instructions that require that financial projections be presented on a “fully allocated” basis. Notably, in its review of the financial projections, AHCA determined that each applicant’s proposed program appeared to be financially feasible in the long-term. Cornerstone’s financial feasibility analysis included consideration of payer mix, level of service mix, admissions, average lengths of stay, patient days and incremental staffing needs, among others, and focused on the resulting incremental revenues and expenses generated by addition of the new program in Hillsborough. Cornerstone’s projected admissions are reasonable and appropriate for the proposed new program in Hillsborough. Cornerstone’s proposed incremental staff, combined with its existing staff, is sufficient for project accomplishment and operation. Cornerstone’s projected payer mix is based upon consideration of Cornerstone’s own historic experience, the demographics and recent hospice payer characteristics of Hillsborough, and consideration of Cornerstone’s goal to serve the non-cancer under-65 population, which may reduce Medicare 12 In terms of its budgeting process, Cornerstone has one “bucket” for its administrative overhead/home office expenses and then separate buckets for each of its hospice programs. Home office expenses include human resources, IT, compliance, and facility maintenance. Cornerstone does not allocate its home office expenses to each of its hospice programs within its internal books. However, when an audit is performed, the performances of each hospice program and the home office expenses are all included, and the home office expenses are allocated to each of its hospice programs. levels slightly from what they otherwise may be, and is reasonable and appropriate for its proposed hospice program in Hillsborough. Cornerstone’s projected level of service mix and average length of stay are based upon Cornerstone’s historical experience, and are reasonable and appropriate for the proposed hospice program in Hillsborough. Likewise, Cornerstone’s projected revenues as set forth in schedule 7A are based upon the projected volumes, service level mix, payer mix projections, and Medicare service level specific rates, and are a reasonable projection of revenues for the proposed project in Hillsborough. Cornerstone has established the long-term financial feasibility of its proposed SA 6A program. VITAS’s financial projections were prepared through the work of an internal team led by Lou Tamburro, Vice President of Development for VITAS. VITAS reasonably based these projections on the successful opening and ramp up of new hospice programs in Service Areas 1, 3E, 4A, 6B, 7A, 8B, and 9B, and other Florida communities. VITAS has a clear understanding of what startup costs will be, and it was appropriate for VITAS to rely on its past history of success in developing these projections. VITAS projects admissions of 492 patients for project year one and 593 patients for project year two. Mr. Tamburro developed the projected admissions using an internal model based upon VITAS’s prior experience. While Mr. Tamburro is an expert in health finance, not health planning, Ms. Platt reviewed VITAS’s projections and credibly concluded they are reasonable. VITAS proposes to dedicate more resources to SA 6A than the other two applicants in the second year of operations; 74% of that expense is focused on direct patient care, with only 23% associated with administrative and overhead, and 2% property costs. In contrast, Suncoast and Cornerstone only dedicate 54% and 56%, respectively, of their expenses on direct patient care and 41% and 42%, respectively, on administrative and overhead. However, VITAS’s higher direct patient care costs are at least partially explained by the larger number of clinical and ancillary FTE’s associated with the higher levels of continuous care projected by VITAS than either Suncoast or Cornerstone. As would be expected, VITAS also projects to admit a larger number of high acuity patients than Suncoast or Cornerstone. Given VITAS’s vast experience in the start-up and operation of hospice programs, including 16 within Florida, there is no reason to doubt that the VITAS Hillsborough program would be financially feasible in the long term. The following table summarizes the three applications’ financial metrics: Cornerstone Suncoast Vitas Total Project Costs $286,080 $703,005 $1,134,149 Operating Costs Yr.2 $6 million $5.7 million $8.6 million Net Profit Yr.2 $4,972,346[13] $615,416 $154,913 Proj. Admits Yr. 2 819 701 593 Routine Home Care 95.4% 97.5% 94% General Inpatient 3.5% 1.5% 2.5% Continuous Care 0.3% 0.5% 3.5% Respite 0.8% 0.5% 0% Section 408.035(5) The extent to which the proposed services will enhance access to health care for residents of the service district; and Section 408.035(7) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. Rule 59C-1.0355 and the criteria for determination of need for a new hospice program found within that rule, is predicated upon the notion that, 13 As noted, Cornerstone’s relatively large profit margin is a function of its incremental cost, versus fully allocated cost, financial projections. when need exists, approval of an additional program will foster competition beneficial to potential and prospective hospice patients in the service area. As between the three applicants, Suncoast did the most thorough and extensive analysis of the current needs of the Hillsborough population. This effort was driven by the fact that Suncoast had recently applied for a new hospice program in neighboring Pasco County, and was denied in favor of a competing applicant. In that case, Administrative Law Judge Newton specifically faulted Suncoast for failing to carefully evaluate the hospice needs of Pasco County residents: Suncoast, in effect, proposes a branch operation for Pasco County. Suncoast did not conduct the focused, individualized inquiry into the needs of Pasco County that Seasons did. Nor did it begin developing targeted ways to serve the needs or begin establishing relationships to further that service. The Hospice of the Fla. Suncoast v. Ag. For Health Care Admin., Case No. 18- 4986, ¶ 126 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 16, 2019). As explained by Mr. Sciullo at hearing, Suncoast took the above criticism to heart, and determined to conduct an exhaustive evaluation of the hospice needs in SA 6A, and to formulate a strategy for addressing those needs. Specifically, Suncoast’s intent was to identify issues and gaps in services facing residents of Hillsborough, and to enable a dialogue with existing community partners and providers in order to create shared solutions. As part of this comprehensive effort, Suncoast met with more than 50 key individuals and organizations, representing a broad range of general and special populations within the county. This effort resulted in the development of collaborative strategies and action plans to fill the gaps and meet the unmet need for additional hospice services in Hillsborough, as reflected in the Suncoast application conditions. In contrast to Suncoast, Cornerstone did not conduct its own needs assessment, but rather relied on the community needs assessments prepared by the HCDOH and two area hospitals. Moreover, rather than reaching out to the Department of Health and to the area hospitals that prepared those assessments to conduct further research or seek their support of its CON application, Cornerstone simply “verified that their documentation was thorough enough.” Cornerstone’s limited outreach effort in Hillsborough is further demonstrated by the letters of support submitted with its CON application. While Suncoast obtained letters of support from the HCDOH and numerous hospitals and community organizations in Hillsborough, Cornerstone failed to obtain a single letter of support from any hospital in Hillsborough. Despite submitting approximately 150 letters of support (many of which were form letters, and letters from Cornerstone employees), Cornerstone failed to obtain any letters from the Hispanic community, the African American community, the HIV community, the migrant community, or organizations that assist the homeless, unlike Suncoast. As Mr. McLemore testified, “a large part” of the review criteria is “hav[ing] the commitment from the organizations in the service area. I think that’s where – a little bit where Cornerstone was a little off base. They did have a bunch of letters of support, but again, they were not specific to the service area.” Mr. McLemore further testified that, rather than a large pile of letters, he was looking for letters “that are definitely from hospitals, nursing homes and civic organizations, healthcare organizations in the area.” Cornerstone’s failure to conduct meaningful and thorough outreach efforts in Hillsborough is also demonstrated by its generic list of CON application conditions. As multiple Cornerstone witnesses acknowledged, the services Cornerstone is proposing to offer in Hillsborough are identical to the services Cornerstone already offers in its existing service areas. Specifically, Cornerstone conditions its application on Hispanic outreach, bilingual volunteers, multiple office locations within a service area, complementary therapies, veterans-specific programming, bereavement counseling for parents, cooperation with local community organizations, a separate foundation account for the specific service area, and continuing education programming, all of which are services that Cornerstone already offers in its existing service areas. Thus, unlike Suncoast, which used the existing community health needs assessments as a starting point for its own comprehensive needs assessment, and proposed conditions that are reflective of the unique needs of Hillsborough, the conditions proposed by Cornerstone are almost identical to the services Cornerstone currently provides elsewhere. Cornerstone’s plan to serve Hillsborough in phases does not immediately address the unmet need for hospice services countywide. Cornerstone will not send its marketing team to facilities and other referral sources in those phased areas until Cornerstone has completed each phase of its plan. Although Cornerstone’s witnesses testified that Cornerstone will not turn away referrals from parts of the county before Cornerstone begins operations in those areas, they also confirmed that Cornerstone will not actively seek referrals from other phased areas until it is ready to move into those areas. Unlike Suncoast, and to a lesser extent VITAS, there is no evidence that Cornerstone conducted a thorough needs assessment of SA 6A before developing its phased implementation plan. Cornerstone simply looked at a map of where existing providers have offices and decided to start elsewhere. Likewise, Cornerstone did not conduct any independent assessment of the needs of the four different geographic areas of its plan to determine whether Cornerstone will be capable of serving all of the county’s residents immediately upon CON approval. Further, Cornerstone did not conduct any review or analysis of comparable start-ups in Florida when preparing its SA 6A CON application. VITAS undertook an analysis of information from a variety of sources, including meetings with various individuals within Hillsborough regarding the perceived gaps in care. Based on this review, VITAS identified a number of patient groups with purported unmet needs: African American and Hispanic populations; migrant workers; patients residing in the eastern and southern parts of the county who are not accessing hospice at the same rate as other parts of the subdistrict; patients with respiratory, sepsis, cardiac, and Alzheimer’s diagnoses; patients requiring continuous care and high acuity services such as Hi-Flow oxygen; patients requiring admission in the evening or on weekends; and patients residing in small, less than 10-bed, ALFs. VITAS proposed a number of solutions to address the purported needs identified in Hillsborough, and largely included those proposed solutions as conditions of its application. However, VITAS failed to identify a specific operational plan for Hillsborough. The purported gaps in care and solutions identified in VITAS’s application for Hillsborough largely mirror those identified in its application for Service Area 2A that was submitted during the same cycle, despite significant differences between the makeups of those two service areas. VITAS’s application included 47 letters of support. Many of the letters are from persons and organizations outside Hillsborough, and even include a letter from one of VITAS’s employees, Kellie Newman, and two letters in support of its 2A application. At hearing, VITAS offered testimony from letter of support authors Mary Donovan and Margaret Duggar. Ms. Donovan lives in Miami and is VP for Caregiver Services, Inc., a nurse staffing agency that contracts with VITAS in other areas of the state and hopes to do so in Hillsborough. Ms. Duggar is the President of MLD & Associates, Inc., located in Tallahassee, which is a management firm that serves as executive staff for a number of entities. Neither of these letters is probative of VITAS’s ability to meet the hospice needs of Hillsborough residents. Ultimately, the applicants all agreed that the unmet need in SA 6A is not purely numeric: it is concentrated among certain patient populations, including Hispanic and migrant communities; non-cancer patients under age 65, including those with dementia, Alzheimer’s, respiratory, and cardiac disease; and lower income groups. Each applicant tailored their proposal to address the perceived, underlying access barriers accordingly. Two primary theories concerning the source of access barriers in Hillsborough developed at final hearing: (a) that access barriers, and hence, unmet need in the service area stem from a lack of access to relevant hospice services through existing providers once a patient has entered hospice care; and (b) that access barriers, and hence, unmet need in Hillsborough, stem from a lack of outreach and education necessary to bring awareness of hospice services to Hillsborough residents so that they access hospice services in the first place. All three applicants proposed to tailor their hospice services and programming to the particular residents of Hillsborough. But Suncoast’s proposal and conditions focused more heavily on outreach and education to bring geographically and culturally-driven awareness of the hospice benefit to patients appropriate for hospice. As noted, Suncoast also did a more comprehensive needs analysis, which allowed Suncoast to focus its CON conditions on those segments of the Hillsborough population most in need of improved access to hospice services. Among the applicants, Suncoast alone proposes to implement a dedicated pediatric hospice program, which is not currently offered in Hillsborough. Dr. Stacy Orloff, accepted as an expert in pediatric hospice care, confirmed in her testimony the following: Suncoast's pediatric hospice program includes a dedicated integrated care team comprised of a fulltime pediatric nurse with more than 25 years’ hospice experience, a pediatric medical director, a full-time licensed social worker, a team assistant, a volunteer coordinator and a pediatric team leader. Additionally, there are part-time staff members including LPNs and CNAs with dedicated pediatric hospice experience. This is an important distinction, as many hospice programs claim to provide pediatric hospice services, but oftentimes they utilize the same care teams that provide care for adult patients. Suncoast's longstanding expertise and network of community partners for its pediatric program will ensure that the proposed pediatric hospice program fits the specific needs of the pediatric patient and family. Suncoast will use a combination of existing staff and PRN assistance until the pediatric caseload is large enough to warrant addition of new team members in Hillsborough County. Suncoast's existing pediatric hospice team has a strong relationship with St. Joseph's Children's Hospital, which it will utilize to expand its network of pediatric providers to increase hospice awareness and utilization in Hillsborough. Suncoast conditions its application on purchasing a $350,000 mobile van, the “Empath Mobile Access to Care,” to conduct mobile outreach activities in Hillsborough for ethnic-specific programming and outreach to homeless. VITAS also conditioned its application on a “Mobile Hospice Education Unit” van, and included photos of similar vans that it operates in other service areas. The Suncoast van will be staffed by a full-time bilingual LPN and a full-time social worker prepared to discuss advanced care planning and education, and will be equipped with telehealth technology capable of linking with the Empath Care Navigation Office. In contrast, VITAS did not explain how its van will be staffed, or whether any of the staff will be clinicians. Indeed, from the photos included in the application, the van appears to be more of a mobile advertisement for VITAS, than it does a tool for hospice education and outreach. VITAS attempted to differentiate its proposal by pointing to disease- specific programming for patients with pulmonary and cardiac conditions, Alzheimer’s, and sepsis. But, Cornerstone and Suncoast are also capable of caring for patients with those conditions. And, specific to sepsis programming—a feature of VITAS’s presentation at final hearing— septicemia is not usually the primary reason a patient enrolls in hospice. Instead, sepsis is a complication of another terminal condition for which a patient is admitted to hospice, and therefore does not represent a need unto itself. VITAS further attempted to differentiate its program by pointing to its comparatively longer average length of stay, arguing that longer average lengths of stay are indicative of greater access and quality. However, this notion was countered by credible testimony that longer lengths of stay, along with a higher percentage of live discharges and higher 30-day readmission rate, may, alternatively, represent targeting of patients unlikely to experience the types of access barriers at which CON is aimed, and may be indicative of lower quality and higher costs. And VITAS’s healthcare planning expert did not conduct an analysis, and offered no opinion, as to the specific cause of VITAS’s comparatively longer length of stay. Taken together, the evidence was inconclusive as to whether longer lengths of stay reflect access enhancements generally, or as applied to VITAS’s proposal. Section 408.035(9) - The applicants’ past and proposed provision of health care services to Medicaid patients and the medically indigent. Rule 59C-1.0355(2)(f) provides that hospice services must be available “to all terminally ill persons and their families without regard to age, gender, . . . cost of therapy, ability to pay, or life circumstances.” Consistent with rule, hospice providers must provide care to Medicaid patients. Medicaid pays essentially the same for hospice care as does Medicare. As such, there is no financial disincentive to accept Medicaid hospice patients. VITAS and Cornerstone both have a history of providing Medicare, Medicaid, and medically-indigent care; Suncoast’s affiliated entity, Suncoast Pinellas, has a similar history, and all three applicants propose to provide care to Medicare, Medicaid, and the medically indigent. While the three applicants project that they will experience different payor mixes for Medicaid and indigent patients, there is no evidence in this record that any of the applicants have discriminated against such patients in the past, or would do so in their Hillsborough program. Cornerstone argues that it is entitled to preference over Suncoast because Cornerstone’s projected percentage of Medicaid and medically indigent admissions (6%) is almost double that of Suncoast (3.3%). However, Cornerstone’s projection is exactly that: a projection of the payor mix it may experience in its new program. Significantly, Cornerstone did not commit to a 6% Medicaid/indigent payor mix within its CON conditions, and therefore that level of Medicaid/indigent admissions is unenforceable. Rather than the applicants’ projected payor mixes, what is significant are plans to reach out to the Medicaid and charity care population to improve their knowledge about, and use of, hospice services. Suncoast’s application presents a specific plan for doing exactly that. All of the applicants have proposed programs for outreach to financially disadvantaged communities within Hillsborough, and none of the applicants are entitled to preference under this criterion. Rule 59C-1.0355(4)(e) – Preferences for a New Hospice Program.Preference shall be given to an applicant who has a commitment to serve populations with unmet needs. Each applicant expressed a commitment to provide hospice services to populations with unmet needs. And to a greater or lesser extent, each applicant conducted an analysis of the specific populations with unmet needs in Hillsborough. No evidence was presented to establish that care for hospice patients with the varying identified conditions or within the various demographic groups is not available in Hillsborough. Rather, the evidence demonstrates that patients are not accessing hospice services, despite their availability to residents of Hillsborough. Among the three applicants, Suncoast best demonstrated a plan for enhancing access to quality hospice care for these populations, as well as a track record of past experience with enhancing access to quality hospice services for these populations. Preference shall be given to an applicant who proposes to provide the inpatient care component of the Hospice program through contractual arrangements. Each of the applicants propose to provide the inpatient care component of the hospice program through contractual arrangements, and presented testimony regarding their ability to do so. Likewise, all three applicants presented letters from entities in Hillsborough regarding their purported willingness to contract for the inpatient care component of the hospice program. However, no applicant presented non-hearsay evidence from any entity within Hillsborough regarding a willingness to contract for the inpatient care component of the hospice program. The applicants are on equal footing in terms of the ability to contract for inpatient care. Notwithstanding its intention to provide the inpatient component of the hospice program through contractual arrangements, VITAS conditioned its application on applying for a CON to construct an inpatient hospice house within the first two years of operation. However, VITAS presented no evidence to establish the need for an additional inpatient hospice house in SA 6A, and no evidence was presented to demonstrate that an inpatient hospice house is a more cost-effective alternative to contracted beds. The proposals by Cornerstone and Suncoast to contract for the inpatient component of the hospice program represent a better use of existing resources than that of VITAS, which will incur the expense of a freestanding hospice house for its proposed program. On balance, this preference weighs equally in favor of Cornerstone and Suncoast, and against VITAS. Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each applicant presented evidence of a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. However, the programs proposed by Suncoast to address the needs of these populations are more precisely targeted than those of the other applicants, and Suncoast is therefore entitled to preference. Proposals for a Hospice service area comprised of three or more counties. SA 6A is comprised of a single county, Hillsborough. This preference is therefore not applicable in this case. Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare. All three applicants propose to provide services in Hillsborough that are not specifically required or paid for by private insurance, Medicaid, or Medicare. The added services beyond those covered by private insurance, Medicaid, or Medicare as proposed by the applicants differ slightly, but on balance, weigh equally in favor of approval of each applicant. Rule 59C-1.0355(5) – Consistency with Plans. Each of the applicants conducted an analysis of the needs of Hillsborough residents and included evidence within their applications and through testimony at final hearing regarding the consistency of their respective plans with the needs of the community. However, Suncoast’s evaluation of the needs specific to Hillsborough was more thorough, and its application is best targeted at meeting the identified needs. Rule 59C-1.0355(6) – Required Program Description. Each applicant provided a detailed program description in its CON application. The elements of the program descriptions are discussed above in the context of the various statutory and rule criteria. Ultimate Findings Regarding Comparative Review Suncoast conducted the most comprehensive evaluation of the end of life care needs of Hillsborough residents, and developed targeted programs and services to address those needs. Those programs and services are identified as CON conditions, and are enforceable by AHCA. The depth and breadth of Suncoast’s commitments to the residents of Hillsborough exceed those of Cornerstone and VITAS. Unlike the other applicants, Suncoast offers needed programs which are not currently available in Hillsborough, including a dedicated pediatric hospice program, and enhanced transportation options for persons living in rural areas of the county. Suncoast and Cornerstone are comparable in terms of history of providing quality care. VITAS is inferior in this regard, as evidenced by the numerous confirmed deficiencies in recent years. Undoubtedly, VITAS has redoubled its efforts to improve quality in response to the numerous confirmed deficiencies and complaints, but based upon the record in this case, Suncoast and Cornerstone have a better history of providing quality care. Suncoast would be able to commence operations in SA 6A more quickly than Cornerstone or VITAS. It has connections with other healthcare providers in Hillsborough and could easily transition to that adjacent geographic area. All three proposals would enhance access to hospice services in the county, but Suncoast’s program would be the most effective at enhancing access. A careful weighing and balancing of the statutory review criteria and rule preferences favors approval of the Suncoast application, and denial of the Cornerstone and VITAS applications. Upon consideration of all the facts in this case, Suncoast’s application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Suncoast Hospice of Hillsborough, LLC’s, CON No. 10605 and denying Cornerstone Hospice and Palliative Care, Inc.’s, CON No. 10602 and VITAS Healthcare Corporation of Florida’s, CON No. 10606. DONE AND ENTERED this 26th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Marc Ito, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 2021. Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge, Ecenia & Purnell, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 Elina Gonikberg Valentine, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Allison Goodson, Esquire GrayRobinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Maurice Thomas Boetger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC Suite 3600 303 Peachtree Street Northeast Atlanta, Georgia 30308 D. Carlton Enfinger, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue in this proceeding is whether the application of Catholic Hospice, Inc., to establish a hospice program in District 10 meets the statutory and rule criteria for approval.
Findings Of Fact 1. Catholic Hospice, Inc. (Catholic Hospice) is the preliminarily approved applicant for Certificate of Need (CON) Number 9333, to expand hospice services, currently provided in Dade County, into adjacent Broward County, Florida. 2. The Agency for Health Care Administration (AHCA) is the department authorized to administer the Florida CON program for health care facilities and services. 3. Catholic Hospice applied for CON Number 9333 to initiate services in Eroward County, which is designated AHCA, District 10, for the July 2001, planning horizon. As the parties stipulated prior to the final hearing, AHCA published zero as the numeric need for an additional hospice program in Broward County. At the time the CON application was submitted, Catholic Hospice asserted that its proposal would meet an unmet need for hospice care for the Hispanic and Haitian populations, in particular, and the growing multi-ethnic population in Broward County, in general. Catholic Hospice also initially indicated that its program would increase access to hospice care by eliminating financial, language, religious, and cultural barriers. At the hearing, Catholic Hospice presented evidence to support its intention to improve access for the Hispanic population by overcoming language and cultural barriers, and its assertion that the existing hospice programs are not consistently and aggressively reaching Hispanics. 4. Catholic Hospice is a partnership established in 1988 by the Archdiocese of Miami, St. Francis Medical and Health Care Services, and Mercy Hospital. The governing body is a 15-member Board of Directors with five directors from each of the three member organizations. The Board is ethnically diverse and includes three directors who are native Spanish language speakers. Catholic Hospice serves people of various religions, having, within the last year and a half, established the L'Chaim Jewish Hospice Program. 5. Catholic Hospice has steadily increased the proportion of care it gives to Hispanics in Dade County. In 1989, approximately 30% of Catholic Hospice patients were Hispanic. By 1999, Catholic Hospice served 740 Hispanic patients out of a total of 1157. By 2000, the number and proportion of Hispanic patients increased to 841 out of a total of 1228. Currently, over 60% of Catholic Hospice's patients are Hispanics, while 55% of the total populaticn of Dade County is Hispanic. Existing Hospice Programs and Services 6. The existing hospice providers in Broward County are vitas Healthcare Corporation (Vitas), Hospice Care of Broward County, Inc. (Hospice Care of Broward), Hospice by the Sea, Inc. (HBTS), and Hospice of the Gold Coast. All of the existing hospices have elected to qualify for and to obtain accreditation from the Joint Commission for Accreditation of Health Care Organizations. 7. Vitas is the successor to the organization known as Hospice of Miami, established in 1978. Vitas is a for-profit organization, having been established prior to the enactment of the Florida law which currently requires hospices to be not-for- profit corporations. ‘Currently, Vitas operates twenty separately licensed programs in seven states with an average daily census of 5,400 patients. In 1999, Vitas admitted 5,921 patients in Broward County and 4,382 in Dade County. It is the largest provider of hospice care in the United States, and in Broward and Dade Counties. In Broward County, Vitas cared for 180 Hispanic patients in 1998, 238 in 1999, and 206 through November 15, 2000. Approximately 3.3 to 4% of its total number of Broward County patients are Hispanic. 8. Hospice Care of Broward operates in both Dade and Broward Counties, with offices in both Fort Lauderdale and Miami. The main business office is the one in Fort Lauderdale with close to 180 employees as compared to a staff of 50 in the Miami office. The Miami and Fort Lauderdale operations share the same board of directors, executive director, development director, finance director, and clinical director of operations. 9. Hospice Care of Broward cares for patients in their homes, in hospitals or nursing homes, and in its own 5-bed residence in Fort Lauderdale. Approximately half of their Dade County patients and 2% of their Broward County patients are Hispanic. In 1999, Hospice Care of Broward admitted a total of 999 patients in Broward County and 172 in Dade County. 10. HBTS, established in 1979, is a not-for-profit corporation, which serves both AHCA District 9, for Palm Beach County and AHCA District 10, for Broward County. It operates a 30-bed inpatient center in Palm Beach and, by contract, provides care at various hospitals, including Hollywood Medical Center, Holy Cross Hospital, Cleveland Clinic Hospital and North Ridge Hospital. 11. In Broward County, HBTS served five Hispanic patients out of a total of 287, in 1998; 7 out of 415 in 1999; and 15 out of 641 in 2000, or almost 2.4%. 12. Hospice of the Gold Coast is a relatively small operation, serving approximately 200 patients a year, primarily at the North Broward Hospital District facilities. Its office located in the northeastern area of the County, which has a relatively small Hispanic population. As a result, Hispanic utilization of Hospice of the Gold Coast was estimated at 2% by one expert. 13. In general, hospice care is provided to terminally ill patients who are certified by a medical doctor as having a prognosis of death within six months. The care is, therefore, palliative, that is, to provide comfort to the dying patient, not curative. The patient and family members are treated as a unit by an interdisciplinary team which includes doctors, nurses, home health aides, chaplains, social workers, and counselors. Hospice services are gaining in acceptance and utilization in the United States. It is considered cost effective and is, therefore, subject to reimbursement by Medicare, Medicaid and private insurances. Many hospice services to relatives and the community, however, including camps for bereaved children, are funded by charitable donations to the programs. 14. In its CON application, Catholic Hospice describe two cases in which hospice patients in Broward expressed a preference for its care. One doctor who testified by deposition for Catholic Hospice said he supports the application because there is no real advocate for Hispanics in Broward County. He complained of discriminatory practices in county hospital emergency rooms. He also expressed frustration that the existing hospices are not supporting his clinic, but admitted that he is not familiar with referrals to hospices. When his hospital patients need hospice, the social service departments handle referrals. He refers his other potential hospice patients to their churches. See Catholic Hospice Exhibit 20. Demographic Data 15. Approximately 80% of all hospice patients are over 65 years old. Hospice patients, obviously, are those whose deaths 10 are not unexpected, that is, not the victims of homicides, suicides or fatal motor vehicle accidents. Hospice services were traditionally provided largely to terminally-ill cancer patients, who still make-up the majority of patients statewide. 16. Catholic Hospice's expert noted that, particularly after some Dade County communities were destroyed by Hurricane Andrew, the trend of Hispanic migration into Broward County has been increasing. The projected increase in the Broward Hispanic population, from 2000 to 2005, is 45,900 for people under age 65 and 7,000 for people 65 and over. 17. The total Hispanic population of Broward County, is approximately 205,000 people out of a total of 1.5 million, or an estimated 12.6 to 13.4%. It is projected to increase to 15.6% by 2005. By comparison, Hispanics are approximately 55% of the population in Dade County. In Broward, Hispanics are more heavily concentrated in south central and southwestern areas of the County. One of Catholic Hospice’s offices is located in the northern Dade County area of Miami Lakes, conveniently near the southern areas of Broward County. Broward County residents are included in the staff and volunteers working in that office. The other office is in Kendall. Consistent with the concentration of the population, the largest number of Hispanics discharged from a Broward County hospital come from Memorial Hospital West. il 18. Catholic Hospice took the position that hospice care for Hispanics in Broward County should be provided within two or three percentage points of that which the group represents in the total population. The fact that the Broward providers serve from two to 4% Hispanic patients is, according to Catholic Hospice, indicative of underservice to the group. 19. Catholic Hospice's health planning expert conceded, however, that a better analysis than Hispanic population as a percentage of the total, would take into consideration more specific demographic data, including age, death rates by ethnicity, and causes of death. 20. Hispanics over 65 were 8.7% of the total Hispanic population in Broward County, 3.4% were over 75 years old. By comparison, over 20% of the total Broward County population is over 65, and over 10% over 75. Catholic Hospice offered its Dade County service, where 60% of its patients are Hispanics, as an example of its ability to achieve better results serving Hispanics in Broward County. In Dade County, however, the pool of potential patients is larger, with smaller differences between ethnic groups. Hispanics over 65 are 14.4% of the total population, almost identical to the 14.6% the non-Hispanic and total Dade populations over age 65. 21. Differences in age cohorts in the population are, as expected, reflected in differences in death rates. In 1998, 12 there were 641 Hispanic deaths in Broward County. of these, 383 were in the 65 and over age group, and 258 were under 65 years old. For 1999, there were 718 Hispanic deaths, of which 455 were 65 and over, and 261 were under 65. In the larger and older Hispanic population of Dade County, there were 9,220 Hispanic deaths, in 1999. 22. Hispanics in Broward County have a lower number of deaths per thousand, which is consistent with the relative youth of the group, as compared to the total population. In 1998, Hispanics accounted for 3.64 deaths per thousand, while there were 10.71 deaths per thousand in the total population of Broward County. In 1999, the Hispanic rate was 3.83 per thousand, as compared to 10.89 per thousand for the total population. When death rates are adjusted to exclude as causes accidents, suicides, and homicides, the Broward Hispanic death rates for 1998 and 1999 were 3.8 and 4%, respectively. 23. The analysis of the Hispanic population by age, death rates, and causes of death indicates that the current level hospice services, ranging between 2% for lower volume providers to 4% for Vitas, is the appropriate, expected level. 24. The level of hospice care which Catholic Hospice deemed appropriate is virtually impossible to reach considering the reality of the causes of death. Using Catholic Hospice's expert health planner's expectation that nine percent of all 13 Hispanics who died in Broward County should have hospice care, then 680 of 718 deaths in 1999, would have had to have been admitted to hospice. Numeric Need 25. Due to the demographic make-up and the level of care provided by the existing four hospice programs in District 10, AHCA published a zero numeric need for additional programs. AHCA publishes a need for a new hospice program when its formula demonstrates that the number of additional patients who would elect hospice care equals or exceeds 350 patients over and above the current volume of hospice admissions. 26. The formula, in Rule 59C-1.0355(4) (a), Florida Administrative Code, for projecting additional hospice deaths, uses actual three-year resident deaths in four groups of people, those with and without cancer, who are both over and under age 65. 27. When the formula was applied to the Broward County data, the result was 5,947 projected hospice patients for the July 2001, planning horizon. When compared to the actual volume, in 1999, of 7,550 patients served by the four existing hospice programs, the number of projected additional patients is a negative 1,603. The negative number is based on the statewide hospice experience and indicates that the hospices in Broward 14 County, in 1999, served 1,603 more people than they were expected to serve two years later. Penetration Rate, Accessibility and Availability 28. Although not used in the formula, the negative need calculation is, in part, a function of what the health planners described as the hospice use rate or hospice penetration rate. All of the expert health planners who testified agreed that the hospice penetration rate is the single most significant factor in determining the extent of the existing hospice utilization. The total number of hospice deaths divided by the total number of deaths during the same time period in the same planning area gives that planning area's penetration rate. 29. In Florida, the statewide hospice penetration rate for is 33.5%. In Broward County, District 10, the rate is 46.6%, the highest in the State. By contrast, the national average is approximately 29%. For adjacent District 11, which includes Dade County, the penetration rate is 30.7%. 30. For Hispanics in Broward County, the hospice penetration rate was 37.3% in 1999. In Dade County, the Hispanic hospice penetration rate was 28.2% in 1999, indicating greater opportunities for growth in Dade. In general, the data indicates that Hispanics in Broward are utilizing hospice care more than Hispanics in Dade County, and more than the total population of Florida. 15 31. The adequacy of access to hospice care in terms of geographical coverage has been considered. In Broward, with a total of 1,211 square miles and four hospices, each one averages 303 square miles. The smallest geographical area for hospices in Florida was 280 square miles for the one hospice operating in Pinellas County. The statewide average, however, is 1,083 square miles for each hospice in Florida. There are no apparent geographical limitations on access to hospice care in Broward County. 32. As the parties stipulated, accessibility in terms of timeliness is not at issue. There is no indication that hospice referrals do not get a response within 48 hours, a special circumstance, specified in Rule 59C-1.0355(4) (d)3., Florida Administrative Code. Spanish Language Material and Spanish-Speaking Staff 33. Catholic Hospice conceded that the existing Broward County hospices provide appropriate printed material, forms, and promotional information in Spanish. But, Catholic Hospice argued that it has the ability to reach out to and serve Hispanic patients better than any of the other existing providers based on its experience and staff. Catholic Hospice noted that the percentages of Hispanics to total Dade County patients it serves is higher, ranging between 61 to 67% than Vitas' to 35 to 40%, even though in absolute numbers Vitas 16 served twice as many Hispanics, in Dade County in 1999, as did Catholic Hospice. 34. Spanish-speaking staff is inadequate to serve Spanish- speaking patients, according to Catholic Hospice, unless every member of the hospice interdisciplinary team speaks Spanish. In response to discovery requesting numbers of fluent Spanish speakers on staff in Broward County, HBTS reported three full- time equivalent (FTE) employees. Each FTE represents a 40-hour work week. 35. Hospice Care of Broward reported that it employs, in Broward, three nurses, one home health aide, two chaplains, but no social workers or bereavement counselors who speak Spanish. Although that was considered inadequate by Catholic Hospice's expert, Hospice Care of Broward noted its ability to use Spanish-speaking staff from its Dade office. Catholic Hospice also indicated its intention to use its staff from Dade, if needed, as well as some of its current staff members and volunteers in Dade who actually reside in Broward County. 36. Vitas employed three chaplains, six registered nurses, three doctors, three home health aides, a secretary, a case worker, six pool staff and various others, for a total of 42 Spanish speakers in Broward County. Vitas was considered inadequately staffed by Catholic Hospice's expert for not having a Spanish-speaking social worker, although its chaplains and not 17 just social workers provide bereavement counseling. At the time, Vitas' census of Hispanic patients included seven in three different nursing homes, and 29 patients at home. 37. Catholic Hospice listed the names of 69 Spanish- speaking employees, who staff Catholic Hospices current operations in Dade County. Catholic Hospice's expert testified that, with 69 Spanish-speaking staff members, it adequately met the needs of 840 Hispanic patients. It must be concluded, logically, that Vitas, with 42 Spanish-speaking staff members, also had an adequate number to serve 238 Broward County Hispanic admissions in 1999. Including all of Catholic Hospice's administrators and excluding all but apparently fluent Spanish- speaking staff, the ratio of staff to Hispanic admissions is 9.9 to one for Catholic and 5.7 to one for Vitas. 38. All of the hospices rely on volunteers to help provide care to patients and their relatives. They also rely on relatives to serve as translators, if necessary. In addition, some hospice employees who are not fluent in the language do speak and understand some Spanish. Staffing 39. The staffing and related expenses, included in Catholic Hospice's financial projections, were criticized as inadequate. An expert for Vitas testified that $80,000 rather than $50,000 is appropriate for an hospice administrator; that 18 $18.99 an hour, Catholic Hospice's second year projection, is more appropriate for the first year than the first year projection of $17.78 an hour, or $37,000 a year, which was proposed for the first year for a registered nurse; that, although starting salaries are $16,000, or $7.69 an hour for nurses' aides, Catholic Hospice should expect to pay a minimum of $8.50 an hour in Broward County; that $35,000 a year is unreasonable for a patient care manager, a position typically filled by a registered nurse; and that $37,000 rather than $32,000 is more reasonable for a licensed clinical social worker. 40. The Vitas' expert also testified that 7.6 not 6 FTEs for registered nurses are needed, and more than one FTE for a social worker for the entire County for the first year. The proposal to hire one bereavement counselor, and one volunteer coordinator in the second year, but none in the first was also criticized as an underestimate of staffing needs, considering an average daily census of 30 patients in the first year, and 50 patients in the second. 41. Catholic Hospice used its experience and ratios established by national associations to project staffing needs. The projections are reasonable in providing, for example, one nurse for every ten patients and one home health aide for every eight patients. The nursing shortage, which all parties concede 19 exists in South Florida will likely increase the time and expense for Catholic Hospice to recruit its staff. Some health care facilities also find it necessary to provide signing bonuses, which Catholic Hospice has not proposed to do. At the time of the hearing, Catholic Hospice needed more staff and was participating in a jobs fair in Dade County. 42. In terms of its own operations, Catholic Hospice could also use and benefit from economies of scale, by using some of its existing staff and volunteers in Broward County. Its per unit costs would decrease primarily from sharing administrative staff, in much the sawe way as Hospice Care of Broward operates in both counties. For this reason, the criticism of Catholic Hospice that its propesed staffing and salaries are adequate is rejected, even though its work papers showed more staff than its CON application. Financial Feasibility 43. Catholic Hospice expects to serve 220 patients in the first year and 400 in the second. The average length of stay for each hospice patient in Broward County was around 40 days For Catholic Hospice, in Dade County, it was 48.9 days in 1999. When patient days are calculated from admissions with an average of 48.9 days, the results are 10,219 for the first year, and 19,574 for the second year. Catholic Hospice's application uses 10,905 patient days for the first year, and 25,520 for the 20 second year. It appears that utilization is overestimated by 700 admission in the first year and 6000 in the second year. To reach the second year projection of 400 admissions, the average length of stay would have to be 63.8 days. 44. One expert quantified the effect on projected revenues as a result of Catholic Hospice's overstatement of utilization by patient days. The conclusion was that projected revenues would decrease by $136,000 in the first year, and $1,063.881, in the second year. When Medicare rate increases approved by Congress are considered, the projected revenue decreases are approximately $65,000 in the first year, and that adds back $123,000, to the expected decrease of $1,063,881, increasing it to about a $900,000 reduction in revenues for the second year. 45. The analysis of revenues as compared to patient days was flawed having not reflected a proportionate reduction in variable expenses. Vita's expert's assumed that expenses should not be reduced because: Catholic Hospice had underestimated staffing and salaries. The finding that staffing and salaries are adequate means that, although Catholic Hospice overestimated revenues, the exact amount cannot be determined. The evidence that revenues and utilization are overestimated means that Catholic Hospice failed to prove that its proposal is financially feasible. The assumption is made that revenues are sufficient to‘cover projected start-up costs of $69,493. 21 46. Catholic Hospice's expert criticized the use of average length of stay to determine patient days. That approach is more reasonable than that used by Catholic Hospice which relied on its start-up experience in Dade County in 1989, to guess what Broward patient days might be in 2002 and 2003. When Catholic Hospice started, its average lengths of stay were 21.17 days in 1989, and 32.1 days in 1990. 47. Additional factors which cast doubt on the likelihood of Catholic Hospice achieving its projected utilization and revenues are the pattern of referral sources in Broward County and the level of charity care. Physicians referred approximately 43% of all hospice patients in Broward County, while approximately 24% came from hospitals in 1999. It will take Catholic Hospice longer to establish referral relationships with a number of different physicians. Lower revenues are also reasonably expected with higher percentages of charity care. Historically, in Dade County, charity care has accounted for -23% of Catholic Hospice's services, but it projected 3.5% for Broward County. 48. The CON application submitted to AHCA was incomplete, having omitted key information necessary for AHCA to determine financial feasibility, including the following: (1) failure to distinguish between Broward and Dade operations in sufficient detail for an evaluation of Broward separately, 22 although payer mix assumptions for each were different ; (2) inadequate breakdown of admission by payer type; (3) no provision for dietetic and nutritional counseling; (4) no specific allocation of FTEs for a medical director; (S) no details of a staff recruitment and retention plan; and (6) a material discrepancy of $3 million, given the projected year two net profit of $39,100, between revenues on one schedule as compared to the notes to the same schedule. Impact on Existing Providers 49. The existing providers presented evidence related to the potential impact on their admissions, revenues, and staffing, if Catholic Hospice begins operating in the Broward County market. They need to maintain or increase their censuses to have some leverage for contract negotiations, and to provide charity care and unreimbursed services, such as bereavement services. Catholic Hospice maintained that it would not adversely affect existing providers, citing the experience in Dade County when Hospice Care of Broward began operations in 1998. The situations are distinguishable. From 1997 to 1999, for example, hospice admissions increased 16.7% in Broward and 35.3% in Dade County. Dade County started with a lower-than- average hospice penetration rate in 1998. Most importantly, 23 AHCA published a numeric need for an additional hospice which led to the approval of the Hospice Care of Broward CON. 50. Although Vitas' market share in Dade County increased during the time that Hospice Care of Broward began operations there, the smaller hospices, Hospice Care of South Florida and Catholic Hospice lost market shares. Similarly, recent increases in the market share of HBTS in Broward County have adversely affected Hospice Care of Broward, but not Hospice of the Gold Coast, which has the affiliation with a hospital district, or Vitas. Based on these experiences, it is reasonable to expect that the smaller providers will experience a disproportionately greater adverse impact from the entry of Catholic Hospice into the Broward County market. 51. Assuming that: Catholic Hospice achieves it projection of 220 patients in its first year of operations in Broward County and 400 in the second year, then it will adversely affect all of the existing providers, at least to the extent of limiting their potential growth. 52. Using the total number of projected hospice patients for 2002 and 2003, and allocating all incremental admissions to Catholic Hospice first, the result is that 61 cases for 2002, and 120 for 2003, are available for Catholic Hospice. That leaves an additional 159 admissions for the first year and 280 24 for the second year, waich must come from patients who would have otherwise used the existing hospices. 53. When proportional losses of cases to Catholic Hospice are assumed with static market shares, the expected impact in terms of lost admissions are 5 and 8 from Hospice of the Gold Coast, 11 and 20 from HBTS, 21 and 37 from Hospice Care of Broward, and 121 and 215 from Vitas, in years one and two, respectively. 54. If the assumption is made that the market shares will change, following established trends, then projected losses will increase most (to 16 in 2002 and 29 in 2003) for the hospice which has been expanding most rapidly, HBTS. More consistent providers, in terms of volume, would have lower projected losses, for example, 15 and 26 admissions in years one and two, respectively, for Hospice Care of Broward County. 55. Of the three scenarios presented, the most reasonable assumptions are that proportional losses of the type which occurred in Dade County would also occur in Broward, and that market share trends would continue. If that happens, then the smaller providers would lose more potential patients, up to 91 and 165 from HBTS, 87 and 158 from Hospice Care of Broward, and 27 and 49 from Hospice of the Gold Coast, in years one and two, respectively. For Hospice Care of Broward, the loss of 158 is 25 significant when compared to total volume of approximately 1000 patients. 56. The market share analyses could be criticized for relying on projected population growth, but not factoring in an increase in the penetration rate. In fact, the penetration rate in Broward, as high as it is, has been increasing, but in relatively small increments, from 45.8% in 1993 to 46.6% in 1999. The .8% increase is considered approximately flat, particularly having followed a 7% decline in the Broward hospice penetration rate from 45.8% in 1993 to 38.6% in 1994. The fluctuations in the penetration rate and the decline in deaths from cancer and AIDs support the reasonableness of the assumption of a static penetration rate in the market share analysis. 57. Only HBTS presented evidence on the financial impact of the projected losses, ranging from a low of $61,554 for 20 lost admissions to a high of $507,464 for the more reasonable assumption of 165 lost admissions. The magnitude of the detrimental impact, put in context, is significant given HBTS' losses from operations of $1.8 million in 1999, and $1 million in 2000, which had to be offset by charitable contributions and income from investments. 58. In addition to lower operating revenues from patient care reimbursements, HBTS also projected losses from charitable 26 contributions. In 1993, HBTS received $629 in charitable donation for each hospice patient admitted, from bequests, memorials, tributes, holiday remembrances from families and friends. Contributions from these sources are directly related to the care given to individual patients and, therefore, to the total number of patients. At HBTS, over 64% of its total charitable contributions are in the combined categories of tributes and bequests. The adverse financial impact on HBTS including reduced charitable contributions, is $74,149 for 20 cases and up to $611,301 for 165 cases. 59. WVitas received referrals from Holy Cross Hospital, a Catholic facility in Broward County which would be expected to enter an agreement with Catholic Hospice. Vitas also runs a bereavement group for Spanish speakers at Holy Cross Hospital. Holy Cross Hospital is listed, in the CON application, as the likely source of a contract for services with Catholic Hospice. In a three-month period, Vitas received 30 referrals resulting in 25 hospice admissions from Holy Cross Hospital. In Dade County, Vitas receives virtually no referrals from Mercy Hospital, which is also a Catholic institution and one of the Catholic Hospice partners. Therefore, despite the projected disproportionate impact in the market, to Vitas' advantage, if all other things were comparable to the Dade County experience, because of the institutional relationships between Catholic 27 Hospice and Holy Cross Hospital, Vitas' is reasonably expected to be adversely affected. It is impossible to determine if projected losses are significant in terms of the total Vitas operation, since it provides over three-fourths of all hospice care in Broward and returned approximately $10 million in revenues in 1999, to its corporate operations. There is also no evidence that more competition with Vitas will enhance services or reduce costs. 60. Expert witnesses acknowledged a severe nursing shortage in South Florida, approaching crisis proportions. The existing providers are always recruiting and never fully staffed. The kind of care required of hospice nurses, the pressure of dealing with dying patients, the need for them to be on call rather than working only on scheduled shifts, the preference for oncology nurses, and the need for bilingual nurses further limits the available pool. The shortage has increased since 1998, when Hospice Care of Broward expanded into Dade County. Hospices are also not free to attract nurses by raising rates to pay increasingly higher salaries, but must resort to other incentives which increase recruiting costs. Hospice patient care is usually reimbursed on a per diem basis, regardless of actual costs, at rates set by the Medicaid and Medicare programs. The existing hospices reasonably expect an adverse impact on their staffing, recruiting time and costs, 28 particularly for nurses and home health aides, if Catholic Hospice enters the market in Broward County and succeeds in staffing its project as proposed. Agency Action and Rules 61. The Chief of the Bureau of Health Facility Regulation for AHCA, who is also an expert in health planning, testified that the review process in this case was the same as for most CONs. Within AHCA, however, the initial recommendation was to deny the application because of insufficient data to support the allegation of a lack of access for the Hispanic population. 62. The decision to approve CON Number 9333 was made because AHCA Secretary, "Ruben King-Shaw indicated that he felt that it was a policy priority at the highest level of the current administration, both within the Agency and I would say at the level of the Governor, to promote culturally sensitive access to end of life care. And that he referenced a presentation that I believe that he had heard Secretary Brookes (phonetic) of the Department of Health make a day or two prior to our meeting where he said that Dr. Brookes was one of the best speakers that he had ever seen on the issue of culturally sensitive health care and barriers to -- cultural barriers to health care." Transcript, p. 955-956. 63. In addition to the statutory review criteria for CONs, AHCA relied on Rule 59C-1.030, Florida Administrative Code, which lists general criteria for evaluation of CON applications, 29 and Rule programs. there is included 64. follows: 59C-1.0355, which applies specifically to hospice The need to serve a particular ethnic minority, if evidence that their access to a service is limited, is in the criteria. The most relevant provisions of Rule 59C-1.030 are as (2) Health Care Access Criteria. (a) 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. (b) 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. (c) 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. (d) In determining the extent to which a proposed service will be accessible, the following will be considered: 30 1. 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; 65. In the absence of numeric need, the special circumstances subsection in Rule 59C-1.0355(4) (d)1., Florida Administrative Code, on which Catholic Hospice relied is as follows: Evidence submitted by the applicant must document one of the following: 1. That a specific terminally ill population is not being served. 66. One expert testified that the provision should be narrowly construed to require a proposal to care for a specific terminal diagnosis, such as AIDS, but AHCA reasonably rejected that interpretation as applied to this case. Care fora particular ethnic group is specifically recognized as a valid consideration in Rule 59C-1.030. 67. AHCA's expert also noted, that under its rules, there is no reason to approve the application of Catholic Hospice if it fails to show that there is an underserved population, in this case, Hispanics in Broward County. The CON was prepared based on a belief that Hispanics are underserved, but without any data on Hispanic utilization. That data is not routinely 31 collected by AHCA and only became available in this case as a result of discovery. AHCA also determined that Catholic Hospice needed to show evidence that the existing providers are not meeting the area's needs. Catholic Hospice failed to show any need for its services in Broward County. In fact, there is affirmative evidence that the Hispanic hospice penetration rate should be what it is, which is approximately the same as the Hispanic death rate, adjusted to exclude unexpected causes of death. Therefore, the application of Catholic Hospice should be denied.
