The Issue Vitas Healthcare Corporation of Florida, Inc., and Heartland Services of Florida, Inc., each filed applications with the Agency for Health Care Administration to establish a new hospice program in Duval County, Hospice Service Area 4A, in the second batching cycle of 2004. The issue in these consolidated cases is whether either, both or neither of the applications should be approved.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is designated by Section 408.034(1), Florida Statutes, "as the single state agency to issue . . . or deny certificates of need . . . in accordance with present and future federal and state statutes." Accordingly, it is the state agency responsible for issuing or denying the applications for certificates of need sought by Heartland and VITAS in this proceeding. Heartland Heartland is a subsidiary of Manor Care, Inc. ("Manor Care"), a company traded on the New York Stock Exchange. Manor Care through various subsidiaries operates approximately 279 nursing homes, 65 assisted living facilities, 89 rehabilitation clinics, and 94 home health agencies and hospices. To the extent these operations require buildings, Manor Care owns the majority of them. While many companies offer one service or another of those offered by Manor Care, the company's ability to offer the variety of health care services in its portfolio enables it to provide continuum of care to its patients. In Florida, Manor Care, through its subsidiaries, operates "just under 30 nursing homes, three . . . in the Jacksonville market." Tr. 31. It operates 11 assisted living facilities in Florida, 29 rehabilitation facilities (14 of which are in the Jacksonville area), and six home health operations. Neither Heartland nor any of the healthcare companies with which it is affiliated through Manor Care operates a hospice program in Florida. But Manor Care operates 86 licensed hospice programs in the United States, the greatest number of any company operating hospices in the country. It commenced hospice operations in 1995 with approximately 58 patients; its hospice census at the time of hearing exceeded 5,600 patients. Heartland's proposed hospice program will be similar to Manor Care's programs in other states, and Heartland will use Manor Care's considerable hospice experience outside of Florida to assist Heartland in operating the proposed hospice if its CON application is approved. Heartland's proposal to provide hospice services in the Jacksonville area, moreover, will offer the opportunity to enhance continuum of care for patients in the area who decide to choose Heartland for hospice in addition to home health care, rehabilitation services or nursing home services. VITAS VITAS Healthcare Corporation of Florida, Inc., ("VITAS" or "VITAS the Applicant"), and the Petitioner in DOAH Case No. 04-3856CON, is a wholly-owned subsidiary of Vitas Healthcare Corporation ("VITAS the Parent.") VITAS the Parent operates 39 hospice programs nationwide and provides services to more hospice patients than any other hospice provider in the country. In 2004, VITAS the Parent merged with Comfort Care Holding, a subsidiary of Chemed Corporation (Chemed). As a result of the merger, VITAS the Parent became a wholly owned subsidiary of Chemed. Chemed is a for-profit corporation that operates under the trade name Roto-Rooter and describes itself as North America's largest provider of plumbing and drain cleaning services. The acquisition of VITAS the Parent by Chemed was made to allow Chemed shareholders to realize 100% of the revenue and earnings of VITAS the Parent. The Chemed acquisition was preceded by significant contributions of VITAS the Parent and its affiliates to the hospice movement in this country. A pioneer in the hospice movement, VITAS the Parent offered hospice services in Florida more than 28 years ago. One of the first hospice programs in the country was a Miami-Dade program affiliated with VITAS the Parent. The program was organized by Huge Westbrook and Esther Colliflower, a Methodist minister and a nurse with an oncology background, respectively, who were both professors at Miami-Dade Community College teaching courses on death and dying issues. VITAS the Parent was also instrumental in the development of hospice licensure standards in Florida and the establishment of the federal Medicare benefit for hospital services. Over this three-decade stretch of time, VITAS the Parent has also been a leader in hospice research and development and has created pain management tools and hospice care manuals that are widely used by other hospice providers across the nation. For example, it developed the Missoula-VITAS quality of life index, licensed and used by over 150 hospices nationwide. The publication 20 Common Problems in End of Life Care was authored by employees of VITAS the Parent and is used as a textbook for delivery of hospice care. In recent years, VITAS the Parent has provided hospice services to more hospice patients than any other hospice provider in the country. In 2004, VITAS programs admitted over 46,000 patients with an average daily census of 9,000. In 2005, VITAS national admissions increased more than 8% to over 50,000 patients with an average daily census of over 10,000. Provision of hospice services through VITAS the Parent's affiliates has expanded recently. In the past three years alone, 15 operational hospices affiliated with VITAS the Parent have been added. In the hospices operated around the country, all Medicare-certified, VITAS earned over $531 million in 2004, growing to over $600 million in 2005. In Florida, affiliates of VITAS the Parent currently operate a number of licensed hospices. These include programs located in Miami-Dade County (Service Area 11), Broward County (Service Area 10), Palm Beach County (Service Area 9C), Orange, Osceola and Seminole Counties (Service Areas 7B and 7C), Brevard County (Service Area 7A), and Volusia and Flagler Counties (Service Area 4B). Of licensed hospices operated in Florida by subsidiaries of VITAS the Parent, three are operated by VITAS the Applicant: one each in Dade, Broward, and Palm Beach County. VITAS the Applicant considers itself to be Florida’s largest hospice and the dominant existing licensed hospice provider in Florida. Whether all parties would agree with that characterization, there is no question about VITAS the Applicant's place among the subsidiaries of VITAS the Parent. VITAS the Applicant is the “major contributor of revenue to Vitas Healthcare Corporation on a consolidated basis.” Tr. 946. Described by the controller of VITAS the Parent as a “cash cow,” VITAS the Applicant “makes VITAS [the Parent] as a whole a very healthy organization [financially].” Id. In 2004, the hospice programs in Florida affiliated with VITAS the Parent collectively admitted more than 16,000 hospice patients. The average daily census for these programs was 3,500 with earnings of over $210 million. All of the hospice programs affiliated with VITAS the Parent are in full compliance with Medicare conditions of participation and none have exceeded Medicare cost caps. Community Community Hospice of Northeast Florida ("Community" or "CHNF"), the Petitioner in DOAH Case No. 04-3886CON, is a not- for-profit Florida corporation, licensed by the State of Florida to operate Northeast Florida Community Hospice in Service Area 4A, serving Baker, Clay, Duval, Nassau and St. Johns Counties. Community was established by a group of volunteers in 1978. Its mission is to improve the quality of life for hospice patients and families and to be the compassionate guide for end- of-life care in the community it serves. It has history of high quality of care, the breadth of which was demonstrated in multiple areas that included community education, bereavement, outreach, and pediatric hospice care. Community also operates a separately licensed pharmacy and a durable medical equipment provider service. Among the issues pled by CHNF's petition in DOAH Case No. 04-3886CON are the following: Material issues of disputed fact to be resolved at hearing include, but are not limited to: * * * b. Whether Heartland's Application, and whether the CON Applications of any co- batched Applicant who files a Petitioner [VITAS], complies with the applicable criteria in Chapter 408, Fla. Stat., and Rules 59C-1.008, 59C-1.030 and 59C-1.0355, F.A.C. * * * Community Hospice alleges that the specific statutes and rules at issue in this case include, but are not limited to, §408.035, §408.037, Fla. Stat., and Rules 59C-1.008, 59C-1.030, and 59C-1.0355, F.A.C. Community Hospice of Northeast Florida, Inc.'s Petition for Formal Administrative Hearing, pp. 4-5. Overview of Hospice Care Hospice care is provided to patients who are terminally ill. As "end of life" care, it is entirely palliative; curative treatment is not a part of the hospice regimen. Hospice admission eligibility criteria require that the patient's condition be certified as terminal by an attending physician or hospice medical director with less than six months to live and, of course, that the patient's wishes include hospice or palliative care services. Hospice care is holistic. It provides physical, emotional, psychological and spiritual comfort and support to a dying patient and considers the patient and the patient's family to be a unit of care. Hospice services are provided by a team of professionals: physicians and nurses who provided skilled nursing care, home health aid services, social worker services, chaplain and religious counseling services and bereavement services for the family left of the patient after death. Hospice care may be provided in location where a patient has lived or is temporarily residing such as a private home, family member's home, assisted living facility (ALF), nursing home, hospital or other institution. There are four basic levels of hospice care: routine home care, general inpatient care, continuous care, and respite care. The majority of hospice patients receive routine home care: care in their own residences whether it be their home, a family member's home, a nursing home, or an ALF. Routine home care comprises the vast majority of hospice patient days. Continuous care is also provided in the patient's home. Unlike routine home care, continuous care is for emergency care or control of acute pain or symptom management. The term "continuous" to describe this type of hospice care is something of a misnomer. Continuous care is typically intermittent but requires a minimum of 8 hours of one-on-one care in a 24-hour period with at least 50% of the care provided by a nurse. The continuous care patient usually has a higher level of acuity than the hospice patient that is receiving general inpatient care. Aside from the difference in acuity level, the continuous care patient is different from the patient receiving general inpatient care because the continuous care patient has made the choice to remain at home, despite the patient's need for emergent care, acute pain relief, or symptom management that is also appropriate in an inpatient setting. As the term indicates, the hospice patient receiving general inpatient care is in an inpatient setting such as a hospital, the sub-acute unit in a nursing home or in a freestanding hospice unit. This type of care provides increased nursing care for patients with symptoms temporarily out of control and in need of round-the-clock nursing, although generally at a lower level of care than the continuous care hospice patient. Respite care is provided to patients in an institutional setting such as a nursing home, ALF or a freestanding hospice unit in order to allow care givers at home, such as family members, a short break or "respite" from the demands of caring for a terminally ill patient. Medicare Reimbursement Medicare provides reimbursement for hospice care and is by far the largest payer for hospice care. Medicare reimburses different rates for hospice based on each of the four basic levels of hospice care. Hospice regulations consider certain hospice services to be "core services": nursing, social work, pastoral or other counseling, dietary counseling, and bereavement services. Referral Sources The main sources of referrals for hospice are hospitals, nursing homes, ALFs, and physician groups. Stipulation The Parties stipulated to the following: AHCA published a fixed, numeric need for one new hospice program in District 4A for the first batching cycle of 2004. No challenges were filed to that published fixed need determination. Vitas and Heartland each timely filed letters of intent, initial applications, and omissions responses proposing to establish a new hospice program in District 4A, in response to AHCA's published fixed need for one new program. AHCA issued its State Agency Action Report preliminarily approving Heartland's CON application 9783, and preliminarily denying Vitas' CON application 9784. Notice of AHCA's decision was published in the September 10, 2004, Florida Administrative Weekly, Vol. 30, No. 37. Community has a history of providing high quality hospice services in District 4A, and has standing in this proceeding. Heartland and Vitas each have the ability to provide high quality hospice services in District 4A, should their respective CON applications be approved. All parties reserve the right to present comparative evidence related to any party's quality of care. All Parties agree that the project costs identified in Schedule 1 of each CON application are reasonable, appropriate, and are not in dispute or at issue in this proceeding. * * * Heartland and Vitas each satisfy the CON review criteria contained in section 408.035(3) pertaining to ability of the applicant to provide quality of care and the applicant's record of providing quality of care. The CON review criteria set forth in subsections 408.035(8)(cost and methods of proposed construction), and (10) (designation as a Gold Seal program nursing facility) are not applicable to this proceeding. Agreed Joint Pre-hearing Stipulation, filed February 20, 2006. Numeric Need in Service Area 4A On April 29, 2004, AHCA published its determination that there is a fixed numeric need for one new hospice in Service Area 4A for the planning horizon at issue in this case. The fixed need pool was calculated by AHCA using a fixed numeric need methodology for hospices. The hospice numeric need methodology is found in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"). Section (4) of the Hospice Programs Rule is entitled, "Criteria for Determination of Need for a New Hospice Program." It has several subsections, the first of which, subsection (a), bears the catch-line, "Numeric Need for a New Hospice Program." Subsection (a) sets out a particular need methodology for determining the numeric need for new hospice programs (the "Hospice Numeric Need Methodology"). The Hospice Numeric Need Methodology Subsection (4)(a) of the Hospice Programs Rule, sets forth the Hospice Numeric Need Methodology. It is, in part, as follows: Criteria for Determination of Need for a New Hospice Program. Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows: (HPH) - (HP) >= 350 where: (HPH) is the projected number of patients electing a hospice program in the service area during the 12 month period beginning at the planning horizon. * * * (HP) is the number of patients admitted to hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (9) of this rule. 350 is the targeted minimum 12-month total of patients admitted to a hospice program. Fla. Admin. Code R. 59C-1.0355. Aside from the formula for calculating numeric need, quoted in the previous paragraph, the Hospice Numeric Need Methodology is quite detailed. It requires that a number of different values used by the methodology be determined prior to the calculation required by the numeric need formula. For example, it calls for assessments of the projected number of service area resident deaths in various categories dependent on age and whether the death was due to cancer or not. "Projected deaths" are defined and determined by the Hospice Need Methodology Rule as follows: "Projected" deaths means the number derived by first calculating a 3-year average resident death rate, which is the sum of the service area resident deaths for the three most recent calendar years available from the Department of Health and Rehabilitative Services' Office of Vital Statistics at least 3 months prior to publication of the fixed need pool, divided by the sum of the July 1 estimates of the service area population for the same 3 years. The resulting average death rate is multiplied by projected total population for the service area at the mid-point of the 12- month period which begins with the applicable planning horizon. Population estimates for each year will be the most recent population estimates published by the Office of the Governor at least 3 months prior to publication of the fixed need pool. Fla. Admin. Code R. 59C-1.0355(4)(a) (emphasis supplied.) The underscored language in the Hospice Numeric Need Methodology, quoted above, clearly shows that population data, in the form of estimates and projections of certain populations of the service area, is taken into consideration in the calculation of numeric need. In addition to the Hospice Need Methodology found in paragraph (a), Subsection (4) of the Hospice Programs Rule has several other paragraphs that relate to approval. Their application occurs on alternative bases when there is numeric need or in the absence of numeric need. These paragraphs relate to the effect of "licensed hospice programs," and "approved hospice programs," on determinations of numeric need greater than zero and "approval under special circumstances" in the absence of numeric need. Licensed Programs and Approved Programs Even if the Hospice Needs Methodology yields a numeric need for hospice programs in a hospice service area, "the agency shall not normally approve a new hospice program . . . unless each hospice program serving that area has been licensed and operational for at least 2 years as of 3 weeks prior to publication of the fixed need pool." Fla. Admin. Code R. 59C- 1.0355(4)(b). Likewise, even where the methodology yields numeric need, "the agency shall not normally approve another hospice program for any service area that has an approved hospice program . . . not yet licensed." Fla. Admin. Code R. 59C- 1.0355(4)(c). Subsections (4)(b) and (c) of the Hospice Programs Rule immediately precede subsection (4)(d). Subsection (4)(d) is the converse of (4)(b) and (c). Instead of no approval despite numeric need, it provides for approval when there is no numeric need under special circumstances. Special Circumstances Subsection (4)(d) of the Hospice Program Rule bears the catchline: "Approval Under Special Circumstances." Those circumstances are detailed as follows: 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. Fla. Admin. Code R. 59C-1.0355(4)(d). A conclusion to be drawn from Subsection (4)(d) of the Hospice Programs Rule is that in the absence of a showing of special circumstances, the number of applications granted may not exceed the numeric need yielded by the Hospice Numeric Need Methodology. See Conclusions of Law, below. Existing Providers Service Area 4A is served currently by two hospice programs. Community has provided hospice services since 1978 and Haven Hospital (formerly North Central Florida Hospice based in Gainesville) since 2001. Community has over 700 employees. During fiscal year 2004, Community cared for over 5,000 patients and their families. During the same time period, the average daily census was 844 patients and the average length of stay ("ALOS") was 61.5 days. Forty-two percent of the patients had cancer as their primary diagnosis. The remainder of the patients (58%) had a primary diagnosis that was not cancer. Community provides services to hospice patients and families regardless of age, race, religion, gender, ethnic background, handicap, diagnosis or ability to pay and is certified to serve Medicare and Medicaid patients. Community's roots in Service Area 4A are deep. For example, its CEO and president, Ms. Susan Ponder- Stansel, has lived and worked continuously in Jacksonville and St. Augustine since 1980. She is a member of community organizations that provide an excellent vantage point on the needs of the community, including the Board of the District IV Health Planning Council, the Rural Health Network, and the Advisory Board of the Malone Cancer Institute at Baptist Medical Center. Community is governed by a Board of Directors with 30 members, representatives of a multitude of the communities in Service Area 4A. The Board includes community volunteers, physicians and representatives of each of the major hospital systems. Hospital representatives on CHNF's Board ensure the best collaboration and outreach to hospital patients who are hospice eligible. It allows the formation of partnerships for the development of additional services to fill any gaps between hospice and hospital care. Community encourages and receives input from its St. Augustine/St. Johns Advisory Board and its Clay County Advisory Board, consisting of more than 20 members each. Advisory Board members advise CHNF of additional ways hospice services can be made accessible and available to the residents of those areas. Community has made hospices services accessible and visible throughout the entire service area by strategically establishing offices and facilities to serve each of the metropolitan and the rural communities of the service area. As one might expect from any new hospice program, Heartland and VITAS the Applicant have only committed to office space in Duval County. VITAS proposes to rent such office space and might rent space elsewhere for satellite offices. Heartland proposes to establish its primary initial office in Duval; otherwise, it "will look at the need for satellite offices to ensure that the five-county are is covered." Tr. 274. Community has a history of providing high quality hospice services in Service Area 4A. It provides all levels of hospice care, including respite and continuous care, and has demonstrated the capacity to organize and deliver core hospice and other hospice services in a manner consistent with all regulations and prevailing standards for hospice care. Although most hospice patients prefer to remain in their own homes during the dying process, some symptoms require management with a higher level of 24-hour acute care. Three venues may be provided by a hospice to deliver general inpatient care to a hospice patient. One method is to use beds scattered throughout an acute care hospital or nursing home as they are available ("scatter beds"). Another is to establish a hospital- based inpatient unit specifically dedicated to hospice patients operated in leased space and staffed by hospice employees. The third is to establish a freestanding hospice inpatient facility. Freestanding facilities are generally more home-like than scatter beds or dedicated space in a hospital. Heartland and VITAS propose to contract with nursing homes and hospitals to provide general inpatient care on a scatter bed or single bed basis as needed. Community offers such care in freestanding facilities, hospital-dedicated leased space, and scatter beds so it can allow the patient's needs to determine the venue of choice. Community has two general inpatient facilities. The Hadlow Center of Caring is a 38-bed, freestanding Medicare certified facility centrally located in the service area and easily accessible from I-95, I-295, and US-1. The Morris Center is a 16-bed Medicare-certified dedicated facility located in Shands Hospital in the demographic and geographic center of metropolitan Jacksonville. The Hadlow Center, notwithstanding its medical mission to provide crisis intervention for hospice patients, is designed and operated to create a home-like environment for patients and families enduring end-of-life crisis. It has unlimited visiting hours. Patients can decorate their rooms with their own mementoes. Pets can visit. There are lanais and outdoor areas for patients and families to use. All 38 beds at Hadlow are certified for general inpatient care. Some of the beds are used by CHNF for residential patients -- patients eligible for routine home care, but who either have no caregiver at home, no home, or an unsafe environment