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 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 Florida Administrative Code Rule 59C-1.0355(4)(d)3. is an invalid exercise of delegated legislative authority?
Findings Of Fact Background This is a challenge to the facial validity of the 48-hour rule. It is not a challenge to the 48-hour rule as applied.2 Nonetheless, the following background provides the context that produced the challenge. See also Findings of Fact 14-16. LifePath, Suncoast, and Palm Coast (or related entities), as well as the Agency, are parties in pending proceedings at the Division of Administrative Hearings (DOAH) involving Palm Coast's (or related entities) challenges to the Agency's preliminary determinations to deny CON applications (hospice) filed by Palm Coast (or related entities). These cases have been abated pending the outcome of this proceeding. In each proceeding, Palm Coast (or related entities) contends that a "special circumstance" exists under the 48-hour rule to justify approval of each CON application. Moreover, in support of its position, Palm Coast (or related entities) relies, in part, on data compiled by LifePath and Suncoast. It is the use of this data, in light of the 48-hour rule and interpretation thereof, that caused LifePath and Suncoast to file the rule challenges, notwithstanding that the Agency has not definitively interpreted the 48-hour rule. Parties The Agency administers the CON program for the establishment of hospice services and is also is responsible for the promulgation of rules pertaining to uniform need methodologies, including hospice services. See generally §§ 408.034(3) and (6) and 408.043(2), Fla. Stat.; Ch. 400, Part IV, Fla. Stat. Suncoast is a not-for-profit corporation operating a community-based hospice program providing hospice and other related services in Pinellas County, Florida, Hospice Service Area 5B. Suncoast has provided a broad range of hospice services to residents of Pinellas County since 1977. Suncoast has implemented an electronic medical records system and has developed a proprietary information management software system known as Suncoast Solutions. LifePath is a not-for-profit corporation operating a community-based hospice program providing hospice services in Hillsborough, Polk, Highlands, and Hardee Counties, Hospice Service Areas 6A and 6B. LifePath has provided a broad range of hospice services for the past 25 years. Palm Coast is a not-for-profit corporation currently operating licensed hospice programs in Daytona Beach, Florida, Hospice Service Area 4B and in Dade/Monroe Counties, Hospice Service Area 11. Palm Coast, as well as other related entities such as Odyssey Healthcare of Pinellas County, Inc., e.g., CON application No. 9984 filed in 2007, for Hospice Service Area 5B, has filed several CON applications to provide hospice services. It is also a party in pending proceedings before DOAH, challenging the Agency's preliminary decisions to deny the respective applications. Palm Coast's sole member is Odyssey Healthcare Holding Company, Inc., which is a wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey). (Palm Coast and Odyssey shall be referred to as Palm Coast unless otherwise stated.) Standing Petitioners provide hospice services in Florida and have not applied for a CON to provide hospice services outside their current service areas. In the absence of a numeric need,3 an applicant for a hospice CON is afforded the opportunity to demonstrate a need for a new hospice program by proving "special circumstances." These include circumstances described in the 48-hour rule. The applicant must document that "there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested)."4 The parties have cited no law that requires an existing hospice provider to maintain records documenting when a person is referred to a hospice program. Public documents are not available that may otherwise provide information regarding when a person is referred to a hospice program.5 Existing providers do not uniformly maintain data that reflects the length of time between when a person is referred to and later admitted to a hospice program. By rule, existing licensed hospice providers in Florida are required to report admissions data every six months to the Agency. The Agency uses the information to calculate numeric need under the rule methodology. Petitioners keep records indicating, for their record keeping purposes, e.g., when a person contacts the hospice program and when the person is admitted. Petitioners use software to assimilate this type of information. Petitioners also maintain patient records that contain this type of information. However, this information is not specifically gathered and maintained for the purpose of determining when a person is actually "referred" to a hospice program and later "admitted" and whether "persons" are admitted within 48 hours from being referred. During discovery in pending CON proceedings following preliminary agency action, Petitioners produced information, related to this record, to Palm Coast or related entities. Palm Coast or related entities have used this information in their CON applications to justify a "special circumstance" under the 48-hour rule. See generally Pet 6, 17, 17A and PC 75-78. See also T 987-995. It is a fair inference that Palm Coast or related entities have and will use this information in CON application cases pending at DOAH. See generally Palm Coast's February 14, 2008, Request for Judicial Notice, items 1-18. It is the use of the information by Palm Coast or related entities, coupled with Palm Coast's or related entities interpretation of the 48-hour rule that caused Petitioners to file the rule challenges in this proceeding. LifePath and Suncoast are regulated by and subject to the provisions of Rule 59C-1.0355. See generally Pet 30 at 2, item 2. The 48-hour rule is a CON application criterion, a planning standard, that is not implicated unless and until an applicant relies on this provision in its hospice CON application and uses data provided by, e.g., existing providers such as Petitioners. Subject to balancing applicable statutory and rule CON criteria, application of the 48-hour rule may provide an applicant with a ground for approval of its CON application by indicating a need for a new hospice program. This may occur either leading up to the Agency's issuance of its SAAR, see Section 408.039(4)(b), Florida Statutes, stating the Agency's preliminary action to approve a CON application, or ultimately with the entry of a final order following a proceeding conducted pursuant to Section 120.57(1), Florida Statutes. This information may also be considered during a public hearing if the Agency affords one. § 408.039(3)(b), Fla. Stat. Existing hospice providers, such as LifePath and Suncoast, may be substantially affected by the Agency's consideration of this information, especially if the Agency preliminarily concludes (in the SAAR) that a CON application should be approved based in part on application of the 48-hour rule. At that point, existing hospice providers have the right to initiate an administrative hearing upon a showing that its established program will be substantially affected by the issuance of the CON. See § 408.039(5)(c), Fla. Stat. Existing providers may also intervene in ongoing proceedings initiated by a denied applicant. Id. Petitioners have proven that they are substantially affected by the application of the 48-hour rule. Rule 59C-1.035(4) Prior to the Agency's adoption of Rule 59C-1.0355 in 1995, the Agency adopted Rule 59C-1.035, which included, in material part, a numeric need formula. In a prior rule challenge proceeding, it was alleged that Rule 59C-1.035(4) and in particular the numeric need formula was invalid. Paragraph (4)(e) provided: (e) Approval Under Special Circumstances. In the absence of need identified in paragraph (4)(a), the applicant must provide evidence that residents of the proposed service area are being denied access to hospice services. Such evidence must demonstrate that existing hospices are not serving the persons the applicant proposes to serve and are not implementing plans to serve those persons. This evidence shall include at least one of the following: Waiting lists for licensed hospice programs whose service areas include the proposed service area. Evidence that a specifically terminally ill population is not being served. Evidence that a county or counties within the service area of a licensed hospice program are not being served. Rule 59C-1.035(4), including paragraphs (4)(e)1.-3., was determined to be invalid. Catholic Hospice of Broward, Inc. v. Agency for Health Care Administration, Case No. 94-4453RX, 1994 Fla. Div. Admin. Hear. LEXIS 5943 (DOAH Oct. 14, 1994), appeal dismissed, No. 1D94-3742 (Fla. 1st DCA Jan. 26, 1995). However, other than quoting from paragraph (4)(e) because it was included as part of the rule, there was no specific finding or conclusion regarding the validity of paragraphs (4)(e)1.-3. The successor rule, Rule 59C-1.0355(4)(d)1.-3., changed the preface language and substantially retained paragraphs (4)(e)2. and 3., now paragraphs (4)(d)1.-2., but omitted paragraph(4)(e)1. (waiting lists) and added paragraph(4)(d)3. (the 48-hour rule). Rule 59C-1.0355(4)(d)1.-3. Elfie Stamm has been employed by the Agency in different capacities. Material here, Ms. Stamm was the health services and facilities consultant supervisor for CON and budget review from July 1985 through June 1997. Since 1981, Ms. Stamm has had responsibility within the Agency for rule development. In and around 1994 and prior to the former hospice rule being invalidated, a work group was created for the purpose of developing a new hospice rule. Input was requested from the work group. Various hospice providers throughout the state participated in the rule development process. It appears that there was an attempt to replace the waiting list standard in the prior rule with the 48-hour standard. (There had been general objections made to the waiting list standard in this and other Agency rules.) The language for the 48-hour rule apparently came from the work group, rather than from Agency staff, although there is no evidence indicating which person or persons suggested the language. The Agency kept minutes of a meeting conducted on June 30, 1994, to discuss the proposed hospice rule, including the 48-hour rule. The minutes were kept to record any criticisms or comments regarding the proposed hospice rule. The minutes of a rule workshop "only addresses issues where people have concerns and varying opinions." The record does not reveal that any adverse comments were made regarding the 48-hour rule. In 1995, the Agency, adopted Rule 59C-1.0355, including Rule 59C-1.0355(4)(d)1.-3. that provides: (d) Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: That a specific terminally ill population is not being served. That a county or counties within the service area of a licensed hospice program are not being served. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.6 The 48-hour rule, in its present iteration at issue in this proceeding, has been a final rule since 1995.7 The Agency's hospice need methodology is set forth in Rule 59C-1.0355(4), which is entitled "Criteria for Determination of Need for a New Hospice Program." Rule 59C-1.0355(4) is comprised of four paragraphs, (4)(a) through (4)(e). Paragraph (4)(a) sets forth the process for the Agency's calculations of a numeric fixed need pool for a new hospice program. Paragraph (4)(b) provides that the calculation of a numeric need under paragraph (4)(a) will not normally result in approval of a new hospice program unless each hospice program in the service area in question has been licensed and operational for at least two years as of three weeks prior to publication of the fixed need pool. Paragraph (4)(c) similarly states that the calculation of a numeric need under paragraph (4)(a) will "not normally" result in approval of a new hospice program for any service area that has an approved but not yet licensed hospice program. Paragraph (4)(d) of the need methodology sets forth the three "special circumstances" quoted above. Paragraph (4)(e) sets forth preferences that may be applicable to a CON application for a new hospice program. The purpose of the 48-hour rule is to establish a standard by which the Agency may determine whether there is a timeliness of access issue that would justify approval of a new hospice program despite a zero fixed need pool calculation. Under the hospice need methodology, "special circumstances" are distinguishable from "not normal" circumstances, in part, because the three "special circumstances" are comprised of three delineated criteria rather than generally referencing what has been characterized as "free form" need arguments. Also, "not normal" circumstances may be presented when the Agency's numeric fixed need pool calculations produces a positive numeric need. Once an applicant demonstrates at least one "special circumstance" in accordance with Rule 59C-1.0355(4)(d)1.-3., the applicant may then raise additional arguments in support of need, which may be generally classified as "not normal" or as additional circumstances. Although the 48-hour rule has existed since 1995, it has rarely been invoked as a basis for demonstrating need by a CON applicant seeking approval of a new hospice program. In this light, the Agency has rarely been called upon to interpret and apply the 48-hour rule. The Agency recently approved a CON application filed in 2003 by Hernando-Pasco Hospice to establish a new hospice program in Citrus County (CON application No. 9678). The application was based, in part, on the 48-hour rule. In its SAAR, the Agency mentions that the applicant presented two letters of support, stating that some admissions to hospice were occurring more than 48 hours after referral. The number of patients was not quantified. There was no challenge to the Agency's preliminary decision. The Agency's decision does not provide any useful guidance with respect to the Agency's interpretation of the 48-hour rule. The Challenges Petitioners allege that the 48-hour rule is an invalid exercise of delegated legislative authority because the terms "referred" and "persons" are impermissibly vague and vest unbridled discretion with the Agency. For example, Petitioners point out that the term "referred" is not defined by statute or rule and contend it is not a term of art within the hospice industry. As a result, Petitioners assert the starting point for the 48-hour period cannot be determined from the face of the rule. Petitioners also contend that the 48-hour rule is arbitrary and capricious because the language, "excluding cases where a later admission date has been requested" (the parenthetical), is the only exception that may be considered when determining whether there has been compliance with the subsection, when, in fact, there are "other facts and circumstances beyond the control of the hospice provider that may result in delay in admission of a hospice patient." Petitioners also contend that the use of a 48-hour time period for assessing the need for a new hospice provider in a service area notwithstanding the Agency calculation of a zero numeric need is arbitrary and capricious. Finally, Petitioners allege that the 48-hour rule contravenes the specific provisions of Section 408.043(2), Florida Statutes, which is one of the laws it implements. Specifically, Petitioners further allege that "[b]ecause of its vagueness, its lack of adequate standards, its vesting of unbridled discretion with the Agency, and its arbitrary and capricious nature [the 48-hour rule] fails to establish any meaningful measure of the 'need for and availability of hospices in the community,' as required by [S]ection 408.043(2), Florida Statutes, and in violation of Section 120.52(8)(c), Florida Statutes (2007)." Joint Prehearing Stipulation at 2-4. The Agency's and Palm Coast's Positions The Agency and Palm Coast contend that Petitioners do not have standing to challenge the 48-hour rule, but otherwise assert that the 48-hour rule is not invalid. In part, Palm Coast and the Agency contend that there is a common and ordinary meaning of the term "referred," which is "that point in time when a specific patient or family member on behalf of a patient or provider contacts a hospice provider seeking to access hospice services. Once a patient, patient family member on behalf of [a] patient, or provider contact [sic] a hospice provider seeking to access services, the 48 hour 'clock' should begin to run." See Joint Prehearing Stipulation at 6; AHCA/Palm Coast PFO at paragraph 79. With respect to the term "persons," Palm Coast and the Agency suggest that whether there are a sufficient number of "persons" that fit within the special circumstance "is a fact-based inquiry, which should be evaluated based on a totality of the circumstances." The Agency and Palm Coast contend that circumstances other than as stated in the parenthetical may be considered. Rule 59C-1.0355(4)(d)3. and Specific Terms Referred The term "referred" is not defined either by AHCA rule, in Chapter 400, Part IV, Florida Statutes, entitled "Hospices," or in Chapter 408, Part I, Florida Statutes, entitled "Health Facility and Services Planning." The terms "referred" or "referral" are not defined in any Agency final order or written policy. No definition of "referred" appears in at least three dictionaries, Webster's New World College Dictionary (4th ed. 2005) at 1203, Webster's II New College Dictionary (1999) at 931, and Webster's Ninth New Collegiate Dictionary (1985) at 989, although "refer" is defined, id. For example, "refer" means, in part "[t]o direct to a source for help or information." Webster's II New College Dictionary (1999) at 931. The term "referral," as a noun, means: "1 a referring or being referred, as for professional service, etc. 2 a person who is referred or directed to another person, an agency, etc." Webster's New World College Dictionary (4th ed. 2005) at 1204. Referral also means: "The practice of sending a patient to another practitioner or specialty program for consultation or service. Such a practice involves a delegation of responsibility for patient care, which should be followed up to ensure satisfactory care." Taber's Cyclopedic Medical Dictionary at 1843 (19th ed.). Pet 18A. Pursuant to the Patient Self-Referral Act of 1992, "'[r]eferral' means any referral of a patient by a health care provider for health care services, including, without limitation: 1. The forwarding of a patient by a health care provider to another health care provider or to an entity which provides or supplies designated health services or any other health care item or service; or 2. The request or establishment of a plan of care by a health care provider, which includes the provision of designated health services or other health care item or service." § 456.053(3)(o)1.-2., Fla. Stat. Essentially, this Act seeks to avoid potential conflicts of interest with respect to referral of patients for health care services. In the absence of any authoritative definition of "referred," it is appropriate to determine whether the word has a definite meaning to the class of persons within the 48-hour rule. It is also appropriate to consider the Agency's interpretation of the 48-hour rule. As noted, hospice services are required to be available to all terminally ill patients and their families. Under the 48-hour rule, a CON applicant has the opportunity to prove that persons are being denied timely access to hospice services after 48 hours elapses from when they have been referred and they have not been admitted, absent some a reasonable justification. The issue is what elements are necessary for a person to be deemed "referred" and are those elements commonly understood well enough to enable the 48-hour rule to withstand a challenge for vagueness. If a person calls a hospice organization and inquires about the availability of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate for an elderly parent in need of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill, and further requests hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill based on a prognosis by a licensed physician under Chapters 458 or 459, Florida Statutes, and further requests hospice services, does this call start the 48-hour period? Does eligibility for hospice services have a bearing on when a person is referred? If so, what factor(s) constitute eligibility? Petitioners contend the term "referred," as used in the 48-hour rule, can not be defined with any precision; hence the term is vague.8 Petitioners describe "referred" and "referral," for operational purposes, but not with respect to how the term "referred" is used in the 48-hour rule. Agency experts define the term differently, although none suggest the term is vague. Palm Coast offers a definition of "referred" or "referral" as part of its standard of admitting patients within three hours after referral. But, Palm Coast has a more generic and broader definition for the terms when used in the 48-hour rule. It is determined that "referred" can be defined with some precision and is not vague. But, the various positions and thought processes of the parties are described below and help in framing the controversy for resolution. LifePath and Suncoast Over the years, LifePath developed an administrative/operational manual pertaining to policies and procedures. One such policy is the "referral/intake procedure" that is the subject of a two page written policy, PC 55, revised March 2006. LifePath does not have a written definition of the terms inquiry or referral. LifePath does not believe it is reasonable to define referral as the point in time when a patient, a patient family member, or a physician requests hospice services on behalf of a patient. It is too general. In and around March 2006, LifePath considered a referral to occur when a first contact to LifePath was made by a person requesting hospice services. LifePath used the term referred "to anybody requesting services as a referral source." The admissions staff was directed to gather from the referral source, physician, and/or family any information needed to complete the patient record in the Patient Information System, and contact the patient/family on the same day of referral if available to discuss Lifepath hospice services. Sometime after December 2006, and the final hearing that was held in the Marion County hospice case, LifePath began revising its referral and intake procedure. According to LifePath, its process did not change, only its manner of characterizing certain terms, such as referral. At this time, LifePath wanted to track more precisely different occurrences within LifePath's process, including providing a more accurate label for referral as a request for assessment (RFA) rather than a referral. For LifePath, a referral and a RFA are not synonymous. A RFA is the first contact with the hospice program, which enables staff to follow- up with the prospective patient. A referral is a written physician's order for admission. At the same time, it had come to LifePath's attention that hospice providers (Palm Coast) defined referral differently. It became clear to LifePath that "Palm Coast had a very different definition of referral than [LifePath] did at that particular time. [LifePath] wanted to be able to clearly track each event during that time process so that [LifePath] would be able to compare with [Palm Coast's] definition of referral at that time." Stated somewhat differently, LifePath wanted to create a process that would capture several events (e.g., dates and times) consistently and measurable in the intake process rather than comb through paper charts to verify what they were doing. In April 2007, LifePath made several changes and updates to its written policy/procedure manual and software system, including using the term RFA instead of referral. According to the revised April 2007 policy, "Intake means: the initial demographic and patient condition information that is necessary to initiate the process for 'request for assessment.'" PC 56-57. In summary, for LifePath, a RFA for services is different from and precedes a referral. A RFA occurs when a person makes an initial contact with LifePath inquiring about access to hospice services. At this point LifePath has a name and an action to follow up with, and the information is entered into LifePath's system. The intake process begins. A RFA could be made by a physician in the community who orally or in writing requests LifePath to assess a patient for hospice care and/or issues an assess and admit order if appropriate. A call from a physician requesting LifePath to determine whether a person is appropriate for hospice services begins LifePath's RFA process. An RFA could arise when a person calls LifePath and says that their neighbor is really sick and gives LifePath the neighbors name and telephone number. RFA used in the April 2007 policy revision (PC 56) means the same as the term referral as used in the March 2006 policy revision (PC 55), i.e., the same point in time when LifePath received the patient's name and began the intake process and ability to follow up. Again, LifePath's intake process did not change; Lifepath's policies became more specific describing the events that occur during the entire intake process. According to LifePath, LifePath's revised policy of April 2007 is not reflective of LifePath's interpretation of the 48-hour rule. LifePath's revised policy "outlines the process in the organization in which [Lifepath] begin the intake process and how [LifePath follows] up and then certain moments in time within that process that [LifePath tracks] and monitor[s] as an organization." The April 2007 revision was followed by a May 2007 revision. LifePath characterized Palm Coast exhibits 55 through 57 as an "interim pilot process" that has been made permanent without any apparent significant changes. LifePath also perceived Palm Coast as defining referral to mean when a physician issues an admission order. As a result, LifePath began capturing data reflecting that moment in time so that the Agency could compare LifePath's data -- an apples-to-apples approach -- with another provider's data based on a definition that equated referral with a physician's order, but not for the purpose of defining what referred means to LifePath under the 48-hour rule. LifePath now considers a referral to occur when a physician issues an order to admit for the purpose of gathering data that is to be used to compare other providers, not for the purpose of applying the 48-hour rule. An assess and admit order in LifePath's view is not a referral until LifePath assesses the patient, obtains consent of care, determines that the patient is appropriate for hospice services, receives certification, and receives an order to admit the patient at that time. The RFA process is completed when either the patient is admitted to the program or it is determined that the patient cannot be admitted to the program. LifePath will admit a patient in lieu of having an admitting order when LifePath receives a verbal order to admit the patient from a physician. The verbal order for admission is a referral. LifePath admits at least 75 percent of its patients within 48 hours of the RFA. However, LifePath gave several reasons outside of a hospice program's control that would delay admission greater than 48 hours from the RFA. LifePath believes that the Agency's rule is a good rule, but that the language has been taken out of context and used inappropriately. Like LifePath, Suncoast's interest in the 48-hour rule was stimulated when Palm Coast filed two CON applications requesting approval to provide hospice services in Pinellas County and both applications claim a need for an additional hospice program based, in part, on the 48-hour rule. Suncoast was concerned with the manner in which referral was being used by Palm Coast in light of data provided by Suncoast and further believes that the 48-hour rule is being manipulated by Palm Coast. Suncoast uses an elaborate software product that uses terms such as referral. Suncoast does not have a formal policy definition of referral. Suncoast believes that there are differing definitions of referral among hospice programs. Suncoast filed its rule challenge because according to Suncoast the 48-hour rule is nonspecific; because there is no commonly understood definition of referral in the hospice rule or in the Agency that Suncoast and other hospice providers can depend on. Given the lack of a specific definition, Suncoast and others are unable to determine when the 48-hour clock begins. As used in its business and not for the purpose of defining the term in the 48-hour rule, Suncoast defines referral to mean "that first contact with [Suncoast's] program where [Suncoast gets] a name and [Suncoast gets] other information about the client so that [Suncoast] can go see them." This definition is not limited Medicare reimbursed hospice services. Inquiry and referral are the starting points. But, Suncoast states that there is no consistent definition of referral across the hospice industry. Suncoast also views a referral and an admission as "processes," "not really events." Sometimes the process takes a period of weeks to evolve with many variants, e.g., eligibility, consent, etc. Palm Coast In this proceeding, Interrogatories were answered on behalf of Hospice of the Palm Coast - Daytona and by Hospice of the Palm Coast - Waterford at Blue Lagoon with respect to the referral, intake, and admission of patients for hospice services to such facilities. Several terms are defined. "Referral" is an industry term, referring to contact by an individual or entity including but not limited to a patient, family member on behalf of a patient, HCS, POA, guardian, ALF, nursing home, or hospital seeking to access hospice services. "Referred" is an industry term, having a plain and ordinary meaning within the hospice field which generally describes when a patient, patient family member or personal representative, or provider contacts a hospice program seeking to access hospice services. "Intake" [] a general term of art describing the process from referral to admission. Admission is a general term of art describing that point in time when a patient meets all eligibility requirements including clinical requirements for hospice services and is admitted to a hospice program. [Assessment is t]he process by which patients are evaluated regarding clinical appropriateness for hospice services including eligibility requirements as set forth by state regulation, Medicare, Medicaid or other third party payors. [First Contact and initial contact, a]s it relates to referral, intake, and admission of patients, are defined above as referral and referred. For Palm Coast's purposes, a referral occurs when someone, e.g., a physician, discharge planner, family or a friend, contacts the hospice agency seeking hospice services. If the first contact comes from a physician, Palm Coast seeks that physician's approval to admit the patient if the patient is eligible or qualifies for hospice. For Palm Coast, it is typical to obtain a physician's written order for evaluation and admission before the patient is evaluated by the hospice provider. If a physician calls with a referral of a patient, the call goes to the admission coordinator. Calls from patients or family of a hospice patient would be routed into the clinical division. A referral does not include contacting a hospice requesting information where a chemotherapy wig or a hospital bed could be purchased. For Palm Coast, the admissions coordinator determines when an inquiry is an inquiry only or is a referral. The phone call may turn into a referral when the caller is asking for hospice services to be provided or a family member or to a patient who is at their end of life as opposed to a general request for information about hospice services. But, Palm Coast does not have written criteria for use by the admissions coordinator in determining whether a phone call is an inquiry or referral, or when an inquiry becomes a referral. Odyssey also does not have a written definition of referral, although it is a term used in policies and procedures. A referral results when they have a patient's name and a physician's name and someone is calling for hospice services. Ms. Ventre states that order and referral are not interchangeable. A physician's order is not a referral. For the purpose of describing Palm Coast's hospice operations and referring to page four of the "referral process" page within Palm Coast's Admission and Patient/Family Rights Policies, a referral begins when a written physician's order is received by the hospice program. Receipt of a physician's written order and referral are synonymous regarding the three- hour standard. Receipt of a telephone call from a potential patient does not qualify as a referral. It is classified as an inquiry. It is unusual for a patient or a patient's family would make a referral themselves. (Ms. Ventre characterized an inquiry as someone calling for an explanation of hospice services. A phone call could be classified as an inquiry or referral depending on the depth of the call. It may be an inquiry where there is no follow-up.) Palm Coast uses Odysseys service standard providing that all patients are admitted within three hours from a written physician's order to admit -- 24 hours a day, seven days a week. (This three hour standard is one of 14 standards adopted by Palm Coast/Odyssey.) A clinical assessment is performed within this three hour period. For Palm Coast, if it has a written physician's order to admit and if the family is available, Palm Coast believes it can meet the three-hour standard. Palm Coast (and Odyssey) does not track the time between receipt of a physician's order to evaluate and the admission of the patient nor does Odyssey track the time between the receipt of a physician's order to admit and the time the admission of the patient. Palm Coast (and Odyssey) maintains internal mechanisms that are reviewed on a daily basis to evaluate the referral process and if patients are being admitted in a timely fashion. Sometimes the three-hour standard is not met. The most frequent reason is that the patient and/or the family are not available to meet. Another is the time it may take to gather documentation from the referring physician. The Agency Agency experts defined "referred" differently. During the final hearing, Ms. Stamm stated that in order for a person to receive hospice services, the person must be qualified or eligible. Eligibility occurs when a physician certifies that the person has a six months or less (for Medicare) or (pursuant to Florida law) one year or less life expectancy. Ms. Stamm clarified her deposition testimony during the final hearing and stated that a person is referred to a hospice program when a request for hospice services is made to the hospice program by or on behalf of the person, coupled with the physician's written certification. A referral would not occur when, e.g., the person or someone on their behalf simply asks for hospice services without the physician's certification. Ms. Stamm was not aware whether this interpretation reflected the Agency's interpretation. She never thought there was a problem with defining "referred" or that it was an issue, so it was not discussed. Also, Ms. Stamm was not aware of how the Agency has interpreted the 48-hour rule. Mr. Gregg confirmed that there is no written definition of referred, but that it is commonly used in healthcare, i.e., "referral is a mechanism by which a patient is channeled into some specific new or different provider." Having considered his prior deposition testimony, see endnote 9, and in preparation for the final hearing in this proceeding, for Mr. Gregg, the 48 hours starts "[a]t the point of initial contact," "the point when some person representing a potential patient calls a hospice or contacts a hospice and says I believe we have a person who is appropriate for your service." The first contact could be made by a hospital discharge planner or nursing home social worker. Mr. Gregg does not believe that a physician's certification is required to start the 48-hour period or is part of the initial contact.9 Rather, the physician's certification would come at the end of the process, although the "physician is going to be a part of a successful referral." In other words, in order to start the 48-hour period, it would not be necessary for the hospice program to be advised that a patient was terminally ill. The latter determination is required to assess whether "the patient is appropriate and eligible." Generally, Mr. Baehr agrees with Mr. Gregg's view. For Mr. Baehr, there is a transfer of responsibility that occurs when the first contact is made at a point in time when either the patient or a family member or some institution, whether it be an assisted living facility, nursing home, hospital, or a physician, makes a contact with a hospice, and in a sense initiates a process that requires the hospice program to respond and do something so that this process can get underway. Mr. Baehr opines that referral has a common understanding; it is similar to when a patient is provided with a different medical service, whether it be hospice or some other form of healthcare service, from the one they are currently receiving. Mr. Baehr differentiates this scenario from one that occurs when a person merely seeks information about hospice versus someone who is seeking eventual admission to a hospice program. Admitted There is no rule or statute that requires a hospice provider to admit a patient within a certain time period. In Big Bend Hospice, Inc. v. Agency for Health Care Administration, Case No. 01-4415CON, 2002 Fla. Div. Hear. LEXIS 1584 (DOAH Nov. 7, 2002; AHCA April 8, 2003), aff'd, 904 So. 2d 610 (Fla. 1st DCA 2005), a proceeding involving a challenge to a numerical need (under the fixed need pool) for an additional hospice program, it was expressly found: "40. An admission consists of several components: (a) a physician's diagnosis and prognosis of a terminal illness; (b) a patient's expressed request for hospice care; (c) the informed consent of the patient; (d) the provision of information regarding advance directive to the patient; and (e) performance of an initial professional assessment of the patient. At that point, the patient is considered admitted. A patient does not have to sign an election of Medicare benefits form for hospice care prior to being admitted." 2002 Fla. Div. Admin. Hear. LEXIS at *26- 27(emphasis added). See also § 400.6095(2)-(4), Fla. Stat. This finding of fact was adopted by AHCA in its Final Order. A patient cannot be admitted for Medicare reimbursement without a physician's order. In order to be eligible to elect hospice care under Medicare, an individual must be entitled to Part A of Medicare and be certified by their attending physician, if the individual has an attending physician, and the hospice medical director as being terminally ill, i.e., that the individual has a medical prognosis that his or her life expectancy is six months or less if the illness runs its normal course, and consent. 42 C.F.R. §§ 418.3, 418.20(a)- (b), and 418.22(a),(b),(c)(i)-(ii). AHCA has defined the term "admitted" by and through its Final Order in Big Bend Hospice and there is no persuasive evidence in this case to depart from that definition, although the definition of the term was discussed during the hearing. The Agency's definition of "admitted" establishes the outer time limit when the 48-hour period ends for the purpose of the 48-hour rule. Persons The 48-hour rule requires the applicant to indicate the number of persons who are referred but not admitted to hospice within 48 hours of the referral (excluding cases where a later admission is requested). The term "persons" is not defined by AHCA statute or rule. However, the term is generically defined by statute. "The word 'person' includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations." § 1.01(3), Fla. Stat. "The singular includes the plural and vice versa." § 1.01(1), Fla. Stat. The term "persons" used in the 48-hour rule is not vague, ambiguous, or capricious. In context, it refers to individuals who are eligible for hospice services within the meaning of the 48-hour rule as discussed herein and who request hospice services. The Agency has not established by rule or otherwise a specific number of persons that can trigger a special circumstance under the 48-hour rule or the specific duration for counting such persons. The numeric need formula does not encompass every health planning consideration. The need formula is based on general assumptions such as population, projected deaths, projected death rates applying statewide averages, and admissions. The special circumstances set forth in Rule 59C- 1.0355(4)(d) compliment other portions of the rule and the statutory review criteria and allows an applicant to identify factors that may be unique to a particular service area, such as a particular provider not providing timely access to persons needing hospice services or a service area that is rural or urban that affects access. One size may not appropriately fit all. Rather, the term is capable of being applied on a case-by-case basis when (hospice) CON applications are reviewed by the Agency prior to the issuance of the SAAR and thereafter, if necessary, in a de novo proceeding, through and including the issuance of a final order. The Agency's exercise of discretion is not unbridled. Excluding cases where a later admission date has been requested10 The 48-hour rule provides in part: "3. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons." There is some testimony that the parenthetical may be interpreted broadly by the Agency, although Mr. Gregg suggested that the parenthetical was literally limited to when a specific request is made for a later admission date. There are numerous circumstances beyond the control of a hospice that delay an admission other than when a later admission date is requested under the rule. These circumstances do not necessarily indicate an access problem.11 Petitioners provided examples of situations (other than when a later admission date is requested) that may arise when a person would not be admitted with 48 hours after being referred such as when a patient or family is unresponsive to a contact made by the hospice provider; a patient was out of a hospice program's service area when the initial request for hospice services was made and no immediate plans to transfer to the service area; the patient/family/caregiver chose to stay with another benefit, e.g. skilled nursing facility, versus electing their hospice Medicare benefit; a patient residing in a non-contract hospital, e.g., VA Hospital, when the initial request is made and patient admitted to hospice service when the patient is transferred out of that facility into a contract facility, hospice inpatient setting or home; patient meeting the admission criteria at a later date; a delay in obtaining a physician order for assessment; or when a patient is incompetent at the time the initial request to consent for care or other delays in obtaining consent. There are also factors where a referral does not end in an admission. Persons falling in this category would not be counted under the 48-hour rule. The Agency and Palm Coast suggest that the Agency may consider these non-enumerated factors, whereas LifePath and Suncoast suggest the Agency's discretion is limited. Compare Agency/Palm Coast PFO at paragraphs 90-95, and 141 with LifePath/Suncoast PFO at paragraphs 61-67. The persuasive evidence indicates that the Agency should consider these factors. Nevertheless, the plain language of the parenthetical excludes from consideration legitimate circumstances that would reasonably explain a delay in admission other than the affirmative request for a later admission date and, as a result, is unreasonably restrictive. 48 hours Licensed hospice programs are required to provide hospice services to terminally ill patients, 24 hours a day and seven days a week. It is important that terminally ill persons who request hospice services (or if requested on their behalf), receive access to hospice services in a timely fashion. There is evidence that approximately 30 percent of patients that are admitted to hospice die within seven days or less after admission, i.e., an average length of stay of seven days or less. While the opinions of experts conflict, the 48-hour period is a quantifiable standard assuming that there is a precise and reasonable definition of referred and admission. Ultimate Findings of Fact Having considered the entire record in this proceeding, it is determined that the term "referred" is not impermissibly vague or arbitrary or capricious. A person is "referred" to a hospice program when a terminally ill person and/or their legal guardian or other person acting in a representative capacity, e.g., licensed physician or discharge planner, on their behalf, requests hospice services from a licensed hospice program in Florida. This definition presumes that prior to or contemporaneous with the request for hospice services a determination has been made by a physician licensed pursuant to Chapter 458 or Chapter 459, Florida Statutes, that the person is terminally ill, i.e., "that the patient has a medical prognosis that his or her life expectancy is 1 year or less if the illness runs its course." §§ 400.601(10) and 400.6095(2), Fla. Stat. This determination may be made by, e.g., the hospice's medical director, who presumably would be licensed pursuant to one of these statutes. The Agency and Palm Coast implicitly suggest that a referral (pursuant to the 48-hour rule) does not include a determination by a physician that the person is terminally ill. When it comes to "referral" in the generic, non- emergency physician/patient setting, the patient is examined by a physician; the physician determines that the patient needs a further evaluation by a specialist; and the physician refers the patient to the specialist.12 This is usually followed with a written order. The patient, or his or her authorized representative on the patient's behalf, must consent to and request any further examination for the ensuing service to be provided. The point is that the physician makes the referral. In order to apply the plain and commonly understood meaning of the term "referred" in the context of the 48-hour rule, the physician's determination is a critical component of the referral process, coupled with the patient's request and ultimate consent for services. Access to hospice services and the time it takes to deliver the service is of the essence for the prospective hospice patient. Having a written and dated physician certification of terminal illness would likely make recordkeeping easier and more predictable to assist in determining when the 48-hour period starts, in conjunction with the request for services. However, the potential delay in obtaining a written certification from a physician who has determined the patient is terminally ill should not be required to begin the 48-hour period and the referral in light of the purpose of the 48-hour rule. Thus, while a determination of terminal illness is necessary to start the running of the 48 hours under the 48-hour rule, reduction of that determination to writing is not. This definition, coupled with the 48 hour admission requirement and consideration of other factors affecting an admission, provides a sufficient standard for determining whether a person is receiving hospice services in a timely fashion.13 Whether access has been denied to a sufficient number of "persons" under the rule for the purpose of determining whether a special circumstance may justify approval of a hospice CON application in the absence of numeric need can be determined on a case-by-case basis by the Agency in the SAAR or later, if subject to challenge in a Section 150.57(1), Florida Statutes, proceeding in light of the facts presented. See generally Humhosco, Inc. v. Department of Health and Rehabilitative Services, 476 So. 2d 258, 261 (Fla. 1st DCA 1985). The use of the word "persons" in the rule is not vague or arbitrary or capricious. The time period of "48 hours" is not vague or arbitrary or capricious. Given the plight of terminally ill persons needing hospice services, it is not unreasonable for the Agency to have chosen this time period, in conjunction with "referred" and "admitted" as the beginning and stopping points for determining whether access is being afforded on a timely basis. The parenthetical language "(excluding cases where a later admission date has been requested)" is arbitrary and capricious because it precludes consideration of other factors that reasonably demand consideration given the rule's purpose. There is persuasive evidence that persons may not access hospice services (be admitted within 48 hours after being referred) within the 48-hour period based on circumstances that are outside the control of the hospice provider and arguably outside the parenthetical language. To the extent the parenthetical language is construed to limit consideration to one circumstance, the failure to consider other circumstances could unreasonably skew upward or overstate the number of persons that may fit outside the 48-hour period and indicates a lack of timely access when the contrary may be true, having considered the circumstances. The 48-hour rule can remain intact notwithstanding severance of the parenthetical language. The remaining portions of the rule provide an applicant with a viable avenue to demonstrate a lack of timely access based on a special circumstance. Finally, even if the 48-hour rule was not in existence, under applicable statutory and rule criteria, see, e.g., Subsections 408.035(2), Florida Statutes, an applicant may provide evidence that persons are being denied timely access to hospice services in a service area. However, such evidence would not necessarily be classified as a special circumstance unless the evidence fit within Florida Administrative Code Rule 59C-1.0355(4)(d)1. and 2.
The Issue Whether a need exists for an additional hospice in Agency for Health Care Administration service area 1. Whether the certificate of need application of Bay Medical Center to establish the hospice, on balance, meets the criteria for approval.
Findings Of Fact The Agency For Health Care Administration (“AHCA”) is the state agency which administers the certificate of need (“CON”) program for health care facilities and services in the state. AHCA published a need for one additional hospice program in service area 1, in Volume 22, Number 5 of the Florida Administrative Weekly (February 2, 1996). Bay Medical Center (“BMC”), which currently operates a hospice in service area 2A, is the applicant for CON 8377 to establish the additional hospice program in service area 1. Hospice of Northwest Florida, Inc. (“HNWF”) is an existing provider of hospice services in both service areas 1 and 2A. Service area 1 encompasses Escambia, Santa Rosa, Okaloosa, and Walton Counties. Adjacent service area 2A includes Bay, Holmes, Washington, Jackson, Calhoun and Gulf Counties. Hospice care is provided to terminally ill persons, defined as those with a life expectancy of six months or less if their disease runs its normal course. It is palliative and comfort-oriented, rather than curative. Clinical, pschosocial, and spiritual services are provided by an interdisciplinary team, which includes a physician, nurses, social workers, home health aides, chaplains, and bereavement counselors. In addition to paid staff, hospices also use volunteers. Social workers, chaplains, and bereavement counselors work with patients' families for up to a year following death. Services are provided in patients' homes, nursing homes, or acute care hospitals. Hospice care is less expensive than aggressive acute care for the terminally ill. It is estimated that every dollar of hospice care saves a dollar and a half in Florida. Hospice services began in the United States in the 1970’s and were approved for government reimbursement in the 1980’s. Routine home hospice care is reimbursed at a per diem rate, for which the hospice provides care, and pharmaceutical drugs and supplies. Hospices also receive financial support from fund raising activities, and typically provide substantial community services which are otherwise unfunded and not reimbursed. These include community outreach programs in churches and schools, and services to families in which a death was accidental. In 1985, the national hospice penetration rate or P Factor (the percentage of total deaths in which patients received hospice care) was approximately 8 percent. By 1995, the P Factor had increased to 17 percent, with the greatest rate of growth in the most recent five years. In Florida, approximately 29.6 percent of all deaths occur after a person has been admitted to a hospice program. In service area 1, the P Factor is 21 percent. Bay Medical Center BMC is a legislatively - created independent special governmental district, authorized initially to provide health care services to Bay County, but now also to surrounding areas. It operates a 353-bed public, not-for-profit full service hospital in Panama City, Florida, but does not receive tax support. Over 190 physicians staff BMC’s hospital with every specialty, except rheumatology, endocrinology, and neonatology. BMC’s tertiary services include an open heart surgery program. BMC also provides ambulatory or outpatient services. Since 1992, BMC has operated a hospice program in service area 2A, with offices in Panama City (on the campus of the BMC hospital) and in Marianna. The Marianna office opened in February 1997, as a result of the Florida Legislature's 1995 amendment to the enabling legislation allowing BMC to offer services beyond Bay County. The 1995 legislation also expressly authorizes BMC to provide hospice services and to create other organizations to further its mission. The Board of Directors of BMC created the Bay Medical Center Hospice (BMCH). BMCH is governed by a board of directors which is separate and distinct from the board of BMC, although BMC is the entity licensed to operate the hospice program in service area 2A. The BMCH board members live and work in each of the six counties of service area 2A. BMC, which holds the existing license, is the applicant in this proceeding. The board of BMC met on the day that the letter of intent was due, February 19, 1996. A few days prior to the meeting the Chairman of the Board executed the letter of intent, and sent it to a health planning consultant in Tallahassee. After the Board met and passed the resolution authorizing the filing of the letter of intent, the consultant filed the letter of intent with AHCA in Tallahassee. In service area 2A, BMCH has an average daily census of 58-64 patients. BMC projected and HNWF stipulated that BMC can reasonably attain 250 admissions for a total of 12,471 patient days in year one, and 300 admissions for 18,706 patient days in year two of operation in service area 1. BMCH currently advertises its hospice services on television and radio stations, and in newspapers with coverage extending into service area 1. Fund-raising events, including the holiday tree lighting program, are used to market hospice services. Hospice services are also explained in newsletters which reach 27,000 households and all physicians in the area. BMC purchased over 100 sixty-second radio spots, which aired on three stations over a two month period in 1996. The hospice radio spots reached an estimated 87,000 people an average of five times each. BMC estimates a total project cost of $129,591, if CON 8377 is approved, to extend hospice services into service area 1. BMC proposes to condition CON 8377 on the provision of a minimum of 12.8 percent Medicaid and 3.65 percent charity care by the end of the second year of operation, and the care of 7 AIDS patients (with a minimum of 350 total visits) each year. Hospice of Northwest Florida HNWF is an existing provider of hospice services in AHCA service areas 1 and 2A. It is the only licensed hospice in service area 1 and competes with only BMC in 2A. HNWF, organized by hospitals in Pensacola, was issued a CON in December 1982 and a license in 1983, to operate a hospice in Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington and Jackson Counties. The home office of HNWF is located in Pensacola. HNWF admitted its first patients and families in January 1984. In 1987, HNWF opened a branch office in Fort Walton Beach, later apparently consolidated with a Niceville office, to serve Okaloosa and Walton Counties. An additional branch office was opened in Marianna in 1991. An adjunct medical director for the Marianna and Niceville offices was hired in 1996. In December 1995, HNWF received a CON waiver and its license was amended to allow it to operate in the remainder of service area 2A, in Bay, Gulf, and Calhoun Counties. HNWF then opened a branch office in Panama City, in August 1996. HNWF also operates, and is expanding from six to eight beds, a residential facility in Pensacola, to house hospice patients without homes or without at-home caregivers. Prior to opening the Panama City office, HNWF historically served Holmes, Washington, and Jackson Counties, while BMCH served patients in Bay, Gulf, Washington, and Calhoun Counties. From 1993 to the present time, HNWF has increased its contracts or agreements from the Pensacola hospital to all of the hospitals in the service areas, including two military hospitals, from none to virtually all assisted living facilities, and from five to all except two or three nursing homes. HNWF operates an extensive outreach and educational effort, including a monthly half-hour television show, which is estimated to reach over 200,000 people in Escambia and Santa Rosa Counties. Other efforts include radio talk show appearances, speaking engagements reaching over 5,000 people in 1996, and extensive direct physician contact. HNWF also relies on it chaplaincy and bereavement programs to extend information about hospice care, particularly to culturally diverse groups of people. Despite these efforts, the number of hospice patients in service area 1 has remained relatively constant. HNWF served 969 patients in calendar year (CY) 1995, and 963 in CY1996. HNWF contends that its lack of growth is due, in part, to declining referrals from nursing homes despite increased referrals from other sources. HNWF attributes the nursing home decline to government investigations of suspected excessive nursing home reimbursements. There is no waiting list for HNWF's services, and its goal is to admit patients within 24 hours of referral. HNWF criticized BMCH’s outreach efforts as inadequate and misdirected, attracting only “easy” patients, those easily diagnosed as qualified for hospice care by well-informed referral sources. On this basis, HNWF expects BMC to take hospice patients from HNWF and not from any growth in hospice patients. HNWF also expects competition from BMC to adversely affect its ability to provide enhanced and unfunded services, including bereavement services in schools, on military bases, and in work- places, and its ability to operate satellite offices and the residential facility. Revenues from patient care are supplemented by donations and grants. In 1992, HNWF established a foundation to coordinate fund raising efforts. The approval of the BMC application, according to HNWF, will also affect the types of hospice services available in the area. In general, more sophisticated hospice services can be provided by larger hospices, including palliative chemotherapy and radiation. BMC’s expert testified that HNWF will continue to be a large hospice with or without the approval of a CON for BMC, and that the additional program will create additional demand for the service. The parties stipulated that subsections 408.035(1)(m) and (3), Florida Statutes, and Rule 59C-1.0355(7) and (8), Florida Administrative Code, are not applicable to this proceeding. At hearing, the parties also stipulated that BMC's list of capital projects meets the requirements of subsection 408.037(2)(a). Rule 59C-1.0355(4)(a) - Numeric Need; Subsections 408.035(1)(b) - like and existing services; (d) - available alternatives Rule 59C-1.0355, the hospice rule, includes the formula for calculating the numeric need for hospice programs. Numeric need exists if the projected total number of hospice patients in service area one for the planning horizon (1400 for July 1997) minus the actual number of hospice patients in the base year (969 in calendar year 1995) is equal to or greater than 350 (in this case, 431). The statewide P Factor, 29.6 percent, is used in the formula to calculate the ratio of projected hospice patients to projected total deaths. The statewide rate represents the normative minimum applied to each service area by operation of the formula in the rule. In service area 1, the P Factor in the base year was 21 percent. The statewide P Factor is an average of rates for various disease categories and ages. Those rates range from a high of hospice care for 70.9 percent of deaths due to cancer in people 65 and over, to a low of 14.1 percent for people under 65 with all other diseases. BMC cites HNWF's relatively low hospice penetration rate as proof of the need for an additional hospice program to create and accommodate additional potential demand. HNWF asserts, however, that certain local circumstances cause the deviation from the statewide P Factor. HNWF also contends that more people received hospice services than the number used in the formula for the base year. The result, according to HNWF is an excess projected demand for hospice services by the July 1997 planning horizon. The extenuating local circumstances cited by HNWF, are the sizable active duty military population, the strong Medicaid AIDs program, the aggressiveness of home health agencies, the prevalence of cancer centers, and the established practice parameters of medical doctors in the service area. The number of active duty military in service area 1 is 23,162. The number of those who die from terminal illnesses is statistically insignificant, because it is military policy to retire personnel who are diagnosed with terminal illnesses, which enhances death benefits to survivors. BMC's expert confirmed that policy and the improbability of serving military patients, although HNWF has served military base families after active duty casualties. Military families represent some of those served by HNWF in the base year, who are not included in the numeric need formula as hospice admissions. In the numeric need formula, according to BMC's expert, military personnel are included in projected deaths to younger age cohorts from causes other than cancer. Of the 431 projected additional hospice admissions, BMC’s expert calculated that, at most, 3 projected hospice deaths of those result from including the active duty military population. By contrast, HNWF's expert testified that the military population of 23,162 multiplied by the statewide death rate of .008 results in an estimated 186 deaths, or approximately 62 hospice patients. The background information in support of the fixed need pool, prepared by AHCA, shows that AHCA calculates projected hospice patients by age and disease. The actual base year service area non-cancer deaths under 65 (1010) divided by the actual service area total deaths (4562), times total projected deaths (4816) gives the total projected deaths non-cancer under 65 (1066). Of the 1066 deaths, 150 are expected to be hospice patients. It is not reasonable to assume that 186 deaths will occur among active duty military, or that 62 of the 150 non- cancer hospice patients under 65 will be in that group. It is more reasonable to assume, as BMC's expert did and as the state numeric need methodology does, that the age cohort of that group has and will continue to have a significantly lower death rate and lower hospice admissions than the 65 and over population. HNWF's expert health planner was unable to distinguish service area 1 from the rest of the state in terms of the strength of the Medicaid AIDs waiver program, the presence of prisons, the existence of home health agencies, the presence of cancer centers, or physicians' practice patterns. Similarly, BMC's expert found no statistical relationship between home health agency visits and hospice utilization. BMC's expert also noted that some hospices provide services to prisoners. HNWF's expert agreed that there is no prohibition to providing hospice services to prisoners. In some areas of the state, such as Gainesville and Tampa, cancer centers co-exist with high levels of hospice utilization. There was no evidence to distinguish physicians' practice patterns in service area 1 from the areas of the state. The argument that HNWF served more than the reported 969 in the base year, through it AIDs support groups, in schools, and for families in which deaths were accidental also does not distinguish HNWF. The evidence shows that hospices typically provide services to persons other than patients and their families, and benefit in terms of marketing and fund-raising. The incidence of AIDS in service area 1 is below that of the state. That could affect the gap between 21 percent and 29 percent, by approximately 3 or 4 percent. Late referrals to hospice services can adversely affect utilization rates. The federal government program, Restore Trust, initiated a HCFA Inspector General's investigation into charges of waste, fraud, and abuse in nursing homes and home health agencies. The decline in referrals to hospice programs coincided with the investigation, while hospice referrals and admissions in non-nursing home settings increased. There is no evidence, however, that service area 1 nursing homes were subject to more intense scrutiny than any others in the state. In fact, the Executive Director of HNWF testified that the effects of Restore Trust were national. The active duty military population difference of 3 fewer projected hospice deaths, and the 3 or 4 percent gap in the P Factor due to the lower incidence of AIDs are insufficient to explain the gap between P Factors of 21 and 29 percent. BMC's expert's estimate that ninety percent of the gap results from the lower than average P Factor is, at most, reduced to eighty-six percent. From 1994 to 1996, as the hospice utilization statewide reached 27.7 percent, the rate increased from 22 to 27 percent in service area 2A. By contrast, the rate increased from 17 to 22 percent in service area 1. For the six months ending December 31, 1996, the rate in service area 1 declined to 18 percent, while that in service area 2A increased to 24 percent. One of the highest rates in service area 2A is in relatively rural Washington County, in which BMC and HNWF have the greatest overlap in services. HNWF has approximately 60 percent and BMC has 40 percent of the hospice market in Washington County. In western Washington County, hospice rates range from 27 to 100 percent, with the remainder of the county in the 18 to 27 percent range. In service area 2A, there has been a steady increase in hospice admissions for HNWF and BMC, except for a decline at BMC immediately after HNWF opened an office in Panama City. Subsection 408.035(1)(a) - need in relation to district and state health plans; Rule 59C- 1.0355(5) and (4)(e) District health plan allocation factor one favors applicants having hospice services available seven days a week, district-wide for 24 hours a day as needed, regardless of a client’s ability to pay. BMCH currently complies with the requirement in service area 2A and can do so in service area 1. By carefully selecting patients, hiring staff in appropriate locations to serve the patients, and expanding slowly geographically, as HNWF has done, BMC can meet the requirements. Initially, BMC will focus on adjacent Okaloosa and Walton Counties. District allocation factor two, for proposals to add beds or use existing inpatient facilities rather than construct new facilities, is met by BMC. By proposing to contract with existing hospitals and nursing homes, BMC also meets the preference in Rule 59C-1.0355(4)(e)2. State health plan preference one, for applicants who seek Medicare certification, is consistent with BMC’s current and proposed operations. State health plan preference two favors members of the National Hospice Organization ("NHO") and applicants accredited by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO"). BMCH is a member of the NHO. BMC is JCAHO-accredited, after receiving a rating of ninety-six of a possible one hundred in the scoring system in December 1996. Recently, BMCH was separately surveyed by the JCAHO, and received favorable exit comments. BMCH is also annually surveyed by AHCA, which identified no deficiencies in its January 1996 report. BMCH and HNWF each had one complaint regarding practices and procedures in 1996. A BMCH nurse disposed of controlled drugs when no longer needed in the patient's home, without the required signature of the patient's family representative on the disposal record. HNWF received a complaint and disciplined the responsible admitting nurse who failed to convene the appropriate staff to timely prepare an Interdisciplinary Care Plan. Neither incident indicates that the hospices are not providing a high quality of care. It is reasonable to expect BMC hospice to meet the requirements of the preference and to provide appropriate hospice care. See, also, subsection 408.035(1)(b) and (c), on the quality of care of the existing hospice and the applicant’s ability to provide quality of care. In proposing to establish a physical presence in rural, underserved Walton County, BMC meets state preference three and the preference in Rule 59C-1.0355(4)(e)4. State health plan preference four for applicants proposing to meet unmet needs of specific groups, such as children, is consistent with BMC's current and proposed operations. The same preference is also a requirement of Rule 59C-1.0355(4)(e)1. State health plan preference five favors applicants proposing residential services to patients without at-home assistance. BMC proposes to provide caregivers or to use existing inpatient facilities to provide residential services. The proposal is, therefore, also consistent with Rule 59C- 1.0355(4)(e)3 as it relates to those who are without primary caregivers at home or who are homeless. The sixth and final state health plan preference, for hospices proposing to use additional beds in existing facilities rather than new construction, is not applicable to the BMC proposal. On balance, the BMC application meets the preferences in the rule, and in state and district health plans. Subsection 408.035(1)(b) and (1)(d) - availability and quality of like and existing services; other alternatives Alternatives to hospice care include home health, acute, and nursing home care, all of which are available. The state policy, as reflected in numeric need methodology, encourages the use of hospice services until every service area achieves the state norm. Consistent with that policy, theoretically, HNWF could be even more aggressive in marketing and outreach than it has been. Historically, for BMC and HNWF, however, hospice services are more available, more accessible, better utilized, and higher in quality of care in areas in which they compete. Subsection 408.035(1)(c) - economics and improvements of joint, cooperative or shared resources Because BMC operates an existing hospice, it is reasonable to expect economics of scale and improvements based on its experience, if it establishes a second hospice. BMC expects to use existing human resources and billing departments. Subsection 408.035(1)(f) - need for special equipment or services not available in adjoining areas The statutory criterion is inapplicable to the case. Subsection 408.035(1)(g) and (h) - need for research, educational, health professional training BMC's is not a proposal which is intended to assist a research or educational program. In-service and volunteer training programs are proposed for the benefit of its staff and to assure the quality of its own services. Subsection 408.035(1)(h) - available manpower, management personnel; (1)(i) - immediate and long-term financial feasibility of the proposal BMC has over $21 million in cash, and revenues and gains in excess of $4 million for the year ending September 30, 1995. BMC has and continues to generate sufficient funds to provide over $24 million for planned capital projects over the next two years, including $129,591 in costs for the additional hospice program. BMC’s proposal is financially feasible in the short term. HNWF claims that the BMC proposal is not financially feasible in the long term, based on understated salaries, wages, and benefits, travel expenses, depreciation, and interest. Salaries, wages, and benefits are based on the staffing ratios at BMCH, which, according to HNWF, serves a more concentrated population in Panama City. Initially, BMC plans to serve Okaloosa and Walton Counties from a Destin office, with staff appropriately located throughout the areas to timely and efficiently serve patients. BMC plans to hire 6.6 full time equivalent (FTEs) administrative staff and 11.4 FTEs patient care staff. HNWF asserts that BMC will need an additional 1.7 FTEs for nurses, 2.6 for home health aides, and 1 FTE for a social worker. HNWF also questioned the ability of BMC to implement its proposed children's programs without a registered nurse with pediatric experience. HNWF asserted that .4 FTE for a chaplain was inadequate, as is reliance primarily on volunteer chaplains. The adequacy of the proposed staffing is supported by calculating the 50 day average length of stay times the annual volume of 250 patients, times 1.6 (the projected worked hours per patient day), which equals 10.85 FTEs for patient care. BMC's 11.4 FTEs for patient care in year one is a reasonable, conservative complement of staff. In addition, HNWF received 19 percent of its 1996 hours worked from volunteers, and has a history of hiring specialized staff and establishing specialized programs and departments when justified by the demand for those services. For its first seven or eight years, HNWF was well- served by a volunteer medical director. The bereavement coordinator was hired in 1990. The children's bereavement specialist was hired in 1993, when bereavement and social services became separate departments. Travel expenses, projected by BMC, were also criticized by HNWF. HNWF would increase miles for each visit from 13.9, as estimated in BMC’s CON application, to 18.3 miles per visit as experienced by HNWF. One assumption, which invalidates HNWF’s projection of travel distances, is that each separate visit will originate and end at the Destin office, not that BMC staff would make some visits going directly from their residences to the patient's home, or that they would arrange schedules to make several visits without returning to the office between each visit. In addition, BMCH will initially cover two counties rather than the entire service area. As a result of a mathematical error in the BMC CON application, the depreciation expense for year one of operations is $25,578, not $21,962. HNWF's expert's adjustments to interest expenses assumed that any additional expenses would require additional borrowing. BMC, however, has not materially underestimated expenses, considering the $3,616 difference in depreciation. The pro forma is conservatively based on revenues and expenses without reliance on charitable donations, although hospices typically depend on donations to break-even financially. In 1996, HNWF received a total of $339,780 in contributions. To estimate what BMC might expect in District 1, it is reasonable to exclude from HNWF's experience, approximately $80,000 in interest on reserve invested income (used by HNWF in 1996) and $90,000 in grants, since BMC has not applied for any grants. The balance, representing memorials and fund-raising of $240,000 reasonably indicates the level of contributions which a new BMC hospice might expect in service area 1. That level, for BMC, is proportionately half that projected by BMC, or $60,000 to $80,000 in year one, and $130,00 to $185,000 in year two of operations. With a projected loss in income of $28,091 in year one, a projected profit of $74,054 in year two, and considering historical hospice fund-raising, BMC's operation of a hospice in service area 1 is reasonably expected to be financially feasible in the long term. Adverse Impact Subsection 408.035(1)(l) - probable impact on costs, effects of competition. Using BMC's experts' utilization projections for service area 1, HNWF projects that its net operating income will decline from a negative $408,070 to a negative $655,712 in year one, and from a negative $355,404 to a negative $612,696 in year two. Approximately $420,000 in total contributions to HNWF is expected each year, although that number has increased annually since 1993, from 183,750, to $224,415 in 1994, to $282,368 in 1995, and $339,780 in 1996. BMC suggests that the adverse impact analysis should consider HNWF's total operations in service areas 1 and 2A to determine financial feasibility. Health planning experts for both BMC and HNWF acknowledge that there are up to 431 more people available for hospice admissions than are currently receiving hospice services. They also agree that number will increase by approximately 100 a year as the population increases, and that the presence of a new hospice provider will increase hospice penetration rates. In addition, as HNWF's witnesses emphasized, nursing home hospice admissions were depressed temporarily due to a government investigation. BMC’s expert also noted that, as long as available admissions exist, increasing hospice utilization is largely a function of how the hospice delivers its services. For example, the historic requirement that patients have a caregiver at home has adversely affected HNWF’s penetration rate. As recently as November 1996, at least one referral source, Sacred Heart Hospital, in Pensacola was distributing an HNWF brochure which specifically required an eligible hospice patient to have “[a] capable caregiver in the home to meet the patient’s day-to-day basic needs." Essentially, the same requirement is included in a list of admissions criteria on page 49 of BMC's CON application. HNWF and BMC have both changed their policies and now admit patients without caregivers, which is reasonably expected to increase admissions of patients. With competition to identify and alleviate access barriers, HNWF and BMC are better able to increase hospice utilization rates by eliminating self-imposed constraints. Based on the rapid increase in hospice utilization in service area 2A after HNWF began to compete with BMC, it is reasonable to assume the same effect of competition in service area 1. By the year 2000, BMC's expert reasonably projects hospice penetration rates of 29 percent in service area 1, equaling the current statewide average. As the late entrant into a limited geographical area within the market, BMC is projected to capture approximately one-third of that market by the years 2000 to 2001, leaving two thirds for HNWF. At the same time BMC and HNWF are reasonably expected to divide in half the market in service area 2A. At those levels, HNWF will range, in total projected admissions for both service areas, from 1,186 to 1,400, from 1997 to 2001. The evidence that a BMC hospice in service area 1 will not adversely impact HNWF is more persuasive. The suggestion that health care providers or the public will be confused by the presence of BMCH in service area 1 is rejected. Subsection 408.035(1)(n) - The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. BMC is a disproportionate share Medicaid provider, having historically provided over 97 percent of all indigent care in Bay County. In 1995, the charity care write-off was over $8.5 million. The effect of approving BMC’s CON is increased hospice penetration in service area 1, caused by an expanding market for hospice services. As a disproportionate share provider of inpatient acute care services, BMC is uniquely capable of identifying and referring low income patients for hospice care. Subsection 408.035(1)(0) - The applicant’s past and proposed provision of services which promote a continuum of care in a multilevel health care system, which may include, but is not limited to, acute care, skilled nursing care, home health care, and assisted living facilities. BMCH is a part of a multilevel system with levels of care ranging from a 353-bed acute care tertiary hospital to a home health agency. Because of 1995 legislation, these services are available to persons beyond the boundaries of Bay County. Consistent with this statutory criterion, hospice services should also be extended.