Conclusions For Petitioner Hospice by the Sea, Inc.: Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP 118 North Gadsden Street The Perkins House, Suite 200 Tallahassee, Florida 32301 For Petitioner Vitas Healthcare Corporation: Geoffrey D. Smith, Esquire Steven E. Oole, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 For Petitioner Hospice Care of Broward County, Inc.: Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 For Respondent Catholic Hospice, Inc.: Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303 For Respondent Agency for Health Care Administration: Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying the application of Catholic Hospice for Certificate of Need Number 9333 to establish a hospice program in District lo. DONE AND ENTERED this [3% day of July, 2001, in Tallahassee, Leon County, Florida. Ahicamae rn Yt. 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 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this /.3r* day of July, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 38 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Robert A. Weiss, Esquite Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP 118 North Gadsden Street The Perkins House, Suite 200 Tallahassee, Florida 32301 Geoffrey D. Smith, Esquire Steven E. Oole, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 22302-0551 Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether the Certificate of Need (CON) applications filed by Odyssey Healthcare of Collier County, Inc., d/b/a Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and HPH South, Inc. (HPH), for a new hospice program in the Agency for Health Care Administration (AHCA or the Agency) Service Area 5B, satisfy, on balance, the applicable statutory and rule review criteria to warrant approval; and whether such applications establish a need for a new hospice based on special circumstances, and, if so, which of the two applications best meets the applicable criteria for approval. Holding: Neither applicant proved the existence of special circumstances warranting approval of an additional hospice program in Service Area 5B. Although neither application is recommended for approval in this Recommended Order, both applicants, on balance, satisfy the applicable statutory and rule criteria. Of the two, HPH best satisfies the criteria.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Subsection 408.034(1), Florida Statutes. HPH HPH is a newly created not-for-profit corporation formed to initiate hospice services in Pinellas County. HPH is a wholly-owned subsidiary of Hernando-Pasco Hospice, Inc., d/b/a HPH Hospice and is one of the oldest, not-for-profit community hospices in Florida. HPH Hospice was incorporated in 1982 to serve terminally ill persons within Hernando and Pasco Counties. HPH was approved to expand its services north to Citrus County in 2004. HPH is a high-quality provider of hospice services in the service areas where it currently operates. It provides pain control and symptom management, spiritual care, bereavement, volunteer, social work, and other programs. HPH employs a physician-driven model of hospice care, with significant involvement of hospice and palliative care physicians who are physically present treating patients in their homes. The number of physician home visits provided to hospice patients by HPH physicians is larger than many hospices in Florida and throughout the United States. In 2009, HPH provided over 35,000 visits by physicians, advanced registered nurse practitioners, and licensed physician assistants to its hospice patients. The majority of these visits occurred in the patients' homes. HPH operates multiple facilities that allow for provision of services to patients in various settings and hospice levels of care. Among its facilities, HPH operates four buildings it calls Care Centers, at which patients can receive general in-patient care. Additionally, HPH operates four units which it calls Hospice Houses. Those units provide for residential care in a home-like environment for patients who do not have caregivers at home or who otherwise are in need of a home. HPH receives no reimbursement for room and board for the care provided at its Hospice Houses and expends over $1.4 million annually in charity care to operate these Hospice Houses for the benefit of its patients. HPH has an established record of providing all levels of hospice care and does not use its Care Centers as a substitute for providing continuous care in the patient's home when such care is needed. Annually, HPH provides approximately percent of its patient days for continuous care patients. HPH has well-developed staff education and training programs, including specialized protocols for care and treatment of patients by terminal disease type such as Alzheimer's, COPD, cancer, failure to thrive, and pulmonary diseases. Odyssey Odyssey is the entity applying for a new hospice program in Service Area 5B. The sole shareholder of Odyssey is Odyssey HealthCare Operating B, LP, which is a wholly-owned subsidiary of Odyssey HealthCare, Inc. (OHC), Odyssey's parent and management affiliate. Odyssey was formed for the purpose of filing for CON applications in Florida and, thereafter, for owning and operating hospice programs in Florida. OHC is a publicly-traded company founded in 1996 and focuses on caring for patients at the end of life's journey. OHC's sole line of business is hospice services. OHC's patient population consists of approximately 70 percent non-cancer and 30 percent cancer patients. OHC is one of the largest providers of hospice care in the United States. OHC has approximately 92 Medicare-certified programs in 29 states, including established programs in Miami-Dade (Service Area 11) and Volusia (Service Area 4B) Counties and a start-up program in Marion County (Service Area 3B), which was licensed in January 2010. Over four years ago, OHC was the subject of an investigation by the United States Department of Justice that ultimately resulted in a settlement and payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of any wrongdoing by OHC. As part of the settlement, OHC entered into a corporate integrity agreement (CIA) with a term of five years. Odyssey is now in the final year of the CIA. The settlement and CIA allow OHC to self-audit to ensure compliance with the Medicare conditions of participation, which is the first and only time the OIG has allowed a provider to self audit. Suncoast Suncoast is a large and well-developed comprehensive hospice program serving Pinellas County, Service Area 5B. Suncoast is the sole provider of hospice services in Service Area 5B. According to data reported to the Department of Elder Affairs, Suncoast had 7,375 admissions and provided 795,102 patient days of care in 2009, more than any other Florida hospice. In that same year, Suncoast provided 115,247 patient days of care in assisted living facilities, the third highest total in Florida. Suncoast considers itself a model for hospice across the United States and the world. Suncoast has a large depth and breadth of programs, including community programs offered by its affiliate organizations, such as the AIDS Service Association of Pinellas County, the Suncoast Institute, and Project Grace. Suncoast is active in the national organization for hospices and interacts with programs that use it as a model and resource. Unlike the applicants, Suncoast does not use the Medicare conditions or definitions to limit or define the scope of services it provides. Under the Florida definition, hospice is provided to patients with a life expectancy of 12 months or less. HPH, by way of contrast, uses the Centers for Medicare and Medicaid Services definition for hospice, i.e., a prognosis of six months or less. Overview of Hospice Services In Florida, hospice programs are required to provide a continuum of palliative and supportive care for terminally ill patients and their families. Under Florida law, a terminally ill patient has a prognosis that his/her life expectancy is one year or less if the illness runs its normal course. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice benefits if their life expectancy is six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, including nursing, social work, pastoral care or counseling, dietary counseling, and bereavement counseling. Physician services may be provided by the hospice directly or through contract. Hospices are required to provide four levels of hospice care: routine, continuous, in-patient, and respite. Hospice services are furnished to a patient and family either directly by a hospice or by others under contractual arrangements with a hospice. Services may be provided in a patient's temporary or permanent residence. If the patient needs short-term institutionalization, the services are furnished in cooperation with those contracted institutions or in a hospice in-patient facility. Routine home care comprises the vast majority of hospice patient days. Florida law states that hospice care and services provided in a private home shall be the primary form of care. Hospice care and services, to the extent practicable and compatible with the needs and preferences of the patient, may be provided by the hospice care team to a patient living in an assisted living facility (ALF), adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. A resident or patient living in an ALF, nursing home, or other facility, who has been admitted to a hospice program, is considered a hospice patient, and the hospice program is responsible for coordinating and ensuring the delivery of hospice care and services to such person pursuant to the statutory and rule requirements. The in-patient level of care provides an intensive level of care within a hospital setting, a skilled nursing unit or in a freestanding hospice in-patient facility. The in- patient component of care is a short-term adjunct to hospice home care and home residential care and should only be used for pain control, symptom management, or respite care in a limited manner. In Florida, the total number of in-patient days for all hospice patients in any 12-month period may not exceed 20 percent of the total number of hospice days for all the hospice patients of the licensed hospice. Continuous care, similar to in-patient care, is basically emergency room or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care, like in-patient care, was designed to be provided for short amounts of time, usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. Respite care is generally designed for caregiver relief. It allows patients to stay in hospice facilities for brief periods to provide breaks for the caregivers. Respite care is typically a very minor percentage of overall patient days and is generally designed for caregiver relief. Medicare reimburses the different levels of care at different rates. The highest level of reimbursement is for continuous care. Approximately 85 to 90 percent of hospice care is covered by Medicare. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a terminally ill patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. There is no "bright line test" as to what constitutes palliative care and what constitutes curative care. The determination is made on a case-by-case basis depending upon the facts and circumstances of each such case. However, palliative care generally refers to services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary group consisting of physicians, nurses, social workers, and various counselors, including chaplains. There are certain services required by individual hospice patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are also more complicated and expensive non-covered services, such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Suncoast provides, and both Odyssey and HPH propose, to provide hospice patients with all of the core services and many of the other services mentioned above. Fixed Need Pool The Agency has a numeric need formula within its rule for determining the need for an additional hospice program in a service area. See Fla. Admin. Code R. 59C-1.0355(4)(a). When applying the formula in the present case, AHCA ultimately determined that the fixed need was zero for the second batching cycle of 2009. In the absence of numeric need, an applicant must document the existence of one of three delineated special circumstances set forth in Florida Administrative Code Rule 59C-1.0355(4)(d), i.e., (1) That a specific terminally ill population is not being served; (2) That a county or counties within the service area of a licensed hospice program are not being served; or (3) That there are persons referred to hospice programs who are not being admitted within 48 hours. Absent numeric need or one of the delineated special circumstances, there cannot be approval of a new hospice program. In forecasting need under the hospice rule's methodology, AHCA uses an average three-year historical death rate. It applies this average against the forecasted population for a two-year planning horizon. AHCA also uses a statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The statewide average penetration rate is subdivided into four categories: cancer over age 65, cancer under age 65, non-cancer over age 65, and non-cancer under age 65. The projected hospice admissions (based on death rate and projected population growth) in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceed 350, a new hospice is warranted, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for two years. In the instant case, AHCA's final projections showed the net un-met need for hospice's admissions in Service Area 5B was 318, i.e., below the threshold amount of 350 necessary to establish need for an additional hospice program. The fixed need pool for the purpose of this administrative hearing is zero. HPH is primarily basing its determination of need for a new hospice on its contention that there are three specific terminally ill population groups in Pinellas County that are not being served. Odyssey is primarily basing its determination of need for a new hospice on its contention that there are persons being referred to the existing hospice program in Pinellas County who are not being admitted within 48 hours. The Proposals HPH's Proposal HPH proposes to establish its new hospice program in Pinellas County, Service Area 5B. HPH is currently licensed to provide hospice care in three contiguous sub-districts north of Service Area 5B, i.e., in Hernando, Pasco, and Citrus counties. HPH's corporate headquarters is located in Pasco County, ten to 15 minutes from the Pinellas County border. HPH currently operates a home health agency in Pinellas County. HPH's CON application identifies special circumstances justifying approval of its proposal, including four sub-populations of terminally ill persons who are currently underserved in Service Area 5B: (1) patients living in ALFs; (2) patients requiring continuous care; (3) medically complex patients; and (4) patients not being admitted within 48-hours. Another circumstance identified by HPH to support approval of its application is the fact that Pinellas County is one of the most populous and most elderly service areas in the State, and yet, it only has a single hospice provider. HPH argues that the fact Suncoast is a sole hospice provider for the service area exacerbates and contributes to the problems of gaps in available hospice services to the specific terminally ill sub-populations identified in its CON application. HPH proposes a de-centralized model of hospice service delivery similar to its model in the three contiguous counties where HPH presently provides hospice services. HPH proposes contracting with existing nursing homes and hospitals for in-patient beds ("scatter beds") throughout Service Area 5B. HPH then projects that it could offer in-patient services in the local neighborhoods of patients and families where they live, as opposed to transferring patients to a single in-patient facility for the provider's convenience. As census increases, HPH commits to establish, by month seven of operation, a dedicated in-patient unit to provide in-patient level of care and Hospice House residential care to patients in a home-like environment. Like its hospice operations in Hernando, Pasco and Citrus Counties, HPH proposes to implement its "physician- driven" model of hospice care in Service Area 5B, allowing for greater involvement of physicians in the care and treatment of hospice patients, including physician home visits. Odyssey's Proposal Odyssey proposes to address lack of competition2 in Service Area 5B and the special circumstance of patients not being admitted within 48 hours of referral. Under AHCA's hospice rule, an applicant may demonstrate the need for a new hospice provider if there are persons referred to a hospice program who are not being admitted within 48 hours. However, the applicant must indicate the number of such persons. Odyssey relies upon referral of admission statistical information previously provided by Suncoast to a sister Odyssey entity in a 2005 hospice CON matter. Suncoast at that time provided three years of data that demonstrated between 1,700 (31 percent of admissions) and 2,300 (38 percent of admissions) of patients admitted to Suncoast were admitted 72 hours or more after referral. The definition of referral by Suncoast, however, differs from the definition of referral relied upon by Odyssey. (See Paragraph 56, herein.) Odyssey also provided letters of support from the community to further evidence the existence of the 48-hour special circumstance. However, the letters of support originally appeared in an application filed by Odyssey in 2007 and were not given any weight in the instant proceeding based on their staleness. Odyssey also contends that the existence of a sole provider in Service Area 5B has created a monopolistic situation in the service area. It further contends that the lack of competition has led to the existence of a 48-hour special circumstance in Service Area 5B. Approval of Odyssey's application will, it says, eliminate the monopoly currently existing in Service Area 5B and will address the lack of competition currently occurring in Service Area 5B. Subsection 408.045(2), Florida Statutes, speaks of a "regional monopoly," but there is no credible evidence in the record to suggest that Suncoast's position as a sole provider in Pinellas County constitutes a "regional monopoly." Facts Concerning Special Circumstances Arguments Service Area Demographics Hospice Service Area 5B, Pinellas County, is a single-county hospice service area with a population of approximately one million residents. Pinellas County is currently ranked as the fourth largest county in the State in total numbers of elderly persons over 65 years of age, as well as elderly persons over 75 years of age, behind only Miami-Dade, Broward and Palm Beach Counties. Pinellas County also experienced the fourth highest number of total deaths in the State in 2008--11,268. Pinellas County's mortality rate in recent years has slowed. However, even considering a slower growth rate in the number of deaths, Pinellas County likely will remain the fourth largest county in the State in both elderly population and number of deaths through 2015. Although it is the fourth largest service area in terms of likely hospice patients, Suncoast is the sole hospice provider in Service Area 5B. By contrast, the other three largest service areas all have multiple hospice programs to serve their large elderly populations with eight providers in Service Area 11 (Miami-Dade), five providers in Service Area 10 (Broward), and three providers in Service Area 9C (Palm Beach). In assessing the extent of utilization of hospice services in Service Area 5B, HPH through its health planner, Patricia Greenberg, noted that Suncoast appears to have over-stated its utilization rate in its semi-annual reports to AHCA. Ms. Greenberg testified that Suncoast's AHCA data includes patients who are not truly hospice patients and are, instead, patients who are participating in non-hospice programs operated by Suncoast, including palliative care programs known as "Suncoast Supportive Care" and "Hospital Support." The number of such patients was not quantified by Ms. Greenberg.3 Suncoast counters that it does not let the conditions of participation define the scope and breadth of hospice services it offers. Suncoast tries not to be defined by the Medicare conditions of participation and has programs that are not covered by the benefit, including but not limited to its residential care at Woodside and its caregiver services. Specific Terminally Ill Populations HPH identified as under-served in Service Area 5B medically complex patients with complex medical needs, including multiple IVs, wound vacs, ventilator, complex medications, or acutely uncontrolled symptoms in multiple domains. These are the same kinds of patients who would require continuous care within their homes. Hospice patients have become more highly acute in recent years. More patients are being discharged from hospitals with highly complex medical conditions, often directly from hospital intensive care units. Patients discharged directly from hospitals tend to have higher acuity levels. Ms. Greenberg reviewed Suncoast's data on hospital discharges and found Suncoast statistically lags behind HPH in caring for medically complex patients discharged from hospitals. Looking at a three-year average, HPH had 3.7 percent of its hospice discharges directly admitted from hospitals, compared to percent for Suncoast. This is more than a 50-percent deviation between hospital discharges to hospice for HPH versus Suncoast. However, a comparison of Suncoast to HPH does not establish that there is a specific underserved population in Service Area 5B which is not receiving services. One case manager testified to sometimes not being able to timely find hospice placements for medically complex patients. Such patients would then have to be transferred from the hospital to a nursing home or rehabilitation facility. However, she did not testify that this specific terminally ill population was not being served, only that they were being served somewhere other than in an in-patient hospice bed. Medically complex patients, including those needing continuous care, were another specific terminally ill population identified by HPH. At page 54 of her deposition, Deborah Casler, a case manager at Helen Ellis Hospital, addressed those populations, saying, "[w]hat I am going to say is if anybody needed continuous care through Suncoast, it would happen, but it wasn't always a quick and easy process." HPH compared its percentage of continuous care patient days with Suncoast, showing that HPH had more. That does not equate to an absence of service for any specific terminally ill population. HPH attempts to create a presumption that services are not being provided by conditioning its application on a certain percentage (3 percent) of days for continuous care patients. That is merely a projection of intent; it is not evidence that a certain population is not currently being served. Assisted Living Facility Residents HPH provided anecdotal evidence that some ALFs in Pinellas County were not pleased with the services being provided by Suncoast. One ALF administrator was dissatisfied that Suncoast took a long time to admit her resident (but the resident was ultimately admitted). Another was disappointed with Suncoast because it took a long time to get medications for her resident. Another felt like Suncoast's quality of care was inferior. HPH provides a greater percentage of hospice services to ALF residents in Pasco (12.7 percent), Hernando (26.5 percent), and Citrus (23.5) counties than Suncoast provides to ALF residents in Pinellas County. There are approximately 215 ALFs in Pinellas County of varying sizes, i.e., from three beds to almost 500 beds. Suncoast did not provide services to all of them. There was no showing, however, that any resident of an ALF who needed or requested hospice services was denied such care. None of the evidence presented by HPH establishes the existence of a group of ALF residents who were not being served in the service area; nor does the evidence prove that any specific ALF residents are, in fact, terminally ill. The 48-Hour Admission Provision Neither Suncoast, nor Odyssey presented any hard data on timeliness of admissions. In fact, none of the parties could agree as to what action constitutes an admission. Suncoast says an admission must include a physician order and a consent by the patient and family. Odyssey identifies a referral as a telephone call from a family member, even if the call is simply an inquiry as to what services might be available. Odyssey says that the majority of its patients are admitted within three hours of referral and at least 80 percent are admitted within 24 hours. During that three-hour time frame, Odyssey will contact the family, contact the physician in order to evaluate and admit, if appropriate, screen the patient to ensure he or she meets the eligibility guidelines, go out and meet with the family, and provide support while necessary information is being gathered. HPH candidly admits that the issue of admissions within 48 hours does not, in and of itself, justify the approval of a new hospice program in Service Area 5B. However, HPH argues, it is an element of hospice services that HPH would do better than the other parties. There is no credible evidence in the record that an identified number of persons in Pinellas County had not been admitted to hospice within 48 hours of referral. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1 through 5: Commitment to serve populations with unmet need.-- There is no numeric need in this matter. Neither applicant proved the existence of a population with unmet need. Commitment to provide in-patient care through contract with existing health care facilities.-- Both HPH and Odyssey intend to use scatter beds and to contract with existing health care providers. Commitment to serve homeless and AIDS patients, as well as patients without caregivers.--Both applicants have shown a history of serving such groups and commit to do so in Pinellas County. Not Applicable. Commitment to provide services not covered by insurance, Medicare or Medicaid--Both applicants have a good history of providing indigent care and commit to do so in Pinellas County. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. The state health plan addresses the concept of letters of support. Again, as neither applicant proved special circumstances warranting approval of a new hospice program, this comparison is unnecessary. However, there was considerable testimony and argument at final hearing concerning letters of support and the issue deserves some discussion. Each applicant provided letters of support. In fact, HPH's application contained over 250 letters of support from a wide range of writers, including physicians, nurses, ALF and nursing home administrators, and others. AHCA even complimented HPH's letters of support in both quantity and quality. Such letters are, of course, hearsay and cannot be relied upon to make findings as to the statements made herein. However, the fact that HPH generated so many letters of support is a fact that lends additional credence to their application. Odyssey's letters of support, by comparison, were much fewer in number. The letters were also dated, having come from a CON application filed some three years prior to the application currently at issue. The content of those letters would also be hearsay. And in the present action, the age of the letters would reduce their significance as support for the Odyssey CON application at issue. Statutory Review Criteria The Agency reviews each CON application in context with the criteria set forth in Subsection 408.035(1)(a) through (j), Florida Statutes: Subsection 408.035(1)(a), Florida Statutes--The need for the health care facilities and health services being provided There was no need projected by AHCA under its need methodology. Neither party established the existence of special circumstances warranting approval of a new hospice program in Service Area 5B. Subsection 408.035(1)(b), Florida Statutes-- availability, quality of care, accessibility, and extent of utilization Suncoast is the sole provider of hospice services in Service Area 5B. This service area is one of the largest in the State. There are other service areas which have a single hospice provider, but Service Area 5B is the largest service area to be served by a single hospice provider. Service Area 5B experienced the fourth largest number of deaths in the State in 2008, an important factor in the provision of hospice care. Suncoast has 15 interdisciplinary care teams, each of which, lead by a patient-family care coordinator, includes RNs, home health aides, counselors, volunteers, and a chaplain. Suncoast has a north community service center in Palm Harbor that houses four patient care teams. On the back of that property is Brookside, Suncoast's newly built 30-bed in-patient facility. In central Pinellas County, Suncoast has its main service center with six patient care teams along with administrative and support offices. Suncoast has a pharmacy, as well as durable medical equipment and infusion departments, located in Largo. In central Pinellas County is Suncoast's ten-acre, 72-bed Woodside facility. Thirty-six of the beds are in-patient and 36 are residential. On the back of the property are 18 efficiency apartments called "Villas" with separate living, sleeping and kitchen areas. When patients become too ill to remain at home, their spouse may move into a villa until the patient dies. In the southern portion of the county is Suncoast's south community service area which houses five patient care teams, as well as "ASAP." ASAP is Suncoast's AIDS Service Association of Pinellas County which serves and provides support to patients with HIV and AIDS. Suncoast also has in-patient contracts with every hospital in Pinellas County and a number of contracts with nursing homes for in-patient care. Patients may receive continuous care in the home whether that is a residence, an ALF, or a nursing home or may receive care in the Suncoast in-patient unit. There is disagreement over whether Suncoast accurately reports its admissions and whether all reported admissions are actually hospice patients. Further, HPH points out that its penetration rate in counties where it operates is much higher than Suncoast's penetration rate in Pinellas County. However, the most credible evidence is that Suncoast is effectively serving the needs of hospice-eligible residents of Service Area 5B. Subsection 408.035(1)(c), Florida Statutes--ability to provide quality of care and record of providing quality of care Both applicants satisfy this criterion. Both applicants can provide a broad range of quality hospice services to all its patients. HPH touts its physician model, including physician home visits, as evidence of its commitment to quality care. Physician visits have been proven to help patients get pain under control more quickly, an important factor considering ten percent of hospice patients die within 48 hours of admission. Odyssey is a large company and has extensive operational policies and procedures concerning provision of quality care to its patients. Odyssey has a program called Care Beyond which it believes will enhance quality care in Service Area 5B. Odyssey has had some regulatory violations while HPH has not. However, Odyssey has resolved those violations favorably. Subsection 408.035(1)(d), Florida Statutes-- availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(e), Florida Statutes--extent to which proposed services will enhance access to health care for residents of the service district Both applicants satisfy this criterion. HPH is the existing provider of hospice services in the adjacent service area to Service Area 5B. HPH can use its existing contacts in Service Area 5B to extend its service to residents of that area. HPH has already established relationships with Airamed Corporation and its 11 nursing homes and ALF in Service Area 5B. HPH also commits to being more directly involved with smaller ALFs in Pinellas County. Odyssey is a large hospice with significant resources which can be utilized to enhance access for residents of Service Area 5B. It commits to bring quality personnel to Service Area 5B as part of its successful start-up procedures. Subsection 408.035(1)(f), Florida Statutes--immediate and long-term financial feasibility The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(g), Florida Statutes--extent to which proposal will foster competition that promotes quality and cost-effectiveness Both applicants are established providers of hospice services. The absence of any other hospice provider in Pinellas County means there is no effective competition. If either of the applicants was granted a CON for a new hospice in Service Area 5B, it would likely foster competition and promote quality and cost-effectiveness. Subsection 408.035(1)(h), Florida Statutes--costs and methods of construction, etc. This criterion is not applicable to the instant case. Subsection 408.035(1)(i), Florida Statutes--the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Both applicants meet this criterion. HPH offers extensive services that go beyond the Medicare requirements of participation. It also operates "Hospice Houses" which provide room and board to homeless hospice patients. Odyssey's record of indigent care is evidenced by the fact that approximately 55 percent of its non-Medicare net revenue is from Medicaid, and 9.5 percent of its non-Medicare services are provided to indigent patients. Subsection 408.035(1)(j)--designation as a Gold Seal Program This criterion is not applicable to the instant case. Ultimate Findings of Fact The Agency determined that there is no need for an additional hospice in the service area based upon the fixed need pool formula. Neither applicant was able to establish the existence of special circumstances warranting approval of a new hospice in the service area. There is no specific terminally ill population which is not receiving hospice services that has been identified by the applicants. There is no persuasive evidence that there is an identifiable number of individuals who were referred to hospice, but were not admitted within 48 hours.
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 denying the CON applications of HPH South, Inc. (No. 10066), and Odyssey Healthcare of Collier County d/b/a Odyssey Healthcare of Central Florida (No. 10068). DONE AND ENTERED this 30th day of November, 2010, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of November, 2010.
The Issue Whether the Certificate of Need (CON) applications filed by Regency Hospice of Northwest Florida, Inc. (Regency), Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and United Hospice of West Florida, Inc. (United) for a new hospice program in Agency for Health Care Administration (AHCA or the Agency) Service Area (Service Area) 1, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval and, if so, which of the three applications best meets the applicable criteria for approval.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1) Florida Statutes.1 Regency Regency Hospice of Northwest Florida, Inc. (Regency) is a for-profit, wholly-owned subsidiary of Regency Healthcare Group, LLC (RHG). Regency is a start-up corporation formed for the purpose of owning and operating a new hospice program in Service Area 1. (Findings relating to the creation of Regency and Regency Hospice of Northwest Florida, LLC (Regency LLC) are set forth in section III.) RHG was formed in 2005 for the purpose of acquiring and then owning and operating hospice operations in the southeastern United States. The company's sole business is providing hospice services. In February 2006, RHG acquired the hospice operations of Regency Hospice with locations in Georgia and South Carolina. In June 2006, RHG acquired New Beacon Hospice with multiple locations in Alabama. In addition to these acquisitions, RHG opened a new Medicare licensed hospice program in Augusta, Georgia, and also opened two additional satellite offices in Gainesville, Georgia, and Gadsden, Alabama. RHG operates under the "Regency" brand name in Georgia and South Carolina (seven hospice offices) through its wholly- owned subsidiary Regency Hospice of Georgia, LLC, and operates under the "New Beacon" brand name in Alabama (eights hospice offices) through its wholly-owned subsidiary New Beacon Healthcare Group, LLC. Presently, RHG owns and operates ten Medicare certified hospice programs at 15 office locations: eight in Alabama, four in Georgia, and three in South Carolina. The offices are located in urban and rural settings. If approved in Florida, RHG would operate the hospice through the wholly-owned subsidiary Regency Hospice of Northwest Florida, Inc. There is no separate corporate management of Regency at the subsidiary level. The supervision, management, and control of all of the RHG hospice operations, whether operating under the Regency or New Beacon brand name, are centralized in the senior management team of RHG located in Birmingham, Alabama. The mission, core values, service standards, operating practices, protocols and policies are uniform throughout the company regardless whether a hospice program is operated under the New Beacon or Regency brand name. RHG senior management team has demonstrated a history of developing successful hospice operations. The origin of Regency's New Beacon hospice operations in Alabama dates back approximately 25 years when the hospice was first established in Birmingham, Alabama. The Birmingham hospice was initially owned by the Baptist Health System as a department of Montclair Hospital. Over time, the Baptist Hospice expanded its operations through acquisitions and opening of new programs in locations outside of Birmingham. Eventually, Baptist-owned hospice operations merged with the hospice operations of the Catholic health system in 1997. The joint Baptist/Catholic venture was operated under the name of Unity Health Services changing its name to New Beacon in 2001. In 2006, the Baptist and Catholic health systems decided to sell their hospice operations in Alabama. Both Odyssey and Regency submitted bids to purchase the New Beacon operations. Although Odyssey was the highest bidder, the hospice program was sold to Regency, apparently because RHG shared New Beacon's philosophy regarding providing hospice care. The Baptist and Catholic health systems continue to have a minority ownership in Regency and share a seat on the seven-member board of directors. RHG's hospice operations have grown in terms of patient admissions and average daily census since the acquisition of Regency and New Beacon. RHG plans to focus efforts in the southeast and expand into southern Alabama and the Florida panhandle. RHG's present plans are to open from three to ten new hospice locations in 2008 including the three Florida panhandle locations at issue in this case if approved. New Beacon is a recognized provider of choice in Alabama for some health care providers and its operations have been successful. RHG's operations in Georgia and South Carolina have also been successful. Under RHG's management and prior to its acquisition, New Beacon has afforded high quality of care to the patients its served. There are numerous examples of highly complex, difficult, and costly patients that New Beacon has accepted both before and after the acquisition. There have been no apparent changes in New Beacon's direction or philosophy since acquisition by RHG. Some witnesses who testified on behalf of Regency, expressed a preference for New Beacon over Odyssey based on ease of referrals and complexity of care of patients New Beacon accepts. Odyssey Odyssey Healthcare of Northwest Florida, Inc. (Odyssey) is a for-profit, wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey Healthcare). Odyssey is a start-up corporation formed for the purpose of filing a CON application at issue in this proceeding and owning and operating a new hospice program in Service Area 1. Odyssey Healthcare is a publicly-traded company founded in 1996 and focuses on caring for patients at end-of-life care. Odyssey Healthcare's sole line of business is hospice services. Since 1996, Odyssey Healthcare has started up and acquired more than 80 hospice programs in 30 states. Odyssey Healthcare presently operates approximately 76 Medicare certified hospice programs, including the operation of two hospice programs in Florida. Odyssey Healthcare has approximately 5,000 employees through affiliated programs and serves approximately 8,000 patients per day across its 76 hospice programs and serves has approximately 34,000 admissions in a 12-month period. Last year, Odyssey Healthcare started five or six new hospice programs. Odyssey is the only one of the three co-batched applicants with start-up and operational hospice experience in Florida - in AHCA Service Areas 4 and 11. Since 2003, Odyssey Healthcare has started up approximately 40 new hospice programs, but over the past several years, Odyssey Healthcare has closed or sold seven programs as underperforming or, in some cases, in light of unfavorable market conditions. Odyssey Healthcare has not sold or closed other hospice programs, such as those located in New Orleans and Baton Rouge, Louisiana, following the hurricane, or in Boston, Massachusetts, notwithstanding the loss of money in those markets or other market conditions. Odyssey Healthcare's patient population consists of approximately 68 percent non-cancer and 32 percent cancer patients. Odyssey Healthcare was the subject of an investigation by the United States Department of Justice (DOJ) that ultimately resulted in a settlement and the payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of wrongdoing. As part of the settlement with the United States Department of Health and Human Services, Office of Inspector General, Odyssey Healthcare entered into a corporate integrity agreement (CIA) for five years. Ody 4 at 32. According to Odyssey Healthcare, the federal investigation allowed Odyssey Healthcare to self- audit to ensure compliance with the Medicare conditions for participation followed by an outside verification agency. The federal investigation was not related to quality of care issues. Medicare CAP problems result from longer patient stays that are not balanced by shorter patient stays, thus leading to increased overall revenue per patient. Medicare CAP limitations have been a problem for the hospice industry at large because they place a ceiling on the overall Medicare revenue per patient that a hospice may receive. Odyssey Healthcare's Medicare CAP liability increased from approximately 2 million dollars in 2004 to approximately 12 million dollars in 2005 to approximately 16 million dollars in 2006, but lower in 2007. Odyssey Healthcare has plans in place to reduce its Medicare CAP exposure that may have negative short-term affects. Odyssey Healthcare's net income declined significantly from 2004 to 2006. The decline is due in part to Medicare CAP limitations. Regency has had one cap repayment ($670,000, T 201) and United has had none. United United Hospice of West Florida, Inc. (United) is a wholly-owned subsidiary of United Hospice, Inc. (UH), which, in turn, is a wholly-owned subsidiary of United Health Services, Inc. (UHS) commonly known as UHS-Pruitt. UH is an existing provider of hospice services in Georgia, South Carolina, and North Carolina. UHS has also established a not-for-profit foundation, which offers the public and professional community information and assistance regarding end of life care and planning. UHS-Pruitt was founded in 1969 as a nursing home company and has expanded to become a comprehensive long-term care provider in Georgia, South Carolina, North Carolina, and Florida. UHS-Pruitt provides several services including nursing homes, hospices, assisted living facilities, pharmacy services, medical supplies, durable medical equipment, outpatient rehabilitation, adult day care, and home health services. UHS-Pruitt currently has a 120-bed skilled nursing facility (Santa Rosa Heritage, operated by United Hospice, Inc.), pharmacy services, rehabilitation office (including therapy programs), durable medical equipment, located in Milton, Santa Rosa County, Florida. UHS-Pruitt has approximately 8,000 employees in all of its programs. The main focus of United Hospice, Inc. and UHS-Pruitt has been the nursing home business, with additional product lines developed as an adjunct to the delivery of nursing home services as noted herein. United Hospice Foundation was established to educate individuals about hospice services and end-of-life decision making. The foundation provides training and educational programs to both the professional and the lay community regarding these subjects. The foundation is operated independently from the for-profit portions of UHS-Pruitt. UHS-Pruitt by and through United Hospice, Inc. for the most began providing hospice services in 1993 and offers hospice programs in approximately 13 to 20 locations in Georgia, North Carolina, and South Carolina, with the vast majority of the programs in Georgia. The hospice programs were start-up programs, not acquisitions. There is evidence that approximately 40 to 42 percent of United Hospice, Inc.'s hospice patients reside in company owned nursing homes. United Hospice, Inc. opened one or more new hospice program each year during the past several years and is internally discussing three new hospices "[t]hrough pure development, as opposed to acquisition." Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their family. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. §§ 400.601(3) and (8), Fla. Stat. Under the Medicare program administered by the federal government, a terminally ill patient is a person who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, 7 days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. § 400.609(1)(a), Fla. Stat. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support of services to the family for a minimum of one year after the patient's death. §§ 400.609(1)- (5), Fla. Stat. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, including chaplains. There are four levels of service of hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care is the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room type or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85 to 90 percent of hospice care is Medicare related. There are certain services required by specific patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are other more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Each applicant proposes to provide hospice patients with the all of the core services and many of the other services mentioned above. However, there are several distinctions among the applicants which are discussed later. Regency's LOI and CON Application Prior to the final hearing, Odyssey and United filed separate motions requesting entry of an order dismissing Regency's petition and CON application. Odyssey and United argue that Regency Hospice of Northwest Florida, LLC's initial LOI and shell CON application were defective because only a corporation, not a limited liability company, authorized to do business in Florida on the date these documents were filed, can be a viable applicant to provide hospice services in Florida. As a result, the Agency should have rejected the LOI and shell CON application because Regency LLC was not an existing corporation on the date the LOI and shell CON application were filed contrary to Florida law. The following findings of fact relate to this issue. On November 2, 2006, Regency Hospice of Northwest Florida, LLC was formed as a Delaware limited liability company for the purpose of pursuing approval of a CON to provide for a new hospice program in Florida. (Regency LLC was 100 percent owned by RHG and did not differ in structure from Regency, except for the difference in entity status.) On November 3, 2006, the Florida Secretary of State certified that Regency LLC was properly registered to conduct business in Florida on November 3, 2006. In October 2006, Odyssey and United filed separate LOIs. By Agency rule, these filings created a grace period for filing additional LOIs. During the grace period, on November 7, 2006, Regency LLC filed a LOI to establish a new hospice program in Service Area 1. On November 9, 2006, the Agency issued a letter to Regency LLC, accepting the LOI. On November 22, 2006, Regency LLC filed its initial shell application with the Agency. The initial CON application consisted of two pages. Reg 7; T 118. Thereafter, Odyssey advised the Agency that Regency LLC's CON application should be withdrawn from further consideration because the applicant entity, Regency LLC, was not a corporation under Florida law, but was instead a limited liability company. On November 28, 2006, the Agency notified Regency LLC that it was withdrawing Regency LLC's CON application for consideration on the basis that Regency LLC was a limited liability company, rather than a corporation. On November 29, 2006, a certificate of incorporation was filed on behalf of Regency Hospice of Northwest Florida, Inc., with the State of Delaware. A certificate of conversion was filed converting the limited liability company to a corporation, i.e., Regency Hospice of Northwest Florida, LLC to Regency Hospice of Northwest Florida, Inc. On December 5, 2006, a certificate of conversion and articles of incorporation were filed on behalf of Regency Hospice of Northwest Florida, Inc. with the Florida Secretary of State. The Florida Secretary of State issued a document stating in part: "The Certificate of Conversion and Articles of Incorporation were filed December 5, 2006, with an organizational date deemed effective November 2, 2006, for REGENCY HOSPICE OF NORTHWEST FLORIDA, INC., the resulting Florida corporation." On October 24, 2007, the Florida Secretary of State certified that Regency Hospice of Northwest Florida, Inc. "is a corporation organized under the laws of the State of Florida, filed on December 5, 2006, effective November 2, 2006." (emphasis added). On December 11, 2006, Regency Hospice of Northwest Florida, Inc., filed a formal petition (by letter) requesting a hearing in connection with the Agency's prior notice indicating withdrawal of the CON application. On or about December 21, 2006, a settlement agreement was reached among representatives of the Agency and Regency Hospice of Northwest Florida, LLC and "now known as" Regency Hospice of Northwest Florida, Inc. The Agency agreed to accept a timely filed and complete CON application by Regency Hospice of Northwest Florida, Inc. The Agency was persuaded that Regency was a proper applicant in light of its conversion from Regency LLC to Regency. On or before December 27, 2006, Regency, Odyssey, and United timely filed their completed CON applications, also known as the omissions responses. In particular, the president and CEO of Regency executed the "certification by the applicant," Schedule D-1, which stated in part: "I certify that the applicant for this project will license and operate the health services, programs, or beds described in this application." Reg 7 at Schedule D-1, p. 9. On January 9, 2007, the Agency adopted and approved the settlement agreement by entry of a Final Order. On January 12, 2007, the Agency published its decision in the Florida Administrative Weekly to accept the Regency Hospice of Northwest Florida, Inc., CON application. On January 16, 2007, the Agency advised Odyssey of the final Agency's decision to accept Regency's CON application. On February 5, 2007, Odyssey filed a petition to challenge the Agency's decision to accept Regency's CON application. On April 19, 2007, the Agency partially granted the Agency's own motion to dismiss "to the extent that the Petition is dismissed as moot and due to the fact that the Petitioner did not have standing to file the Petition at the time it was filed." In essence, the Agency decided that because Odyssey had already filed a petition to challenge the Agency's preliminary decision to deny its CON application and the Agency approval of Regency's application, that the filing of that petition rendered the original petition to challenge the agency's decision to allow Regency of Northwest Florida, Inc. to submit a CON application moot.2 There is no evidence that Odyssey sought appellate review of the Agency's April 19, 2007, Final Order. On November 8, 2007, Odyssey filed a Motion for Summary Recommended Order seeking dismissal of Regency's CON application. A similar motion was filed by United on November 9, 2007. Regency, joined by the Agency, filed a response. On November 26, 2007, a hearing was held regarding the motions and all counsel were heard. After hearing argument of counsel, the motions were denied without prejudice. As a matter of fact, Regency Hospice of Northwest Florida, Inc. did not exist at the time the LOI and shell CON application were filed with the Agency. The LOI and the shell CON application were filed on behalf of Regency Hospice of Northwest Florida, LLC that was not a corporation authorized to do business in the State of Florida and not eligible at that time to file a LOI or CON application to provide a new hospice program. Whether Regency Hospice of Northwest Florida, Inc., formed after the LOI and shell CON application were filed, is a viable applicant turns on whether the "conversion" statutes apply, or if not, whether the 'forgiveness clause,' Section 408.039(5)(d), Florida Statutes, applies. For the reasons stated in the Conclusions of Law, the issues regarding Regency's corporate status, while novel, are resolved in Regency's favor. Fixed need pool Pursuant to its numeric need methodology, the Agency published a fixed need pool or a numeric need for one new hospice program in Service Area 1 for the second batching cycle of 2006. In forecasting need under the rule methodology, the Agency uses the historical average three-year death rate. It applies it against the forecasted population two years out or for a two-year planning horizon, in this case January 2008. The projected first year of operation for a new provider in this case is 2008. Then, the Agency uses the statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The penetration rate is also considered a use rate in other health care arenas, but in hospice it is generally referred to as a penetration rate. The statewide average penetration rate is subdivided into four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65. The projected hospice admissions in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceeds 350, the need for a new hospice is