at home. Although CHNF is reimbursed for the routine home care, it is not reimbursed by any third party payor for providing residential care. If the patient lacks the ability to pay, CHNF provides the residential bed at Hadlow free of charge. The Morris Center is operationally similar to the Hadlow Center with many of the same amenities, but it is located in a hospital. The Neviaser Educational Institute at Community Hospice of Northeast Florida is a department of the Hospice created in 2003 to provide education to the community and the hospice's employees on end-of-life issues. The Institute has grief and loss, professional education, and a community relations component. Since its inception, the scope and breadth of the professional education provided by the Institute has been significant. In November of 2005, for example, the Institute provided 1,874 hours of education to 1,421 persons (703 staff and 718 community). The hours of education were apportioned 1,448 to unlicensed professionals/students/lay persons, 371 to nurses, 41 to social workers and 13 those seeking continuing medical education (CME) credits. Community is the only hospice in the state authorized by the Florida Medical Association to conduct CME. Although the need for community education can never be fully met by any one provider, and additional education will likely always be needed, CHNF's community education and community grief and loss programs have been thoughtfully designed and delivered. They are efficacious in developing a larger community sense of how to manage grief and loss and in communicating the availability of hospice to deal with those issues. Community PedsCare is an innovative program established by CHNF in collaboration with Wolfson Children's Hospital, Nemours Children's Clinic and the University of Florida. The program provides palliative and hospice services to children (up to 21 years of age) who have been diagnosed with a life-threatening disease, injury, illness or condition, and to the families of these children. Community operates an in-house pharmacy allowing it to dispense prescribed medications to patients in their homes and in CHNF's general inpatient facilities. Community operates its own in-house durable medical equipment department. This enables greater control to ensure prompt delivery when needed and timely pick-up which is not always of concern to for-profit contract vendors of durable medical equipment. The location for CHNF's Gateway Mall Branch Office was specifically chosen to enhance access for African-Americans in the Service Area 4A, the preponderance of whom live proximate to metropolitan and Northwest Jacksonville. The Morris Center for Caring, one of CHNF's general inpatient facilities, was located at Shands Hospital in downtown Jacksonville, specifically because it is in the geographic center of the City, and it is where most of the SA's African- Americans come to receive their healthcare. CHNF has employed a Community Education Manager for the past two and a-half years. She was previously employed by the City of Jacksonville's Human Rights Division for three years to initiate a community dialogue of race relations. For the preceding 20 years she acquired an understanding of the Jacksonville and neighboring counties in Service Area 4A working as manager for a home health agency that, like hospice, primarily delivers healthcare in the patient's home. CHNF's Community Education Manager has had an excellent opportunity to observe how healthcare is, or is not, delivered to African- Americans and minorities and has experience in the difficulties unique to educating African-Americans about the availability of home health and hospice. The community education manager has developed outreach and education programs specifically targeting African-Americans, other ethnic group and Veterans. A significant barrier to higher utilization of healthcare services by African-Americans, which is not unique to Jacksonville, is a historical distrust of healthcare, passed by word of mouth and based on the disparities in treatment African- Americans have experienced. Many physicians are not comfortable, even today, treating African-Americans. As a consequence of disparate treatment, African-Americans are less likely than their Caucasian counterparts to trust or allow a stranger to provide end-of-life care to themselves or a member of their family. To address these barriers, CHNF has recognized that it takes time, persistence, consistency, and commitment to develop a trust in hospice that will overcome years of generalized mistrust of healthcare professionals and the healthcare delivery system. Community management fully supports and historically has implemented diversity training for all of it staff. Community has been very successful in increasing the number of African-American churches and corresponding faith based communities which will allow hospice to make educational presentations. There are a great number of African-American churches in Jacksonville. In FY 2005, CHNF made over 390 visits and made 24 presentations in African-American Churches. Community has focused on African-American women and makes numerous presentations to African-American women's groups because, more often than not, women are the heads of households and are the caregivers to families and friends in the African- American community. Community conducts conferences and workshops with clergy of a variety of denominations to address issues specific to African-American end of life and access to healthcare. If for any reason, including lack of funds, the above programs were pulled back or diminished, it would be like starting over to rebuild trust in the African-American community. Community hired an African-American public relations firm to tailor a number of CHNF brochures specifically to African-Americans. Community has developed effective printed material utilizing testimonials from African-Americans, and succinct wording about topics as varied as how to ask your physician questions, where to get caregiving information and the availability of compassionate care at CHNF for African- Americans. Community places articles and advertising in the Jacksonville First Coast Edition of Black Pages USA, which serves and is distributed to African-American families and businesses in Jacksonville, Orange Park, St. Augustine, Middleburg, Yulee, Callahan, Baldwin, Jacksonville beaches and surrounding areas. Community's outreach to the African-American community in Service Area 4A is having success. In short, CHNF is an available, high quality, full- service hospice. Because of its not-for-profit status and current economies of scale, CHNF is able and willing to fund unique and effective community and professional education, community outreach, and a variety of enhanced services to its patients, their families and the communities in Service Area 4A. Heartland's Application Heartland's hospice care is delivered by an interdisciplinary team. The team consists of a registered nurse, social worker, spiritual care coordinator, volunteer and bereavement coordinators, the attending physician, the hospice medical director, volunteers and therapists. The therapists come from a variety of disciplines: physical, occupational, speech and alternative therapies such as music, art, or massage therapy. Which therapists comprise an individual patient's interdisciplinary team depends on the patient's plan of care. On admission, Heartland patients are provided a hospice client handbook describing available hospice benefits for patients and families. Patients and their families are provided a telephone number to call with any questions or requests for assistance. Foreign language materials are available, as are interpreters and services for the deaf. Heartland's hospice services are available 24 hours a day and seven days a week. Upon hospice admission to Heartland, a plan of care is developed by the interdisciplinary team, including the physicians, in consultation with the patient and family to determine the kinds of care and services needed. Every 14 days the team meets to review each patient's plan of care to ensure the care is evaluated for effectiveness and any changes in services or care that may be needed. Heartland's plan of care for each patient addresses all orders and treatments that are directed by physicians and the needed frequency and types of services and treatments. The plan is implemented by the entire interdisciplinary team, including the attending physician and the medical director. Patients may choose to have the hospice medical director assume patient care or may choose to retain their attending physicians. In the latter case, the attending physician and the hospice medical director work closely together. Each Heartland patient is assigned to a specific interdisciplinary team that oversees all of the patient's care. That team cares for the patient and family throughout the hospice stay irrespective of changes in the level of care needed. Continuity of care is therefore achieved. Bereavement services are provided through the Heartland interdisciplinary team for families and communities up to 13 months post death. Services include one-on-one counseling, community grief support groups, and memorial services. Bereavement needs are anticipated and assessed upon admission and throughout the care, and assessed again after a death to ensure bereavement needs of the family are met. A bereavement plan of care is established with the family and the bereavement coordinator, which may include visits and other forms of contact. Grief support groups meet at locations that are convenient to community and family needs, which may be at a variety of community buildings. Heartland has developed bereavement specialty programs that include spouses and children, including day or weekend childrens' camps throughout Heartland hospices across the country. Heartland has also provided specialty support groups for the spouses of veterans who have lost their lives in war. Heartland programs hold memorial services for all of the patients who have died. One-on-one bereavement counseling is always available. The frequency of counseling depends on the needs of the individual. Heartland's bereavement counselors have extensive experience in grief counseling. Some are also social workers. They are often called upon to conduct crisis intervention. Heartland, therefore, has specific required qualifications for bereavement counselors. New employees, irrespective of their prior grief counseling experience, are trained through the use of an extensive bereavement manual. There is also an extensive training of spiritual care coordinators whose services are sometimes provided in conjunction with bereavement services. Heartland utilizes a customer service training program called Circle of Care for extensive training of every employee. The program focuses on the ability to talk with patients and families and to identify and resolve conflicts in order to provide the best care possible. Heartland provides an extensive volunteer training program with five levels. The training is tied to the nature of the volunteer jobs that will be performed, such as clerical tasks, administrative help or bereavement assistance. There is also training for volunteers who sit with patients when they are dying as part of a vigil program that ensures patients do not die alone. Licensed professionals may volunteer professional services as well. Heartland volunteers are also involved in music therapy or enrichment programs. The volunteer coordinator works closely with activities directors in nursing homes to ensure that any nursing home resident who desires such therapy receives it, whether the resident is a hospice patient or not. The volunteer program seeks to meet patient and family needs of greatly varied kinds. As but one example, the program could see to it that the lawn at the family home is mowed to relieve the patient and family of that responsibility. In addition to gardeners, the volunteers may meet needs such as those addressed by a beautician or a housekeeper. In sum, the program looks at "the whole picture of . . . needs" (tr. 89), of the patient and family. Applicable rules require that hospices provide a minimum of 5% of direct patient care through volunteers. To that end, Heartland's volunteer training programs incorporate all CHAP and NHPCO standards and practice guidelines. Heartland, moreover, believes that every patient who so desires should receive volunteer assistance. During 2005, Heartland hospice programs nationally provided over 178,000 hours of service by volunteers. Heartland also offers a specialized spiritual care program directed by spiritual care coordinators with extensive training in dealing with bioethical issues, and assisting the hospice care teams with crisis intervention and spiritual needs. The focus is on spirituality, values, beliefs and desires, rather than on religion. Heartland spiritual care coordinators and social workers also lead the Heartland suffering program consistent with Heartland's Sincerus Care philosophy. The spiritual care coordinators develop community plans and work with local and family clergy to coordinate the appropriate care for the patient and family. Heartland's chaplains are often called upon to provide funeral services. Heartland employs social workers for the psychosocial needs of patients and families and to identify community resources beyond hospice services when needed. Social workers also assist with funeral plans and with examining financial eligibility for other types of community service that might be available for the patient and family. Social workers provide suffering assessments and advanced care planning and are instrumental in assisting with coping with chronic disease near the end of life. Heartland's Sincerus Program was developed based on three years of extensive research of then available palliative care programs around the country. Some of the programs focused on specific disease categories, such as cardiac or cancer, and many were designed for a hospital-based delivery. A need for stronger programs when patients returned to their homes, however, was identified. In the course of the development of the Sincerus program, Heartland determined that palliative care tools such as pain management, psychological assistance and help with activities of daily living were beneficial for patients with many non-terminal health conditions as well as those who were dying. Heartland developed clinical pathways that could be employed in both the home health care and hospice divisions of the company. Sincerus Care is Heartland Hospice's program for its palliative care and holistic approach to both hospice and health care at home when the patient has not been admitted to hospice. It addresses unmet patient needs in the areas of psychosocial and spiritual support in this time of rapid advances in medical technology. Heartland's research also determined that hospice patients across the country typically received better pain management than non-hospice patients with chronic diseases. For many years up until the present, there have been millions of Americans with chronic disease. Half of those afflicted with chronic disease had two or more chronic diseases. Not all of those suffering from chronic disease, of course, are in a hospice; the majority, in fact, have not been admitted to hospice. Heartland decided to bring the best practices of hospice to all of its patients, including those with chronic disease in home care programs. It did so through Sincerus Care. Heartland has also developed high quality national palliative care intervention processes. In developing the Sincerus Care approach addressing the body, mind and spirit, a need was identified for the development of a suffering assessment and initiative program. Previously, suffering had not been well researched. Heartland was the first national company to fold suffering assessments and initiatives into all of its programs for home care and hospice. Suffering differs from pain. A person may experience pain without suffering or suffer without physical pain. There are three domains of suffering. One is physical suffering, in which a person has been affected by changes in physical abilities. Concern over body image related to surgeries or amputations is a subset of this domain of suffering. A second is personal family suffering. As the most common, it is related to fears that a patient or family may have about the unknown, including whether they may experience uncontrollable pain. Third, is spiritual suffering. A patient may struggle with values and beliefs as they question why they are here, ask what they may have done wrong to deserve their situation or wonder why they do not believe in God. Four typical vital signs are blood pressure, temperature, pulse, and respiration with pain as a fifth. Heartland's programs use suffering as a sixth vital sign. Heartland's spiritual care coordinators and social workers receive specific additional training on suffering assessment and interventions and techniques to minimize, improve or eliminate suffering as much as possible to improve quality of life. Heartland uses a multifaceted approach to pain management because medication alone is not always sufficient to eliminate or alleviate pain. Heartland also finds it necessary to address aspects of suffering. Heartland's medical directors and physicians review the effectiveness of all the modalities for each patient's pain management to ensure that pain and symptoms are managed effectively. All of Heartland's staff receive specialized pain management training and awareness and sensitivity training. Heartland's social workers, spiritual care coordinators, nurses, home health aides, and other staff also receive extensive training to learn how to deal with issues such as oncology emergencies, care of an Alzheimer's patient, and the particular types of care needed during the last hours of life. Heartland offers extensive community education based on assessment of each community's needs so that community outreach programs are developed to meet those specific community needs for end-of-life care. Many outreach programs have been developed by Heartland for underserved populations and ethnic populations. For example, through one of Heartland's Oklahoma offices, Heartland has a partnership with a Native-American tribe because typically Native Americans have not accessed hospice service as fully as other populations. Heartland uses clinical pathways to follow each patient's care from admission through death to continuously assess suffering, psychological and physical needs and track what has occurred over time with the patient and what has been effective and what has not been effective. At the end of the stay, another assessment is preformed with regard to any changes in the patient's quality of life, whether their pain was successfully managed and whether they died in a place of their choosing. Heartland identifies those patients with the most urgent needs or who are in a fragile state of health to ensure that the staff meets those needs. Heartland developed a "referral quick check" to assist nursing homes and assisted living facilities who requested help in identifying patients who might be in need of hospice services. Heartland also provides a variety of information and brochures to patients, families, and the community for education to explain the nature of hospice care. Heartland employs a multi-tiered quality assessment and assurance program. Quality improvement activities and meetings are held at each local hospice. In addition, quality assessment and assurance committees are used at the regional, division, and company-wide levels so that quality effectiveness is evaluated with respect to quality improvement programs throughout the organization to identify trends locally, regionally, divisionally, and company-wide to identify areas of improvement on a continuing basis. In a number of cities, Heartland operates home health and hospice programs together. Home health involves skilled nursing or physical therapy and serves patients who are able to be rehabilitated, either through therapy or training to reach their maximum optimum level. Often patients who are in home care due to problems such as a broken hip, and are undergoing rehabilitation through physical therapy, also develop or have a terminal prognosis. While in Heartland's home care program, they can be assessed, cared for, and visited by a social worker and a chaplain. The Sincerus Care program that addresses patients where they reside is able to transition patients from home care with rehabilitative types of care to the appropriate levels for terminal care. This transition ability is beneficial for patients. Manor Care has over 65,000 employees and provides Heartland hospice programs with access to corporate support for staff recruitment, including a national contract with an advertising agency which allows freedom for local advertising preferences. The company also has a strong human resources department that assists the local programs with training in hiring practices and with extensive background screening processes to ensure the best employees for their programs. Manor Care provides its subsidiaries and affiliates with many services such as consultants, accounting, financial services, and many other areas of support. Those overhead costs or management fees are annually allocated to various operating entities based on their ability to pay, and therefore would never be applied in a manner to financially harm a new hospice program. Heartland's human resources department provides recruiters to assist with recruiting of administrative and director of nursing positions. Manor Care and Heartland also assist in funding the Job Corp program throughout the United States, which program assists people in obtaining skill sets to obtain jobs in areas such as an LPN or a certified nursing assistant position. Despite a recognized national nursing shortage, Heartland has been able to appropriately staff all of its programs to ensure quality care. Heartland hospice program medical directors are hired from the local community, and may be full-time, part-time, or contracted. Heartland requires all of its medical directors to become board-certified, or to be board-certified in their specialty and to have experience with terminally ill patients and to have an affiliation with a Medicare certified hospital. Heartland desires that all its medical directors be palliative care-certified. If a physician is not, then Heartland provides the education and training. Every Heartland hospice program has at least one medical director. Some have more than one medical director, each of whom supervises specific clinical teams. Heartland's employee retention program includes providing scholarship and tuition reimbursement for nurses, LPNs, and social workers going to school or getting their master's degree, as well as home health aides who desire to become LPNs and RNS. This program also includes persons seeking certification in hospice and palliative care and physician certification for palliative care. The Heartland human resources department is active in each local program, with education and training of staff as part of the employee retention program. In addition to Circle of Care training, the Heartland human resources department also provides leadership and management development training through online courses and educational materials. Heartland has a dedicated team utilized for the implementation of new hospice programs. The team's primary responsibility is to set up each new program location, and includes an administrator, nursing supervisor and office staff who prepare manuals and documentation for use, acquire the furniture and leases, hire the local staff, and assist through the Medicare certification process. The implementation team is expected to function in the same manner with the new Service Area 4A program. Heartland has been very successful with its implementation teams in starting new programs. It is reasonable to expect it to be successful in Service Area 4A as well. Heartland management has met with its affiliated Jacksonville nursing home and rehabilitation clinic directors to discuss methods of providing the best pertinent care for those also in need of hospice care. The administrator of Heartland South-Jacksonville, a nursing home, testified to the current contract with Community, which provides the nursing home residents with quality hospice care, and to the willingness to negotiate a similar contract with Heartland hospice. She supports Heartland's hospice proposal and believes it would be beneficial for patients to have another high quality choice for hospice. She would also assist Heartland's implementation of a hospice program through exiting relationships with local physicians and other health care providers. Vitas Application An experienced provider of hospice services, VITAS is capable of providing in Service Area 4A the core services and related specialized services it provides in Dade, Broward and Palm Beach Counties. As an affiliate, moreover, of VITAS Healthcare Corporation, if its application were to be approved, Vitas would benefit from its affiliation with its parent and its parent’s subsidiaries. Prior to submitting its application, VITAS representatives visited Service Area 4A to assess the market and any potential populations and areas of unmet needs. Mr. Ron Fried, a VITAS senior vice president for development, visited 26 of 32 nursing homes in Duval County, and additional nursing homes in other counties. He also visited with community leaders and organizations. Based on his assessments, he determined there was an unmet need in inner city areas, among nursing home residents and in the African-American community. In addition to Mr. Fried’s on-the-ground survey, VITAS representatives also reviewed the published hospice admission and fixed need pool data, as well as data on deaths and causes of death. They determined there was a large unmet need among the non-cancer patient population. Offers of conditions on hospice programs "are typically rejected" (tr. 502) by AHCA. For state licensure purposes and for federal certification purposes, hospices have to treat any patient who is referred to them or who self- presents. Since hospices, in contrast to hospitals or nursing homes, have no choice in whether to take a patient, AHCA normally will make the comment in the SAAR that it is not necessary to condition an application. While the Hospice Program Rule does not require that an application be conditioned in any way, it nonetheless provides for preferences among competing CON applications as a way to distinguish one competing application from another: Preferences for a New Hospice Program. The agency shall give preference to an applicant meeting one or more of the criteria specified in subparagraphs 1. through 5.: Preference shall be given to an applicant who has a commitment to serve populations with unmet needs. 