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 issuing CON 8377 to Bay Medical Center to establish a hospice program in service area 1, conditioned on providing annually a minimum of 12.8 percent Medicaid care, 3.65 percent charity care, and service to a minimum of 7 AIDs patients with a minimum of 350 visits. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 19th day of May, 1997. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 19th day of May, 1997. COPIES FURNISHED: Richard Ellis, Senior Attorney Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Darrell White, Esquire William B. Wiley, Esquire McFarlain, Wiley, Cassedy & Jones, P.A. Post Office Box 2174 Tallahassee, Florida 32315-2174 J. Robert Griffin, Esquire J. Robert Griffin & Associates, P.A. 2559 Shiloh Way Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403 Jerome W. Hoffman, General Counsel Agency For Health Care Administration 2727 Mahan Drive Fort Knox Building 3, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Does Certificate of Need (CON) Application 10065 of VITAS Healthcare Corporation of Florida (VITAS) or CON Application 10064 of United Hospice of Florida, Inc. (United), or both, best meet the CON criteria to establish a new hospice program in Service Area 4A (Area 4A), consisting of Duval, Clay, Baker, Nassau, and St. Johns Counties?
Findings Of Fact The Parties AHCA AHCA is the state agency responsible for the administration of Florida's Certificate of Need (CON) Program. It is the only state agency with authority to issue, revoke, or deny certificates of need. VITAS VITAS is a for-profit Florida corporation presently licensed and Medicare/Medicaid certified. It is the oldest, largest, and most experienced hospice service provider in Florida. VITAS is a wholly-owned subsidiary of VITAS Healthcare Corporation (VHC). VHC is headquartered in Miami. It operates over 40 hospice programs nationwide. VHC has approximately 10,000 employees and cares for about 12,000 terminally ill patients each day. VITAS and its predecessor entities date back to the mid-seventies when Hugh Westbrook, an ordained United Methodist minister, and Esther Colliflower, a registered nurse, organized a group of hospice volunteers. In order to raise capital to expand its operations, VHC converted to for-profit status in 1992. At that time Chemed Corporation purchased a minority interest. VHC expanded greatly during the 1990s. Chemed largely funded this period of expansion. Chemed acquired 100% of VHC n 2004. The acquisition did not cause operational changes. Most of the senior management remained after the acquisition. VHC is a hospice industry leader and a socially responsible company. It has been largely focused on hospice care since its start in the late 1970s. VHC's core values are: Patients and families come first; We take care of each other; and We pledge to do our best today and even better tomorrow. VITAS’ significant involvement with the National Hospice and Palliative Care Organization’s and local ethics committees manifests its social responsibility. VITAS is also involved with Certified Pastoral Education programs. United United is a wholly-owned subsidiary of UHS-Pruitt Corporation (UHS-Pruitt), a family-owned, for-profit corporation. United provides long-term care, hospice, home health, and community based services for the elderly. United is also a socially responsible company. UHS-Pruitt, through its affiliates in United Hospice, successfully operates 25 hospice programs in Georgia, South Carolina, and North Carolina. All of the programs were start- ups as opposed to acquisitions. UHS-Pruitt is the largest provider of community nursing home services in Georgia. It is one of the largest providers of hospice services in the southeastern United States. In the early 1990s, Neil Pruitt, Sr., the founder of UHS Pruitt, determined that community nursing home services would not be the model of care delivery for the elderly in the future. He concluded that home and community-based programs such as hospice, home heath, durable medical equipment, and other alternatives to institutional care should be the company's direction. UHS-Pruitt's emphasis on home and community-based services has succeeded. Today, it provides a full continuum of health care services for the elderly, including 71 long-term care facilities, 25 hospice programs, 13 home health agencies, five pharmacies, a healthcare management company, a nutritional services company, a clinical service company, and 14 Medicaid diversion and case management programs. UHS-Pruitt subsidiaries and divisions support United's hospice operations. The subsidiaries and divisions include: (a) United Clinical, which provides clinical consultants and expertise and support services for a full range of health care professions; (b) United Pharmacy, with Doctor of Pharmacy consultants that review each hospice patient's medication regimen; (c) United Rehab, which provides physical and occupational therapies to end of life patients to improve quality of life; (d) United Medical, a full service Durable Medical Equipment and home equipment company; (e) United Home Care, offering a full range of home health services; (f) United Community Services, which provides services such as meals, outdoor activities and monthly field trips; and (g) United Care Management, which operates Medicaid nursing home diversion programs. United offers specialized programs for specific end- of-life patients and their families. Camp Cocoon, a children's grief camp open to any child who has lost a loved one, is one example. United is also the largest provider of post-acute services to veterans in the Southeast. United Veterans Services provides specialized services to veterans participating in all United Hospice programs. It also operates nine specifically certified Veterans Nursing Homes, five in Georgia and four in North Carolina. The Georgia facilities partner with the Veterans Administration to provide hospice services. Community Community is a Florida, private, non-profit corporation. Community is also a socially responsible company. It operates a full service hospice in Area 4A. Community employs approximately 800 people who provide hospice care to an average daily census of 1,100 patients and their families. Community's annual operating budget is $70,000,000. Community has one or more offices located in each of the 5 counties in Area 4A, except for Baker County. Community is Medicare and Medicaid certified. Approximately 80% of Community’s patients are Medicare patients. Medicare pays a fixed rate per day for each of the four levels of care that Medicare requires a certified hospice to deliver. During its 20-plus years of existence, Community and its volunteer board and foundation have reinvested all revenues in excess of expenses, including donations, back into patient care and serving the community in Area 4A. Community’s main office and a 38-bed hospice general inpatient and residential facility, the Hadlow Center, are located on a campus in southern Duval County to serve the most densely populated area of consolidated Jacksonville/Duval County. Community's Acosta Rua Center is a freestanding inpatient and residential facility on the West side of Duval County. Acosta Rua has 16 general inpatient beds that can also be used as residential beds. Community selected the location for Acosta Rua because it is accessible to patients from rural Baker and western Clay County and is in an area heavily populated with lower income elderly persons and African- Americans. Community located its McGraw Center for Caring, a freestanding general inpatient and residential bed facility, on the Mayo Clinic campus. This location facilitates access for patients in east Duval, northern St. John’s, and southern and southeastern Nassau Counties. Community also operates a dedicated hospice general inpatient and residential bed facility in the Pavilion at Shands Hospital in Jacksonville. Community located the facility at Shands to make it available to a large population of inner city, lower income residents who use Shands. In 2011, Community will open a dedicated general inpatient and residential bed unit at Flagler Hospital. The unit will serve patients and families in the southern part of the Service Area, southern St Johns, and south and east Clay Counties. The unit will be like all of Community’s freestanding facilities and units — homelike and designed to provide end of life care with dignity. In addition to its freestanding and dedicated inpatient and residential units, Community contracts with local hospitals for available acute care beds in the hospital, if needed. Community operates a variety of programs that provide services beyond the required minimum standards and levels of care. Examples of its programs include Community Peds Care, enhanced and extended bereavement services, veterans outreach, Camp Healing Powers for children, advanced care planning, and community professional education on end of life issues. Community operates the Neviaser Institute, on its Hadlow campus. The Institute provides professional end of life, health care, and community education to Community's staff and residents of Area 4A. Outreach programs and freestanding facilities, like Community’s, take years to develop. They involve partnerships built on trust, over the long term, with other community health care providers in Area 4A and the community. One example is the "Community Peds Care" program. The program currently serves 117 children facing end of life and their families. Community partners with the State, Nemours Children’s Clinic, the University of Florida, and Shands Hospital Jacksonville for this program. Its services go beyond hospice care. It includes perinatal planning for women at risk. The interdisciplinary, multi-provider "Community Peds Care" program is not restricted to insured or Medicaid patients. "Peds Care" in its present form took three iterations and a decade to succeed. Community spends $640,000 a year in connection with its participation in the Community Peds Care partnership. Community is the only hospice provider in Area 4A that operates freestanding hospice inpatient and residential facilities and dedicated units on hospital campuses, staffed exclusively by hospice personnel. Community’s inpatient and residential facilities and units also provide homelike accommodations (residential beds), on a sliding fee scale, for hospice patients who are temporarily or permanently homeless and are receiving the routine home care level of hospice care. Community has put its financial capital at risk to create program enhancements with an understanding that competition in the market, for the finite set of hospice patients in Area 4A, would increase every time a new provider is added. Community was aware that CON regulations permitted approval of new hospice providers when application of the regulations resulted in the "need" for a new provider. Community was also aware that the regulations permitted approval of a new provider in "not normal" circumstances, even if the "need" rule did not project the need for a new provider. Overview of Hospice Services Florida and federal laws and rules require hospice programs to provide a continuum of palliative and supportive care for terminally ill patients and their families. Palliative care generally refers to services or interventions that are not curative but are provided for the reduction or abatement of pain and suffering. Under Florida law, a terminally ill patient may qualify for hospice care if his or her life expectancy is one year or less if the illness runs its normal course. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice Benefit if the patient's life expectancy is six months or less. A provider must make hospice services available 24 hours a day, seven days a week. The services provided must include nursing, social work, pastoral care or spiritual counseling, dietary counseling, and bereavement counseling. A hospice may provide physician services directly or through contract. Hospices must provide four levels of hospice care: routine, continuous, in-patient and respite. A hospice provides services to a patient and family either directly or by others under contractual arrangements with a hospice. A hospice may provide services in a patient's temporary or permanent residence. If the patient needs short-term institutionalization, the hospice provides services in cooperation with contracted institutions or in a hospice inpatient facility. Routine home care makes up the vast majority of hospice patient days. Florida law states that hospice care and services provided in a private home shall be the primary form of care. Hospice care and services, to the extent practical and compatible with the needs and preferences of the patient, may be provided by the hospice care team to a patient living in an assisted living facility (ALF), adult family-care home, nursing home, hospice residential unit or facility, or other nondomestic place of permanent or temporary residence. A resident or patient living in an ALF, nursing home, or other facility who has been admitted to a hospice program is considered a hospice patient. The hospice program is responsible for coordinating and ensuring the delivery of hospice care and services to the person consistent with statutory and rule requirements. The inpatient level of hospice care provides an intensive level of care within a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient facility. Inpatient care is a short-term adjunct to hospice home care and home residential care. It should only be used for pain control, symptom management, or respite care in a limited manner. In Florida, the total number of inpatient days for all hospice patients in any 12-month period may not exceed 20% of the total number of hospice days for all the hospice patients of the licensed hospice. Continuous care is basically emergency room or crisis care. It may be provided in a home care setting or in any setting where the patient resides. Continuous care, like inpatient care, was designed to be provided for short periods of time, usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. Continuous care is the costliest care for payors and has the lowest profit margin for providers. Respite care is for caregiver relief. It allows patients to stay in hospice facilities for brief periods to provide breaks for their caregivers. Respite care is typically a minor percentage of overall patient days. Medicare reimburses the different levels of care at different rates. The highest level of reimbursement is for continuous care. Medicare covers payment for approximately 85% to 90% of hospice care. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a terminally ill patient and the patient's family. Hospice care focuses on palliative care and comfort measures. Hospices provide services according to a plan of care developed by an interdisciplinary group of physicians consisting of nurses, social workers, and various counselors, including chaplains. Individual hospice patients sometimes benefit from services that are not covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are also more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be helpful for severe pain control and symptom control. Community provides, and both VITAS and United propose to provide, all of the core hospice services and many of the other services mentioned above to patients. Fixed Need Pool AHCA'S hospice rule includes a numeric need formula for determining the need for an additional hospice program in a Service Area. See, Fla. Admin. Code R. 59C-1.0355(4)(a). The Agency's formula uses an average three-year historical death rate. It applies this average to an area's forecasted population for a two-year planning horizon to project the number of deaths in the area. Then the formula uses a statewide hospice use penetration rate. This is the number of hospice admissions divided by current total deaths. The statewide average penetration rate is subdivided into four categories: cancer over age 65, cancer under age 65, non-cancer over age 65, and non-cancer under age 65. By applying the penetration rates to the projected numbers of death in each category in an area, the rule formula projects hospice admissions (based on death rate and projected population growth) in each category. The most recent published actual admissions are subtracted from the projections to determine the number of projected un-met admissions in each category. If the total un- met admissions in all categories exceed 350, a new hospice is "needed," unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for two years. In this case, application of the numeric need rule projected a "need" for one additional hospice in Area 4A. Subtracting the most recently reported published hospice admissions in Area 4A from the projected number of likely hospice admissions calculated by applying the penetration rates to the projected deaths in Area 4A indicated that there would be 925 more projected admissions than there had been for the period for which the admissions were published. The hospice service use rate in Area 4A has consistently been below the statewide average use rate for the past ten years. Area 4A Area 4A consists of five counties. The central and most heavily populated county is Duval. It includes the urban center of Jacksonville and its population of approximately 860,000 people. Clay and St. Johns County each have approximately 186,000 residents. Nassau County is north of Duval. Part of Nassau County is considered part of the Jacksonville metropolitan area. There are resort and retirement communities along the east coast of Nassau County. The western part of Nassau County is less densely populated and rural. The fifth county, Baker County, is west of Duval County. It is the only state-designated rural area in Area 4A. Baker County's small population is largely concentrated in the southeast quadrant of the county. A large part of the county is part of the Okefenokee Wildlife Refuge. Baker County has the lowest hospice admission rate of any county in Area 4A. None of the existing providers have an office in Baker County. Approximately 72% of Area 4A's population is Caucasian. Approximately 22% of the area's population is African-American. Community has served Area 4A for approximately 30 years. It accounts for approximately 90% of all hospice admissions in the area. In the most recent year for which figures are published, Community had 5,216 admissions. Haven Hospice began operating in Area 4A in 2001. It has an approximately 8% market share and 481 admissions annually. Heartland Hospice opened in 2007. In the most recent 12 month period for which there are published figures, Heartland served 108 patients. The Proposals VITAS and United propose to provide hospice patients in Area 4A with all of the core services and many of the other services mentioned above. The proposals are similar in many respects. Both will provide quality services and propose financially feasible programs. Either applicant could serve Area 4A well if approved. Either applicant would serve the "need" projected by AHCA. Both applicants emphasize what they describe as "underserved" African-American populations and rural populations. Each applicant maintains that its plan for serving these populations is a primary reason to approve its application. "Underserved" is not an accurate description. There is no persuasive evidence that African-American or rural patients in Area 4A who desire hospice services do not have timely access to them. The populations each use hospice services at a lesser rate than Caucasian or urban and suburban populations. But nothing indicates that this is because the services are not available. African-American utilization of hospice services in Area 4A is lower than utilization by the Caucasian population. This is not unique to Area 4A. Lower hospice utilization by African-Americans is common throughout the nation. Nothing indicates that the lower hospice utilization by African- Americans in Area 4A is not normal. To the contrary, the credible evidence establishes that this is the normal state of affairs. Each applicant also identifies a need to serve more non-cancer patients and serve more patients in need of continuous care. There is no persuasive evidence that non- cancer patients or patients needing continuous care in Area 4A who desire hospice services do not have timely access to hospice services. United also maintained that homeless persons with terminal illnesses were individuals who needed more hospice services. There is no persuasive evidence that homeless individuals in Area 4A who desire hospice services do not have timely access to them. Each applicant advances secondary arguments about features of its operations that make it superior to the other. Each applicant acknowledges, as the evidence established, the quality of the other applicant. The applicants make limited criticisms of the reasonableness of each other's proposals. The distinctions between the applicants' proposals are relatively fine and are discussed later. The VITAS Proposal VITAS proposes to establish a main office in Duval County with satellite offices in Baker and Nassau counties. It will open the Baker County office the first year of operation. VITAS projects equipment costs of $170,000 and start- up costs of $83,500. The projections are reasonable. VITAS projects 162 admissions in Year 1 and 297 admissions in Year 2. The projections are conservative and reasonable, especially in light of the market dominance of Community. VITAS' own start-up experience in Brevard, Collier, Volusia, and Flagler counties also supports the reasonableness of the utilization projections. VITAS is able to recruit staff. Its proposed staffing levels and salaries are reasonable. Factors considered in assessing reasonableness include ratios of census to discipline and the number of core employees that will be needed. The proposal of VITAS budgets sufficient funding for physician services and contracted services. VITAS's total projected costs for the proposal are $338,353. This projection is reasonable. VITAS's proposal satisfies both the Local Health Planning Council's general preferences and its hospice specific preferences. VITAS complied with all applicable AHCA rules and preferences. VITAS has well-developed and effective information technology systems that help it deliver hospice services efficiently over large geographic areas. It will use these systems in its proposed Area 4A hospice. VITAS made a number of enforceable commitments in the proposed conditions for the Area 4A hospice. VITAS commits to the following: -Minimum of 3% total patient days to persons in need of continuous care -Minimum of 65% patients with non- cancer diagnoses -Exceed statutory pain control outcome measures -Death attendance of at least 90% of deaths -Patient-family satisfaction score of 90% or greater -Discipline specific satisfaction of 90% or greater -Provide pet therapy -Establish satellite offices in Baker and Nassau Counties -Implement TeleCare Program with 24/7 nurse availability -Establish Local Ethics Committee -Implement CarePlanIT a handheld bedside clinical information system -Provide palliative radiation, chemotherapy, and transfusions where appropriate -Provide hospice services 24/7 as indicated by patient’s medical condition -Patient assessment by physician upon admission -Medical Directors must be board certified in Hospice or Palliative Care medicine within 5 years of employment -RNs encouraged to become certified in Hospice and Palliative Care nursing; with 50% of all supervisory nurses attaining such certification by second year of operation -Chaplains will be Masters of Divinity, from accredited CPE program -Social workers will be Master’s level or Licensed Clinical Social Workers -Designate hospice representative to provide community outreach, promote hospice awareness, and enhance access to African- American individuals in Service Area 4A -A Physician will serve as member of every care team -VITAS will provide bereavement services beyond the normal one year after death of patient, if needed -VITAS will not solicit or accept donations from hospice patients, their families, or the general community -Immediately establish a Clinical Pastoral Education program In addition, VHC (the parent of VITAS) will provide: -A charitable contribution of $300,000 to Florida State College of Jacksonville to fund an Endowed Teaching Chair, Scholarships and the Northeast Florida Initiative for Nursing Workforce Diversity; -A charitable contribution of up to $500,000 to the United Way of Northeast Florida, during the first three years of licensure; -A charitable contribution of $50,000 to the Jacksonville Urban League to expand health and quality-of-life initiatives in the greater Jacksonville area. Florida State College of Jacksonville is the second largest state college in Florida. It has a full array of health programs from entry level to bachelor’s degree. The college produces more nursing graduates than all other colleges and universities in the region combined. The fundraising arm of Florida State College is the Florida State College Foundation. Its sole purpose is supporting the college by raising money to support academic programs and help develop facilities. One component of the VITAS/Florida State College Foundation Hospice Care Partnership Proposal is linked to factors that affect African-American utilization of hospice care. That is the $130,000 contribution to support Florida State College's operation of a Northeast Florida Initiate for Nursing Workforce Diversity. The initiative strives to increase the number of registered nurses from disadvantaged or under represented backgrounds and ensure all citizens have access to culturally, ethically and linguistically appropriate health services. This addresses two factors identified as contributing to lower utilization of hospice services by African-Americans. The remaining components of the $300,000 VITAS proposal are not directly related to factors affecting African- American hospice utilization. VITAS's proposed measure of fulfillment of this commitment is only a signed statement by VITAS and evidence of funds transferred. VITAS proposes a donation of $500,000 to the United Way of Northeast Florida. United Way’s mission is to identify critical issues in the community, perform a needs assessment, and then raise the dollars to address those issues. The organization serves Duval, Clay, Nassau, Baker, and northern St. Johns Counties. The United Way partners with two area hospitals, Baptist Medical Center and Shands of Jacksonville. Shands has a contract with the City of Jacksonville to provide care for indigent and low income persons. It is the largest provider of health services to the indigent in the area. The United Way will use VITAS's donation to expand its elder care advocacy program and to develop better support for caregivers. Through the United Way’s partnership with Shands, donations by VITAS will reach the community’s homeless population. VITAS’ funding would also support United Way’s ?Life: Act 2.? This is a seniors initiative focused on assisting working caregivers, predominantly minority families with low and moderate incomes, to access information and support services, including end of life services. The mission of the Jacksonville Urban League is to assist African-Americans and others achieve social and economic equality. It serves Duval, Nassau, Baker, and Clay Counties, as well as a portion of South Georgia. VITAS commits to a $50,000 grant to the Jacksonville Urban League if approved. The grant addresses the fact that African-Americans utilize hospice services at a lower rate than Caucasians. The Jacksonville Urban League committed to spend $15,000 of the $50,000 grant on expanding community health and end-of-life awareness initiatives offered under the League's African-American Health Network. It also committed that $3,500 would provide educational components about end-of-life care and advance directives as part of quarterly Health and Quality of Life seminars and workshops. The remaining $31,500 is earmarked as follows: $10,000 -- four quarterly community education workshops conducted by a nutritionist focusing on healthy cooking and healthy eating; $12,000 -- sponsorship of the Jacksonville Urban League Centennial Celebration Walk-A-Thon community fund-raiser; $5,000 -- promotion for an employee/community walking program with a goal of each participant walking at least 100 miles during the year as part of the Urban League Centennial Celebration; and $4,500 -- individual incentives for people who sign up for various programs and meet specific goals. VITAS proposes only a signed statement by a VITAS representative and evidence of payment to the Jacksonville Urban League as measurement of fulfillment of the condition. VITAS has been actively involved in the Foundation for Hospices in Sub-Saharan Africa (FHSSA) since 1998. The FHSSA is a national initiative of the National Hospice and Palliate Care Organizations (NHPCO). VITAS is its leading participant, providing both monetary and clinical support over the years. Robin Fiorelli, Senior Director of Bereavement Volunteers for VHC, sits on the FHSSA Board. VITAS participates in FHSSA because that is part of its philanthropic mission. The United Proposal Like VITAS, United relied in its application upon AHCA's projected need for a hospice in Area 4A. United's letter of intent and its application did not propose approval of two programs, one based on the need projection and one based upon special or "not normal" circumstances. United advanced that proposal for the first time in this proceeding. United proposes to establish a main office in Jacksonville and satellite offices in rural Baker and Nassau Counties. United projects admissions of 222 in its first year of operations and 702 in its second year of operations. United's projected increase in second year admissions relies upon its plan to develop home health services in the area if it obtains the certificate of need. United plans to bring its allied services and programs to the area if approved. But none are presently provided in the area. United's second year projections are aggressive but not unreasonable in light of AHCA's projected 925 additional hospice admissions. In any event, United can be reasonably expected to achieve or exceed the same utilization as that projected by VITAS. United projects equipment costs of $170,000, project development costs of $84,853, and start up costs of $83,500. These are reasonable projections. United's total projected costs of $338,353 are reasonable. United's proposal will be financially feasible. It will be financially feasible even with lower utilization than projected. This is because the costs of operation are primarily staffing, which is a variable expense directly related to utilization. The ?break even? point for United is 360 admissions. Thus, even if admissions were reduced dramatically from United’s Year 2 projections, the United proposal remains financially feasible. UHS Pruitt will fund the proposed United project. United, with the support of UHS Pruitt, has the financial resources to fund, accomplish, and operate its proposed hospice program at the cost stated in its CON Application. UHS Pruitt has well-developed recruitment, training and education programs. It operates the Pruitt Online University, with numerous education modules available for each specific discipline in a patient care team. Additionally, United’s parent organization operates a state-of-the-art training and education center at its corporate headquarters in Norcross, Georgia, where it routinely conducts orientation