shown, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for less than two years. According to the Agency's fixed need pool methodology, the net un-met need for hospice's admissions in Service Area 1 is 450 additional hospice admissions in 2008. Among the four categories, there is a higher need projected among non-cancer patients. The percentage of non- cancer patients can vary from community to community and a hospice patient's admissions will likely reflect that local decedent population. (Historically, for RHG hospice operations, approximately 62 percent of the admissions were non-cancer diagnoses and 38 percent were cancer diagnoses, whereas Odyssey Healthcare's overall hospice experience is approximately 68 percent non-cancer and 32 percent cancer and UHS's experience is approximately 64 percent non-cancer and 36 percent cancer.) Demographics of Service Area 1 AHCA Service Area 1 consists of four counties: Escambia, Santa Rosa, Okaloosa, and Walton Counties, located in the northwest portion of the Florida panhandle. Geographically, the service area is large. It spans from the Florida-Alabama border on the west in Escambia County to the eastern border of Walton County over 100 miles away. The July 2006 population estimates for Service Area 1 indicate that the total population was approximately 700,000 with the four counties having the following population: Escambia (303,578); Santa Rosa County (140,988); Okaloosa County (193,298); and Walton County (56,900). In the most recent calendar year, there were 5,800 deaths in the service area and 6,400 deaths per year projected in the two-year planning horizon. The largest population center is Escambia County (and the city of Pensacola) followed by Okaloosa, Santa Rosa, and Walton Counties. Walton County is the fastest growing county, which experienced 40 percent growth in the last six years followed by Santa Rosa with approximately 20 percent growth. Overall, the service area grew approximately 11 to 12 percent. When Escambia County is excluded, the service area grew approximately 19-20 percent for the three eastern counties. Between 2006 and 2011, Santa Rosa County is projected to grow by approximately 16 percent and Walton County by approximately 20 percent. Service Area 1 has two major east-west arteries, with the I-10 corridor cross the central and more northern portion of the service area, and U.S. Highway 98 running along the coastal beach communities. There are 13 hospitals, 27 nursing homes, and two existing hospice providers in Service Area 1. The two existing hospice providers are Covenant Hospice and Hospice of the Emerald Coast. Covenant Hospice currently has its headquarters in Pensacola, Escambia County, and satellite offices in Milton, Santa Rosa County and Crestview and Niceville in Okaloosa County. It appears that Emerald Coast has its headquarters in Pensacola and a satellite office in Crestview. The existing hospice providers do not have offices in Walton County and neither has an office in Fort Walton Beach along the coast in Okaloosa County. Currently, Covenant Hospice provides approximately 86 percent of the hospice care in Service Area 1 followed by Emerald Coast providing approximately 14 percent of the hospice services. Emerald Coast does not serve hospice patients without primary caregivers. Based upon the 2,000 U.S. Census, the population of the State of Florida is 65.4 percent White; 14.6 percent African-American; 16.8 percent Hispanic; and 3.2 percent in the other category. With respect to Escambia, Santa Rosa, Okaloosa, and Walton Counties, the percentages of African-Americans, Hispanics, and others are as follows: Escambia (21.4 percent African-American, 2.7 percent Hispanic, and 5.0 percent other; Santa Rosa (4.2 percent African-American, 2.5 percent Hispanic, and 4.2 percent other; Okaloosa (9.1 percent African-American, 4.3 percent Hispanic, and 5.6 percent other); and Walton County (7.0 percent African-American, 2.2 percent Hispanic, and 3.5 percent other). The Hispanic population in Service Area 1 is low relative to the State of Florida, although it is projected to grow. On a percentage basis by county, the African-American population is lower than the statewide percentage, except Escambia County, which also has the largest population of the four counties in Service Area 1. The proposals Regency's proposal Regency proposes to establish its new hospice program with the immediate opening of three offices at commencement of operations in Pensacola, Escambia County; along the coast in Fort Walton Beach, Okaloosa County; and along the I-10 corridor in De Funiak Springs, Walton County. In its CON application, Regency projected the number of admissions in years one and two, 2008 and 2009, 242 and 496, respectively. With the projected average length of stay (ALOS) 60 days in year one and 80 days in year two, the overall projected patient days were 14,543 in year one and 39,686 in year two. The ALOS projections were demonstrated to be consistent with other Florida hospice start-up operations. The resulting total average daily census (ADC) from the proposed three office locations is 40 in year one growing to 108 in year two, with continuing growth thereafter. The Regency projections appear to be reasonable and achievable. Regency projects that it can open all three offices for $195,745. Odyssey suggests that Regency has impermissibly amended its CON application by describing proposed programs and services in great detail during the final hearing that were minimally, at best, discussed in Regency's CON application, including the omissions responses. See Odyssey's PRO at 44-52. In its CON application, Regency notes that it is a subsidiary Regency Healthcare Group, LLC, which offers hospice services in three states, Alabama, Georgia, and South Carolina. Regency described the corporate structure, including the entities operating in these states. Regency is also affiliated with two non-profit foundations, which accept donations and provide support to their hospice programs. Regency places heavy reliance on the experience of the existing hospice programs in Alabama, Georgia, and South Carolina. In its CON application, Regency lists several types of programs currently offered. For example, the Regency Hospice/New Beacon programs have a full-time pharmacist (Pharm. D.) on staff to assist their teams. Regency lists the services that its staff will directly provide and provide through contractual arrangements. Reg 7 at 33-34. (Regency [and United] mention providing dietary services through contractual arrangements, but the service is required to be provide by staff. AHCA 1 at 17.) Regency mentions that it will sponsor community education programs. Id. at 16. Regency also lists several non-reimburseable services provided by its affiliated hospice programs such as bereavement (for at last 12 months (13 months according to hearing testimony) following death of the patient) and chaplain services, the recruitment, training, and supervision of volunteers, hospice care for the medically indigent, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities for needy patients. See Reg 7 at 2, 25, and 26. On page 12 of its CON application, Regency notes that for the year ending October 31, 2006, Regency affiliated hospice programs rendered 18.4 percent of total days of care to African- Americans and that "Regency will focus on this population as an outreach group since it is a significant part of the population of Service Area 1. This is particularly the case in Escambia County, which has the largest population, and African-Americans may be an underserved group." Regency mentions a potentially unmet need in Walton County and commits to opening an office in De Funiak Springs to serve the rural areas of the county. Id. at 23-25. Regency commits to providing care to persons without caregivers. Id. In several places in its CON application, Regency references continuous care generically, id. at 5-6, and based on the experience of Regency's affiliated hospice programs in other markets and expectations for the start-up of a new program, Regency projects patient days for continuous home care, routine home care, inpatient respite care, and general inpatient care. Id. at 32. On Schedule 7A, Regency has a line dedicated for continuous care as part of its revenue projections and also Schedule 8A provides for an expense for continuous care for years one and two. Id. at 27-28, 30, and 32. (Regency proposes 1.46 percent of continuous case; Odyssey, 1.33 percent; and United, a negligible amount.) During the final hearing, Regency expounded on these services. For example, there was testimony that as part of the "flower ministry," Regency expects to offer a Christmas tree program. It appears that the flower ministry and Christmas tree programs are local programs within the Birmingham, Alabama, area, spearheaded by a volunteer. It does not appear that Regency presently provides this service on a corporate-wide basis, although there is some intent to do so - it would depend on the leadership of their volunteers. See T 125-126, 142, 368, 537; Reg 83. In its CON application, Regency notes at page 32 that "[t]rained volunteers will provide important services by helping families and loved ones care for patients, by raising funds to support hospice services, and by performing administrative report functions." One witness, Ms. Acton, testified that her testimony was limited to the volunteer program in Jefferson County. Regency included letters of support in the deposition testimony of Richard Mason, Reg 79, indicating that Regency would be able to establish inpatient programs at the three Sea Crest nursing homes in Service Area 1 in Pensacola, Destin, and Crestview. (There is no affiliation between Sea Crest and RHG or its subsidiaries, except for two minority investors in Sea Crest who are also investors in RHG.) Overall, Regency's CON application mentions, although not in elaborate detail, the programmatic aspects of its proposal that were discussed in much more detail during the final hearing. United's proposal United proposes to establish a new hospice program in Service Area 1 with the headquarters in Milton, Santa Rosa County, Florida. It intends to open its first satellite office in Walton County when market forces indicate that it would be more efficient to have another office. United plans to have a dedicated hospice team located in Walton County to ensure access to services to the Walton County residences. United also proposes to have inpatient arrangements at its sister-facility in Milton as well as at nursing homes in Okaloosa and Walton Counties. United included letters of support from all three nursing homes indicating that it would be able to establish the proposed inpatient sites. In its CON application and during the final hearing, United provided a detailed discussion of hospice services it will offer. United is projecting project costs of $336,467. United Hospice of West Florida, Inc.'s parent is UHS- Pruitt, whose principle business appears to be the nursing home business. UHS-Pruitt also has a number of operating subsidiaries that appear to supply or enhance those nursing homes with physical therapy or pharmacy services. In its CON application, United focuses on minority outreach to the Hispanic population in the service area. As noted herein, the population of Hispanics in the service area is quite low compared to the statewide average. In its CON application, United projected that it would achieve 264 admissions in year one and 454 admissions in year two. United applied a median length of stay of 27 days to arrive at its projection of 7,185 patient days in year one and 12,061 patient days in year two. United's admissions and average daily census ramp up through the end of year one and then remain flat showing no growth throughout the second year of operation. United's projections appear to be reasonable and achievable. Odyssey's proposal Odyssey proposes to initiate hospice services by opening an office in Pensacola, Escambia County. In the final quarter of year two, Odyssey proposes to open a second office in Okaloosa County, and an office in Walton County in year three. Within six months following the opening of the Walton County office, Odyssey plans to open a fourth office in Santa Rosa County. Odyssey projected 270 admissions in year one and 411 admissions in year two. Odyssey projected in its CON application that it would have an ALOS of 25 in year one and 50 in year two, resulting in total patient days of 6,750 in year one and 20,550 in year two. Odyssey's projections for routine care for year two are similar to the percentages proposed by United and Regency. Odyssey proposes less cancer, but more respite and non-cancer care than United and Regency. United proposes more inpatient care than Regency and Odyssey. Odyssey's projections appear to be reasonable and achievable. Odyssey anticipates that it will cost $464,720 to start its Escambia office. Odyssey Healthcare, through its not-for-profit affiliate, Hospice of the Palm Coast, currently operates two start-up hospice programs in Florida, Volusia County, with a satellite office in Flagler County, Florida, and one in Dade County, Florida, with a satellite office in Monroe County. Both programs are licensed and Medicare/Medicaid certified. Odyssey will benefit from the clinical experience, expertise, management resources, and financial strength of Odyssey Healthcare in implementing its program within Service Area 1. Odyssey start-up team has a group of experts located in Odyssey's Dallas support center. The team consists of designated experts from several departments including billing, human resources, clinical compliance, and IT. The team meets weekly and is responsible to support the start-up hospice programs. For Odyssey Healthcare, hospice care is delivered via an interdisciplinary team of caregivers who specialize in end- death-of-life care, including nurse care managers, physician, nurses, spiritual advises, bereavement coordinators, social workers, home health aides, and members of the patient's family. The manager of the team is an RN who addresses the needs of the patient and family and develops a specific plan of care with the physician. The RN case managers coordinate care with other team members while the patient's physician works with the Odyssey medical director and other team members to assure that all symptoms are controlled, pain managed, and the patient and family informed. Other members of the interdisciplinary team include a chaplain, home healthcare aide, social worker, trained volunteers, bereavement coordinator, on-call nursing team, and other specialists. The interdisciplinary team delivers these services in a context of Odyssey Healthcare's 14 service standards by focusing on admissions within three hours of a physician admission order. Odyssey Healthcare offers certain educational tools which will be implemented by Odyssey to furnish healthcare providers with information about non-cancer and cancer diagnoses of all types. Odyssey commits to spending $25,000 in its first year of operation for community outreach and marketing. Odyssey identified the African-American community as an underserved population in Service Area 1. Odyssey Healthcare operates in numerous locales where there are culturally diverse areas such as Miami/Dade County and El Paso, Texas, with high percentages of Hispanic population. Other Odyssey Healthcare hospice programs have also reached out to African-American communities in Memphis, Tennessee, and Charleston, North Carolina. Odyssey's interdisciplinary teams are often made up of Hispanic or African-American medical directors, home health aides, social workers, priest, ministers, and nurses. Odyssey Healthcare has recreated a developmental model called community education representatives (CERs) to educate the community as to the benefits of hospice services and the services that are provided by Odyssey. These CERs are used to establish and develop referral sources in part. Odyssey Healthcare programs offer extensive bereavement programs (for 13 months after the death of the patient) as part of the core Medicare services it provides. Odyssey Healthcare operates hospice programs in Birmingham, Montgomery, and Mobile, Alabama. The Mobile program is in Baldwin County, which is contiguous to the Pensacola, Escambia County, an area Odyssey proposes to serve. Odyssey Healthcare's Mobile, Alabama, hospice program has an inpatient agreement with Providence Hospital in Mobile, Alabama, which has a related facility, Sacred Heart Hospital, in Pensacola, Florida, which has the same parent organization. Odyssey will benefit from Odyssey Healthcare's resources and experience with respect to start-ups as well as centralized services such as accounting, centralized billing, and training. All other benefits include the size of Odyssey Healthcare, comprehensive scope of hospice services, service standards, staff education including palliative care center vocation, commitment to education, and investment and technology. Odyssey Healthcare has internally developed an in- house pharmaceutical system called Hospice Pharmaceutical Services (HPS). HPS is a separate company and not a wholly- owned subsidiary of Odyssey Healthcare. HPS provides services 24 hours a day, 7 days a week, including pre-admission consultations on referrals. HPS hotline is housed in the Dallas Odyssey Healthcare corporate office and is staffed by a Pharm. D., a pharmacist, and seven hospice certified RNs and at least two on-call nurses who cover the pharmacy system 24/7. The HPS staff is available to the attending physician and to the local hospice nursing staff when needed. Odyssey included several letters of support in its CON Application. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1.-5. The first preference is for an applicant who has a commitment to service populations with unmet needs. Each of the applicants identified population groups they believe to have unmet needs. Hospice patients can be viewed as consisting of four basic categories: cancer patients under age 65; cancer patients age 65 and older; non-cancer patients under age 65; and non- cancer patients age 65 and older. (This is the breakdown of hospice patients used by the Agency in its need methodology.) It appears that the largest underserved group of these four is the under age 65 non-cancer patients, followed by the non-cancer patients age 65 and older and cancer patients age 65 and older. The only over-served group was the cancer patients under the age 65. All applicants stated a commitment to serve non-cancer patients. However, only Odyssey and United identified this group as an underserved group and provided evidence concerning how they would meet the needs of this group. Historically, RHG hospice programs have provided approximately 62 percent of its patient care to non-cancer patients; whereas UHS has provided approximately 64 percent, followed by Odyssey Healthcare at approximately 68 percent. One witness suggested that a range of 35 to 50 percent was reasonable, although there are factors that affect the range such as age of the program. Regency and Odyssey identified African-Americans as a traditionally underserved group. However, while it is possible to extract the percent of the population by race group in the service area, neither applicant presented any concrete data to show that existing providers in the service area are failing to meet the demands of the African-American population or that this population group is underserved by the existing providers. The percentage of African-Americans in Escambia County according to 2000 Census information was 21.4 percent; 4.2 percent in Santa Rosa County; 9.1 percent in Okaloosa County; and 7.0 percent in Walton County. Regency stated that it "will focus on this population as an outreach group since it is a significant part of the population of Service Area 1." Reg 7 at Odyssey stated that African-Americans in the service area would benefit from Odyssey's experience. See Ody 1 at (bates stamp) 46, 59 and 74. United does not discriminate against individuals based upon ethnicity or for any other reason and it historically provides care to minorities. Both of the existing providers have offices in Escambia County and Regency and Odyssey both propose offices in this county. Odyssey presented data claiming that RHG hospice programs did a below average job in outreach and service to the African-American communities in areas served by RHG. The analysis was flawed in part because it compares the statewide experiences of RHG and Odyssey Healthcare based upon the operations in different local communities (e.g. rural versus urban) that can have different demographic compositions. Overall, the evidence indicates that RHG and Odyssey Healthcare have demonstrated a record of doing a credible job of outreach and service to the African-American community. All applicants agreed that providing continuous care services is an important level of service for hospice patients. In Service Area 1, continuous care accounts for only 0.6 percent of patient days; whereas the national and Florida averages are four and two percent, respectively. As noted herein, Regency and Odyssey propose a specific percent of continuous care, 1.46 and 1.33 percent, respectively, and United projects a negligible amount, see United 1 at Schedule 7A, although United proposes to provide the service. United identified patients without caregivers as an underserved population because Hospice of the Emerald Coast does not accept these patients. All three applicants will serve this population. United identified Hispanics as a population with unmet needs. Service Area 1 has the lowest percent of total population that is Hispanic of all of AHCA's service areas, although there is projected growth. In calendar year 2006, there were 59 Hispanic deaths out of 5,821 deaths in Service Area 1 or approximately one percent. In Santa Rosa County, where United plans to initially open its sole office, there were approximately seven Hispanic deaths in 2006. It was estimated that a little more than 20 Hispanics would use hospice services in the service area per year. Regency and Odyssey deserve preference under this subsection and United to a lesser degree. The second preference shall be given to an applicant who proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost-effective alternative. Each of the applicants proposes to serve inpatients through contractual arrangements. No applicant is proposing a freestanding inpatient unit. Through its related skilled nursing facility in Santa Rosa County, United has an existing relationship with a health care facility that will be used to provide inpatient care. United did not include all of the room and board expenses for Medicaid nursing home patients in its financial projections. United provided unauthenticated letters of support to demonstrate that it will be able to offer inpatient services in Santa Rosa, Okaloosa, and Walton Counties. United expects to offer only one office (primary headquarters) in Santa Rosa County that would serve the four- county service area. United expects to establish working teams in the other counties. Regency does not have any directly affiliated inpatient providers. However, Regency has commitments to enter inpatient contracts with, among other facilities, three nursing homes operated by Sea Crest Management through mutual investors. These nursing homes are located in Destin and Crestview in Okaloosa County, and Pensacola in Escambia County. Regency also has a commitment from Healthmark Hospital in De Funiak Springs, Walton County. Although Odyssey did not include any letters of support from any potential inpatient service locations in its original CON application, it stated that it will contract with acute care providers and skilled nursing home facilities in the service area. (Odyssey's CON applications have general letters of support of its application.) At hearing, Odyssey provided letters of support from area nursing homes, including a memorandum of understanding from the administrator of Southern Oaks Nursing Home in Pensacola, a 210-bed facility, indicating a willingness to provide inpatient services for Odyssey patients. Each applicant can be expected to contract for inpatient services and satisfy this preference. The third preference shall be given to an applicant who has a commitment to service patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each of the applicants presented evidence demonstrating a history and commitment to serve such patients and have in place programs and policies to ensure that such services are provided. The fourth preference provides: "In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties." The two Service Area 1 existing hospice providers have their headquarter offices in Escambia County and there are currently satellite offices in Santa Rosa and Okaloosa Counties. There are no offices in Walton County, which is the smallest county of the four by population, 56,900 or approximately eight percent in 2006, but with the highest projected growth, 16,299, by percent, approximately 40 percent. Regency plans to open an office in Escambia and Walton Counties and an additional office in Fort Walton Beach along the Okaloosa County coastal area where neither existing providers have a current office location. Regency proposes the widest geographic coverage of offices of the three applicants, although the Escambia County office would add little. Its Walton County office would make it the only service provider with an office in that county. Odyssey plans to initially open an office in Escambia County and open an additional office in Okaloosa County starting toward the end of the second year of operation. Odyssey plans to open an office in Walton County in its third year of operation and a fourth office in Santa Rosa County six months thereafter. United proposes to open an office initially in Milton, Santa Rosa County. United proposes to have a dedicated hospice team in Walton County. No persuasive evidence was presented that residents of Walton County (or any other county in the service area) do not have access to hospice services or are actually underserved. The fifth and final preference provides: "Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare." All of the applicants meet this preference. Odyssey identifies several proposed services such as bereavement, pet, message, aroma, and music therapy, dialysis, palliative radiation, and palliative chemotherapy. United identifies similar services, although United provides bereavement coordination through either a social worker or chaplains. United does not allocate a specific position exclusively for bereavement. Regency identifies similar services such as bereavement following death, chaplain services, recruitment and training of volunteers, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities. (The bereavement services offered, as well as policies and procedures used by RHG's hospice programs, are similar.) Bereavement and volunteer services are not specifically reimbursed by Medicare, but they are conditions of participation. The State of Florida requires all hospice providers to serve indigent patients and the applicants agree to provide hospice services to all regardless of their ability to pay. § 400.6095(1), Fla. Stat. The applicants have established charitable foundations to provide assistance to the medically needy for services that Medicare does not reimburse. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. Each applicant provided letters of support ranging from three for Regency; approximately 20 for Odyssey; and 161 for United. Statutory Review Criteria Section 408.035(2), Florida Statutes - availability, quality of care, accessibility, and extent of Utilization The Agency published a fixed need for one additional hospice in the service area. See § 408.035(1), Fla. Stat. There is no persuasive evidence to rebut the presumption of need and all parties concur there is a need for one new hospice. The service area is served by two hospice providers: Hospice of the Emerald Coast with a market share of 14 percent and Covenant Hospice with a market share of 86 percent. The extent of utilization of the two providers results in the projection for unmet need of 450 hospice admissions in 2008 growing to an unmet need of 507 admissions in 2009. Regency, United, and Odyssey projected the following admissions for their respective second year or operation (2009): 496, 454, and 411. Each applicant can reasonably meet the projected need in conjunction with the existing providers. Neither of the current providers has offices located in Walton County or in the Fort Walton Beach coastal communities. Regency plans to locate offices in these areas, which may improve accessibility. Odyssey proposes to serve Walton County from its Pensacola office until it opens a Walton County office. United proposes to meet the needs in Walton County by establishing a dedicated hospice team there and by establishing an inpatient treatment center at an existing nursing home. Aside from the numeric need projections, there is no persuasive evidence that any geographic portion of the service area or any discreet population category, such as African- Americans, Hispanic, or by age and cancer versus non-cancer groups, needing hospice services are truly underserved, although there is evidence that there are some gaps in services for the existing hospice providers when compared to statewide numbers of hospice use. Section 408.035(3), Florida Statutes - ability to provide quality of care and record of providing quality of care Each applicant has a history of providing quality hospice services. Each applicant has reported overall good responses on patient and family satisfaction surveys. Each applicant proposes to provide a broad array of hospice services to all persons regardless of their ability to pay. It is expected that each applicant will continue to provide quality of hospice services as they have in their existing programs. Each applicant will staff its hospice programs according to national guidelines. Regency proposes to staff its program with nurses on a ratio of one nurse for every ten patients as opposed to the ratio of one nurse for every 12 patients (the National Hospice and Palliative Care Organization [NHPCO] standard) proposed by Odyssey and United. Regency proposes more home visits per week (five-to- six hours per week) and more direct care hours as a percent of total staff hours than Odyssey and United. (The national average is four visits per week.) Regency and Odyssey have developed service standards. All of the applicants propose to offer similar hospice services that are discussed herein. There is evidence that Regency, in its Birmingham program, accepts medically complex patients when other providers may not. There is no evidence that any Regency or United hospice program has been cited for conditional level deficiencies, whereas Odyssey has been cited in approximately three programs, although the specifics and severity of each deficiency is unclear. It appears the deficiencies have been cleared. T 1244-1252. Odyssey also operates under a CIA, unrelated to any quality of care concerns. RHG has a Doctor of Pharmacy (Pharm. D.) on staff who is experienced in hospice and palliative care pharmacy issues. Dr. Blodgett makes regular visits to the offices in Alabama and at least quarterly visits to each of RHG hospice programs in Georgia and South Carolina; participates in IDT meetings, quarterly in South Carolina and Georgia and on a regular basis in Alabama; and is available for consultations on a regular basis. Dr. Blodgett averages between four to five home visits while working for New Beacon in Alabama. She has not made house calls yet in Georgia and South Carolina, although she consults with nurses in those areas and provides training for the hospice staff. Having a Pharm. D. on staff is advantageous for a hospice program. Dr. Blodgett recounted several representative events when she was able to directly assist a patient in dire straits. Dr. Blodgett currently oversees all of Regency's local hospice operations in Alabama, Georgia, and South Carolina with a combined average daily census of 900 to 1,000 patients, roughly 600 at New Beacon and 350 at Regency Hospice. RHG contracts for pharmacy services when Dr. Blodgett is unavailable. Odyssey provides pharmacy services through a consulting contract arrangement with a specialized pharmacy that is co-located with odyssey at its Dallas, Texas, headquarters. The consulting pharmacy has a Pharm. D. and a pharmacist on staff to provide consulting services to Odyssey's programs. The Pharm D. does not provide home visits. UHS-Pruitt has a subsidiary company, United Pharmacy Services, headed by a Pharm. D., which provides pharmacy services to the company's long term nursing home facilities, including its affiliated nursing home in Santa Rosa County. Fifty percent of United Pharmacy Services business is unrelated to UHS. The Pharm. D. is not responsible for oversight of the hospice operations. There are two licensed pharmacists who are not Pharm. D.'s within United Pharmacy Services who provide training for hospice staff and provide consulting services as needed 24/7. As a normal practice, they do not provide medications for hospice patients who at home. They consult on every hospice admission. Odyssey Healthcare has operational experience in Florida with two hospice programs, beginning in 2004. No confirmed complaints have been reported by the Agency. (Regency and United do not operate hospice programs in Florida.) Odyssey also has contiguous hospice program across Perdido Bay in Alabama. Odyssey Healthcare operates 76 Medicare certified hospice programs (or seeking certification) in 30 states. Odyssey will adopt Odyssey Healthcare's quality and improvement plans and its operational policies and procedures. United has an existing relationships with related party providers, particularly its Milton nursing home in Service Area 1. The United family of health companies located there includes a skilled nursing home, pharmacy, durable medical equipment provider, and a therapy provider. These shared resources may increase efficiency for United's hospice program. It also provides United with local contacts with physicians, hospitals, and nursing homes. Of course, in time, it is reasonable that Regency and Odyssey would develop similar relationships, although having existing relationships is a plus for United. An issue was raised regarding the applicant's commitment to provide continuous care. For the second year of operation, Regency proposes 1.46 percent; Odyssey, 1.33 percent; and United, a negligible amount, although United expects to provide continuous care days as needed by its patients. Given its existing nursing home as a component of its corporate family, United naturally provides more services to patients in its nursing homes and nursing homes owned by others. Section 408.035(4), Florida Statutes - availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation Each of the applicants is a start-up company, relying on its parent organizations for financial and management strength. Each applicant has demonstrated sufficient resources to fund the start-up of a new hospice program. Controversies arose regarding when Regency and Odyssey would actually start-up operations following issuance of a CON and the amount each applicant allocated for start-up costs. Odyssey provided a start-up timeline in its application. The timeline assumes approximately six months from CON approval until Medicare certification. The timeline provides for approximately 60 days between licensure and Medicare certification. The timing of licensure and Medicare certification is imprecise at best. A provider is not entitled to reimbursement from Medicare until after certification. Operational expenses for treatment of patients between state licensure and Medicare certification would generally fall under start-up costs. Approximately three months prior to state licensure, Odyssey intends to hires a general manager who begins interviewing and hiring key staff. Other staff including the admission coordinator, RN, home health aide, dietician, social worker, and chaplain are hired in the third month. Odyssey projected its total project cost of $464,720 and total start-up costs of $350,000, with $240,000 allocated for salaries/benefits/taxes, over the six-month period from licensure approval until Medicare certification. (Odyssey exhibit 39 projects start-up expenses of $343,191.) Regency projected on Schedule 1 that its total project costs would be $195,745, with pre-opening staffing and recruitment costs of $36,500. Total start-up costs are projected at $60,000 for three offices. Mr. Morris joined RHG in February 2006. He is currently CEO for RHG and has experience with hospice programs. Subsequent to RHG's acquisitions, RHG started three hospice programs, one of which is a Medicare certified program in Augusta, Georgia, and two satellite offices. T 47, 50, 59-60, 62, 95-96. United projected on Schedule 1 that its total project costs would be $336,467, with total start-up costs at $57,257. According to Dr. Luke, if Odyssey's start-up model and time line is applied to Regency, i.e., month one is actual Medicare certification rather than licensure, Regency would need $543,408 in pre-opening expenses for the three offices it plans to open instead of $60,000 listed by Regency on Schedule 1. Odyssey also criticized United's projected start-up costs as too low based on Odyssey's six month start-up time line. United proposed it would hire most of its staff 30 days prior to licensure. United's vice president in charge of development who has started 15 to 20 hospice operations stated that it is a reasonable approach to hire, orient, and train staff one month prior to licensure. According to Dr. Luke, if Odyssey's start-up model and time line is applied to United, United would need $201,482 rather than $57,257 projected by United on Schedule 1. If month one is the month when United achieves licensure, then the start- up expenses would be $115,846 according to Dr. Luke. The persuasive evidence shows that Regency and United do not use the Odyssey start-up model and time line. Regency's pre-opening costs on Schedule 1 include only the pre-opening salaries prior to initial state licensure of the hospice rather than Odyssey's approach. The salary and wage expenses for Regency after initial licensure are included on its Schedule 8A projection of expenses, whereas it appears Odyssey started its Schedule 8A expenses on the date of Medicare certification. Dr. Luke agreed that this difference in approach would reduce his estimate of pre-opening expenses from $543,408 to $297,792. In other words, if Regency's month one, year one is licensure not certification, according to Dr. Luke, Regency's start-up expenses would be $297,792. Unlike Odyssey, Regency proposes to hire its local executive director one month prior to licensure. All of the additional patient care staff necessary to care for the low initial patient census in the first month of operation would also be hired and undergo training 30 days prior to licensure. Additional staff would be hired and start on day one of licensure and undergo training during the first month of operation while the patient census is in the ramp up stage. While Odyssey and Regency propose differing start-up models and time lines with differing hiring schedules and Regency's time line appears to be quite concentrated, both applicants have sophisticated parent company's who have experience with hospice operations, albeit that Odyssey has more experience than Regency or United with start-up hospice programs, especially in Florida where Regency and United have no experience and Odyssey has experience with two start-up hospice programs. (Regency has not done any start-up hospice programs in a state where either Regency or New Beacon had no presence, although it was noted by a witness that the markets were similar except for the CON process in Florida.) Like, Odyssey, United has start-up experience and given its time-line, its projected start-up costs are reasonable. The start-up costs and expenses projected by the applicants are reasonable, although it would appear the Regency's projected start-up costs may be overly optimistic. In any event, the parent organizations have sufficient funds to cover projected start-up costs and expenses. All of the applicants demonstrated they can recruit staff to adequately provide hospice services. Section 408.035(5), Florida Statutes - extent to which proposed services will enhance access to health care for residents of the service district There is a projected need for one additional hospice program in the service area. Approval of any of the applicants would enhance access to some degree and it is difficult to predict which applicant would enhance access the best. Regency proposes to open three offices immediately in Escambia, Okaloosa, and Walton Counties. Regency would have the only office offering hospice services located in Walton County. Covenant has an office in Niceville in Okaloosa County and not far from Fort Walton Beach, also a site proposed for a Regency office. The existing providers have their headquarters in Escambia County, also the location of Odyssey's headquarters and initial office. Thereafter, Odyssey plans to open offices in Okaloosa, Walton, and Santa Rosa Counties in this order. United plans to open its initial office in Santa Rosa County where its related nursing home is located. United plans to have dedicated hospice team in Walton County and perhaps a second office located there in the future. Of the three applicants, United would enhance access the least. The proposed office locations for Regency and to a lesser extent Odyssey would probably favor Regency rather than Odyssey, although it is one of degree. Some of the factors that favor Regency and Odyssey over United are: Regency and Odyssey expect to provide a specific percent of continuous care, 1.46 and 1.33, respectively; both project to serve more patients (by patient census) than United; both will focus efforts more on a service area wide basis than related nursing home patients in the case of United; and both will devote more FTEs for community hospice/education representatives and information materials than United. Section 408.035(6), Florida Statutes - immediate and long-term financial feasibility Short-term financial feasibility is considered to be the ability of an applicant to finance the start-up of operations. Each of the parent entities of the applicants has sufficient funds to finance the start-up of operations and, as a result, each applicant demonstrated immediate or short-term financial feasibility. Each of the financial projections relating to long- term financial feasibility submitted by the applicants has problems. There is no rule or statute that expressly defines long-term financial feasibility, notwithstanding the requirement that an applicant provide the Agency with detailed financial projections, including a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. § 408.037(1)(b)3., Fla. Stat. The applicants provided financial projections for two years of operation. Thus, as identified by the applicants, long-term financial feasibility relates to whether an applicant has the ability to break even or show a profit by the end of the second year of operations. See generally T 1412, 1533. Regency's errors including typographical errors, admittedly small (the inclusion of Medicare revenue that would not be received for the first 45 days to two months of operation while the hospice program would not yet have Medicare certification), would not affect the projected long-term financial feasibility of its project. The errors affect the year one projections only and resulted in a projected write-off of approximately $31,000 or an increase to the projected loss of approximately $31,000. Regency shows a profit in year two. Also, regardless of whether Regency's projection of pre-opening expenses is reasonable or not, which it appears to be, Regency has adequate cash on hand to open its three proposed offices and the pre-opening expense if greater than projected is not likely to affect long-term financial feasibility. United's financial schedules contained an error by omitting the room and board expenses for Medicaid nursing home residents who receive hospice care. This failure to include the full cost of inpatient care would result in a shortfall in the pro forma of between $50,000 to $150,000 and potentially $373,000 in year two of operation. United also explained that it used a conservative number of patient days on its financial schedules. It is likely that if United had used a mean average length of stay rather than a median length of stay, the projected revenues would likely have increased although offset by increasing expenses. In other words, it would have increased the average daily census and thereby increased the revenues. Mr. Shull testified that he expected that the United proposal would be financially feasible in the long-term based on the experience in its other hospice programs. Odyssey's financial projections were the subject of focus by the applicants. See, e.g., Odyssey's PRO at paragraphs 53-55; Regency's PRO at paragraphs 203-210; and United's PRO at 43-45. On Schedule 6, an applicant sets forth its projected staffing for the project. When reporting full time equivalents (FTEs) for staffing, the Agency does not proscribe the specific format to be used. On its original Schedule 6 contained in the application, Odyssey set forth the number of year-end FTEs as opposed to using a weighted average of FTEs for the year. Regency suggested that, as a result of Odyssey's portrayal of staffing information, there was no link between Odyssey's Schedule 6A FTEs and salaries and the expense for staff's salaries and wages on Schedule 8A. Regency also contended that Odyssey did not account for staffing expenses associated with the provision of respite care and continuous care. Further, although Odyssey proposes to spend $25,000 in community outreach and marketing programs in its first two years of operation, that expense was not included in its pro forma projections. Odyssey prepared numerous exhibits, including revisions, that deal with these areas and various witnesses explained and offered rebuttal in response. Regarding the continuous care/respite issue, if appropriate revisions are made to Odyssey's pro forma, on paper, there is likely to be a projected net loss in year two of approximately $100,000. Odyssey proposes changing the 13.5 percent management fee that was included in the application to a seven percent management fee. Odyssey Healthcare's two not-for-profit Florida hospice entities are charged a seven percent management fee, similar to the fee it charges to other not-for-profit subsidiaries. Odyssey's proposed seven percent management fee is in line with the management fees proposed by Regency (7.2 percent) and United (6.3 percent). It appears reasonable to charge not-for-profit entities a lower fee because these entities would not be charged with the home office costs associated with various regulatory filings associated with being a publicly traded company. On the other hand, other than perhaps being a mistake, Odyssey's rationale for charging a different management fee for the applicant, a for-profit entity, T 1039, than other related for- profit entities is a departure from the norm. Changing the management fee and accounting for all of the adjustments to its financial schedules would result in Odyssey showing a year two profit of approximately $80,000. Section 408.035(7), Florida Statutes - extent to which proposal will foster competition that promotes quality and cost- effectiveness Approval of any of the applicants is likely to foster competition, thereby improving quality and cost-effectiveness in the service area, although there is no evidence that the current providers do not provide quality of care or are not cost- effective. Hospice services are not price competitive because Medicare pays a flat per diem rate to all providers in a given area and the vast majority of hospice patients are Medicare patients. Each provider has the ability to increase community awareness of available hospice services thus increasing the opportunity for increasing market penetration of all providers. United has existing linkages in the community that it serves through its related nursing home and other related companies. United's prospects of achieving cost-efficiencies and economies of scale are increased because of these relationships. Regency and Odyssey can also achieve similar efficiencies through their existing relationships with related entities. Having an office in a particular county such as Walton County, would most likely establish and promote a presence in the area that would be beneficial given its rural setting. However, it was not persuasively proven that opening more versus fewer offices in the short-term is more beneficial to the potential hospice patient pool from the standpoint of actually promoting cost-effectiveness and quality of care, although it does increase the physical presence of a hospice provider and give potential patients more choices. Section 408.035(8), Florida Statutes - costs and methods of construction, etc. None of the applicants are proposing construction as part of their hospice programs, thus, this criterion is not applicable. (Section 408.035(10), Florida Statutes, is also not applicable.) Section 408.035(9), Florida Statutes - the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent All of the applicants propose to serve all eligible patients without regard to ability to pay and have a history of providing patient care to the medically indigent. All of the applicants have allocated patient days to serving, e.g., Medicaid patients. Regency offered to provide 2.5 percent of patient days to the medically indigent as a condition on the CON. Odyssey and United did not offer a similar condition. However, the Agency states in the SAAR that "[b]ecause hospice programs are required to provide services to anyone seeking them, CON conditions are not necessary to ensure such care is given." AHCA 1 at 6. Ultimate findings of fact The Agency determined that there is a numeric need for one additional hospice program in the service area. On balance, each of the applicants satisfies the applicable statutory and rule criteria, although the projected long-term financial feasibility by year two on paper of United's proposal was not proven. This proceeding involves a close question. The Agency preliminarily approved Regency's application. The only evidence of the Agency's rationale for its position is stated in the SAAR, which does not include consideration of the facts presented in this de novo hearing. Each of the applicant's related entities has experience starting-up, owning, and operating hospice programs with Odyssey related entities operating two programs in Florida unlike Regency and United. Each applicant's related hospice entities provide a broad array of hospice services to all persons regardless of their ability to pay, race, severity of illness, or setting where hospice services need to be provided. Each applicant demonstrated a history of service, by related entities, to Medicaid and medically indigent patients. The residents of the service area would benefit regardless of which applicant is approved. The applicants are committed to community outreach and can be expected to heavily market their services. All of the applicants demonstrated that they will actively recruit needed personnel. United's presence in the service area may give United an edge with regard to recruitment, but if so, the edge is slight. Consistent with NHPCO standards, Odyssey and United propose a ratio of one nurse for every twelve patients. Regency proposes a better ratio: one nurse for every ten patients. Regency's Pharm. D., although spread thin given the number of hospice programs served by Regency's related entities in three states, is a positive feature. Despite correcting errors in its financial projections, Regency demonstrated financial feasibility in year two of operations and should receive a comparative advantage. Odyssey and United had problems with proving long-term financial feasibility. Odyssey, after revisions to its financial schedules and reducing the proposed management fee, demonstrated financial feasibility by year two. United can expect to have a loss in year 2, but like Odyssey, its parent organization has a strong financial position and is committed to the project such that it is likely to be financially feasible beyond year two. Regency expects to initially open three offices and, in particular, one in rural Walton County. Odyssey plans to open an office in each county within the service area, although staggered. United plans to open one office initially and takes a wait and see approach regarding opening other offices. The approach of United and to a much lesser extent Odyssey, require less overhead expense but is not necessarily appropriate given the need for an additional hospice services over a four-county area, although the need projection does not indicate which portion or portions of the service area need the additional program the most or where underserved persons may be located, although there are gaps in service. Regency should receive a slight advantage for proposing to offer slightly more continuous care than Odyssey and a greater advantage over United, which expects to provide the service, but did not allocate a specific percentage of care. United receives an edge given its established relationships in the service area by and through its related service providers. The United family includes a nursing home, pharmacy, durable medical equipment provider, and a therapy provider. It gives United the opportunity to share resources among programs to increase efficiency. Odyssey receives a plus given current operations in Florida and contiguous operations across Perdido Bay in Alabama. Odyssey Healthcare's prior problems with the federal government, Medicare cap issues, and unfavorable surveys detract from the overall positive features of Odyssey's proposal. Regency has had one Medicare cap issue. United does not share these problems. Overall, and in a tight comparative review hearing, the persuasive evidence favors Regency followed by Odyssey with United closely behind Odyssey.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving of Regency's CON No. 9971 and denying United's CON No. 9955 and Odyssey's CON No. 9954. DONE AND ENTERED this 30th day of April, 2008, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2008.
The Issue The issue is whether Petitioner’s application for a Certificate of Need to establish a new hospice program in Hospice Service Area 8B should be approved.