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- efficient alternative. 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. In the case of proposals for a hospice SA 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. Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare. Fla. Admin. Code R. 59C-1.0355(4)(e). Despite the lack of necessity for conditions in hospice CON applications and the practice of AHCA in reviewing such applications and commenting on them in SAARs, VITAS offered specific conditions in its application. The purpose of the conditions, by and large, was to demonstrate VITAS' commitment to meet the preferences advanced in Subsection (4)(e) of the Hospice Program Rule. For example, having determined that there was a large unmet need in Service District 4A for the non-cancer population, it conditioned approval of its application on support of a commitment to serve those populations. VITAS conditioned approval of its CON on providing at least 67% of its patient days to non-cancer patients, including a condition for at least 10% of total days to be Alzheimer’s patients. VITAS has demonstrated ability to meet the needs of the non-cancer population. Nationally, hospices have provided one average around 43% of service to non-cancer patients according to the most recent data, while VITAS programs provided 57% of care to non-cancer patients. VITAS has focused significant attention and resources in development of clinical criteria to identify appropriate non-cancer admission, and in education of physicians about the benefits of the hospice for the non-cancer population. While the Florida statewide average for hospice providers is 57.6% non-cancer, VITAS’ programs had 67% non- cancer populations. As Patricia Greenberg, VITAS’ health planning consultant explained, VITAS has established a niche in serving non-cancer patients, including its most recent start up programs in Brevard County with a 69% non-cancer population and Palm Beach County with a 76% non-cancer population. Aside from agreeing to condition its CON on providing 67% of care to non-cancer patients, VITAS’ application projects 274 non-cancer admissions in its second year of operations. VITAS Healthcare Corporation and affiliates have a demonstrated history and commitment to serving large ethnic minority populations in metropolitan markets, including funding of full-time community outreach positions, partnership with the Rainbow Coalition/Operation Push organization, and participation in clergy forums and events aimed at the African-American community in the Jacksonville area. VITAS Healthcare Corporation also “partnered with Duke Institute on Care at the End of Life housed at Duke Divinity School to provide in several areas of the country . . . ministers . . . to learn about end- of-life care issues and how . . . together [to] educate the community to assure access particularly for African Americans to hospice care.” Tr. 627. VITAS specifically conditioned its application on providing a minimum of 15% of its services to Medicaid and charity days, including those Medicaid-designated persons residing in nursing homes. As explained by Mr. Fried, this commitment was made to meet the unmet needs of the underserved inner-city, a largely African-American population with substantial unmet needs. VITAS has a corporate policy of social responsibility and provided over $7 million in charity care in 2004, growing to $8 million in 2005. VITAS proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities. Its financial pro formas do not include general inpatient care projections. The reason for the lack of these projections was explained at hearing by Ms. Law. The experience of VITAS the Parent through its affiliates is that with startups through the first two years, the projection is less than one- half percent, which rounded down to zero. Put another way, VITAS expected that its average daily census for inpatient care in its first two years would be less than one patient and therefore the application "did not reflect the revenue or the expense" (tr. 661) associated with inpatient care. There is no question, however, that the VITAS' application is clear that it proposes to provide inpatient care through contractual arrangements. The proposal is supported, despite not being reflected in the financial pro formas, by the experience nationally of VITAS the Parent, "one of the nation's leading providers of [hospice] inpatient care . . . run[ning] about 5% of [total] days of care." Tr. 660. VITAS demonstrated a commitment to serve AIDS patients, the homeless, and patients without primary caregivers at home. VITAS conditioned its CON application on providing 2% of its admissions to AIDS/HIV patients or to serve at least 10% of all AIDS/HIV-related deaths in Service Area 4A. VITAS Healthcare Corporation and its affiliates have demonstrated a commitment to serve such patients; VITAS Healthcare Corporation has even sponsored programs to combat AIDS in sub-Saharan Africa. VITAS' application proposes a physical location in Duval County, but it does not definitely propose a physical presence in any other county (whether underserved or not). While the application is viewed by VITAS as allocating funds for multiple offices, at least a main office in Duval County and a satellite office somewhere in Service Area 4A, Mr. Fried testified that the funds so allocated "might" (tr. 877) support a satellite office in Nassau County but that VITAS "hadn't decided on a precise location. And I don't recall whether that included any satellite space elsewhere in the service area." Tr. 878. VITAS proposes to provide services not specifically covered by private insurance, Medicare or Medicaid, for example, pet therapy, community education and outreach to combat AIDS. VITAS conditioned its application on the implementation of an information technology system known as CarePlanIT. A hand-held, bed-side device, CarePlanIT allows caregivers to perform bed-side entry of notes and orders and to have immediate access to the full range of data stored in the company-wide database known as the VITAS Exchange. CON Review Criteria The Agency found in its SAAR (and continues to maintain) that both applicants generally meet all applicable CON review criteria. It approved Heartland's application and denied VITAS after comparative review that convinced AHCA that Heartland's was superior. Heartland concedes that the “Vitas application generally addresses all applicable CON review criteria.” Heartland Services Inc. And Agency for Health Care Administration Joint Proposed Recommended Order, p. 29. It is joined by CHNF in the contention, however, that compliance with certain CON requirements and review criteria is doubtful and the application information is flawed in a number of respects. VITAS' three opponents in this proceeding, moreover, charge that the VITAS' application is flawed in a manner that may be cause for dismissal under the circumstances of this case: that it does not contain an audited financial statement and therefore does not meet minimum application content requirements. The Agency did not dismiss VITAS' petition; Heartland, nonetheless, maintains that it should be dismissed as the result of the evidence in this proceeding for is failure to meet minimum application content requirements. Application Content Requirements Section 408.037, Florida Statutes (the “Application Content” Statute) governs the content of CON applications. It states, in part, (1) An application for a certificate of need must contain: * * * (c) An audited financial statement of the applicant. In an application submitted by a[] . . . hospice, financial condition documentation must include, but not be limited to, a balance sheet and a profit- and-loss statement of the 2 previous fiscal years’ operation. (Emphasis supplied.) Heartland’s CON application satisfies all of the application content requirements. The application of VITAS does not. VITAS’ application contains audited consolidated financial statements for its parent and for the subsidiaries of VITAS the Parent. It does not contain a separate audited statement of VITAS the Applicant. The presence in the application of a consolidated financial statement of the parent and subsidiaries is not a substitute for the required audited financial statement of the applicant. See Fla. Admin. Code R. 59C-1.008(1)(c): “. . . Nor shall the audited financial statements of the applicant’s parent corporation qualify as an audit of the applicant.” In short, the application fails to contain an audited statement of the VITAS the Applicant and therefore fails to meet minimum content requirements. Although the Application Content Statute is phrased in mandatory terminology (“[a]n application . . . must contain”), VITAS’ failure is not necessarily fatal to its application. The failure to strictly comply with the Application Content Statute may be forgiven by Section 408.039(5)(d), Florida Statutes (the “Forgiveness Statute”) under certain circumstances: The applicant’s failure to strictly comply with the requirements of s. 408.037(1) . . . is not cause for dismissal of the application, unless the failure to comply impairs the fairness of the proceeding or affects the correctness of the action taken by the agency. VITAS maintains that the Forgiveness Statute forgives the application’s lack of an audited financial statement of VITAS the Applicant. The Case for Forgiveness VITAS the Parent does not typically obtain separate audited financial statements for each of its subsidiaries. Instead, independent certified public accountants audit the financial statements of VITAS the Parent and its subsidiaries together in a consolidated fashion. After audit, a consolidated audited financial statement is issued by the independent CPAs. If there is ever a need for a separate audited financial statement of any one of the subsidiaries, according to Lawrence Press, at the time of hearing the controller of VITAS the Parent (see tr. 929), then VITAS commissions an audited financial statement of any “separate legal entity” within the group, id., including VITAS the Applicant. Whether the financial information submitted by VITAS supports the conclusion that the lack in the application of an audited financial statement of the applicant may be forgiven depends on an examination and analysis of the information submitted. It begins with one of the documents attached to Schedule 3 in the application, the consolidated financial statements of VITAS the Parent and its subsidiaries (the "Audited Consolidated Financial Statements." The Audited Consolidated Financial Statements The Audited Consolidated Financial Statements cover two years: the year ended September 30, 2003 (the "2003 Consolidated Audit") and the year ended September 30, 2002 (the "2002 Consolidated Audit.") See VITAS’ Certificate of Need Application, Vol. 1 of 4, Tab 3. The Audited Consolidated Financial Statements contain two reports each entitled, “Report of Certified Public Accountants,” one for the 2003 Consolidated Audit, the second for the 2002 Consolidated Audit. The first report is dated November 10, 2003; the second report is dated November 8, 2002. The first report concludes: In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated position of Vitas Healthcare Corporation and Subsidiaries at September 30, 2003 and 2002, and the results of their operations and cash flows for each of the three years in the period ended September 30, 2003, in conformity with accounting principles generally accepted in the United States. VITAS Certificate of Need Application, Vol. 1 of 4, Tab 3, p. 1 of the 2003 Consolidated Audit.2 Following the first report are the consolidated financial statements themselves. These are listed in the Table of Contents as follows: Consolidated Financial Statements; Consolidated Balance Sheets at September 30, 2003 and 2002; Consolidated Statements of Income for the years ended September 30, 2003, 2002 and 2001; Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders Deficit for the years ended September 30, 2003, 2002, 2001; Consolidated Statements of Cash Flows for the years ended September 30, 2003, 2002 and 2001; and Notes to Consolidated Financial Statements. See VITAS Certificate of Need Application, Vol. 1 of 4, Tab 3, Contents, Consolidated Financial Statements, September 30, 2003. The second report contains an identical opinion, except for a change in dates to reflect that the statements are for the statement year ending in 2002 rather than 2003. The second report also contains a paragraph that does not appear in the first report: Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental balance sheets as of September 30, 2002 and 2001, and statements of income for the years then ended which include Vitas Healthcare Corporation, Vitas Healthcare Corporation of Florida, . . . [and a number of other VITAS Healthcare Corporation Subsidiaries] are presented for the purpose of additional analysis and are not a required part of the financial statements of Vitas Healthcare Corporation and Subsidiaries. Such information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. VITAS Certificate of Need Application, Vol. 1 of 4, Tab 3, p. 1 of the September 30, 2002, Consolidated Financial Statements. Following the second report are consolidated financial statements of the same type as those following the first report, that is, detailed balance sheets, detailed statements of income, detailed statements of changes in redeemable preferred stock and stockholders deficit, detailed statements of cash flows, and notes. Unlike the information that follows the first report, however, there is other information listed in the Table of Contents for the 2002 Consolidated Audit. It is denominated “Other Financial Information.” The Other Financial Information is described in the Contents page of the Consolidated Financial Statements for September 30, 2002, as “Supplemental Balance Sheets at September 31 [sic], 2002 and 2001” and “Supplemental Statements of Income for the years ended September 31 [sic], 2002 and 2001.” It is this information that is “presented for additional analysis” as reported in the paragraph that appears in the 2002 report that is not present in the 2003 report. This is also the information that is reported in the same paragraph to have been subject to the auditing procedures applied in the Ernst & Young audits and found, in Ernst & Young’s opinion, to be fairly stated. The financial information attached to Schedule 3 in VITAS’ application also contains another set of documents. These documents are not a part of the Audited Consolidated Financial Statements. Nor, accordingly, were they reviewed by Ernst & Young. They consist of three pages. The first page is a letter from Robin Johnson, CPA, that identifies her as vice president and controller of VITAS Healthcare Corporation. The letter is dated June 25, 2004 (the “Johnson Letter.”) Attached to the Johnson Letter are two pages. The first page is entitled, “Vitas Healthcare Corporation and Subsidiaries Consolidated Balance Sheets.” The second page is entitled, “Vitas Healthcare Corporation and Subsidiaries Consolidated Statements of Income.” The Johnson Letter refers to these pages as "[t]he . . . supplemental balance sheets as of September 30, 2003 and 2002 [2003 information] and the statements of income for the years then ended . . . ." Each of these two pages (the “Johnson Supplemental Balance Sheets and Statement of Income” or the "Johnson Supplemental Financial Information") contains 13 columns; the first column devoted to “CONSOLIDATED VITAS,” the next twelve devoted to one of each of twelve subsidiaries. Of the 13 columns on each page, one column is devoted to financial information that pertains solely to “VITAS OF FLORIDA” or VITAS the Applicant. The Johnson Letter and the Johnson Supplemental Financial Information were not audited by Ernst & Young or any other independent certified public accountant. Nonetheless, they appear in the VITAS application within the body of the Audited Consolidated Financial Statements. Mr. Beiseigle described them at hearing: “[T]hat information that’s sandwiched between the 2002 and 2003 audits of VITAS Healthcare Corporation.” Tr. 1701. Mr. Beiseigle’s description was quickly followed by a clarification from CHNF’s counsel, Mr. Newell: “He means physically in the book, not necessarily chronologically.” Id. Mr. Newell's clarifying comment is confirmed by an examination of the application in evidence. Indeed, Mr. Beiseigle's description is accurate; the Johnson Letter and the Johnson Supplemental Financial Information is "sandwiched" between the 2003 Consolidated Audit and the 2002 Consolidated Audit. It appears in the midst of the Audited Consolidated Financial Statements, despite the fact that it is information that was not audited by Ernst & Young and not audited by any other independent certified public accountant. The insertion of the Johnson Letter and Supplemental Balance Sheets and Statements of Income into the VITAS application in the midst of the Audited Consolidated Financial Statements was explained by VITAS through the testimony of Mr. Press, VITAS' controller at the time of hearing, and Ms. Greenberg, the primary author of the application who was responsible for compiling all four volumes of the application in their entirety. See Tr. 996. The Insertion of the Johnson Information VITAS attempted to commission an audited financial statement of VITAS the Applicant standing alone. As Mr. Press testified, such an attempt would be in due course whenever there was a need for a separate audit of any of the individual VITAS subsidiaries. An example of a case of such a need is this one, when a CON application must contain an audited financial statement of the applicant. VITAS representatives, therefore, asked Ernst & Young to audit financial statements of VITAS the Applicant separately from the consolidated review it had conducted. VITAS' request of Ernst & Young followed the audit of the Consolidated Financial Statements and was also made in the wake of ChemEd’s acquisition of VITAS the Parent. After the acquisition, ChemEd informed Ernst & Young that its responsibilities with regard to VITAS the Parent and its subsidiaries would be assumed by ChemEd’s accountants, PriceWaterhouse. Ernst & Young, therefore, declined the request by VITAS for an independent separate audit. There is nothing of record to show that VITAS attempted to obtain either an exception from ChemEd to allow Ernst & Young to proceed with a separate audit or to show that VITAS attempted to obtain an audit of itself from PriceWaterhouse or some other certified public accountant firm besides Ernst & Young. VITAS was aware that its application would lack minimum content without an “audited financial statement of the applicant.” It attempted to cure its non-compliance with the statutory requirement by insertion into the application of the Johnson Letter and Johnson Supplemental Financial Information. VITAS had no illusions that the information would constitute an audited financial statement of the applicant. It knew the information had been generated internally and constituted "managerial accounting" rather than "financial accounting." It knew the information had not been audited externally by an independent certified public accountant. In introduction of the Supplemental Information, the Johnson Letter reads, in part: VITAS Healthcare Corporation audits were conducted for the purpose of forming an opinion on the financial statements of Vitas Healthcare Corporation and Subsidiaries taken as a whole. The enclosed supplemental balance sheets as of September 30, 2003 and 2002, and the statements of income for years then ended which include . . . Vitas Healthcare Corporation of Florida . . . are presented for the purpose of additional analysis and are not a required part of the financial statements of VITAS Healthcare Corporation and Subsidiaries. Such information has been subjected to the auditing procedures applied in the audits of the financial statements and are fairly stated in all material respects in relation to the financial statements of VITAS Healthcare Corporation and Subsidiaries … taken as a whole. VITAS CON Application 9784, Vol. 1 of 4, Tab 3 (no page no., emphasis supplied). The language in the Johnson Letter underscored above makes two claims paraphrased as follows: first, the balance sheets and statements of income have been subjected to the auditing procedures applied by Ernst & Young in the consolidated audit; second, the information in the balance sheets and statements of income is fairly stated in all material respects in relation to the Audited Consolidated Financial Statements. It appears that the language of the letter, quoted above, was selected because it mirrors the language used by Ernst & Young to describe the “Other Financial Information” attached to the Ernst & Young 2002 consolidated audit. Whether that was why the language was selected or not, the inclusion in the letter was the subject of sharp criticism, see tr. 421-423, by Steven Jones, a licensed certified public accountant in Florida and Heartland's expert in accounting and healthcare finance. He found the language contrary to provisions of the American Institute of Certified Public Accountants, provisions of the Florida Statutes and the Florida Administrative Code, and generally accepted auditing standards that address "independence, integrity and objectivity." See Tr. 421-23. Whatever the motivation for including the two claims in the Johnson Letter, Ms. Johnson was not acting as an independent auditor. Nor could she have been so acting. Although a certified public accountant, as the