and continuing education classes. The facility is equipped with video conferencing capabilities, multiple classrooms and lecture halls. United will use these resources to establish and operate its proposed hospice program. United will be able to appropriately staff and operate its proposed hospice program. Like VITAS, United is an established provider of high- quality hospice services. United also conditions its CON on becoming accredited by the Community Healthcare Accreditation Program (CHAP), an outside accreditation body. This will help United ensure that it provides high quality care. United commits to several conditions upon its CON. They are: -UHS Pruitt will make all of the services that it provides available to any hospice provider that wishes to contract for the services. This includes services from United Home Care, United Medical, United Pharmacy Services, and United Clinical Services. -A staff member will be responsible for outreach initiatives to the African-American community. -Form an African-American Community planning and outreach team -United will host listening sessions with African-American leaders, African- American clergy and other members of the African-American community -Based on the listening sessions United will develop message, presentation, and marketing materials addressed to the African-American community -Continually assess existing tools and obtain or develop new resources to provide culturally meaningful and appropriate educational opportunities for the African- American community -Provide ongoing comprehensive training for staff and volunteers involved in the outreach program -Develop and maintain a calendar of events that address, support, and celebrate African-American issues, heritage, and healthcare concerns. Staff members will attend the events -Develop a tool to track referrals generated by the outreach program to measure its effectiveness. -Report admissions annually by race to AHCA -Continue active membership in the Emergency Services and Homeless Coalition (ESHC) of Jacksonville, Inc., a non-for- profit alliance of organizations dealing with homeless issues. -Provide hospice services to the homeless in shelters and help with placement -Provide health screening by a registered nurse once a month at a local social service organization chosen in collaboration with the ESHC -Open a centrally located Baker County office immediately upon licensure -Open a centrally located Nassau County office by the end of the second year of operation -Join the St. Johns Rural Health Network -Provide a minimum of 2.5 % of patient days in continuous care by the end of year two -Obtain CHAP accreditation -Join Florida Hospice and Palliative Care, Jacksonville Regional Chamber of Commerce, St. Johns County Chamber of Commerce, Clay County Chamber of Commerce, and Baker County Chamber of Commerce -Make the four annual $2,000 scholarships offered by United Hospice Foundation available to Florida residents. -Meet or exceed all NHPCO Guidelines for qualifications and staffing ratios of patient care staff -Implement rapid pain management protocols to ensure 75% of patients who report severe pain will report a reduction to 5 or less by the end of the second day of care. Statutory and Rule Review Criteria Rule Preferences AHCA 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. Commitment to serve populations with unmet need Both applicants propose to serve populations that they maintain have an unmet need for hospice services. Those populations are African-Americans, rural residents, and the homeless. The evidence does not establish an unmet need for hospice services for these populations in the sense of people desiring hospice services not being able to obtain them. The evidence establishes that these populations use hospice services at a lower rate than other populations. What the applicants really propose is outreach and marketing of various sorts to increase utilization by these groups. AHCA's apparent health policy and planning goal is to increase utilization by these groups. VITAS and United proposed offices in rural areas. Their plans to increase utilization by rural residents are comparable. One is not better than the other. Both proposals include efforts to improve utilization by the homeless. Neither is superior to the other. Similarly both applicants make plausible and equivalent proposals to increase hospice utilization by non- cancer patients and people needing continuous care (3% for VITAS and 2.5% for United). Neither is superior to the other. Both applicants commit to outreach to the African- American population. Both have a history of serving African- Americans and plans to reach out to the African-American Community. VITAS also has a history of working with the community to increase awareness of end of life options. Finally, VITAS has a more concrete and expansive plan to increase African-American utilization. VITAS's commitments to make donations to the Jacksonville Urban League, the United Way, and Florida State College are specifically linked to activities that designed to increase awareness of hospice services and improve comfort with the idea of hospice in the African-American Community. This specificity and VITAS's history of engagement in the issue of hospice services for African-Americans make its proposal the better one for increasing African-American utilization of hospice services. Commitment to provide in-patient care through contracts with existing health care facilities VITAS and United intend to use scatter beds to provide in-patient care. Both intend to contract with existing health care providers. Commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS The applicants make equivalent commitments to serve these patients. Commitment to provide services not covered by insurance, Medicare or Medicaid VITAS and United each have a history of providing services not covered by insurance, Medicare, or Medicaid. Both propose to do so in their applications. There proposals on this subject are equivalent. Consistency with plans; letters of support Both applicants provided letters of support demonstrating their outreach to the community and sufficient support within the community. Neither is superior in this factor. Similarly, both applicants demonstrated that their proposals are consistent with the needs of the community and other criteria contained in local and state health plans. Required Program Description VITAS and United provide detailed program descriptions in their CON applications. Both establish reasonable staffing, referral sources, projected admissions, volunteer recruitment, community education, and bereavement services. Although there are differences between the proposals, there is no significant distinction between the two in the quality or feasibility of the proposed programs. Section 408.035(1)(a), Florida statutes -- The need for the health care facilities and health services being provided AHCA projected a need for one new hospice program in Area 4A. There are no special circumstances in Area 4A that would justify adding a new program in the absence of a calculated need. Section 408.035(1)(b), Florida Statutes -- availability, quality of care, accessibility, and extent of utilization Existing providers offer quality and accessible hospice care to the residents of Area 4A. Each applicant can serve the need projected by AHCA. VITAS and United each would provide quality care to the area. It is unlikely, given the utilization rate in Area 4A and the market dominance of Community, that all of the hospice admissions projected will go to the new provider. However, each applicant is capable of satisfying the projected need. Section 408.035(1)(c), Florida Statutes -- ability to provide quality of care and record of providing quality of care VITAS uses over 40 Quality Assurance Performance Improvement measures and reports from them that help it provide high quality care. VITAS has and uses guidelines for intensive palliative care for both internal and external use. The guidelines outline how to approach and manage symptoms pharmacologically and non-pharmacologically. VITAS's medical director will be a direct employee of VITAS. In March of 2010, AHCA cited VITAS's Palm Beach hospice for deficiencies related to, but not causing or hastening, a patient's death. This was an isolated error. Because of a time lag in updating the patient records, the patient was discharged when she should not have been. AHCA made a finding of immediate jeopardy. VITAS responded promptly and correctly with a plan of correction that AHCA accepted. Since then the Palm Beach VITAS program has passed its bi-annual licensure survey. AHCA has also accepted other corrective action plans for unrelated VITAS deficiencies. Given the size of VITAS's operations, the number of people it serves, and VITAS's prompt attention to the deficiency, this incident does not indicate material problems with VITAS's quality of care. United has extensive internal quality assurance and performance improvement programs. United Clinical Services provides consulting services to all of United's hospices from an interdisciplinary care team. United also conducts surveys and audits of United's hospice program. That is one way United ensures quality care for its patients. United also conditioned its Certificate of Need on becoming accredited by the Community Healthcare Accreditation Program. This is an outside accreditation body. United will employ Medical Director services by engaging a physician under contract. Both applicants have a history of providing quality hospice services. Each demonstrated the ability to provide high quality care. VITAS and United each employ qualified people and provide them all needed training. Both applicants proposed appropriate staffing for their programs and good quality control and review practices. Neither applicant's proposed quality of care is superior to the others. They are equivalent. Section 408.035(1)(d), Florida Statutes -- availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation United has adequate financial resources to establish and operate its proposed hospice program. Its parent company is committed to providing the full amount of project costs and is able to fulfill that commitment. VITAS also has adequate financial resources to establish and operate its proposed hospice program. Its parent company is committed to funding the community contributions that VITAS includes in its proffered conditions. Both applicants have the necessary personnell resources available to start and operate their programs. Section 408.035(1)(e), Florida Statutes -- extent to which proposed services will enhance access to health care for residents of the service district None of the existing providers have an office in Baker County. VITAS and United propose to establish an office in Baker County. This will improve the availability of hospice services to rural residents. Between the two applicants, neither proposal to increase availability to rural residents is superior to the other. The applicants and AHCA agree that increasing the low African-American utilization rate is an important goal. There is no persuasive evidence, however, that the lower rate is due to a lack of access to hospice services. The low rate results from a combination of historical distrust of the medical system; reliance upon family, church, and community during a patient's final days on earth; and difficulties with access to health care in general. Both applicants commit to reach out to African- Americans and work with leaders in the community to increase utilization of hospice served. Their commitments include making outreach a primary responsibility of a designated employee. VITAS, through its parent company, has a substantial record of working closely with and supporting the African- American community. Diane Deese, Director of Community Affairs for VHC, works with all minority communities. She works predominately with African-American and Hispanic organizations. Ms. Deese works with the boards and executive leadership of groups and organizations such as the National Medical Association, the largest African-American physician organization in the U.S.; the National Federation of Licensed Practical Nurses; Rainbow/PUSH; the Samuel DeWitt Proctor Conference; and the Full Gospel Baptist Church Fellowship International. The New Orleans Chapter of the National Black Nurses Association asked VHC to help in providing education and support for its nurses, although VITAS has no licensed program in the area. VITAS helped. Since 2003, VITAS has been the only hospice provider actively involved with the National Medical Association. On behalf of VITAS, Ms. Deese works closely with the president of the National Black Nurses Association, as well as with the organization’s Daytona Beach Chapter. Both wrote letters of support for the VITAS proposal. The National Black Nurses Association has a chapter in Jacksonville. For many years VITAS has supported informing African- Americans about hospice care through its engagement with The Duke Institute on Care at the End of Life, a program of the Duke Divinity School. The program was established with a founding gift from Hugh Westbrook (VITAS founder), VHC, and the End of Life Foundation. Crossing Over Jordan is one of the educational programs of the Duke Institute. The Institute created the program to focus on the role of African-American churches in supporting terminally ill members of their congregations. The Full Gospel Baptist Church Fellowship International is a group of predominantly African-American clergy who have worked with the Crossing Over Jordan conferences to educate communities, particularly African-American communities, about hospice and end-of-life care. The Full Gospel Baptist Church Fellowship International has several ministries in Jacksonville, Florida. It has worked with VITAS to educate African-American church congregations about the benefits of hospice and to encourage members to volunteer. The Samuel DeWitt Proctor Conference is a group of African-American pastors. The group leads a number of large and influential churches around the country that have entered into a partnership with the Duke Institute on Care at the End of Life to help it spread the word about the need for African-Americans to know more about hospice and palliative care options for end- of-life care. United has a record of providing hospice services to African-Americans. Overall in 2009, United provided 26% of its hospice patient days to African-Americans in 2009. In communities with large African-American populations similar to Duval, United provided in excess of 46% of its patient days to African-Americans. In 16 of its 25 hospice programs, 26% or more of United’s hospice admissions were persons of African-American descent. In five of United's hospice programs, African- Americans accounted for more than 40% of admissions. United is committed to increasing access to hospice services for African-Americans. Claudia Warren-Wheat is a Clinical Social Worker with United Clinical. She assists the United Hospice programs in the social work and community outreach functions. Ms. Warren Wheat coauthored an article published in the Journal of the National Association of Social Workers examining barriers to access for hospice use by African- Americans entitled "Hospice Access and Use by African-Americans: Addressing Cultural and Institutional Barriers through Participatory Action Research" (Nov. 1999). This Article includes recommendations for dismantling barriers to access to hospice care for African-Americans. United's plan to increase African-American utilization of hospice services includes developing a census tracking tool to routinely track referrals generated by the outreach program to measure its success. Section 408.035(1)(f), Florida Statutes -- immediate and long-term financial feasibility VITAS’s operating cash flow will fund the proposed project cost of $338,000. It is more than adequate to cover the VITAS's project costs. VITAS is an existing hospice provider in Florida and in sound financial condition. VITAS's parent, VHC, will fund the project's charitable contribution commitments. The VITAS proposal is financially feasible in the short-term and long-term. The VITAS pro forma was derived from the same financial model it has used successfully for years. The assumptions used by VITAS for revenues and expenses are reasonable and achievable. Its existing operations in Florida provide sufficient net income and cash flow to ensure the project’s financial success. VITAS’ projected utilization is conservative and is both reasonable and achievable. United has a successful history of establishing new hospice programs. It too has the resources to establish and operate the proposed program. If United does not achieve its projected utilization and linked revenue in the second year of operation, that will not impair its financial feasibility. United can adjust staffing as needed. And United is likely to achieve the utilization needed to "break even. The United project is financially feasible in the short and long term. Section 408.035(1)(g), Florida Statutes -- extent to which proposal will foster competition that promotes quality and cost- effectiveness Both applicants are capable, established hospice service providers with the backing of experience and committed parent companies. Either applicant will foster competition with the existing providers in all arenas including quality and cost effectiveness. Section 408.035(1)(h), Florida Statutes -- costs and methods of construction, etc. Neither applicant proposes construction as part of its proposal. Section 408.035(1)(i), Florida Statutes -- the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent The applicants present comparable records of providing services to Medicaid and medically indigent patients. VI. Ultimate Findings of Fact Both applicants would provide quality care to their patients. Neither is demonstrably superior to the other. Both applicants will improve access of rural and homeless residents of Area 4A. Neither is demonstrably likely to improve access more than the other. Both applicants propose financially feasible projects. There are no "not normal" or "special" circumstances related to the need for hospice services in Area 4A. Both applicants are committed to and capable of providing care to non-cancer patients. Neither has a demonstrably superior plan for doing this. Both applicants are committed to and capable of providing continuous care to those who need it. Neither has a demonstrably superior plan for doing this. VITAS's plans for increasing utilization by African- Americans, in light of its conditions, are more likely than those of United to improve African-American utilization.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, RECOMMENDED that the Agency for Health Care Administration issue a Final Order denying the application of United Hospice of Florida, Inc., and granting VITAS Healthcare Corporation of Florida, Inc., a Certificate of Need to establish a hospice program in AHCA Service Area 4A with the conditions stated in VITAS's Certificate of Need Application. DONE AND ENTERED this 22nd day of March, 2011, in Tallahassee, Leon County, Florida. S John D. C. Newton, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of March, 2011.
The Issue Whether the Agency for Health Care Administration (AHCA) should approve the application of Compassionate Care Hospice of the Gulf Coast, Inc. (Petitioner, the Applicant, or CCH), for Certificate of Need (CON) No. 10337 to provide hospice services in Sarasota County, Florida.
Findings Of Fact THE PARTIES AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034, Florida Statutes. CCH is a development stage, Florida for-profit, privately-owned corporation, formed for the purpose of initiating hospice services in the Gulf Coast region of Florida, including Sarasota, Manatee, and Pasco Counties. Compassionate Care Group, LTD (CCH-LTD), the Applicant’s parent, is a national, for-profit hospice provider, headquartered in Parsippany, New Jersey, operating 39 hospice programs in 22 states, with 57 offices. CCH-LTD (or its affiliate(s)) currently provides hospice services in Service Area 6B consisting of Polk, Highlands, and Hardee Counties; Service Area 3E, consisting of Lake and Sumter Counties; and Service Area 11, consisting of Miami-Dade and Monroe Counties. The hospice services offered in Service Area 6B is CCH-LTD's only mature program in Florida. The other two are still in the start-up phase. Tidewell is a Florida, not-for-profit corporation, currently licensed to provide hospice services and is currently the sole hospice provider in three geographically contiguous Hospice Service Areas, including Service Areas 8D, Sarasota County; 8A, Charlotte and DeSoto Counties; and 6C, Manatee County. Tidewell currently serves on an annual basis approximately 8,000 patients and their families, employs 500 to 600 fulltime, and 100 to 150 part-time, employees and has approximately 1,000 active volunteers. Tidewell has a total average daily census of approximately 1,130 patients. Tidewell’s average daily census in Service Area 8D, Sarasota County, is approximately 500 patients. STIPULATED FACTS AND LAW CCH submitted its Application for CON 10337 to establish a new hospice program in Service Area 8D, Sarasota County, in the October 2014 AHCA Hospice Program Batching Cycle. CCH's Application was deemed complete, reviewed, and preliminarily denied by AHCA. CCH timely petitioned for a hearing, pursuant to section 120.57. Tidewell timely petitioned to intervene. Intervention was granted subject to proof of legal standing at hearing. All of the review criteria in section 408.035 and Florida Administrative Code Rules 59C-1.008, 59C-1.030 and 59C-1.0355 were at issue in this proceeding, except the following subsections of section 408.035(1): (h) is not applicable to this proceeding; (j) is not applicable to this proceeding; and (d) for which the parties stipulated that CCH has access to sufficient resources, including health personnel, management personnel, and funds for capital and operating expenditures for project start-up as described in its Application, except for manpower specifically associated with CCH's proposed Cardiac Connections, Pulmonary Connections, and Promises programs. Florida law requires a hospice program to provide a continuum of palliative and supportive care for terminally-ill patients and their families. "Palliative care" means services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. A terminally-ill patient is defined under sections 400.601(3), (7), and (10), Florida Statutes, as having a medical prognosis of 12 months or less life expectancy. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to dying patients and their families. Hospice care is provided pursuant to an individualized plan of care developed by an interdisciplinary team consisting of physicians, nurses, home health aides, social workers, bereavement counselors, spiritual care counselors, chaplains, and others. There are four levels of service in hospice care: routine home care; continuous care; general inpatient care; and respite care. Routine home care (provided where patients reside) accounts for the vast majority of admissions and patient days. Continuous care, sometimes called "crisis care," is provided in a home care setting or in any setting where patients reside. Continuous care is provided for short durations when symptoms become so severe that around-the-clock care is necessary for pain and symptom management. General inpatient level of care is provided in either a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient unit. Respite care is generally designed for caregiver relief. It allows patients to stay in facilities for brief periods to provide breaks for caregivers. The Medicare hospice benefit requires terminally-ill patients to have a life expectancy prognosis of six months or less to be eligible to elect the Medicare benefit. Like Florida law (chapter 400, Florida Statutes), the Federal Medicare benefit excludes patients seeking curative treatments from hospice eligibility. Medicare is the largest payor source for hospice services. Other sources include Medicaid, private insurance, managed care plans including Medicaid Managed Care, other government payors and charity. Hospices are required to accept all patients regardless of ability to pay. STATUTORY REVIEW CRITERIA The need for the healthcare facilities and health services being proposed. § 408.035(1)(a), Fla. Stat. On October 3, 2014, AHCA published a numerical fixed need of zero for new hospice programs in Hospice Service Area 8D, comprised of Sarasota County, for the October 2014 “Other Beds and Programs” batching cycle with a planning horizon of January 2016. The published need of zero was not timely challenged by any party and is, therefore, the numerical need applicable to this case. A published need of zero creates a rebuttable presumption that a new hospice is not needed. Florida Administrative Code Rule 59C-1.0355(3)(b) provides: (b) Conformance with Statutory Review Criteria. A Certificate of Need for the establishment of a new Hospice program or construction of a freestanding inpatient Hospice facility shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new Hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in Sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. Conceding the absence of a published numerical need in the batch cycle, CCH filed the Application seeking to establish a new hospice program in Service Area 8D, Sarasota County, based on the existence of “not normal and special circumstances.” CCH asserts that there are a number of not normal and special circumstances in Sarasota County that outweigh the lack of a numerical fixed need in the overall weighing and balancing of the statutory and rule review criteria. The not normal and special circumstances alleged by CCH include: Tidewell is a regional monopoly provider, operating the sole hospice in three contiguous hospice service areas. Per section 408.043(2), Florida Statutes, and Rule 59C-1.0355(3)(c), F.A.C., the lack of published numeric need is outweighed by the need to promote competition and discourage regional monopolies. There are over 46,979 Medicaid recipients living in Sarasota. Pursuant to section 409.967(2)(c), Florida Statutes, under the new Medicaid managed care model, AHCA established Medicaid Managed Care Requirements to ensure there is an “adequate network” of health care providers in place to provide Medicaid patients with choices when seeking health care services. An “adequate network” of hospices requires a minimum of two hospice providers per county. The Applicant asserts Medicaid recipients in Service Area 8D are being underserved because they do not have an adequate network of providers to choose from in Sarasota. Patients, families, physicians, long term care facilities, home health agencies, and other typical hospice referral sources for hospice lack any choice of provider in Service Area 8D. This is especially important for those who have had negative experiences with Tidewell. There are numerous large scale referral sources in Sarasota that are unhappy about, reluctant to, or in some instances even refusing to refer patients to Tidewell because of their negative experiences. The patients not being referred to hospice because Tidewell is the only option are underserved. Almost 10 percent of Sarasota County residents who received hospice services in 2012, 528 out of 5,707 patients, left Sarasota County to do so. While there is no statistical way to determine why these residents opted to leave Service Area 8D for their hospice care, the number is significant given the large scale referral sources, including home health agencies and long term care providers, dissatisfied with Tidewell or who prefer choice. Hospice patients with end-stage heart, pulmonary, and renal diseases, are underserved in Service Area 8D. Tidewell’s decreasing trends on admitting these patients is inconsistent with national, Florida, and Sarasota County data demonstrating increasing needs for hospice care for these patients. The cost and difficulty of caring for these patients often causes hospices to avoid admitting them. The Applicant has developed disease specific programs targeting these patients. In addition to the alleged not normal and special circumstances summarized above, CCH asserts that the AHCA's numeric need calculation of zero should be given little weight in determining whether to approve the Application because there are anomalies in Tidewell’s reported admissions that distort the apparent penetration rate used in the calculation. At the final hearing, CCH pointed out that, while AHCA allows double counting for purposes of the fixed need calculation, from a health planning perspective, the apparent penetration rate can be distorted by routinely double counting admissions. CCH provided an example where Tidewell reported admitting more than 100 percent of the potential cancer deaths over 65. Based on this analysis, CCH argues that because of a distorted penetration rate, the presumption of no need for a new hospice should be given little weight. CCH's attempt to demonstrate an error in the fixed need pool calculation, however, is untimely. Subsections 2 and 3 of rule 59C-1.008(2)(a) state: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Therefore, CCH's purported evidence of an error in the calculation of the fixed need pool has not been considered, and the rebuttable presumption that a new hospice is not needed has not been diminished by CCH's criticism of the fixed need calculation. CCH's alleged not normal and special circumstances are addressed below in the same order as summarized in paragraphs through e., above. Regional Monopoly Section 408.043(2), Florida Statutes, provides in pertinent part: HOSPICES.