Findings Of Fact Parties (1) Hope Hope is a not-for-profit corporation. Hope has operated a hospice program in SA 8C -- Lee, Glades, and Hendry Counties –- since 1981. Hope is the sole provider of hospice services in SA 8C. Hope’s SA 8C hospice program is one of the largest hospices in Florida; in 2003, it had more than 3,200 admissions. Hope is licensed by the Agency and it is a Medicare- certified provider. Hope was accredited by the Community Health Accreditation Program (CHAP) in December 2003. CHAP is a nationally-recognized accrediting body for hospices. Hope’s main office is in Ft. Myers, which is in central Lee County. Hope also has offices in Lehigh Acres, which is in eastern Lee County, and a counseling center in Boca Grande, which is in northwest Lee County. Hope currently has approximately 50 inpatient hospice beds where it provides inpatient and respite care. Those beds are located in “hospice houses” in Ft. Myers and Cape Coral, which are both in Lee County. Hope has Agency approval for an additional 24 inpatient hospice beds. Those beds will be located in a “hospice house” that is currently under construction in Bonita Springs, which is also in Lee County. In addition to its Lee County offices and inpatient facilities, Hope has offices in Clewiston and Buckhead Ridge. Clewiston is in Hendry County, and Buckhead Ridge is in Glades County. Hope’s Clewiston office opened in 1996, and its Buckhead Ridge office opened in 2001. Prior to opening those offices, Hope served Glades and Hendry Counties from its Lehigh Acres office, which opened in 1993. Hope divides its patients amongst four care teams, each of which serves patients in a specific geographic region of SA 8C. One team serves patients in and around Lehigh Acres, Clewiston, and Buckhead Ridge; one serves patients in Cape Coral and Pine Island; one serves patients in Ft. Myers and North Fort Myers; and one serves patients in South Fort Myers and Bonita Springs. Each of Hope’s care teams includes multiple nurses, social workers, home health aides, chaplains, therapists, volunteers, and other professionals involved in the hospice care provided to Hope’s patients. The staffing of the care teams is sufficient to deliver high quality hospice care to the group of patients being served by each care team. Hope does not have a separate clinical admissions team; an “admission specialist,” whose function is more clerical than clinical, typically is the first Hope employee to visit the patient after he or she is referred to Hope. The admission specialist begins processing the patient's admissions paperwork; the initial clinical assessment of the patient and the completion of the admissions process occurs later that day, or sometimes the following day, when the patient is evaluated by a nurse and a social worker. The nurse and social worker that do the initial clinical evaluation of the patient are typically the same individuals that will be caring for the patient after he or she is admitted to Hope. The primary purpose of having the nurse and social worker that will be caring for the patient do the initial evaluation is to enhance continuity of care. Hope adheres to the “open access” philosophy, which is embodied in the “Hospice Service Guidelines” published by the National Hospice and Palliative Care Organization (NHPCO). NHPCO is the national trade association of hospices. The Guidelines are different from the “Standards of Practice for Hospice Programs,” which is also published by NHPCO. The Standards of Practice document was not introduced into evidence in this proceeding. The “open access” philosophy embodied in the Guidelines is not yet the standard of practice in the hospice industry; it is an “expectation” or benchmark that industry is moving towards. The goal of “open access” is to remove or minimize all barriers to accessing hospice care, including barriers associated with the availability of palliative chemotherapy and palliative radiation treatment. Proactive education and outreach activities to the community and to physicians and other referral sources is also part of the “open access” philosophy. As stated in Hope’s PRO and as more fully discussed below, Hope has adopted a “sales and marketing model” that it uses to “outreach to physicians and other referring entities, in order to enhance referrals and access to care.” Hope has recently won several national awards, including the 2003 Circle of Life Citation of Honor from the American Hospital Association and NHPCO for its “open access” policies, and the 2003 Pinnacle Award from the American Pharmacists Association Foundation for its pain and symptom management protocols. Hope is a financially-sound organization. Its audited financial statements from September 30, 2002, reflect that it had unrestricted net assets of $19.6 million, including $7.8 million in cash and $5.5 million in other current assets. Hope is a profitable organization. It had operating income of $4.65 million and $3.45 million during its fiscal years ending September 30, 2001 and 2002, respectively. Hope is a successful fundraising organization. Its financial statements reported contributions of approximately $2.9 million and $2.4 million for the fiscal years ending September 30, 2001 and 2002, respectively. Hope regularly distributes newsletters about its hospice program to the community and to physicians. Its community newsletter is published quarterly and is sent to approximately 30,000 persons; its physician newsletter is published bi-monthly and is sent to approximately 1,500 physicians and their staff. Hope’s employees regularly hold workshops and make presentations to community organizations, nursing homes, churches and other entities about the hospice services provided by Hope and the general benefits of hospice. Those community education and outreach efforts are only a small part of the “community development” activities that Hope uses to attract patients. Indeed, as discussed in Part F(2)(c) below, the primary focus of Hope's community and professional relations staff is to build and maintain relationships with physicians (primarily oncologists) and health care facilities that refer patients to Hope. Hope provides access to all hospice-eligible patients who request hospice services without regard to the patient’s ability to pay or payer status. (2) HON HON is a not-for-profit corporation. HON has operated a hospice program in SA 8B -– Collier County –- since 1983. HON is the sole provider of hospice services in SA 8B. HON is licensed by the Agency and it is a Medicare- certified provider. HON was certified by the Joint Commission on Accreditation of Health Care Organizations (JCAHO) in August 2001, and it was recently re-certified. JCAHO is a nationally- recognized accrediting body for hospices and other types of health care facilities. HON has five physical locations in Collier County. Four of the locations are west of Interstate 75 in or around Naples; the fifth location is in Immokalee, which is a rural community approximately 40 miles east of Naples. HON has approximately 30 inpatient hospice beds where it provides inpatient and respite care. Sixteen of the beds are in a “hospice house” that is co-located with HON’s main office in central Naples, and the remainder of the beds are located in space that HON leases from a nursing home in northern Naples. The beds at the nursing home opened in March 2003, and the “hospice house” opened in October 2003. Prior to opening those inpatient units, HON provided inpatient and respite care to its patients at Naples Community Hospital (NCH) pursuant to a contract. The NCH beds are still available to HON, as needed. HON had approximately 1,300 admissions in 2003, and at the time of the hearing, its average daily census (ADC) was approximately 245 patients. HON’s admissions and ADC have steadily grown since its inception, and absent a material change of circumstances (such as the approval of Hope’s CON application), the growth trend at HON is expected to continue as a result of the projected population growth in SA 8B and HON’s increasing penetration rate. HON provides hospice care to its patients through three care teams, which are based out of offices in and around Naples. The north care team serves patients in the northern portion of Collier County, including the Immokalee area. The south care team serves patients in the southern portion of the county. The central care team serves “specialty” patients throughout the county, which include patients residing in long- term care facilities and patients whose primary language is not English. Each care team includes one physician, a nurse manager, six-to-eight nurses, two-to-three social workers, a chaplain, three home health aides, a bereavement counselor, a volunteer coordinator, and a clerical support person. The staffing of the care teams is sufficient to deliver high quality hospice care to the group of patients being served by each care team. The only staff person based out of HON's Immokalee office is a social worker, but the members of the north care team who serve patients in the Immokalee area use the office for charting and other purposes. In addition to the care teams described above, HON has separate admissions teams consisting of nurses and social workers that are responsible for conducting the initial patient assessment and completing the admissions paperwork once a patient is referred to HON. HON’s admissions teams conduct admissions 24 hours a day, seven days a week. The admissions team nurses and social workers that conduct the initial patient assessment are not the same nurses and social workers that will be caring for the patient once he or she is admitted to HON. After admission, the patient will be assigned to one of the three care teams –- northern, central, or southern -– identified above. HON is a fiscally-sound organization. As of December 31, 2003, it had net assets of approximately $16.1 million, and no long-term debt. HON is a profitable organization. In 2003, HON had total revenues of approximately $15.5 million and net income of approximately $3.3 million. HON is a successful fundraising organization. It raised all of the funds necessary to construct its main office in 1992, and between August 2001 and December 2003, it was able to raise $10 million to improve its main office, expand its services, and construct its “hospice house.” HON holds a number of well-established fund-raising events in Collier County each year, which raise between $350,000 and $400,000 in donations annually. Those donations account for approximately one-third of HON’s annual donations. HON’s success in its fund-raising efforts is a reflection of the community’s support for, and its perception of HON, both historically and on an on-going basis. HON has approximately 230 employees, including full- time, part-time, and per diem staff. HON currently employs a full-time medical director, and five other physicians on a full-time or part-time basis. Prior to April 2003, however, the medical director was the only physician employed by HON. HON operates an extensive community education program about the hospice services that it provides. The program includes newsletters and regular participation in and presentations to a variety of community groups by HON employees. HON does not specifically focus on increasing referrals through sales and marketing efforts directed to oncologists or other physicians. HON provides a number of free services to the residents of Collier County in addition to the services that it provides to its hospice patients that are not reimbursed by Medicare. For example, HON provides a psychologist who conducts grief workshops for children in the community who have lost loved ones through death, and it provides counselors and other assistance to the Alzheimer’s Support Network in Naples to help the Network develop and implement programs for managing grief in Alzheimer’s families. HON provides access to all hospice-eligible patients who request hospice services without regard to the patient’s ability to pay or payer status. (3) Agency The Agency is the state agency that administers the CON program, and it is responsible for reviewing and taking final agency action on CON applications. Application Submittal and Review and Preliminary Agency Action The FNP published by the Agency for the April 2003 batching cycle identified a need for zero new hospice programs in SA 8B. That determination was challenged by Hope, but the challenge was subsequently withdrawn. Hope timely filed a letter of intent and a CON application in the April 2003 batching cycle through which it sought to establish a new hospice program in SA 8B, which is immediately to the south of SA 8C where Hope currently provides hospice services. Hope's SA 8B application was designated as CON 9695 by the Agency. In the same batching cycle, Hope also filed an application to establish a new hospice program in SA 8A, which is immediately to the north of SA 8C. That application is the subject of another pending proceeding at the Division, DOAH Case No. 03-2013, etc. Hope’s application complied with all of the applicable submittal requirements in the statutes and the Agency’s rules. The application was complete and all applicable filing fees were paid. The Agency comparatively reviewed Hope’s application with the CON application filed by Heartland, which also sought to establish a new hospice program in SA 8B. The Agency’s review complied with all of the applicable requirements in the statutes and the Agency’s rules. On August 22, 2003, the Agency issued its State Agency Action Report (SAAR), which summarized its comparative review of the applications filed by Hope and Heartland and recommended denial of both applications. The Agency published notice of its decision to deny Hope's and Heartland's applications in the September 12, 2003, volume of the Florida Administrative Weekly as required by the statutes and the Agency's rules. Hope and Heartland timely challenged the denial of their respective applications. Heartland withdrew its challenge to the denial of its application prior to the final hearing, and it did not participate in the hearing in any way. The Agency reaffirmed its opposition to Hope’s application at the hearing through the testimony of Jeffrey Gregg, the Bureau Chief of the Agency’s CON program. Hospice Care, Generally Hospice care is provided to patients who are at or near the end of their lives. To be eligible for hospice care, the patient must have been diagnosed with a terminal illness from which the patient is expected to die within six months if the disease runs its normal course. Hospice care is considered palliative care rather than curative care. The purpose of palliative care is to provide comfort to the patient rather than to cure the patient. Curative care is inconsistent with the eligibility requirement for hospice that the patient's illness be terminal. Hospice care includes a comprehensive range of services provided by physicians, nurses, social workers, chaplains, therapists, and volunteers, which address the psychosocial and spiritual needs of the patient in addition to the physical pain associated with the dying process. Hospice care also includes services provided to the patient’s family, including grief counseling during the dying process and after the patient’s death. Hospice care is collaboratively provided through care teams, or interdisciplinary teams (IDTs), which are composed of individuals in the various disciplines identified above. There are four general types or “levels” of hospice care: routine home care (RHC), continuous care, inpatient care, and respite care. More than 80 percent of all hospice care is RHC. The types of services provided in RHC vary based upon the patient’s needs, but they typically include health care services provided by a nurse or a home health aide and counseling provided by a social worker or chaplain. RHC is provided in the patient’s home. Continuous care involves the full-time placement of a nurse or home health aide in the patient’s home to manage a medical crisis that might otherwise require inpatient care. Inpatient care is for the management of a medical crisis or pain that is out of control. It is provided at a licensed inpatient hospice facility (commonly referred to as a “hospice house”) or at an acute care hospital pursuant to a contract between the hospice and the hospital. Respite care allows the patient to be temporarily relocated to a nursing home, hospital, or “hospice house” to give the patient's primary caregiver a break. Hospice care is covered by Medicare, and Medicare is the largest payer source for hospices, both generally and specifically in Hope’s and HON’s hospice programs. Medicare pays a per diem rate to the hospice that varies based upon the type of care being rendered. For example, the per diem rate for RHC in 2003 was approximately $115. The hospice receives the per diem rate for each patient, whether or not services are provided to the patient on a given day. Medicare-certified providers such as Hope and HON are required to comply with the Conditions of Participation in the Medicare regulations, 42 CFR Part 418, in order to receive reimbursement from Medicare for the hospice services that they provide to their patients. Hope and HON are also required to comply with the state licensure requirements in Part IV of Chapter 400, Florida Statutes, and Florida Administrative Code Rule 58A-2. The Medicare regulations require hospice providers to directly provide certain “core” services, including nursing, social work, and counseling. Other services, such as physician services, therapies, and medications, may be provided through third parties pursuant to a contract with the hospice. The Medicare regulations make the hospice responsible for all medical tests, durable medical equipment, biologicals, and other medically necessary services related to the patient’s terminal illness once the patient elects the Medicare hospice benefit. Hospices are required to admit hospice-eligible patients without regard to the patient’s ability to pay, and as stated above, Hope and HON each do so. The Medicare regulations require hospices to have a medical director, who is responsible for the overall medical supervision of the hospice's patients and for setting medical policies and procedures for the hospice. The medical director, or his or her physician designee, is required to participate in the development and maintenance of each hospice patient’s care plan. The patient’s care plan is required to be developed when the patient is first admitted to hospice, and it is required to be continually updated as warranted by the patient’s condition and needs. Development of the care plan is to be a collaborative process involving the hospice medical director, the IDT, any consulting physicians, the patient, and the patient’s family. There are four classes of physicians commonly involved in hospice care: referring, attending, consulting, and hospice. The referring physician is the physician that refers the patient to hospice after determining (in conjunction with the hospice medical director) that the patient is eligible for hospice. The attending physician is the physician that is primarily responsible for the patient’s care once the patient becomes a hospice patient. The consulting physician is a physician, typically one with some sort of specialty (such as oncology), who is consulted by the attending physician while the patient is a hospice patient. The hospice physician is the medical director of the hospice or other physician employed by the hospice. The attending physician will either be the referring physician or the hospice physician, depending upon whether the referring physician is comfortable with having primary responsibility for the patient’s care once the patient becomes a hospice patient. A referring physician who chooses not to be the attending physician might become a consulting physician, which is particularly common when the referring physician is a specialist such as an oncologist. The hospice physician is the attending physician for a majority of the patients at both Hope and HON. In order for a patient to be admitted to hospice, the hospice medical director must agree with the referring physician's assessment that the patient has a terminal illness that is expected to run its course in less than six months. Once a patient is admitted to hospice, the only physician who can separately bill Medicare for services rendered to the patient is the attending physician. For services rendered by the attending physician related to the patient’s terminal illness, the “professional component” (i.e., the patient examination or other hands-on physician care) of the attending physician’s bill is submitted to and reimbursed by Medicare; the “technical component” of the attending physician’s bill (e.g., medical tests, drugs administered) is submitted to and reimbursed by the hospice. For services unrelated to the patient’s terminal illness, the attending physician’s entire bill is submitted to Medicare for reimbursement. The hospice is not responsible for any portion of the bill. Other physicians, such as consulting physicians, submit their bills to the hospice rather than to Medicare. The hospice pays the consulting physician’s bill in the first instance. The professional component of the bill is then submitted by the hospice to Medicare for reimbursement above and beyond the per diem rate paid to the hospice; the technical component of the bill is paid by the hospice without any additional reimbursement from Medicare. Medicare contracts with a fiscal intermediary who is responsible for reviewing bills from Medicare-certified providers to determine whether the treatment was actually rendered and whether it was medically necessary and appropriate; however, because the technical component of the consulting physician's bill is paid by the hospice, not Medicare, it is not subject to review by the fiscal intermediary. Medicare reimburses physician services at a standard rate, which is typically referred to as the “Medicare allowable rate.” Generally, it is beneficial to the patient for hospice care to be initiated as early as possible after the patient is determined to meet the hospice eligibility criteria so that the patient and his or her family receives as much support as possible during the dying process. As a result, longer lengths of stay in hospice can be viewed as beneficial. Longer lengths of stay can also be viewed as detrimental to the extent that they are being motivated by the financial interests of the hospice and/or the consulting physicians, who each have the potential to benefit financially from a patient living longer in hospice. The hospice benefits because it receives a per diem payment for each day that the patient is enrolled in its program, and as discussed in Part F(2)(c) below, the consulting physician can benefit if he or she is able to continue to provide services to the patient that he or she otherwise may not have be able to provide without having to justify the medical appropriateness of the services. Longer lengths of stay are not necessarily an indicator of hospice quality of care, which depends more upon the services that the patient is receiving from the hospice than the length of time that the patient is enrolled in hospice. Longer lengths of stay are an indicator of the accessibility of hospice care because they tend to reflect that patients are being referred to, and admitted into hospice earlier in the dying process. Penetration rates, which are the ratio of hospice admissions in a service area (by age/disease cohort or overall) to the total number of deaths in service area (by age/disease cohort or overall), are a more well-accepted measure of the accessibility of hospice care than are lengths of stay. The FNP formula used by the Agency to determine need for additional hospice programs in a service area is driven in large part by the penetration rates achieved by the existing hospice(s) in the service area. Hospices in Southwest Florida and Relevant Demographics of Hospice Service Areas 8B and 8C Southwest Florida is divided into three hospice service areas, 8A, 8B, and 8C. SA 8A consists of Charlotte and DeSoto Counties; SA 8B consists of Collier County; and SA 8C consists of Lee, Glades, and Hendry Counties. Each of those service areas currently has a single hospice provider: Hospice of Southwest Florida, Inc., in SA 8A; HON in SA 8B; and Hope in SA 8C. There are no approved, but not yet licensed hospice programs in any of those service areas. The 2002 population of SA 8B was approximately 276,000. The population is projected to grow by 21.3 percent over the next five years. Approximately 24 percent of the SA 8B population is in the 65 and older (“65+”) age cohort, which is higher than the statewide average of 17 percent. The 65+ age cohort is the group most likely to utilize hospice services. 108. The three-year average death rate in SA 8B is 0.009131, which is slightly lower than the statewide average of 0.010218. 109. The number of deaths in SA 8B is projected to increase by 14.1 percent -- from 2,398 to 2,736 -- over the July 2004 through June 2005 planning horizon applicable to this case. Spanish is the most common second language in SA 8B, and it is particularly prevalent in and around the Immokalee area. SA 8B and SA 8C are similar in that most of the population is concentrated in the western portions of the service areas along the coast and the eastern portions of the service areas are rural and sparsely populated. SA 8B and SA 8C are also demographically similar. For example, both service areas are less densely populated than the state as a whole; both service areas are growing at a faster rate than the state as a whole; the percentage of each service area’s population in the 65+ age cohort is the same and is higher than the statewide average for that age cohort; the median household net worth in both service areas is higher than the statewide average; both service areas had similar mortality rates and a similar array of causes of death for their residents; and both have a single, well-established hospice provider. Because of the similarities between SA 8B and SA 8C, they should have similar hospice penetration rates. Any material differences between the penetration rates in the service areas can be attributed to differences in the management and operation of HON and Hope. For calendar year 2002, which is the period reflected in the FNP, the overall penetration rate for SA 8B (44.3 percent) was higher than the overall statewide penetration rate (43.8 percent), but it was significantly lower than the overall penetration rate for SA 8C (54.7 percent). The data for calendar year 2003, which was the most current available at the time of the hearing, reflects a significant increase in the overall penetration rate in SA 8B to 53.7 percent. That rate is higher than the statewide penetration rate of 48 percent, and it is only slightly lower than the 55.3 percent penetration rate in SA 8C. Hope’s Proposed SA 8B Hospice Program Hope’s proposed SA 8B hospice program is essentially an expansion of its existing SA 8C program’s service area. The policies and procedures that Hope utilizes in its existing program will be implemented in its proposed SA 8B program. The policies include Hope’s commitment to serving patients and families without regard to caregiver status, homelessness, or HIV/AIDS status, and without regard to their ability to pay. The procedures include the protocols and algorithms used by Hope’s nurses to help them manage the most common pain symptoms found in hospice patients, including anxiety, fatigue, and depression, as well as Hope's detailed protocols for pediatric hospice patients. The protocols are used by the hospice nurses as a guide in the assessment of the patient; the identification of treatment options; the administration of medications, when indicated and pre-authorized by the physician; and the facilitation of the nurse’s communications with the physician and pharmacist about the patient’s condition and course of treatment. Hope intends to establish an office in Naples to serve central and south Collier County. The office will be located in leased space; no new construction is proposed. Hope intends to serve northern Collier County from its existing Bonita Springs office, which is in Lee County close to the border of Collier County. Hope intends to serve the Immokalee area from its existing Lehigh Acres office, which is closer to the Immokalee area than is Naples. Additionally, Hope conditioned the approval of its application on its establishment of a “counseling and education center” in Immokalee during the first two years of operation of its proposed SA 8B hospice program. Hope is not proposing any inpatient hospice beds as part of its SA 8B program. Hope intends to provide inpatient and respite care through contractual arrangements with existing nursing homes and hospitals in Collier County and/or through the use of its inpatient facilities in Lee County. Hope’s proposed SA 8B hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social services, and all other services required by state and federal law. Hope intends to provide services that are not reimbursed by Medicare or other insurance, such as bereavement services, chaplain services, and massage, music, art, and pet therapies. Hope currently provides those services in its existing hospice program in SA 8C. Hope expects to receive the vast majority of its referrals to its proposed SA 8B hospice program from physicians’ offices, which is consistent with its experience in SA 8C. Hope projected in its CON application that a majority of its patients from Service Area 8B will have diagnoses other than cancer, which is consistent with HON's experience in SA 8B. Hope projected in its application that approximately 86 percent of the admissions at its proposed SA 8B hospice program will be Medicare patients, approximately six percent of the admissions will be Medicaid patients, and approximately two percent of the admissions will be charity patients. The application states that these figures are consistent with Hope’s experience in SA 8C, and the evidence establishes that they are reasonable. Hope projected in its application that its proposed SA 8B hospice program will have 183, 259, and 304 admissions in its first three years of operation. By the seventh year of operation, Hope projected that its proposed SA 8B hospice program will have 529 admissions. Those figures represent 15 percent (year 1), 20 percent (year 2), 22 percent (year 3), and 30 percent (year 7) of the projected hospice admissions in SA 8B. Those market shares are at the high end of the range of the market shares achieved by other recent start-up hospice programs that entered into single-provider markets; however, under the circumstances of this case, the market shares projected by Hope are actually somewhat understated. In projecting the total number of hospice admissions in SA 8B, Hope assumed that the overall penetration rate in the service area would increase each year based on its presence in the market. The assumption of an increasing penetration rate is reasonable, but attributing that increase to Hope’s presence in the market is not. Indeed, the evidence reflects that penetration rate in SA 8B has been steadily increasing over the past several years to levels consistent with and even higher than the rates projected by Hope in its application. Hope’s projected admissions translate into ADCs of 32.9 patients (year 1), 51.4 patients (year 2), 61.6 patients (year 3), and 107 patients (year 7). The ADC figures are based upon a 65.7-day average length of stay (ALOS) in year one, which increases to 74-day ALOS in year seven. The ALOSs and ADCs projected by Hope are consistent with Hope’s experience in SA 8C and are reasonable in light of Hope’s “open access” policies. The methodology used to calculate the projected admissions and the ADCs is reasonable, and Hope will be able to achieve its projected utilization levels. Indeed, as more fully discussed in Part G below, the projected admissions are actually understated because the penetration rate and market share assumptions made by Hope are too low. Hope projected in the application that the total project costs for the establishment of its proposed SA 8B hospice program will be $144,208. The largest line-item cost -- $59,818 –- is for “preoperational staffing, recruiting and training.” The projected costs are reasonable. Hope intends to fund the costs of its proposed SA 8B hospice program with "cash on hand" and operating revenues from its existing SA 8C hospice program. Hope has sufficient financial resources to fund the costs of its proposed SA 8B hospice program along with its other ongoing capital projects, including its proposed establishment of a hospice program in SA 8A. Hope projected in its application that it will need 12.88 full-time equivalents (FTEs) to staff its proposed SA 8B hospice program in its first year of operation, and that it will need an additional 7.12 FTEs (for a total of 20 FTEs) in its second year of operation. It was stipulated that the projected staffing levels are reasonable, and the evidence establishes that Hope will be able to recruit the necessary FTEs at the salaries projected in its application. In addition to the FTEs projected in the application, Hope will utilize volunteers to “provide both patient and administrative support.” Hope projects that its proposed SA 8B hospice will have approximately one volunteer per patient, or approximately 30 volunteers in the first year of operation and 50 volunteers in the second year of operation. Hope has been successful in recruiting and retaining volunteers in SA 8C. It will likely be able to recruit and retain sufficient volunteers for its proposed SA 8B hospice program despite the seasonal fluctuations in the availability of volunteers in SA 8B; indeed, SA 8C experiences similar seasonal fluctuations in the availability of volunteers. The payer mix and revenues projected in Schedule 7A of Hope's application and the expenses projected in Schedule 8A of the application are reasonable. Hope projected in its application that its proposed SA 8B hospice program would generate a net loss from operations of $18,509 in its first year, and that it would generate a net profit from operations of $87,027 in its second year. These projections are reasonable. Hope projected that it will have non-operating revenue of $63,310 and $92,697 in the first and second years of operations. Those amounts include “donations/memorials and bequests” that Hope expects to receive as well as a net of $10,000 -- $15,000 in revenues and $5,000 in expenses -- in fundraising revenues. Although Hope’s application states that the fundraising revenue “included in the financial projections is in line with the historical experience at Hope Hospice,” Hope’s audited financial statements reflect that Hope received contributions of $2.47 million and $2.97 million for the fiscal years ending September 30, 2001 and 2002, respectively. Even if 33 percent of those contributions were attributed to fund- raising expenses, which is the ratio used in the application to project the fundraising income, the $10,000 of net fund-raising revenue projected by Hope for its proposed SA 8B program is significantly understated.1 Alleged “Special Circumstances” Hope identified five “special circumstances” in its CON application which, in its view, support the approval of its proposed SA 8B hospice program. As more fully discussed below, the preponderance of the evidence does not support Hope’s claims. Inadequate Service to Persons Under 65 The first special circumstance alleged in Hope’s CON application is that persons under the age of 65 are being underserved by HON. The justification offered by Hope for this special circumstance was statistical data; there was no testimony from physicians or community witnesses related to this special circumstance. The primary statistical data relied upon by Hope are the penetration rates in SA 8B for cancer and non-cancer patients under the age of 65 for the calendar-year 2002 time period reflected in the FNP calculations. Because HON is the only hospice provider in SA 8B, the penetration rates for the service area reflect the penetration rates achieved by HON. The penetration rates for those age/disease cohorts are components of the formula by which the Agency calculates the hospice FNP; the penetration rate for cancer patents under the age of 65 (“U65C patients”) is the P1 factor, and the penetration rate for non-cancer patients under age 65 (“U65NC patients”) is the P3 factor. HON’s penetration rate for U65C patients for calendar-year 2002 was 57.3 percent, which was lower than the statewide average of 74.8 percent for that age/disease cohort. HON’s penetration rate for U65NC patients for calendar-year 2002 was 10.7 percent, which was lower than the statewide average of 14.7 percent for that age/disease cohort. By contrast, the penetration rate achieved by Hope in SA 8C for those age/disease cohorts in calendar-year 2002 was higher than the relevant statewide averages; its penetration rate for U65C patients was 89.3 percent, and its penetration rate for U65NC patients was 16.9 percent. The data for calendar-year 2003, which was the most current available at the time of the hearing, shows a significant increase in HON’s penetration rates for persons under the age of 65; its penetration rate for U65C patients was 96.21 percent (as compared to the statewide average of 82.6 percent), and its penetration rate for U65NC patients was 16.82 percent (as compared to the statewide average of 15.98 percent). HON’s penetration rates in those age/disease cohorts is higher than the penetration rates achieved by Hope in SA 8C over the same time period; Hope’s penetration rate in calendar- year 2003 for U65C patients was 87.85 percent, and its penetration rate for U65NC patients was 14.75 percent. To the extent that the lower penetration rates in SA 8B for patients under the age of 65 in calendar-year 2002 reflected a “gap” in the hospice services provided by HON or an “unmet need” in SA 8B, that gap no longer exists and the unmet need is being met. Accordingly, the first special circumstance alleged by Hope in its application was not proven. Denial of Access to Persons on Palliative Chemotherapy and Palliative Radiation The second special circumstance alleged in Hope’s CON application was that persons who are receiving or may need to receive palliative chemotherapy or palliative radiation (hereafter “palliative chemo/radiation”) are being denied delayed access to hospice by HON. Palliative Chemo/Radiation, Generally Palliative chemo/radiation are medical treatments whose primary purpose is to reduce the size of the patient’s malignant tumors, thereby relieving the pressure exerted by those tumors on other organs and reducing the pain associated with that pressure. Unlike curative chemotherapy and radiation whose purpose is to cure the patient’s cancer and to allow the patient to have a normal life expectancy, the purposes of palliative chemo/radiation are symptom reduction and improved quality of life during the dying process. Palliative chemo/radiation is typically administered by oncologists, who are physicians that specialize in the treatment of cancer. The treatments are typically administered in the oncologist’s office. The toxicity of the chemotherapy and the resulting side-effects (e.g., fatigue, nausea, etc.) have to be weighed against the benefits of the treatment for each patient. Similarly, the burdens of radiation treatment (e.g., interruption of other pain control measures to transport the patient to the radiation facility) have to be weighed against the benefits of the treatment for each patient. In some cases, particularly as the patient’s tumor burden increases, the burdens associated with palliative chemo/radiation will outweigh the benefits. Palliative chemo/radiation is expensive. The average cost of a treatment is $750, but the cost can be as high as $2,500 per treatment, and the treatments are typically administered on a weekly basis. The costs of the chemotherapy drugs and the radiation treatments are a larger component of those costs than are the costs of the physician services related to the administration of the drugs/treatments. An oncologist administering palliative chemo/radiation to a non-hospice Medicare patient submits his or her bills directly to Medicare and those bills are subject to review by the fiscal intermediary as described above. When palliative chemo/radiation is administered to a hospice Medicare patient by an oncologist who is acting as a consulting physician, the professional component of the palliative chemo/radiation bill is paid by Medicare as a “pass- through” charge submitted by the hospice; the technical component (i.e., the chemotherapy drugs and the radiation treatment itself) is paid by the hospice, not Medicare. Oncologists make more money on the drugs that are administered as part of the palliative chemo/radiation treatment than they do on the professional services related to the administration of the drugs. Because the costs of palliative chemo/radiation that are not passed-through to Medicare typically exceed the per diem payment that the hospice receives from Medicare for the patient, the costs of the patient’s palliative chemo/radiation are effectively being subsidized by the per diem payments received by the hospice for other patients. As a result, it is important for hospices that provide large amounts of palliative chemo/radiation to increase their admissions and/or their ALOS in order to remain profitable. Most hospice patients who are receiving palliative chemo/radiation were receiving that treatment at the time of their admission to hospice. It is far less common that a patient not receiving palliative chemo/radiation at the time of his or her admission to hospice is started on that course of treatment after being admitted to hospice. At the time the patient is admitted to hospice, the oncologist is in the best position to determine whether the patient is benefiting from palliative chemo/radiation because he or she has an established physician-patient relationship with the patient; however, the hospice medical director is still required to do an independent assessment (typically through a review of the patient’s medical records) of the appropriateness of palliative chemo/radiation as part of the development of the patient’s initial care plan. Once the patient is a hospice patient, the hospice medical director is responsible for the implementing and monitoring the patient’s care plan and, as a result, the medical director should be the physician making the ultimate decision (with the input of the consulting oncologist, the IDT, the patient, and the patient’s family) as to the continuation or termination of palliative chemo/radiation treatments. To that end, it is important for the medical director to monitor the effectiveness and appropriateness of the palliative chemo/radiation being administered to the hospice’s patients. Hospices have a financial incentive not to provide, or not to continue to provide palliative chemo/radiation to their patients because the hospice is not reimbursed for a large part of the high costs associated with those treatments; however, the evidence was not persuasive that the disincentive to providing palliative chemo/radiation is as significant as Hope’s witnesses suggested.2 HON’s Approach to Palliative Chemo/Radiation in Service Area 8B HON does not categorically deny palliative chemo/radiation to its patients, and it does not refuse to admit or delay the admission of patients who are receiving palliative chemo/radiation.3 HON provides palliative chemo/radiation to its patients where it shown that the treatments are actually benefiting the patient and that the benefits outweigh the burdens on the patient. The consulting oncologist is involved in the benefit-burden analysis, but he or she does not have sole discretion as to whether palliative chemo/radiation will be continued. Among other things, HON’s medical director uses a fatigue algorithm and the “Palliative Care Practice Guidelines in Oncology” published by the National Comprehensive Cancer Network in evaluating the benefit and burden to the patient of continuing palliative chemo/radiation. HON’s medical director also uses objective information such as laboratory results and imaging data, which HON requires the consulting oncologist to provide, in the benefit-burden analysis. HON’s approach is consistent with the Medicare regulations, which vest the ultimate responsibility for the patient’s pain and symptom management in the hospice medical director, not the consulting oncologist. It is also consistent with the “Medical Director Model” published by the American Academy of Hospice and Palliative Medicine. The amount of palliative chemotherapy provided by HON in 2000, 2001, and 2002, was higher than the “national average,”4 when measured on a cost per patient served basis or cost per patient day basis. The amount of palliative radiation provided by HON in 2002 was also higher than the “national average” when measured on a cost per patient served basis or cost per patient day basis; it was lower than the “national average” in 2000 and 2001. HON does not defer to the oncologist’s determination that the patient’s palliative chemo/radiation should be continued once the patient becomes a hospice patient. The determination as to whether to continue the palliative chemo/radiation is made as part of the development and monitoring of the patient’s care plan. HON's medical director is ultimately responsible for developing the patient's care plan, which is done with the input and collaboration of the patient, patient’s family, the IDT, and the consulting oncologist. HON reimburses the consulting oncologist at 100 percent the Medicare-allowable rate for palliative chemo/radiation administered by the oncologist. Hope’s Approach to Palliative Chemo/Radiation Hope’s approach to palliative chemo/radiation is much different from HON’s approach, and Hope intends to replicate its existing policies in its proposed SA 8B hospice program. The differences start in the way that Hope interacts with its referral sources, particularly physician groups such as Florida Cancer Specialists (FCS). FCS has over 40 medical oncologists with offices in Ft. Myers, Naples, and several other cities in southwest Florida. Hope generates the vast majority of its admissions from physicians. In 2002, for example, approximately 90 percent of its referrals -- 3,002 out of 3,335 -- were from physicians. The disproportionate number of physician referrals at Hope is explained, at least in part, by Hope’s “aggressive and assertive” sales and marketing efforts directed to physicians. In that regard, Hope’s “professional relations coordinators” have been trained by a sales and marketing professional to spend most of their time where it is likely to generate the most sales. Hope employs four professional relations coordinators, who along with a professional relations director and a community relations coordinator, make up Hope’s Professional Relations Department. That Department is Hope’s “sales and marketing arm.” Hope’s professional relation coordinators most frequently visit physicians’ offices, and primarily oncologists’ offices such as FCS. Indeed, the professional relations coordinator whose region included FCS’s Ft. Myers office testified that she visits FCS, on average, three to five times per week. The professional relations coordinators’ primary purpose when visiting physicians’ offices is to encourage physicians to make earlier referrals to Hope, thereby increasing the Hope’s ALOS and utilization. Another significant difference in Hope’s approach to palliative chemo/radiation is the degree of control that the oncologist continues to have over the patient’s course of treatment after the patient is enrolled in hospice. Hope's medical director does not routinely monitor or determine the effectiveness and appropriateness of the palliative chemo/radiation administered to its patients; instead, that monitoring is done by the oncologist administering the treatments. As a result, the treatments continue as long as the oncologist determines that they are benefiting the patient.5 Stated another way, for those patients at Hope receiving palliative chemo/radiation, the consulting oncologist effectively controls the patient’s care plan, at least to the extent of the pain management through palliative chemo/radiation, without any significant input from or oversight by Hope’s medical director or the IDT. Another difference is that Hope uses a third party administrator (TPA) to pay the bills submitted by the consulting oncologists and other physicians. The TPA performs essentially ministerial duties in processing the bills for payment. It does not do a chart review or any other analysis to determine whether the palliative chemo/radiation or other services billed by the physician were actually delivered or whether those services were medically- appropriate. The practical effect of using the TPA to pay the bills submitted by the consulting oncologists is that those components of the bills that are not passed through to Medicare –- e.g., the cost of the chemotherapy drugs or radiation treatments –- are not subjected to any type of utilization review. The TPA pays the bills submitted by consulting oncologists (and other consulting physicians) at 100 percent of the Medicare allowable rate, typically within 30 days after the bill is submitted. Hope’s use of the TPA to pay its consulting physicians, in conjunction with the level of control that it gives to its consulting oncologists over the administration of the patient’s palliative chemo/radiation treatments, creates an incentive for oncologists to refer their patients to Hope. The incentive is not financial in the sense that the oncologist will be reimbursed at a higher rate, but rather it is based upon the reimbursement being made without subjecting the treatment or the bills to the same level of review that they would be subject to if the patient was not enrolled in hospice and the oncologist billed Medicare directly. The end-result of Hope’s policies related to palliative chemo/radiation can be seen in the level of expenditures made by Hope for those services, both to FCS and in total, as compared to HON and the “national average.” Hope paid FCS over $1.1 million in 2002, and over $1.7 million in 2003 for services rendered by FCS physicians to patients at Hope, which primarily consisted of palliative chemo/radiation services. No other physician group received more reimbursements from Hope than did FCS. In 2002, Hope’s total palliative chemo/radiation expenditures were approximately nine times (i.e., $1.83 million to $207,000) higher than HON’s palliative chemo/radiation expenditures even though Hope only had four times (i.e., 1,344 to 331) as many cancer admissions as did HON. In 2003, Hope’s palliative chemo/radiation expenditures were more than 12.5 times (i.e., $2.58 million to $201,500) higher than HON’s palliative chemo/radiation expenditures even though Hope only had 2.3 times (i.e., 1,333 to 571) as many cancer admissions as did HON. Similarly, on a per-cancer admission basis, Hope’s palliative chemo/radiation expenditures were approximately two times that of HON in 2002 ($1,365 to $625) and approximately 5.5 times that of HON in 2003 ($1,937 to $353). The disparity between Hope’s and HON’s palliative chemo/radiation expenditures is comparable to the disparity between Hope’s expenditures and the “national average.” Ultimate Findings Related to Palliative Chemo/Radiation as a “Special Circumstance” The evidence was not persuasive that hospice patients on or in need of palliative chemo/radiation in SA 8B are being underserved by HON despite the fact that HON provides considerably less palliative chemo/radiation than does Hope in the adjacent SA 8C. If anything, the evidence suggests that those services are being overutlized in SA 8C. The evidence was also not persuasive that HON has policies that inappropriately deny or unreasonably delay access to hospice for patients on or in need of palliative chemo/radiation, even though HON’s approach to providing those services differs markedly from Hope’s approach. If anything, the evidence suggests that Hope improperly delegates too much authority and control to the consulting oncologist over the management of hospice patients on palliative chemo/radiation. Accordingly, the second special circumstance alleged by Hope was not proven. Inadequate Service to African-Americans The third special circumstance identified in Hope’s CON application is that African-Americans are not being adequately served by HON. Hope expressly abandoned this alleged special circumstance at the hearing through the testimony of its health planner and the stipulations of its counsel. Inadequate Intensive Hospice Care The fourth special circumstance alleged in Hope’s CON application is that intensive hospice care (i.e., inpatient care and continuous care) is not being adequately provided by HON. Hope expressly abandoned this alleged special circumstance at the hearing through the testimony of its health planner and the stipulations of its counsel. Inadequate Service to the Immokalee Area The fifth special circumstance alleged in Hope’s CON application is that the Immokalee area is being underserved by HON. Immokalee is an unincorporated area in northeastern Collier County composed of zip codes 34142 and 34143. It is approximately 40 miles from Naples. Immokalee has approximately 20,000 year-round residents, and its population grows to as many as 40,000 residents during the growing season. Immokalee is a rural, economically-disadvantaged area, and it is generally underserved for health and social services. In 1993, a charitable organization donated a building in Immokalee to HON. HON remodeled the building to include eight hospice residential beds and office space for the care team members serving patients in the Immokalee area. HON closed that office in the fall of 1994 because the residential beds were not being sufficiently utilized. HON sold the building (for the cost of the renovations that it made to the building) to an organization that provides social services to residents of the Immokalee area. HON has continuously provided hospice services to residents of the Immokalee area since 1983 when it began operating in SA 8B, even though it only had physical office space in the Immokalee area for a short time in the mid-1990’s. HON’s service of the Immokalee area is similar to Hope’s service of Glades and Hendry Counties, which are the rural counties served by Hope in SA 8C. Hope did not have a physical office in those counties until 1996 (Hendry County) and 2001 (Glades County), but according to Hope’s chief executive officer, Hope was still able to adequately serve those counties. HON continued to serve patients in the Immokalee area after it closed its Immokalee office in the fall of 1994. HON remained involved in the Immokalee community after it closed its Immokalee office, but prior to April 2002 its involvement was minimal, and did not include the same level of proactive community education and outreach that it is currently doing.6 HON has recently become more visible in the Immokalee community. For example, HON placed advertisements (in both English and Spanish) in the 2003-04 phone books the serve the Immokalee area; it is now regularly advertises in the local Immokalee newspapers (in both English and Spanish); and it recently joined the Immokalee Chamber of Commerce. HON has also recently engaged in a number of proactive community education and outreach activities in the Immokalee area. For example, a HON representative regularly participates in the meetings of the Immokalee Interagency Council, which is a collection of social service agencies that meet monthly to coordinate with each other in an effort to ensure that there are no gaps in the social services provided to Immokalee residents. HON’s renewed involvement in the Immokalee community began in April 2002 when it assigned a “social services coordinator," Kathleen Hill, to the Immokalee area. Ms. Hill was based out of HON’s main office in Naples, but she was in the Immokalee area “a minimum of two to three times a week” meeting with patients and communicating with community organizations regarding the hospice services offered by HON. Ms. Hill continued in that position until April 2003. HON decided to reestablish an office in the Immokalee area in mid-2002, well before April 2003 when Hope submitted its letter of intent to the Agency for its proposed SA 8B hospice program. That decision was based, in part, on a need to reduce the crowded conditions at HON’s main office by moving staff to satellite offices. HON’s new Immokalee office opened in August 2003. The office is staffed by social worker Lillian Cuevas, who is primarily responsible for providing education and information about hospice and HON to community organizations in the Immokalee area. Ms. Cuevas has actively engaged in those education and outreach efforts since she filled Ms. Hill’s position in September 2003. No direct patient care is provided out of the Immokalee office, but the office is used by the care team members serving patients in the Immokalee area as a place to do charting work. HON’s current Immokalee office serves essentially the same functions as the “counseling and education center,” which Hope committed in its application to open within two years after the approval of its proposed SA 8B hospice program. HON penetration rate in the Immokalee area in 2002 was 29.35 percent. That rate is considerably lower than the penetration rate achieved by HON for SA 8B as a whole, which is not unexpected given the geographic and demographic characteristics of the Immokalee area. The penetration rate achieved by HON in the Immokalee area in 2002 was lower than the 36.44 percent7 overall penetration rate achieved by Hope in the two rural counties that it serves, but it was higher than the 26.92 percent penetration rate achieved by Hope in Glades County alone. The difference in the penetration rates achieved by HON and Hope in the rural areas of their respective service areas is not material, and that difference does not in and of itself constitute a special circumstance that would warrant the approval of a new hospice program in SA 8B, particularly since the physical presence that Hope has proposed for Immokalee is essentially the same as that which HON currently has. In sum, the evidence fails to establish that the Immokalee area is or has been underserved by HON. Moreover, HON’s recent reestablishment of an office in the Immokalee area is expected to help HON increase its penetration rate in the Immokalee area and ensure that that the area continues to be adequately served in the future. Indeed, Hope’s health planner testified that he does not know whether Immokalee continues to be an underserved area in light of HON’s recent reestablishment of an office in the area. Accordingly, the fifth special circumstance alleged by Hope in its application was not proven. Impact on HON As stated above, Hope projected in its application that it will have 183, 259, and 304 admissions at its proposed SA 8B hospice program in its first three years of operation. Those figures also represent the number of “lost admissions” at HON since HON is currently the sole provider of hospice services in SA 8B; however, as discussed below, those figures are materially understated. First, in projecting the total number of hospice admissions for SA 8B, Hope used penetration rates that are lower than those actually achieved by HON. The penetration rates used by Hope were based upon the assumption that “gap with the Service Area 8C penetration rates” would be closed by the seventh year of operation of Hope’s proposed SA 8B hospice program; however, the calendar- year 2003 data reflects that the “gap” between the penetration rates in SA 8B and SA 8C has effectively been closed already. The effect of using the lower penetration rates is that the total number of hospice admissions for SA 8B projected in the application for 2003 and beyond are materially understated and not reliable. On this issue, the projections made by HON’s health planner regarding the total number of hospice admissions for SA 8B during Hope’s first three years of operation –- i.e., 1,490 (year 1), 1,605 (year 2), and 1,736 (year 3) -- are more reasonable than Hope’s projections in the application. Second, the projections in the CON application assume that Hope’s proposed SA 8B program will take an equal percentage of the cancer and non-cancer patients that would have otherwise been served by HON. Specifically, in the first year of operation, Hope projects that it will get 15 percent of SA 8B’s cancer patients and 15 percent of the service area’s non-cancer patients; in the second year of operation, Hope projects that it will get 20 percent of each category’s patients; and in the third year of operation, Hope projects that it will get 22 percent of each category’s patients. The assumption that Hope will take an equal number of cancer and non-cancer patients from HON each year is not consistent with the evidence regarding Hope’s “open access” philosophy towards palliative chemo/radiation or the testimony of oncologists in SA 8B regarding their intent to refer their patients to Hope rather than HON if Hope’s application is approved.8 Indeed, based upon that evidence and testimony, it is reasonable to expect that Hope will get a significantly larger percentage of the cancer patients in SA 8B than will HON. On the issue of the percentage of cancer patients that Hope will take from HON, the projections of HON’s health planner are more reasonable than the projections of Hope’s health planner.9 Specifically, it is reasonable to expect that Hope will get 25 percent, 50 percent, and 75 percent of the cancer patients in SA 8B in its first three years of operation. The effect of Hope's getting a larger percentage of the service area’s cancer patients is that its total admissions and, hence, HON’s “lost admissions” will more likely be 289, 533, and 787 in its first three years of operation.10 Those admissions translate into projected market shares for Hope of 19.4 percent, 33.2 percent, and 45.3 percent in its first three years of operation, based upon the total number of admissions projected by HON’s health planner for SA 8B over that period. Those market shares are reasonable and attainable, even after taking into account HON’s status as the long-time incumbent hospice provider with considerable community support. The ultimate effect of the “lost admissions” is that HON’s ADC will be 169 patients (rather than 210 patients) in the first year of operation of Hope’s proposed SA 8B hospice program; 151 patients (rather than 226) in the second year of Hope’s program; and 134 patients (rather than 245 patients) in the third year of Hope’s program.11 The financial impact on HON of the “lost admissions” is significant, both in terms of the lost patient revenues from the admissions and the lost donations and bequests that HON would have otherwise received from those patients. That financial impact is material, even though HON has a strong balance sheet because the impact will be cumulative and continuing in nature. The “lost admissions” would require HON to eliminate certain services that it currently provides, including a number of “non-core” services (e.g., massage and pet therapies) that enhance the hospice experience of the patient and his or her family; however, the evidence was not persuasive that HON would have to eliminate as many services as it projected in Exhibit HON-28. Indeed, HON provided those services in the past when its census was at levels similar to those which would result from “lost admissions” to Hope.12 To the extent that Hope’s entry into SA 8B would adversely impact HON’s ability to recruit and retain staff and/or volunteers, that impact is mitigated by HON’s expectation that it would need to cut services and staff as a result of the admissions that it would lose to Hope. The evidence was not persuasive that Hope’s entry into SA 8B will benefit HON by increasing awareness of hospice services and thereby increasing the overall penetration rate for hospice services in the service area, particularly since the calendar-year 2003 data reflects that the penetration rate in SA 8B is already 53.7 percent, which is the fifth highest in the state and only 2.9 percentage points lower than SA 9C, which has the highest penetration rate in the state at 56.6 percent. In sum, the approval of Hope’s application will have a material and adverse impact on HON from a financial and programmatic perspective because HON will be transformed from a growing hospice into one with a declining census, which in turn, will limit HON’s ability to provide the same range and quality of services that it currently provides. Applicable Statutory and Rule Criteria Section 408.035, Florida Statutes (2004)13 (a) Subsections (1), (2), and (5) (Need for Proposed Services; Accessibility of Existing Services; and Enhancing Access) As stated above, there is no numeric need for a new hospice program in SA 8B under the Agency’s rule methodology. Statistically speaking, HON is adequately meeting the need for hospice services in SA 8B. Its penetration rate has consistently been higher than the statewide average, and the calendar-year 2003 data, which was the most current available at the time of the hearing, shows that HON's penetration rate is one of the five highest in the state. Because a hospice’s penetration rate is, a measure of the hospice’s success in making its services accessible to terminally-ill patients in its service area, there is no need for an additional hospice in SA 8B from an access-to-care perspective. There is also no need for an additional hospice program in SA 8B from a quality of care perspective. HON is accredited by JCAHO and it performs well on the annual state licensure surveys, which provide objective measures the high quality of care at HON. The anecdotal evidence presented by Hope regarding the inappropriate medication and/or treatment of HON patients and the routine overmedication of HON patients was not persuasive. Most of that testimony was from individuals who had no specialized training or experience in hospice and palliative care or the unique medication issues associated with dying patients in hospice. The fact that certain medications are discontinued by HON upon the patient’s admission into hospice is not in and of itself an indicator of a quality of care problem at HON. Indeed, it is entirely appropriate for the hospice medical director to reevaluate each medication that the patient is taking at the time of his or her admission to hospice in order to determine (in conjunction with the patient, patient’s family, and the patient’s other physicians) whether those medications are appropriate since the goals of care in hospice are pain management rather than curative care. The evidence establishes that HON’s medical director does precisely that before discontinuing medications that the patient is taking at the time of his or her admission to hospice. The evidence was not persuasive that HON requires its patients to execute do-not-resuscitate orders (DNRs) as a condition of admission such that patients who do not have DNRs are being denied or delayed access to hospice care by HON. Instead, the evidence establishes that HON discusses DNRs with its patients at the time of admission and on an ongoing basis, consistent with the guidelines of the American Medical Directors Association, but that it does not require its patients to execute a DNR as a condition of admission. The evidence was not persuasive that access to hospice care needs to be “enhanced” for any subset of the population in SA 8B, particularly those allegedly underserved groups identified in Hope’s application. See Parts F(1), (2), and (5) above. To the contrary, the evidence establishes that HON is providing sufficient and appropriate outreach in SA 8B regarding the hospice services that it provides. Moreover, to the extent that Hope’s proposed SA 8B hospice program would “enhance” access to hospice for patients on palliative chemo/radiation because of Hope’s aggressive sales and marketing efforts designed to get oncologists to refer their patients to Hope earlier, the evidence was not persuasive that such “enhancements” are appropriate under the Medicare regulations or necessarily beneficial to the patient. In sum, criteria in Section 408.035(1), (2), and (5), Florida Statutes, weigh against the approval of Hope’s application. Subsection (3) (Applicant’s Quality of Care) Hope provides quality care at its existing hospice program in SA 8C.14 Hope has several ongoing initiatives through which it continuously evaluates its internal operations and delivery of services to its patients. The purpose of those initiatives is to enhance the quality of care that Hope provides. It is reasonable to expect that Hope will provide quality care in its proposed SA 8B hospice program because it intends to utilize its current policies and procedures in its proposed program, including its pain and symptom management protocols which guide the treatment of almost all of Hope’s patients at its existing SA 8C program. The protocols, which help to ensure that patients receive consistent and quality hospice care, are not unique to Hope. Indeed, HON has developed similar pain and symptom management protocols that guide the treatment of almost all of its patients. HON provides high quality care at its existing hospice program in SA 8B.15 Indeed, the quality of care that will be provided by Hope in its proposed program is lower than that provided by HON in at least two respects. First, Hope has fewer bilingual direct-care employees than does HON. Only five of Hope’s direct-care employees are bilingual. As a result, Hope relies upon volunteer interpreters to enable its direct-care employees to communicate with patients and families for whom English is not the primary language. By contrast, HON has 25 direct-care employees, including its medical director, who are bilingual in Spanish and English; and it has approximately 15 other direct-care employees who speak French, Creole, Portuguese, Polish, Armenian, Thai/Laotion, sign language, and/or German in addition to English. This allows HON’s direct-care employees communicate directly (rather than though an interpreter) with the patient and his or her family, and it also fosters sensitivity to the patient’s cultural/ethnic values. HON has Spanish versions of its brochures, caregiver’s guide, admissions forms, and other materials, which it provides to patients and families whose primary language is Spanish rather than English. Hope also provides some of its documents and forms in Spanish as well as English. Second, even though Hope’s ALOS exceeds the ALOS at HON and the “national average,” the amount that Hope spends on nursing costs is lower than the “national average” and the amount spent on nursing costs by HON, both on a per patient basis and on a per patient-day basis. In 2002, for example, Hope’s ALOS was 62.51 days, HON’s ALOS was 49.13 days, and the “national average” was 47.79 days. In that same year, Hope’s nursing expenditures were $1,158.09 per patient (or $18.53 per patient-day) whereas the “national average” was $1,540.43 per patient (or $33.06 per patient-day) and HON’s nursing expenditures were $2,250.84 per patient (or $45.82 per patient day). The effect of the higher ALOS and lower expenditures on nursing at Hope is that its patients are staying longer but receiving less, or less-intense direct patient care than HON’s patients.16 There are slight differences in the admissions processes at Hope and HON –- e.g., HON uses designated admissions teams of nurses and social workers for the initial clinical assessment of its patient in order to streamline and eliminate delays in the admission process, whereas the initial clinical assessment of Hope’s patients is done by the nurse and social worker that will be caring for the patient in order to promote continuity of care; however, the evidence was not persuasive that those differences make the admission process and/or the overall quality of care at Hope materially better than that at HON, or vice versa. In sum, Hope satisfies the criterion in Section 408.035(3), Florida Statutes, because it has a history of providing quality care in its existing SA 8C hospice program and it has the ability to provide quality care in its proposed SA 8B hospice program; however, this criterion does not materially weigh in favor of the approval of Hope’s application because HON is currently providing high quality care in SA 8B. Subsections (4) and (6) (Availability of Resources and Financial Feasibility) Hope has adequate personnel and funds to expand its current hospice program into SA 8B as proposed in its CON application. Hope has adequate financial resources to fund the cost of its proposed SA 8B hospice program and its other ongoing and proposed capital projects, including its proposed SA 8A expansion. As a result, Hope’s proposed SA 8B hospice program is financially feasible in the short-term. Hope’s proposed SA 8B hospice program is projected to generate a net profit from operations in its second year (see Finding of Fact 141), and as a result, Hope’s proposed SA 8B hospice program is financially feasible in the long-term. In sum, Hope’s application satisfies the criteria in Section 408.035(4) and (6), Florida Statutes. Subsection (7) (Fostering Competition that Promotes Cost-effectiveness) The establishment of a new hospice in SA 8B will necessarily increase competition for hospice care in the service area because there is currently only one hospice in SA 8B; however, the evidence was not persuasive that such competition would benefit the hospice patients in SA 8B or the community at large. The evidence was not persuasive that fostering competition is a consideration that should be given significant weight in the hospice context because hospice care does not lend itself to competition in the traditional sense because its “consumers” are terminally-ill patients and their families. Indeed, Hope’s chief executive officer acknowledged that the free market system should not drive the establishment of hospices, and that not all standard business approaches are appropriate for the hospice industry. Moreover, the evidence was not persuasive that competition between Hope and HON would promote cost- effectiveness. To the contrary, Hope’s entry into SA 8B would likely result in a dramatic increase the utilization of palliative chemo/radiation services in the service area, which as discussed above, is costly. Accordingly, the criterion in Section 408.035(7), Florida Statutes, weighs against approval of Hope’s application. Subsection (8) (Costs and Methods of Construction) Hope is not proposing any new construction in connection with its proposed SA 8B hospice program, and as a result, the criterion in Section 408.035(8), Florida Statutes, is not applicable. Subsection (9) (Medicaid and Charity Care) Hope did not condition the approval of its CON application on the provision of a minimum level of patient days to Medicaid and/or charity patients. The financial projections in Schedule 7A of Hope’s application assume that six percent of the patient days at its proposed SA 8B hospice program will be attributable to Medicaid patients and that two percent of its patient days will be attributable to charity patients. The evidence is insufficient to evaluate the significance of the percentages of Medicaid and charity care patient days projected by Hope. For example, the record does not reflect how those percentages compare to the statewide average for hospices and/or HON’s actual experience in SA 8B. The evidence is also insufficient to evaluate Hope’s past provision of hospice care to Medicaid and charity patients; even though the notes accompanying Schedule 7A state that the proposed payer mix (and, hence, the Medicaid and charity patient-day percentages) is based upon “the experience of the applicant and the proposed service area,” the record does not include Hope’s Medicaid cost reports or other data showing its actual experience in SA 8C. Nevertheless, it is clear from the evidence that Hope has a history of providing free services for the benefit of the local community that it serves. For example, Hope provides its bereavement services to the entire community, not just hospice patients and families; it offers a bereavement camp known as Rainbow Trails for children who have a death in the family even if the deceased was not a hospice patient; and it provides crisis counseling to the children in the local schools as needed. Hope also administers a “VOCA” program that works with the local State Attorney’s office and the Florida Highway Patrol to counsel persons who are victims of crime or who are involved in serious traffic accidents. Approximately 80 percent of the cost of the VOCA program is funded by a grant Hope received from the Attorney General’s Office; the remaining 20 percent is funded by Hope. The significance of the free services provided by Hope is mitigated by the fact that HON provides similar free services to the community. See Finding of Fact 51. Moreover, the criterion in Section 408.035(9), Florida Statutes, is not entitled to great weight in this proceeding because Hope, like HON and all other hospices, is required by law to serve all hospice-eligible patients who request hospice services regardless of their ability to pay. Subsection (10) (Designation as a Gold Seal Nursing Home) Hope is not proposing the addition of any nursing home beds and, as a result, the criterion in Section 408.035(10), Florida Statutes, is not applicable. (2) Section 408.043(2), Florida Statutes The statutory criteria in Section 408.043(2), Florida Statutes -- “need for and availability of hospice services in the community” –- encompass essentially the same issues as the criteria in Subsections (1), (2) and (5) of Section 408.035, Florida Statutes, and, the findings related to those subsections equally apply to the evaluation of Hope’s application under Section 408.043(2), Florida Statutes. See Part H(1)(a) above. (3) Rule Criteria Florida Administrative Code Rule 59C-1.0355(4)(e) Florida Administrative Code Rule 59C-1.0355(4)(e)1. provides that preference will be given to an applicant who commits to serve populations with “unmet needs.” Hope committed in its application to open a "counseling and education center" in Immokalee during the first two years of the operation of its program, and it committed to engage in a “special outreach program to educate the medical and consumer communities in Service Area 8B about the effectiveness of hospice care for patients under the age of 65.” Those commitments are aimed at two of the population groups in SA 8B that Hope contends are being underserved by HON; however, as discussed in Parts F(1) and (5) above, Hope failed to prove that those population groups are being underserved by HON or that they have "unmet needs." Florida Administrative Code Rule 59C-1.0355(4)(e)2. provides that preference will be given to an applicant who proposes to provide inpatient care through contractual arrangements with existing health care facilities unless the applicant demonstrates a more cost-effective alternative. Hope plans to provide inpatient care “through contractual arrangements with existing nursing homes and hospitals or through the use of its three existing and approved facilities in Lee County.” This approach is reasonable, and the record does not reflect whether there is a more cost-effective alternative. Florida Administrative Code Rule 59C-1.0355(4)(e)3. provides that preference will be given to an applicant who has a commitment to serve patients without primary caregivers at home, the homeless, and patients with AIDS. Hope plans to serve homeless patients, patients without caregivers at home, and patients with AIDS in its proposed SA 8B program; it has a history of serving such patients in its existing hospice program, as does HON. The fact that HON has a history of serving such patients reduces the weight given to the preference in Florida Administrative Code Rule 59C-1.0355(4)(e)3., in evaluating Hope’s application. Florida Administrative Code Rule 59C-1.0355(4)(e)4., which gives preference to an applicant who commits to establish a physical presence in the underserved county or counties of a three-county hospice service area, is inapplicable because there is only one county in SA 8B. Florida Administrative Code Rule 59C-1.0355(4)(e)5. provides that preference will be given to an applicant who proposes to cover services that are not specifically covered by private insurance, Medicaid, or Medicare. Hope plans to provide services that are not covered by private insurance, Medicaid, or Medicare, including chaplain services, therapies (e.g., massage, pet, music, art), and bereavement services to families of non-hospice patients; it has a history of providing such unreimbursed services as part of its existing hospice program, as does HON. The fact that HON has a history of providing similar unreimbursed services reduces the weight given to the preference in Florida Administrative Code Rule 59C-1.0355(4)(e)5. in evaluating Hope’s application. Florida Administrative Code Rule 59C-1.0355(5) Florida Administrative Code Rule 59C-1.0355(5) requires the applicant for a new hospice program to include evidence showing that that its proposal is “consistent with the needs of the community and other criteria contained in the local health council plans.” The applicable local health council plan includes the following preferences related to hospice care: Preference shall be given to applications that indicate a willingness to serve patients with HIV/AIDS and the homeless, as well as traditionally underserved populations. Preference shall be given to applications that propose either new or use of unused inpatient facilities that best provide for the care of patients and families. Preference shall be given to applications that demonstrate a commitment to provide services that do not impose barriers to care, such as requiring a caregiver or providing intensive palliative care. Preference shall be given to applications that exceed 80% occupancy level during the period of January through March on an annual basis, and in the event of multiple locations under one license, any individual location applies. Preference shall be given to applications that meet the minimum volume requirement as specified in the rule within the applicant’s core service area. The local health plan criteria are not as significant because of the 2004 amendments to the CON law –- Chapter 2004- 383, Laws of Florida -- which effectively eliminated the local health plan as a consideration in CON review. In any event, except for the third and fifth preferences, the local health plan preferences are either inapplicable or materially similar to the preferences in Florida Administrative Code Rule 59C-1.0355(4)(e) discussed above. Thus, the findings related to that rule equally apply to the evaluation of Hope’s application under Florida Administrative Code Rule 59C-1.0355(5). With respect to the third preference, Hope demonstrated that its policies do not discourage the admission patients receiving intensive palliative care, such as palliative chemo/radiation. Indeed, as discussed in Part F(2)(c) above, Hope’s polices effectively encourage the admission of those patients. Thus, to the extent that the local health plan preferences are still relevant, Hope is entitled to the third preference; however, for the reasons stated above in Part F(2)(d), that preference is not given significant weight in relation to the other statutory and rule criteria. With respect to the fifth preference, the minimum volume requirement in the Agency’s hospice rule is 350 admissions per year, which represents the volume arguably necessary to support a comprehensive range of hospice services. Hope projected in its application that its proposed SA 8B hospice program would achieve that volume by its fourth year of operation and, as discussed in Part G above, it is more likely to achieve that volume by its second year of operation. Moreover, Hope’s proposed SA 8B program is essentially an expansion of its existing hospice program, which had more than 3,200 admissions in 2003. With respect to the consistency of Hope’s application with the needs of the community, Hope's proposed SA 8B hospice program is not inconsistent with the needs of patients in the service are under the age of 65, patients in the service area in need of palliative chemo/radiation, and/or patients in the Immokalee area; however, as discussed in Part F above, Hope failed to establish that there was an "unmet need" in those areas that needs to be addressed through the establishment of a new hospice program in SA 8B. Florida Administrative Code Rule 59C-1.0355(5) also requires the applicant to include letters of support from various types of entities and organizations in the service area endorsing the hospice program being proposed by the applicant. Hope’s application includes letters of support from physicians, nursing homes, members of the Immokalee community and other individuals, and religious and community organizations. Five of the nine physician letters were from oncologists, three of whom are FCS oncologists. Hope’s application does not include any letters of support from an acute care hospital in SA 8B, even though the application states that Hope may provide respite and inpatient care through contractual arrangements with the local hospital. Florida Administrative Code Rule 59C-1.0355(6) Florida Administrative Code Rule 59C-1.0355(6), quoted below, requires the applicant to include a detailed description of its proposed hospice program in the CON application. Among other things, the rule requires the application to include the projected number of admissions for the first two years of operations, the arrangements for providing inpatient care, and proposed community education and fundraising activities. Hope’s application included all of the information required by Florida Administrative Code Rule 59C-1.0355(6); the description of the project in the application is reasonable and attainable; and as discussed above, Hope will likely exceed the number of admissions projected in its application.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency issue a final order denying Hope’s application, CON 9695, to establish a new hospice program in SA 8B. DONE AND ENTERED this 24th day of January, 2005, 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 24th day of January, 2005.