controller of VITAS Healthcare Corporation, Ms. Johnson is quite the opposite of “independent” when it comes to VITAS the Parent and its subsidiaries, including the applicant in this case. Thus the Johnson Letter cannot stand for the claim made within it that Johnson Supplemental Financial Information had been subject to the same auditing procedures as the information subject to the consolidated review. Any light that Ms. Johnson might have shed on the claims in the letter did not materialize. Ms. Johnson did not testify at hearing. The task of proving compliance with the statutory requirement or how lack of strict compliance could be forgiven fell to Mr. Press and Ms. Greenberg. To the credit of both Mr. Press and Ms. Greenberg, neither claimed that the Johnson Letter and Johnson Supplemental Information constituted audited financial statements. As Ms. Greenberg stated in cross- examination by Mr. Newell at hearing: Q. But there is a difference . . . between the Letter that accompanies the . . . audits by Ernst & Young . . . and this letter [Ms. Johnson’s letter] . . . Now Ernst & Young did that in 2002, but based on your request and Ms. Johnson’s willingness, she certified that this time, but she was not one of the independent auditors, was she? A. No, her role was to work with them and provide them with the financial statements, but she was not an independent auditor. * * * Q. Would you agree with me perhaps that one who uses language like that in the bottom of Ms. Johnson’s letter, which is essentially identical to what external auditors used in the 2002 letter, might be the use of language in a manner that is to imply that a CPA is acting as independent certified public accountant in the audit of the attached statements. A. I don’t understand the question. Ms. Johnson is a CPA and controller and she was providing that language. We’ll make sure – she was not an external auditor, was she? A. No, I think I already said that. Tr. 1130, 1132, 1133. Although Ms. Johnson’s letter does not raise the supplemental information to the level of a financial statement audited by an independent certified public accountant, VITAS presented evidence as to why the failure to file an audited financial statement of the applicant does not impair the fairness of the proceeding or would not impair the correctness of approving VITAS’ application should AHCA do so. For example, all of the data on the balance sheets and income statements for subsidiary corporations tie to the consolidated totals for VITAS Healthcare Corporation as a whole. The statements reveal that on a consolidated basis the company had over $13 million in net income in 2003. VITAS Healthcare Corporation of Florida supplies the majority of revenue and net income to VITAS Healthcare Corporation. In fact, it makes up for losses by other subsidiaries. Ms. Greenberg opined that, as a financial analyst, she could determine ability to fund the project from the financial information supplied in the CON application. First, the $200,000 startup cost is minimal. Second, all of the supplemental information ties back to the audited consolidated financial statements. Mr. Press made this point, too. Ms. Greenberg determined, moreover, that VITAS Healthcare Corporation of Florida has available to it $14.3 million in current assets, $14.9 million in total assets, $51 million in retained earnings, and over $29 million in net income. Quite clearly, in her view, there are adequate funds available to fund the program of VITAS the Applicant in Service Area 4A. In addition, Ms. Greenberg noted that the proposed method of funding is from future cash flows and is not based on historic information. The application includes a forecast of financial operations of VITAS Healthcare Corporation with and without approval of the proposed project. Under a conservative scenario, VITAS is expected to net over $26 million in income, an amount more than sufficient to fund a $200,000 project. Ms. Greenberg’s analysis was subject to criticism by Mr. Beiseigel, CHNF’s expert health care financial analyst and forensic financial analyst. His analysis began with appreciation of the import of the lack of an audited financial statement of the applicant. The analysis requires an understanding of the elements of an audited financial statement. Elements and Import of an Audited Financial Statement The elements of an independently audited financial statement include an audit opinion letter, a detailed balance sheet, detailed income statement, detailed statement of changes in owner’s or stockholder’s position, a detailed operating cash flow statement and detailed notes allowing a financial reviewer to determine the existence of contingent liabilities and the materiality of the financial statements. These elements are all present in the Ernst & Young Audited Consolidated Financial Statements. The import of the lack of an audited financial statement of VITAS the Applicant and the presence of the Johnson Letter and Johnson Supplemental Financial Information to cover the year ending September of 2003 in this case is obvious. All of the elements of an independently audited financial statement are not subject to review by financial analysts such as those employed by AHCA and analysts outside AHCA (Mr. Beiseigel, for example) who might have reviewed the independently audited financial statement for purposes of a contested proceeding at DOAH, as is the case here. The Johnson Information that pertains to VITAS the Applicant was criticized in more detail on another basis: it does not contain any cash flow statements. Cash Flow Statements The Johnson Supplemental Financial Information does not include cash flow statements. In the SAAR, the Agency observed that cash flow data were not included in the application when it discussed compliance with Section 408.035(4), Florida Statutes, that is, what funds for capital and operating expenditures are available for project accomplishment and operation. Nonetheless, the SAAR concluded: Although the applicant [VITAS] did not provide historic cash flow data, the applicant showed healthy earnings. Even under the conservative analysis, the applicant has $6 million in working capital. Therefore, funding for this project and all capital projects should be available as needed. Heartland 16, p. 64. As part of its case that the failure to include an audited financial statement of the applicant should be forgiven, and that it was not necessary for it to provide cash flow data, VITAS points to the language that follows the statutory requirement that an application contain an audited financial statement: In an application submitted by a[] hospice, financial documentation must include, but need not be limited to, a balance sheet and a profit-and-loss statement of the previous 2 years’ operation. § 408.037(1)(c), Fla. Stat. VITAS submitted balance sheets and income statements for 2003, albeit not audited. Furthermore, Ms. Greenberg's point that the information provided to AHCA in the application demonstrates that VITAS the Applicant clearly has the financial wherewithal to fund the start-up costs associated with the application, costs that are minimal was adopted, in essence, by AHCA in the SAAR. Nonetheless, at hearing, AHCA supported Heartland and CHNF's argument that the lack of an audited financial statement in VITAS’ application is a material point to be considered in this proceeding when it comes to comparative review. The Agency has never excused the lack of an audited financial statement of an applicant. Furthermore, Mr. Gregg testified that in a comparative review proceeding where one applicant provides an audited financial statement and another does not, to not take into consideration that one application was missing the required audit would impact the fairness of the proceeding: I would say that it impacts the fairness to the extent that it prevents us from comparing apples to apples. A completely audited financial statement is generally more reliable and . . . has been viewed by a CPA who is not typically involved with the organization, and the other [an internally generated management report] is less . . . reliable. Tr. 512. As Mr. Gregg further testified in the context of comparative review, “I would say that there were uncertainties in the financial information that we got from VITAS. And we were more comfortable with the level of certainty of the financial information that we had from Heartland.” Tr. 506. Thus, while AHCA did not dismiss VITAS’ application for failure to meet minimum content requirements, it took into consideration the missing audit as it reviewed Heartland and VITAS’ applications on a comparative basis after determining that the two applicants generally meet the statutory and rule criteria for approving a CON application. CON Review Criteria Heartland demonstrated that it meets the statutory and review criteria for approval. To do so, Heartland had to correct an error in the Heartland application that related to long-term financial feasibility. The application had assumed that continuous care patient days would amount to approximately 7% of total patient days for both Year One and Year Two. The assumption was made after looking at national data in which continuous care is presented in terms of hours while other patient service types are presented in terms of days. The assumption was criticized by VITAS' witnesses. The criticism was discovered before hearing by Heartland. Mr. Jones realized the mistake, and therefore "recast those relative ratios, using a normal range for a continuous day, [so that] the percentage of continuous care produce[d] [is] substantially around 1 percent," tr. 412-13, an accurate percentage of continuous care for hospice programs. Mr. Jones also re-cast the pro formas to assume that continuous care should be reimbursed only at 15 hours per day rather than 24 hours per day (as the application had done) in response to another valid criticism by VITAS. VITAS moved to strike any testimony or evidence that concerned the re-casting on the basis that it is an impermissible amendment to Heartland's application. Ms. Greenberg also opined that Heartland projected salaries for some FTE positions were too low. Mr. Jones testified otherwise: that the salary estimates are generally reasonable. Ms. Greenberg also criticized the Heartland application based on an assertion that the projections did not reflect an additional 5% expense per patient day ("PPD") for dual eligible Medicare/Medicaid patients who reside in nursing homes. For nursing home residents who elect hospice admission, the state no longer pays the nursing home its Medicaid room and board rate, but rather pays a geographic area average rate to the hospice, which on average is about 95% of the rate previously paid to the nursing home. Even though it is negotiable, hospices often pay the nursing home its normal rate, resulting in a hospice expense of about 5% PPD more than the hospice is reimbursed for room and board. Five percent of the average nursing home room and board rate in the Jacksonville area would equal approximately $7.50 PPD. Statewide, about 30% of nursing home patient days for hospice care is delivered to Medicaid dually eligible nursing home residents. In the face of the criticism, Heartland demonstrated at hearing that its proposal is financially feasible in the long term, even if it were assumed: that Ms. Greenberg is correct about the salaries; that continuous care days should be 1% rather than 7% and reimbursed at only 15 hours per day instead of 24 hours per day; and, that the revenue for Medicaid nursing facility residents should be reduced at a rate of 5% PPD. This demonstration was conducted by Mr. Jones in what he described as a "worst case scenario" analysis. The analysis used a model that reduced continuous care revenue and shifted the reduced days to routine care; correspondingly adjusted the staffing levels to the Heartland standard; accounted for the 5% PPD Medicaid nursing home resident differential; and increased salary expenses. The re-casting is reflected in Heartland Exhibit 15, a recast of Schedules 6, 7, and 8 in its CON application. The re-casting results in a projected loss in Year One, but a projected profit in Year Two of $88,596, a demonstration of long term financial feasibility. The adjustments reflected in Heartland Exhibit 15, moreover, do not reflect every adjustment that would have to be made to fully recast the entire financial projections. If other expenses that would be reduced, such as drug costs and medical supplies, by a full recasting were included, the profit projected for Year Two would higher than the $88,596 reflected in the exhibit. In CON application proceedings, short-term financial feasibility is typically considered as the ability to fund the projected costs reflected on Schedule 1 of the application and to provide sufficient working capital for a start-up period. Heartland's application demonstrates short term financial feasibility. Because the applicant is a company in the development stage, it obtained a funding commitment from Manor Care to meet its funding needs. The application contained Manor Care's audited financial statements demonstrating the ability to fund its commitment in addition to an audited financial statement of the applicant as required. Manor Care is committed to providing all necessary funding and working capital requirements to Heartland to establish and operate the proposed hospice. Manor Care has the financial resources to fund the project. If needed, Manor Care also has approximately $230 million of unused debt capacity. It can clearly fund the $294,000 needed for the project. Manor Care, moreover, consistent with its policy with other subsidiaries, will not charge Heartland any interest on funds it provides for capital or operating expenses. If the CON is approved, Manor Care is committed to moving forward with the development of the hospice program. Neither Manor Care nor any of its affiliates has ever received a CON to develop a hospice in any state and not proceeded with development. Testimony at trial bolstered the Agency's conclusion in its SAAR that VITAS, despite the missing audited financial statement of VITAS the Applicant, should be able to fund the hospice program it proposes for Service Area 4A in the short term. The financial information supplied by VITAS, however, because of the lack of an audited financial statement of the applicant, was not as certain as that of Heartland, a matter that was determinative in the Agency's comparative review of the two applications. Comparative Review The financial information in Heartland's application was more certain than the financial information in the application of VITAS. Since Heartland provided an "audited financial statement of the applicant" and VITAS did not, Heartland must be viewed as providing a greater level of certitude about its financial position. The Agency opined that there is a second factor that makes Heartland's application superior. Currently, there are hospice programs operated either by VITAS the Applicant or affiliated with VITAS the Parent in Service Areas 11 (Dade and Monroe Counties), 10 (Broward County), 9C (Palm Beach County), 7A (Brevard County), 7B (Flagler and Volusia Counties), and 7C (Orange County.) Hospice programs affiliated with VITAS the Parent now serve the eastern coast of Florida from Key West to the service area adjacent to Service Area 4A in the northeast corner of the state and inland covering the most populous area of Central Florida. The introduction of Heartland, a nationally recognized quality hospice provider, into Florida will foster competition that, in AHCA's view, will benefit patients and families through providing a choice in hospice care.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration approve CON Application 9783 filed by Heartland Services of Florida, Inc., and deny CON Application 9784 filed by Vitas Healthcare Corporation of Florida. DONE AND ENTERED this 18th day of October, 2006, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of October, 2006.
The Issue The issues are whether Petitioner is entitled to recover Medicaid funds paid to Respondent pursuant to section 409.913(1), Florida Statutes, for hospice services Respondent provided during the audit period between September 1, 2009, and December 31, 2012; and the amount of sanctions, if any, that should be imposed pursuant to section 409.913(15), (17).
Findings Of Fact Based upon the stipulations of the parties and the evidence presented at hearing, the following relevant Findings of Fact are made. Parties Petitioner, AHCA, is the state agency responsible for administering the Florida Medicaid Program. § 409.902, Fla. Stat. (2016). Medicaid is a joint federal and state partnership to provide health care and related services to certain qualified individuals. Respondent, Halifax, is a provider of hospice and end- of-life services in Volusia and Flagler counties. During the audit period of September 1, 2009, through December 31, 2012, Halifax was enrolled as a Medicaid provider and had a valid Medicaid provider agreement with AHCA. Hospice Services Hospice is a form of palliative care. However, hospice care is focused upon patients at the end-of-life-stage while palliative care is for any patient with an advanced illness. Both hospice and palliative care patients are amongst the sickest patients, generally. Hospice is focused upon serving the patient and family to provide symptom management, supportive care, and emotional and spiritual support during this difficult period when the patient is approaching their end-of-life. Hospice care, as with Halifax, uses an inter-disciplinary team (IDT) to provide comfort, symptom management, and support to allow patients and their families to come to terms with the patient’s terminal condition, i.e., that the patient is expected to die. Each patient is reviewed in a meeting of the IDT no less than every two weeks. For hospice, a terminally-ill patient must choose to elect hospice and to give up seeking curative care and aggressive treatments. At all times relevant to this proceeding, Petitioner was authorized to provide hospice services to Medicaid recipients. AHCA Audit A Medicaid provider is a person or entity that has voluntarily chosen to provide and be reimbursed for goods or services provided to Medicaid recipients. As an enrolled Medicaid provider, Halifax was subject to federal and state statutes, regulations, rules, policy guidelines, and Medicaid handbooks incorporated by reference into rule, which were in effect during the audit period. AHCA is required to oversee the integrity of the Medicaid program. Among other duties, AHCA is required to conduct (or cause to be conducted) audits to determine possible fraud, abuse, overpayments, or recipient neglect in the Medicaid program. § 409.913(2), Fla. Stat. Under Florida law, “overpayment” is defined as “any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake.” § 409.913(1)(e), Fla. Stat. The federal Department of Health & Human Services, Centers for Medicare and Medicaid (“CMS”), contracted with Health Integrity, LLC (“HI”), a private vendor, to perform an audit of Halifax on behalf of AHCA. HI, in turn, retained a company called Advanced Medical Reviews (“AMR”) to provide physician reviews of claims during the audit process to determine whether an audited claim was eligible for payment. The audit in this matter was conducted to determine whether Medicaid recipients met eligibility for hospice services. To establish the scope of the audit, HI identified patients that had greater than six months of service, and then, excluded recipients with cancer diagnoses and patients who were dual eligible for Medicaid and Medicare. All the claims at issue, along with patient medical records, were first reviewed by a claims analyst, who is a nurse consultant, to determine whether the claims met the criteria for hospice services. The patient records and the nurse consultant's summary for each patient were then forwarded to a peer reviewer, a physician who used his or her medical expertise to determine the medical necessity of the hospice services provided. In this case, AHCA employed the services of two peer reviewers: Dr. Alan Heldman was the peer reviewer who specializes in internal medicine and cardiology, and Dr. Todd Eisner, who specializes in gastroenterology. The peer reviewers prepared reports that offered their opinion as to whether a patient was qualified for hospice services. A draft audit report (“DAR”) was prepared by HI, which initially identified overpayment of Medicaid claims totaling $694,250.75, relating to 12 patients. Halifax provided a response to the DAR, and contested the overpayments for each of the 12 patients. Halifax’s response was provided to the peer review physicians, who, after reviewing the response, maintained their original conclusions. HI then prepared the FAR, upholding the overpayments identified in the DAR, and submitted it to CMS. CMS provided the FAR to AHCA with instructions that AHCA was responsible for initiating the state recovery process and furnishing the FAR to the provider. The FAR contains the determinations of the peer review physicians, specifically, whether each of the 12 patients at issue had a terminal diagnosis with a life expectancy of six or less months if their disease progressed at its normal course. After the FAR had been issued, upon further review, of certain patient files at issue, AHCA determined that four of the original 12 patients were eligible for Medicaid hospice services, and revised the amount of overpayment it seeks to $529,906.88, with a reduction in the fine it seeks to $105,981.38. Halifax is challenging the eligibility determination, i.e., the medical necessity of services provided, regarding the following patients1/: Patient D; Patient H; Patient P; Patient Q; Patient S; Patient U; Patient V; and Patient O. The Florida Medicaid Hospice Services Coverage and Limitations Handbook, the January 2007 edition (“Handbook”), governs whether a service is medically necessary and meets certification criteria for hospice services. MPI instructs each peer reviewer to review the criteria set forth in the Handbook to determine whether services provided to a patient are eligible for Medicaid coverage. To qualify for the Medicaid hospice program, all recipients must: Be eligible for Medicaid hospice; Be certified by a physician as terminally ill with a life expectancy of six months or less if the disease runs its normal course; Voluntarily elect hospice care for the terminal illness; Sign and date a statement electing hospice care; Disenroll as a participant in a Medicaid or Medicare health maintenance organization (HMO), MediPass, Provider Service Network (PSN), Medicaid Exclusive Provider Organization, MediPass Pilot Programs or the Children’s Medical Services Network; Disenroll as a participant in Project AIDS Care; and Disenroll as a participant in the Nursing Home Diversion Waiver. The Handbook also provides certification of terminal illness requirements as follows: For each period of hospice coverage, the hospice must obtain written certification from a physician indicating that the recipient is terminally ill and has a life expectancy of six months or less if the terminal illness progresses at its normal course. The initial certification must be signed by the medical director of the hospice or a physician member of the hospice team and the recipient’s attending physician (if the recipient has an attending physician). For the second and subsequent election periods, the certification is required to be signed by either the hospice medical director or the physician member of the hospice team. Certification documentation requirements used by the peer review physicians are as follows: Documentation to support the terminal prognosis must accompany the initial certification of terminal illness. This documentation must be on file in the recipient’s hospice record. The documentation must include, where applicable, the following: Terminal diagnosis with life expectancy of six months or less if the terminal illness progresses at its normal course; Serial physician assessments, laboratory, radiological, or other studies; Clinical progression of the terminal disease; Recent impaired nutritional status related to the terminal process; Recent decline in functional status; and