— When an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community. The formula on which the certificate of need is based shall discourage regional monopolies and promote competition . . . . Tidewell is the sole hospice provider in three adjoining hospice service areas (Service Areas 8D, 8B, and 6C), encompassing Manatee, Sarasota, Charlotte, and Desoto Counties. This situation is unique in the state. There is no other part of the state consisting of multiple contiguous hospice service areas with only a single hospice provider. In fact, there is no other part of the state where there are even two adjoining service areas with a single hospice provider. The four counties that comprise the three hospice service areas where Tidewell operates as the sole provider are recognized as a “region” by the U.S. Bureau of the Census and the Office of Management and Budget. These four counties constitute a recognized combined statistical area used for federal planning and budgeting decisions. Multiple witnesses confirmed Tidewell operates as a single integrated regional provider. All of Tidewell’s licensed hospices have the same officers and directors; adhere to the same policies, procedures, and protocols; and share multiple support services, such as information technology and human resources. Practically speaking, Tidewell functions as a single hospice in the four counties which comprise Service Areas 8D, 8B, and 6C. While neither the applicable statute nor rule defines “monopoly,” its commonly understood meaning is that there is an exclusive or sole provider of services or goods in an area. Tidewell is the only hospice provider in the four counties that make up Service Areas 8D, 8B, and 6C. It is found, under the circumstances, that Tidewell has a regional monopoly in those contiguous service areas. The fact that Tidewell is a regional monopoly, standing alone, however, is not a sufficient basis to justify approval of a new hospice program in Service Area 8D. 2. Enhancing Access for Medicaid Managed Care Eligible Patients AHCA recently transitioned its Medicaid program to a managed care delivery model. In so doing, the state was required to develop “adequate network” standards for healthcare services offered to Medicaid patients, including hospice services. Section 409.967(2)(c), Florida Statutes, requires AHCA to develop standards governing the number, type, and regional dispersal of healthcare providers to ensure access. There are two separate components of the Statewide Medicaid Managed Care Program: (1) Managed Medical Assistance (MMA), and (2) Medicaid Long Term Care (LTC). AHCA developed model contracts for managed care plans seeking to become approved Medicaid plan providers under the MMA or LTC programs. The model contracts included “adequate network” standards for the various healthcare providers, including hospices. Under the MMA and LTC model contracts, there must be a minimum of two hospice providers per county. The “adequate network” standards contained in the model contracts were developed through a deliberative process between AHCA and the federal government’s Center for Medicare and Medicaid Services (CMS) as part of the Medicaid Waiver Program issued by CMS. AHCA and CMS used the existing CMS standards from other programs as a starting point, and then made informed decisions on particular adjustments to the standards as necessary. Ultimately, some of the standards adopted for Florida were more stringent than the CMS standards and some were less stringent, depending on Florida use rates. The hospice standard adopted for Florida is two hospices per county. One of the reasons that the standard of two hospices per county was adopted is to provide for patient choice in hospice care. Fifty-six of Florida’s 67 counties have two or more licensed hospices. Nevertheless, Abbie Riddle, AHCA’s Medicaid Plan Management Operations Bureau Chief, testified that there is nothing unusual or not normal about a county not meeting the hospice “adequate network” standards because she had issued waivers in numerous counties throughout the state where there were fewer than two licensed hospices, including Sarasota County. Tidewell argues that because Service Area 8D MMA and LTC contracts are operating under a waiver, there is no reason to be concerned about the lack of an “adequate network.” There is no evidence, however, that the decision to issue waivers for fewer than two hospices within a county was based upon an adequacy analysis or determination. Rather, Ms. Riddle, on behalf of AHCA, granted waivers to all counties that did not have at least two hospices with a physical address within the county. Further, AHCA’s waiver authority under the model contract does not suggest that the issuance of a waiver is a determination of network adequacy. Rather, Section VI, B., 3. of the model contract provides: If the Managed Care Plan is able to demonstrate to the Agency’s satisfaction that a region as a whole is unable to meet network requirements, the Agency may waive the requirement at its discretion in writing. As soon as additional service providers become available, however, the Managed Care Plan shall augment its network to include such providers in order to meet the network adequacy requirements. Such a written waiver shall require attestation by the Managed Care Plan that it agrees to modify its network to include such providers as they become available. The addition of another hospice program in Service Area 8D, Sarasota County, would be consistent with the applicable “adequate network” standards for hospice services. This finding, however, is not the equivalent of finding that there is an underserved population in Sarasota County. 3. Lack of Choice and Out-Migration CCH relies on 13 letters of support from the community and 13 deposed witnesses who all urge that choice and competition are sufficient reasons to support approval of CCH’s Application. The letters and witnesses, however, express personal opinions that are not based upon any demonstrated expertise in health planning. Those opinions, therefore, have not been given significant weight. CCH also presented evidence that some residents of Sarasota County receive hospice services from hospices located in surrounding counties. That evidence, however, was insufficient to demonstrate a cause for the outmigration. The observations of outmigration, alone, do not support a conclusion that the outmigration would be prevented by the addition of another hospice provider. 4. Specific Terminally-Ill Populations Not Being Served The Special Circumstances provision in the hospice rule recognizes that a CON may be granted in the absence of need when there are specific terminally-ill populations that are not being served. This can include a specific disease category. The health planners testifying at the final hearing agreed that a given population does not have to be completely unserved to rise to a level of special circumstance. Rather, it is adequate to demonstrate that a given population is underserved compared to the statewide use rate of hospice services for that population. CCH asserts that hospice patients with end-stage heart, pulmonary, and renal diseases are underserved in Service Area 8D. CCH described its programs especially designed to meet the needs of patients with those diseases. CCH failed, however, to demonstrate that patients in Service Area 8D in those disease categories are underserved. In describing its Cardiac Connections Program, Pulmonary Connections Program, and Advanced Care Connection Programs, CCH relied on evidence from those who created and operate the programs. Documenting an ability to provide care under specialty programs with alternative or additional clinical protocols, however, is not the equivalent of documenting substandard care by an existing provider, an underserved group, or “special circumstances” sufficient to find a need for the Applicant who is offering those alternative protocols. Only 40 percent of CCH-LTD affiliate program offices have implemented the Cardiac Connections Program. Even where implemented, not all of CCH-LTD’s end-stage heart failure patients are enrolled in Cardiac Connections. CCH acknowledged that CCH-LTD hospices are still able to deliver acceptable and appropriate care to end-stage heart disease hospice patients without the Cardiac Connections Program. CCH described the Cardiac Connections Program as an enhanced service and agreed that the failure of CCH-LTD affiliate facilities to provide its end-stage heart failure patients with Cardiac Connection Program services does not constitute “substandard service” to those patients. In fact, CCH agrees that adequate palliative hospice care can be provided to end-stage heart patients without the Cardiac Connections Program. As an example of the significance of the Cardiac Connections Program, CCH cites the fact that its Cardiac Connections Program admits inotrope and left ventricle assist device (LVAD) patients. CCH suggests that, because inotropes must be started in an intensive care setting and are expensive, many hospices will not provide inotropes in a home setting for their patients. Tidewell, however, also admits LVAD patients and patients being infused with inotropes. Those patients are included in Tidewell’s complex case management protocol when the patient is going to be infused at home and Tidewell pays for all infused medications related to the patient’s primary diagnosis. The evidence further demonstrated that Tidewell understands the needs of end-stage heart failure patients and provides high quality care hospice services for those patients consistent with best practices and generally accepted guidelines. As argued with regard to end-stage heart failure patients and its Cardiac Connections Program, CCH contends that end-stage pulmonary disease patients in Sarasota County are an underserved group because those patients do not have access to CCH’s Pulmonary Connections Program. CCH-LTD's national Pulmonary Connections Program coordinator, however, acknowledged that hospice patients with a primary diagnosis of end-stage pulmonary disease, who are not enrolled in its Pulmonary Connections Program, should not be presumed to be receiving substandard care. Tidewell demonstrated that Tidewell provides high quality palliative care to its end-stage pulmonary disease patients, consistent with best practices, including the necessary patient and family training for the symptoms associated with shortness of breath. Although CCH also argued that its Renal Advanced Care Connections program would enhance access for renal failure patients in Sarasota County, the evidence in that regard was not sufficiently developed at hearing to support any findings of fact with regard to an unmet need that would be served by that program. In addition to describing its specialty programs, CCH relies on admissions data and general demographic or disease prevalence information to support its contention that there is an unmet hospice need in Service Area 8D for end-stage cardiac, pulmonary, and renal patients. For instance, CCH provided evidence showing that heart disease is the number one leading cause of hospitalization nationally and in Florida, and that it has a high mortality rate. It was also shown that, nationally, there were over 5.7 million heart disease hospitalizations in 2008, and that figure is projected to grow to over 10 million by 2037. Using admissions data, CCH made various data comparisons to demonstrate the need for CCH’s Cardiac Connections Program in Sarasota County. CCH compared the rate of re-hospitalization (within 30 days) for patients in the Cardiac Connections Program, with general readmission rates (i.e. not specifically from hospice programs) for end-stage heart failure patients nationally, and all end-stage heart failure readmissions to Sarasota County and surrounding hospitals. CCH also compared the rates of re-hospitalization of cancer patients with heart failure patients. CCH did not, however, offer evidence to allow a comparison of Tidewell’s re-hospitalization rates for Service Area 8D end-stage heart failure hospice patients with rates for Cardiac Connections Program patients. Nor did CCH provide data to allow a comparison of the hospital readmission rates for Cardiac Connections Program patients with the re-hospitalization rates for CCH-LTD affiliate end-stage heart failure patients where end-stage heart failure patients are not enrolled in the Cardiac Connections Program. CCH also submitted admissions data showing that Florida has the second highest number of pulmonary disease cases in the U.S. behind California, which has double the population. The evidence showed that Florida ranks number one for pulmonary disease with a prevalence rate of six percent, followed by California at four percent. Sarasota County is even higher with a 7.37 percent prevalence rate, closely followed by Manatee County at 6.5 percent. Relying primarily on comparative admissions data, CCH argues that the population requiring hospice care for heart, pulmonary and renal failure has been going up, while the percentage of patients served by Tidewell for those populations has declined. The admissions data for Tidewell submitted by CCH in support of its argument of allegedly underserved populations, however, does not properly utilize death rates necessary to determine “penetration rates.” Rather than relying on general demographic and disease prevalence information or merely comparing differences in the number of admissions in trying to determine whether underservice exists, it is more accurate to compare penetration rates. Penetration rates for an area within a given time period are calculated by dividing the number of hospice admissions by the resident deaths for the area during the time period. Using penetration rates calculated and published by AHCA, Tidewell’s overall annual penetration rates for Service Area 8D range from four to nine percent higher than the Florida average penetration rates during the period from 2004 to 2014. While CCH has criticized the calculations for Tidewell’s penetration rates as inflated due to AHCA's double counting of readmissions, the numbers hold up in other contexts, indicating that Tidewell is available and accessible for those persons eligible for hospice to a greater degree than the average Florida hospice. When annual Service Area 8D hospice admissions for end-stage heart failure patients as a percentage of annual Service Area 8D end-stage heart failure deaths from 2011 to 2014 (from Department of Elder Affairs’ admissions data that does not include readmissions and death statistics from the Florida Bureau of Vital Statistics, respectively) are compared to the average penetration rate for all Florida hospices, it shows that, although the state average fluctuates annually, Tidewell’s rate increased incrementally year over year, and approximated, or exceeded, the state average rate three out of four years. Comparing Service Area 8D to all of Florida, using hospice end-stage pulmonary disease and end-stage renal disease admissions as a percentage of end-stage pulmonary and renal disease deaths, respectively, for the years 2011 to 2014, shows that annual variations in the average rates exist in both Service Area 8D and Florida, but there is no pattern of historical or remarkable underservice to hospice eligible patients of Service Area 8D for either disease. To the extent the state average penetration exceeds Tidewell’s in any one year, it does not support the notion that the difference represents a “gap” in service. Gaps, for purposes of the special circumstance applications, must be a material or sustained trend, not a blip. Availability, quality of care, accessibility, and extent of utilization of existing healthcare facilities, and health services in the service district of the applicants. § 408.035(1)(b), Fla. Stat. Sarasota County, with a population of over 400,000 residents, has a healthcare delivery system with 6 acute care hospitals, 31 skilled nursing facilities, 61 assisted living facilities, 53 home health agencies, 9 adult family care homes, 54 homemaker and companion services, 20 surgical centers, 1,100 doctors, and over 5,000 registered nurses. As the sole provider of hospice services in Sarasota County, Tidewell is governed by a 15-member volunteer Board of Trustees who all live in and are representative of Tidewell’s Service Areas. The Board provides independent accountability to the communities served by Tidewell, including Sarasota County, Service Area 8D. In addition to its principle administrative office in Sarasota, Tidewell has located two of its eight satellite offices within the geographic boundaries of Service Area 8D, Sarasota County. In addition, Tidewell owns and operates seven hospice houses with a total of 65 licensed general inpatient beds, which can also be used for residential patients and respite care. Two of Tidewell’s hospice houses are located in Service Area 8D, with six beds in the hospice house located in Venice and 12 beds in Sarasota. A hospice house residential patient is a patient receiving the hospice routine home level of care when the patient does not have anywhere else available or safe to receive the care (e.g. homeless patients and patients without a caregiver). Although Tidewell maintains contracts with all the hospitals and nursing homes in its Service Areas to utilize facility beds for general inpatient, respite care and residential care, Tidewell’s hospice houses provide a more homelike environment, and are more accessible and preferred by families. Tidewell makes all of its hospice program services, hospice houses, and community services available to patients regardless of their ability to pay, religious preference, race, nationality, ethnicity, or sexual orientation. Tidewell is Medicaid and Medicare certified to serve patients and families eligible for those program benefits, and is accredited, with “deemed” status, by the Community Health Accreditation Program (CHAP) (i.e. AHCA defers to and accepts CHAP accreditation surveys in lieu of routine AHCA operational surveys). CHAP’s standards and practices mirror those contained in the Federal Medicare Hospice Conditions of Participation (CoPs). Tidewell is accredited by the National Institute for Jewish Hospice, and Tidewell has a full time Rabbi available and accessible in Service Area 8D. Tidewell effectively competes with other types of post-acute care providers, like private duty home health companies in its Service Areas. Tidewell allocates its excess revenue philanthropic contributions to operating reserves and to provide additional and enhanced services for patients, families, and the community at large. In Sarasota County, Service Area 8D, Tidewell deploys one assisted living facility (ALF) team, two home teams, one nursing home team, and three hospice house teams, and has coverage from its crisis/continuous care, admissions, and triage (after hours and weekends) teams. Each of these service teams in Sarasota County includes seven to eight registered nurse (RN) case managers (one RN for every 12 patients), one licensed practical nurse (LPN), four to five certified nursing assistants (CNA), three social workers (SW), and one chaplain. Tidewell also employs, for use in Service Area 8D, additional clinical staffing personnel for upticks in census, after hours and triage, admissions and crisis care, including 20 as-needed CNAs, 25 crisis care LPNs, 20 RNs and one LPN for triage and after hours, a wound care coordinator, and a certified child life specialist. Tidewell has access to contracted RNs and LPNs if the census ever exceeds employed staffing ratios. Beyond the interdisciplinary group (IDG) positions required by the CoPs, Tidewell supplies each IDG team with an experienced hospice RN clinical director and a team coordinator. Tidewell also employs an RN wound care program coordinator to assist RN case managers in managing patients with wounds and a specialist trained in therapeutic play for children and how to support parents of chronically ill children. Tidewell maintains a state-of-the-art call center to immediately dispatch and track triage RNs and to respond to requests for information from patients, families, and physicians during evenings and weekends. Tidewell gives all patients eligible for general inpatient, residential, and respite care a choice of all contracted venues and hospice houses that have a bed available. Families often choose the geographically closest hospice house available, without regard to the Service Area where they reside. In hospice, the location where the patient receives care is considered the patient’s residence. When the geographically nearest hospice house selected by a patient and family for their convenience is in a Tidewell Service Area, other the one in which the patient is currently receiving care, AHCA requires that the transfer to the new Service Area be reported as a new admission on the hospice’s semi-annual utilization report to AHCA. AHCA considers this approach to be consistent with the requirements of rule 59C-1.0355(8)(a)2., which links reported admissions to Service Areas. Tidewell’s size and economies of scale allow it to provide an array of enhanced counseling services to patients, families, and the community. Tidewell operates a grief education and support center (the Center), managed by an expert in bereavement, with 10 full-time grief specialists who hold either a license as a clinical social worker or a Master’s degree in counseling, or both. Three Tidewell grief counselors are assigned to hospice patients and families in Sarasota County. In addition to counseling individuals, the Center organizes grief groups in the community. In fiscal year 2015, in Sarasota County, 865 hospice family members accessed Tidewell community group bereavement services beyond the 13-month Medicare hospice benefit period, and Tidewell also served 1,623 community group attendees with no prior hospice connection. The Center also provides, at no charge, emergency counseling interventions. Tidewell grief counselors are on call and respond to calls from law enforcement, fire-rescue, and medical personnel in the community to deal with grief associated with serious accidents and disasters. Tidewell has an extensive and well-organized professional relations and outreach program to ensure that existing and new physicians, nursing homes, ALFs, and other potential referral sources are aware of Tidewell’s services. Tidewell provides literature to physicians, nurse practitioners, and physician assistants for use in promoting end-of-life conversations with patients early, and to let physicians know that Tidewell is available 24/7, every day, to evaluate their patients for hospice eligibility. Tidewell provides a significant number of well- organized, well-staffed, professional programs to patients, families, and the community free of charge, which are not otherwise required or reimbursed under the Medicare hospice benefit. The programs include complementary services, the Tidewell Honors Veterans program, and the Transitions program. Complementary services are methods of intervention that work in conjunction with traditional medicine and nursing interventions to provide the patient with moments of joy, stress relief, and lasting legacies for the family. Complementary service therapies include pet therapy, massage, horticultural intervention, expressive arts, music therapy, humor, Reiki, aromatherapy, care and touch, life legacy and reminiscence. The complementary therapy department is staffed by two massage therapists and one expressive arts facilitator, contracts with two horticulture contractors and one expressive arts contractor, and relies heavily on volunteers. Sarasota Service Area 8D had a total of 1,201 complementary visits from Tidewell staff, contractors, and volunteers in fiscal year 2015. In fiscal year 2015, Tidewell served 478 veterans in its Tidewell Honors Veterans hospice program and 42 patients in its Transitions program in Sarasota County. The Tidewell Honors Veterans is a program that recognizes veterans and expresses the community’s gratitude for military service. The Transitions program is a pre-hospice, volunteer- operated program that offers practical assistance to those in the community with a diagnosis of one year or less life expectancy, but who have not elected hospice care. Tidewell employs a child life specialist and participates in Florida’s Partners in Care (PIC) program, which allows pediatric patients with chronic terminal illnesses to receive curative care while also electing hospice palliative care. Tidewell currently has 21 children enrolled in its PIC program and four pediatric hospice patients. The PIC program operates at a deficit because the reimbursement rate from the waiver program is insufficient to fully compensate the staff. Other than the waiver program funding, there are no grants or other funding services for the PIC program. Tidewell has a contract with music therapists for a combined 30 hours a week to see PIC patients and consult with pediatric hospice patients. Currently, Tidewell has a total of 1,002 volunteers that are active and available for assignment. Tidewell employs an expert in non-profit management to organize and maintain its volunteer services. Tidewell has four volunteer coordinators physically located in Sarasota County. Each of the Sarasota volunteer coordinators works with 120 to 150 volunteers. CCH submitted anecdotal evidence that one cardiologist (Dr. Rosenfeld) and two nursing facilities (according to Dr. Robinson) have had difficulty with referrals to Tidewell. That evidence, however, from a health planning perspective, especially in view of the credible evidence submitted by Tidewell demonstrating the quality, accessibility, and extent of utilization of Tidewell services in Sarasota County, is entitled to little weight. Persuasive evidence submitted by Tidewell showed significant volume of admissions at Tidewell, effective overall outreach to physicians, and Tidewell’s success in penetrating Service Area 8D. The ability of Applicant to provide quality of care and Applicant’s record of providing quality of care. § 408.035(1)(c), Fla. Stat. In the State Agency Action Report (SAAR), AHCA addressed CCH-LTD’s history of providing quality of care in its existing Florida operations and found that CCH-LTD attained a “five-of-five star rating” in each of five survey questions, meaning “respondents were 90 to 100 percent satisfied with the hospice’s performance.” CCH-LTD has an established Quality Assessment Performance Improvement (QAPI) program in place throughout all of its operations, with continual assessment of quality measures, ongoing and periodic audits of patient medical charts, quarterly meetings between 12 Regional QAPI coordinators and local programs, and monitoring to assure follow-up on improvement items. In addition, CCH-LTD conducts internal periodic surveys to assure ongoing compliance. All of CCH-LTD’s 39 programs have been accredited by CHAP, which is considered as the “gold standard” for hospice quality. According to CCH-LTD’s current Florida regional director, the CCH-LTD affiliate in Florida Service Area 6B had a “miscommunication” with AHCA in 2015 regarding its hospice license renewal application. In February 2015, AHCA required CCH-LTD to close its affiliate’s hospice in Service Area 6B for failure to submit a renewal application and to discharge or transfer its approximately 230 patients to other hospices, until the affiliate obtained a new license in June of 2015. This incident, in all probability, interfered with the continuity of care for those patients because of CCH-LTD’s miscommunication with AHCA. CCH, however, cooperated in the transfer of patients and the transfers were made in an orderly process until the issue with the temporary lapse in license was fully resolved. After that, AHCA reissued CCH its license, and AHCA has subsequently surveyed the program and found it to be without deficiencies. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. § 408.035(1)(d), Fla. Stat. CCH demonstrated that it has the resources available, or can secure the necessary resources, for accomplishment of the proposed project. The extent to which the proposed services will enhance access to healthcare for residents of the service district. § 408.035(1)(e), Fla. Stat. While the addition of another hospice would provide a choice for hospice care in Sarasota County, considering the present zero fixed need determination for Service Area 8D, as well as evidence of the quality services and accessibility currently provided by Tidewell, it is found that approval of the Application would not materially improve access to hospice care for residents of Service District 8D. To the contrary, evidence presented by Tidewell demonstrated that approval of CCH’s proposed program will, immediately and over the long term, have a material adverse impact on Tidewell and the hospice services provided by Tidewell to the Sarasota community. Tidewell, using reasonable assumptions regarding length of stay, number of patients that would be lost to CCH, and variability of Tidewell’s expenses, demonstrated that a reasonable expectation from approval of the Application will cause Tidewell to incur a lost contribution margin per patient day of $72.92, totaling at least $1.2 million for each year that CCH captures 300 or more of Tidewell’s Service Area 8D admissions. If CCH captures 300 admissions annually, Tidewell reasonably and conservatively expects, based on a calculation of average historical donations per admission, to lose at least $145,000 in philanthropy annually. Considering available options to absorb the contribution margin and philanthropic losses in the event CCH is approved, and because Medicare hospice benefit core services are required by law, Tidewell determined that operational and administrative costs for core patient and family services costs would not be cut (except for reducing the variable costs associated with the 300 lost admissions accounted for in Tidewell’s contribution margin analysis). Given the impact, approval of the Application would require Tidwell to look for reductions to costs in its enhanced patient services (not otherwise required by the Medicare hospice benefit) and community education and support services, which Tidewell currently provides and for which Tidewell incurred costs in fiscal year 2015 of approximately $1.5 million exclusive of grants. Specifically, and within two years of CCH’s second year of operation, Tidewell reasonably estimated that it will need to eliminate: 100 percent of Tidewell’s community grief education and support groups; the Transitions Program; 100 percent of complementary services to patients; 100 percent of its volunteer program; and Tidewell’s Childrens Program. Tidewell has cut community services in the past when operating revenue dropped significantly. Between fiscal year 2012 and fiscal year 2014, when operating revenue dropped $10 million, Tidewell had to cut $346,000 from bereavement services and over $300,000 from complementary services. This history indicates a willingness and likelihood Tidewell would make similar cuts if a competitor reduces Tidewell’s contribution margin by $1.5 million. CCH contends that Tidewell can easily absorb any lost margin because Tidewell had an increase in unrestricted net assets in 2015 of approximately $10 million. However, approximately $6 million of Tidewell’s 2015 asset increase came from philanthropy, of which $2.5 million came from a single donor. Another $1 million of the increase came from investments. Neither philanthropy nor investment income are considered assured for purposes of projecting future net assets and funding losses. In reality, and disregarding philanthropy and interest, a net operating revenue of only approximately $2.7 million would have been available to Tidewell to absorb a contribution margin loss of $1.2 million in 2015. It is fair to characterize the impact of terminating these Tidewell programs as significant and adverse in the short- and long-term for Tidewell and the services it provides to the Sarasota community. The immediate and long-term financial feasibility of the proposal. § 408.035(1)(f), Fla. Stat. Assuming CCH secures 300 admissions in year two of its proposed project, its project appears financially feasible in the near and long-term. The extent to which the proposal will foster competition that promotes quality and cost effectiveness. § 408.035(1)(g), Fla. Stat. While approval of the Application would increase competition, in view of other findings regarding the negative impact on Tidewell and likely interference with its thriving hospice program with complementary, voluntary and overall quality, it is concluded that competition of the type proposed by CCH is not needed in Service Area 8D, nor would it promote quality and cost effectiveness. The applicant’s past and proposed provision of healthcare services to Medicaid patients and the medically indigent. § 408.035(1)(i), Fla. Stat. CCH demonstrated a history of providing services to both Medicaid and charity patients. The Applicant projects 4.3 percent of patient days to be provided to Medicaid and charity patients and conditioned the Application on contracting with the Medicaid managed care plan provider.
Recommendation Accordingly, based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10337. DONE AND ENTERED this 19th day of September, 2016, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of September, 2016.