The Issue Whether Florida Administrative Code Rule 59C-1.0355(4)(d)3. is an invalid exercise of delegated legislative authority?
Findings Of Fact Background This is a challenge to the facial validity of the 48-hour rule. It is not a challenge to the 48-hour rule as applied.2 Nonetheless, the following background provides the context that produced the challenge. See also Findings of Fact 14-16. LifePath, Suncoast, and Palm Coast (or related entities), as well as the Agency, are parties in pending proceedings at the Division of Administrative Hearings (DOAH) involving Palm Coast's (or related entities) challenges to the Agency's preliminary determinations to deny CON applications (hospice) filed by Palm Coast (or related entities). These cases have been abated pending the outcome of this proceeding. In each proceeding, Palm Coast (or related entities) contends that a "special circumstance" exists under the 48-hour rule to justify approval of each CON application. Moreover, in support of its position, Palm Coast (or related entities) relies, in part, on data compiled by LifePath and Suncoast. It is the use of this data, in light of the 48-hour rule and interpretation thereof, that caused LifePath and Suncoast to file the rule challenges, notwithstanding that the Agency has not definitively interpreted the 48-hour rule. Parties The Agency administers the CON program for the establishment of hospice services and is also is responsible for the promulgation of rules pertaining to uniform need methodologies, including hospice services. See generally §§ 408.034(3) and (6) and 408.043(2), Fla. Stat.; Ch. 400, Part IV, Fla. Stat. Suncoast is a not-for-profit corporation operating a community-based hospice program providing hospice and other related services in Pinellas County, Florida, Hospice Service Area 5B. Suncoast has provided a broad range of hospice services to residents of Pinellas County since 1977. Suncoast has implemented an electronic medical records system and has developed a proprietary information management software system known as Suncoast Solutions. LifePath is a not-for-profit corporation operating a community-based hospice program providing hospice services in Hillsborough, Polk, Highlands, and Hardee Counties, Hospice Service Areas 6A and 6B. LifePath has provided a broad range of hospice services for the past 25 years. Palm Coast is a not-for-profit corporation currently operating licensed hospice programs in Daytona Beach, Florida, Hospice Service Area 4B and in Dade/Monroe Counties, Hospice Service Area 11. Palm Coast, as well as other related entities such as Odyssey Healthcare of Pinellas County, Inc., e.g., CON application No. 9984 filed in 2007, for Hospice Service Area 5B, has filed several CON applications to provide hospice services. It is also a party in pending proceedings before DOAH, challenging the Agency's preliminary decisions to deny the respective applications. Palm Coast's sole member is Odyssey Healthcare Holding Company, Inc., which is a wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey). (Palm Coast and Odyssey shall be referred to as Palm Coast unless otherwise stated.) Standing Petitioners provide hospice services in Florida and have not applied for a CON to provide hospice services outside their current service areas. In the absence of a numeric need,3 an applicant for a hospice CON is afforded the opportunity to demonstrate a need for a new hospice program by proving "special circumstances." These include circumstances described in the 48-hour rule. The applicant must document that "there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested)."4 The parties have cited no law that requires an existing hospice provider to maintain records documenting when a person is referred to a hospice program. Public documents are not available that may otherwise provide information regarding when a person is referred to a hospice program.5 Existing providers do not uniformly maintain data that reflects the length of time between when a person is referred to and later admitted to a hospice program. By rule, existing licensed hospice providers in Florida are required to report admissions data every six months to the Agency. The Agency uses the information to calculate numeric need under the rule methodology. Petitioners keep records indicating, for their record keeping purposes, e.g., when a person contacts the hospice program and when the person is admitted. Petitioners use software to assimilate this type of information. Petitioners also maintain patient records that contain this type of information. However, this information is not specifically gathered and maintained for the purpose of determining when a person is actually "referred" to a hospice program and later "admitted" and whether "persons" are admitted within 48 hours from being referred. During discovery in pending CON proceedings following preliminary agency action, Petitioners produced information, related to this record, to Palm Coast or related entities. Palm Coast or related entities have used this information in their CON applications to justify a "special circumstance" under the 48-hour rule. See generally Pet 6, 17, 17A and PC 75-78. See also T 987-995. It is a fair inference that Palm Coast or related entities have and will use this information in CON application cases pending at DOAH. See generally Palm Coast's February 14, 2008, Request for Judicial Notice, items 1-18. It is the use of the information by Palm Coast or related entities, coupled with Palm Coast's or related entities interpretation of the 48-hour rule that caused Petitioners to file the rule challenges in this proceeding. LifePath and Suncoast are regulated by and subject to the provisions of Rule 59C-1.0355. See generally Pet 30 at 2, item 2. The 48-hour rule is a CON application criterion, a planning standard, that is not implicated unless and until an applicant relies on this provision in its hospice CON application and uses data provided by, e.g., existing providers such as Petitioners. Subject to balancing applicable statutory and rule CON criteria, application of the 48-hour rule may provide an applicant with a ground for approval of its CON application by indicating a need for a new hospice program. This may occur either leading up to the Agency's issuance of its SAAR, see Section 408.039(4)(b), Florida Statutes, stating the Agency's preliminary action to approve a CON application, or ultimately with the entry of a final order following a proceeding conducted pursuant to Section 120.57(1), Florida Statutes. This information may also be considered during a public hearing if the Agency affords one. § 408.039(3)(b), Fla. Stat. Existing hospice providers, such as LifePath and Suncoast, may be substantially affected by the Agency's consideration of this information, especially if the Agency preliminarily concludes (in the SAAR) that a CON application should be approved based in part on application of the 48-hour rule. At that point, existing hospice providers have the right to initiate an administrative hearing upon a showing that its established program will be substantially affected by the issuance of the CON. See § 408.039(5)(c), Fla. Stat. Existing providers may also intervene in ongoing proceedings initiated by a denied applicant. Id. Petitioners have proven that they are substantially affected by the application of the 48-hour rule. Rule 59C-1.035(4) Prior to the Agency's adoption of Rule 59C-1.0355 in 1995, the Agency adopted Rule 59C-1.035, which included, in material part, a numeric need formula. In a prior rule challenge proceeding, it was alleged that Rule 59C-1.035(4) and in particular the numeric need formula was invalid. Paragraph (4)(e) provided: (e) Approval Under Special Circumstances. In the absence of need identified in paragraph (4)(a), the applicant must provide evidence that residents of the proposed service area are being denied access to hospice services. Such evidence must demonstrate that existing hospices are not serving the persons the applicant proposes to serve and are not implementing plans to serve those persons. This evidence shall include at least one of the following: Waiting lists for licensed hospice programs whose service areas include the proposed service area. Evidence that a specifically terminally ill population is not being served. Evidence that a county or counties within the service area of a licensed hospice program are not being served. Rule 59C-1.035(4), including paragraphs (4)(e)1.-3., was determined to be invalid. Catholic Hospice of Broward, Inc. v. Agency for Health Care Administration, Case No. 94-4453RX, 1994 Fla. Div. Admin. Hear. LEXIS 5943 (DOAH Oct. 14, 1994), appeal dismissed, No. 1D94-3742 (Fla. 1st DCA Jan. 26, 1995). However, other than quoting from paragraph (4)(e) because it was included as part of the rule, there was no specific finding or conclusion regarding the validity of paragraphs (4)(e)1.-3. The successor rule, Rule 59C-1.0355(4)(d)1.-3., changed the preface language and substantially retained paragraphs (4)(e)2. and 3., now paragraphs (4)(d)1.-2., but omitted paragraph(4)(e)1. (waiting lists) and added paragraph(4)(d)3. (the 48-hour rule). Rule 59C-1.0355(4)(d)1.-3. Elfie Stamm has been employed by the Agency in different capacities. Material here, Ms. Stamm was the health services and facilities consultant supervisor for CON and budget review from July 1985 through June 1997. Since 1981, Ms. Stamm has had responsibility within the Agency for rule development. In and around 1994 and prior to the former hospice rule being invalidated, a work group was created for the purpose of developing a new hospice rule. Input was requested from the work group. Various hospice providers throughout the state participated in the rule development process. It appears that there was an attempt to replace the waiting list standard in the prior rule with the 48-hour standard. (There had been general objections made to the waiting list standard in this and other Agency rules.) The language for the 48-hour rule apparently came from the work group, rather than from Agency staff, although there is no evidence indicating which person or persons suggested the language. The Agency kept minutes of a meeting conducted on June 30, 1994, to discuss the proposed hospice rule, including the 48-hour rule. The minutes were kept to record any criticisms or comments regarding the proposed hospice rule. The minutes of a rule workshop "only addresses issues where people have concerns and varying opinions." The record does not reveal that any adverse comments were made regarding the 48-hour rule. In 1995, the Agency, adopted Rule 59C-1.0355, including Rule 59C-1.0355(4)(d)1.-3. that provides: (d) Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: That a specific terminally ill population is not being served. That a county or counties within the service area of a licensed hospice program are not being served. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.6 The 48-hour rule, in its present iteration at issue in this proceeding, has been a final rule since 1995.7 The Agency's hospice need methodology is set forth in Rule 59C-1.0355(4), which is entitled "Criteria for Determination of Need for a New Hospice Program." Rule 59C-1.0355(4) is comprised of four paragraphs, (4)(a) through (4)(e). Paragraph (4)(a) sets forth the process for the Agency's calculations of a numeric fixed need pool for a new hospice program. Paragraph (4)(b) provides that the calculation of a numeric need under paragraph (4)(a) will not normally result in approval of a new hospice program unless each hospice program in the service area in question has been licensed and operational for at least two years as of three weeks prior to publication of the fixed need pool. Paragraph (4)(c) similarly states that the calculation of a numeric need under paragraph (4)(a) will "not normally" result in approval of a new hospice program for any service area that has an approved but not yet licensed hospice program. Paragraph (4)(d) of the need methodology sets forth the three "special circumstances" quoted above. Paragraph (4)(e) sets forth preferences that may be applicable to a CON application for a new hospice program. The purpose of the 48-hour rule is to establish a standard by which the Agency may determine whether there is a timeliness of access issue that would justify approval of a new hospice program despite a zero fixed need pool calculation. Under the hospice need methodology, "special circumstances" are distinguishable from "not normal" circumstances, in part, because the three "special circumstances" are comprised of three delineated criteria rather than generally referencing what has been characterized as "free form" need arguments. Also, "not normal" circumstances may be presented when the Agency's numeric fixed need pool calculations produces a positive numeric need. Once an applicant demonstrates at least one "special circumstance" in accordance with Rule 59C-1.0355(4)(d)1.-3., the applicant may then raise additional arguments in support of need, which may be generally classified as "not normal" or as additional circumstances. Although the 48-hour rule has existed since 1995, it has rarely been invoked as a basis for demonstrating need by a CON applicant seeking approval of a new hospice program. In this light, the Agency has rarely been called upon to interpret and apply the 48-hour rule. The Agency recently approved a CON application filed in 2003 by Hernando-Pasco Hospice to establish a new hospice program in Citrus County (CON application No. 9678). The application was based, in part, on the 48-hour rule. In its SAAR, the Agency mentions that the applicant presented two letters of support, stating that some admissions to hospice were occurring more than 48 hours after referral. The number of patients was not quantified. There was no challenge to the Agency's preliminary decision. The Agency's decision does not provide any useful guidance with respect to the Agency's interpretation of the 48-hour rule. The Challenges Petitioners allege that the 48-hour rule is an invalid exercise of delegated legislative authority because the terms "referred" and "persons" are impermissibly vague and vest unbridled discretion with the Agency. For example, Petitioners point out that the term "referred" is not defined by statute or rule and contend it is not a term of art within the hospice industry. As a result, Petitioners assert the starting point for the 48-hour period cannot be determined from the face of the rule. Petitioners also contend that the 48-hour rule is arbitrary and capricious because the language, "excluding cases where a later admission date has been requested" (the parenthetical), is the only exception that may be considered when determining whether there has been compliance with the subsection, when, in fact, there are "other facts and circumstances beyond the control of the hospice provider that may result in delay in admission of a hospice patient." Petitioners also contend that the use of a 48-hour time period for assessing the need for a new hospice provider in a service area notwithstanding the Agency calculation of a zero numeric need is arbitrary and capricious. Finally, Petitioners allege that the 48-hour rule contravenes the specific provisions of Section 408.043(2), Florida Statutes, which is one of the laws it implements. Specifically, Petitioners further allege that "[b]ecause of its vagueness, its lack of adequate standards, its vesting of unbridled discretion with the Agency, and its arbitrary and capricious nature [the 48-hour rule] fails to establish any meaningful measure of the 'need for and availability of hospices in the community,' as required by [S]ection 408.043(2), Florida Statutes, and in violation of Section 120.52(8)(c), Florida Statutes (2007)." Joint Prehearing Stipulation at 2-4. The Agency's and Palm Coast's Positions The Agency and Palm Coast contend that Petitioners do not have standing to challenge the 48-hour rule, but otherwise assert that the 48-hour rule is not invalid. In part, Palm Coast and the Agency contend that there is a common and ordinary meaning of the term "referred," which is "that point in time when a specific patient or family member on behalf of a patient or provider contacts a hospice provider seeking to access hospice services. Once a patient, patient family member on behalf of [a] patient, or provider contact [sic] a hospice provider seeking to access services, the 48 hour 'clock' should begin to run." See Joint Prehearing Stipulation at 6; AHCA/Palm Coast PFO at paragraph 79. With respect to the term "persons," Palm Coast and the Agency suggest that whether there are a sufficient number of "persons" that fit within the special circumstance "is a fact-based inquiry, which should be evaluated based on a totality of the circumstances." The Agency and Palm Coast contend that circumstances other than as stated in the parenthetical may be considered. Rule 59C-1.0355(4)(d)3. and Specific Terms Referred The term "referred" is not defined either by AHCA rule, in Chapter 400, Part IV, Florida Statutes, entitled "Hospices," or in Chapter 408, Part I, Florida Statutes, entitled "Health Facility and Services Planning." The terms "referred" or "referral" are not defined in any Agency final order or written policy. No definition of "referred" appears in at least three dictionaries, Webster's New World College Dictionary (4th ed. 2005) at 1203, Webster's II New College Dictionary (1999) at 931, and Webster's Ninth New Collegiate Dictionary (1985) at 989, although "refer" is defined, id. For example, "refer" means, in part "[t]o direct to a source for help or information." Webster's II New College Dictionary (1999) at 931. The term "referral," as a noun, means: "1 a referring or being referred, as for professional service, etc. 2 a person who is referred or directed to another person, an agency, etc." Webster's New World College Dictionary (4th ed. 2005) at 1204. Referral also means: "The practice of sending a patient to another practitioner or specialty program for consultation or service. Such a practice involves a delegation of responsibility for patient care, which should be followed up to ensure satisfactory care." Taber's Cyclopedic Medical Dictionary at 1843 (19th ed.). Pet 18A. Pursuant to the Patient Self-Referral Act of 1992, "'[r]eferral' means any referral of a patient by a health care provider for health care services, including, without limitation: 1. The forwarding of a patient by a health care provider to another health care provider or to an entity which provides or supplies designated health services or any other health care item or service; or 2. The request or establishment of a plan of care by a health care provider, which includes the provision of designated health services or other health care item or service." § 456.053(3)(o)1.-2., Fla. Stat. Essentially, this Act seeks to avoid potential conflicts of interest with respect to referral of patients for health care services. In the absence of any authoritative definition of "referred," it is appropriate to determine whether the word has a definite meaning to the class of persons within the 48-hour rule. It is also appropriate to consider the Agency's interpretation of the 48-hour rule. As noted, hospice services are required to be available to all terminally ill patients and their families. Under the 48-hour rule, a CON applicant has the opportunity to prove that persons are being denied timely access to hospice services after 48 hours elapses from when they have been referred and they have not been admitted, absent some a reasonable justification. The issue is what elements are necessary for a person to be deemed "referred" and are those elements commonly understood well enough to enable the 48-hour rule to withstand a challenge for vagueness. If a person calls a hospice organization and inquires about the availability of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate for an elderly parent in need of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill, and further requests hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill based on a prognosis by a licensed physician under Chapters 458 or 459, Florida Statutes, and further requests hospice services, does this call start the 48-hour period? Does eligibility for hospice services have a bearing on when a person is referred? If so, what factor(s) constitute eligibility? Petitioners contend the term "referred," as used in the 48-hour rule, can not be defined with any precision; hence the term is vague.8 Petitioners describe "referred" and "referral," for operational purposes, but not with respect to how the term "referred" is used in the 48-hour rule. Agency experts define the term differently, although none suggest the term is vague. Palm Coast offers a definition of "referred" or "referral" as part of its standard of admitting patients within three hours after referral. But, Palm Coast has a more generic and broader definition for the terms when used in the 48-hour rule. It is determined that "referred" can be defined with some precision and is not vague. But, the various positions and thought processes of the parties are described below and help in framing the controversy for resolution. LifePath and Suncoast Over the years, LifePath developed an administrative/operational manual pertaining to policies and procedures. One such policy is the "referral/intake procedure" that is the subject of a two page written policy, PC 55, revised March 2006. LifePath does not have a written definition of the terms inquiry or referral. LifePath does not believe it is reasonable to define referral as the point in time when a patient, a patient family member, or a physician requests hospice services on behalf of a patient. It is too general. In and around March 2006, LifePath considered a referral to occur when a first contact to LifePath was made by a person requesting hospice services. LifePath used the term referred "to anybody requesting services as a referral source." The admissions staff was directed to gather from the referral source, physician, and/or family any information needed to complete the patient record in the Patient Information System, and contact the patient/family on the same day of referral if available to discuss Lifepath hospice services. Sometime after December 2006, and the final hearing that was held in the Marion County hospice case, LifePath began revising its referral and intake procedure. According to LifePath, its process did not change, only its manner of characterizing certain terms, such as referral. At this time, LifePath wanted to track more precisely different occurrences within LifePath's process, including providing a more accurate label for referral as a request for assessment (RFA) rather than a referral. For LifePath, a referral and a RFA are not synonymous. A RFA is the first contact with the hospice program, which enables staff to follow- up with the prospective patient. A referral is a written physician's order for admission. At the same time, it had come to LifePath's attention that hospice providers (Palm Coast) defined referral differently. It became clear to LifePath that "Palm Coast had a very different definition of referral than [LifePath] did at that particular time. [LifePath] wanted to be able to clearly track each event during that time process so that [LifePath] would be able to compare with [Palm Coast's] definition of referral at that time." Stated somewhat differently, LifePath wanted to create a process that would capture several events (e.g., dates and times) consistently and measurable in the intake process rather than comb through paper charts to verify what they were doing. In April 2007, LifePath made several changes and updates to its written policy/procedure manual and software system, including using the term RFA instead of referral. According to the revised April 2007 policy, "Intake means: the initial demographic and patient condition information that is necessary to initiate the process for 'request for assessment.'" PC 56-57. In summary, for LifePath, a RFA for services is different from and precedes a referral. A RFA occurs when a person makes an initial contact with LifePath inquiring about access to hospice services. At this point LifePath has a name and an action to follow up with, and the information is entered into LifePath's system. The intake process begins. A RFA could be made by a physician in the community who orally or in writing requests LifePath to assess a patient for hospice care and/or issues an assess and admit order if appropriate. A call from a physician requesting LifePath to determine whether a person is appropriate for hospice services begins LifePath's RFA process. An RFA could arise when a person calls LifePath and says that their neighbor is really sick and gives LifePath the neighbors name and telephone number. RFA used in the April 2007 policy revision (PC 56) means the same as the term referral as used in the March 2006 policy revision (PC 55), i.e., the same point in time when LifePath received the patient's name and began the intake process and ability to follow up. Again, LifePath's intake process did not change; Lifepath's policies became more specific describing the events that occur during the entire intake process. According to LifePath, LifePath's revised policy of April 2007 is not reflective of LifePath's interpretation of the 48-hour rule. LifePath's revised policy "outlines the process in the organization in which [Lifepath] begin the intake process and how [LifePath follows] up and then certain moments in time within that process that [LifePath tracks] and monitor[s] as an organization." The April 2007 revision was followed by a May 2007 revision. LifePath characterized Palm Coast exhibits 55 through 57 as an "interim pilot process" that has been made permanent without any apparent significant changes. LifePath also perceived Palm Coast as defining referral to mean when a physician issues an admission order. As a result, LifePath began capturing data reflecting that moment in time so that the Agency could compare LifePath's data -- an apples-to-apples approach -- with another provider's data based on a definition that equated referral with a physician's order, but not for the purpose of defining what referred means to LifePath under the 48-hour rule. LifePath now considers a referral to occur when a physician issues an order to admit for the purpose of gathering data that is to be used to compare other providers, not for the purpose of applying the 48-hour rule. An assess and admit order in LifePath's view is not a referral until LifePath assesses the patient, obtains consent of care, determines that the patient is appropriate for hospice services, receives certification, and receives an order to admit the patient at that time. The RFA process is completed when either the patient is admitted to the program or it is determined that the patient cannot be admitted to the program. LifePath will admit a patient in lieu of having an admitting order when LifePath receives a verbal order to admit the patient from a physician. The verbal order for admission is a referral. LifePath admits at least 75 percent of its patients within 48 hours of the RFA. However, LifePath gave several reasons outside of a hospice program's control that would delay admission greater than 48 hours from the RFA. LifePath believes that the Agency's rule is a good rule, but that the language has been taken out of context and used inappropriately. Like LifePath, Suncoast's interest in the 48-hour rule was stimulated when Palm Coast filed two CON applications requesting approval to provide hospice services in Pinellas County and both applications claim a need for an additional hospice program based, in part, on the 48-hour rule. Suncoast was concerned with the manner in which referral was being used by Palm Coast in light of data provided by Suncoast and further believes that the 48-hour rule is being manipulated by Palm Coast. Suncoast uses an elaborate software product that uses terms such as referral. Suncoast does not have a formal policy definition of referral. Suncoast believes that there are differing definitions of referral among hospice programs. Suncoast filed its rule challenge because according to Suncoast the 48-hour rule is nonspecific; because there is no commonly understood definition of referral in the hospice rule or in the Agency that Suncoast and other hospice providers can depend on. Given the lack of a specific definition, Suncoast and others are unable to determine when the 48-hour clock begins. As used in its business and not for the purpose of defining the term in the 48-hour rule, Suncoast defines referral to mean "that first contact with [Suncoast's] program where [Suncoast gets] a name and [Suncoast gets] other information about the client so that [Suncoast] can go see them." This definition is not limited Medicare reimbursed hospice services. Inquiry and referral are the starting points. But, Suncoast states that there is no consistent definition of referral across the hospice industry. Suncoast also views a referral and an admission as "processes," "not really events." Sometimes the process takes a period of weeks to evolve with many variants, e.g., eligibility, consent, etc. Palm Coast In this proceeding, Interrogatories were answered on behalf of Hospice of the Palm Coast - Daytona and by Hospice of the Palm Coast - Waterford at Blue Lagoon with respect to the referral, intake, and admission of patients for hospice services to such facilities. Several terms are defined. "Referral" is an industry term, referring to contact by an individual or entity including but not limited to a patient, family member on behalf of a patient, HCS, POA, guardian, ALF, nursing home, or hospital seeking to access hospice services. "Referred" is an industry term, having a plain and ordinary meaning within the hospice field which generally describes when a patient, patient family member or personal representative, or provider contacts a hospice program seeking to access hospice services. "Intake" [] a general term of art describing the process from referral to admission. Admission is a general term of art describing that point in time when a patient meets all eligibility requirements including clinical requirements for hospice services and is admitted to a hospice program. [Assessment is t]he process by which patients are evaluated regarding clinical appropriateness for hospice services including eligibility requirements as set forth by state regulation, Medicare, Medicaid or other third party payors. [First Contact and initial contact, a]s it relates to referral, intake, and admission of patients, are defined above as referral and referred. For Palm Coast's purposes, a referral occurs when someone, e.g., a physician, discharge planner, family or a friend, contacts the hospice agency seeking hospice services. If the first contact comes from a physician, Palm Coast seeks that physician's approval to admit the patient if the patient is eligible or qualifies for hospice. For Palm Coast, it is typical to obtain a physician's written order for evaluation and admission before the patient is evaluated by the hospice provider. If a physician calls with a referral of a patient, the call goes to the admission coordinator. Calls from patients or family of a hospice patient would be routed into the clinical division. A referral does not include contacting a hospice requesting information where a chemotherapy wig or a hospital bed could be purchased. For Palm Coast, the admissions coordinator determines when an inquiry is an inquiry only or is a referral. The phone call may turn into a referral when the caller is asking for hospice services to be provided or a family member or to a patient who is at their end of life as opposed to a general request for information about hospice services. But, Palm Coast does not have written criteria for use by the admissions coordinator in determining whether a phone call is an inquiry or referral, or when an inquiry becomes a referral. Odyssey also does not have a written definition of referral, although it is a term used in policies and procedures. A referral results when they have a patient's name and a physician's name and someone is calling for hospice services. Ms. Ventre states that order and referral are not interchangeable. A physician's order is not a referral. For the purpose of describing Palm Coast's hospice operations and referring to page four of the "referral process" page within Palm Coast's Admission and Patient/Family Rights Policies, a referral begins when a written physician's order is received by the hospice program. Receipt of a physician's written order and referral are synonymous regarding the three- hour standard. Receipt of a telephone call from a potential patient does not qualify as a referral. It is classified as an inquiry. It is unusual for a patient or a patient's family would make a referral themselves. (Ms. Ventre characterized an inquiry as someone calling for an explanation of hospice services. A phone call could be classified as an inquiry or referral depending on the depth of the call. It may be an inquiry where there is no follow-up.) Palm Coast uses Odysseys service standard providing that all patients are admitted within three hours from a written physician's order to admit -- 24 hours a day, seven days a week. (This three hour standard is one of 14 standards adopted by Palm Coast/Odyssey.) A clinical assessment is performed within this three hour period. For Palm Coast, if it has a written physician's order to admit and if the family is available, Palm Coast believes it can meet the three-hour standard. Palm Coast (and Odyssey) does not track the time between receipt of a physician's order to evaluate and the admission of the patient nor does Odyssey track the time between the receipt of a physician's order to admit and the time the admission of the patient. Palm Coast (and Odyssey) maintains internal mechanisms that are reviewed on a daily basis to evaluate the referral process and if patients are being admitted in a timely fashion. Sometimes the three-hour standard is not met. The most frequent reason is that the patient and/or the family are not available to meet. Another is the time it may take to gather documentation from the referring physician. The Agency Agency experts defined "referred" differently. During the final hearing, Ms. Stamm stated that in order for a person to receive hospice services, the person must be qualified or eligible. Eligibility occurs when a physician certifies that the person has a six months or less (for Medicare) or (pursuant to Florida law) one year or less life expectancy. Ms. Stamm clarified her deposition testimony during the final hearing and stated that a person is referred to a hospice program when a request for hospice services is made to the hospice program by or on behalf of the person, coupled with the physician's written certification. A referral would not occur when, e.g., the person or someone on their behalf simply asks for hospice services without the physician's certification. Ms. Stamm was not aware whether this interpretation reflected the Agency's interpretation. She never thought there was a problem with defining "referred" or that it was an issue, so it was not discussed. Also, Ms. Stamm was not aware of how the Agency has interpreted the 48-hour rule. Mr. Gregg confirmed that there is no written definition of referred, but that it is commonly used in healthcare, i.e., "referral is a mechanism by which a patient is channeled into some specific new or different provider." Having considered his prior deposition testimony, see endnote 9, and in preparation for the final hearing in this proceeding, for Mr. Gregg, the 48 hours starts "[a]t the point of initial contact," "the point when some person representing a potential patient calls a hospice or contacts a hospice and says I believe we have a person who is appropriate for your service." The first contact could be made by a hospital discharge planner or nursing home social worker. Mr. Gregg does not believe that a physician's certification is required to start the 48-hour period or is part of the initial contact.9 Rather, the physician's certification would come at the end of the process, although the "physician is going to be a part of a successful referral." In other words, in order to start the 48-hour period, it would not be necessary for the hospice program to be advised that a patient was terminally ill. The latter determination is required to assess whether "the patient is appropriate and eligible." Generally, Mr. Baehr agrees with Mr. Gregg's view. For Mr. Baehr, there is a transfer of responsibility that occurs when the first contact is made at a point in time when either the patient or a family member or some institution, whether it be an assisted living facility, nursing home, hospital, or a physician, makes a contact with a hospice, and in a sense initiates a process that requires the hospice program to respond and do something so that this process can get underway. Mr. Baehr opines that referral has a common understanding; it is similar to when a patient is provided with a different medical service, whether it be hospice or some other form of healthcare service, from the one they are currently receiving. Mr. Baehr differentiates this scenario from one that occurs when a person merely seeks information about hospice versus someone who is seeking eventual admission to a hospice program. Admitted There is no rule or statute that requires a hospice provider to admit a patient within a certain time period. In Big Bend Hospice, Inc. v. Agency for Health Care Administration, Case No. 01-4415CON, 2002 Fla. Div. Hear. LEXIS 1584 (DOAH Nov. 7, 2002; AHCA April 8, 2003), aff'd, 904 So. 2d 610 (Fla. 1st DCA 2005), a proceeding involving a challenge to a numerical need (under the fixed need pool) for an additional hospice program, it was expressly found: "40. An admission consists of several components: (a) a physician's diagnosis and prognosis of a terminal illness; (b) a patient's expressed request for hospice care; (c) the informed consent of the patient; (d) the provision of information regarding advance directive to the patient; and (e) performance of an initial professional assessment of the patient. At that point, the patient is considered admitted. A patient does not have to sign an election of Medicare benefits form for hospice care prior to being admitted." 2002 Fla. Div. Admin. Hear. LEXIS at *26- 27(emphasis added). See also § 400.6095(2)-(4), Fla. Stat. This finding of fact was adopted by AHCA in its Final Order. A patient cannot be admitted for Medicare reimbursement without a physician's order. In order to be eligible to elect hospice care under Medicare, an individual must be entitled to Part A of Medicare and be certified by their attending physician, if the individual has an attending physician, and the hospice medical director as being terminally ill, i.e., that the individual has a medical prognosis that his or her life expectancy is six months or less if the illness runs its normal course, and consent. 42 C.F.R. §§ 418.3, 418.20(a)- (b), and 418.22(a),(b),(c)(i)-(ii). AHCA has defined the term "admitted" by and through its Final Order in Big Bend Hospice and there is no persuasive evidence in this case to depart from that definition, although the definition of the term was discussed during the hearing. The Agency's definition of "admitted" establishes the outer time limit when the 48-hour period ends for the purpose of the 48-hour rule. Persons The 48-hour rule requires the applicant to indicate the number of persons who are referred but not admitted to hospice within 48 hours of the referral (excluding cases where a later admission is requested). The term "persons" is not defined by AHCA statute or rule. However, the term is generically defined by statute. "The word 'person' includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations." § 1.01(3), Fla. Stat. "The singular includes the plural and vice versa." § 1.01(1), Fla. Stat. The term "persons" used in the 48-hour rule is not vague, ambiguous, or capricious. In context, it refers to individuals who are eligible for hospice services within the meaning of the 48-hour rule as discussed herein and who request hospice services. The Agency has not established by rule or otherwise a specific number of persons that can trigger a special circumstance under the 48-hour rule or the specific duration for counting such persons. The numeric need formula does not encompass every health planning consideration. The need formula is based on general assumptions such as population, projected deaths, projected death rates applying statewide averages, and admissions. The special circumstances set forth in Rule 59C- 1.0355(4)(d) compliment other portions of the rule and the statutory review criteria and allows an applicant to identify factors that may be unique to a particular service area, such as a particular provider not providing timely access to persons needing hospice services or a service area that is rural or urban that affects access. One size may not appropriately fit all. Rather, the term is capable of being applied on a case-by-case basis when (hospice) CON applications are reviewed by the Agency prior to the issuance of the SAAR and thereafter, if necessary, in a de novo proceeding, through and including the issuance of a final order. The Agency's exercise of discretion is not unbridled. Excluding cases where a later admission date has been requested10 The 48-hour rule provides in part: "3. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons." There is some testimony that the parenthetical may be interpreted broadly by the Agency, although Mr. Gregg suggested that the parenthetical was literally limited to when a specific request is made for a later admission date. There are numerous circumstances beyond the control of a hospice that delay an admission other than when a later admission date is requested under the rule. These circumstances do not necessarily indicate an access problem.11 Petitioners provided examples of situations (other than when a later admission date is requested) that may arise when a person would not be admitted with 48 hours after being referred such as when a patient or family is unresponsive to a contact made by the hospice provider; a patient was out of a hospice program's service area when the initial request for hospice services was made and no immediate plans to transfer to the service area; the patient/family/caregiver chose to stay with another benefit, e.g. skilled nursing facility, versus electing their hospice Medicare benefit; a patient residing in a non-contract hospital, e.g., VA Hospital, when the initial request is made and patient admitted to hospice service when the patient is transferred out of that facility into a contract facility, hospice inpatient setting or home; patient meeting the admission criteria at a later date; a delay in obtaining a physician order for assessment; or when a patient is incompetent at the time the initial request to consent for care or other delays in obtaining consent. There are also factors where a referral does not end in an admission. Persons falling in this category would not be counted under the 48-hour rule. The Agency and Palm Coast suggest that the Agency may consider these non-enumerated factors, whereas LifePath and Suncoast suggest the Agency's discretion is limited. Compare Agency/Palm Coast PFO at paragraphs 90-95, and 141 with LifePath/Suncoast PFO at paragraphs 61-67. The persuasive evidence indicates that the Agency should consider these factors. Nevertheless, the plain language of the parenthetical excludes from consideration legitimate circumstances that would reasonably explain a delay in admission other than the affirmative request for a later admission date and, as a result, is unreasonably restrictive. 48 hours Licensed hospice programs are required to provide hospice services to terminally ill patients, 24 hours a day and seven days a week. It is important that terminally ill persons who request hospice services (or if requested on their behalf), receive access to hospice services in a timely fashion. There is evidence that approximately 30 percent of patients that are admitted to hospice die within seven days or less after admission, i.e., an average length of stay of seven days or less. While the opinions of experts conflict, the 48-hour period is a quantifiable standard assuming that there is a precise and reasonable definition of referred and admission. Ultimate Findings of Fact Having considered the entire record in this proceeding, it is determined that the term "referred" is not impermissibly vague or arbitrary or capricious. A person is "referred" to a hospice program when a terminally ill person and/or their legal guardian or other person acting in a representative capacity, e.g., licensed physician or discharge planner, on their behalf, requests hospice services from a licensed hospice program in Florida. This definition presumes that prior to or contemporaneous with the request for hospice services a determination has been made by a physician licensed pursuant to Chapter 458 or Chapter 459, Florida Statutes, that the person is terminally ill, i.e., "that the patient has a medical prognosis that his or her life expectancy is 1 year or less if the illness runs its course." §§ 400.601(10) and 400.6095(2), Fla. Stat. This determination may be made by, e.g., the hospice's medical director, who presumably would be licensed pursuant to one of these statutes. The Agency and Palm Coast implicitly suggest that a referral (pursuant to the 48-hour rule) does not include a determination by a physician that the person is terminally ill. When it comes to "referral" in the generic, non- emergency physician/patient setting, the patient is examined by a physician; the physician determines that the patient needs a further evaluation by a specialist; and the physician refers the patient to the specialist.12 This is usually followed with a written order. The patient, or his or her authorized representative on the patient's behalf, must consent to and request any further examination for the ensuing service to be provided. The point is that the physician makes the referral. In order to apply the plain and commonly understood meaning of the term "referred" in the context of the 48-hour rule, the physician's determination is a critical component of the referral process, coupled with the patient's request and ultimate consent for services. Access to hospice services and the time it takes to deliver the service is of the essence for the prospective hospice patient. Having a written and dated physician certification of terminal illness would likely make recordkeeping easier and more predictable to assist in determining when the 48-hour period starts, in conjunction with the request for services. However, the potential delay in obtaining a written certification from a physician who has determined the patient is terminally ill should not be required to begin the 48-hour period and the referral in light of the purpose of the 48-hour rule. Thus, while a determination of terminal illness is necessary to start the running of the 48 hours under the 48-hour rule, reduction of that determination to writing is not. This definition, coupled with the 48 hour admission requirement and consideration of other factors affecting an admission, provides a sufficient standard for determining whether a person is receiving hospice services in a timely fashion.13 Whether access has been denied to a sufficient number of "persons" under the rule for the purpose of determining whether a special circumstance may justify approval of a hospice CON application in the absence of numeric need can be determined on a case-by-case basis by the Agency in the SAAR or later, if subject to challenge in a Section 150.57(1), Florida Statutes, proceeding in light of the facts presented. See generally Humhosco, Inc. v. Department of Health and Rehabilitative Services, 476 So. 2d 258, 261 (Fla. 1st DCA 1985). The use of the word "persons" in the rule is not vague or arbitrary or capricious. The time period of "48 hours" is not vague or arbitrary or capricious. Given the plight of terminally ill persons needing hospice services, it is not unreasonable for the Agency to have chosen this time period, in conjunction with "referred" and "admitted" as the beginning and stopping points for determining whether access is being afforded on a timely basis. The parenthetical language "(excluding cases where a later admission date has been requested)" is arbitrary and capricious because it precludes consideration of other factors that reasonably demand consideration given the rule's purpose. There is persuasive evidence that persons may not access hospice services (be admitted within 48 hours after being referred) within the 48-hour period based on circumstances that are outside the control of the hospice provider and arguably outside the parenthetical language. To the extent the parenthetical language is construed to limit consideration to one circumstance, the failure to consider other circumstances could unreasonably skew upward or overstate the number of persons that may fit outside the 48-hour period and indicates a lack of timely access when the contrary may be true, having considered the circumstances. The 48-hour rule can remain intact notwithstanding severance of the parenthetical language. The remaining portions of the rule provide an applicant with a viable avenue to demonstrate a lack of timely access based on a special circumstance. Finally, even if the 48-hour rule was not in existence, under applicable statutory and rule criteria, see, e.g., Subsections 408.035(2), Florida Statutes, an applicant may provide evidence that persons are being denied timely access to hospice services in a service area. However, such evidence would not necessarily be classified as a special circumstance unless the evidence fit within Florida Administrative Code Rule 59C-1.0355(4)(d)1. and 2.