Specific documentation that indicates that the recipient has entered an end- stage of a chronic disease. The Medicaid hospice provider must provide written certification of eligibility for hospice services for each patient. The certification is also required for each election period. A patient may elect to receive hospice services for one or more of the election periods. The election periods include: an initial 90-day period; a subsequent 90-day period; and subsequent 60-day time periods. The Handbook further provides guidance regarding the election periods as follows: The first 90 days of hospice care is considered the initial hospice election period. For the initial period, the hospice must obtain written certification statements from a hospice physician and the recipient’s attending physician, if the recipient has an attending physician, no later than two calendar days after the period begins. An exception is if the hospice is unable to obtain written certification, the hospice must obtain verbal certification within two days following initiation of hospice care, with a written certification obtained before billing for hospice care. If these requirements are not met, Medicaid will not reimburse for the days prior to the certification. Instead, reimbursement will begin with the date verbal certification is obtained . . . . For the subsequent election periods, written certification from the hospice medical director or physician member of the interdisciplinary group is required. If written certification is not obtained before the new election period begins, the hospice must obtain a verbal certification statement no later than two calendar days after the first day of each period from the hospice medical director or physician member of the hospice’s interdisciplinary group. A written certification must be on file in the recipient’s record prior to billing hospice services. Supporting medical documentation must be maintained by the hospice in the recipient’s medical record. Peer Review Physicians The two peer reviewers assigned to review claims in this matter were Florida-licensed physicians, who were matched by specialty or subspecialty to the claims they were reviewing. Each physician testified as to his medical education, background, and training. Petitioner offered each physician as an expert, and the undersigned accepted each expert as such. Dr. Heldman has been licensed to practice medicine in the state of Florida for 10 years. While in Florida, he worked as a professor and practitioner within the University of Miami Medical School and Health System until 2015. Since 2015 he has maintained an independent private practice. Before practicing in Florida, Dr. Heldman practiced at Johns Hopkins Hospital in Baltimore, Maryland, for 19 years. Dr. Heldman received his training at Johns Hopkins in cardiology and interventional cardiology. He has been board-certified in cardiovascular disease since 1995, and board-certified in interventional cardiology since 1999. Both cardiology specialties are subspecialties of the board of internal medicine. Dr. Heldman was previously board-certified in internal medicine in 1992 but was not certified in that area when he reviewed the claims in this matter.2/ Dr. Heldman has referred patients to hospice. Dr. Eisner, who is board-certified in gastroenterology, has seen numerous patients with liver disease throughout his career and, based upon his experience, Dr. Eisner understands what factors are properly considered when estimating a patient’s life expectancy. He also refers patients to hospice on a regular basis, which routinely requires him to make the type of prognosis determination such as those at issue in this matter. Although Dr. Eisner has some experience dealing with patients who have Chronic Obstructive Pulmonary Disease (“COPD”), he does not have board-certification in pulmonary disease. Also, Dr. Eisner has never provided expert testimony regarding pulmonology conditions. Halifax Hospice Providers Dr. Zimmerman, Halifax’s medical director, authored the provider response to the eight patients at issue and testified at the final hearing in that regard. Although he is board-certified in hospice and palliative medicine, he is not and has never been certified in internal medicine, gastroenterology, or cardiology. Halifax did not elicit testimony from Dr. Zimmerman that he had any experience in examining and treating patients with liver disease, COPD, dementia, or end-stage lung disease. Likewise, none of the other Halifax physicians testified at hearing and there was no evidence of their respective experience in examining and treating patients with the illnesses involved in this case. Additionally, although Dr. Zimmerman initially certified the patients selected for the audit for hospice services, and attempted to support the other Halifax hospice physicians when they repeatedly recertified the patients as eligible, Dr. Zimmerman admitted he never examined any of these patients himself and was unable to attest that any of his in- house physicians ever personally examined any of the patients. In addition to Dr. Zimmerman, the hospice physicians involved in the certification of the eight patients at issue in this audit were as follows: Dr. Richard C. Weiss: board-certified in internal medicine, oncology, and hospice & palliative medicine Dr. John Bunnell: board-certified in family medicine and hospice & palliative medicine Dr. Arlen Stauffer: board-certified in family medicine and hospice & palliative medicine Dr. Susan Howard: board-certified in family medicine and hospice & palliative medicine Dr. Lyle E. Wadsworth: board-certified in internal medicine, geriatrics, and hospice & palliative medicine Dr. Gregory Favis: board-certified in internal medicine, with subspecialty certification in hematology and oncology; and Dr. Justin Chan: board-certified in family medicine Specific Patient Review At the time of the hearing, the hospice service claims related to eight patients remained at issue. The findings of fact regarding eligibility of each patient for hospice services are set forth below in the following order: D, H, P, Q, S, U, V, and O. Patient D Patient D, a 53-year-old male, was first admitted to Halifax Hospice on February 25, 2011, with a terminal diagnosis of hepatocellular cancer and cirrhosis secondary to hepatitis C. He was discharged on May 29, 2012, and then readmitted on June 13, 2012, through December 31, 2012 (audit period). He had previously been in various hospices for six to seven years. Dr. Eisner noted there was no recent decline in functional status. In June 2011, a nurse noted the patient was ambulating well and went fishing, but he experienced frequent falls. He continued to experience falls (from his couch and bicycle) and also had mild to moderate arm and hand tremors. His weight decreased from 176 to 162 over seven months. Thus, the patient records reflected some indication of functional decline. However, as Dr. Eisner credibly testified, even considering the alleged terminal diagnosis, the patient showed no evidence of having refractory ascites, hepatic encephalopathy nor gastrointestinal bleeding. Further, he indicated there was no documentation of variceal bleeding, hepatorenal syndrome, or spontaneous bacterial peritonitis, which he would expect to see if the patient truly had six or less months to live. The medical records support Dr. Eisner’s conclusion that the patient did not meet the standard of six or less months to live. Throughout the period of the hospice stay, nursing notes indicate that the patient was stable, ambulating well, felt good, and was observed by an ER doctor after a fall off his bike, as “well-nourished, well-developed patient, [and] in no apparent distress.” Even Dr. Weiss, the hospice physician who worked with Patient D, noted in recertification that “It is a difficult case as he clearly has a terminal illness and at the same time is manipulative with no overt progression of disease.” Dr. Eisner credibly testified that the patient was not eligible for hospice services and, thus, the services provided were not eligible for Medicaid reimbursement. The greater weight of the evidence proves that Patient D was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $98,776.63 Patient H Patient H was admitted to Halifax on December 31, 2010, with a terminal diagnosis of end-stage liver disease secondary to chronic hepatitis C. Dr. Eisner determined that Patient H did not have a life expectancy of less than six months. Dr. Eisner opined that there was no clinical progression of the patient’s terminal disease. The patient did not have impaired nutritional or functional status related to the terminal illness. The patient had weight loss but experienced increased abdominal girth. The treating hospice physician was Dr. Wadsworth, who is board-certified in internal medicine. He noted that the patient had cirrhosis and variceal bleeding and hepatic encephalopathy. However, as correctly noted by Dr. Eisner, those conditions were the natural progression of the disease, but would not result in a life expectance of less than six months. Dr. Eisner also testified that patients with chronic liver disease can live up to 10 years and patients with hepatic encephalopathy can live up to 15 years. Patient H was ultimately discharged for drug diversion, and although her discharge note states: “Suspected drug diversion became evident over last 2 months when controlled medication was not available for nurses to check during visit,” the patient records reflect that Halifax was aware of this problem throughout her stay, but did not discharge her for an additional 12 months. The inconsistency of the medical records and Dr. Eisner’s opinions indicate that this patient did not have a terminal diagnosis with a life expectancy of six months or less if her terminal disease progressed at its normal course at initial certification or at any recertification throughout her stay with Halifax. The medical records contained in this patient’s file do not support a finding that the Medicaid hospice eligibility standard was met. Based upon the greater weight of the evidence in this case, it is determined that Patient H was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $50,142.74. Patient P Patient P, a 48-year-old male, was admitted to Halifax on August 25, 2011, with a terminal diagnosis of end-stage liver disease. The first 11 months of his stay were denied, however, the last month was approved. Dr. Eisner testified that although the patient had ascites requiring frequent paracentesis, he did not see documentation indicating there was a progression of the terminal disease until July 2012. Dr. Eisner also determined there was no documentation in the patient records of impaired nutritional status related to the disease or a decline in functional status. However, when the patient did show a decline in functional status, Dr. Eisner agreed the patient was eligible. Further, because, during the denied period, there was no evidence of variceal bleeding, hepatorenal syndrome or recurrent spontaneous bacterial peritonitis, Dr. Eisner opined that the life expectancy of the patient would typically be one to two years, not six or less months. There is also a discrepancy in the medical records for this patient. In the narrative for the recertification for November 24, 2011, Dr. Wadsworth indicates this is a “48 yo ES Dementia, and multiple comorbidities. Has had [hallucinations] has improved.” Certainly this is in error and cannot be the basis for a valid recertification–-this patient did not have dementia nor were there reported hallucinations. This patient did not have a terminal diagnosis with a life expectancy of six months or less if his terminal disease progressed at its normal course at initial certification or at any recertification throughout the first 11 months of his stay with Halifax. The medical records contained in this patient’s file do not support a finding that the Medicaid hospice eligibility standard was met. Based upon the greater weight of the evidence in this case, it is determined that Patient P was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $60,872.04. Patient Q Patient Q was a 56-year-old male admitted with end- stage lung disease. Per the FAR overpayment recalculations, he was deemed ineligible for the first three months of his hospice admission beginning on December 13, 2011, and was thereafter approved through the end of the audit period. As Dr. Eisner reasoned, the medical records did not support hospice eligibility for the first three months that were billed. The patient was stable, using a walker, and had reasonable palliative performance scale scores, and showed no decline in functional status and Transient Ischemic Attacks (“TIA), if any, were stable. However, as Dr. Eisner noted, after three months, the records did contain evidence supporting a progressive deterioration of the patient’s condition and functional status. Much of the issue with this patient appears to be whether the patient actually had ongoing TIA episodes prior to and during the initial certification period. The patient’s medical record from a hospital visit six months prior to hospice admission, where he was seen for chest pains, made no mention of TIAs. Further, Dr. Zimmerman admitted that none of his doctors or nurses had witnessed the patient having a TIA, and the records do not support that the patient had mini-strokes prior to the approved period. While Dr. Zimmerman also attempted to justify his concerns with TIAs based upon one episode during the denied period where the patient reported being dizzy and short of breath, he admitted that these could have been caused by the extensive amount of opiates and other drugs the patient had been given. For the denied period, the patient did not have a terminal diagnosis with a life expectancy of six months or less if his terminal disease progressed at its normal course at initial certification. The medical records do not support a finding that the Medicaid hospice eligibility standard was met. Based upon the greater weight of the evidence, it is determined that Patient P was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $12,716.10. Patient S Patient S, a 51-year-old patient, was admitted to Halifax with a terminal diagnosis of end-stage liver disease. Dr. Eisner determined that hospice services were not appropriate for Patient S. Specifically, he determined that the patient’s disease, while terminal, did not result in a life expectancy of six months or less. In refuting Dr. Zimmerman’s response, Dr. Eisner stated, “In the absence of recurrent, untreated, variceal bleeding, hepatorenal syndrome or recurrent spontaneous bacterial peritonitis, the life expectancy of patients with cirrhosis, ascites, and hepatic encephalopathy is typically 1 to 2 years.” There was no clinical progression of the disease. The Halifax treating physician, Dr. Weiss, noted that the patient’s condition included cirrhosis and hepatic encephalopathy. However, as noted by Dr. Eisner, the condition was the natural progression of the disease. The greater weight of the evidence supports that Patient S was not eligible for hospice services for the period September 1, 2009, through December 1, 2010, and that Petitioner is entitled to recover an overpayment of $63,235.91. Patient U Patient U, a 61-year-old female, was admitted with a terminal diagnosis of dementia. She was first admitted to Halifax hospice in October 2010, however, the claims audit period for this patient did not begin until January 1, 2011. Dr. Heldman indicated that she was not eligible through the end of her initial stay in hospice on January 31, 2012. Dr. Heldman approved her second stay in hospice beginning on May 19, 2012. Dr. Heldman, who indicated he had dealt with dementia patients many times, testified that there were discrepancies throughout her medical records and that the file did not contain documentation showing serial physician assessments, clinical progression of the terminal disease, a decline in functional status, nor of the end stage of a terminal disease. Dr. Zimmerman, in his provider response after the DAR, focused on what he claimed was a significant weight loss with this patient over the period she remained in hospice care. As Dr. Zimmerman stated in the provider response: “when certifying physicians saw consistent weight gain/stabilization they became comfortable that the improvement was not a brief ‘honeymoon’ in her failing nutritional status and they no longer believed that her ‘normal course’ would result in a life expectancy of six months or less and they appropriately discharged her.” It is clear Dr. Zimmerman relied on the patient’s alleged dramatic weight loss to justify continued provision of hospice services to the patient. However, at the final hearing, Dr. Zimmerman conceded that the dramatic weight loss upon which he relied (and his physician who was recertifying the patient relied on) in evaluating this patient, was a mistake. The factor upon which Dr. Zimmerman relied upon to support the patient’s stay in hospice, including his initial certification and at least two recertifications, did not actually exist. Dr. Heldman likewise provided credible testimony regarding the inconsistencies in Halifax’s records for Patient U’s file and that the records did not contain sufficient documentation to support the initial certification and recertifications. The preponderance of the evidence proves that Patient U was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $47,159.40. Patient V Patient V, a 56-year-old male, was initially admitted to Halifax on May 22, 2012, with a terminal diagnosis of end- stage liver disease. Dr. Eisner testified that although this patient did have ascites, they are part of the normal progression of the disease and the condition was appropriately treated with paracentesis. Further, he indicated that throughout the course of the patient’s stay, there was no documentation to show a clinical progression of the terminal disease. Dr. Eisner also noted there was no evidence of impaired nutritional status related to the terminal disease or any decline in functional status. More importantly, Dr. Eisner opined that there was no evidence that the patient had entered the end stage of a chronic disease. Finally, he saw no evidence that the patient had variceal bleeding, hepatorenal syndrome, or recurrent spontaneous bacterial peritonitis, which would have indicated six months or less to live. Dr. Zimmerman testified that his team was extremely worried about the patient’s prior episode of ventricular tachycardia and the chance of another episode that would be fatal, and that this chance supported keeping him in hospice. Dr. Zimmerman highlighted this grave concern repeatedly through his written response to the DAR. However, on cross-examination, he admitted that the patient did not have a history of the tachycardia but rather had one episode that lasted 20 beats or less and that Halifax did not send the patient to be further evaluated by a cardiologist. He also admitted that the opiates Halifax treatment providers were giving Patient V could have caused the dizziness that prompted their concern and allegedly supported the prognostication of limited life expectancy. Patient V did not have a terminal diagnosis with a life expectancy of six months or less if his terminal disease progressed at its normal course at initial certification or at any recertification throughout his stay with Halifax during the audit period. The medical records contained in this patient’s file do not support a finding that the Medicaid hospice eligibility standard was met. Based upon the greater weight of the evidence in this case, it is determined that Patient V was not eligible for Medicaid hospice services and that Petitioner is entitled to recover an overpayment of $38,769.20. Patient O Patient O, a 57-year-old female, was first admitted to Halifax on October 16, 2009, with a terminal diagnosis of COPD, a common breathing disorder. She was discharged November 9, 2012, because Halifax determined she did not meet the criteria for hospice. Although Patient O had COPD, Halifax never presented her for a FEV1 test which would have been a good indicator of the degree of COPD and would have assisted in properly obtaining a prognosis of life expectancy. Patient O was recertified for hospice 16 times, with little or no narrative from the recertifying Halifax physician present in the medical records. Patient O also regularly showed oxygen saturation levels within the normal range for a COPD patient. In May 2010, seven months into her hospice stay, there was no evidence of impaired nutritional status, no signs or symptoms of respiratory distress, no change in chest pain, residual weakness, fair appetite, no swallowing difficulties and her pain was well controlled. Additionally, in September 2010, there were notes that the patient’s lungs were clear, she had been removed from oxygen for activities, and had showered without difficulty. Between December 2010 through September 2012, the nurse’s notes reflect that patient O stated that she was doing better and had not experienced shortness of breath. It appears from the medical records that while the patient may have had COPD, it was not progressing. Dr. Eisner testified that other than intermittent upper respiratory infections, the patient’s pulmonary status remained stable and showed no progression over the course of time. Further, he saw no proof that her coronary heart disease or diabetes deteriorated over the three years and that, although she had some weight loss, there was no documentation of a decline in her functional status. However, Dr. Eisner provided an opinion regarding this patient outside his expertise. That a COPD terminal diagnosis was beyond his experience was made clear when Dr. Eisner could not identify the specific indicators for when a COPD patient was decompensating. Although Dr. Eisner may have treated patients with COPD, his primary practice treating patients was related to gastroenterological conditions. He was not board-certified in pulmonology and was not trained in the specialty. Therefore, AHCA has not met its burden by the greater weight of the evidence that Patient O was not eligible for Medicaid hospice services, and Petitioner is not entitled to recover an overpayment of $158,234.66. Fine Calculation When calculating the appropriate fine to impose against a provider, MPI uses a formula based on the number of claims that are in violation of rule 59G-9.070(7)(e). Specifically, the formula involves multiplying the number of claims in violation of the rule by $1,000 to calculate the total fine.3/ The final total may not exceed 20 percent of the total overpayment, which resulted in a fine of $64,981.38. Summary of Findings of Fact At the time of the hearing, AHCA sought from Respondent overpayments in the amount of $529,906.88 for eight patients who received hospice services at Halifax during the audit period. The findings of fact above upheld AHCA's denial of hospice services for patients: D, H, P, Q, S, U, and V. The Respondent rebutted the evidence regarding eligibility of Patient O. Therefore, AHCA is entitled to recover overpayment of $371,672.22. Each expert credibly testified as to when each patient was admitted and the certification for each patient. The experts provided the requisite support to both the DAR and FAR for the patients where there was a finding of ineligibility for hospice services.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that that the Agency for Health Care Administration enter a final order directing Halifax to pay $371,672.22 for the claims found to be overpayments and a fine of $67,981.38. The undersigned reserves jurisdiction to award costs to the prevailing party. DONE AND ENTERED this 30th day of June, 2017, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN 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 June, 2017.
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 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 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 numeric need for hospice programs in health planning subdistrict 6A for the March 2000, batching cycle should be one, as originally published by the Agency for Health Care Administration, or zero, as published in a revision of the original publication?