The Issue Whether the Certificate of Need (CON) applications filed by Odyssey Healthcare of Collier County, Inc., d/b/a Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and HPH South, Inc. (HPH), for a new hospice program in the Agency for Health Care Administration (AHCA or the Agency) Service Area 5B, satisfy, on balance, the applicable statutory and rule review criteria to warrant approval; and whether such applications establish a need for a new hospice based on special circumstances, and, if so, which of the two applications best meets the applicable criteria for approval. Holding: Neither applicant proved the existence of special circumstances warranting approval of an additional hospice program in Service Area 5B. Although neither application is recommended for approval in this Recommended Order, both applicants, on balance, satisfy the applicable statutory and rule criteria. Of the two, HPH best satisfies the criteria.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Subsection 408.034(1), Florida Statutes. HPH HPH is a newly created not-for-profit corporation formed to initiate hospice services in Pinellas County. HPH is a wholly-owned subsidiary of Hernando-Pasco Hospice, Inc., d/b/a HPH Hospice and is one of the oldest, not-for-profit community hospices in Florida. HPH Hospice was incorporated in 1982 to serve terminally ill persons within Hernando and Pasco Counties. HPH was approved to expand its services north to Citrus County in 2004. HPH is a high-quality provider of hospice services in the service areas where it currently operates. It provides pain control and symptom management, spiritual care, bereavement, volunteer, social work, and other programs. HPH employs a physician-driven model of hospice care, with significant involvement of hospice and palliative care physicians who are physically present treating patients in their homes. The number of physician home visits provided to hospice patients by HPH physicians is larger than many hospices in Florida and throughout the United States. In 2009, HPH provided over 35,000 visits by physicians, advanced registered nurse practitioners, and licensed physician assistants to its hospice patients. The majority of these visits occurred in the patients' homes. HPH operates multiple facilities that allow for provision of services to patients in various settings and hospice levels of care. Among its facilities, HPH operates four buildings it calls Care Centers, at which patients can receive general in-patient care. Additionally, HPH operates four units which it calls Hospice Houses. Those units provide for residential care in a home-like environment for patients who do not have caregivers at home or who otherwise are in need of a home. HPH receives no reimbursement for room and board for the care provided at its Hospice Houses and expends over $1.4 million annually in charity care to operate these Hospice Houses for the benefit of its patients. HPH has an established record of providing all levels of hospice care and does not use its Care Centers as a substitute for providing continuous care in the patient's home when such care is needed. Annually, HPH provides approximately percent of its patient days for continuous care patients. HPH has well-developed staff education and training programs, including specialized protocols for care and treatment of patients by terminal disease type such as Alzheimer's, COPD, cancer, failure to thrive, and pulmonary diseases. Odyssey Odyssey is the entity applying for a new hospice program in Service Area 5B. The sole shareholder of Odyssey is Odyssey HealthCare Operating B, LP, which is a wholly-owned subsidiary of Odyssey HealthCare, Inc. (OHC), Odyssey's parent and management affiliate. Odyssey was formed for the purpose of filing for CON applications in Florida and, thereafter, for owning and operating hospice programs in Florida. OHC is a publicly-traded company founded in 1996 and focuses on caring for patients at the end of life's journey. OHC's sole line of business is hospice services. OHC's patient population consists of approximately 70 percent non-cancer and 30 percent cancer patients. OHC is one of the largest providers of hospice care in the United States. OHC has approximately 92 Medicare-certified programs in 29 states, including established programs in Miami-Dade (Service Area 11) and Volusia (Service Area 4B) Counties and a start-up program in Marion County (Service Area 3B), which was licensed in January 2010. Over four years ago, OHC was the subject of an investigation by the United States Department of Justice that ultimately resulted in a settlement and payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of any wrongdoing by OHC. As part of the settlement, OHC entered into a corporate integrity agreement (CIA) with a term of five years. Odyssey is now in the final year of the CIA. The settlement and CIA allow OHC to self-audit to ensure compliance with the Medicare conditions of participation, which is the first and only time the OIG has allowed a provider to self audit. Suncoast Suncoast is a large and well-developed comprehensive hospice program serving Pinellas County, Service Area 5B. Suncoast is the sole provider of hospice services in Service Area 5B. According to data reported to the Department of Elder Affairs, Suncoast had 7,375 admissions and provided 795,102 patient days of care in 2009, more than any other Florida hospice. In that same year, Suncoast provided 115,247 patient days of care in assisted living facilities, the third highest total in Florida. Suncoast considers itself a model for hospice across the United States and the world. Suncoast has a large depth and breadth of programs, including community programs offered by its affiliate organizations, such as the AIDS Service Association of Pinellas County, the Suncoast Institute, and Project Grace. Suncoast is active in the national organization for hospices and interacts with programs that use it as a model and resource. Unlike the applicants, Suncoast does not use the Medicare conditions or definitions to limit or define the scope of services it provides. Under the Florida definition, hospice is provided to patients with a life expectancy of 12 months or less. HPH, by way of contrast, uses the Centers for Medicare and Medicaid Services definition for hospice, i.e., a prognosis of six months or less. Overview of Hospice Services In Florida, hospice programs are required to provide a continuum of palliative and supportive care for terminally ill patients and their families. Under Florida law, a terminally ill patient has a prognosis that his/her life expectancy is one year or less if the illness runs its normal course. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice benefits if their life expectancy is six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, including nursing, social work, pastoral care or counseling, dietary counseling, and bereavement counseling. Physician services may be provided by the hospice directly or through contract. Hospices are required to provide four levels of hospice care: routine, continuous, in-patient, and respite. Hospice services are furnished to a patient and family either directly by a hospice or by others under contractual arrangements with a hospice. Services may be provided in a patient's temporary or permanent residence. If the patient needs short-term institutionalization, the services are furnished in cooperation with those contracted institutions or in a hospice in-patient facility. Routine home care comprises the vast majority of hospice patient days. Florida law states that hospice care and services provided in a private home shall be the primary form of care. Hospice care and services, to the extent practicable and compatible with the needs and preferences of the patient, may be provided by the hospice care team to a patient living in an assisted living facility (ALF), adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. A resident or patient living in an ALF, nursing home, or other facility, who has been admitted to a hospice program, is considered a hospice patient, and the hospice program is responsible for coordinating and ensuring the delivery of hospice care and services to such person pursuant to the statutory and rule requirements. The in-patient level of care provides an intensive level of care within a hospital setting, a skilled nursing unit or in a freestanding hospice in-patient facility. The in- patient component of care is a short-term adjunct to hospice home care and home residential care and should only be used for pain control, symptom management, or respite care in a limited manner. In Florida, the total number of in-patient days for all hospice patients in any 12-month period may not exceed 20 percent of the total number of hospice days for all the hospice patients of the licensed hospice. Continuous care, similar to in-patient care, is basically emergency room or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care, like in-patient care, was designed to be provided for short amounts of time, usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. Respite care is generally designed for caregiver relief. It allows patients to stay in hospice facilities for brief periods to provide breaks for the caregivers. Respite care is typically a very minor percentage of overall patient days and is generally designed for caregiver relief. Medicare reimburses the different levels of care at different rates. The highest level of reimbursement is for continuous care. Approximately 85 to 90 percent of hospice care is covered by Medicare. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a terminally ill patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. There is no "bright line test" as to what constitutes palliative care and what constitutes curative care. The determination is made on a case-by-case basis depending upon the facts and circumstances of each such case. However, palliative care generally refers to services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary group consisting of physicians, nurses, social workers, and various counselors, including chaplains. There are certain services required by individual hospice patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are also more complicated and expensive non-covered services, such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Suncoast provides, and both Odyssey and HPH propose, to provide hospice patients with all of the core services and many of the other services mentioned above. Fixed Need Pool The Agency has a numeric need formula within its rule for determining the need for an additional hospice program in a service area. See Fla. Admin. Code R. 59C-1.0355(4)(a). When applying the formula in the present case, AHCA ultimately determined that the fixed need was zero for the second batching cycle of 2009. In the absence of numeric need, an applicant must document the existence of one of three delineated special circumstances set forth in Florida Administrative Code Rule 59C-1.0355(4)(d), i.e., (1) That a specific terminally ill population is not being served; (2) That a county or counties within the service area of a licensed hospice program are not being served; or (3) That there are persons referred to hospice programs who are not being admitted within 48 hours. Absent numeric need or one of the delineated special circumstances, there cannot be approval of a new hospice program. In forecasting need under the hospice rule's methodology, AHCA uses an average three-year historical death rate. It applies this average against the forecasted population for a two-year planning horizon. AHCA also uses a statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The statewide average penetration rate is subdivided into four categories: cancer over age 65, cancer under age 65, non-cancer over age 65, and non-cancer under age 65. The projected hospice admissions (based on death rate and projected population growth) in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceed 350, a new hospice is warranted, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for two years. In the instant case, AHCA's final projections showed the net un-met need for hospice's admissions in Service Area 5B was 318, i.e., below the threshold amount of 350 necessary to establish need for an additional hospice program. The fixed need pool for the purpose of this administrative hearing is zero. HPH is primarily basing its determination of need for a new hospice on its contention that there are three specific terminally ill population groups in Pinellas County that are not being served. Odyssey is primarily basing its determination of need for a new hospice on its contention that there are persons being referred to the existing hospice program in Pinellas County who are not being admitted within 48 hours. The Proposals HPH's Proposal HPH proposes to establish its new hospice program in Pinellas County, Service Area 5B. HPH is currently licensed to provide hospice care in three contiguous sub-districts north of Service Area 5B, i.e., in Hernando, Pasco, and Citrus counties. HPH's corporate headquarters is located in Pasco County, ten to 15 minutes from the Pinellas County border. HPH currently operates a home health agency in Pinellas County. HPH's CON application identifies special circumstances justifying approval of its proposal, including four sub-populations of terminally ill persons who are currently underserved in Service Area 5B: (1) patients living in ALFs; (2) patients requiring continuous care; (3) medically complex patients; and (4) patients not being admitted within 48-hours. Another circumstance identified by HPH to support approval of its application is the fact that Pinellas County is one of the most populous and most elderly service areas in the State, and yet, it only has a single hospice provider. HPH argues that the fact Suncoast is a sole hospice provider for the service area exacerbates and contributes to the problems of gaps in available hospice services to the specific terminally ill sub-populations identified in its CON application. HPH proposes a de-centralized model of hospice service delivery similar to its model in the three contiguous counties where HPH presently provides hospice services. HPH proposes contracting with existing nursing homes and hospitals for in-patient beds ("scatter beds") throughout Service Area 5B. HPH then projects that it could offer in-patient services in the local neighborhoods of patients and families where they live, as opposed to transferring patients to a single in-patient facility for the provider's convenience. As census increases, HPH commits to establish, by month seven of operation, a dedicated in-patient unit to provide in-patient level of care and Hospice House residential care to patients in a home-like environment. Like its hospice operations in Hernando, Pasco and Citrus Counties, HPH proposes to implement its "physician- driven" model of hospice care in Service Area 5B, allowing for greater involvement of physicians in the care and treatment of hospice patients, including physician home visits. Odyssey's Proposal Odyssey proposes to address lack of competition2 in Service Area 5B and the special circumstance of patients not being admitted within 48 hours of referral. Under AHCA's hospice rule, an applicant may demonstrate the need for a new hospice provider if there are persons referred to a hospice program who are not being admitted within 48 hours. However, the applicant must indicate the number of such persons. Odyssey relies upon referral of admission statistical information previously provided by Suncoast to a sister Odyssey entity in a 2005 hospice CON matter. Suncoast at that time provided three years of data that demonstrated between 1,700 (31 percent of admissions) and 2,300 (38 percent of admissions) of patients admitted to Suncoast were admitted 72 hours or more after referral. The definition of referral by Suncoast, however, differs from the definition of referral relied upon by Odyssey. (See Paragraph 56, herein.) Odyssey also provided letters of support from the community to further evidence the existence of the 48-hour special circumstance. However, the letters of support originally appeared in an application filed by Odyssey in 2007 and were not given any weight in the instant proceeding based on their staleness. Odyssey also contends that the existence of a sole provider in Service Area 5B has created a monopolistic situation in the service area. It further contends that the lack of competition has led to the existence of a 48-hour special circumstance in Service Area 5B. Approval of Odyssey's application will, it says, eliminate the monopoly currently existing in Service Area 5B and will address the lack of competition currently occurring in Service Area 5B. Subsection 408.045(2), Florida Statutes, speaks of a "regional monopoly," but there is no credible evidence in the record to suggest that Suncoast's position as a sole provider in Pinellas County constitutes a "regional monopoly." Facts Concerning Special Circumstances Arguments Service Area Demographics Hospice Service Area 5B, Pinellas County, is a single-county hospice service area with a population of approximately one million residents. Pinellas County is currently ranked as the fourth largest county in the State in total numbers of elderly persons over 65 years of age, as well as elderly persons over 75 years of age, behind only Miami-Dade, Broward and Palm Beach Counties. Pinellas County also experienced the fourth highest number of total deaths in the State in 2008--11,268. Pinellas County's mortality rate in recent years has slowed. However, even considering a slower growth rate in the number of deaths, Pinellas County likely will remain the fourth largest county in the State in both elderly population and number of deaths through 2015. Although it is the fourth largest service area in terms of likely hospice patients, Suncoast is the sole hospice provider in Service Area 5B. By contrast, the other three largest service areas all have multiple hospice programs to serve their large elderly populations with eight providers in Service Area 11 (Miami-Dade), five providers in Service Area 10 (Broward), and three providers in Service Area 9C (Palm Beach). In assessing the extent of utilization of hospice services in Service Area 5B, HPH through its health planner, Patricia Greenberg, noted that Suncoast appears to have over-stated its utilization rate in its semi-annual reports to AHCA. Ms. Greenberg testified that Suncoast's AHCA data includes patients who are not truly hospice patients and are, instead, patients who are participating in non-hospice programs operated by Suncoast, including palliative care programs known as "Suncoast Supportive Care" and "Hospital Support." The number of such patients was not quantified by Ms. Greenberg.3 Suncoast counters that it does not let the conditions of participation define the scope and breadth of hospice services it offers. Suncoast tries not to be defined by the Medicare conditions of participation and has programs that are not covered by the benefit, including but not limited to its residential care at Woodside and its caregiver services. Specific Terminally Ill Populations HPH identified as under-served in Service Area 5B medically complex patients with complex medical needs, including multiple IVs, wound vacs, ventilator, complex medications, or acutely uncontrolled symptoms in multiple domains. These are the same kinds of patients who would require continuous care within their homes. Hospice patients have become more highly acute in recent years. More patients are being discharged from hospitals with highly complex medical conditions, often directly from hospital intensive care units. Patients discharged directly from hospitals tend to have higher acuity levels. Ms. Greenberg reviewed Suncoast's data on hospital discharges and found Suncoast statistically lags behind HPH in caring for medically complex patients discharged from hospitals. Looking at a three-year average, HPH had 3.7 percent of its hospice discharges directly admitted from hospitals, compared to percent for Suncoast. This is more than a 50-percent deviation between hospital discharges to hospice for HPH versus Suncoast. However, a comparison of Suncoast to HPH does not establish that there is a specific underserved population in Service Area 5B which is not receiving services. One case manager testified to sometimes not being able to timely find hospice placements for medically complex patients. Such patients would then have to be transferred from the hospital to a nursing home or rehabilitation facility. However, she did not testify that this specific terminally ill population was not being served, only that they were being served somewhere other than in an in-patient hospice bed. Medically complex patients, including those needing continuous care, were another specific terminally ill population identified by HPH. At page 54 of her deposition, Deborah Casler, a case manager at Helen Ellis Hospital, addressed those populations, saying, "[w]hat I am going to say is if anybody needed continuous care through Suncoast, it would happen, but it wasn't always a quick and easy process." HPH compared its percentage of continuous care patient days with Suncoast, showing that HPH had more. That does not equate to an absence of service for any specific terminally ill population. HPH attempts to create a presumption that services are not being provided by conditioning its application on a certain percentage (3 percent) of days for continuous care patients. That is merely a projection of intent; it is not evidence that a certain population is not currently being served. Assisted Living Facility Residents HPH provided anecdotal evidence that some ALFs in Pinellas County were not pleased with the services being provided by Suncoast. One ALF administrator was dissatisfied that Suncoast took a long time to admit her resident (but the resident was ultimately admitted). Another was disappointed with Suncoast because it took a long time to get medications for her resident. Another felt like Suncoast's quality of care was inferior. HPH provides a greater percentage of hospice services to ALF residents in Pasco (12.7 percent), Hernando (26.5 percent), and Citrus (23.5) counties than Suncoast provides to ALF residents in Pinellas County. There are approximately 215 ALFs in Pinellas County of varying sizes, i.e., from three beds to almost 500 beds. Suncoast did not provide services to all of them. There was no showing, however, that any resident of an ALF who needed or requested hospice services was denied such care. None of the evidence presented by HPH establishes the existence of a group of ALF residents who were not being served in the service area; nor does the evidence prove that any specific ALF residents are, in fact, terminally ill. The 48-Hour Admission Provision Neither Suncoast, nor Odyssey presented any hard data on timeliness of admissions. In fact, none of the parties could agree as to what action constitutes an admission. Suncoast says an admission must include a physician order and a consent by the patient and family. Odyssey identifies a referral as a telephone call from a family member, even if the call is simply an inquiry as to what services might be available. Odyssey says that the majority of its patients are admitted within three hours of referral and at least 80 percent are admitted within 24 hours. During that three-hour time frame, Odyssey will contact the family, contact the physician in order to evaluate and admit, if appropriate, screen the patient to ensure he or she meets the eligibility guidelines, go out and meet with the family, and provide support while necessary information is being gathered. HPH candidly admits that the issue of admissions within 48 hours does not, in and of itself, justify the approval of a new hospice program in Service Area 5B. However, HPH argues, it is an element of hospice services that HPH would do better than the other parties. There is no credible evidence in the record that an identified number of persons in Pinellas County had not been admitted to hospice within 48 hours of referral. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1 through 5: Commitment to serve populations with unmet need.-- There is no numeric need in this matter. Neither applicant proved the existence of a population with unmet need. Commitment to provide in-patient care through contract with existing health care facilities.-- Both HPH and Odyssey intend to use scatter beds and to contract with existing health care providers. Commitment to serve homeless and AIDS patients, as well as patients without caregivers.--Both applicants have shown a history of serving such groups and commit to do so in Pinellas County. Not Applicable. Commitment to provide services not covered by insurance, Medicare or Medicaid--Both applicants have a good history of providing indigent care and commit to do so in Pinellas County. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. The state health plan addresses the concept of letters of support. Again, as neither applicant proved special circumstances warranting approval of a new hospice program, this comparison is unnecessary. However, there was considerable testimony and argument at final hearing concerning letters of support and the issue deserves some discussion. Each applicant provided letters of support. In fact, HPH's application contained over 250 letters of support from a wide range of writers, including physicians, nurses, ALF and nursing home administrators, and others. AHCA even complimented HPH's letters of support in both quantity and quality. Such letters are, of course, hearsay and cannot be relied upon to make findings as to the statements made herein. However, the fact that HPH generated so many letters of support is a fact that lends additional credence to their application. Odyssey's letters of support, by comparison, were much fewer in number. The letters were also dated, having come from a CON application filed some three years prior to the application currently at issue. The content of those letters would also be hearsay. And in the present action, the age of the letters would reduce their significance as support for the Odyssey CON application at issue. Statutory Review Criteria The Agency reviews each CON application in context with the criteria set forth in Subsection 408.035(1)(a) through (j), Florida Statutes: Subsection 408.035(1)(a), Florida Statutes--The need for the health care facilities and health services being provided There was no need projected by AHCA under its need methodology. Neither party established the existence of special circumstances warranting approval of a new hospice program in Service Area 5B. Subsection 408.035(1)(b), Florida Statutes-- availability, quality of care, accessibility, and extent of utilization Suncoast is the sole provider of hospice services in Service Area 5B. This service area is one of the largest in the State. There are other service areas which have a single hospice provider, but Service Area 5B is the largest service area to be served by a single hospice provider. Service Area 5B experienced the fourth largest number of deaths in the State in 2008, an important factor in the provision of hospice care. Suncoast has 15 interdisciplinary care teams, each of which, lead by a patient-family care coordinator, includes RNs, home health aides, counselors, volunteers, and a chaplain. Suncoast has a north community service center in Palm Harbor that houses four patient care teams. On the back of that property is Brookside, Suncoast's newly built 30-bed in-patient facility. In central Pinellas County, Suncoast has its main service center with six patient care teams along with administrative and support offices. Suncoast has a pharmacy, as well as durable medical equipment and infusion departments, located in Largo. In central Pinellas County is Suncoast's ten-acre, 72-bed Woodside facility. Thirty-six of the beds are in-patient and 36 are residential. On the back of the property are 18 efficiency apartments called "Villas" with separate living, sleeping and kitchen areas. When patients become too ill to remain at home, their spouse may move into a villa until the patient dies. In the southern portion of the county is Suncoast's south community service area which houses five patient care teams, as well as "ASAP." ASAP is Suncoast's AIDS Service Association of Pinellas County which serves and provides support to patients with HIV and AIDS. Suncoast also has in-patient contracts with every hospital in Pinellas County and a number of contracts with nursing homes for in-patient care. Patients may receive continuous care in the home whether that is a residence, an ALF, or a nursing home or may receive care in the Suncoast in-patient unit. There is disagreement over whether Suncoast accurately reports its admissions and whether all reported admissions are actually hospice patients. Further, HPH points out that its penetration rate in counties where it operates is much higher than Suncoast's penetration rate in Pinellas County. However, the most credible evidence is that Suncoast is effectively serving the needs of hospice-eligible residents of Service Area 5B. Subsection 408.035(1)(c), Florida Statutes--ability to provide quality of care and record of providing quality of care Both applicants satisfy this criterion. Both applicants can provide a broad range of quality hospice services to all its patients. HPH touts its physician model, including physician home visits, as evidence of its commitment to quality care. Physician visits have been proven to help patients get pain under control more quickly, an important factor considering ten percent of hospice patients die within 48 hours of admission. Odyssey is a large company and has extensive operational policies and procedures concerning provision of quality care to its patients. Odyssey has a program called Care Beyond which it believes will enhance quality care in Service Area 5B. Odyssey has had some regulatory violations while HPH has not. However, Odyssey has resolved those violations favorably. Subsection 408.035(1)(d), Florida Statutes-- availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(e), Florida Statutes--extent to which proposed services will enhance access to health care for residents of the service district Both applicants satisfy this criterion. HPH is the existing provider of hospice services in the adjacent service area to Service Area 5B. HPH can use its existing contacts in Service Area 5B to extend its service to residents of that area. HPH has already established relationships with Airamed Corporation and its 11 nursing homes and ALF in Service Area 5B. HPH also commits to being more directly involved with smaller ALFs in Pinellas County. Odyssey is a large hospice with significant resources which can be utilized to enhance access for residents of Service Area 5B. It commits to bring quality personnel to Service Area 5B as part of its successful start-up procedures. Subsection 408.035(1)(f), Florida Statutes--immediate and long-term financial feasibility The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(g), Florida Statutes--extent to which proposal will foster competition that promotes quality and cost-effectiveness Both applicants are established providers of hospice services. The absence of any other hospice provider in Pinellas County means there is no effective competition. If either of the applicants was granted a CON for a new hospice in Service Area 5B, it would likely foster competition and promote quality and cost-effectiveness. Subsection 408.035(1)(h), Florida Statutes--costs and methods of construction, etc. This criterion is not applicable to the instant case. Subsection 408.035(1)(i), Florida Statutes--the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Both applicants meet this criterion. HPH offers extensive services that go beyond the Medicare requirements of participation. It also operates "Hospice Houses" which provide room and board to homeless hospice patients. Odyssey's record of indigent care is evidenced by the fact that approximately 55 percent of its non-Medicare net revenue is from Medicaid, and 9.5 percent of its non-Medicare services are provided to indigent patients. Subsection 408.035(1)(j)--designation as a Gold Seal Program This criterion is not applicable to the instant case. Ultimate Findings of Fact The Agency determined that there is no need for an additional hospice in the service area based upon the fixed need pool formula. Neither applicant was able to establish the existence of special circumstances warranting approval of a new hospice in the service area. There is no specific terminally ill population which is not receiving hospice services that has been identified by the applicants. There is no persuasive evidence that there is an identifiable number of individuals who were referred to hospice, but were not admitted within 48 hours.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration denying the CON applications of HPH South, Inc. (No. 10066), and Odyssey Healthcare of Collier County d/b/a Odyssey Healthcare of Central Florida (No. 10068). DONE AND ENTERED this 30th day of November, 2010, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of November, 2010.
The Issue Whether the certificate of need (“CON”) applications filed by Cornerstone Hospice & Palliative Care, Inc. (“Cornerstone”); Suncoast Hospice of Hillsborough, LLC (“Suncoast”); and VITAS Healthcare Corporation of Florida (“VITAS”), for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A (Hillsborough County), satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications, on balance, best meets the applicable criteria for approval.