The Issue In the first batching cycle of 2006, Hospice of the Palm Coast, Inc. ("Palm Coast") and Catholic Hospice, Inc. ("Catholic Hospice"), applied to the Agency for Health Care Administration ("AHCA" or the "Agency") for a certificate of need to establish a new hospice program in Broward County. Palm Coast's application number is CON 9931; Catholic Hospice's is CON 9928. The issues in this case are whether either, both or neither of the applications should be approved.
Findings Of Fact The Parties AHCA "[D]esignated as the state health planning agency for purposes of federal law," Section 408.034(1), Florida Statutes, AHCA is responsible for the administration of the CON program and laws in Florida. See § 408.031, Fla. Stat., et seq. As such, it is also designated as "the single state agency to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat. Catholic Hospice Catholic Hospice, Inc., has been a licensed provider of hospice services in Miami-Dade and Monroe Counties (Hospice Service Area 11 which adjoins Service Area 10 along the Broward/Miami-Dade County line) since 1988. It is faith-based and mission-driven; in keeping with its nature as such, it is a section 501(c)(3) not-for-profit corporation. Catholic Hospice has two corporate members: the Archdiocese of Miami and Mercy Hospital, a part of Catholic Health East. Neither of its two members provide it with funding. Catholic Hospice is governed by a board of directors with autonomous authority to govern its activities. The members of its board live and work in the local community. Palm Coast Palm Coast is a not-for-profit Florida corporation currently licensed to operate hospice programs in Hospice Service Area 4B and, like Catholic Hospice, in Hospice Service Area 11 (Miami-Dade and Monroe Counties). Palm Coast's provision of hospice services in Service Area 11 is new relative to Catholic Hospice's service for nearly 20 years in the service area. Palm Coast has been licensed as a hospice in Service Area 11 since March 2006. Palm Coast is a wholly-owned subsidiary of a its management affiliate and parent organization, Odyssey HealthCare, Inc. ("Odyssey"), which is a for-profit national chain of hospices. The sole member of Palm Coast is Odyssey HealthCare Holding Company, Inc., a wholly-owned subsidiary of Odyssey. Palm Coast's Board of Directors are managers of Odyssey all of whom live and work in or near Dallas, Texas. Numeric Need for a Service Area 10 Hospice Program Hospice Service Area 10 Hospice Service Area 10 consists of Broward County. Referred interchangeably by the parties at hearing as either Service Area 10 or Broward County, Hospice Service Area 10 will also be referred to in this Order as either Service Area 10 or Broward County. AHCA's Determination of Numeric Need To determine need in Service Area 10 in the "Other Beds and Programs" First Batching Cycle 2006, AHCA employed the numeric need methodology found in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"). The Agency's methodology calculates need using a number of factors. Among the factors are four categories of deaths in the service area: U65C, 65C, U65NC, and 65NC, described by the rule as follows: (a) Numeric Need for a New Hospice Program * * * U65C is the projected number of service are resident cancer deaths under 65 . . . 65C is the projected number of service area resident cancer deaths age 65 and over . . . U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer . . . 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer . . . Fla. Admin. Code R. 59C-1.0355(4). (Consistent with these four factors, data was introduced at hearing that is discussed further in this order that relates to four categories of patients grouped by diagnosis and age in much the same way: "65 and Over Cancer," "65 and Over Non-cancer," "Under 65 Cancer," and "Under 65 Non-cancer." See paragraph 16, below.) According to the Hospice Programs Rule, "[n]umeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater." Id. Application of the Agency's methodology to the factors relative to Service Area 10 yielded more than 400 projected unserved patients who would elect a hospice program ("Net Need"). Palm Coast presented a hybrid methodology that yielded a Net Need of 1,340. In Palm Coast's view, the Net Need produced by its hybrid methodology demonstrated need for at least two new hospice programs. The Agency, however, interprets the Hospice Programs Rule to allow only one new hospice program to be added in any one batching cycle no matter what number is yielded by its methodology. True to its calculation of numeric need and its interpretation of the rule, the Agency duly published its fixed need pool of one. The fixed need pool was not challenged. In response to the published need, Catholic Hospice and Palm Coast submitted timely applications for approval of a new hospice in Broward County. In its State Agency Action Report ("SAAR"), AHCA approved Catholic Hospice's application and denied Palm Coast's. Overview and Approaches of the Applications The applications of Catholic Hospice and Palm Coast comply with the application content and review requirements in statute and rule. Both applications include information related to "special circumstances" that would justify approval of a hospice program in the absence of numeric need. Catholic Hospice, however, did not attempt to demonstrate the existence of "special circumstances" at hearing. Palm Coast, on the other hand, attempted to show that more than one new hospice program could be approved in Broward County. Palm Coast's case for approval of more than one hospice program has two bases. The first is justification under the Special Circumstances provisions art of the Hospice Programs Rule found in Subsection (4)(d) of the rule. The special circumstances advanced by Palm Coast are discussed below in paragraphs 138 to 140. The second base is the "hybrid need methodology" discussed above and developed by its expert health planner. Palm Coast's Hybrid Need Methodology Palm Coast's hybrid methodology follows the assumptions of AHCA's methodology in three categories based on age and diagnosis: "Under 65 Cancer," "Under 65 Non-cancer," and "65 and Older Cancer." It differs from AHCA's methodology in that it assumes that penetration in the "65 and Older Non- cancer" population will remain stable. Palm Coast's "hybrid" need methodology suggests that the need in Service Area 10 is greater than the need forecast by AHCA's approved methodology. The hybrid methodology yields a net need of 1,320 admissions rather than the 441 projected by the Agency's methodology. Stipulated Facts Prior to hearing, the parties filed a joint pre- hearing stipulation.1 In Section E.,2 of the document, entitled "Statement of Facts Which Require No Proof," the parties stipulated to following facts: [a.] Section 408.035, Florida Statutes (2005) sets forth the statutory CON review criteria at issue in these proceedings. The parties agree that the following subparagraphs of Section 408.035, Florida Statutes (2005) are either not applicable or not at issue to consideration of the application: (8) and (10); [b.] The Parties agree that the CON review criteria and standards applicable in this proceeding are set forth in Section 408.035, Florida Statutes (2005), and Rules 59C- 1.0355 and 59C-1.030, Florida Administrative Code. The parties agree that the following criteria in Rule 59C-1.0355, Florida Administrative Code, are either not applicable or not at issue to consideration of the application: (7), (8), (9), and (10); [c.] The parties agree that CATHOLIC HOSPICE and PALM COAST's Letter of Intent (hereinafter referred to as "LOI") and CON applications were timely filed with the Agency. [d.] The CON Applications filed by CATHOLIC HOSPICE and PALM COAST comply with the Application content and review process requirements of Sections 408.037 and 408.039, Florida Statutes (2005) and Rule 59C-1.0355, Florida Administrative Code, and the Agency's review of the Application complied with the review process requirements of the above-referenced Statutes and Rule. [e.] A FNP of one (1) was projected and published for Hospice Service Area 10 for the 2006 - 1st Batching Cycle in the Florida Administrative Weekly, Volume 32, No. 14. [f.] The FNP publication of one (1) was not challenged. [g.] The parties agree that Schedules 1 through 10, contained in each of the two CON applications (Nos. 9928 and 9931), may be admitted into evidence as reasonable projections without a sponsoring witness. [h.] The parties agree that the audited financial statements of the two applicants and parent entities, presented in the CON applications are true and accurate copies of the respective entity's audited financial statements and may be admitted into evidence without a sponsoring witness. [i.] As to Schedule 5, the parties agree that the figures presented by both Applicants are reasonable, and each applicant is likely to meet their respective utilization projections presented in Schedule 5. * * * [j.] As to Schedule 6, the parties agree that each applicant can provide hospice services with the staffing positions and volumes presented in Schedule 6, and that the staffing and salaries proposed are reasonable for the services proposed by each applicant. [k.] The stipulations, referenced in paragraphs 8 through 11 above, shall not preclude the parties from presenting comparative evidence about any aspect of the information presented or assumptions contained in Schedules 1 through 10 of either of the two remaining applications. [l.] Section 408.035(1), Florida Statutes (2005) provides in pertinent part as follows: "The need for the healthcare facilities and health services being proposed." Pursuant to AHCA's Florida Need Projections for the hospice program, background information for use in conjunction with the April 2006 Batching Cycle for the July 2007 Hospice Planning Horizon, a need was identified for one (1) additional hospice program in AHCA Service Area 10. Thus, CATHOLIC HOSPICE, PALM COAST, and the Agency agree there is a need for one (1) program. * * * [m.] Section 408.035(3) provides in pertinent part as follows: "The ability of the applicant to provide quality of care and the applicant's record of providing quality of care." Section 408.035 is not at issue with respect to either CATHOLIC HOSPICE or PALM COAST's compliance with the above-referenced statutory criteria. The parties agree that both of the proposed programs can provide quality care and satisfy the criterion in Section 408.035(3), Florida Statutes. [n.] Section 408.035(4) provides in pertinent part as follows: "The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." [o.] Section 408.035(5), Florida Statutes (2005) provides in pertinent part as follows: "The extent to which the proposed services will enhance access to healthcare for residents of the service district." The parties agree, that to the extent there is a published need, approval of either CATHOLIC HOSPICE or PALM COAST would enhance access to healthcare for residents of the Service Area. Notwithstanding the fact that both CATHOLIC HOSPICE and PALM COAST believe that approval of either program will enhance access to healthcare for residents of the Service Area, nothing herein shall preclude the parties from presenting comparative evidence as to which program would provide better access. [p.] Section 408.035(6) provides in pertinent part as follows: "The immediate and long-term financial feasibility of the proposal." Section 408.035(6) is not at issue in these proceedings. The parties agree that both proposed hospice programs are financially feasible in the short- and long-term, and satisfy the criteria in Section 408.035(6), Florida Statutes. [q.] Section 408.035(8), Florida Statutes (2005), provides in pertinent part as follows: "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." Section 408.035(8) is not at issue with respect to a review of the CON applications filed by CATHOLIC HOSPICE or PALM COAST. [r.] AHCA is the state agency responsible for issuance of licenses to hospice providers, and is the sole state agency authorized to make Certificate of Need ("CON") determinations. [s.] North Broward Hospital District is a special hospital taxing district created by Special Act of the Florida Legislature, chapter 27438, Laws of Florida (1951), and operates in the northern geographical area of Broward County. GOLD COAST is an operating unit of North Broward Hospital District. [t.] CATHOLIC HOSPICE is a not-for-profit Florida corporation and existing provider of hospice services in Florida. [u.] PALM COAST is a not-for-profit Florida corporation and existing provider of hospice services in Florida. [v.] CATHOLIC HOSPICE and PALM COAST are each currently providing services through licensed hospice programs in Hospice Service Area 11 (Miami - Dade and Monroe Counties). [w.] Hospice Service Area 10 is Broward County, Florida. [x.] The current hospice providers in Hospice Service Area 10 are VITAS Healthcare Corporation of Florida, Hospice By the Sea, Inc., HospiceCare of Southeast Florida, Inc., and GOLD COAST. Joint Prehearing Stipulation, filed May 9, 2007. The Applicants in Other Service Areas; Existing Providers in Service Area 10 Catholic Hospice is currently licensed and operating in Service Area 11, Dade and Monroe Counties. Palm Coast has programs that are currently licensed and operating in Service Area 4B, comprising of Flagler and Volusia Counties and, like Catholic Hospice, in Service Area 11. Service Area 10 has four existing providers of hospice services. Vitas Healthcare Corporation of Florida (Vitas) is a for-profit hospice. The other three, Hospice By the Sea, Inc., HospiceCare of Southeast Florida, Inc., and Gold Coast, are all community-based not-for-profit hospices. Of the four existing providers, Vitas is by far the dominant provider of hospice services in the service area. Affiliations and Sponsors Palm Coast Affiliation with Odyssey Palm Coast is affiliated with Odyssey Healthcare, Inc., a for-profit corporation. Despite the affiliation, Palm Coast is a distinct entity in accordance with Florida law. It has its own Articles of Incorporation and By-Laws, its own audited financial statements and its own local governing board. It complies, moreover, with all state and federal requirements for AHCA and Medicare licensure and certification. Additionally, each of the individual Palm Coast programs has its own bank account into which all of its revenues are deposited and out of which all of its expenses are paid. If the proposed Palm Coast hospice program in Broward County exhibits a positive cash flow from its operations, those fund will remain with the program to be used for patient care and operations. This is the practice followed by Palm Coast at its existing programs in Service Areas 4B and 11. The Palm Coast model, therefore, which Palm Coast will follow should it be approved in Broward County, will be to act and operate as a community-based hospice. While it will "act locally," it will also benefit from its affiliation with Odyssey. It will be able to take advantage of Odyssey's resources, experience and successful management tactics. These benefits include economies of scale based on Odyssey's buying power and operation of 80 programs in 26 states, Odyssey's experience with a multitude of startup programs, identification and treatment of minority population and non-cancer patients, treatment of cancer patients (traditionally served by hospices), extensive educational tools developed over 10 years of operation, continuing education for all staff members, accessibility to a large clinical database, and access to centralized services such as billing and foundation funds. Through its affiliation with Odyssey and with the assistance Odyssey is reasonably expected to provide, Palm Coast possesses the necessary management and clinical experience, operational systems and corporate resources to efficiently, effectively and successfully implement a new hospice program in Service Area 10. Indeed, the benefit of combining local resources and knowledge with Odyssey's nationwide experience, assets, buying power and success has been demonstrated with the successful establishment of Palm Coast programs in Service Area 4B and Service Area 11, the service area in which Palm Coast's rival in this proceeding gathers its own support and sponsorship. b. Catholic Hospice's Corporate Sponsors in Service Area 11 Catholic Hospice has two corporate sponsors in Service Area 11: the Archdiocese of Miami and Mercy Hospital. The Archdiocese consists of Broward, Dade and Monroe Counties. It places a priority on health care as a large part of its mission. The Archdiocese is the sole corporate sponsor of a substantial network of post-acute health care facilities in Dade and Broward Counties, including rehabilitation hospitals, nursing homes, assisted living facilities, HUD elderly housing facilities and cemeteries. This health care network is managed from its headquarters in Broward County by Catholic Health Services (“CHS”), and extends throughout the geographic boundaries of the Archdiocese. Founded in 1988, Catholic Hospice is the realization of the aspirations of the Archdiocese's Monsignor Walsh. At the time, the hope was for Catholic Hospice to serve the entire geographic area of the Archdiocese; a CON, however, could only be secured for Service Area 11. Hospice services in Broward County is missing from the continuum of care in which the Archdiocese is engaged. There will be a benefit to the patients in the CHS network of care because continuum of care increases continuity of care and is better for patients. The gap in the Archdiocese's continuum of care is therefore significant to the patients it serves. Mercy Hospital, the second corporate sponsor of Catholic Hospice in Dade County, is an acute care hospital managed by Catholic Health East. Catholic Health East is a Catholic network of over 35 acute care hospitals that extends along the east coast of the United States from Maine to Florida. The network includes Holy Cross Hospital in Broward County. Support for Catholic Hospice by Catholic Health and Elder Care Entities The Archdiocese of Miami, Mercy Hospital, Holy Cross Hospital in Broward County and Catholic Health East all share a common identity as faith-based, not-for-profit organizations with the mission of demonstrating reverence for the human body and spirit by bringing the healing and comfort of the Lord to those in need throughout their respective communities. The common mission and identity that Catholic Hospice and the related Catholic health care entities share naturally cultivates collaboration among them. These collaborations within an extended network of health and elder care services are significant. They will allow Catholic Hospice to expand into Broward County quickly and efficiently. Palm Coast's Benefits from Affiliation with Odyssey Palm Coast has available to it through its management agreement with Odyssey, all the resources of the two existing Palm Coast programs as well as the nationwide resources of Odyssey. Due to its experience with new market development, Odyssey has the ability to enter the market rapidly; programs, policies, and operations are already in place, and the strong support resources provide the wherewithal for Hospice Palm Coast to do their job of rapidly, efficiently, and appropriately upon entering the Broward County marketplace. Odyssey has started over thirty hospice programs since 1995, with five new programs established in the 2006 calendar year, evidence of experience in development of new hospice programs, in addition to their experience with hospice acquisitions. The proof of likely success in Broward County as the result of Palm Coast's affiliation with Odyssey can be seen, moreover, in the success of Palm Coast's programs in District 4A and 11, implemented under the guidance and direction of Odyssey. In the marketplaces where Odyssey and Palm Coast have historically initiated new hospice programs, they have become proficient at determining the traditional or existing core of business for the existing providers, and utilized their experience and success to come in and fill the gaps, otherwise known as providing "Hospice Services Beyond the Traditional Model." The addition of Hospice of the Palm Coast in Broward County will allow for the expansion of the Odyssey way of life, through its not-for-profit affiliate, utilizing its successful operational philosophy and Fourteen Service Standards. Odyssey has a dedicated start-up team that, upon CON approval, plans to work with the local providers and other individuals or entities within the local market, to guide the Palm Coast's Broward program from the CON approval, up through Medicare certification. Operationally, based on its size in terms of programs and economies of scale, there are significant benefits to Palm Coast's proposed program in Broward; the ability to contract on a national level for corporate wide benefits including a variety of medical equipment, medical supplies, and pharmacy supplies, due to the operation of over 80 hospice programs nationwide, which yields significant economies of scale. The Odyssey Support Center provides the Palm Coast start-up programs with policies and procedures, forms, educational materials, and training, in addition to centralized services efficiently operated for all the Odyssey programs from the Dallas corporate headquarters. Specifically, Odyssey supports each individual hospice location by providing coordination, centralized resources, and corporate services, including, but not limited to: Financial accounting systems, including billing, accounts receivable, accounts payable, and payroll; Information and telecommunications systems; Clinical support services; Human resource administration; Regulatory compliance and quality assurance; Marketing and educational materials; Training and development; and Start-up licensure and certification. In return for these services provided by Odyssey, the Palm Coast programs pay a management fee, which is calculated as seven percent of the local hospice's net revenue. The same arrangement will be implemented upon Palm Coast's approval for the CON in Broward. These resources allow each local office to focus on Odyssey's primary mission to provide responsive, quality care to patients and their families. Once the Palm Coast entities, including the proposed Broward program, become "cash positive," a separate and distinct bank account will be opened to ensure the funds of the not-for- profit Palm Coast entities are not co-mingled with that of its management affiliate Odyssey. Broward County Diversity and Need The population of Broward County is becoming increasingly diverse. The population that is dying is also becoming more diverse. For example, from 1996 to 2004, Hispanic deaths in Broward County increased by 50 percent whereas deaths of the non-Hispanic population declined. At the same time, African-Americans and non-Caucasians had significant increases in deaths while Caucasian deaths declined. Since 2000, existing providers have not met the needs of all of the age and diagnosis groups in the District. "[P]art of the reason for that is that the underlying nature of the service area has been changing, becoming more diverse … [and] younger, with a growing ethnic population." Tr. 620. While Service Area 10 has been changing, the existing providers have not been able to adapt to the changes in the population. Catholic Hospice's History of Dealing with Diversity For almost 20 years, Catholic Hospice has refined its expertise in ascertaining and meeting the needs of the diverse, multi-cultural population within Dade County, including Hispanics, Haitians, Caribbeans, Jamaicans and African Americans. This history demonstrates Catholic Hospice's ability to ascertain and meet the needs of the diverse population in Broward County if approved. One of the strengths of Catholic Hospice is its culturally and ethnically diverse staff, many of whom are bilingual. Having bilingual staff is significant. For example, Catholic Hospice’s Medical Director, Dr. Kiedrowski speaks Spanish fluently and has seen only one patient whose primary language was English in the year and a half he has been on staff. In fact, seventy to eighty percent of Catholic Hospice’s patients in Service Area 11 are Hispanic. Catholic Hospice is particularly sensitive and responsive to the needs of the Hispanic community – the majority of which identify themselves as Catholic. Palm Coast's History of Dealing with Diversity Palm Coast does not have Catholic Hospice's multi- decade experience of dealing with diversity in Service Area 11 that will be of such benefit in Service Area 10. In contrast to Catholic Hospice in Service Area 11, Palm Coast is a start up that has only been in existence for about a year. Palm Coast is not lacking in the ability to deal with diverse populations, however, because of its affiliation with Odyssey and experience in Service Areas 4B and 11. This ability is demonstrated by Palm Coast's practice while its programs have been in a start-up phase in these service areas. Upon entering a new community, Palm Coast hires caregivers and administrative personnel for the hospice office from the community. These new employees reflect different local cultures, whether Hispanic, African American or other. In Service Area 11, for example, Palm Coast's new employees include Haitian employees to reflect the Haitian component of the diverse local culture in the area. In addition to diversity in hiring practices, cultural diversity training is offered to Palm Coast employees by Odyssey. The training involves education with regard to local cultures, religions, and customs unique to the area. Palm Coast's intent, therefore, is to hire and train a diverse group of individual from the same locale as the patients in order to facilitate the service to patients and increase the patients' comfort levels. Palm Coast makes an effort to recruit a staff that mirrors the racial and ethnic make-up of the community it serves. The effort and experience that Palm Coast has had in Service Area 11 in particular will serve Palm Coast well in Service Area 10 should its application be approved. But Catholic Hospice’s long history with serving the multicultural needs in Dade County is predictive of better capability to deal with Broward County's diversity than Palm Coast's one-year experience in the County and its intent to follow in the footsteps of that experience in Broward County should its application be approved. Hospice Services and Programs Hospice is both a philosophy and method of care for terminally ill patients, their families and loved ones. Hospice services provide palliative care for pain and management of symptoms of a terminal disease process or processes, as well as supportive care to ease the psychological and social strains of a patient and his or her family confronting mortality. Palliative medicine focuses on relieving suffering and symptoms, not curing a patient. Usually provided in the home, hospice services are required to be capable of being tailored based on individual need and are required to be available twenty-four hours a day, seven days a week, including holidays. Catholic Hospice meets these requirements. Palm Coast meets the requirements as well. Palm Coast's Program Palm Coast's program is reflective of a spirit and idea of caring that emphasizes comfort and dignity for the dying, making it possible for them to remain independent for as long as possible and in familiar surroundings. Palm Coast utilizes an interdisciplinary team approach of physicians, nurses, social workers, and others to provide services including palliative care in the home, short-term inpatient services, mobilization and coordination of ancillary services and bereavement support. The patient's plan of care is developed and regularly modified by the interdisciplinary team: a physician, nurse, social worker, chaplain, and bereavement coordinator. The team may include a volunteer coordinator, volunteers, nursing assistants and home health aides. The Palm Coast interdisciplinary team meets on a specific timetable. Paula Toole, an Odyssey Healthcare regional vice president who covers Odyssey's south region described the timetable at hearing and the content of the meetings: "Generally its every two weeks. If [the patient] is on a higher level of care, it may be every week or . . . day." Tr. 962. The interdisciplinary team discusses the patient and the family to determine what services are being provided and whether they are appropriate to provide the patient and the family with the best hospice care. Catholic Hospice’s Continuum of Quality Services There are four levels of hospice care: continuous care, general inpatient care, routine home care, and inpatient respite care. Continuous care and general inpatient care are considered “intensive” services as they involve the most complex, medically unstable patients and a higher level of services. Continuous care is often used when a patient is in crisis and requires more frequent physician visits. A key factor that has improved availability of hospice care is the Medicare Hospice benefit. To be eligible for the Medicare hospice benefit, a patient must be certified by two physicians to have a life expectancy of less than six months if the patient’s disease process runs its normal course. Statutory standards require that a hospice implement home care within three months after licensure and inpatient care within twelve months. Catholic Hospice will be able to make routine and continuous home care visits immediately upon licensure in Broward County. Catholic Hospice can manage operations from its existing office in Miami Lakes and a new office to be almost immediately established in Lauderdale Lakes through a lease with CHS. Catholic Hospice reasonably expects to enter contracts for the provision of inpatient hospice care with existing hospitals and nursing homes immediately upon licensure –- making inpatient hospice immediately available. In addition, Broward residents may choose to access a freestanding inpatient hospice unit in northwest Dade County for which Catholic Hospice has been approved and plans to open in 2008. Upon approval and licensure of Catholic Hospice’s proposed Broward County program, CHS will contract with Catholic Hospice to provide hospice services to persons in its Broward facilities as it does currently for its Dade County facilities. The plans for Broward County will not be the first collaboration between Catholic Hospice and CHS. Catholic Hospice has an approved CON for a 13-bed free-standing inpatient hospice facility in Dade County. The inpatient hospice facility will be on the third floor of a building that will also house a rehabilitation hospital for CHS. That facility is located so that it will be accessible to persons in southern Broward County that require an inpatient level of care, or lack a caregiver or are homeless and require residential care. Catholic Hospice will employ existing policies and procedures to administer its offices and direct patient care. Hospice services are typically provided through the use of an interdisciplinary team that provides, at a minimum, core services, including physician services, nursing services, nutrition services, social services, pastoral care or chaplain services, volunteer services, and bereavement services. In addition, services such as physical therapy, occupational therapy, speech therapy, home health aide services, infusion therapy, medical supplies and equipment, and homemaker services should be provided as needed. Catholic Hospice complies and provides core services as well as additional services such as radiation therapy and chemotherapy as each patient requires. Catholic Hospice has divided its current service area into four sections and provides a full spectrum of hospice services through four interdisciplinary teams that provide high quality care. Each team is responsible for one section of the county. The number of visits a patient receives from members of the interdisciplinary team is determined by the plan of care. Once a patient enters the program, they are admitted by an admissions nurse who collaborates with the physician and family to develop the plan of care. As a patient’s health declines, the patient will receive visits by the interdisciplinary team members, including nurses and physicians as needed. Catholic Hospice has no limitation or hard rules on the number of visits -– it is based on patient need. The interdisciplinary teams have regular meetings to re-evaluate patients’ plans of care. Physician Services Physician services are a strength of Catholic Hospice -– ensuring that any patient that needs to see a physician does, and promptly. Catholic Hospice has four staff physicians who work in the community making house calls and seeing patients at nursing homes and assisted living facilities. In addition, Catholic hospice has contracted physicians at hospitals within its service area to cover patients in its contract hospitals. Patient care and particularly physician services at Catholic Hospice are overseen by Dr. Brian Kiedrowski, a Certified Medical Director, board-certified in geriatric medicine and a diplomat of the American Board of Hospice and Palliative Medicine. Catholic Hospice has policies for the credentialing of its physicians to verify education and experience, ensuring the continued quality of Catholic Hospices’ physician services. A physician is assigned to each interdisciplinary team at Catholic Hospice, including Dr. Kiedrowski, the Medical Director. This has added to his credibility with the facilities in Service Area 11 and improved collaboration with community providers. At a minimum, each Catholic Hospice patient is seen by a physician within three days of coming into the program because hospice is urgent. Following that, patients are seen at least once a month, but it depends on the needs of the patient and may be more often. Nothing substitutes for a physician’s presence with the patient while performing an examination to determine appropriate treatment. For example, if a patient is short of breath, the physician needs to see the patient to determine what is happening and appropriate treatment. Catholic Hospice also has protocols for the communication among its physicians and between its physicians and attending physicians, should an attending physician want to continue to follow the patient. This improves quality of care by increasing communication and ensuring that patients are not in limbo if an attending physician cannot be reached at a time of crisis. Physicians, like other Catholic Hospice employees, participate in orientation which facilitates team-building and increases physicians’ sensitivity to the various cultures and religions in South Florida. In addition, Dr. Kiedrowski will go into the field with nurses or other staff physicians to exchange training and provide monitoring or proctoring of clinical skills. In contrast, most of Palm Coast’s clinical education is performed through standardized self-directed online training modules through its parent corporation in Dallas, Texas. Nursing Services Catholic Hospice provides high quality nursing services and has policies in place to ensure that quality continues, including such clinical details as the care of central venous access (“CVA”) devices and subcutaneous infusions. Catholic Hospice can immediately implement its comprehensive nursing policies in Broward County upon approval. Nutrition Services Catholic Hospice provides nutrition services to its patients through two pooled dieticians, one for the northern part of Service Area 11 and one for the southern portion. The dieticians perform nutritional risk assessments on all non- cancer patients and patients under eighteen who are having total parenteral nutrition -- meaning they are being fed intravenously. The dieticians are a great asset and comfort to patients and families. Catholic Hospice cares about nutrition for its patients eating. It provides patients and their families with nutrition education and prepares them for what to expect as the patient’s disease progresses. Nutrition, as with many areas within hospice services, requires particular sensitivity to cultures, including Hispanics and others. Catholic Hospice has successfully accommodated the nutritional needs of the various cultures it serves. Catholic Hospice will implement these same policies for providing nutrition services in Broward County upon approval. Social Services Social Services at Catholic Hospice are provided by a group of graduate level social workers which is a requirement of Catholic Hospice. The services are broad in scope, including everything from family counseling to coordinating for caregivers and facilitating the securing of other resource needs of the patient and family. Catholic Hospice has policies in place for the provision of these services that can be immediately implemented in Broward County. Catholic Hospice has written and received a caregiver grant in the amount of one hundred thousand dollars that is renewed annually and administered locally through Dade County. The grant targets individuals and families that are facing the choice of having to place a loved one in a nursing home to be able to hold a job or attend appointments because they cannot financially afford a private caregiver and, in part counteracts caregiver fatigue. Volunteers can provide respite for caregivers as well. Catholic Hospice will seek similar opportunities in Broward County if approved. State and local regulations require hospices have emergency management plans. These plans are submitted to the Agency and local government. The plans are required to have certain elements to ensure that patients and families will not experience interruptions in hospice service in the event of a natural disaster or other emergency. Catholic Hospice is capable of successfully developing and implementing a similarly comprehensive plan in Broward County if approved. Serving All Faiths -- Pastoral Care or Chaplain Services Catholic Hospice serves persons regardless of religion or lack thereof. Patients include those who are Catholics (as expected), Buddhists, Seventh-day Adventists, Santerians, Jewish, Baptists, and Pentecostals. The staff of Catholic Hospice reflects a diversity of religious beliefs as well. Ms. Murray, for example, the Vice President for Nursing Services is of the Jewish faith. All of the staff are comfortable, however, with the Catholic identity and mission of Catholic hospice as a faith-based organization. Catholic Hospice has six chaplains who take care of persons of all faiths or no faith according to each patient’s needs and desires. In fact, the very first patient ever cared for by Catholic Hospice was Jewish. The chaplains are not all Roman Catholic. Chaplains are required to complete Clinical Pastoral Education (“CPE”) training, which is chaplaincy training. CPE training assists clergy with providing spiritual direction to persons of all faiths, independent of that clergy member’s own religious identity or affiliation. It helps them view spirituality from a universal standpoint to provide pastoral care and spiritual direction. At Catholic Hospice, chaplains also provide a connection to patients’ own faith communities -– mobilizing those relationships for the benefit of the patient and family. Additionally, each orientation includes a component of general spiritual care training to enable employees to reach out and connect with patients and families whatever their religious beliefs may be. One of Catholic Hospice’s chaplains is a Rabbi who provides particular assistance with Catholic Hospice’s L’Chaim program. The L’Chaim Program is a Jewish Hospice program emphasizing sensitivity to Jewish beliefs, customs and holiday traditions. Developed in response to community need, the L’Chaim program has its own mission statement and brochures geared to persons of the Jewish faith. Catholic Hospice’s orientation similarly includes a segment on L’Chaim. Catholic Hospice can successfully implement its current chaplain services policies upon approval of its proposed Broward program. Volunteer Services Catholic Hospice has a comprehensive program for the recruitment and training of volunteers. Volunteers provide respite services within the home setting –- often allowing a caregiver the opportunity to go to appointments and uphold other obligations they otherwise could not do. Catholic Hospice also has an “Angel Program” of volunteers that accompany patients during their final hours of life. These volunteers provide companionship to patients without family, and comfort to patients and families who are together in those final hours. Volunteers undergo comprehensive training similar to an employee orientation. Training is 16 hours long and is provided over two consecutive Saturdays. The training provides an overview of the organizational structure, the culture of Catholic Hospice and provides a breakdown of each volunteer’s role in the interdisciplinary team to ensure a complete understanding of the volunteer’s function and the limits that each works within. Catholic Hospice has developed training manuals for volunteers and because Catholic Hospice has volunteers fluent in both English and Spanish, training can be presented in either language, including the training manuals. Catholic Hospice has volunteers in its Dade program that are residents of Broward County. A condition of participation in the Medicare program for hospices requires that volunteer service match at least five percent of the overall care hours provided by hospice employees. Catholic Hospice surpassed that last fiscal year as ten percent of direct care hours were matched by volunteer hours. Catholic Hospice can adopt the same strategy and policies to successfully implement its volunteer program in Broward County. Bereavement Services Medicare guidelines require that some form of contact be maintained with families of hospice patients for up to 13 months following the death of their loved one. Catholic Hospice far surpasses that minimum. Catholic Hospice has a corps of graduate level clinicians specializing in grief work and each is assigned to a team. All of Catholic Hospice’s bereavement counselors are affiliated with the Association of Death Education and Counseling. Bereavement counselors preside over all bereavement activities and all family members are invited to establish a clinical relationship with that counselor to address his or her grief. Many hospice families experience what is called “complicated grief” -- grief that is particularly emotionally or spiritually complex due to the relationship with the patient, and much of the counseling work addresses those issues so that a survivor is not carrying regrets or guilt. Often a family member experiencing complicated grief will continue to work with the clinician over the course of several months. Catholic Hospice also provides bereavement services and support groups to the community. Such support groups are in parishes, nursing homes, and various community and institutional settings. The groups are open to members of the community as well as family members of patients and meet for a set period of time, usually 10 to 12 weeks. This allows Catholic Hospice to spread its resources throughout the community for maximum accessibility and responsiveness. On other occasions, bereavement counselors have visited local schools following student suicide. There the counselors not only intervened with the children trying to understand that loss, but provided education to school staff on responding to the children’s needs. A memorable example involved a group of accountants at the Loews Hotel in Miami Beach who were attending a workshop during the 911 attacks and lost many of their colleagues. Counselors were rotated to provide blocks of time over a two-day period to help those accountants with their grief. Catholic Hospice has conditioned its CON on providing community bereavement support groups at senior housing facilities in Broward county and is prepared to successfully provide those programs. CHS and Holy Cross have already volunteered its facilities for such programs. Catholic Hospice provides “Camp Hope” an annual bereavement camp for children who have experienced the loss of a family member, usually a parent. Camp Hope is volunteer-driven and provided free of charge to children throughout the community, not just children of hospice patients. The camp receives many referrals through the Dade County School system. The children are taken to a local camping facility and are provided a variety of therapeutic activities and recreation –- all presided over by professionals in their respective specialization. In the past, people from Broward have participated in the camp as a result of requests from within the community. Catholic Hospice has bereavement services policies that can be implemented in Broward County upon approval. Education Education is a strength of Catholic Hospice, including education of its own employees, its contract facilities, physicians and other health care providers, as well as the community at large. Catholic Hospice has a full-time nurse educator who is certified in hospice and palliative care nursing. Each employee participates in a week-long orientation familiarizing himself or herself with Catholic Hospice and the diverse ethnic and religious community he or she is about to serve. Clinical staff may be oriented for an additional week or more. Following orientation, there is a new employee follow-up and periodic additional training. As part of the orientation process and thereafter in continuing education presentations, the employees demonstrate competency with various skills. The competency packet also contains a post-test and, if an individual has a particularly low post-test score, a copy is sent to that person’s supervisor for follow-up. The goal is for employees to feel comfortable training patients and families about hospice. During the orientation, employees are trained on how to perform a cultural assessment for any patient who chooses Catholic Hospice’s Services. This includes general information on tendencies within certain ethnic groups and leaving one’s assumptions and beliefs “at the door” so that each individual patient may express his or her beliefs. The goal of Catholic Hospice is for each employee to be able to engage in active listening to help differentiate the needs of individuals within the Hispanic population or any other population. The education manager is also responsible for two hours of continuing education for the interdisciplinary staff every month. The education manager holds a provider number issued through the Board of Health, Division of Medical Quality Assurance for providing education for nurses, social workers and mental health workers; accordingly, all presentations at Catholic Hospice are geared toward allowing professional staff to accumulate medical education credit. Medical education is likewise offered to contract and non-contract facilities in the community for their staff. The nurse educator oversees university students who come to Catholic Hospice as part of their medical education training. Catholic Hospice has enjoyed long-standing relationships with various universities, including the University of Miami, Florida International University, and Barry University. Catholic Hospice has contracts with each university for nursing students and other health and counseling program interns for rotations with Catholic Hospice as part of the students’ community experience and training in end-of-life care. Working with the students provides Catholic Hospice valuable information on how it is perceived within the community it serves. Outreach Catholic Hospice recognizes that cultural factors can prevent access to hospice care and is organizationally sensitive to those factors providing employee education to counteract them -– such as the cultural assessments described earlier, through facility education with its contracted facilities and insurance providers, and through community outreach to the general population. Catholic Hospice’s goal is to reduce barriers to hospice care overall. For example, Catholic Hospice is part of a pilot program, “Partners in Care,” to provide palliative care services for children with life-limiting illnesses. Catholic Hospice has two community liaisons who conduct community outreach with hospitals, nursing homes, physicians and various civic organizations to provide presentations on hospice. As a condition to its CON, Catholic Hospice has agreed to provide outreach to Hispanics and persons under 65 and to provide bereavement support groups and has a proven ability to do so. Much of Catholic Hospice’s outreach includes persons under 65 years old and Hispanics. The composition of participants in facility education, insurance provider in- services, caregiver education initiatives, support groups, community health fairs, parish and community bereavement groups are attended by persons under 65. Catholic Hospice has also provided care outreach and training for lay ministers within the parishes to increase sensitivity to specific needs of patients facing illness. Brochures and other materials are available in English and Spanish. Providing outreach in existing community facilities increases Catholic Hospice’s visibility in the community. Most of Catholic Hospice’s patients are Hispanic and the majority of those persons are Roman Catholic. As an organization of the Archdiocese, the individual parishes throughout Dade County have been opened for Catholic Hospice to visit Mass or smaller groups to provide education on end of life care and hospice. Catholic Hospice has a radio show on Radio Paz, the Archdiocese’ radio station. Called “Caminando Contigo” or “Walking with You,” the show is presented in Spanish each Monday from 2:30 p.m. to 3:00 p.m. The program is an educational presentation on hospice services broadcast throughout Miami-Dade and Broward County into West Palm Beach. In addition, Catholic Hospice’s community relations manager regularly appears on public television shows to speak about hospice services. Catholic Hospice engages in modest fundraising to supplement its mission of caring for all those in need. Catholic Hospice’s two main fundraisers are an annual golf tournament and the Tree of Hope where people contribute by purchasing or sponsoring memorial holiday ornaments. Catholic Hospice can successfully duplicate its outreach and fundraising programs in Broward County upon approval. Different Orientations Catholic Hospice's organization is "faith based." “Faith based” is not just providing chaplain services. All hospices are required to do so. Rather, "faith based" is the spirit of mission that drives every decision at Catholic Hospice from the top of the organization down. Catholic Hospice’s stakeholders are the community it serves and its employees. Palm Coast's affiliation with Odyssey gives it different orientation from Catholic Hospice's. A for-profit company such as Odyssey Health Care has a fiduciary duty to increase profits for its shareholders and will be motivated by that fiduciary duty or “mission” of profitability. Although organized as a not-for-profit, Palm Coast nevertheless shares that mission of profitability acting like a for-profit company. For example, Palm Coast offers stock options to its employees. Palm Coast’s billing and banking are done at the Dallas headquarters, consolidated with the ledger for Odyssey Healthcare. Palm Coast pays a management fee to Odyssey because that is the only way for the cash to flow upstream under Florida law and Palm Coast’s assets, along with those of other Odyssey programs, secures a 20-million dollar line of credit for Odyssey. Odyssey assesses a management fee of seven percent of net revenue monthly therefore the higher net revenue to Palm Coast the greater the contribution to Odyssey's profitability. Currently, the profits from Palm Coast are used to develop additional hospices in Florida. In contrast, Catholic Hospice is likely to spend more on patient care and provide the choice of faith-based hospice services that currently do not exist in Service Area 10. Palm Coast's Community and Employee Education When entering a community, Palm Coast hires a team of community education representatives ("CERs"), along with the program's general manager, their function is to primarily provide day-to-day education to the community at large. It is not unusual to find people in the community who are completely unfamiliar with hospice and its benefits. The CERs concentrate on educating referral sources, not just on the availability of hospice services, but also patient eligibility and provide information not only on cancer but the numerous non-cancer terminal diseases for which hospice care is potentially appropriate. The Palm Coast CERs seek to educate the members of the medical profession at hospitals, nursing homes, and assisted living facilities, doctors offices, professional buildings, as well as educating those within the community, by speaking at churches, community organizations, Kiwanis clubs, rotary clubs, Chambers of Commerce and other community activities. The CERs utilize any opportunity to educate about hospice in general (not necessarily regarding Odyssey or Palm Coast), because as evidenced by the increasing number of patients accessing hospice care and current penetration rates, the service is still underutilized and to some degree misunderstood. Palm Coast - Broward plans to initially hire a minimum of three CERs to concentrate its efforts on community education in Broward before it serves its first patient. The CERs travel throughout the community and evaluate the areas in which the existing providers are providing sufficient hospice education, and where they may be lacking, seeking to find the holes in the system or gaps in the network, in which to offer their services. Palm Coast provides education to employees of nursing homes, hospitals, and assisted living those facilities, many of whom require bereavement counseling following the death of patients. The CERs have also proven to be a resource to grief stricken individuals seeking hospice care; if a patient or family calls and inquiries, the CERs help walk them through the process of how one is admitted to hospice care. The Palm Coast educational team is comprised of an array of individuals, including the receptionist, nurse, social worker, chaplain, home health aides, and volunteers, along with the CERs; everybody involved talks about hospice and educates those in the community. With respect to Palm Coast's interdisciplinary team members, there is ongoing follow-up training in each office by the Quality Improvement Manager, in addition to monthly educational sessions company-wide. As one educational tool, Odyssey and Palm Coast have developed pocket-sized "Slim Jims," which are clinical indicators or educational reference material that detail various disease processes and the criteria that would make an individual hospice appropriate. The front of each individual "Slim Jim" details the clinical indicators for each terminal disease, and the flip slide illustrates the benefits hospice care through Odyssey or Palm Coast could provide. These clinical indicators, incorporating CMS guidelines, have been successful in determining when hospice is appropriate for patients. The clinical indicators are regularly updated, along with any new guidelines published through CMS. Palm Coast in Miami has used the "Slip Jims" in helping to educate families on disease progression, what to expect, and the general characteristics of hospice care. In order to meet the cultural needs of the community, the laminated cards are currently being translated into Spanish, for use with Hispanic patients and families in Miami-Dade, Broward, and any other Palm Coast or Odyssey location with a significant Hispanic population. All hospice disciplines, including the members of the interdisciplinary team and the CERs utilize the "Slim Jims" to educate the community on various levels. As an educational tool to assist in the orientation and continual education of its employees, Palm Coast has access to "Odyssey University," as online program created by Odyssey that allows employees to participate in various educational courses and nursing modules, specifically tailored to each individual hospice professional (i.e., nursing manager, chaplain, social worker, etc.). There are a multitude of different modules, spanning the realm of topics from clinical to management. Palm Coast's Affiliation with Nova Southeastern University Palm Coast has executed a memorandum of understanding with Nova Southeastern University ("NSU"), by which it will be a partner with NSU's college of osteopathic medicine, geriatric program, dental program, and law program. The purpose of the partnership will be to develop ways for NSU's students to rotate through or to work with Palm Coast's patients and families. As the largest independent institution of higher education in Florida, and the seventh largest nationally, NSU educates its students using non-traditional methods, including, but not limited to utilizing external clinical settings to supplement what is taught in the classroom with real life settings and situations. The affiliation will create clinical settings for NSU's students that will afford benefits to Palm Coast, NSU, and the community at large. The program will offer the College of Osteopathic Medicine student clinical rotations with Palm Coast's patients; it will offer a Mental Health Counseling Program with NSU's Center for Psychological Studies; it will provide College of Pharmacy students experience with elderly patients; it will provide College of Dental Medicine with the opportunity to ease oral pain of a patient exacerbated by tooth decay, gum disease, or other "ortho-ailments;" and it will allow the Shepard Broad Law Center student to work with Palm Coast patients, reviewing forms and policies for legal sufficiency and accuracy. Patient benefits from the affiliation between Palm Coast and NSU include, but are not limited to: relief of symptom distress, understanding of the plan of care, assistance in coordination and control of care options, simultaneous palliation of suffering along with continued disease modifying treatments, ease of transition to hospice, and providing practical and emotional support for exhausted family caregivers. Odyssey, and specifically Ms. Toole, Odyssey Regional Vice President of the Southeastern Region, has established similar beneficial relationships with universities such as University of Alabama Birmingham, working together and involving them in certain aspects of the patient's care; a similar arrangement will be developed in Broward County upon approval. Ms. Toole, the expert witness in the fields of hospice operations and hospice administration, has observed a significant benefit to not just the hospice program, but to the students as well, providing an experience of dealing with patients with terminal illness and dying in the hospice setting. Odyssey and Palm Coast Charity Funds and Foundations As hospice staff cares for their patients, non- hospice needs are frequently identified; Odyssey has established the "Special Needs Fund" to assist their patients or families with extraordinary requests and needs. As an affiliate of Odyssey, Palm Coast has access to Odyssey's Special Needs Fund, from which it can request money for use to benefit patients in each local program. The fund is designed to provide assistance situations, for example, when it is cold and a patient is unable to pay his/her heating bill, or when the patient has no money available to purchase groceries. In those situations, Palm Coast request funds from the company, along with the justification, and that money will be provided, as needed. In 2005, over $60,000 in Special Needs Funding was use to meet the needs of 278 families. Palm Coast Bereavement Groups The Palm Coast team continues to care for the family even after the patient's death. In actuality, this program begins with an assessment upon admission of the patients into hospice. During the initial assessment, the registered nurse assess the grief of the family, and provides anticipatory "pre- bereavement" services based on need. Palm Coast seeks to identify people early on who are likely going to have a more difficult time in grieving the inevitable loss, so a plan for the family unit is initiated and included in the patient's plan of care. A bereavement plan of care is initiated within 72 hours of a patient's death. The bereavement coordinators offer support groups and memorial services for those who have had a loss, regardless of whether their loved ones were on hospice with Palm Coast, or never admitted to hospice at all. Support groups and memorial services offered by Palm Coast are held in nursing homes and ALFs, both for the facility as a whole and anyone who has had a loss, including staff members or residents, regardless of whether they were on hospice; it is not only those involved in hospice but for people in the community as a whole who may benefit from bereavement. Odyssey operates, "SKY Camp," a weekend camp in Amarillo for children who have experienced a loss, and is open to families of all Odyssey patients, as well as any other individuals who may inquire. Funded by the Odyssey Healthcare Foundation, SKY Camp is a free weekend camp for children ages seven to seventeen grieving the death of a loved one. The camp provides the children an opportunity to feel safe, nurtured, and most importantly, not alone, as many do in their time of grieving. Three Offices vs. One CHS will contract with Catholic Hospice for office space in Broward County at a fair market rate allowing Catholic Hospice to rapidly and efficiently establish an office centrally located within Broward County. This contrasts with Palm Coast’s plans for three offices. "[H]ospice care is primarily a home-based service, so the number of offices is not of particular importance[;] . . . [the number of] offices can be as many or as few as the provider would like . . . as long as they have at least one." Tr. 1409. The number of offices may play a part in rural areas in a multi- county service area. But Broward County is densely populated making more than one office an insignificant factor. Furthermore, because hospice services are provided in the home and hospice education can occur in any community facility, additional offices are not only not necessarily beneficial, they may be inefficient. For example, Palm Coast proposes to spend substantially more on rent and administrative costs than on patient care, whereas Catholic hospice spends on patient care and has low rent and administrative costs –- providing more benefit to the community consistent with its mission. Access: A Difference in Emphasis Catholic Hospice fulfills its mission to all patients regardless of age, sex, ethnicity, religious belief or lack of belief, ability to pay or level of need for care. While Catholic Hospice has an undeniable appeal to the Hispanic population that is predominantly Roman Catholic and an appeal to other Roman Catholics eligible for hospice services in Service Area 10, on the bases of age and diagnosis, Catholic Hospice does not emphasize service to "65 and over non-cancer" patients as does Palm Coast. In contrast to Palm Coast, Catholic Hospice outreach efforts are directed at persons under 65 and Hispanics. Consistent with conditions of Medicare participation that require hospice providers to accept all patients who meet eligibility requirements regardless of disease or ability to pay, Palm Coast also treats all patients. But Palm Coast emphasizes serving non-cancer patients 65 and older and seeks to emphasize penetration of the market segment represented by the population seeing it as underserved. Many non-cancer patients 65 and older in need of hospice service are recipients of care in long-term care settings such as assisted living facilities, supportive housing type programs and nursing homes. Odyssey has had great success in developing these programs. Such development as a goal for Palm Coast is consistent with Palm Coast's belief that non- cancer patients 65 and older are underserved. Yet, patients in Broward who are non-cancer patients 65 and older appear to be served as well as patients in other hospice-typical groups based on age and diagnosis. It is apparent that Vitas Healthcare-Broward, an existing hospice provider in Broward County, for example, already places an emphasis on serving the "65 and over non-cancer" patient that Palm Coast targets as underserved. Furthermore, Vitas has had greater success in serving this population relative to other hospice-typical groups than the three other existing providers in Broward County. This is illustrated by the chart at page 37 (Bate-stamped 00038) of Catholic's application proved up by the testimony at hearing of Mr. Cushman. The 2005 data on the chart shows Vitas Healthcare- Broward, a for-profit hospice organization like Palm Coast's parent, to be the dominant hospice provider in Service Area 10. Its market share for calendar year 2005 is 74 percent, dwarfing the market shares of the three other providers led by Hospice by the Sea at 13 percent with less than one-fifth of total market share enjoyed by Vitas. Dividing market share by age ("Under 65" and "65 and Over") and diagnosis (Cancer and Non-cancer), as is done by the Hospice Programs Rule, the highest market share for Vitas is in the "Non-cancer 65 and Over" category" at 77 percent. As Mr. Cushman explained: [Market share]'s nine percentage points less for those who have diagnoses other than cancer who are under 65; it's seven percentage points less for cancer diagnosis for elderly patients; and again, nine percentage points less for the patients with cancer under 65. . . . [T]he significance … is that the patients who are … the least costly to care for are the noncancer patients who are elderly. And that is the area where the for-profit program in Broward County [Vitas] Tr. 647. has sought and obtained the highest market share. Palm Coast's Claim of Special Circumstances Palm Coast claims that the "65 and Over Non-cancer" population in Service Area 10 is underserved. With regard to Special Circumstances to support approval of hospices, AHCA's rule provides: (4) Criteria for Determination of Need for a New Hospice Program. * * * (d) Approval Under Special Circumstances. In the absences of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: 1. That a specific terminally ill population is not being served. Fla. Admin. Code R. 59C-1.0355. Palm Coast did not demonstrate that the "65 and Over Non-cancer" population in Service Area 10 is not being served. To the contrary, Catholic Hospice showed that it is being served by existing providers. Palm Coast's Affiliation with a For-profit Parent Palm Coast's emphasis on the "65 and Over Non-cancer" population in Broward County is consistent with the nature of its affiliation with its for-profit parent, Odyssey. If a hospice can spend less per patient day on patient care, it can be more profitable. Non-cancer patients tend to be less costly. Further, hospice care is generally more expensive at the beginning of care -– when the patient is being set up on a plan of care including medications, equipment and the like, and at the end of care when the patient and family may require additional visits and medications. Therefore, a hospice can increase its profits by increasing the number of patients with longer lengths of stay. Non-cancer patients over 65 tend to have longer lengths of stay. Thus, by heavily marketing to non-cancer patients over 65, Palm Coast can maximize its profitability. It will do so, however, to the detriment of other providers in its service area at the same time that the dominant provider in the service area is already doing so. Since Medicare reimbursement for hospice services is based on the assumption that all hospices will accept all patients, hospice programs will be able to redistribute costs from costly patients by having a balance between the more costly and less costly patients. When a hospice takes a disproportionate number of profitable patients, however, it leaves only the more costly patients for other providers who are not able to distribute costs over a full spectrum of expensive and less expensive patients. The effect is magnified because for-profits tend to be larger than not for profits. Indeed, Palm Coast’s new Dade program has ramped up quickly and doubled its budget projections. Palm Coast’s focus on profitability will negatively impact existing providers within the service areas it operates. Catholic Hospice, on the other hand, is likely to serve populations in the four categories of "under 65 non- cancer," "under 65 cancer," "65 and over non-cancer," and "65 and over cancer" without an emphasis on the more profitable "65 and over non-cancer" population segment, the group that Palm Coast will emphasize serving in order to maximize profits for its parent, a for-profit organization. Community Support for Catholic Hospice Letters of support demonstrates deep support for Catholic Hospice' application. One hundred twenty-five of them were received, a "high number . . . for a hospice program." Tr. 1406. Five were from physicians who indicated a willingness to refer patients to Catholic Hospice; two were from hospitals and one from a skilled nursing facility. In addition, Vitas recommended that if an additional hospice program for Broward County were to be approved that it should be Catholic Hospice, an "unusual" letter of support in Mr. Gregg's view. See id. CHS, itself, has received numerous requests for Catholic Hospice in its Broward facilities and has had to make other arrangements for those in its nursing homes, ALFs, and other facilities in Broward County since Catholic Hospice is not available in Broward County. Due to this recognized need, CHS has openly supported Catholic Hospice’s application and, through administrators of its various Broward health and elder care facilities, has provided letters of support, including letters from the administrator of St. John’s Nursing Center, the administrator of St. Joseph’s Residence, an ALF, the administrator of St. Anthony’s Rehabilitation Hospital, and an administrator at the HUD elderly housing facilities for CHS, including the five in Broward County. Similarly, Holy Cross Hospital is highly supportive of Catholic Hospice’s application and the need for a faith-based option for hospice in Broward County. Like CHS, Holy Cross intends to contract with Catholic hospice for inpatient hospice beds if Catholic Hospice’s Broward program is approved. Holy Cross has the capacity to provide more hospice inpatient beds without having to disrupt contracts and relationships it currently has for hospice beds; thus, relationships with existing providers will not be impacted. Physicians at Holy Cross support Catholic Hospice’s application, noting in particular Catholic Hospice’s sensitivity to the needs of Hispanic patients,--a growing segment of the population in Broward County-- and will refer patients to Catholic Hospice if it is approved. Memorial Healthcare System, a group of five hospitals that comprise the South Broward Hospital District, supports Catholic Hospice’s application noting that it will provide patients with a choice for a faith-based provider and emphasizing Catholic Hospice’s sensitivity to the needs of the Hispanic community and the growing Hispanic population in southern Broward County. Of the existing hospice providers in Broward County, one supports Catholic Hospice’s application and two others prefer Catholic Hospice if a new program is approved. In sum, Catholic Hospice is a diverse, long-term provider with a proven record of quality services and community responsiveness that fits within a continuum of care offered through the Archdiocese. Accordingly, Catholic Hospice can quickly move into Broward County with outstanding community support and improve the situation for residents of Service Area 10 with minimal impact to existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusion of Law it is RECOMMENDED that the Agency for Health Care Administration issue a final order that approves Catholic Hospice's CON application for a new hospice program in Service Area 10 and denies Palm Coast's CON application for a new hospice program in Service Area 10. DONE AND ENTERED this 26th day of October, 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 26th day of October, 2007.