Findings Of Fact The Parties Petitioner, Hernando-Pasco Hospice, Inc., was formed in 1982 and commenced service in 1984. It is licensed to provide hospice services in Service Areas 3D and 5A, Hernando and Pasco Counties, respectively. On average, it serves 500 patients per day. Hernando-Pasco has three offices for the delivery of care in its service areas. It operates three hospice residential houses with a total of 23 beds. The houses are in Hudson, Dade City, and Spring Hill. Hernando-Pasco also operates an inpatient unit at a nursing home in Brooksville serving Hernando County. LifePath Hospice is a not-for-profit community organization founded in 1983. It is licensed to provide hospice services in two service areas, 6A and 6B. Service Area 6A is Hillsborough County. Service Area 6B is comprised of three counties: Polk, Highlands, and Hardee. LifePath serves 820 patients on an average daily basis. In calendar year 2000, it served 4,002 patients. LifePath provides hospice service without regard to the patient's ability to pay. The services are provided, moreover, regardless of the circumstances in which the patient is found so long as the patient is in Service Area 6A or 6B. For example, services are provided to the patient whether at home, in another residential setting, in an inpatient facility such as a hospital or even if homeless. In other words, LifePath provides hospice service to patients wherever the patient might be within LifePath's two service areas. Similarly, Hernando-Pasco Hospice provides its hospice services to hospice patients at home, in residential settings, and in in-patient settings. It does not matter in what setting the hospice patient is found at the time of the request for hospice services as long as the patient is located within the service areas where Hernando-Pasco Hospice is authorized to provide its services. Hernando-Pasco delivers services within its authorized service areas "wherever the patient may be." (Tr. 64). Hospice services are also delivered by Hernando-Pasco Hospice to the homeless, although requests by the homeless for hospice services tend to be few. As Mr. Taylor, CEO of Hernando- Pasco Hospice explained at hearing: Fortunately, the few of them [the "homeless"] are able to go to an adequate facility, but some of them prefer to live in cardboard boxes . . . things of that nature. We go where they are. * * * [I]f they want to be living in a cardboard box, we will take service to that cardboard box for them. (Tr. 248, 249). The Agency for Health Care Administration is the single state agency responsible for the administration of certificate of need laws in Florida. In conjunction with these duties, it determines semi-annually the net numeric need for new hospice programs pursuant to Rule 59C-1.0355, Florida Administrative Code ("the Rule.") Numeric Need Under The Rule Rule 59C-1.0355, Florida Administrative Code, entitled "Hospice Programs" was adopted on April 17, 1995. Its purpose is to ensure "the availability of hospice programs as defined in this rule to all persons requesting and eligible for hospice services, regardless of ability to pay." Rule 59C-1.033(1), Hernando-Pasco Ex. 9. The Rule establishes criteria and standards for assessing the need for new hospice programs. For determining whether a new hospice is needed in a service area, the Rule includes a numeric need formula. The numeric need formula contains two terms: "HPH" and "HP." "HPH" is defined as "the projected number of patients electing a hospice program in the service area during the 12- month period beginning at the planning horizon." (Hernando Ex. 9). "HP" is defined as "the number of patients admitted to hospice programs serving a service area during the most recent 12-month period ending on June 30 or December 31. (Id.) If the number of patients denoted as HPH exceeds the number denoted by HP by 350 or more, then a numeric need is indicated for the service area. The formula is expressed as: HPH - HP > 350 [Rule 59C-1.0355(4)(a), Hernando-Pasco Ex. 9]. The "350" figure in the Rule's numeric need formula "is a threshold value to determine whether any difference that may exist between HPH and HP rises to a significant level. It represents a minimum volume that would be associated with a hospice that would be large enough to be financially viable and still offer comprehensive services to the patients who request hospice care." (Tr. 782). AHCA's Calculation and First Fixed Need Pool Publication On July 12, 1999, LifePath submitted the first of two "Semi-annual Reports of Hospice Utilization" for calendar year 1999 to the Agency. The report showed a total of 1,406 new patients admitted by LifePath for the period January 1, 1999, through June 30, 1999. The first half of the year total was broken down for LifePath's two service areas; the number of admissions in Service Area 6A totaled 1,282, and the number of admissions in Service Area 6B totaled 124. The report is signed in a space for the administrator of LifePath to show that it had been reviewed and approved. On January 7, 2000, LifePath filed its second utilization report for calendar year 1999. The second semi- annual report, covering the period from July 1, 1999, through December 31, 1999, showed a total of 1,368 patients admitted for the second half of 1999. Also broken down into admissions by service area, the report indicated that 1,228 of the admissions were in Service Area 6A and 140 of the admissions were in Service Area 6B for the second half of 1999. This report also shows review and approval by a LifePath Administrator, in this second case, by Kathy L. Fernandez, LifePath's CEO. With the two utilization reports in hand, AHCA calculated numeric need for the two service areas served by LifePath pursuant to the Rule's formula. With regard to Service Area 6A, Hillsborough County, AHCA determined HPH to be 2,871. (The HPH figure for Hillsborough County is not in dispute in this proceeding.) Based on LifePath's utilization reports, AHCA determined HP for Service Area 6A, Hillsborough County, to be 2,510. Inserting these two figures into the appropriate places in the formula yielded a resulting difference of 360. Since the result was a positive difference of 350 or more, the result indicated a numeric need for one more hospice in Service Area 6A. Different Information The Agency prepared to publish a hospice fixed need pool of "one" for Service Area 6A on January 28, 2000. While preparation was underway, LifePath's CEO Ms. Fernandez was informed of what the publication would show. Surprised, she asked her staff to investigate the utilization data LifePath had submitted to AHCA. The investigation conducted, the results were reported to Ms. Fernandez. In Ms. Fernandez' words, she realized: there was an error. When [staff] ran a simple computer report for the admissions that were admitted in 6A and 6B, they came back and told me the numbers that they had run on the computer were different than the numbers that we turned into AHCA. (Tr. 609) According to the new computer-run numbers, LifePath had admitted 32 more patients during Calendar Year 1999 in Service Area 6A than it had reported. The difference in the new numbers and the ones reported to AHCA concerned hospice patients who had been admitted to LifePath while patients of hospitals located in Hillsborough County but whose permanent residences were outside Hillsborough County and, conversely, patients who had been reflected as 6A admissions but had been admitted while outside Hillsborough County. The new numbers reflected where patients were located at the time of admission as opposed to where the patients permanently resided. Forty patients were involved. Thirty-six of them had been admitted to LifePath while physically present in Service Area 6A, that is, at the time of admission, they were patients in Hillsborough County hospitals. Another four patients had been reported to have been admitted in Service Area 6A, but had actually been admitted while physically present in Service Area 6B. In consideration of location at time of admission rather than permanent residence or home as the patient's place of admission, the new numbers, therefore, showed a net change of 32 patients that in LifePath's view should have been regarded as Service Area 6A admissions above the reported number of Service Area 6A admissions. The utilization reports submitted to the Agency, unlike the new numbers, did not show admissions by location of the patient at the time of admission because the reports had determined admissions by which LifePath team had cared for the patients. The 36 patients admitted while in Hillsborough County hospitals but omitted from the utilization reports as 6A admissions had been cared for by LifePath's Rose Team, a team "geographically placed in 6B." (Tr. 610). They were counted in the reports, therefore, as 6B admissions without regard to the fact that the admissions had occurred at a moment when the patients were actually located in Service Area 6A as Hillsborough County hospital patients. The same was true of the four patients reported to have been 6A admissions. They were all physically located in Service Area 6B at the time of their admission. In each of these cases, the teams were assigned on the basis of the patient's home address at the time of admission rather than the patient's actual location at the time of admission. In light of the new numbers that reflected a different approach and an understanding of the difference between those numbers and the ones LifePath had submitted by way of the reports, LifePath concluded that its utilization reports had underreported 6A admissions for calendar year 1999 by 32 patients. Armed with this new information and what it viewed as a sounder approach to the reporting of admissions, LifePath set out to correct what it hoped AHCA would see as an error. On January 26, 2000, two days in advance of the scheduled publication of the fixed need pool for hospice programs in the State, LifePath caused to be hand-delivered to the Agency, a letter from its attorney. In pertinent part, the letter reads as follows: Enclosed . . . is correspondence and a packet of information . . . which notifies the Agency of mistakes . . . made in LifePath's last two [reports]. This information included Patient Data Sheets from LifePath's information system for 36 patients who were admitted and cared for in Service Area 6A (Hillsborough County), but who were mistakenly counted as Service Area 6B patients. Also, enclosed are Data Sheets for 4 patients who were admitted and cared for in Service Area 6B (Polk County), but who were mistakenly counted as Service Area 6A patients . . . . The error occurred when patients were mistakenly counted by nursing team (e.g., the Rose and Yellow teams), rather than strictly by geographic location of where the patient received his/her care. The net result will be an addition of 32 patients to Service Area 6A and a reduction of 32 patients from Service Area 6B. It is respectfully requested that, based upon this new information, your office correct the upcoming fixed need pool projection for Hospice Service Area 6A, scheduled to be published on January 28, 2000 and, instead of publishing a need for one (1) new hospice program in Service Area 6A, publish a need for zero (0) new hospice programs in Service Area 6A for the upcoming CON batching cycle. (Hernando-Pasco Ex. No. 15). The forty Patient Data Sheets attached to the letter bear the title "Patient Referral Data." Below the title is the time that the data was generated by the computer. All forty sheets were generated between 10 a.m. and 11 a.m., the morning of January 26, 2000. As current location, 36 of the sheets list one of a number of hospitals in Hillsborough County. The majority of the sheets show the Moffitt Cancer Center as the patient's current location. Some data sheets of these 36 list other hospitals in Hillsborough County as the patient's current location: Tampa General Hospital, St. Joseph's Hospital, Brandon Regional Hospital, and South Florida Baptist Hospital. The other four data sheets list as "current location" either Lakeland Regional Medical Center in Polk County or Winter Haven Hospital in Polk County. The forty referral data sheets generated by LifePath's information system on January 26, 2000, were not produced in the customary format used by LifePath. They were reformatted to show the patient's location at the time of admission (termed "current location") and to omit the patient's permanent residence or home address. At hearing, LifePath's CEO candidly stated that the "Patient Referral Data" sheets were "altered . . . to show the [patient's] location at the time of admission." (Tr. 612). Some of the information remained the same on the sheets produced on January 26 as was customary. Just as Ms. Fernandez testified, for example, the 36 sheets that show a hospital in Hillsborough County as the current location list under "Team Code" the Rose Team, LifePath's team that serves Service Area 6B. The four that show Polk County as "current location" list the Yellow Team, the LifePath team that serves Hillsborough County or Service Area 6A, under "Team Code." The January 26 data sheets' use of the word "current" to describe the patient's location is a misnomer if applied to the date the information was generated. The 36 patients with Hillsborough County locations had passed away by January 26, 2000. On the other hand, the use of the word "current" is accurate if understood to mean the location at the time of the referral and admission, a use consistent with the title of the document as reflecting "referral" data. Response by the Agency The January 28, 2000, publication proceeded as planned without change. But, after receiving the information submitted by LifePath, AHCA published a second "Notice of Hospice Program Fixed Need Pool." This second publication appeared in Volume 26, Number 6 of the Florida Administrative Weekly on February 11, 2000. It indicated a revised net need for zero (0) hospice programs for Service Area 6A. As reflected by the revised publication, AHCA believed that the second publication correctly determined the net need for the service area to be zero. The determination is based upon the Agency's interpretation of Rule 59C-1.0355. As Mr. Gregg, Chief of the Bureau of Health Facility Regulation, for the Agency explained at hearing: [T]he rule . . . directs us to consider the place where the patient was prior to admission. * * * For people who have been . . . nursing home residents, or ALF residents, or in and out of hospitals prior to being admitted to a hospice, their actual residence may not be quite so clear. And so the interpretation is that it is the place from which they are referred. (Tr. 932, 933). With regard to the 36 patients originally reported as Service Area 6B admissions but who had been admitted while in a hospital in 6A, LifePath continued to provide hospice services to the patients after they returned to a location in Service Area 6B. LifePath's ability to admit in one service area and provide treatment later in a different service area makes this case somewhat unusual. There are few hospices in Florida that provide service in more than one service area. For that reason, the issues presented in this case have not surfaced in the past. The more common situation for when a patient is admitted in a hospital in one service area and provided hospice services there and then returns to a permanent residence in another service area would call for the patient to be admitted to two different hospices at two different times. In such a case, for the sake of consistency, the Agency "would want to see . . . an admission to the program in [the service area in which the hospital was located]" (Tr. 934) and then a second admission to the hospice in the service area in which the patient had permanent residence when the patient moved back home or to a location in the second service area. This expectation of the Agency, however, is not required by rule. It is one that apparently has emerged in the context of this case. LifePath's Transmission of Data to Hernando-Pasco On February 18, 2000, LifePath transmitted to Mr. Rodney Taylor, the Administrator of Hernando-Pasco Hospice, referral records for the same forty patients whose referral data sheets generated on the previous January 26 had been submitted to the Agency. In its cover letter to Mr. Taylor, Ms. Fernandez wrote on behalf of LifePath: I'm enclosing the referral records for the patients who were inadvertently mis- classified as to county of admission by LifePath in 1999. We found a few original referral records were not filed appropriately in the medical record, or in error, reflected the home address versus the hospital in which they were admitted. In those instances, I am attaching a portion of the Admission Assessment or Patient Information Sheet to which show the actual point of admission. As you know, if I run a current referral record, HPMS will show the patient's current address rather than the point of admission. (Hernando-Pasco Ex. 16). Unlike the Patient Referral Data generated January 26, the Patient Referral Data sheets sent to Mr. Taylor show that they were generated earlier, on various dates in 1999. Also dissimilar from the sheets produced on January 26 that had omitted "home address" and had shown only the location at the time of admission, moreover, the sheets provided Mr. Taylor show not only a "current location" or a location at the time of admission but also the patient's home address. No attempt was made by LifePath to hide the fact that the Patient Referral Data Sheets submitted to AHCA on January 26, 2000, had been generated on that same date rather than any earlier date as in the case of the information transmitted later to Mr. Taylor and Hernando-Pasco Hospice. The other main difference between the two sets of data submitted to the Agency and to Mr. Taylor, that is, the omission from the data submitted to AHCA of the patient's home address, was explained by Ms. Fernandez as an act done for the State's benefit, "so as not to confuse them." (Tr. 622.) Other Provisions of the Rule Rule 59C-1.0355 is an extensive rule. The Rule consists of ten subsections that cover an array of topics related to hospice programs. In addition to the provisions setting forth criteria for determination of numeric need, the rule contains a "definition" section, general provisions related to quality of care and conformance with statutory criteria, consistency with plans, required description of the program, construction and changes in licensed capacities of freestanding hospice facilities, and grandfathering provisions. Also included in the Rule is a statement of intent and pertinent to this proceeding, Subsection (9), which governs semi-annual utilization reports. Subsection (9) of the Rule states: Each hospice program shall report utilization information to the agency or its designee on or before July 20 of each year and January 20 of the following year. The July report shall indicate the number of new patients admitted during the 6-month period composed of the first and second quarters of the current year, the census on the first day of each month included in the report, and the number of patient days of care provided during the reported period. The January report shall indicate the number of new patients admitted during the 6-month period composed of the third and fourth quarters of the prior year, the census on the first day of each month included in the report, and the number of patient days of care provided during the reporting period. The following detail shall also be provided: For the number of new patients admitted: The 6-month total of admissions under age 65 and age 65 and over by type of diagnosis (e.g., cancer; AIDS). The number of admissions during each of the 6 months covered by the report, by service area of residence. For the patient census on April 1 or October 1, as applicable, the number of patients receiving hospice care in: A private home. An adult congregate living facility. A hospice residential unit. A nursing home. A hospital. (Hernando-Pasco Ex. 9, emphasis supplied). There is no definition of "service area of residence." The term "service area resident" is used extensively in the descriptions of the factors that make up HPH, "the projected number of patients electing a hospice program in the service area during the 12 month period beginning at the planning horizon." See Subsection (4)(a) of the Rule. HPH, however, is not in dispute in this proceeding. It is the other term in the formula that is in dispute: "HP." The Rule's definition of "HP" does not use the term "service area of residence." But the definition cross-references to Subsection reporting requirements: "(HP) is the number of patients admitted to hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (9) of the rule." Section (4)(a) of the Rule. The Agency interprets "service area of residence" not to mean the service area where the patient has a "permanent residence," but the service area which is the patient's "location at the time of admission." There are good reasons in support of the AHCA's interpretation. Hospitalized hospice patients come from a population that has been mobile. Some have permanent residences in foreign countries, other states (so-called "snowbirds") or in other counties in the state or different health planning service areas than the one in which they are hospitalized. Some hospice patients may have no permanent residence at all, as in the case of the homeless. To report as admissions only those who reside permanently in a service area in Florida by that service area and to not report the patient as an admission when admitted in the service area in which the patient is hospitalized or located at the time of admission would omit many admissions. As Mr. Gregg testified on behalf of the Agency, the numeric need formula produces the "most accurate projection of need by having the best data and the most complete data; therefore you would want every possible admission to be reported." (Tr. 958). An Additional Contention In addition to contending that the numbers originally reported by LifePath were correct for calculation of HP and that the later reported numbers may not be used for calculation of HP, Hernando-Pasco raises a second, fundamental issue. Hernando- Pasco contends that the 36 patients did not achieve the status of admission while in the hospital. According to Hernando-Pasco's line of thinking, if the patients were ever admitted to LifePath, it was not until after their return to Service Area 6B. To address these contentions, it is necessary to examine the admissions process used by LifePath, whether that process was applied to the 36 patients, and, ultimately, whether that process meets the legal requirements for hospice admission. LifePath's Admissions Process for the Hospitalized Patient Whether hospitalized or not, admission of a patient to LifePath commences with a physician order or a request from the patient or family of the patient. A pre-admission visit is conducted to determine if the patient is eligible for hospice services. During the visit, a representative of LifePath speaks with the patient and family to ensure that services have been requested. In the case of a hospitalized patient, death is often imminent and occurs in the hospital. LifePath, therefore, does not wait for the patient to return home or to a residential setting to commence admission. The formal admission process is initiated at the hospital by the admissions nurse, a professional who has received training on how to conduct initial psychosocial, spiritual and financial assessments to be undertaken during the admissions process together with the physical assessment. The admitting nurse goes to the location of the patient where the admissions process takes between two and one-half and three hours. Because of the length of time required, LifePath's "admission nurses do [only] two admissions a day." (Tr. 641). If the patient's location is a hospital, the nurse does a physical assessment and an initial psychosocial, financial, and spiritual assessment of the patient. Forms for consent of care, medical exchange of information, and authorization of payment forms as well as a patient information sheet are completed. Advance directives are discussed. Prognostic indicators, criteria set by the state, are reviewed to determine whether the patient meets admission criteria. Emergency planning is discussed. A teaching record is prepared. A physician's referral and plan of treatment are completed and confirmed with the physician. An interdisciplinary plan of care is initiated. Referrals of patients, if necessary, are facilitated. For the hospitalized patient for whom end of life is not imminent and who will have the opportunity to return home, LifePath's objective is to facilitate that return. Planning for the discharge of a patient from a hospital is an important hospice service. Often it involves the ordering of medications and equipment in anticipation of the patient's return home, two functions that require admission to the hospice. In such cases, physician's orders are necessary and a physician will not give a hospice orders to care for a patient unless the patient is admitted to the hospice program. For the hospitalized patient for whom death is imminent, one of the important reasons for admission to hospice is to qualify the patient's family for the 13 months of bereavement services hospices are required to provide survivors under the Medicare hospice benefit. Hospices also admit patients near death so that they may be provided care as quickly as possible. A hospitalized patient is considered by LifePath to be admitted when the physical assessment and at least the initial psychosocial, spiritual, and financial assessments are conducted by the admitting nurse, all consent forms are complete and the hospice takes over the care of the patient in coordination with the hospital. LifePath's Administrative/Operational Manual with regard to the subject of "Admission Process" (see Hernando-Pasco Exhibit 25) requires more in the way of procedure for an admission than is done for the typical hospitalized patient. The manual describes procedure for the admissions process as consisting of 35 categories of items (Procedures A - Z, and AA through II), some of which have numerous sub-parts. The process leads to a Plan of Care. The procedure includes: W. In conjunction with one additional IDT member develop the "Plan of Care". Identify foci and document on the IDT Plan of Care. Complete a "Hospice Interdisciplinary Plan of Care Evaluation/Summary" form. (Id., emphasis supplied.) Normally, it is the social worker member of LifePath's interdisciplinary care team, together with the admissions nurse, who develops the plan of care. According to the "Position Description" of LifePath's "Hospital Team Patient/Family Counselor", it is the social worker also who "[w]orks closely with the LH Hospital Team RN to assure timely admissions." (Hernando-Pasco Exhibit 26, Li-He 974). In the case of a hospitalized patient for whom admission is requested, however, the social worker may not participate in LifePath's admission process at all. To complete a full psychosocial assessment and history takes up to three hours. To do so on the day of admission following the two and one-half hour to three-hour admissions process conducted by the nurse frequently "would be cumbersome and overburdening to a patient and family." (Tr. 644). This is especially true in the case of the patient for whom death is imminent. In the case of the patient who will have the chance to return home, the full follow-up psychosocial and spiritual assessments conducted by social workers and chaplains are often deferred by patient and family request. Understandably, conducting the full assessment can be too much for the hospitalized patient who has just received a prognosis of terminal illness and the patient's family in the midst of arrangements for transfer of the patient home and initiation of the care to be delivered. The family frequently chooses to defer "to a time when they can sit down and comfortably speak about what they need to, at a different time, when things are calmer." (Tr. 647). There may be other complications with a hospitalized patient, as opposed to a patient admitted at home or in another setting. Sometimes hospitals do not permit patients to elect the Medicare hospice benefit while they are inpatients. Nonetheless, they can still be admitted to the hospice and be provided hospice services. If the hospital allows the patient to elect hospital benefits, LifePath is eligible for reimbursement for services provided on the day of a patient's admission. Once LifePath admits a hospitalized patient, the LifePath hospital team is notified. The team consists of hospice nurses, social workers, and a chaplain. The team continues to see the patient while in the hospital and helps coordinate the care and, frequently, the discharge of the patient. The 36 Patients Hospitalized in 6A The 36 patients originally reported by LifePath as admissions in Service Area 6B were all eligible for admission to hospice at the time LifePath undertook to admit them to hospice care. All 36 were admitted while physically located in Service Area 6A. The admission process for the 36 patients included a professional initial assessment by the admitting nurse of the social, psychological, spiritual and financial needs of the patient as well as a physical assessment. LifePath was not reimbursed by Medicare for 34 of the patients in question for hospice care in the hospital. Nor did LifePath seek compensation from Medicare for the care in the hospital provided these patients. As to those patients who returned home or were transferred to another residential setting in Service Area 6B, LifePath received Medicare reimbursement for the hospice care provided in the residential setting. LifePath explained that it did not receive Medicare reimbursement for the care provided during the time the 34 spent in the hospital because the hospitals would not allow the patients to elect hospice Medicare benefits while in the hospital. Hospitalized patients, moreover, LifePath explained, can be admitted as patients who pay privately without the involvement of a third party payer.
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 determining the fixed need pool for health planning subdistrict 6A for the March 2000 batching cycle to be zero. DONE AND ENTERED this 18th day of May, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of May, 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 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Gerald B. Sternstein, Esquire Frank P. Rainer, Esquire Sternstein, Rainer & Clarke, P.A. 101 North Gadsden Street Tallahassee, Florida 32301 H. Darrell White, Esquire McFarlain, Wiley, Cassedy & Jones, P.A. 215 South Monroe Street, Suite 600 Post Office Box 2174 Tallahassee, Florida 32316-2174
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 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 Whether the Certificate of Need (“CON”) applications filed by Seasons Hospice and Palliative Care, Inc. (“Seasons”); Gulfside Hospice and Pasco Palliative Care, Inc. (“Gulfside”); and West Florida Health, Inc. (“West Florida”); for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A/Hillsborough County, satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications best meets the applicable criteria, on balance, for approval.