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing, and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA AHCA is designated as the single state agency for the issuance, denial, and revocation of CONs, including exemptions and exceptions in accordance with present and future federal and state statutes. AHCA is also the state health planning agency. See §§ 408.034(1) and 408.036, Fla. Stat. In addition, AHCA is the agency designated as responsible for licensure and deficient practice surveys for health facilities, including hospices. See ch. 408, Part II and § 400.6005-.611, Fla. Stat. Pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), the Agency established a numeric formula for determining when an additional hospice program is needed in a service area. The Agency's need formula determined a need for one new hospice program in SA 6A in the application cycle at issue. That determination is unchallenged. None of the applicants argued that more than one new hospice program should be approved for Hillsborough in this cycle. Suncoast The Hospice of the Florida Suncoast (“Suncoast Pinellas”) was founded in 1977, and was one of the first hospices in Florida, and in the nation. Although it operates only in Pinellas County, Suncoast Pinellas has grown to become one of the largest nonprofit hospices in the country. Suncoast Pinellas is a subsidiary of Empath Health (“Empath”), which also provides a number of non-hospice services. As discussed further below, Empath is currently undergoing a merger with Stratum Health System (“Stratum”), which operates Tidewell Hospice in Sarasota and Manatee Counties. The Chief Executive Officer (“CEO”) of Empath and Suncoast Pinellas is Rafael Sciullo. Mr. Sciullo was recruited to be CEO of Suncoast Pinellas in 2013, where he has served ever since. When Mr. Sciullo arrived at Suncoast Pinellas, the company operated a human immunodeficiency virus (“HIV”) testing and treatment program, a PACE program, a home health program, and a palliative care program. Mr. Sciullo became concerned that patients in the HIV, PACE, and home health programs were not comfortable hearing the word “hospice,” as those patients did not view themselves as hospice patients. Mr. Sciullo reorganized Suncoast Pinellas by creating Empath in order to alleviate this concern with a more inclusive and mission directed organization. Empath is an administrative services provider that provides support to its affiliates, which include Suncoast Pinellas, Empath Partners in Care (“EPIC”),2 Suncoast PACE, Suncoast Hospice Foundation, and programs for palliative care, pharmacy, durable medical equipment (“DME”), and infusion services. Through its affiliates, Empath already provides several services within Hillsborough, including EPIC HIV services and support, and palliative care. The federal definition of hospice care requires a prognosis of a six- month or less life expectancy. However, Florida’s definition permits patients with a 12-month prognosis. Under its supportive care program, Suncoast Pinellas offers hospice services to patients with a prognosis of six to 12 months. As one of the largest not-for-profit hospices in the nation, Suncoast Pinellas offers specialized programs for veterans, the Jewish population, African Americans, the Hispanic population, and disease groups such as heart failure, Alzheimer’s, and COPD. The applicant entity for the CON is Suncoast Hospice of Hillsborough, LLC. If approved, Suncoast will appear beside Suncoast Pinellas in Empath’s organizational chart, operating as a subsidiary under the Empath Health, Inc., family of companies. Empath has entered into a Memorandum of Understanding with Stratum to merge the two organizations. The merger has not yet been accomplished; the companies are currently in the process of conducting due 2 Empath’s EPIC program provides programs and services to persons impacted by HIV and AIDS throughout the Tampa Bay area. diligence. However, the two companies have already agreed that if the merger is consummated, Mr. Sciullo will serve as the CEO of the merged entity, and will be in charge of both original entities after the merger. According to Mr. Sciullo, the merger will not distract or otherwise serve as an impediment to Suncoast’s plans to implement its new hospice program in Hillsborough. Cornerstone Cornerstone is a 501(c)(3) community-based, not-for-profit entity, founded in 1981 by compassionate nurses in Eustis, Florida, to care for patients during their last days of life. Licensed in 1984, Cornerstone (formerly, Hospice of Lake and Sumter, Inc.) has since grown to serve three hospice service areas (3E, 6B, and 7B) which encompass seven central Florida counties, including Polk County, which is contiguous to Hillsborough. Cornerstone has spent more than 35 years serving tens of thousands of patients and their loved ones in the Central Florida region. As a local, not-for-profit hospice, Cornerstone’s governing body is comprised of leaders from the communities it serves, and its board would be expanded to include new members from Hillsborough. This fosters local accountability to the populations Cornerstone serves. Due to its not-for-profit status, Cornerstone is also legally and ethically bound to benefit its communities, and its earnings are reinvested locally rather than inuring to the benefit of private owners. The Cornerstone Hospice Foundation is an independent, 501(c)(3), nonprofit foundation led by community volunteers. The purpose of the Foundation is to raise money for Cornerstone’s community programs, hospice houses, and for people with no method of paying for hospice. Cornerstone Health Services, LLC, is an affiliated entity which provides non-hospice palliative care services to patients. Cornerstone also includes Care Partners, LLC, which is a consulting and group purchasing organization that provides information and materials to other hospices and group purchasing options. Cornerstone leadership has extensive experience in hospice, including development and expansion of new programs in Florida and elsewhere. Cornerstone has achieved significant growth and expansion within its existing service areas in recent years, led largely by the team that would lead Cornerstone’s expansion into Hillsborough. Cornerstone serves all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, disability, military status, marital status, pregnancy, or other protected status. Hospice and palliative care are the only healthcare services Cornerstone provides. This focus assures that Cornerstone is committed to providing high quality care to meet the needs of hospice patients and their families. VITAS VITAS Healthcare Corporation (“VITAS Healthcare”), the corporate parent of VITAS, is the largest provider of end-of-life care in the nation. VITAS Healthcare was initially founded in 1978 in South Florida. At that time, its leaders helped organize bipartisan legislative efforts to establish the state and federal regulatory mechanisms that guide the provision of hospice services today. Upon its inception, VITAS programs in Dade and Broward Counties participated in a federal demonstration project that resulted in the development of model clinical protocols and procedures used by hospice programs across the country. In 2018, VITAS Healthcare served 85,095 patients and maintained an average daily census of 17,743 patients among its 47 hospice programs in 14 states and the District of Columbia. As of 2018, VITAS Healthcare employed 12,176 staff members, including over 4,700 nurses nationwide. VITAS currently serves 46 of Florida’s 67 counties, which covers about 72% of Florida’s population. VITAS serves 16 of AHCA’s 27 hospice service areas under three separate licenses. VITAS successfully operates 34 satellite offices in Florida and provides facility-based care through freestanding inpatient units as well as its contracts with hospitals and nursing homes. In Florida in 2018, VITAS served over 36,000 patients, providing 3.3 million days of care with an average daily census of 9,028 patients. This was no aberration—at the time of the filing of its 6A CON application, VITAS had admitted over 35,000 patients in Florida during 2019. In addition to providing the four required levels of hospice care (see ¶ 35), VITAS also provides a full continuum of palliative and supportive care, and additional unreimbursed services that are beneficial to the hospice population it serves. VITAS has over 40 years of experience as a hospice provider, and has developed comprehensive outreach, education, and staff training programs and resources designed specifically to address the unique needs of a wide range of patient types, communities, and clinical settings. Similarly, VITAS recognizes that the needs of Florida patients vary between service areas, and it has endeavored to provide programs and services tailored to meet the needs of each community. In its Florida programs, VITAS provides complete hospice care, including medications, equipment and supplies, expert nursing care, personal care, housekeeping assistance, emotional counseling, spiritual support, caregiver education and support, grief counseling, dietary, physical, occupational and speech therapy, and volunteer support. VITAS has a long history of providing significant levels of care to all patients without regard to the ability to pay, as well as a demonstrated commitment to underserved populations such as the homeless, veterans, AIDS population, and minorities. VITAS provided almost $7 million in charity care in Florida in 2018, and $7.25 million in 2019 at the time it submitted its CON application. VITAS ensures that anyone who is appropriate for hospice services has the right to access them. VITAS is committed to giving back to the communities it serves through meaningful donations. It accomplishes this goal through VITAS Community Connections, a nonprofit organization, which makes donations and grants to local organizations and families. In 2018, VITAS made over $161,000 in charitable contributions to organizations in Florida. In that same year, VITAS contributed over $700,000 to sponsoring Florida community events. At the time of filing its Hillsborough application, VITAS employed nearly 5,500 persons in Florida, 2,235 of which are nurses. VITAS encourages and assists its nurses in obtaining board certification in hospice and palliative care through training, compensation incentives, and support. Due to VITAS Healthcare’s multi-state operations, VITAS can readily recruit staff to Florida from other markets. VITAS also relies on volunteers in a variety of roles to enhance patient care. In 2018, VITAS used 1,165 active volunteers in Florida, who provided over 145,054 volunteer hours. VITAS is led by an extremely experienced and highly qualified leadership team, many of which have long and successful tenures with the company. Hospice Care Generally Hospice refers both to care provided to terminally ill patients and the entities that provide the care. Hospice care is palliative care. Palliative care relieves or eliminates a patient's pain and suffering and helps patients remain at home. It differs from curative care, which seeks to cure a patient's illness or injury. 42 C.F.R. § 418.24(d); §§ 400.6005 and 400.601(6), Fla. Stat. Hospices provide physical, emotional, psychological, and spiritual comfort and support to patients facing death and to their families. The Medicare and Medicaid programs pay for the vast majority of hospice care. The services those programs require hospices to offer and the services the programs will pay for have become, de facto, the default definition of hospice care, the arbiter of hospice services, and the decider of when a patient is terminally ill. Florida requires a CON to establish a hospice program and regulates hospices through licensure. §§ 400.602 and 408.036(1)(d), Fla. Stat. Florida considers a patient with a life expectancy of one year or less to be terminally ill and eligible for Medicaid payment for hospice care. § 400.601(10), Fla. Stat. To be eligible for Medicare payment for hospice services, a patient must have a life expectancy of six months or less. 42 C.F.R. § 418.20; 42 C.F.R. § 418.22(b)(1). A hospice must provide a continuum of services tailored to the needs and preferences of the patient and the patient’s family delivered by an interdisciplinary team of professionals and volunteers. §§ 400.601(4) and 400.609, Fla. Stat. Hospice programs must provide physical, emotional, psychological, and spiritual support to their patients. A hospice must provide physician care, nursing care, social work services, bereavement counseling, dietary counseling, and spiritual counseling. 42 C.F.R. § 418.64; § 400.609(1)(a), Fla. Stat. In Florida, hospices must also provide, or arrange for, additional services including, but not limited to, “physical therapy, occupational therapy, speech therapy, massage therapy, home health aide services, infusion therapy, provision of medical supplies and durable medical equipment [DME], day care, homemaker and chore services, and funeral services.” § 400.609(1)(b), Fla. Stat. Federal requirements are similar. 42 C.F.R. § 418.70. Hospices are required to provide four levels of care. The levels are routine home care, general inpatient care, crisis care (also called continuous care), and respite care. Since hospice’s goal is to support a patient remaining at home, hospices provide the majority of their services in a patient’s home. Routine home care is the predominant form of hospice care. Routine care is for patients who do not need constant bedside support. A hospice may provide routine care wherever the patient lives. The location could be a residence, a skilled nursing facility (SNF), an assisted living facility (ALF), some other residential facility, or a homeless camp. Continuous care, sometimes called crisis care, may also be provided wherever the patient resides. It is more intense services for a short period of time. Continuous care supports a patient whose pain and symptoms are peaking and need quick management. With continuous care, unlike routine care, a nurse may be at a patient’s bedside 24 hours a day, seven days a week. Continuous care is an option allowing a patient to avoid admission to an inpatient facility. Hospices provide general inpatient care in a hospital, a dedicated nursing unit, or a freestanding hospice inpatient facility. To qualify for inpatient care, a patient must be acutely ill and need immediate assistance and daily monitoring to the extent that they cannot be cared for at home. Hospices must offer around-the-clock skilled nursing coverage for patients receiving general inpatient care. Respite care is caregiver relief. It allows patients to stay in an inpatient setting for up to five days in order to provide caregivers respite. Florida law requires hospices to accept all medically eligible patients. Each hospice must make its services available to all terminally ill persons and their families without regard to age, gender, national origin, sexual orientation, disability, diagnosis, cost of therapy, ability to pay, or life circumstances. A hospice may not impose any value or belief system on its patients or their families, and must respect the values and belief systems of its patients and their families. § 400.6095(1), Fla. Stat. Hospices frequently offer additional, uncompensated services that are not required by Florida licensure laws or federal Medicare requirements. Pre- hospice care and community counseling are two examples. Hospices often establish programs to meet the needs of particular populations, such as the Hispanic, African American, Jewish, veteran, and HIV/AIDS communities. Cornerstone, Suncoast Pinellas, and VITAS provide the hospice services required by state laws and funded by the Medicare benefit. All three providers also offer services beyond those required by, or paid for by, government programs. The Fixed Need Pool and Preliminary Agency Decision Pursuant to its rule-based numeric need methodology, AHCA determined and published a fixed need for one new hospice program in SA 6A, Hillsborough, in the second batching cycle of 2019. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. In this instance, the difference between projected hospice admissions and current admissions in SA 6A was 863, and therefore a numeric need for an additional hospice program exists in Hillsborough.3 In addition to the three litigant applicants, three other entities filed applications seeking approval for the new program. Those three applications have been deemed abandoned and are not at issue herein. On February 21, 2020, the Agency published its preliminary decision to award the hospice CON to Suncoast, and to deny the remaining applications. Thereafter, Cornerstone and VITAS both filed timely petitions for formal administrative hearing contesting the Agency’s preliminary decision. On April 1, 2020, Suncoast filed a “Cross Petition, Notice of Related Cases and Notice of Appearance” in support of the Agency decision on the competitively reviewed applications. None of the applicants petitioning for 3 According to AHCA’s need methodology, absent a showing of “not normal” circumstances, only one new hospice program may be approved for a SA at a time, regardless of the multiples of 350 “need” that may be shown. Fla. Admin. Code R. 59C-1.0355(4)(c). hearing alleged “special circumstances” or “not normal” circumstances in their application. Service Area 6A: Hillsborough County As can be seen by the map below, Hillsborough is located on the west coast of Florida along Tampa Bay. It includes 1,048 square miles of land area and 24 square miles of inland water area. Hillsborough is home to three incorporated cities: Tampa, Temple Terrace, and Plant City, with Tampa being the largest and serving as the county seat. The county is bordered by Pasco County to the north, Polk County to the east, Manatee County to the south, and Pinellas County to the west. (Source: Google Maps) According to AHCA’s Florida Population Estimates 2010-2030, published February 2015, Hillsborough’s total population as of January 2020 was estimated to be 1,439,041. Hillsborough’s total population is expected to grow to 1,557,830 by January 2025, or 8.25% over that five-year period. In 2020, 14% of Hillsborough’s population was aged 65 and older. According to the 2010 U.S. Census, 35.4% of the county population age 65 and older has a disability, and 17.2% of the county population is below the poverty level, compared to 12.2% statewide. The Hillsborough County Department of Health (“HCDOH”) reports that the county has a diverse mix of residents, with 52% White, 16% African American, 26% Hispanic, and 5% other races. Of the Hillsborough households living below the poverty level, 23.73% are Hispanic/Latino and 31.07% are African American. Nearly 10% of Hillsborough residents report not speaking English “very well.” The most recent U.S. Census indicates that the median income for households in Hillsborough is $54,742, considerably below the national average, with 17.2% reported below poverty level. A larger percentage of the county’s residents (3.3%) received cash assistance than did the state’s residents (2.2%), and a larger percentage (15.7%) received food stamp benefits than is the case for the state overall (14.3%), as reported by HCDOH. Hillsborough is currently served by two hospice providers: Lifepath Hospice (“Lifepath”); and Seasons Hospice and Palliative Care of Tampa, LLC (“Seasons”), a for-profit company. Following approval after an administrative hearing, Seasons was newly licensed to begin operations in Hillsborough in December 2016. Florida’s hospice CON rule prevents need for a new program from being shown for a period of two years following the addition of a new program to a service area. The purpose of the two-year forbearance is to allow new programs to gain a foothold in the market, and to potentially avoid a repeated need determination in future batching cycles. Hospice admissions at Lifepath for the period of July 1, 2018, through June 30, 2019, were 6,195, and for Seasons were 601. The addition of Seasons to the service area was not successful in deterring the need for yet another new program in Hillsborough. The Application Proposals and CON Conditions Suncoast Suncoast recently applied for approval for a hospice program in neighboring Pasco County, but, after a DOAH hearing, that application was denied in favor of another applicant. From that experience, Suncoast determined to better identify local needs before applying for approval in Hillsborough. Upon learning that a fixed need pool would be announced for Hillsborough, Mr. Sciullo directed his team of executives and staff over a series of strategy meetings to conduct an independent community needs assessment of Hillsborough. Mr. Sciullo tasked Kathy Rabon to oversee the development of a community needs assessment of Hillsborough to identify potential needs of Hillsborough residents, based on key informant surveys and other assessment tools. Ms. Rabon has significant experience in conducting feasibility studies for capital projects funded by the Suncoast Hospice Foundation, which she leads. Ms. Rabon began by reviewing existing community needs assessments of the county. Those assessments identified the health needs of Hillsborough’s underserved patients, and identified community leaders that informed the assessments. Ms. Rabon then contacted many of those key informants. At hearing, Ms. Rabon described the process she used to develop a community needs assessment for Hillsborough as follows: Q. When tasked with doing an assessment for Hillsborough's hospice, where did you start? What documents did you first review? A. A community needs assessment can take quite a while when you engage focus groups and need to meet with stakeholders. We didn't have the luxury of a lot of time. We also had the luxury of knowledge that other hospitals in Hillsborough County that are not-for-profit have to periodically do a community needs assessment. So rather than start from a blank piece of paper, I turned to those community needs assessments and I began compiling and gathering as many as I could that I felt were relevant to, A, the geographic boundaries of the entire county, which some did not, but B, also were timely. And I found that the Department of Health had done a very comprehensive community needs assessment in 2015-16 that had been updated in March of 2019 that I felt would provide a lot of good information. * * * I was responsible for identifying need and, if possible, identifying perhaps solutions that could be developed as a result of a partnership or a relationship or an engagement or a future plan that we could put together that would help solve a need in Hillsborough County relative to chronic and advanced illness. In addition to the HCDOH needs assessment and update, Ms. Rabon also obtained quantitative information for her assessment from the following sources: Community Health Improvement Plan 2016- 2020, Florida Department of Health in Hillsborough County, Revised January, 2018; Moffitt Cancer Center Community Health Needs Assessment Report 2016; Florida Hospital Tampa Community Needs Assessment Report 2016; Florida Hospital Carrollwood Community Needs Assessment Report 2016; South Florida Baptist Hospital 2016 Community Needs Assessment Report; Tampa General Hospital; Community Health Needs Assessment 2016; and Community Needs Assessment St. Joseph’s Hospitals Service Area 2016. Ms. Rabon also developed a key informant survey tool to elicit qualitative information regarding the healthcare needs of Hillsborough residents. The survey specifically asked about the strengths and weaknesses of the community for treatment of persons with chronic or advanced illness, and other pressing issues relating to end of life care. Those survey questions included, among others: What is your role, and responsibilities within your organization? What do you consider to be the strengths and assets of the Hillsborough community that can help improve chronic and advanced illness? What do you believe are the three most pressing issues facing those with chronic or advanced illness in Hillsborough County? From your experience, what are the greatest barriers to care for those with chronic or advanced illness? What are the strategies that could be implemented to address these barriers? Once meetings with key informants were complete, and 25 key informant surveys were returned, Ms. Rabon summarized her findings in a final Community Needs Assessment Summary. Ms. Rabon’s findings were consistent with assessments conducted by other organizations, including HCDOH, and local hospitals. The results of the Community Health Needs Assessments, Suncoast Key Informant Surveys, and detailed letters of support, identified the following gaps in end-of-life care for residents of Hillsborough: Need for Disease-Specific Programming: High cardiovascular disease mortality rates (higher than the state average and the highest of the six most populous counties in Florida) and low percentage of patients served by existing hospice providers. Other areas where there appears to be a gap in specific end-of-life programming and a large need in terms of Hillsborough resident deaths include: Alzheimer's Disease and Chronic Lower Respiratory Disease, both of which are in the top 5 leading causes of death in the county. Need for Ethnic Community-Specific Programming Nearly 30 percent of the Hillsborough population is Hispanic, with 19 percent of the county's 65+ population falling into the Hispanic ethnic category. The concentration of 65+ Hispanic residents in Hillsborough is higher than the state average. Surveys and assessments indicate a lack of knowledge in the Hispanic/Latinx[4] community in Hillsborough regarding end-of-life care. Many of these residents speak Spanish at home and/or have limited English proficiency. Hillsborough Hispanic population has low utilization of hospice due to factors including lack of regular physician and medical care, lack of information and cultural barriers. Lack of Available Resources for Homeless and Low-lncome Populations With the 5th largest homeless population in the state, Hillsborough has 1,650 homeless residents as of a Point in Time Count conducted in February 2019. Nearly 60 percent of the area’s homeless population is considered ‘sheltered’, yet there are no resources for end-of-life care for these patients where they live, whether it be an emergency shelter, safe haven or transitional housing. Additionally, 17.2 percent of the Hillsborough population lives below the poverty level and has limited access to coordinated care, including end-of- life services. Largest Veteran Population in Florida Requires Special Programming and Large Number of Resources More than 93,000 veterans currently reside in Hillsborough, with more than one-third over the age of 65. 4 Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States. The ?-x? suffix replaces the ?-o/-a? ending of Latino and Latina that are typical of grammatical gender in Spanish. See “Latinx,” Wikipedia (last visited March 19, 2021). While most hospice programs provide special services for veterans, Suncoast Pinellas has obtained Partner Level 4 certification by We Honor Veterans, a program of the National Hospice and Palliative Care Organization (“NHPCO”) in collaboration with the Department of Veterans Affairs (“VA”). Lack of Specialized Pediatric Hospice Program in the Area Pediatric hospice programming in Hillsborough is limited, as there are no specialized pediatric hospice providers in the county. Hillsborough is home to approximately 338,000 residents ages 0-17 in 2020, and is projected to increase to more than 368,000 by 2025. The pediatric utilization rate of hospice services in Hillsborough is low compared to the general population. For the year ended March 31, 2019, there were only five pediatric patients discharged from the hospital setting to home hospice or an inpatient hospice facility, while 106 pediatric patients died in the hospital. Absence of Continuum of Care Navigation Navigation of the healthcare system was highlighted as a key driver that will bring positive improvements to overall continuum of care in Hillsborough. Hillsborough residents are not accessing hospice services at a rate consistent with the rest of the state, and either access hospice programs very late in the disease process, or not at all. Transportation Challenges for Rural Areas of the County Transportation challenges as a deterrent to seeking medical care, particularly in rural areas of Hillsborough. Approximately one-third of the Hillsborough population is considered “transportation disadvantaged” meaning they are unable to transport themselves due to disability, older age, low income or being a high-risk minor/child. Suncoast retained David Levitt and his firm as its healthcare consultant and primary drafter of its CON application. To develop Suncoast’s application, Mr. Levitt utilized numerous reliable data sources and worked with Suncoast Pinellas’s staff. Mr. Levitt credibly confirmed the need for an additional hospice program in Hillsborough based on reliable healthcare planning data. AHCA’s CON application form, adopted by rule, requires applicants to submit letters of support with their CON applications. Suncoast complied with this requirement and included numerous letters of support from the Hillsborough community. One of the key informants identified by Ms. Rabon was Dr. Douglas Holt of the HCDOH. Dr. Holt agreed to meet with Mr. Sciullo and ultimately agreed to provide a letter of support, which was included with the Suncoast application. Mr. Sciullo also personally met with Dr. Larry Fineman, the regional medical director of HCA West Florida, who provided a letter of support. HCA West Florida hospitals are key referral sources of Suncoast Pinellas’s current hospice admissions. In addition to HCA West Florida, Suncoast Pinellas has an existing relationship with other Hillsborough hospitals: St. Joseph’s, Moffitt Cancer Center and Tampa General Hospital. Suncoast received letters of support from St. Joseph’s and Tampa General. The Agency’s witness, James McLemore, testified that letters from such referral sources were highly persuasive to the Agency, as they indicate the likelihood of successful operations. Suncoast’s witness, Dr. Larry Kay, credibly testified that he obtained letters of support from Dr. Howard Tuch, Director of Palliative Medicine at Tampa General Hospital; Dr. Larry Feinman, Chief Medical Officer at HCA West Florida; and Dr. Harmatz, the Chief Medical Officer at Brandon Regional Hospital, an HCA hospital within HCA West Florida. Those letters were included with the Suncoast application. Suncoast Pinellas currently has working relationships with BayCare, HCA, AdventHealth West Florida, Tampa General, and Moffitt hospital systems. Suncoast submitted letters from BayCare and HCA, which were included with its application. Suncoast received letters specifically related to partnering with Suncoast for inpatient services from St. Joseph’s (BayCare) and Brandon Regional (HCA). Suncoast also received a letter of support related to partnering with Suncoast for inpatient services from the Inn at University Village, a long- term care facility in Hillsborough; and support from a pediatric hospitalist who provides care to terminally ill and medically fragile children at St. Joseph’s Children’s Hospital and Johns Hopkins All Children’s Hospital. Suncoast also received letters of support from numerous community organizations, including Balance Tampa Bay and The AIDS Institute. Also included with the Suncoast application were several letters of support from [Remainder of page intentionally blank] the veterans’ community, including one from the Military Order of the World Wars.5 After considering Ms. Rabon’s Community Needs Assessment, and input from key informants, Suncoast developed programs and plans to meet each of the needs identified above. Suncoast conditioned the approval of its CON on the provision of those services. In all, Suncoast offered 19 conditions in its CON application intended to meet the unique needs of Hillsborough. Condition 1: Development of Disease Specific Programing: Suncoast is committed to providing disease-specific programming in Hillsborough: Empath Cardiac CareConnections, Empath Alzheimer’s CareConnections, and Empath Pulmonary CareConnections. Dr. Larry Kay and Dr. Janet Roman credibly testified that Suncoast will fulfill Condition 1 for disease specific programming. To fulfill Condition 1, Suncoast will provide Empath Cardiac CareConnections in Hillsborough. Dr. Roman designed and currently runs the CardiacCare Connections program in Pinellas County. Dr. Roman is a national expert in developing programs across the continuum of care to assist heart failure patients. Although Suncoast Pinellas has always treated patients with heart failure, since Dr. Roman’s arrival, cardiologists have been referring patients to Suncoast Pinellas earlier than before. Dr. Roman has trained Suncoast Pinellas’s nurses in all advanced heart failure therapies, including IV inotropes, and mechanical circulatory 5 As correctly noted by Cornerstone in its Proposed Recommended Order, letters of support included in the three applications, unless adopted by the sponsoring author at hearing or in sworn deposition received in evidence, are uncorroborated hearsay, and the contents therein may not form the basis of a finding of fact. However, the letters are not being received for the truth of the matters set forth therein, but rather the number and types of support letters included in the applications are relevant generally as a gauge of the level of community support for the proposals. The Hospice of the Fla. Suncoast, Inc. v. AHCA and Seasons Hospice and Palliative Care of Pasco Cty., DOAH Case No. 18-4986 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 15, 2019) (“In a broad sense, comparison of each applicant's letters of support illuminates the differences between each applicant's engagement with the community.” FOF No. 127.). supports such as left ventricular assist devices (“LVAD”) and artificial hearts. Dr. Roman’s program has been successful at reducing hospital readmissions. Suncoast’s application provided significantly more detail about the operations of its heart program than either Cornerstone or VITAS. Cornerstone and VITAS’s descriptions of their heart programs do not reach the level of specificity of operation as Suncoast’s and are not backed up with a measure of success such as a reduction in readmissions. In furtherance of Condition 1, Suncoast will also offer Empath Alzheimer’s CareConnections. Suncoast Pinellas has already created the foundation for Empath Alzheimer’s CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. As part of Empath Alzheimer’s CareConnections, Suncoast will deploy a Music in Caregiving program for Hillsborough hospice patients, including those suffering from Alzheimer’s Disease. Suncoast will also offer Empath Pulmonary CareConnections in Hillsborough. Suncoast Pinellas has already created the foundation for Empath Pulmonary CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. Suncoast Pinellas already has several respiratory therapists full time caring for COPD and asthma patients. In Hillsborough, Suncoast plans to engage a pulmonologist as a consultant and to hire dedicated respiratory therapists as volume increases in Hillsborough. Condition 2: Development of Ethnic Community-Specific Programming Suncoast conditioned its CON application on the purchase of a mobile van staffed by a full-time bilingual LPN and a full-time bilingual social worker to discuss advanced care planning and education, and increase access to care to diverse populations. The van will operate eight hours a day, five days a week, and drive to areas in Hillsborough that have a need for the services offered by Suncoast and Empath. This outreach is intended to enhance access to care to diverse communities. The van will spend time at the HCDOH and its satellite clinics, and use Metropolitan Ministries as a resource for identifying additional locations that could benefit. The van will also visit key Latinx community locations within Hillsborough and offer Spanish language assistance. The van will be equipped with telehealth technology capabilities to link the LPN and social worker to the care navigation office to further enhance the care navigation function of the mobile van. The purpose of the mobile outreach van is to build relationships with, and trust in, the community, enhance visibility, and bring care navigation to areas of Hillsborough that may not typically access it. Suncoast Pinellas’s EPIC program has significant experience operating a mobile outreach unit. EPIC currently operates a mobile outreach and testing unit that provides HIV testing and sexually transmitted infection testing in the community. Condition 3: Development of Resources for Homeless and Low-Income Populations Suncoast conditioned its application on the development of resources for homeless and low-income populations. Under this condition, Suncoast will provide up to $25,000 annually for five years to Metropolitan Ministries. Metropolitan Ministries is a leading community-based organization in Hillsborough that serves homeless and low-income individuals. Christine Long, Chief Programs Officer for Metropolitan Ministries, provided a letter of support which was included in Suncoast’s CON application. Condition 4: Development of Specialized Veterans Program Suncoast conditioned its CON application on the development of a specialized veterans program, which includes a dedicated Veterans Professional Relations Liaison to collaborate with the local VA hospital, outpatient clinics, and veterans organizations. Suncoast Pinellas provides a wide range of specialized care for veterans, through its