The Issue The issue is whether certificate of need No. 4370 should be issued to the Visiting Nurse Association of Broward County to operate a hospice program, which will include five inpatient beds. STIPULATON CONCERNING APPLICABLE STATUTES The joint stipulation filed by the parties indicates that not all statutory criteria for evaluating certificate of need applications for hospices apply to this case. Section 381.494(6)(c)6, 10, and 11, Florida Statutes, do not apply. Section 400.601, et. seq. Florida Statutes, and Rules 10A- 5.001(1)(j), 10- 5.011(1)(b), and Rule 10A-12.001, et. seq., Florida Administrative Code, apply. There is a dispute over whether Section 381.494(6)(d), Florida Statutes, applies.
Findings Of Fact General Procedural Background The Visiting Nurse Association of Broward County, Inc. Community Hospital (VNA) applied on December 12, 1985, for a certificate of need to operate a hospice program, including five inpatient beds, in Broward County, Florida. A State Agency Action Report was issued by the Department of Health and Rehabilitative Services (HRS) preliminarily approving the application, which was published in Volume 12, No. 21 of the Florida Administrative Weekly on May 23, 1986, at page 1966. Hospice, Inc., Broward County (Hospice) and Hospice Care of Broward County, Inc. (Hospice Care) filed petitions to contest the preliminary approval of the application, and those petitions were consolidated for hearing. Brief Description of the Parties Visiting Nurse Association VNA is a not-for-profit charitable organization established in 1959. It is a Medicare and Medicaid certified home health agency which provides comprehensive home health services to residents of Broward County regardless of age, ability to pay, or payor source. VNA has a somewhat complex corporate structure. The parent corporation is Visiting Nurse Health Services, Inc. This corporation provides management, administrative support and consultative services to its subsidiary corporations which are: The Visiting Nurse Association of Broward County Foundation, Inc., a not-for-profit corporation which raises funds to fulfill VNA's goal of providing health care to the indigent. Visiting Nurse Home Care, Inc., a Florida not-for-profit corporation which provides private duty nursing care, physical therapy and other home health services, including homemaker services and personal care services to non-Medicare patients in Broward County. Visiting Nurse Association of Dade County, a not-for-profit Medicare and Medicaid certified home health agency which provides comprehensive home health services in Dade County. VNA Foundation, a not-for-profit corporation which raises funds for VNA's operations in Dade County. Visiting Home Services, Inc., a licensed home health agency which provides services to non-Medicare patients in Dade County, Florida. VNA is governed by a board made up of community members who serve voluntarily. VNA has provided service to indigents even before inception of the Medicare program. VNA has maintained long term relationships with publicly funded hospitals, with particular emphasis on providing continuity of care to patients and providing alternatives to hospital care. In fulfillment of its mission, VNA has contracted with the North Broward Hospital District to provide a full range of services to indigent Medicaid patients in the northern two-thirds of Broward County, where that District operates three hospitals, North Broward Medical Center, Broward General Medical Center and Imperial Point Medical Center. VNA employs nurses who work with the district hospitals to improve the accessibility of health care to indigents by assisting in planning care for indigents after discharge from the hospital. In 1985 and 1986 VNA served about 2,900 patients each year. VNA also receives referrals from other hospitals in Broward County, including hospitals operated by Humana Corporation; Memorial Hospital, which is operated by the South Broward Hospital District; and Pembroke Pines General Hospital. It receives referrals in Dade County from Jackson Memorial Hospital, the public hospital for Dade County operated by the Public Health Trust, and the Veterans Administration Medical Center. VNA operates special pediatric programs for children whose health care is covered by Medicaid. VNA also had assisted the Public Health Trust to develop in Dade County a comprehensive proposal seeking a grant from the Robert Woods Johnson Foundation for the treatment and prevention of Acquired Immune Deficiency Syndrome. VNA has operated a specialized subunit since 1984 which provides palliative care. This unit is staffed with registered nurses who are experienced in working in hospices, in symptom control for terminally ill patients and in providing supportive therapy for the patients and their families. In 1985 the palliative care unit provided services to about 129 patients; approximately 63 percent were Medicare patients and 10 percent were Medicaid patients. The program's average daily census was approximately 30 patients. In 1986 the palliative care unit provided service to approximately 134 patients; 68 percent Medicare patients and 14 percent Medicaid patients. The number of physicians referring patients to the palliative care unit has increased from fewer than 100 to more than 150 currently. Referring physicians include internists, surgeons, general practitioners and oncologists (physicians specializing in the treatment of cancer). After only three months of operation, the patient census reached 35 patients. The greatest concentration of the palliative care patients reside in the areas near North Broward Medical Center and Broward General Medical Center, which are also the areas with high indigent populations. VNA's palliative care unit will serve patients in Broward County who have physicians who are located in Dade County, and also will serve patients having no family members or others to serve as caretakers. It also has treated a number of terminally ill pediatric patients. The palliative care program is not as diverse a program as a hospice, in that it does not offer inpatient care or bereavement services to the families of the terminally ill, and the palliative care unit's access to funding from the government or third party payors is limited without a certificate of need to operate a hospice program. About 60 percent of the patients currently cared for in the palliative care unit would qualify for hospice services if VNA were authorized to provide those services. About 21 of VNA's home health patients chose to enter a hospice program out of the 263 patients seen during the first few years of operation of the palliative care unit. 2. Hospice, Inc. Hospice, Inc. is authorized to operate in Broward County, and has a 20-bed inpatient unit with an average daily census of 11 patients. About 10 percent of its services are inpatient services. Eleven percent of Hospice, Inc's patients are charity patients; that is, patients who are provided services without charge. Other patients have reimbursement sources which are not adequate to cover the cost of providing care. Hospice, Inc. does not discriminate on the basis of inability to pay. The two different kinds of indigent are those poor to start with and those who become medically indigent because they have paid all of their money to fight their disease. Hospice, Inc. has worked with AIDS patients since the early 1980's and has continually cared for AIDS patients, beginning with Haitian refugees. Hospice, Inc. has been called upon to write the policy and protocols for AIDS care for hospices nationally by the National Hospice Organization and is the only hospice in Florida with a specific contract to provide service to AIDS patients. That contract is with the State of Florida through Jackson Memorial Hospital and the Public Health Trust using State dollars. Hospice, Inc.'s programs in Dade and Broward Counties were selected as demonstration sites by the federal government to demonstrate the efficacy, including cost effectiveness, of hospice services, in a study conducted by the Health Care Financing Administration between 1980 and 1983. 3. Hospice Care Hospice Care is a not-for-profit hospice program licensed in Broward County which operates five inpatient beds. It does not have a parent company and is supported by donations raised in Broward County. It provides an array of nursing, pastoral and spiritual services to its patients and necessary medical care. The program has a Medical Director, Nurses Aides, Licensed Practical Nurses, a Coordinator of Education and Bereavement, a Director of Volunteers, and a Patient Care Coordinator. About 125 volunteers provide emotional support and assistance which a family might need while the patient is in the hospice program; the program offers the family ongoing bereavement support after the patient's death. Hospice Care also offers homemaker services, pharmaceutical services and occupational and physical therapists, at no extra cost to the patient. A pastor or minister provides spiritual assistance to the patient and family on request. Hospice Care accepts AIDS patients (it served approximately 17 in 1986) and provides support for families of those patients. Hospice Care also is developing a program to educate single people about AIDS. As is the case with other hospices, Hospice Care participates with the Robert Woods Johnson Foundation. Hospice Care provides educational materials regarding hospice programs throughout Broward County. Brochures are sent to physicians in Broward County four times a year. A newsletter is distributed quarterly. Hospice Care provides in service educational programs for its registered nurses and seminars for its social workers. Hospice Care accepts patients without regard to the patient's ability to pay, and places a patient in a program within 24 to 48 hours of referral. Hospice Care became Medicaid-certified in January of 1987 and accepts Medicaid patients. During fiscal year 1986, Hospice Care served 227 patients. It could serve additional patients without adding additional staff. During fiscal year 1986 approximately 25 patients treated by Hospice Care were referred to it from North Broward Hospital District hospitals. Based upon referral patterns, Hospice Care would probably lose some patients to VNA if VNA's application is approved. Hospice Care received at least one referral from VNA's palliative care unit last year. Hospice Care refers patients to other hospices in Broward and Palm Beach Counties based on the needs of those patients. 4. Hospice-By-The-Sea Another hospice operating in Broward County is Hospice-By-The-Sea. It has received a certificate of need and operates as a non-profit program. It was Medicare certified in January of 1987. Hospice-By-The-Sea accepts patients from Palm Beach and Broward counties, as it is authorized to do under its certificate of need. Its program is similar to that of Hospice Care and consists of nurses, social workers, clergy, volunteers, homemaker aides, home health aides, a clinical psychologist and a hospice physician. Its nurses receive specific training in the care of terminally ill children. Hospice-By-The-Sea has a bereavement program for family members for a minimum of one year following a patient's death. Hospice-By-The-Sea also offers the services of a dietician, a physical therapist, a speech therapist and an occupational therapist, as well as providing pharmacological and medical supplies and services. Pastoral counselors meet with patients and their families regularly. It has never denied a prospective patient admission to its program for inability to pay. The program accepts AIDS patients and works with the Robert Woods Johnson Foundation. During fiscal year 1986 Hospice-By-The-Sea served 263 patients, and had an average daily census of between 35 and 45 patients. It could increase the number of patients served without the increase in inpatient beds. Hospice-By-The-Sea does not have a waiting list and places new patients in its program within 24 to 48 hours after referral. Hospice-By-The-Sea refers patients to other hospices based upon the patient's need. Since about 1985 Hospice-By-The-Sea has had a program to educate the community about the availability of hospice services. The testimony of Ms. Webb, that the market for hospice services has leveled out, and now is saturated, is not accepted. In the Hospice-By-The-Sea program, inpatient beds play a minor role in its overall program. Only six patients since 1980 have used inpatient services. Volunteers are an important component of the Hospice-By-The-Sea program. About 25 to 30 percent of hospice volunteers reside in Broward County. Hospice-By-The Sea may experience some increase difficulty attracting volunteers if an additional hospice program is approved in Broward County but there is insufficient proof that it would not be able attract an adequate number of volunteers to continue a quality program. Hospice-By-The-Sea receives funds on an annual basis from Palm Beach and Broward county communities. About 30 percent of its fund raising monies comes from Broward County. The approval of the VNA hospice might make it somewhat more difficult for Hospice-By-The-Sea to attract funds. The Hearing Officer is not persuaded that competition for fund raising will result in either Hospice-By-The-Sea or VNA providing less than a quality program. 5. Hospice Of The Gold Coast Hospice Of The Gold Coast is another not-for-profit hospice which holds a certificate of need to serve Palm Beach and Broward counties which is Medicare certified. It has four licensed inpatient beds located at Holy Cross Hospital in Broward County. The hospice is licensed separately from its parent corporation, Gold Coast Home Health Services, a Broward County home health agency. As with the other hospices, the Gold Coast program offers a wide array of services to patients and their families. These include a medical director who serves as the consultant to the patient's primary care physician, who may assume total care for the patient when the primary physician chooses not to provide terminal care. Gold Coast has a team of nurses available 24 hours a day, seven days a week to meet the medical and psychological needs of patients. The nurses provide pain and symptom control, and are trained in providing psychological care to the patient and the patient's family. The Gold Coast home health aides provide personal and respite care to the patient. A psychologist provides counseling services to the patient and the family, while a bereavement specialist works under the direction of the hospice psychologist in a program which can last for a year or longer after the patient's death. Volunteers are trained to work with the terminally ill. Volunteers are an integral part of the hospice team. Gold Coast has 80 active volunteers. Clergymen on Gold Coast staff provide spiritual care to the patient and family. A medical social worker sees each family to be sure that community resources available to the patient and family are obtained. Gold Coast offers homemaker services which are used to maintain the patient's household. Physical therapy services are provided if required by a patient. Hyperalimentation can also be provided if needed. Hyperalimentation is a supplemental feeding done intravenously. The hospice may also provide morphine drips for pain control where required. Gold Coast accepts patients terminally ill from the AIDS virus, and has no policy which would discourage the admission of such patients. It participates in the activities funded to the Robert Woods Johnson Foundation in the southeast Florida area for AIDS patients. During calendar year 1986 Gold Coast received about 26 patient referrals from North Broward Hospital District hospitals. During calendar year 1986 Gold Coast served 304 patients and had an average daily census of between 50 to 55. A substantial number of additional patients could be served without adding additional inpatient beds, for only five percent of the patients served used inpatient beds. About 15 to 20 additional patients could be served without adding additional staff. Gold Coast does not experience a waiting list of patients and serves them within 24 hours after a physician's referral. Gold Coast will refer patients to other hospices in Broward and Palm Beach Counties if those hospices are closer and therefore could better meet the patient's needs. Gold Coast Home Health Agency provides administrative and other support to the Gold Coast hospice. The experience of Gold Coast in admission to its hospice program of those served by the home health agency is that many patients eligible for hospice services do not wish to obtain them. In 1986, of 139 patients the home health agency served with diagnoses which would make them eligible for hospice services, 39 chose the hospice program. Gold Coast makes efforts to educate the community about the availability of hospice services. Methods include lectures given by the hospice's executive director to local nursing college students and to psychology courses on death and dying. Gold Coast also publishes a newsletter distributed throughout the community and participates in health fairs, distributing brochures on hospice care. Factual Findings Concerning Rule Criteria Against Which The Application Must Be Evaluated Rule 10-5.011(1)(j), Florida Administrative Code, contains the rule methodology governing hospice services. It is the same methodology used by the U.S. Office of Management and Budget and other states in determining the appropriate level of hospice care in a community. All parties have stipulated that this methodology shows a need for five additional hospice beds in Broward County. The Broward Regional Health Planning Council calculates a need for 45.8 hospice beds in Broward County. With the current hospice beds of Hospice Care, Hospice-Of The Gold Coast, Hospice, Inc., and Hospice-By-The-Sea, there are 33 beds now licensed. The rule methodology understates the actual need for hospice services. It was developed before the increased number of terminally ill patients as a result of Acquired Immunity Deficiency Syndrome. Twenty percent of all AIDS patients in Florida are Broward County residents. The representatives of Hospice-By-The-Sea, Hospice Care and Hospice Of The Gold Coast all anticipate an increased need for hospice services for AIDS patients in Broward County. The incidence of cancer is substantially higher in Broward County than in Florida generally. Broward County's population is older than the national population. Twelve percent of the population nationwide is over age 65. Almost 24 percent of Broward County's population is over 65. The most current reliable data available demonstrates that the hospice-eligible population exceeds the population now being served. The rule methodology would indicate there should be at least 400 hospice-eligible patients more than are actually being served currently. Unlike rule methodologies for other health services, minimum utilization thresholds do not apply to hospice services. The inpatient component of the hospice program is used for acute care and respite care. The availability of the beds at times of peak demand is more important than the average daily census of inpatient hospice beds filled on a given day. Statutory Criteria For Evaluating The Application Under Section 381.494(6)(c), Florida Statutes. Consistency with the State Health Plan and the Local Health Plan. Section 381.494(6)(c)1., Florida Statutes. The State Health Plan does not address the need for hospice services. The testimony and cross-examination of Kurt Blair, the planning supervisor for the Broward Regional Health Planning Council, establishes that the VNA proposal is not inconsistent with the Local Health Plan. Availability, Utilization, Efficiency, Geographic And Economic Accessibility Of Facilities In The District. Section 381.494(6)(c)2., Florida Statutes. The utilization of hospice services in Broward County is less than the rule methodology would project. The first step of the methodology estimates a hospice eligible population, and that estimate is that between 1,400 and 1,450 people are hospice eligible. Currently, approximately 955 are being provided hospice care. Thus, under the rule methodology there are approximately 400 people in Broward County who are hospice eligible and who may be receptive to hospice services if appropriate additional education were provided. In addition, the second portion of the rule which determines hospice inpatient bed need shows the need for at least the five additional inpatient beds which this application proposes. The rule utilizes the assumption that about 20 percent of hospice patients will be inpatients. In Broward County, only about 10 percent are inpatients. Unlike rule methodologies for other health services, the hospice rule does not use minimum utilization thresholds as a proxy for quality, or for financial viability. The fact that current utilization of inpatient beds is less than the rule would predict does not mean there is not a need for additional programs in Broward County. The reason for the lower inpatient utilization in Broward is not clear but inpatient services are only a portion of the total continuum of services provided by a hospice, so that the lower inpatient utilization cannot be properly thought to show a lack of need. The VNA will operate hospice education for groups that are currently underserved, especially indigents. VNA provides a substantial amount of care to indigents, providing over $740,000 of free care in 1986. Physicians refer a substantial number of indigent patients to VNA for services. VNA's ability to provide care to indigents is enhanced by the array of services that VNA offers through the VNA network. Moreover, the indigent patient population has less awareness of the availability of hospice services, and increased education regarding these services for both patients and their physicians is likely to result in additional persons choosing hospice care. VNA's palliative care unit's physician referral base is highly concentrated in the geographic areas close to the North Broward Hospital and Broward General Medical Center, which are operated by the North Broward Hospital District. An unmet need for hospice services exists in the geographic area served by the North Broward Hospital District, especially in zip code area 33311, which has a high concentration of indigent persons. The VNA hospice would be more accessible because it will accept patients without an identified family member or care giver to assist in the program, while other hospices believe that such patients are not appropriate for hospice care. Other hospices also will not accept a patient whose physician is located in Dade County. When a physician refers a patient to VNA for care, options are discussed with the patient. If the VNA cannot give appropriate care and the patient chooses another community provider, the patient is referred to another provider of care. While other providers do exist in Broward County to serve the unmet need for hospice services in Broward County, VNA's existing relationships with the North Broward Hospital District and physicians serving indigent patients positions it especially well to serve that need. The Ability To Provide Quality Care, Section 381.494(6)(c)3., Florida Statutes. VNA employs several registered nurses with hospice experience who are well qualified to provide a hospice program. Registered nurses are the backbone of the hospice program because they are responsible for pain and symptom control, providing emotional support to patients and families, and education regarding medications. VNA therefore has an existing corps of nursing staff from which the hospice program could begin. Moreover, VNA's palliative care unit provides a quality program which is similar to (though more limited than) a hospice program, which also gives reason to believe it can provide a quality program. The VNA program will also foster a continuity of care because patients have ready access to other VNA programs, and all programs have uniform recordkeeping and assessment techniques. The VNA conducts inter-team conferences to ensure continuity of care between programs. This continuity is helpful because it avoids the dislocations which can occur when a patient and family begin to be served by a different provider after the decision to utilize hospice care has been made. Economies of Scale. Section 381.494(6)(c)5., Florida Statutes. The VNA network will help create an efficient hospice program since management services such as accounting, marketing, billing and collection, and administration are done by the parent organization which spreads the cost of these services across the subsidiaries while avoiding duplication of effort. The placement of the proposed hospice program within the VNA network allows it to benefit from the economies of scale that result from such organization. The presence of VNA community liaisons within the North Broward Hospital District facilities should also increase the efficiency by which VNA can guide patients appropriately into hospice programs earlier which should lower the overall cost of in-hospital care. Availability Of Resources For Project Accomplishment And Operation. Section 381.494(6)(c)8., Florida Statutes. The VNA has been very successful in obtaining grants and other forms of financial assistance from a variety of local, state and federal sources including the Area-wide Agency on Aging and the Community Care For the Elderly Program. The fundraising mechanism for the VNA, the VNA Foundation, raised $31,000 in private contributions in 1986, and it is projected that this amount will increase as a result of implementation of more aggressive fundraising activities. The Visiting Nurse Association movement in the United States has historically been heavily supported by the United Way. The VNA received $273,000 from the Broward County United Way in both 1985 and 1986 and anticipates receiving approximately $300,000 for 1988. Susan Telli, Executive Director of Hospice Care of Broward, acknowledged VNA's strong fundraising capacity. The VNA initially anticipates receiving funds for its hospice program from the United Way and the VNA Foundation. The VNA would be able to handle any unanticipated decrease in revenue or unanticipated increase in expenses through the solicitation of additional charitable contributions or renegotiations of its hospital contract. Financial Feasibility In The Short And Long Terms. Section 381.494(6)(c)9., Florida Statutes. The VNA hospice program is financially feasible in both the short term and long term. The project involves no capital expenditure. Mr. Robert Simione is an expert in health care financial planning and management, and is a principal with Simione and Simione, a certified public accounting firm. Many of the firm's clients are home health agency and hospices. Mr. Simione has extensive experience in the development of hospice programs including budgeting, financial feasibility analysis and financial management. He has recently completed an extensive survey of ten hospices nationwide. Subsequent to VNA's preparation and submission of its hospice certificate of need application, Simione and Simione merged with- the accounting firm of Holstein and Lechner, which therefore had not been involved in either the preparation or submission of the certificate of need application. In November, 1986, after Simione and Simione merged with Holstein and Lechner, the VNA asked Mr. Simione to conduct a feasibility analysis of its proposed hospice program in preparation for both the final hearing and implementation of the program, and to account for extrinsic changes that occurred subsequent to the preparation and submission of the application in October of 1985. The extrinsic changes included an increase in Medicare reimbursement rates for hospice services on or about April 1, 1986, and the availability of Medicaid reimbursement for hospice services in Florida as of January 1, 1987. 1. Patient Census Projections The VNA hospice application, filed with the Department in October of 1985, included a two-year financial projection. The projection was broken into two periods and assumed a projected patient census of 30 for the first six months of operation and 50 thereafter for the next 18 months. Mr. Simione's reliance at final hearing on an anticipated census of 40 during the second period of the analysis (rather than 50) was based on management decisions, and was not intended to reflect the availability of patients or need for hospice services. The proposed patient census in the application is reasonable as a result of the following: The VNA is not starting from "ground zero"; it has systems in place and existing resources and capabilities that would facilitate development of a high quality hospice program. The VNA has experience in implementing its palliative care unit, including community education. The VNA has existing ties and relationships with various charitable and other organizations in Broward County, as well as Dade County. Since 1952, the VNA has historically had large numbers of patient and family contacts throughout Broward County. The VNA has mature relationships with publicly funded entities such as the Public Health Department. Other hospices in Broward County have realized significant patient growth experience during the previous two years. Broward County's morbidity and mortality rates demonstrate demand for hospice services. 2. Outpatient-Inpatient Ratio The VNA hospice certificate of need application, filed with the Department in October of 1985, included financial projections assuming an 80 percent outpatient population and 20 percent inpatient population (80:20 ratio). Projected out-patient to inpatient care ratio of 80:20 reflects a Medicare-imposed ceiling for inpatient care. A 90:10 ratio is more likely in Broward County. The proposed 80:20 ratio is reasonable for planning purposes because: The VNA's existing palliative care unit's statistical experience reflects high inpatient utilization by these patients. The VNA's historical experience with the North Broward Hospital District, as a result of a demonstration project and otherwise, reflects longer hospitalization for Broward patients that come from low income families, often due to their overall poor health status, both nutritionally and physically. The federal government, based on the results of a Medicare demonstration project, has adopted regulations that allow for an 80:20 inpatient hospital ratio for hospice programs. Certificate of need applications recently submitted by other applicants for hospice programs in Broward County utilized an 80:20 ratio. Indeed, Hospice, Inc.'s certificate of need application filed in 1980 projected an outpatient-inpatient ratio of 80:20. The proposed 80:20 ratio had been commonly used by other hospices for financial planning at the time the VNA prepared its certificate of need application. The survey conducted by Mr. Simione revealed that the inpatient utilization component of a participating hospice was as high as 19 percent. 3. Revenue Projections The experience of the palliative care unit supports the VNA's projected payor mix for its hospice program as indicated by the 1986 VNA breakdown by payor source: Medicare 76.8 percent Medicaid 9.0 percent Private Insurance 6.1 percent Private Pay 5.6 percent (sliding scale used) Veteran's Administration 1.2 percent The payor mix projected by Mr. Simione for the VNA hospice is as follows: Medicare 75 percent Medicaid 7 percent Insurance and Private Pay 10 percent Indigent 8 percent Mr. Simione's projections regarding payor mix are not significantly different from those set forth in the VNA certificate of need application, and reflect the availability of Medicaid funding for hospice care. The VNA's projection that ten percent of its projected revenue will be "insurance and private pay" is reasonable because: The amount is supported by VNA's history and the projections of other visiting nurse associations that have recently established hospice programs. An increasing number of private and commercial insurance carriers, including carriers providing coverage in Broward County, are offering hospice benefits. Hospice, Inc. projected that 11 percent of revenue would be "insurance and private pay" in its application for hospice beds in Palm Beach County. As many as 35 percent of Hospice Care of Broward's patients are privately insured for hospice services. Ten percent of Hospice-By-The Sea patient census is composed of private pay patients. The VNA's projections regarding Medicare and Medicaid reimbursement are reasonable in light of the following: As testified by Ella Charland, Executive Director of Hospice Of The Gold Coast, 90 percent of its patients are Medicare reimbursable. Contractual adjustments are not normally considered for projected Medicare revenues since Medicare reimburses hospice on a prospective flat rate. A 2.5 percent Medicare and/or 5 percent Medicaid contractual allowance, if necessary, will not have a significant impact on the financial feasibility of the VNA's proposed hospice program. Use of a wage index of 1.11249 as opposed to 1.1105 in calculating Medicare or Medicaid rates amounts to a difference of .0079 percent of total revenue in Mr. Simione's financial feasibility study. The impact of a .0079 percent discrepancy in calculating Medicare and Medicaid rates for the VNA's proposed hospice program is insignificant. 4. Other Projections The projection of an average length of stay (ALOS) of either 45 or 50 days for a hospice program is consistent with the national average for hospices as stated by the National Hospice Organization and with a survey done by the CPA firm of Simione and Simione. Ambulance costs are not normally a "line item" in a hospice's budget, but if there were any, they would be insignificant in light of its overall operation. The VNA's projection of a .25 full-time equivalent (FTE) for an M.D. Consultant is consistent with projections relied on by other hospices and not violative of any state or federal requirements. The VNA's hospice program does not require an Inpatient RN Coordinator position or a full-time Admissions Assistant since responsibilities inherent in these positions could be assumed by employees budgeted for by the VNA. Impact of VNA Hospice Section 381.494((6)(c)12., Florida Statutes Reverend Westbrook does not believe "...that one single organization could do a good job of caring for all the hospice patients." The VNA will be a positive competitive force vis-a-vis quality, accessibility to indigents, public education, cost effectiveness, and training. Mr. Gates acknowledges that the entry of a new competitor will generally not have a negative effect on existing providers when the new competitor meets unmet needs or provides services the existing providers are not designed to meet. Competition and Regional Monopolies. Section 381.494(3), Florida Statutes. Statutory Intent The only health service for which the Florida statutes explicitly encourage competition and discourage regional monopolies is hospice care. Section 381.494(3), Florida Statutes, encourages competitive forces in the market. The statute provides that the state need methodology should discourage regional monopolies and promote competition. Existing Market Share Hospice, Inc., the largest of all existing hospice competitors in Broward, has captured 60 percent of the Broward County hospice market, and has a market share that is greater than all three existing competitors combined. Hospice Care of Broward retains 16.4 percent of the market share in Broward County. Hospice Gold Coast retains approximately 20.6 percent of the market share in Broward County. Hospice-By-The-Sea retains less than four percent of the market share in Broward County. Hospice, Inc. has obtained certificate of need approval for hospice programs in Broward, Dade and Monroe Counties. Hospice, Inc. is the only hospice in Dade County. Hospice, Inc. has filed a certificate of need application for two hospice beds in Palm Beach County. Hospice, Inc. intends to open and operate additional hospices. HCI, Hospice, Inc.'s management corporation, was capitalized in 1983 for $3.5 million. Venture capitalists who invested in HCI anticipate a reasonable return on their investment. Accordingy, there exists an expectation that profits are to be maximized by HCI, and its related entities, including Hospice, Inc. Hospice, Inc.'s Income Statement dated September 30, 1986, for Hospice, Inc.'s Broward division for fiscal year ending 9/30/85 reflects the following: Total Revenue $1,445,032.28 Total Operating Expenses 1,252,065.18 Division Income $ 192,967.10 Hospice, Inc.'s Income Statement dated September 30, 1986, for Hospice, Inc.'s Broward division fiscal year ending 9/30/86 reflects the following: Total Revenue $2,773,242.48 Total Operating Expenses 2,568,972.14 Division Income $204,270.34 Hospice, Inc. experienced a 92 percent increase in the total revenue from fiscal year ending 9/30/85 to fiscal year ending 9/30/86. In addition to management fees, Hospice, Inc. incurs substantial managerial and administrative costs relating to salaries and wages, director's fees, contract services, and consulting fees.
Recommendation It is RECOMMENDED that a certificate of need be granted to VNA to operate a hospice program in Broward County, which includes five inpatient beds. DONE AND ORDERED this 31st day of December, 1987, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1987. APPENDIX TO RECOMMENDED ORDER The following are my rulings on the proposed findings of fact submitted by the parties pursuant to Section 120.59(2) Florida Statutes (1985). As a preliminary matter I am constrained to point out that I generally found the testimony of the witnesses for VNA persuasive. While the testimony of the opponents was no doubt sincere, it was colored by undue pessimism about their ability to operate in a more competitive environment but the reasons stated for their fears about licensure of an additional competitor were unpersuasive. While initially the Hearing Officer had some doubt about the financial viability of the project, after a review of the testimony of Mr. Semeoni I am satisfied that the reasons he gave to support his opinion that the project is financially viable and the short and long term, and that the projections found in the application are reasonable, is credible, and should be accepted. In rulings on the proposals filed by VNA and HRS. Rejected as unnecessary. Covered in Finding of Fact 1 Covered in Finding of Fact 21. Covered in Finding of Fact 16. Covered in Finding of Fact 103. Covered in Finding of Fact 112. Rejected as unnecessary. 8-10. Covered in Finding of Fact 2. 11-13. Covered in Finding of Fact 3. Covered in Finding of Fact 4. Covered in Finding of Fact 5. Covered in Finding of Fact 6. Covered in Finding of Fact 7. Covered in Finding of Fact 8. Covered in Finding of Fact 9. 20-22. Covered in Finding of Fact 10. 23. Covered in Finding of Fact 11. 24-27. Covered in Finding of Fact 12. 28-29. Covered in Finding of Fact 13. Covered in Finding of Fact 14. Covered in Finding of Fact 15. Rejected as unnecessary. Covered in Finding of Fact 79. Rejected as subordinate to Finding of Fact 71. Covered in Finding of Fact 84. Rejected as subordinate to Finding of Fact 84. 37-40. Rejected as unnecessary. 41-42. Covered in Finding of Fact 53. 43. Covered in Finding of Fact 54. 44-45. Covered in Finding of Fact 55. 46-49. Covered in Finding of Fact 56. 50-52. Covered in Finding of Fact 57. 53-55. Covered in Finding of Fact 61. 56-57. Rejected as a recitation of testimony not a finding of fact. 58-59. Covered in Finding of Fact 59. 60. Rejected as unnecessary. 61-64. Covered in Finding of Fact 63. 65. Rejected as redundant. 66-67. Covered in Finding of Fact 63. 68-73. Rejected as unnecessary. 74-75. Covered in Finding of Fact 64. 76. Rejected as redundant. 77-80. Covered in Finding of Fact 65. Covered in Finding of Fact 66. Covered in Finding of Fact 60. 83-88. Covered in Finding of Fact 60. 89-91. Rejected as unnecessary. 92-103. Rejected because there are no adequate alternatives to hospice care for persons in need of hospice care. The findings are therefore unnecessary. See Conclusions of Law concerning section 381.494(6)(c)4. 104-105. Rejected as unnecessary. 106. Covered in Findings of Fact 10 and 68. 107-108. Covered in Finding of Fact 69. 109-119. Rejected as unnecessary. 120-122. Covered in Finding of Fact 70. 123-125. Rejected as unnecessary. Covered in Finding of Fact 72. Covered in Finding of Fact 71. Rejected as redundant. Covered in Finding of Fact 79. Covered in Finding of Fact 80. Covered in Finding of Fact 81. Covered in Finding of Fact 82. Rejected as unnecessary. Covered in Finding of Fact 83. 135-136. Covered in Finding of Fact 84. Rejected as cumulative to Finding of Fact 79. Covered in Finding of Fact 85. Covered in Finding of Fact 86. Covered in Finding of Fact 87. Rejected as unnecessary. Covered in Finding of Fact 88. Covered in Finding of Fact 89. Covered in Finding of Fact 90. Covered in Finding of Fact 91. Covered in Finding of Fact 92. Covered in Finding of Fact 93. Covered in Finding of Fact 94. Covered in Finding of Fact 95. Covered in Finding of Fact 96. 151-152. Covered in Finding of Fact 97. Covered in Finding of Fact 98. Covered in Finding of Fact 99. Covered in Finding of Fact 73. Covered in Finding of Fact 74. Covered in Finding of Fact 75. Covered in Finding of Fact 76. Rejected as unnecessary. Covered in Finding of Fact 76. Covered in Finding of Fact 77. Covered in Finding of Fact 78. Covered in Finding of Fact 103. Covered in Finding of Fact 104. Covered in Finding of Fact 105. Covered in Finding of Fact 106. Covered in Finding of Fact 107. Covered in Finding of Fact 108. Covered in Finding of Fact 109. Covered in Finding of Fact 110. Covered in Finding of Fact 111. Covered in Finding of Fact 112. Covered in Finding of Fact 113. Covered in Finding of Fact 114. 175-176. Rejected as unnecessary. Covered in Finding of Fact 115. Covered in Finding of Fact 100. Covered in Finding of Fact 101. Covered in Finding of Fact 102. Rulings on Finding of Fact proposed by Hospice Care of Broward County, Inc. Rejected as inapplicable. Covered in the Conclusions of Law. 3-4. Covered in Finding of Fact 40. 5-6. Rejected as unnecessary. Covered in Finding of Fact 41. Covered in Finding of Fact 42. Covered in Finding of Fact 43. Covered in Finding of Fact 44. Covered in Finding of Fact 45. Covered in Finding of Fact 45. Covered in Finding of Fact 46. Covered in Finding of Fact 47, to the extent necessary. Covered in Finding of Fact 48. Rejected as unnecessary. 17-18. Covered in Finding of Fact 49. Covered in Findings of Fact 50 and 51. Covered in Finding of Fact 52. Rejected because the new hospice, while in competition with hospice of the Gold Coast which necessarily means that its programs would duplicate those of Gold Coast. 22-24. Rejected as unnecessary. Covered in Finding of Fact 30. Covered in Finding of Fact 31. Covered in Finding of Fact 32. Covered in Finding of Fact 33. Covered in Finding of Fact 34. Covered in Finding of Fact 35. Covered in Finding of Fact 36. Covered in Finding of Fact 37. Covered in Finding of Fact 38. Covered in Finding of Fact 39. Rejected as unnecessary. 36-37. Covered in Finding of Fact 21. Covered in Findings of Fact 21, 22, and 23. Covered in Finding of Fact 24. Covered in Finding of Fact 25. Covered in Finding of Fact 26. Covered in Finding of Fact 27. Covered in Finding of Fact 28. Covered in Finding of Fact 29. Rulings on proposed findings of fact from Hospice, Inc. Rejected as unnecessary. Covered in Findings of Fact 2, 16, 21, 40, and 55. Rejected because whether Broward has fewer or more hospices than other counties, HRS service districts or more per person than any county is not relevant, the relevant considerations are those set forth in applicable statutes and rules. Covered in Finding of Fact 54 or rejected as unnecessary. Rejected because I have found the need for an additional hospice program. Rejected for the reasons stated in Finding of Fact Rejected inconsistent with my view of the evidence. Rejected as unnecessary. Rejected for the reasons stated in Finding of Fact Covered in Finding of Fact 49, to the extent necessary. 11-12. Covered in Finding of Fact 27, to the extent necessary. Rejected as argument, not a finding of fact. Rejected as inconsistent with my view of the testimony of Mr. Blair. The local plan does not state that there is a need for a hospice in South Broward, but that if there were two competing applications, preference would be given to the hospice proposing to locate in South Broward, which is not at issue here. Covered in Finding of Fact 60. Rejected as inconsistent with my view of the evidence. Rejected for the reasons given for rejecting finding of fact 3. Rejected as unnecessary. Rejected as unnecessary, the criteria for approving a new hospice is not that existing hospices must have waiting lists. Rejected as unnecessary. To the extent necessary covered in Finding of Fact 87(f). Rejected as unnecessary. To the extent that Broward presents a "not normal" situation, see Findings of Fact 56 and 57. Rejected as unnecessary. Rejected as a recitation of testimony not a finding of fact. Rejected as unnecessary. Covered in Finding of Fact 15. Rejected as recitation of testimony not a finding of fact. Rejected for the reasons stated in Findings of Fact 61 through 67. Rejected as unnecessary because I do not believe that the VNA application should be approved because of unique "high tech" care to be available from it alone. Rejected as unnecessary. To the extent necessary covered in Finding of Fact 17. Covered in Finding of Fact 18. Covered in Finding of Fact 19. 34a. Covered in Finding of Fact 20. Rejected as unnecessary. Rejected as cumulative to the Finding of Fact made in the description of the parties for each of the existing hospices. Rejected as inconsistent with my view of the evidence. Rejected as inconsistent with my view of the evidence. Rejected because hospices may be approved without evidence of "serious problems" seeking admission to hospice programs. Rejected as inconsistent with the evidence which I have credited. See Findings of Fact 73 through 78. Rejected because I do not accept Mr. Nelson's premise that approval of additional hospice means that that a new hospice will have to cut into the existing market share of current hospices. The rule methodology provides reason to believe that there is a substantial pool of unmet need from which patients may be drawn. Rejected as unnecessary. Rejected because I do not share Hospice Care's pessimistic view of the potential loss of revenue it would experience if the VNA hospice were granted. As a general matter, I found the testimony of Mr. Simeone on the reasonableness of the projections in the VNA more persuasive than the criticisms of the application by Reverend Westbrook. No useful purpose will be served by going through a line by line analysis of proposed findings 46 through 92 which generally relate to criticism of the financial projections made by VNA because I have resolved the disputes in favor of VNA's application and against the criticisms of the application raised by Hospice. Inc. The projections of VNA is financially feasible in the long and short terms. See Findings of Fact 79 through 99. COPIES FURNISHED: Howard Hochman, Esquire Gerald M. Cohen, Esquire Wood, Lucksinger & Epstein 200 South Biscayne Boulevard Suite 3700 Miami, Florida 33131-2359 Kenneth Hoffman, Esquire Martha Edenfield, Esquire OERTEL & HOFFMAN, P.A. 2700 Blair Stone Road Post Office Box 6507 Tallahassee, Florida 32314-6507 John Rodriguez, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 John Miller, Esquire Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Charles Stampelos, Esquire 215 South Monroe Street Suite 666 Tallahassee, Florida 32301 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 =================================================================
The Issue The issue is whether Suncoast's application for a Certificate of Need (CON) to establish a new hospice program in Service Area 6C should be approved.