Findings Of Fact Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for one additional hospice program in Hospice Service Area 6A, Hillsborough County, for the January 2016 planning horizon. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. The need methodology promotes competition and access because numeric need exists under the methodology when the hospice use rate in a service area falls below the statewide average use rate. In a service area in which there is a sole hospice provider, as in the present case, the existing provider has an incentive to continually improve access to hospice services in the service area in order to avoid numeric need for an additional program under the formula. For the January 2016 planning horizon, the Agency determined that the difference between projected hospice admissions and current admissions in Hospice Service Area 6A was 759, and therefore a numeric need for an additional hospice program exists in Hillsborough County. AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034(1), Florida Statutes. The Proposals and Preliminary Decision Nine applicants submitted CON applications seeking to establish a new hospice program in AHCA Service Area 6A, Hillsborough County, in response to the fixed need pool. LifePath, the only existing provider of hospice care in the service area, opposed the hospice application which was sponsored by a hospital system, i.e., West Florida’s. After reviewing the applications, the Agency preliminarily approved West Florida's CON Application No. 10302 and preliminarily denied the remainder of the applications, including Seasons’ CON Application No. 10298 and Gulfside's CON Application No. 10294. At the final hearing, Marisol Fitch, supervisor of AHCA's CON unit, testified that the Agency approved West Florida's CON application because it determined that West Florida's application best promotes increased access to hospice services for residents of Hillsborough County. The Agency concluded that Tampa General and Florida Hospital, West Florida's parent organizations, already have large infrastructures in place in Hillsborough County. Accordingly, the Agency determined that West Florida's proposed hospice program, if approved, would benefit from built-in access points that would enable West Florida to improve hospice accessibility. The Applicants, AHCA and Lifepath West Florida West Florida is a joint venture with 50-50 ownership and control by Tampa General and Florida Hospital, two acute care hospitals in Hillsborough County. The entity was created for the purpose of seeking the CON at issue in this proceeding for a new hospice in Service Area 6A. West Florida recently became the owner/operator of three home health agencies which had been operated for several years by the Florida Hospital System. Tampa General has not operated hospices in the past, while Florida Hospital has, and the CON application submitted by West Florida relied heavily upon the Florida Hospital-affiliated hospice’s programs and history. West Florida is the only applicant in this proceeding that is hospital affiliated. Seasons Seasons, the applicant, is a single purpose entity created for the purpose of seeking a CON to operate a new hospice in Service Area 6A. It is affiliated with Seasons Hospice and Palliative Care, a for-profit company (hereinafter referred to as “Seasons HPC”). Seasons HPC is the largest family-owned hospice organization in the country. The first Seasons HPC-affiliated hospice opened in Chicago, Illinois, in 1997. In 2003, Seasons HPC opened its second hospice in Milwaukee, Wisconsin, and in 2004, it acquired a third hospice in Baltimore, Maryland. Since 2004, Seasons HPC has continued to grow nationally by opening, or in some cases acquiring, hospices in new markets. Today, Seasons HPC is the fourth largest hospice company in the United States with 25 separate hospices operating in 18 different states. Each Seasons HPC-affiliated hospice is a separate entity, with its own license, executive director, and staff. However, each Seasons HPC hospice is connected via overlapping ownership and via contracts with Seasons Healthcare Management, its management company. Among the services that Seasons Healthcare Management provides to each Seasons HPC hospice are: education and training, quality management, financial planning support, management of payrolls, tax preparation, cost report preparation and coordination, IT services, corporate compliance policies and programs, marketing and development expertise, in- house legal services, and a wide variety of policies and consultations including, but not limited to, clinical support and physician oversight. Todd Stern is the CEO of Seasons Healthcare Management and is also the CEO of the 25 separate hospices that Seasons HPC operates throughout the country. Mr. Stern joined Seasons HPC in 2001, and was appointed CEO in 2008. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization and is licensed by AHCA. Gulfside has been providing hospice services in Pasco County (which is contiguous to Hillsborough County) for more the 25 years. Gulfside provides service to all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, qualified individual with a disability, military status, marital status, pregnancy, or other protected status. LifePath LifePath is the sole existing, licensed hospice provider in Hospice Service Area 6A, Hillsborough County. LifePath is a subsidiary of Chapters Health System. LifePath has provided hospice services in Hillsborough County since 1983. It was the first hospice program in the state to be accredited by The Joint Commission and has continuously maintained that accreditation. LifePath is also accredited by the National Institute for Jewish Hospices. In addition to providing routine, continuous, and respite care to residents of Hillsborough County, LifePath also provides inpatient hospice care in two, 24-bed hospice houses located in Temple Terrace and Sun City, Florida. Additionally, LifePath has scatter-bed contracts with all of the acute care hospitals in Hillsborough County to provide inpatient care. LifePath is an important part of the healthcare continuum in Hillsborough County and works collaboratively with other healthcare providers in the community, including hospitals, nursing homes, and assisted-living facilities. AHCA AHCA is the state agency responsible for administering the Florida CON program. Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their families. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. Under the Medicare program administered by the federal government, a terminally ill patient is one who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may also be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support services to the family for a minimum of one year after the patient's death. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, chaplains, and other disciplines. There are four levels of service in hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care comprises the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room-like or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85-to-90 percent of hospice care is paid for by Medicare. There are certain services required or desired by some patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy, among others. There are other, more complicated and expensive non-covered services, such as palliative chemotherapy and radiation, that may be indicated for severe pain control and symptom control. Hospices which provide these additional services are said to have “open access” and foot the bill for such services. The Parties’ Proposals Each of the applicants- -as well as LifePath and the Agency– -agree that any one of the applicants could provide quality hospice services if approved. The following paragraphs set out some of each applicant’s attributes. Before each of the applicants’ proposals is discussed more fully below, it is clear that all of the applicants would likely be successful if approved. As stated by the parties themselves: “All three applicants . . . have the ability to operate a high quality hospice.” West Florida counsel, Tr., p. 12. “These are all excellent providers” and “There are no bad choices here.” AHCA counsel, Tr., pp. 1802 and 2009. “All [applicants] would be qualified; they all do good.” Lifepath counsel, Tr., p. 1980. “All applicants will undoubtedly provide the same level of quality care.” West Florida PRO, ¶ 59. The ultimate concern of AHCA regarding a new hospice provider in Hillsborough County is not the quality of care that the applicants can provide. All applicants will undoubtedly provide the same level of quality care. The real concern is costs, access, and availability. The Agency believes that West Florida will be best suited to promote cost effectiveness, as well as increase access and availability. A. West Florida West Florida is a collaborative effort by two existing, licensed hospitals in the service area. West Florida justifiably touts its connection to educational institutions. West Florida conditioned its approval on the funding of an additional palliative care fellowship at the University Of South Florida College of Medicine at an annual cost of roughly $80,000 and an additional CPE resident in Tampa General’s CPE program at an annual cost of $30,000. Having West Florida as part of the Tampa General “family” will expose not only the new palliative care fellow, but also medical students, medical interns and residents, other fellows, nurses, and a wide variety of allied health professionals, to hospice services and the benefits of hospice care. The new CPE resident could help to expand knowledge about end-of-life care and ultimately improve access to hospice services. West Florida will benefit the Tampa General pastoral care and CPE program by extending pastoral palliative care and end-of-life care training and experiences for all CPE students. Florida Hospital is a part of the Adventist Health System, which operates all types of healthcare facilities throughout the nation, including hospitals, rehab facilities, home health agencies, hospices, long term acute care hospitals, nursing homes, and more. In Florida, Adventist operates a range of facilities, including statutory teaching hospitals, quaternary-level service providers, critical-access hospitals, and safety net hospitals. In Hillsborough County, Florida Hospital operates Florida Hospital Tampa and Florida Hospital Carrollwood, both acute care facilities, in addition to a variety of outpatient facilities, physician practices, and the like. West Florida has proposed and is committed to opening a four-bed hospice inpatient unit at Florida Hospital Carrollwood, located in the northwestern portion of the county. Currently, there are two other inpatient hospice house units in Hillsborough County, one on the eastern side and one in the far south, both operated by LifePath. The unit would theoretically benefit hospice patients by increasing the number of inpatient beds and improving geographic distribution, thereby providing more access to hospice care. An inpatient unit may operate better than contracted “scatter beds” because hospice staff trained in end-of-life care and symptom management would be the medical personnel providing care to the patient rather than other hospital staff. Florida Hospital is an experienced provider of hospice services in the State of Florida, operating Florida Hospital Hospice Care in Volusia and Flagler Counties, as well as Hospice of the Comforter in Orange and Osceola Counties. Ms. Rema Cole is the administrator for Florida Hospital Hospice in Flagler and Volusia Counties. She has been responsible for opening two new hospice programs in the State of Florida. West Florida will provide a wide variety of unfunded “open access” services to its patients, such as: radiation and chemotherapy, caring for patients on ventilators, and training staff to provide these services. Combined, Florida Hospital and Tampa General touch tens of thousands of lives in Hillsborough County, totaling approximately 52,000 patients each year. Tampa General or Florida Hospital could tell its patients and their families about the goals and benefits of hospice care. It is likely West Florida would tend to promote its own hospice more prominently than it would promote its competitor’s (LifePath) services. West Florida suggests the possibility of a fully integrated electronic medical record. It would entail a long process, but steps have already been taken to begin the integration. The ability of the medical records of both Tampa General Hospital and Florida Hospital to “talk” to each other and all related ancillary providers, including its clinically integrated network, home health agency, and West Florida could improve the ability to reduce costs, as well as emergency room visits and unplanned admissions of hospice patients to hospitals. Having a streamlined system that communicates between the hospice, hospitals, and their ancillary providers could reduce workload, unnecessary paperwork, and increase the efficiency at which the hospice staff is able to operate. There is no such system in operation yet, but West Florida has plans to implement it once it is available. Florida Hospital Hospice Care provides a wide range of non-compensated programs, including a pet partner program called “HosPooch” that provides pet therapy to patients in inpatient units, nursing homes, ALFs, and even to non-hospice patients at their cancer centers. They also have a recording project called Project Storytellers that has a group of volunteers going into patients’ homes or wherever they may be to talk to the patient about their life, record things that were important to them, and give that recording to the families as a keepsake. Florida Hospital Hospice Care is involved with their local Veterans Administration nursing home and clinic, where volunteers perform pinnings of veterans. There is also music therapy, a group of quilters, and vigil volunteers, who sit at the bedside of patients to keep watch if the caregiver needs to take a break or run errands. West Florida can immediately tap into the existing connections that both Florida Hospital and Tampa General have in the community. These include relationships and connections with physicians, churches, civic groups, and other organizations, both healthcare and non-healthcare related. These existing relationships would serve not only as opportunities to market West Florida, but could also serve as educational opportunities to inform more individuals, groups, and organizations about the benefits of hospice care and the availability of the West Florida. West Florida agreed to condition approval of its CON application on the following eleven concepts: Annual funding for an additional palliative care fellowship at the University of South Florida; Annual funding for an additional CPE resident; Annual sponsorship of up to $5,000 for children’s bereavement camps; Up to $10,000 annually for a special wish fund; Operating a 4-bed inpatient unit at Florida Hospital Carrollwood; Programs which are not paid by Medicare; Offices on the campus of Tampa General and Florida Hospital; Using a licensed clinical social worker with at least a Master’s degree to lead the psychological department; 8) Establish an education program on hospice care accessible to medical staff; Programs for the Hispanic population; and Creation of a community resource information website. A. Seasons Seasons described its proposal for services through various key players within its parent organization. Dr. Balakrishana Natarjan is the chief medical officer for Seasons Healthcare Management. Dr. Natarjan plays an active role in recruiting the medical directors for each Seasons hospice, and the medical director of each hospice reports directly to him. Dr. Natarjan has developed a detailed list of the medical director’s qualifications and responsibilities, and a list of what he deems to be “non-negotiable company values” to which each medical director must agree. It is difficult to imagine how some of those values can be monitored (e.g., “The Medical Director must love holding the patient’s hand”; “The Medical Director must go to bed each night knowing they made a difference in the lives of specific dying patients,” etc.), but the idea of non-negotiables is recognized as positive. Seasons has also recently hired Daniel Maison, M.D., as the associate chief medical officer for the company. Dr. Russell Hilliard is Seasons’ vice-president for Patient Experience and Staff Development. He has a Ph.D. in music education, with an emphasis in music therapy and social work from Florida State University. His work is well-recognized in the hospice community. He was instrumental is starting the music therapy programs at Big Bend Hospice in Tallahassee, Florida, and at Hospice of Palm Beach County (Florida). His concept of music therapy is innovative, inclusive, and well- proven to achieve positive results. Dr. Hilliard will assist Seasons in doing a community-oriented needs assessment to ascertain what needs exist in Hillsborough County, examine how to meet those needs, and establish programs to be implemented upon approval as a hospice provider in the area. Seasons’ music therapies would then be implemented as necessary to meet the identified needs. Seasons has also assembled a team of national experts who are available to assist in various areas. One such expert is Mary Lynn McPherson, Pharm.D. Dr. McPherson has developed an online course entitled “Medication Management at the End of Life for Clinical, Supportive, Hospice and Palliative Care Practitioners,” that is offered through Seasons. Dr. McPherson is purportedly available 24 hours a day, seven days a week, to field numerous calls from Seasons physicians and other staff regarding complex medication management issues. Joyce Simard, a national expert in caring for people with dementia, developed for Seasons HPC hospices a specialized program for patients in the advanced stages of dementia. The program uses person-centered approaches to improve the quality of life for people suffering from dementia through meaningful sensory activities that stimulate the senses and promote comfort and serenity. Seasons Hospice Foundation (Foundation) is an independent 501(c)(3), non-profit foundation founded in 2011. The Foundation was established because Seasons was receiving unsolicited donations from grateful families and friends of patients, and it wanted these funds to go to a charitable purpose. Today the mission of the Foundation is to serve the needs of patients outside the hospice benefit. For example, the Foundation will assist patients who are unable to cover basic non-hospice needs, such as restoring electricity to a patient’s home or airfare so family members can travel to see a patient. Seasons does not rely on charitable contributions or other philanthropy to support its operations, nor does it rely on any other types of non-hospice revenue sources such as thrift shops. Unlike some new hospices which try to conserve resources and hire part-time staff when opening, Seasons invests 100 percent in new programs up front. All of the initial core staff is full-time, even when the hospice may be starting out with just a handful of patients. This allows the hospice team to develop trust among the group and to become familiar with Seasons’ policies, procedures and culture. Each Seasons HPC program and staff is reflective of the ethnic and cultural make-up of the area it serves. However, the mission statement, core values, service standards, operating practices, protocols, and policies are uniform in each Seasons HPC hospice. Seasons provides a large depth and breadth of programs in its hospices. Included among those services are music therapy, pet therapy (using certified pet therapy animals, as well as a specialized robotic seal for certain patients), Namaste (a specialized program for patients in the advanced states of dementia), Kangaroo Kids summer camp, Volunteer Vigil program, Leaving a Legacy, and Careflash. Seasons also participates in the We Honor Veterans program. Seasons would provide “open access” services in Hillsborough County. Seasons would provide these services for patients choosing to continue them so long as their prognosis remains six months or less, and the treatment is approved by the clinical leadership team for appropriateness. Such interventions may include IV antibiotics, blood transfusions, palliative cardiac drips, ventilator support, radiation therapy, heart therapy, dialysis and other palliative therapies. As discussed earlier, Seasons offers a very robust and highly professional music therapy program. But Seasons also provides music companions when simple entertainment is what is called for and Seasons makes sure the entire interdisciplinary staff is trained in this subject. Seasons actively works with hospitals in the markets it serves to educate physicians and allied health professionals in hospice and end-of-life care. Seasons hospices have affiliation agreements with several medical schools around the country to offer internships, fellowships, and other educational opportunities to pre-med students, medical students, and residents. Seasons hires experienced nurses who have previously worked in emergency rooms and intensive care units, and consequently is able to provide a much more clinically complex service than some other hospices. As a result, Seasons is able to serve patients that other organizations typically may not have served. Seasons utilizes a hospice-specific electronic medical record and is the largest hospice client of Cerner, a medical records provider. When a patient is admitted to a Seasons hospice, Seasons gathers the medical history of the patient, including hospital records if the patient has recently been in the hospital, and all relevant non-hospital medical records, including rehab notes, labs and other diagnostic testing results. This integrated electronic medical record is accessible to all Seasons hospice team members. Seasons has a centralized call center that takes calls from patients and their families 24 hours a day, seven days a week. At the call center, there are clinicians who are licensed in every state where Seasons operates who can respond to questions and provide consultation. The call center staff has full access to the patient’s electronic medical record in real time. Seasons also requires that all of its staff, including management at all levels, make calls to check on patients during the term of their treatment (i.e., not only when a patient calls or after the patient has died). In September 2010, Seasons acquired a controlling interest in a hospice in Miami-Dade County that was formerly known as Douglas Gardens Hospice. The hospice was acquired from the Miami Jewish Health System, which retains a 20-percent ownership in the hospice. At the time Seasons took over Douglas Gardens Hospice, the census was approximately 63 patients and the hospice was largely dependent upon referrals from the relatively small Miami Jewish Health System. Seasons retooled the makeup of the staff to better reflect the county’s Hispanic population and aggressively developed outreach efforts across the entire county. By the time of the final hearing, Douglas Gardens had grown to be the second largest hospice in Miami-Dade County with a census of 520 patients. When Seasons acquired its interest in the Miami-Dade County hospice, it diligently pursued referrals from assisted living facilities and nursing homes. In September 2010, Seasons had 13 admissions from ALFs; in September 2015, that number had risen to 154 admissions. Seasons’ hospice in Miami-Dade County has contracts with over 60 percent of the nursing homes in the county. In September 2015, the hospice admitted 110 patients from skilled nursing facilities. It has also pursued marketing to more than 30 acute care hospitals in the county. Today, approximately 40 to 45 percent of Seasons’ referrals in Miami-Dade County come from acute care hospitals. The majority of Seasons’ Miami-Dade County’s staff, including its executive director, is bilingual, and the hospice serves a large number of Hispanic patients. It also employs five to six chaplains, including non-denominational chaplains, a rabbi, and a Catholic priest who is able to deliver the sacrament of last rites. Seasons HPC requires all of its chaplains to be either board-certified or become board-certified within a year of being hired. Seasons HPC has developed a more formalized consulting arrangement with another national expert, Rabbi Elchonon Freedman from West Bloomfield, Michigan. Rabbi Freedman has been involved in the hospice field since the early 1990s and has four CPE units (equivalent to a master’s degree) and is board- certified. He heads the Jewish Hospice & Chaplaincy Network in Michigan which is heavily involved in hospice education across all denominations. Seasons participates in the “We Honor Veterans” program, and its Miami program has achieved Level 3 status. Seasons opened a new hospice in Broward County in late 2014, and it became Medicare certified in August 2015. The Broward hospice has achieved an average daily census of more than 50 patients as of the date of the final hearing. Seasons HPC has been successful in opening and growing new hospices in other large metropolitan markets throughout the country, most of which have no CON requirements and therefore present significantly higher hospice competition. Examples of large metropolitan markets where Seasons has successfully opened and grown the census of new hospices include: Phoenix, northern California, San Bernandino, and Houston. Seasons also agreed to condition its CON application approval on certain agreed services, including: Providing at least two continuing education units per year to registered nurses and licensed social workers at no charge; Offering internship experiences for various disciplines involved in hospice care; Donation of $25,000 per year to fund a wish fulfillment program for its patients and families; Provision of services outside the therapies paid for by Medicare; and Voluntary reporting of the Family Evaluation of Hospice Care survey to AHCA. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization licensed by the AHCA as a hospice. Gulfside has been providing hospice services in Pasco County for more the 25 years. Gulfside provides care to all individuals eligible for care who meet the criteria of terminal illness and reside within the service area. Gulfside is accredited by the Joint Commission with Gold Seal status. Gulfside has grown in scope of services and in terms of census and coverage. In July 2004, it had 50 patients and roughly 30 staff members. It had a limited reach within Pasco County, primarily serving the community of New Port Richey. Hernando-Pasco Hospice, now known as HPH, was the dominant hospice provider in Pasco County. Gulfside grew, in part, through extensive community education to physicians and other healthcare and service providers, to its current average census of 360, which makes it the dominant hospice provider in Pasco County. The leadership at Gulfside has extensive experience in hospice, senior living, and Alzheimer’s care and management, including the management of senior living and SNF facilities, and developing new facilities and programs. Gulfside has a depth of experience in oncology care, social work, nursing, hospice and palliative medicine, health care administration, technical development, as well as program and project development. For example, Gulfside’s CEO and COO were both part of the team at LifePath’s Service Area 6B program (Polk, Highland and Hardee Counties) as the program was developing, growing from a census of 200 to 350 in one year. Each hospice patient at Gulfside meets with its interdisciplinary team (“IDT”) at least bi-weekly to discuss patients and to review their plan of care and any adjustments to the care plan. These meetings also include an educational component for IDT members. IDT meetings also take place when a patient requests a change in their care plan or should a change in the patient’s status trigger a new IDT review. Additionally, the physician member of the IDT will confer on a regular basis with the hospice medical director to obtain guidance and advice. The spiritual and pastoral care staff are also part of the IDT. Gulfside has extensive orientation and training for newly hired staff, requires that new staff must demonstrate core competencies before rendering services, and requires all staff to regularly demonstrate their competencies at Gulfside’s recurring “skills days.” Gulfside encourages all disciplines of its staff to maintain competencies, receive additional training, and earn continuing education units in their respective fields. Field staff use web-connected laptops and smartphones to assist with documentation and make live updates to the Electronic Medical Record (Allscripts) which Gulfside phased in over two years ago. Gulfside also has software programs which help to identify potential hospice referrals, allowing them to focus their outreach and education efforts to reach new patients. Gulfside has inpatient and other hospice service agreements with every hospital and nursing home in Pasco County. Gulfside has a very involved structure for internal improvement and regulatory compliance. There are a series of audits conducted by supervisors and others throughout its organization to ensure proper care, documentation and compliance. This type of review for performance improvement has been in place at Gulfside since 2005. Gulfside uses the services of DEYTA, a national organization, to assist it with the processing and data aggregation of its CHAPs results as part of its benchmarking for excellence. Gulfside’s commitment to quality and compliance was recognized in their last CMS and State Survey results, both of which were deficiency-free. Gulfside’s volunteer services are well-developed, allowing trained and supervised volunteers to work in administration, patient care, patient support, and even as part of the spiritual care team. Gulfside was awarded the Florida Hospices and Palliative Care Association’s Excellence Award in 2015 for its specialized Spiritual Care Volunteer Program. That program uses volunteers with spiritual or counseling training, including Stephen Ministers (lay-ministers) and retired clergy, to primarily serve patients with memory impairments, allowing the hospice chaplains to focus their efforts on patients with a more involved spiritual plan of care that might involve complicated unresolved relationships and life review. Community outreach and education and marketing efforts by hospices are important for a hospice to be part of the community. Gulfside has an extensive history of outreach programs that include educational programs for physicians and facility staff, programs to honor local veterans, and to provide education and support to caregivers, patients, and to others caring for family and loved ones with life limiting illnesses. Local fundraisers and events help keep Gulfside in touch with the community at large, in addition to raising funds which help support its mission. Gulfside’s Thrift Shop operations are part and parcel of this community presence. The thrift shop operations are a significant source of Gulfside’s operating revenues. If approved, Gulfside would focus its attention to end-stage heart disease patients, as its research showed that fewer patients with this diagnosis were currently being served in Hillsborough County. Gulfside has developed special program to serve these patients and their unique needs. The end-stage heart disease incidence rate in Hillsborough County for the Hispanic population was 25 percent, much higher than the incidence rate for the population at large of seven percent. Gulfside sees this fact as evidence of need for more focused services. Another unique trend Gulfside identified in Hillsborough County is a comparatively higher infant mortality rate when compared to the state average. In response to that identified trend, Gulfside proposed a program to meet the need for anticipatory grief and bereavement counseling for the parents and siblings of these infants and children. Gulfside currently has well-established relationships with providers in Hillsborough County, physicians, hospitals, SNFs, and conducts outreach and education as part of its mission to educate about hospice, as well as to serve the increasing number of patients its serves who are Hillsborough County residents. Gulfside agreed to a number of conditions for approval of its CON application: Condition 1 is for enhanced services to Veterans. Gulfside is a Level 4 We Honor Veterans provider. Condition 2 is for special bereavement programs and is consistent with Gulfside’s programs and includes the traumatic loss program. Condition 3 is for special programs not covered by Medicare, and these programs all compliment the patient and family hospice experience and are incorporated into how Gulfside provides care. These programs include: (a) Pet Peace of Mind program for ensuring patients and families are not burdened with additional stress worrying about the care of their pets. (b) Treasured Memories, an interactive craft-based activity to express feelings and to create a tangible reminder of the patient. (c) Heartstrings, a program using Reverie Harps to provide a soothing focus for patients and families, and include the patient playing the Harp. The Reverie Harp is a unique instrument which is auto-tuned and harmonizing; anyone can play it and make beautiful soothing music. Condition 4 provides for an Ethics Committee to assist with dilemmas and concerns for professionals and others when there is a question regarding cultural, religious, or clinical questions about the appropriateness or compatibility of a course of care or other decisions related to a patient. Condition 5 is for Gulfside’s Crisis Stabilization program which has become a significant program as troubled family dynamics and other at-risk situations seem to arise with more frequency. Condition 6 is for the Patient and Family Resource Navigator, a program already being used in Pasco County which assists patients and families to identify community and governmental benefits and resources which may be available to them and assisting them with applying or accessing the benefits or resources. Condition 7 is to provide programs for patients whose primary language is not English. This will include providing for translations and to recruit bilingual staff and volunteers. Condition 8 reflects that Gulfside is an “open access” hospice, providing complex therapies such as infusion therapies, dobutamine, special wound care, palliative chemotherapy and palliative radiation to its patients. Condition 9 was for Gulfside to offer non- cancer patient outreach and education. This includes the previously discussed end-stage heart disease and Alzheimer’s patients. Condition 10, Gift of Presence for the actively dying, will require the provision of specially trained volunteers to be present with patients and families during the last stages to assist and comfort them. Condition 11 is related to physician and clinician education, and networking programs to educate community practitioners and aligned professionals about hospice and palliative care and to provide peer-to-peer networks. Condition 12, provides for professional and physician internships and residencies, as well as the use of professional volunteers to educate about hospice and palliative care services. Condition 13 is for the development and implementation of the Patient and Family secure web-portal. Condition 14 provides that Gulfside will establish a separate foundation for Hillsborough County to help cover patient needs and expensive treatments. Gulfside will provide seed-money of $25,000 and donations will remain in Hillsborough County as part of this Condition. Condition 15 is for the rapid licensure of the new Gulfside program in Hillsborough County. Gulfside will file its licensure application to add Hillsborough County to its existing license within 5 days of receipt of the CON. Gulfside’s corporate office in Land O’Lakes and its freestanding hospice inpatient facility in Zephyrhills would be used to support the Hillsborough County program. Both are located just north of the county line. Gulfside will not need to add administrative capabilities or staff at its corporate office to initially support staff and the incremental additional patients served in Hillsborough County. The existing supports for the new program would allow it to enjoy improved economies of scale and efficiencies. Gulfside projects it will take approximately 45 days to receive a license from AHCA. During that time, existing staff will be canvassed to see which of them would like to work in the new Hillsborough County program. Gulfside would only need to assemble one additional IDT initially to begin serving the new service area. Gulfside would provide services in Hillsborough County through existing experienced staff now working in Pasco County. Travel requirements for the Hillsborough County staff would not differ much from what is commonly seen in Pasco County, because Pasco has many remote areas that Gulfside serves. Gulfside already has 25 current staff who reside in Hillsborough County. Because Gulfside is not creating a new Medicare provider or newly licensed entity in Florida, it could begin offering services as a fully-licensed and Medicare Certified provider as soon as it has a license from AHCA. All of Gulfside’s current ancillary services and supply contractors already serve Hillsborough (as well as Pasco) County and all of these contracts necessary for delivering hospice care can readily be expanded to include Hillsborough County. Gulfside will serve all of Hillsborough County through its extensive network of relationships throughout the county. Pasco and Hillsborough Counties are part of the same recognized healthcare market with patients flowing between the two counties. Gulfside expects its initial referrals will originate in the northern part of the county due to its strong referral relationships with providers in that area, and Gulfside’s assessments showed greater unmet need in that same area. It will later expand to cover the entire county. Gulfside’s operations in Hillsborough County would be more profitable on average than its current operations in Pasco County despite the allocation of administration and corporate overhead costs to the Hillsborough County program, and despite the assessment of a seven percent fee for corporate services and management from the Pasco home office. The cause of this difference is that the new program in Hillsborough County will benefit from economies of scale. Adding service volume does not require the duplication of costs and services for administrative and other support in place in Pasco County. Gulfside had a loss in fiscal year 2015 due to several significant non-recurring expenses. Gulfside’s projected budget for the 2016 fiscal year included a profit of $337,000, and Gulfside for the first four months of the new fiscal year was ahead of budget. The 2016 fiscal year budget did not include those items which Gulfside had identified as non-recurring, and yet they out-performed that conservative budget, corroborating that these were non-recurring expenses, and that Gulfside will be more profitable than projected in the 2016 fiscal year budget. Gulfside had a one-year loss for the 2015 fiscal year, but in that year, it also acquired a significant asset with the purchase of its corporate center office. Gulfside also maintained a good cash position and had significant additional credit available should it have needed to draw on those resources. LifePath’s Position vis-à-vis Competition Due to LifePath’s growth and its penetration rate within Service Area 6A, there has not been a need established by AHCA for another hospice in Hillsborough County until recently. The events leading to the newly established need are partially of LifePath’s own making, to wit: In May 2013, the Centers for Medicare and Medicaid Services (“CMS”) announced a decision to eliminate two categories of diagnosis often used for hospice care–“debility, undefined” and “failure to thrive.” The initial pronouncement from CMS indicated the change would take effect in approximately October 2013. LifePath decided to immediately stop accepting patients with those diagnoses so as to be in compliance with the new federal regulations when they took effect. LifePath also informed all its referring partners, physicians, hospitals, discharge planners, etc., that it would not be taking those types of patients any longer. Then CMS decided to delay implementation of the new policies for a year. By then, LifePath had already taken actions resulting in the loss of some 700 potential admissions. When AHCA did its hospice need calculations shortly thereafter, lo and behold, there was a “shortage” of some 700 cases in the use rate portion of the need calculation formula. As a result, AHCA determined there was a need for one additional hospice provider in Service Area 6A. LifePath had been hoisted on its own petard. LifePath does not challenge the Agency’s fixed need calculation or that another hospice should be approved for Hillsborough County Service Area 6A. Rather, LifePath is desirous that only the hospice with least potential for negative impact on LifePath should be approved. Based on the preponderance of evidence, West Florida would have the most negative impact on LifePath. Gulfside, due to its lower census development, would have the least impact. However, as Seasons would be more likely to completely meet the need projected by AHCA and would impact LifePath less than would West Florida, its proposal is the most acceptable. IV. Statutory and Rule Review Criteria The parties stipulate that: (1) All three applicants’ letters of intent and CON applications were timely and properly filed with required fees; (2) AHCA duly noticed its preliminary intent to approve West Florida’s CON application and to deny Seasons and Gulfside; (3) Seasons, Gulfside and LifePath timely filed Petitions for Formal Administrative Hearings challenging AHCA’s preliminary decision; and (4) Each application contains the minimum application content prescribed by sections 408.037 and 408.039, Florida Statutes. Also, Schedules A, D-1, and 10 in each CON application are acceptable and reasonable. Section 408.035(1) Criteria Stipulations (1)(a) “The need for the health care facilities and health services being proposed.”– -There is a need for one additional hospice program in Service Area 6A. (1)(b) “The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.”- –A consideration of this criterion supports the need for one new hospice program in the service area. (1)(d) “The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.”– -Each applicant has adequately projected the availability of personnel. Each party’s Schedule 6 and staffing projections are reasonable. Each party’s audited financial statements present an adequate financial condition. (1)(f) “The immediate and long-term financial feasibility of the proposal.”– -Schedules 1, 2, and 3 in each application are reasonable and indicate that each applicant’s proposal is financially feasible in the short term and long term. (1)(h) –“The costs and methods of the proposed construction, including the costs and methods of energy provision and availability of alternative, less costly, or more efficient methods of construction.” - This criterion is not applicable. Florida Administrative Code Rule 59C-1.030 Stipulations: (2)(d) – “In determining the extent to which a proposed service will be accessible, the following will be considered: . . . The performance of the applicant in meeting any applicable Federal regulations.”- –This criterion would support approval of any of the three applicants. Florida Administrative Code Rule 59C-1.0355 Stipulations (6)“An applicant for a new hospice program shall provide a detailed program description in its certificate of need application . . . .”– -Each application contained adequate evidence regarding the applicants’ proposals. Factors Mitigating Against Approval of West Florida West Florida's proposal to establish a hospital-based hospice program in Service Area 6A materially differs from Seasons’ and Gulfside's proposals seeking to establish community- based hospice programs in the service area. There are key differences between a freestanding or community-based hospice, on the one hand, and a hospital-based hospice, on the other. Most significantly, in contrast to a community-based hospice, a hospital-based hospice has ready access to a patient population (i.e., acute care patients at its sponsoring hospital) from which it may receive referrals. Further, a hospital-based hospice primarily serves patients discharged from its sponsoring hospital and not the community at large, thereby creating a silo of care in which patients are funneled from the sponsoring hospital to the affiliated hospice. Nationally, for the period 2010 through 2014, hospital-based hospice programs obtained approximately 71 percent of their admissions from hospitals within their own health system and only six percent of admissions from out-of- system hospitals. Further, it is possible for a hospital-based hospice program to quickly obtain a large volume of admissions by virtue of its relationship with its sponsoring hospital. The census development for a community-based hospice program is more gradual. Hospital-based hospices do not tend to serve the broader community; once they have captured all of the admissions coming out of their own hospital or health system, they cease to continue to achieve significant market share growth. Moreover, hospital-based hospices tend to have shorter average lengths of stay and provide higher levels of inpatient care than community-based hospices because they tend to treat patients with a higher acuity and have easy access to inpatient beds where they can provide inpatient hospice care. Medicare reimbursement for general inpatient care is significantly higher than for some other types of hospice care. To the extent that a hospice provider provides more inpatient care, they will experience higher revenues. This would result in a concomitant reduction in revenues for a competing hospice in the same service area. Approximately 36 percent of patients discharged from an acute care hospital in Hillsborough County and admitted to a hospice program are discharged from one of West Florida's sponsoring hospitals. In 2014, approximately 46 percent of LifePath's admissions were referred from acute care hospitals. Accordingly, even if West Florida made no effort to obtain referrals to its program from sources other than its affiliate organizations, approximately 16.6 percent of LifePath's admissions could be at risk if West Florida's proposed project is approved. Mr. Michael Schultz, the CEO of Florida Hospital's West Florida Region, testified that the goal of Tampa General and Florida Hospital is to manage a patient's entire episode of care and that if West Florida's application were approved, both hospital organizations would "absolutely" prefer to have West Florida provide hospice care to patients discharged from its hospitals. LifePath's projection that it would lose 20 percent of its admissions if West Florida's application was approved is reasonable. Mr. Burkhart discussed West Florida’s desire to develop a “covered lives” strategy or network, where the hospital system can control how the dollars are spent and how the care is delivered. West Florida applied for a hospice CON for two reasons: 1) AHCA had published need; and 2) because “we wish to have more control over a piece of the hospice continuum so that when we’re doing things like narrow networks, we have that in our portfolio under our control.” Tr., p. 99. In a covered lives network, a hospice patient would pay less if they went to a West Florida affiliated hospice, and more if they went to Lifepath or another out-of-network hospice. West Florida plans to open satellite hospice offices in Tampa General and in the two Florida Hospitals located in Hillsborough County. There was no mention of the desire or possibility of opening satellite hospice offices in any of the non-West Florida affiliated hospitals located in Hillsborough County. From a practical perspective, it seems unlikely that competing hospital systems would welcome such involvement by a competitor. Seasons Seasons is the only applicant without a current connection to the healthcare community in Hillsborough County. It has, however, some experience in other Florida markets. Fewer of Seasons’ programmatic proposals are directly tied to a Condition of CON approval, but the programs are nonetheless generally universal in Seasons HPC operations. Gulfside Service Area 6A has a sizeable Hispanic population, but Gulfside has very limited experience in treating Hispanics. In fact, only 3.3 percent of its recent admissions are Hispanic. Gulfside’s COO did not know how many, if any, of Gulfside’s existing staff was bilingual. Today, Gulfside relies on interpreters who are accessed through a language line to communicate with Hispanic patients and family members. Since Gulfside plans to utilize existing staff to serve Hillsborough County, it will need to continue to rely upon interpreters to communicate with Hispanics in that county. To the extent the Hispanic population in Hillsborough County is underserved, or there is a need to ensure that these patients have a choice of hospice providers that are committed to meeting their needs, Seasons demonstrated far more experience and ability than Gulfside. Seasons projected 516 admissions in year two while Gulfside projected 276 admissions. Seasons has reasonably projected to achieve 240 more admissions in year 2 than Gulfside and thus will do a better job in meeting the unmet need. West Florida also projects more admissions than Gulfside. Ultimate Findings of Fact Each of the applicants, as advertised, could provide quality hospice services to the residents of AHCA Service Area 6A/Hillsborough County. The proposal by West Florida would be more likely to serve its own hospital patients than the community at large. This would have the effect of less penetration by West Florida in the service area as a whole. It would also likely result in West Florida retaining more of the most critically ill hospice patients (i.e., those with shorter lengths of stay), thereby benefitting from the new reimbursement rules to the exclusion of the competing hospice. Gulfside would be able to commence operations in Hillsborough County more quickly than Seasons or West Florida. It has connections with other healthcare providers in Hillsborough County and could easily transition to that geographic area. However, it proposes less growth and coverage than either Seasons or West Florida, thus will less likely meet the need which currently exists. Seasons has the financial and operational wherewithal to be successful in Hillsborough County. It has more experience (and success) in starting a new hospice than the other applicants. Its programs are well-established and conducted by experts in their fields. Seasons would meet the need for a new hospice provider in Service Area 6A better than the other applicants. Upon consideration of all the facts in this case, Seasons’ application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Seasons Hospice and Palliative Care of Tampa, LLC’s, CON No. 10298 and denying West Florida Health, Inc.’s, CON No. 10302 and Gulfside Hospice & Palliative Care of Tampa, LLC’s, CON No. 10294. DONE AND ENTERED this 21st day of March, 2016, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 2016. COPIES FURNISHED: Stephen K. Boone, Esquire Boone, Boone, Boone and Koda, P.A. 1001 Avenida Del Circo Post Office Box 1596 Venice, Florida 34284 (eServed) Lorraine Marie Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Seann M. Frazier, Esquire Parker, Hudson, Rainer and Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 (eServed) Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC 303 Peachtree Street Northeast, Suite 3600 Atlanta, Georgia 30308 (eServed) Karl David Acuff, Esquire Law Office of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 (eServed) Stephen C. Emmanuel, Esquire Michael J. Glazer, Esquire Ausley & McMullen 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed)