Findings Of Fact Numeric Need for One Hospice in Service Area 6C The Agency determined that there is need for one new hospice program in Service Area 6C in the "Other Beds and Programs" Second Batching Cycle 2006. On October 6, 2006, an FNP of one in Service Area 6C (Manatee County) for the January 2008 Hospice Planning Horizon was published by AHCA in Volume 32, No. 40 of the Florida Administrative Weekly. The published FNP was not challenged. Not an Aberration In the six consecutive batching cycles commencing with the October 2006 cycle and ending with the April 2009 cycle, AHCA's numeric need methodology yielded a number of un-served patients who would elect hospice services that was 350 or greater (see paragraph 34, below) in three batching cycles: October 2006, April 2007, and October 2008. Rather than an FNP of one, however, an FNP of zero was published for the April 2007 and October 2008 batching cycles. The FNPs of the two cycles were "zeroed out" because Suncoast's application had been approved earlier and the approval was still pending. See para. 41, below. The Parties Suncoast Suncoast is the approved applicant for a new hospice program in Service Area 6C. Founded in 1977 and started by a group of volunteers, Suncoast is a not-for-profit, full-service community hospice. It has been a provider of hospice services in Service Area 5B (Pinellas County), a service area adjacent to 6C, since 1978. Except for a Pinellas County hospice that exclusively serves and limits its admissions to veterans, Suncoast is the sole provider of hospice services in Pinellas County. From inception, Suncoast's mission has been to provide assistance to anyone affected by death, dying, grief, or bereavement within the community it serves. Suncoast has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 5B. It is Medicare and Medicaid Certified. Agency for Health Care Administration The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated "as the state health planning agency for purposes of federal law . . . ." § 408.034(1), Fla. Stat. It is also "the single state agency [in Florida authorized] to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." Id. TideWell TideWell, the Petitioner in this administrative proceeding, challenges the Agency's preliminary approval of Suncoast's application. TideWell is a not-for-profit, full-service community hospice, founded in 1980. Licensed to provide hospice services in contiguous Service Areas 6C (Manatee County), 8D (Sarasota County) and 8C (Charlotte and DeSoto Counties), TideWell is Medicare and Medicaid Certified. TideWell began serving Manatee County in 1988. Currently the sole provider of hospice services in the county, TideWell has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 6C. Tidewell: Quality of Care, Commitments, and Programs TideWell is accredited by the Community Home Care Accreditation Program ("CHAP"), with special CHAP Commendations for the quality and the use of technology in its program. CHAP is a national accrediting organization whose standards exceed State and Federal licensure standards. CHAP has been authorized by Medicare and Medicaid to "deem" hospice programs to be in compliance with Medicare and Medicaid survey standards. CHAP Accreditation is confirmation that all of TideWell's services delivered in Manatee County are of the highest quality, and that TideWell has the infrastructure in place to ensure high-quality services in the future, as independently measured against national standards for best practices. It is expensive for TideWell to maintain the high levels of quality for which it has been recognized by CHAP. For example, TideWell financially supports Master's level education for its licensed clinical social workers. For its nurses and nurse's aides, it conducts review courses for their certification and pays for their exams if they pass them. Those achieving certification are rewarded with 3 percent pay increases. TideWell has made significant capital commitments in Manatee County. Three branch offices have been strategically located to serve the northeast, northwest, and southern parts of the County. Two of the branch offices are owned by TideWell, and the third is leased for 5 years. TideWell has also built two strategically located freestanding hospice inpatient facilities in Manatee County. TideWell has located its Manatee County hospice services and community outreach efforts to be geographically available and programmatically accessible. TideWell examines Manatee zip code data annually in order to plan the locations for its offices, clinical services, community bereavement services, pre-hospice services, and outreach, so as to best anticipate and serve population growth. Beyond hospice services, TideWell offers a continuum of pre-hospice programs to address the needs of persons who may not be hospice eligible or who do not desire to elect hospice. None of these pre-hospice programs are required as part of a licensed hospice program. Among the pre-hospice programs is Footprints, a program for children started in 2001. Partners in Care ("PIC") is a Medicaid Waiver program that provides highly specialized pediatric palliative care services to patients determined by Children's Medical Services to be eligible. Transitions is a companionship program, started in 2003, for persons with a terminal diagnosis who have not elected hospice, but who need companionship services and psychosocial support with their illness. TideWell Connect is similar to Transitions but also provides palliative care addressed to physical symptoms relief and management. Palliative Care Partners is a program started in 2005 to provide hospice palliative care expertise on a consultative basis to non-hospice patients in acute care hospitals and their homes. None of TideWell's programs along the pre-hospice continuum were implemented as a result of competitive pressure. Rather, each program was developed over time, as TideWell incrementally achieved increased economies of scale in Manatee County sufficient to support these programs. TideWell's Collaboration with All Children's Hospital Pediatrics is a tertiary service. All Children's Hospital serves a five-county area, including Pinellas and Manatee, providing local health care providers with tertiary pediatric acute care resources. TideWell collaborates with All Children's to provide palliative consultations and care to terminally and chronically ill children, participates in the PIC program and provides a sophisticated array of outreach pediatric services to pre-hospice pediatric patients. The level and nature of the services requires the retention of difficult-to- find, highly-qualified pediatric clinicians. TideWell's economies of scale allow it to provide this service, even though the number of children who require it in TideWell's service area is small. At the time of the hearing, TideWell had resources available to handle a caseload of 50 pediatric patients, with an actual census of two patients. TideWell has an active volunteer program in Manatee County, currently composed of 220 volunteers. It offers frequent and conveniently located training classes for new volunteers and has developed a nationally-recognized teen volunteer program. Because TideWell is CHAP accredited, its volunteer program must meet high national standards and be subject to independent verification of best practices. TideWell offers a stratified community bereavement program that addresses the unique issues for survivors associated with various types of death, such as loss of a parent or infant death, and cause of death--e.g., suicide and or death due to trauma. TideWell has a thanatologist and staff of highly trained and experienced grief specialists stationed in Manatee County. They provide grief support to the community, including school counseling, family retreats, support groups, and teen bereavement programs. TideWell has demonstrated that it has the ability to grow geographically and programmatically to meet the clinical needs of patients and referral sources for hospice services in Manatee County. TideWell offers substantially all non-hospice programs proposed by Suncoast. TideWell program enhancements may differ in name, but are substantively similar or virtually identical to services promised by Suncoast. Florida Model Hospices Suncoast and TideWell are "Florida model" hospices. Florida model hospices are usually not-for-profit charitable entities. They strive to achieve revenue (including donations) in excess of expenses so that they have the financial capability of providing services that are typically unfunded or under-funded. One method employed by Florida model hospices to achieve the revenue necessary to fund otherwise under-funded services is through economies of scale. Economies of scale were defined by Mr. Balsano at hearing as: achieving "additional volume [without] . . . having . . . costs go up . . . proportional with volume." Tr. 387. Achievement of economies of scale is especially important in the environment of revenue reduction that prevailed at the time of hearing. That environment is reasonably expected to continue for the immediate future. Due to relative size, Suncoast enjoys greater economies of scale than does TideWell. Suncoast, for example, has an average daily census double the size of TideWell's. It has roughly 1600 employees compared to TideWell's 900 employees. And its volunteer program with 2,800 volunteers has more than twice as many volunteers as TideWell's 1,100. Medicare: Primary Payer The primary payer for hospice services is Medicare. Authorized in 1982, the Medicare benefit covers reasonable and necessary palliative treatments to the hospice patient on a per diem basis for each day the patient is in hospice. The Medicare benefit is comprehensive, providing virtually all a patient and family need during the period of hospice care. Florida law recognizes hospice patients with a prognosis of one year or less. To qualify for Medicare, however, the patient must be certified as having a prognosis of six months or less if the illness runs its ordinary course. Stipulated Facts In the Pre-hearing Stipulation filed July 29, 2009, the parties stipulated to the following facts: AHCA's rule formula resulted in a numeric need for one new hospice program in Manatee County in the batch cycle for which Suncoast's Application No. 9964 was submitted. Suncoast's letter of intent, initial application and omissions response for Application No. 9964 were timely filed by Suncoast with the appropriate filing fee; and the application was deemed complete by AHCA. Suncoast has a record of providing high quality care. Suncoast has demonstrated immediate financial feasibility. Suncoast has a record of providing services to Medicaid and indigent patients. The estimated startup project costs on Schedule 1 of the application are reasonable for the project as proposed. Pre-hearing Stipulation at 2. Conditions in the Application Approval of Suncoast's application is predicated on 14 conditions. The 14 conditions appear in an attachment to Schedule C of the application. See Suncoast Ex. 1, Vol. 1, at SC 0221- 0222. The Hospice Programs Rule Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs" Rule) governs hospice programs. The Hospice Programs Rule regulates several aspects of hospice programs including the establishment of new hospice programs. See Fla. Admin. Code R. 59C-1.0355(1). The criteria for the determination of need for a new hospice program are set out in Section (4) of the Hospice Programs Rule. The section is divided into five subsections: (a) "Numeric Need for a New Hospice Program"; (b) "Licensed Hospice Programs"; (c) "Approved Hospice Programs"; (d) "Approval Under Special Circumstances"; and (e) "Preferences for a New Hospice Program." Fla. Admin. Code R. 59C-1.0355(4). Among the special circumstances that support approval of a CON application for a hospice program is a finding that there exists an un-served population in the service area. Suncoast's application does not seek approval under any of the special circumstances listed in the Hospice Programs Rule. Rather, it seeks to show that it qualifies to establish a new hospice program in response to published numeric need. Subsection (a) declares "[n]umeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater." Fla. Admin. Code R. 59C-1.0355(4)(a). The subsection then sets out a formula for calculating an FNP or "net need." See id. The formula incorporates four different categories of patients: those under 65 years of age whose deaths are "cancer deaths"; those 65 years of age and over whose deaths are "cancer deaths"; those under 65 years of age and whose deaths are "from all causes except cancer"; and, those 65 years of age and over whose deaths are "from all causes except cancer." The calculation under the formula was described by Mr. Sullivan at hearing: First it looks at statewide averages and it then calculates the penetration rate for the local service area. It looks at the actual number of admissions that occurred in that service area in the most recent period for which data is available and then divides that by the number of deaths from the most recent period that's available. So there's basically two different penetration rates. There is a state average and then there is a local actual rate. The State then projects forward the number of deaths that it expects 18 months in the future in that particular geographic region . . . they calculate a three-year historical death rate. They look back at the three most recent years, calculate an average death rate in each of those categories, and then applies that to projected population going 18 month out into the future. * * * And then the state applies the statewide average death rates to the projected number of deaths to see . . . the expected number of hospice patients 18 months down the road -- and subtracts from that number the actual number of patients who were served in the service area. Tr. 407-409. If the number yielded by the calculation is 350 or greater, then an FNP of one is published subject to protective measures for newly-licensed hospices or approved but unlicensed hospices. See Fla. Admin. Code R. 59C-1.0355(4)(b) and (c). In instances in which these protective measures are invoked, the FNP of one is reduced to zero. The Hospice Program Rule does not allow the establishment of more than one new hospice in a service area at a time. That limitation, plus the protective measures for approved hospices and newly-licensed hospices discussed above, led Mr. Gregg to describe the methodology of the Hospice Program Rule for establishing a new hospice program as "inherently very conservative and very measured." Tr. 542. Death Rates and Penetration Rates Death rates declined in Manatee County from 2000 to 2005, but in the latter half of the decade, the number of deaths have been "pretty flat," tr. 410, with a small increase in 2007. As Mr. Sullivan put it at hearing, "[o]ne thing we know is the death rate ultimately is 100 percent for everybody. So there is a finite limit to how far death rates can fall." Id. The death rate in both Florida and Manatee County over the last decade sets up the potential for AHCA's numeric need methodology to yield a result that over-projects need. On the other hand, the penetration rate by hospices (percentage of deaths associated with hospice admissions) had increased at the time of final hearing every year for the previous 12 years. AHCA's numeric need methodology assumes a constant penetration rate. From the standpoint of penetration rates, the numeric need methodology tends to under-project need. Whatever its imperfections, AHCA's methodology is a reasonable method to establish a point of entry for a new provider of hospices services in a hospice service area. A Rebuttable Presumption From the perspective of health planning, a hospice FNP of "1" creates a presumption of need for one new hospice program. But the presumption is not conclusive; it is rebuttable. If a service area has an existing provider of hospice services, as does Service Area 6C with TideWell, then in terms of "incremental demand," an FNP of one creates a rebuttable presumption that the service area can support two providers in total, one of which is new. "Incremental demand" that is at issue is "future deaths." Tr. 467 The existence of an FNP of one new hospice program, however, does not relieve an applicant that aspires to fill the need from demonstrating that its application complies with and meets the statutory and rule criteria applicable to CON projects. Among the statutory criteria is one which relates directly to an FNP. It is found in paragraph (a) of Subsection (1) of Section 408.035, Florida Statutes: "The need for the health care . . . services being proposed." In response to the FNP of one, TideWell seeks to show in this proceeding that there is no need for a new hospice program in Service Area 6C and thereby rebut the presumption that there is a need for one set up by the FNP. Suncoast seeks to show that TideWell has not rebutted the presumption created by the FNP and that it is qualified to fill the need for one new hospice program under relevant statutory and rule criteria. TideWell takes issue with Suncoast's view of the application of some of those criteria, for example, by attempting to show through utilization data and projections that the impact of an approval will fall too heavily on TideWell. Updated Projected Hospice Admissions Suncoast updated projections in its CON application filed in 2006. The updated projections are reasonable. As of June 2009, it projected that there would be a total of 2,154 hospice admissions in Manatee County in 2011, which is hoped by Suncoast to be its second year of operation. Of these, Suncoast projected it would capture 452 if its application is approved. The remaining cases to be served by TideWell in 2011, therefore, is projected to be 1,702. TideWell achieved 2,006 Manatee admissions in calendar year ("CY") 2008. Using CY 2008 admissions as a benchmark, it is reasonable to project that Suncoast's entry into the market will reduce TideWell's admissions in CY 2011 by at least 304. Re-stated, instead of 2,006 admissions in the year 2011, TideWell can be reasonably expected to achieve only 1,702 admissions in CY 2011. The impact to TideWell caused by Suncoast's entry into the market, therefore, is reasonably expected to be at least 304 fewer admissions in CY 2011. Diversity Trends in Manatee County. Manatee County's population is reasonably projected to increase 1.73 percent each year from 2009 to 2015. Over the same time period, the population of persons under 65 is reasonably projected to increase 1.5 percent each year; the population of persons age 65 years and older, 2.5 percent each year. In Manatee County, the non-white population is growing more rapidly than the white population. Historically, the Hispanic population utilizes hospice services at a rate lower than the non-Hispanic population. In Manatee County, the Hispanic population is growing faster than the non-Hispanic population. From 2000 to 2005, the Hispanic population grew at a rate of 56.48 percent and non- Hispanic population grew at a rate of 11.07 percent. While Hispanic deaths are a relatively small portion of the overall deaths in Manatee County, the number of Hispanic deaths is increasing. From 2000-2005, deaths among the African-American population in Manatee County increased 7 percent while deaths in the white population decreased one percent. There are no data to determine the extent to which TideWell serves Hispanics or African-Americans. TideWell Penetration Rates in Manatee County For the six-year period from 2003 to 2008, penetration rates in both Manatee County and Florida have been on an upward trend. TideWell's penetration rate in Manatee County has increased every year over the period except for 2006 when it fell by two percent. Using round numbers, TideWell's penetration rates for the period were: 40 percent in 2003; 50 percent in 2004; 53 percent in 2005; 51 percent in 2006; 57 percent in 2007; and 59 percent in 2008. The drop-off in 2006 was compensated for by a steep increase of 6 percent between 2006 and 2007. Again using round numbers, the statewide penetration rate has increased every year of the six-year period from 48 percent in 2003 to 51 percent in 2004 to 52 percent in 2005 to 55 percent in 2006 to 59 percent in 2007 to 61 percent in 2008. The statewide penetration rate over the six-year period has been greater than TideWell's every year with the exception of 2005 when TideWell's penetration rate exceeded the statewide rate by one percent. With the exception of 2005, TideWell's rate over the six-year period has been between eight percent and one percent lower than the statewide penetration rate. For the last two years of the period, 2007 and 2008, TideWell's penetration rate has been roughly two percent lower than the statewide penetration rate. Suncoast's Penetration Rate in Pinellas County In contrast to the relationship of TideWell's penetration rate to the statewide penetration rate, data provided by Suncoast showed its penetration rate in Pinellas County to have exceeded the statewide penetration rate in the years closest to the submission of its application. In 2000 and 2001, Suncoast's penetration rate was nearly even with the statewide rate but it exceeded Florida's penetration rate by three percent or more for 2002, 2003 and 2004. In 2005, Suncoast's penetration rate exceeded the statewide rate by more than five percent. Statutory Criteria; Section 408.035 Review criteria for CON determinations are contained in paragraphs (a) through (j) of Subsection 408.035(1), Florida Statutes. (Not all of the criteria require findings. For example, paragraph (j) relates solely to nursing facilities.) The need for the health care facilities and services being proposed. As explained, above, the FNP of one establishes a rebuttable presumption of need. The presumption was not rebutted by TideWell. Availability, quality of care, accessibility and extent of utilization of existing health care services in the service district. Over the years, TideWell's admissions in Manatee County have grown significantly: from 792 admissions in 1996 to 2,006 in 2008. After a flattening of growth in 2004 and 2005, attributable to the impact of Hurricane Charlie, the more recent growth has been particularly significant. In 2006 Manatee County hospice admissions numbered 1,683; in 2007 there were 1,906; and, in 2008, there were 2,006. Suncoast's entry into the Manatee County market place will increase availability. If Suncoast enters the Manatee County market and achieves penetration rates in excess of the statewide average penetration rate as it has done in Pinellas County, it is likely that utilization rates will be higher than if TideWell remained the only provider of hospice services in Manatee County. The projected utilization of the proposed hospice program was estimated in Suncoast's application using historical and projected population data for Manatee County and three-year average death rates, applied to the appropriate age category, assuming some modest growth in number of future deaths. TideWell's penetration rate was assumed to increase by one percent per year, consistent with the trend in Manatee County and statewide. The number of hospice admissions in Manatee County was projected forward to 2008 and 2009; and the last step in Suncoast's projection methodology was to estimate what market share Suncoast would achieve. It was assumed that by the end of the second year of operation, Suncoast would achieve a market share of 21 percent. This was applied to the projected number of admissions. The projected utilization was updated before the hearing using more recent data and then compared to the track record of hospices in Service Areas with two hospices. Some Manatee County data had to be estimated because TideWell reports data to the state for its entire operation, serving three service areas. The result is 452 Suncoast admissions projected for 2011, the second year of operation. If Suncoast's projections are achieved, the projected reductions in TideWell's admissions in Manatee County leaves admissions at a figure (1,702) in excess of TideWell's 2006 admissions. TideWell provides high quality of care in Service Area 6C. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Suncoast has 18 interdisciplinary teams. Nurses, physicians, social workers, chaplains, home health aides, and volunteers comprise the teams. Team members often represent other disciplines: physical, occupational and speech therapy; dietary counselors; massage therapy; and those engaged in music therapy and other palliative arts. Hospice services address physical and medical needs, such as controlling pain, as well as psychological, spiritual and social needs of patients with life-limiting illnesses. They also provide care for families of the patients. Suncoast provides interdisciplinary team care where the patient lives, whether at a residence, nursing home, or assisted living facility or to the homeless. Suncoast has provided quality of care in the arena of hospice services and has the ability to continue to do so in Manatee County if its application is approved. Suncoast has on staff eight full-time physicians, five nurse practitioners, and one physician's assistant. In addition, contract and volunteer physicians work with the teams by serving patients as well as physician groups and by performing consults. Suncoast has 20 full-time clinically-trained chaplains and six part-time chaplains along with volunteer support and assistance from community clergy to provide direct patient care and follow-up with families in bereavement. Suncoast's interfaith community advisory councils assist in keeping up with service needs identified through faith communities. Florida Administrative Code Rule 59C-1.0355(4)(e)2. provides a preference for applicants that propose to provide inpatient care through contractual arrangements. Suncoast currently provides inpatient care through contractual arrangements, so it has experience doing so. Its application proposes the following: While a free-standing inpatient facility would not be feasible until the program matures in Manatee County, discussions with hospitals and nursing homes have made it clear that contracts for scatter-bed patients provision would be available. Discussion with Lakewood Ranch Medical Center revealed that they would be very interested in contracting for a hospice inpatient unit, staffed with personnel. Suncoast Ex. 1., Vol. 1, SC 0130. Contacted by Suncoast, Manatee County Hospital provided a tour of its facility to Suncoast personnel. Additionally, Westminster Retirement Community of Florida has two nursing homes in Manatee County and is willing to contract with Suncoast for beds in those facilities. Contracts have not been entered. Suncoast was among the first programs in Florida to develop a Hospice Veteran Partnership and has provided assistance to set up programs in various areas of the state and nationally. Suncoast has an affiliation with a Jewish-owned and operated nursing home to connect to the Jewish members of the community it serves. Suncoast's application has conditions to provide or enhance services to populations traditionally underserved by hospice. For example, Suncoast "agrees to condition [its] application on achieving … [p]rovision of an AIDS program that will collaborate with existing AIDS Service Organizations in Manatee County in meeting the needs of hospice patients with HIV." Suncoast Ex. 1, Vol. 1 at SC 0221. There are several conditions which relate to serving the Hispanic population of Manatee County, a traditionally underserved group. Suncoast promises to develop a community advisory committee to be composed of residents "reflective of the community whose purpose is to provide input and feedback about the needs of the Manatee County community and whose recommendations will be used in the future program development." Id. at SC 0222. If Suncoast does not implement the conditions, it will be subject to fines and other actions against its license. Suncoast has committed to serve populations whose needs are traditionally unserved. But there was no evidence that any of these groups are, in fact, un- served or underserved in Manatee County. Suncoast, unlike most hospices, has a caregiver program that allows patients with either a frail caregiver or no caregiver to remain at home to die. Suncoast also trains respite and substitute caregivers. Suncoast has a well-developed and in-depth pediatric hospice program. Suncoast has dedicated staff for this program, meaning they only work with children from the first encounter for admission throughout the care given to the pediatric patient. Suncoast's children's hospice team has an excellent working relationship with All Children's Hospital, a tertiary hospital for children that serves several counties, including both Pinellas and Manatee. Suncoast has partnered with the University of California on a five-year National Institutes of Health grant to study bereaved fathers and develop clinical practices specific to that group. Recently, Suncoast was selected to join a regional network to assist hospitals and hospices in starting pediatric hospice or palliative care programs. Under a grant through Children's Hospital and Clinics in Minneapolis, Minnesota, seven sites were selected to participate, Suncoast being the only hospice. After hearing many families lament the difficult choice of selecting hospice for a child, Suncoast responded to the needs of these families by developing children's palliative care services. Suncoast was also among the first hospices in Florida to provide services under the PIC Medicaid waiver program. The program provides palliative care while the child continues curative treatment. Suncoast provides community counseling services as part of its children's palliative care programs. Any family in Pinellas County, from a family dealing with an ill child undergoing curative care to a family bereaved by a tragedy as the result of an auto accident or shooting, can contact Suncoast and receive counseling support. Suncoast also established the Suncoast Children's Care Coalition--a group of community representatives of services to children that works as the eyes and the ears of the community to identify and advise on services to meet community need. Working with the State Victims' Association, Suncoast is actively involved in the adult and children's trauma network. Suncoast received an award for this work in May 2009. Suncoast's perinatal loss program is the only hospice program of its type in the country. Suncoast works very closely with volunteer doulas or birth coaches who receive at least eight hours of interdisciplinary care training to assist families that know their child is likely to be stillborn or not survive beyond labor and delivery. Doulas and children's programs counselors are matched with families to provide information and support. Suncoast provides adult palliative care services to reduce symptoms. Suncoast Supportive Care provides assistance through an interdisciplinary team for those whose life expectance is one year or less or who choose not to go into hospice or who otherwise would not qualify for hospice. Suncoast has relationships with several hospitals in Pinellas County for palliative care consults, and Suncoast's medical director is available for palliative care consults in any hospital. Suncoast also has a licensed home health agency to provide palliative care. Suncoast has palliative arts volunteers who provide services to patients, community program clients, and trainings and presentations to the community. Also known as complementary therapies, aromatherapy, massage therapy, music therapy, expressive arts, and energy works (or Reiki) are used in collaboration with western medicine to relieve symptoms. Suncoast has a partnership with American Stage, a local theatre in Pinellas County. The two collaborated on a play called "Vesta" in which the title character is a woman facing the end of life. After performances of the play, staff speak with the audience about the play and issues raised. Suncoast provides caregiver support through "caregiver coffee breaks." The programs are facilitated by a counselor and are offered at locations throughout the community and at varying times. The services are not reimbursed. Suncoast provides a number of specialized bereavement groups to the community. For example, Kindred Hearts is Suncoast's suicide survivor group, which puts out a monthly newsletter. Persons attend from around Tampa Bay, including Manatee and Hillsborough Counties, because they have not found anything else that meets their needs. In addition, Suncoast personnel are available to respond to grief crises in the community and beyond. Suncoast teams were in Mississippi and Louisiana after hurricane Katrina and assisted after 9/11 to help people cope with loss and grief. These services are not reimbursed. Suncoast has a children's bereavement program that extends to every school in Pinellas County and serves more than 2,000 children a year with loss and grief counseling. Suncoast provides four different bereavement camps. Camp Erin is a weekend bereavement camp for children ages 8-to- 15 years of age in Ellenton in Manatee County. For the past 14 years, Camp Hope has been a smaller camp for families. It provides bereavement for adults and children, both together and apart. "Cube," a bereavement retreat for teens, just completed its third year. Finally, there is a family fun day held each year with arts, crafts, entertainment, and activities that offer fun as well as support and networking for families with a child that has an illness or condition that is life-limiting. Suncoast's staff undergo intense learning for the first 9-to-12 months of employment. Employees are assigned to a mentor or preceptor who oversees their training. Initially, all disciplines receive at least six or eight hours in pain and symptom management, with an additional 12 hours for nurses, pharmacists and physicians. Follow-up education is provided at the two-year mark. Anywhere from 50-to-80 continuing education courses are provided each month. Additionally, all clinic staff are provided laptops on which various references are provided weekly. Diversity is an integral part of Suncoast. Most recently, diversity efforts have been combined into the Committee to Improve Cultural Awareness. The committee offers education internally and externally to increase understanding and respect for cultural differences. The committee meets monthly. It holds educational events, health fairs, and cultural events for staff and the community. Suncoast also has a Latino Advisory Council of members of the Latino community that helps identify needs of the Hispanic community. Suncoast has staff positions dedicated to outreach in the Latino and African-American communities. Suncoast recruits for diversity so that its employees reflect the community. Much of what Suncoast is able to provide is through the assistance of community volunteers. Suncoast has between 2,800 and 3,000 volunteers, including 400 teen volunteers in the Teen Volunteer program. Volunteers do everything from providing direct patient care to administrative support, fundraising, and outreach. Medicare requires that five percent of total patient hours of care be provided by volunteers. Suncoast exceeds that requirement by several percent. Volunteers receive an initial four-hour training to orient them to hospice and volunteerism. For volunteers desiring to perform patient care, an additional 16-to-18 hours of training is provided followed by mentored visits with the teams. Suncoast is able to recruit, train, and retrain volunteers in Manatee County. Suncoast HIV/AIDS services division, "ASAP," provides case management and a variety of service for adults and children who have HIV/AIDS or have a loved one with HIV/AIDS. Services range from providing condoms and safe sex education, to retreats, outings, counseling, and a personal needs pantry from which clients may obtain grocery and personal care items not covered by food stamps. Many of these services are not reimbursed. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Suncoast has approximately 1,600 employees. Suncoast and its six affiliated organizations have an annual budget of approximately $150 million. Suncoast is not the subject of any outstanding fines, liens or overpayments. Suncoast is financially efficient. Its operating expenses, including patient service expense, for fiscal year 2008 were $116.8 million. Its administrative and general expenses were just over $19 million, or 15 percent of total costs, a reflection of administrative efficiency. Schedule 1 of Suncoast's application shows "estimated project costs." Schedule 2 shows all of Suncoast's capital projects whether approved, under development, or planned, and the total capital commitment for both health care and other projects. Schedule 3 shows Suncoast's source of funds, and Schedule 4 depicts utilization of existing hospice by patient days. Each of the four schedules was accurate at the time the application was prepared. Schedule 6 of Suncoast's application presents a reasonable estimate of the staffing that would be required for Suncoast's proposed project. The staffing estimate includes six FTEs "to take care of the conditions for this particular certificate of need application," tr. 300-01, as well. The salaries shown on Schedule 6 are reasonable estimates of salaries for the staffing required to support the proposed project. The extent to which the proposed services will enhance access to health care for residents of the service district. Over the years it has operated in Pinellas County, Suncoast has proven that it is responsive to community needs for hospice services. Hospice programs began in the United States in 1974. Suncoast's program commenced in 1977 when a group composed of chaplains, educators, nurses, social workers, and local residents from "all walks of life," tr. 37, saw the need for hospice in Pinellas County. It was decided then that the program would be not-for-profit and that the mission would be to serve any person in the community affected by death, dying, grief, or bereavement, regardless of ability to pay. In keeping with its mission, Suncoast has multiple community advisory committees through which it identifies and meets community hospice needs. In 1981, for example, at a time when most home health agencies were turning down AIDS patients and hospitals were releasing them, Suncoast was one of the first programs to care for AIDS patients in their homes. A recent example of Suncoast's attempt to increase access to hospice services is its "Touch a Life" program. Aware of spreading financial stress in the community typified by community members' decisions to stop paying health insurance premiums, their difficulty in affording medication, and their forgoing needed visits to physicians, every member of the Suncoast organization was asked to touch a life in some way each week. Within three months of the commencement of the program, 10,000 community members had been contacted with the outreach effort. Suncoast's community service centers, dispersed throughout the community, are not only a resource for staff, but gathering places for the community with libraries, computers available for research, and volunteer staff. Suncoast is affiliated with Suncoast Institute, a national center for hospice education, research, and end-of-life care. The institute's mission is to improve the way individuals and communities care for each other in the last years of life. The institute provides training on a contractual basis, conference presentations, "train the trainer," tr. 247, sessions, and seminars via the Internet or webinars where individuals receive training to implement programs in their own communities. In 2008, Suncoast, together with Morton Plant East Hospital, became one of only three accredited clinical pastoral education programs in the nation with training in end-of-life care. Training occurs across the whole continuum of care, whether in a hospital, nursing home, or inpatient hospice care. At inception, Suncoast Institute had as a goal "trying to bridge the gap between academic research and practice." Tr. 253. It began networking with academicians at the University of South Florida (USF.) Today, along with other hospices including TideWell, the institute is part of a center at USF that studies end-of-life care. The center at USF oversees a research agenda that links community provider needs with academic disciplines to provide meaningful research useful in the promotion of hospice and palliative care. Suncoast has also participated through Suncoast Institute in collaboaration with university researchers at the University of Buffalo, Duke, Yale, Brown, Dartmouth, and various state university systems. The institute oversees student affiliations hosting 2,500-to-3,000 students a year that range from two-day observations to two-year internships, residencies, and fellowships. The affiliations span a broad spectrum of clinical disciplines such as pharmacy, nursing, social work and medicine and include non-clinical student affiliations in non- profit business management, finance, marketing, and community outreach. The institute has a local speakers' bureau and provides continuing education for professionals in the local community. It provides up to a million student hours a year of training in the community and with staff. Suncoast's community committees, outreach programs, its institute, and work in academic settings are likely to continue with as much vigor as in the past should its application be approved. Services Suncoast intends to provide will duplicate services offered by TideWell. Nonetheless, it is reasonable to expect that with two different, competing and perhaps at times collaborating hospices, access to hospice services in Manatee County will be enhanced should Suncoast's application be approved. The immediate and long-term financial feasibility of the proposal. Suncoast is a financially strong organization. Its most recent audited financial statement for the fiscal year ending September 30, 2008 shows $15,142,000 in cash and cash equivalents of $7,567,000. The approximate sum of the two, $22.6 million, is a healthy financial reserve. Unrestricted net assets shown in its Consolidated Statements of Financial Position for 2007 (revised) and 2008, see Suncoast Ex. 38, moreover, were $35,309,089 as of September 30, 2008. Suncoast has the cash on hand to finance the proposed project. The parties have stipulated to the short-term financial feasibility of Suncoast's proposal. As for determining long-term financial feasibility, Mr.Balsano, Suncoast's expert in health care finance, used a model developed on a fixed and variable expense basis. It incorporated accounts at the existing Suncoast Hospice in Pinellas County and "looked towards consistency in some of the revenue and expense relationships." Tr. 331. It made adjustments, however, for operations in Manatee County for patient care costs and some other operating costs, taking into account administrative resources that would be shared with its Pinellas County operations. Assumptions made by Mr. Balsano were reasonable. As source documents, the model used the Suncoast 2007 budget. It identified unique capital costs of depreciation associated with opening a hospice in Manatee County; supply expenses and revenue on a per-patient-day or per-admission relationship were assumed to be similar to those of Suncoast's Pinellas County operations. The model was used to develop Schedule 7A of the application, which calls for projected revenues from operating years 1 and 2, and Schedule 8A, which calls for projected income and expenses for the same operating years. Schedule 8A of the application projects a net operating loss at the end of the second operating year of $269,689. Included in the loss are expenses of approximately $250,000 for uncompensated care that Suncoast has committed to provide. Suncoast will provide $358,933 in non-operating revenues which will not only cover the "uncompensated care" loss but will produce a net profit in the second year of operation attributable to the Manatee County operations of $89,244. The contribution of non-operating revenues enables Suncoast to provide service beyond the Medicare benefit. Suncoast's proposal is financially feasible in the long term. The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. If its application is approved, Suncoast will compete with TideWell in Manatee County. Competition from Suncoast, a mission driven, not-for-profit, organization, should promote quality in Manatee County. In contrast to a for-profit organization that would seek to maximize profits by taking as many patients as possible whether at TideWell's expense or not, Suncoast is more likely to attempt to complement the programs offered by TideWell. There is potential for Suncoast to "add value to [the] service area," tr. 443, as Mr. Sullivan phrased it at hearing. It is reasonable to expect that added value will promote quality of care. Suncoast and TideWell have collaborated in the past. Whether the two will continue to collaborate should Suncoast's application be approved is an open question. Given the nature of their operations, however, there is a strong possibility of collaboration. If it continues, there will be an opportunity to achieve efficiencies. (i) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Suncoast has a long history of providing hospice services to Medicaid patients and the medically indigent. Consistent with its mission, Suncoast has made a conscious decision to provide needed services to hospice patients, whether fully reimbursed or not. These include instances where patients have some level of insurance but not all services are covered or cases where specific covered services are under-reimbursed. It also includes instances of when the patient has no ability to pay. In its fiscal year ending September 30, 2006, Suncoast provided uncompensated care totaling $11.5 million. In its fiscal year ending September 30, 2008, Suncoast provided uncompensated care totaling roughly $11.7 million. During 2006, a total of five percent of Suncoast's patient days were reimbursed by Medicaid and five percent were un-reimbursed charity care. At the time of hearing, Suncoast continued to provide charity care and Medicaid-reimbursed services at or above those levels. In fiscal year 2008, Suncoast's loss from continuing operations was $1,370,000. It received funding from the Suncoast Foundation in that year that was more than enough to cover the loss. Including all program expenses, both reimbursed and un-reimbursed, and all revenues from reimbursement or support from the community for non-reimbursed programs, Suncoast has operated at a profit. Suncoast's past profitability is indicative of the likelihood that it will continue to be able to provide Medicaid services and charity care at levels it has provided in the past. Because many of its programs are not funded through reimbursement by Medicare or private insurance, Suncoast has a fund-raising foundation. The Suncoast Foundation works to support the mission and programs of Suncoast and its affiliates. Its net assets at hearing were $31,690,000. The foundation will coordinate funding in Manatee County by using a community-based, relationship-based approach. The foundation has been successful in the past. In 2007, for example, the foundation raised approximately $9.3 million in contributions to fund its programs that did not generate adequate revenue. The foundation has diverse revenue sources. It receives revenue from contributions, bequests, investment income, rental income, thrift stores, and other fundraisers. In the fiscal year ending September 30, 2008, the foundation received total revenues of approximately $1.7 million from thrift stores alone that netted approximately $750,000. It is reasonable to expect, in light of Suncoast's history and recent performance, that approval of its application will assist in enhancing access to Manatee County's Medicaid patients and medically-indigent patients. Impact to TideWell TideWell is a financially healthy organization. Based on projections found reasonable in this order, approval of Suncoast's application will leave TideWell with a substantial number of Manatee County admissions. TideWell's Manatee County admissions after Suncoast's approval will likely exceed the number of admissions of more than 90 percent of all hospices nationally. Evidence presented reflected two ways of analyzing the impact of the application's approval on TideWell. The first, stressed by TideWell, is impact on its operations in Manatee County. The second, preferred by Suncoast, is impact on the entire entity of TideWell, that is, considering its operations in Charlotte and DeSoto Counties, Service Area 8A, and on its operations in Sarasota County, Service Area 8D, as well as its operations in Manatee County. Impact in Manatee County Alone A Growing Market. The Manatee County market for hospice services has grown because of increasing penetration rates. The "Baby Boom" generation will begin turning 65 in 2011. Despite recent flatness in the death rate, the number of deaths in Manatee County is likely to stabilize or increase forward of the data produced at hearing. The trend in hospice admissions is an upward one both in the state as a whole and in Manatee County. Between 2003 and 2008, the number of hospice admissions in Manatee County increased by 48 percent, "far in excess of any population growth." Tr. 986. The combination of factors that determines hospice admissions indicate that the demand for hospice services in Manatee County is likely to increase. TideWell Quality of Care Post-Suncoast Approval. TideWell maintains that if its admissions were reduced to an annual number of 1,702, as projected by Suncoast, its quality of care in Manatee County will be diminished. There is no evidence that for the years 2004, 2005, and 2006, when it had fewer admissions than 1,702, TideWell provided care that was less-than-excellent quality of care. As Mr. Davidson put it at hearing, however, "[TideWell] was providing the best quality of care it could consistent with its volumes." Tr. 795. Mr. Davidson's testimony with regard to quality of care based on reduced volume should Suncoast's application be approved was consistent with Ms. Maisto's testimony about programs that would be eliminated and jobs lost at TideWell should the application be approved. The cuts in programs and jobs are shown on TideWell Exhibit 19 and the exhibit is supported by testimony from Ms. Maisto. See Tr. 662-672. But Ms. Maisto's testimony and the exhibit are dependent on TideWell's financial impact analysis. Tidewell's Financial Impact Analysis. TideWell predicts a financial loss to TideWell of approximately $1.3 million in the second year of Suncoast's operation in Manatee County. There is no doubt that there will be a financial impact to TideWell as the result of a reduction in volume in Manatee County admissions, but TideWell overstates the projected impact. Furthermore, the impact to TideWell from the loss of Manatee County cases overlooks TideWell's status as a provider of hospice services in several service areas other than Service Area 6C. Impact on the Entity TideWell TideWell serves four contiguous counties: Manatee, Sarasota, Charlotte, and DeSoto. Most of TideWell's hospice activity is outside of Manatee County. In 2008, for example, 29 percent of TideWell's admissions were in Manatee County and 25 percent of its revenues were from Manatee County. TideWell's management views the organization in the aggregate. The view is supported by other indicia. TideWell has one license, one accreditation, one Medicare provider number and its programs are on an organization-wide basis. Likewise, when AHCA conducts surveys of TideWell, it does not limit its inquiry to Manatee County operations; it surveys all of TideWell. Prior to 2009, TideWell did not track financial performance by the counties it served. It accounted for the organization as a whole over the four counties served. Manatee County is not the leading region for TideWell. Sarasota County is regarded by TideWell as its "core business," Suncoast Exhibit 91, at 41, or as the most successful of the four counties it serves. TideWell's assessment is supported by the revenue generated from each county. Sarasota's gross revenue from operation is double the gross revenue from operations of the other three counties combined. TideWell's admissions have grown over the recent past in the three counties it serves that are Manatee County's neighbors. From 2003 to 2008, TideWell's admissions in Sarasota, Charlotte, and DeSoto Counties increased from 3,313 to 4,828. For Suncoast's second year of operation (considering TideWell's loss of admissions in Manatee County), Mr. Balsano projected that total admissions volume for TideWell as an entity in 2011 would be up 3.6 percent over 2008 and revenue would be increased 4.9 percent in the amount of $4,221,800. The projections are based on the assumption that TideWell's growth in admissions from Sarasota, Charlotte and DeSoto Counties would be only half of historical growth. The projections are reasonable. Reasonably projected growth in TideWell's admissions for all four counties and the concomitant reasonably projected increase in revenues mitigates the impact to TideWell's admissions and revenues if Suncoast's proposed hospice in Manatee County is approved. Impact on Charitable Donations TideWell's charity care and unfunded services in Manatee County are not fully covered by donations but the two types of services depend on donations for funding. They are the types of care and services which would be cut should funding levels require cuts within the organization. In fiscal year 2007, TideWell received $823,000 in charitable contributions from Manatee County. The bulk of TideWell's charitable contributions, however, come from outside Manatee County. For the same time period, fiscal year 2007, TideWell received more in charitable donations from outside the four counties than it received from Manatee County: approximately $1 million. From Sarasota County, alone, in fiscal year 2007 TideWell received $5 million, more than five times the amount of Manatee County donations. To make up for lost revenue from the impact of lost admissions in Manatee County, TideWell will need to attempt to increase donations. It is reasonable to expect that memorials and bequests associated with patients lost to Suncoast will be made to Suncoast. An increase in donations, therefore, will not be easily achieved. But it is not reasonable to expect that every charitable dollar raised by Suncoast in Manatee County will be a charitable dollar lost by TideWell. TideWell and Suncoast already compete for charity dollars in Manatee County. (As of January 2008, Suncoast Foundation had 200 active donors from Manatee County.) Without doubt, that competition will sharpen if Suncoast's application is approved. Nonetheless, the impact to TideWell's receipt of charitable contributions is not likely to be so material as to require denial of Suncoast's application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a final order that approves CON 9964, the application of Hospice of the Florida Suncoast, Inc., to establish a new hospice program in Service Area 6C, Manatee County. DONE AND ENTERED this 26th day of February, 2010, 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 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 2010. COPIES FURNISHED: Robert D. Newell, Jr., Esquire Newell, Terry & Douglas, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Lorraine M. Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop No. 3 Tallahassee, Florida 32308 Paul H. Amundsen, Esquire Julia E. Smith, Esquire 502 East Park Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Thomas W. Arnold, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308-5403 Justin Senior, General Counsel Agency for Health Care Administration Fort Knox Building, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308