Empath Honors program, including Honor Flight and pinning ceremonies. Additionally, Suncoast Pinellas holds a Level 4 Certification from We Honor Veterans, a national program through the National Hospice and Palliative Care Organization (“NHPCO”) whose mission is to honor military veterans in hospice care. The NHPCO recently added a new Level 5 Partnership, for which Suncoast Pinellas has already applied for its Pinellas hospice program. Suncoast will also pursue a Level 5 Certification in Hillsborough, if awarded the CON. Condition 5: Development of Specialized Pediatric Hospice Program in Hillsborough County Suncoast will also develop a specialized pediatric hospice program in Hillsborough. Dr. Stacy Orloff started the Children’s Hospice Program at Suncoast Pinellas in 1990 and has been with Suncoast Pinellas for 30 years. Dr. Orloff helped draft the first waiver that the State of Florida submitted to CMS for approval to operate a PIC/TFK program. Once the PIC/TFK waiver was approved, Ms. Orloff led Florida’s PIC/TFK steering committee for 12 years. PIC/TFK is a Medicaid waiver program that provides palliative care services for children with a risk of a death event by age 21, and also provides counseling support for family members who lived at the child’s home, such as parents, siblings, and grandparents. A PIC/TFK provider must be a licensed hospice provider in the service area. Suncoast Pinellas has operated a PIC/TFK program in Pinellas since 2004, utilizing a pediatric interdisciplinary team to provide its PIC/TFK services. Suncoast Pinellas’s PIC/TFK program averages a census of approximately 40 children. Combining the PIC/TFK patients with pediatric patients, Suncoast Pinellas’s census averages approximately 50 children. Suncoast Pinellas has already received acknowledgment from Children’s Medical Services to permit it to operate a PIC/TFK program in Hillsborough if awarded the hospice CON. Initially, pediatric patients will be serviced by the Suncoast Pinellas pediatric staff. Suncoast Pinellas currently has sufficient staff availability to service Hillsborough at the commencement of the program. Suncoast anticipates that by the second year, the Hillsborough pediatric program will have a sufficient census to have a staff that serves only Hillsborough. VITAS’s regional Medical Director, Dr. Leyva, acknowledged that a pediatric patient will receive better care from a care team with pediatric expertise than with an adults-only team. Of the three applicants, Suncoast has demonstrated the most experience providing care to pediatric patients.6 In addition, Suncoast Pinellas has longstanding relationships with the local children’s hospitals, St. Joseph’s Children’s Hospital, and Johns Hopkins All Children’s Hospital. Concurrent care is a benefit created as part of the Affordable Care Act that allows children admitted to hospice care to continue to receive their curative care. Although all applicants have proposed providing concurrent care, only Suncoast has proposed a PIC/TFK program. Suncoast is the only applicant currently operating a perinatal loss program and miscarriage at home program. Dr. Orloff credibly confirmed that Suncoast will implement the perinatal loss program if approved in Hillsborough. Condition 6: Development of Continuum of Care Navigation Program Suncoast’s Community Needs Assessment identified that Hillsborough lacks effective access to the full continuum of healthcare services. Suncoast 6 AHCA’s witness, James McLemore, credibly testified that this is an area where Suncoast enjoys an advantage over the other applicants because “Suncoast went with an entire pediatric program.” Pinellas operates an entire care navigation department that can address any inquiry or referral regarding hospice and Empath’s other services, in order to direct that patient to the right care at the right time. All services offered by Empath, including hospice, palliative care, home health, EPIC, and PACE are available to individuals who call the Care Navigation Center. Care Navigation staff can also assist existing patients with questions involving, for example, DME. Suncoast Pinellas’s care navigation center is available 24 hours a day, 7 days a week, 365 days a year. If its application is approved, Suncoast will also offer its Care Navigation Department in Hillsborough. Condition 7: Development of a Program to Address Transportation Challenges for Rural Areas Suncoast has conditioned its application on developing a program to address transportation challenges for rural areas in Hillsborough. As part of this condition, Suncoast will provide up to $25,000 annually in bus vouchers for the first five years to current hospice patients and their families, as well as non-hospice patients. Critics of Suncoast’s plans to offer bus vouchers claimed that Hillsborough’s bus system does not reach all areas within the county. However, Suncoast has also conditioned its application on the provision of funds that may be used to purchase transportation, including ridesharing providers such as Uber. Condition 8: Interdisciplinary Palliative Care Consult Partnerships Suncoast will implement interdisciplinary palliative care partnerships with hospitals, ALFs, and nursing homes located in Hillsborough. Suncoast has already identified potential partnerships, including with Dr. Harmatz at Brandon Regional Medical Center, to launch the program. Condition 9: Dedicated Quality-of-Life Funds for Patients and Families Suncoast is committed to providing quality of life funds as described in Condition 9 in Suncoast’s CON application. Suncoast Pinellas has extensive experience with providing each interdisciplinary team with $1,200 of quality of life funds to be used to facilitate a safe environment for its patients, such as paying rent, getting rid of bedbugs, paying utilities such as electricity for air conditioning, and to power specialized medical equipment. On occasion these funds are also used to provide meaningful patient experiences, similar to the Make-a-Wish programs. Conditions 10 – 13: Development of Advisory Committees and Councils Suncoast has committed to establishing care councils and advisory committees to learn firsthand the needs and concerns of the community. A care council is made up of members from a particular community who provide input regarding the needs of the community. Suncoast Pinellas offers similar councils and committees in Pinellas County. These groups are critical to the success of Suncoast Pinellas’s mission. Condition 14: Development of Open Access Model of Care Suncoast has committed to implementing an open access model of care in Hillsborough. This condition recognizes that while some patients may be receiving complex medical treatments that may lead some to question whether the patient is terminal, those treatments are actually required for palliation and the patient’s comfort. Under this condition, Suncoast promises to admit these patients and provide coverage for their treatments. Condition 15: SAGECare Platinum Level Certification Joy Winheim testified at the final hearing regarding the HIV positive community and the LGBTQ community. Over her many years working with the HIV/AIDS community, Ms. Winheim has built lasting relationships with community partners in the Tampa Bay area, including HCDOH and the Pinellas County Health Department. Empath’s EPIC program has a permanent staff member housed within the HCDOH, and the HCDOH has physicians housed in EPIC’s Tampa office to provide medical care to EPIC’s clients. Ms. Winheim has built lasting relationships with community partners in the Tampa Bay LGBTQ community, including Metropolitan Community Church, an LGBTQ friendly church; the Tampa Bay Gay and Lesbian Chamber of Commerce; and Balance Tampa Bay. SAGE is a national organization dedicated to improving the rights of LGBTQ seniors by providing education and training to businesses and non- profits. The platinum level of SAGECare certification is the highest level and indicates that 80% of an organization’s employees and 100% of its leadership have been trained by SAGE. Leadership training is in the form of a four-hour in-person training. Employee training is in the form of a one-hour training conducted either in person or web-based. All of Empath’s entities are SAGECare certified at the platinum level. Although the platinum level certification requires only 80% of its employees to receive training, Empath Health required that 100% of its employees attend the training. SAGECare certification makes a difference to members of the LGBTQ community choosing a healthcare provider. Suncoast is committed to fulfilling this condition. Condition 16: Jewish Hospice Certification Suncoast Pinellas has a specialized Jewish Hospice Program and holds a Jewish Hospice Certification from the National Institute of Jewish Hospices. Suncoast has conditioned its CON application on achieving this same certification in Hillsborough by the end of year one. Condition 17: Joint Commission Accreditation The Joint Commission on Accreditation of Healthcare Organizations (“Joint Commission”) accreditation is the “gold standard” for hospitals, nursing homes, hospices, and other healthcare providers. Suncoast is currently accredited by the Joint Commission, and if approved, is committed to achieving Joint Commission accreditation for its Hillsborough program. Condition 18: Provision of Value-Added Services Beyond Medicare Hospice Benefit Suncoast has committed to provide its integrative medicine program in Hillsborough. Suncoast Pinellas’s existing integrative medicine program is staffed by an APRN who is also certified in acupuncture. Suncoast Pinellas’s integrative medicine program is a holistic approach for helping patients manage their symptoms with such therapies as acupuncture, Reiki,7 and aromatherapy. Suncoast Pinellas recently established a Wound, Ostomy, and Continence Nurse Program in Pinellas County to provide expertise in end-of- life wounds and incontinence issues in long-term care settings, particularly smaller ALFs that may not have the necessary staffing. Suncoast will also offer this program in Hillsborough. [Remainder of page intentionally blank] 7 Reiki (??, /'re?ki/) is a Japanese form of alternative medicine called energy healing. Reiki practitioners use a technique called palm healing or hands-on healing through which a “universal energy” is said to be transferred through the palms of the practitioner to the patient in order to encourage emotional or physical healing. Condition 19 – Limited Fundraising in Hillsborough County Suncoast has committed to limiting fundraising activities in Hillsborough. Ms. Rabon credibly testified that Suncoast can, and will, fulfill this condition.8 Suncoast’s PACE Program In addition to its conditions, Suncoast’s proposal also includes several other non-hospice services that will be made available in Hillsborough. For example, Suncoast Pinellas operates a PACE program. The PACE program provides everything from medical care to transportation for medical needs and adult daycare services, as well as respite services for caregivers. The overall goal of the PACE program is to reduce unnecessary hospital visits and nursing home placement and keep elderly participants at home. Suncoast Pinellas’s PACE program currently operates at capacity, with 325 participants enrolled. Over the last four years, Suncoast Pinellas PACE has referred 175 people to Suncoast Pinellas. And although there are approximately 14,000 eligible PACE participants in Hillsborough, there is not a PACE provider in the county. In recognition of this unmet need, Suncoast Pinellas is currently in the process of expanding PACE services to residents of Hillsborough. Suncoast’s PACE program distinguishes Suncoast from Cornerstone and VITAS, neither of which currently operates a PACE program in any of their service areas. Suncoast’s Volunteer Program Under the Medicare Conditions of Participation, hospice programs must use volunteers “in an amount that, at a minimum, equals 5 percent of 8 Both Suncoast and Vitas condition their applications on eschewing fundraising activities in SA 6A, apparently in an effort to minimize adverse impact on the two existing providers in the service area. However, neither Lifepath nor Seasons participated as a party to this litigation, or presented evidence at hearing as to revenues received through their fundraising activities. Thus, it is impossible to determine whether the conditions proposed by Suncoast and VITAS would have a material impact on either of the existing providers. the total patient care hours of all paid hospice employees and contract staff.” 42 C.F.R. § 418.78(e). Suncoast Pinellas regularly exceeds that 5% requirement and, in fact, reached 12% in the last fiscal year. Suncoast Pinellas currently has over 1,000 volunteers who support the hospice program by assisting with palliative arts, including Reiki and aromatherapy, Lifetime Legacies, pediatric patients, and transportation. Suncoast Pinellas’s volunteers also assist with Suncoast’s Pet Peace of Mind Program, for which Suncoast Pinellas won the inaugural award for program of the year in 2019. Suncoast is the only applicant that operates a teen volunteer program. Suncoast Pinellas’s teen volunteer program was established in 1994 and was the first of its kind in the entire country. In 1998, it was awarded the Presidential Point of Light award. Suncoast Pinellas’s Volunteer Services Director, Melissa More, regularly consults with hospices across the country on the development of teen volunteer programs. Ninety of Suncoast Pinellas’s 1,000 volunteers currently live in Hillsborough, but travel to Pinellas to volunteer at Suncoast Pinellas. Nine of those volunteers submitted letters of support for Suncoast’s CON application to serve Hillsborough. Doctor Direct Program Suncoast Pinellas’s existing Doctor Direct Program enables physicians in the community and their ancillary referral partners to contact a Suncoast Pinellas physician 24/7, who can answer any questions about a patient they think might be eligible for hospice, and questions related to other Suncoast Pinellas programs. Suncoast will provide its Doctor Direct Program in Hillsborough. Plan for Inpatient Services Suncoast received letters of support from hospitals and a nursing home indicating a willingness to enter into a contract for inpatient services with Suncoast. Suncoast intends to offer both inpatient units and “scatter- bed” arrangements with these providers. Suncoast received letters specifically related to potential partnerships with St. Joseph’s (BayCare) and Brandon Regional (HCA) for the provision of inpatient hospice services. Suncoast also received a letter related to a potential partnership with the Inn at University Village, a long-term care facility in Hillsborough, for the provision of inpatient services. Telehealth Suncoast Pinellas offers telehealth services using CMS and HIPAA- approved software so that patients can keep meaningful connections with their family and friends, regardless of ability to travel. In Hillsborough, Suncoast will provide nurses, social workers, and chaplains with traveling technology for use in the patient’s home to connect with family and friends. Utilizing telehealth in this way will help to minimize emergency room visits and hospitalizations. Suncoast will be prepared to implement its telehealth program in Hillsborough on day one of operation if awarded the CON. Outreach Efforts to Diverse Communities Suncoast is committed to, and has a proven track record of, community outreach efforts to diverse communities. As part of its outreach efforts in Hillsborough, Empath’s Vice President of Access and Inclusion, Karen Davis-Pritchett, met with the Executive Director of the Hispanic Service Council, Maria Pinzon, to discuss the organization’s outreach efforts and gain insight into the Hispanic community in Hillsborough. Ms. Davis- Pritchett learned that the Hispanic community in Hillsborough differs from the Hispanic community in Pinellas, in that Hillsborough has a large and spread out migrant population. Ms. Davis-Pritchett and Ms. Pinzon also discussed the transportation issues facing residents of Hillsborough. To address these transportation issues, Suncoast conditioned its CON application on the purchase and use of a mobile outreach van with bilingual staff to conduct outreach to the Hispanic and other diverse communities. Suncoast also conditioned its application on the provision of vouchers that may be used for buses or ride-sharing services. Ultimately, Suncoast obtained a letter of support from Ms. Pinzon, which was submitted with its CON application. Additionally, Suncoast conditioned its application on recruiting four community partnership specialists, who will conduct outreach to the African American community, the Hispanic community, the Veterans community, and the Jewish community, and six professional liaisons who will conduct outreach to clinical partners in Hillsborough. All of these positions will be dedicated to Hillsborough and be filled by individuals who are connected to these communities, and understand the importance of access to hospice care. Suncoast’s proposal includes a bilingual medical director, Dr. Jerez- Marte, for its Hillsborough program. Dr. Jerez-Marte regularly speaks Spanish with patients and staff, which would be a benefit to Hispanic patients in Hillsborough. Mr. Sciullo credibly testified that Suncoast will offer high quality hospice services in SA 6A, and will fulfill the 19 conditions proposed in its application. Cornerstone Based on its review of data and analytics that Cornerstone relies upon and conducts as part of its ongoing operations in Florida, Cornerstone recognized in the second quarter of 2019, long before AHCA published its need projections, that there was need for an additional hospice program to enhance access to hospice services in Hillsborough. Regardless of the service area, Cornerstone offers quality hospice care through consistent policies, protocols, and programs to ensure that patients are getting the highest quality care possible. Cornerstone will bring all aspects of its existing hospice programs and services to Hillsborough, including all of the programs and services described throughout its application. However, Cornerstone recognizes each service area is different in terms of the needs and access issues patients face, whether based on demographics, geography, infrastructure, a lack of information about hospice, or other factors. When looking to enter a market, Cornerstone conducts a detailed community-oriented needs assessment to determine the specific needs of the community with regard to hospice to best understand how to enhance access to quality hospice services. Cornerstone explores each potential new area to identify the cultural, ethnic, and religious makeup of the community, the current providers of end- of-life care in the community, and the unmet needs and gaps in care, which is critical to understanding where issues may lie. This allows Cornerstone to build and develop an appropriate operational plan to meet the needs identified in a particular market. Cornerstone conducted this type of analysis for its recent successful expansion in Marietta, Georgia, and has had success expanding access to hospice in its existing markets through ongoing similar analyses. Cornerstone conducted an analysis of Hillsborough similar to those it conducts in its existing markets and in expansion efforts outside its existing markets. In its assessment of Hillsborough, Cornerstone relied, in part, on the extensive knowledge of its senior leaders and outreach personnel, many of whom live and previously worked in Hillsborough, with regard to the population characteristics and needs of the Hillsborough area. This experience in the target service area affords Cornerstone’s team a detailed knowledge of the hospice-related needs of the county. Mr. D’Auria, who conducted much of the analytics internally for Cornerstone, also oversaw a team of Cornerstone staff who spent several weeks canvassing Hillsborough at a grassroots level. The Cornerstone team spoke to residents, medical professionals, community leaders, SNFs, ALFs, and hospitals, among others, on the local experience of hospice care, to identify any areas of concern regarding unmet needs or perceived improvements necessary relative to the provision of hospice care by the current providers. Cornerstone’s retained health planning experts, Mr. Roy Brady and Mr. Gene Nelson, further undertook an extensive data-driven analysis of Hillsborough’s health-related needs to explore the access issues and service gaps identified in Cornerstone’s analytics, knowledge of and discussions in the local community, as well as the issues raised in community health needs assessments,9 letters of support, and other resources. Together, the team concluded that quality hospice services are available in Hillsborough County through existing providers LifePath and Seasons Hospice. That care is available to patients of all ages and demographic groups with virtually any end-stage disease process. Yet some patients simply are not accessing hospice services at the expected rate in Hillsborough. For example, Cornerstone’s analyses identified specific unmet community need among particular geographic areas, as well as among persons with a diagnosis other than cancer, particularly those under age 65, persons with end-stage respiratory disease, the Hispanic and African American communities, migrant communities, residents of smaller ALFs, and veterans. Based upon its analysis of the healthcare needs of Hillsborough, Cornerstone included multiple conditions intended to address those needs. In 9 Cornerstone considered the health needs assessments released by Tampa General Hospital and the Moffitt Cancer Center, both published in 2019. Cornerstone also considered the health needs assessment prepared by HCDOH issued on April 1, 2016, as updated, including the March 2019 update. all, Cornerstone proposed 10 conditions in its CON application targeted to meet the hospice needs of Hillsborough: Licensure of the Hospice Program: Cornerstone commits to apply for licensure within 5 days of receipt of the CON to ensure that its service delivery begins as soon as practicable to enhance and expand hospice and community education and bereavement services in SA 6A; Hispanic Outreach: Cornerstone commits to provide two full-time salaried positions for bilingual staff as part of its Community Education Team. These Community Education Team members will be responsible for the development, implementation, coordination and evaluation of programs to increase community knowledge and access to hospice services, particularly designed to reach the Hispanic community in Spanish. Bilingual Volunteers: Cornerstone commits to recruit bilingual volunteers. Patients’ demographic information, including other languages spoken, is already routinely collected so that the most compatible volunteer can be assigned to fill each patient’s visiting request. Offices: Cornerstone commits to establish its first program office in the Brandon area (zip code 33511 or 33584) during the first year of operation. Cornerstone commits to establish a satellite office in the Town & Country area (zip code 33615 or 33634) during the second year of operations. Complimentary Therapies: Cornerstone conditions its application on offering alternative therapies to patients that may include massage therapy, music therapy, play therapy, and holistic (non-drug) pain therapy. These complimentary therapies are not generally considered to be part of the hospice's core services, but are enhancements to the patient’s care which often have a marked impact on the quality of life during their last days. Veterans: Cornerstone commits to providing services tailored to the military veterans in the community. Cornerstone will immediately upon licensure expand its existing We Honor Veterans Level 4 program to serve Hillsborough and will provide the same broad range of programs and services to veterans in Hillsborough as it currently provides in its existing service areas. Bereavement Counseling for Parents: Cornerstone will implement a program in its second year of operation which will provide outreach for bereavement and anticipatory grief counseling for parents of infants who have died. The Tampa area has several hospitals which provide high-level newborn and infant services such as Level III NICU and other programs, consequently there is a higher than average infant mortality rate due to this concentration of high-level services. Cornerstone will work with the local hospitals which provide high-level neonatal intensive care to develop and carry out this program. Cooperation with Local Community Organizations: Cornerstone commits to donate at least $25,000.00 for four years to non-profit community organizations focused upon providing greater healthcare access, disease advocacy groups and professional associations located in SA 6A. These donations will be to assist with their core missions, which foster access to care, and in collaboration with Cornerstone to provide educational content on end-of-life care. Separate Foundation Account: Cornerstone will donate $25,000.00 to a segregated account for SA 6A maintained and controlled by the Cornerstone Hospice Foundation. Additionally, all donations made to Cornerstone or the Foundation from SA 6A, or identified as a gift in honor of a patient served in the 6A program, shall be maintained in this segregated account and only used for the benefit of patients and services in Hillsborough. This account will be used to meet the special needs of patients in Hillsborough which are not covered under the Medicare hospice benefit and cannot be met through insurance, private resources, or community organization services or programs. Continuing Education Programming (CEUs): Cornerstone will commit to extending free CEU in- services to the healthcare community in Hillsborough. Topics will cover a wide range of both required and pertinent subjects and will include information on appropriate conditions and diagnoses for hospice admission, particularly for non-cancer patients. A minimum of 10 in-services will be offered in a variety of healthcare settings during each of the first five years. Additional CEU will be provided on an ongoing basis. In addition to formulating CON conditions, Cornerstone used information gleaned from its community exploration to develop an operational plan detailing the number and type of staff to hire, which programs to offer, and how to tailor its outreach and education to best enhance access to hospice services in Hillsborough to meet the unmet need. Given Cornerstone’s existing outreach to area providers in Hillsborough, such as Moffitt, Tampa General Hospital, and the VA, which already discharge patients to Cornerstone in neighboring service areas, Cornerstone fully expects that it will receive referrals to its hospice from providers throughout Hillsborough upon the initiation of operations in the county. Cornerstone will provide hospice services to those and any other patients throughout Hillsborough from day one. However, when seeking to expand access in new or existing markets, Cornerstone focuses not on taking patients from existing providers but on enhancing access to groups and populations that have been overlooked, or whose needs are not otherwise being met by existing hospices. Cornerstone therefore developed a phased operational plan to focus its outreach and education efforts on areas where there are barriers to access, rather than simply scattering their efforts haphazardly or concentrating on areas that already have a heavy hospice presence. Phase One of Cornerstone’s operational plan will begin immediately upon licensure and continue through the first six months of operation. During this time, Cornerstone will focus outreach and education efforts heavily on the underserved southeast portion of Hillsborough, including Plant City, Valrico, Brandon, Riverview, Mango, and Sun City Center. Phase One includes 68 ALFs, six SNFs, and four hospitals. Almost one-third of the population of Hillsborough resides in this area, and an estimated 28 percent of the residents are Hispanic, and 14 percent are African American. There is also a large, underserved migrant population in this area. Cornerstone conditioned its application on opening an office in Brandon during this initial phase in the first year of operation. Phase Two will expand Cornerstone’s targeted outreach efforts into the southwest quadrant of Hillsborough, including the Apollo Beach, Ruskin, Gibsonton, Progress Village, and Palm River areas. While the population of this phase is smaller than Phase One, the two areas combined make up almost a third of the county’s Hispanic population, and a fourth of the county’s African American population. Phase Three will reach into the broader Tampa area, including towns such as Temple Terrace, Pebble Creek, University, Ybor City, and Carrollwood. This is the largest and most populated of the four phases; however, it is also currently the most hospice-penetrated area of the county as the two existing providers, LifePath and Seasons, each have offices in Phase Three. There is also a hospice house and two hospice inpatient units in the area as well. Because this area already has better hospice visibility and access, and to avoid siphoning patients from existing providers, Cornerstone will focus on this area after Phases One and Two. Cornerstone will ramp up its outreach staffing consistent with the increased area, facilities, and population added during Phase Three. Combined, the first three phases of the operational plan will offer enhanced outreach and education to 90% of the Hillsborough population starting at the beginning of year two operations. Phase Four will encompass the remainder of the county to the west of Tampa in the Town ‘n’ Country area. While this area represents only about 10% of the county’s population, Phase Four has no hospice visibility currently in the form of hospice offices, hospice houses, or hospice inpatient units. Cornerstone has conditioned its application on establishing an office in the Town ‘n’ Country area within project year two to enhance hospice visibility and access in this area of the county. Upon implementation of Phase Four, Cornerstone’s targeted outreach and education will be fully integrated throughout the county. Cornerstone’s application included more than 174 letters of support for its proposal. The letters of support are from a broad range of individuals and facilities located within and outside Hillsborough, including families, SNFs, ALFs, hospitals, vendors, and local charitable organizations, among others. Cornerstone presented testimony from three authors of letters of support, Andrea Kowalski, Eric Luetkemeyer, and Colonel (Ret.) Gary Clark. Ms. Kowalski is an employee benefits coordinator for USI Insurance Representatives in Tampa who works with Cornerstone to build benefits programs for its employees. In addition to authoring her own letter of support, Ms. Kowalski also assisted in gathering approximately 40 additional letters of support for Cornerstone from her colleagues in Hillsborough. Ms. Kowalski strongly supports Cornerstone’s approval and indicated the community would benefit not only from enhanced access to Cornerstone’s excellence and expertise in caring for those with advanced illness, but also from the addition of a highly-regarded employer, which will provide additional options for healthcare workers and financial benefits as Cornerstone reinvests in the community. Mr. Leutkemeyer is the COO for Spectrum Medical Partners (“Spectrum”), the largest privately-held hospitalist group in Florida. Spectrum manages roughly 400 providers across the state, the majority of which (85%) are medical doctors or doctors of osteopathic medicine, either in hospital or post-acute settings, and sees roughly 2,000 patients per day. Spectrum’s footprint includes coverage in Hillsborough for entities such as Simply or Humana with which Spectrum contracts statewide. Spectrum is looking to expand its footprint and services in Hillsborough in the near future. As detailed in his letter, Mr. Luetkemeyer supports Cornerstone’s efforts to establish a hospice program in Hillsborough, indicated a desire to work with Cornerstone in the county if awarded, and believes the community would benefit from the additional resources and quality care that Cornerstone would provide. Colonel Clark, who retired from the United States Air Force in 1993, is co-founder and current Chairman of the Polk County Veterans Council, a volunteer organization of individuals interested in assisting veterans. Colonel Clark is also affiliated with, and participates in, a number of veterans organizations in Hillsborough, including as an adviser to the Mission United Suncoast Chapter in Hillsborough, which primarily assists veterans in transitioning from service to the civilian world. He also serves on the management advisory committee of James A. Haley Veterans’ Hospital in Tampa, which provides a broad spectrum of hospital-based care to area veterans. Colonel Clark has significant experience with Cornerstone through its participation in the Polk County Veterans Council, including on the Council’s committee for the Flight to Honor program, which provides veterans a flight to Washington D.C. to visit war memorials. If a veteran is unable to make the flight, a virtual flight and tour, as well as ceremonies or presentations, are provided by Cornerstone to veterans enrolled in hospice. Cornerstone is heavily involved in the Council’s Flight to Honor program— participating on the committee, recruiting volunteers, working with local schools to gather letters for the veterans on the flights, arranging for orientation prior to the flights, and putting on the virtual flights for those Veterans unable to make the flight due to various disabilities. Colonel Clark is also familiar with Cornerstone’s efforts to support veterans at James A. Haley Veterans’ Hospital in Tampa. Colonel Clark described Cornerstone’s support not only for veterans but for the community overall as “magnificent,” and detailed his support for Cornerstone’s application in a letter of support that is included in Cornerstone’s application. Cornerstone is well-positioned to quickly establish a successful hospice program to enhance access in Hillsborough, and its proposal is a carefully considered, long range plan that would bring its established and proven processes, procedures, and programs to the residents of the county. Cornerstone also posits that its existing presence nearby in Lakeland will enhance its ability to topple barriers to care and serve patients in adjacent SA 6A immediately. For example, Cornerstone has existing relationships with veterans groups that serve both Polk and Hillsborough, and will utilize those relationships to enhance access to the large veteran population in Hillsborough, as highlighted through Cornerstone’s condition to provide services tailored to the veteran community. VITAS VITAS, which operates a hospice program in adjacent SA 6B, proposes to expand into SA 6A under its existing license. This will allow VITAS to begin serving patients quickly without creating an entirely new administrative infrastructure for the opening. Although VITAS provides many of the same core programs in each of its service areas, it also recognizes that each community is different. VITAS performed a qualitative and quantitative assessment that examined the specific needs of Hillsborough regarding hospice care and services. Through its consultants and internal team, VITAS identified several communities, patient types, and clinical settings that are underserved in SA 6A. These include: the African American, Hispanic, and migrant communities, particularly those age 65 and older; impoverished, food insecure and homeless communities; patients with non-cancer diagnoses such as pulmonary disease, cardiac disease, Alzheimer’s Disease, and patients with sepsis; cancer patients in need of palliative care; high acuity patients in need of complex services and those needing admissions during evenings and weekends; patients requiring admission after hours and on weekends; and patients who reside in nursing homes and small ALFs. To understand the hospice needs within Hillsborough, VITAS conducted a two-step review—(1) analyzing data from a wide variety of sources including Medicare, AHCA, Florida Department of Elder Affairs, Florida CHARTS, and demographic and socioeconomic data; and (2) meeting with some healthcare and social service providers in Hillsborough. Key members of VITAS’s leadership team, including Patty Husted, Mark Hayes, and Dr. Shega, conducted an assessment in Hillsborough to identify the unmet need within the community and underserved populations. VITAS’s needs assessment team physically went into Hillsborough to visit nursing homes, ALFs, hospitals, and physicians to determine the unmet need and how to achieve greater access to hospice services for the residents of Hillsborough. VITAS’s team spent a significant amount of time conducting hospice outreach and education in Hillsborough in furtherance of the needs assessment. Specifically, VITAS’s team met with hospitals including H. Lee Moffitt Cancer Center, Baptist Health, BayCare, St. Joseph’s, and Brandon Regional; nursing homes, such as Hudson Manor, Ybor Health and Rehabilitation Center; and physician and nurse practitioner groups. VITAS’s needs assessment team also participated in physician advisory council meetings as part of its needs assessment for Hillsborough. During these meetings, VITAS gained perspective from these local physicians regarding the challenges faced by patients in need of hospice services in SA 6A, as well as insight as to what VITAS could bring from its existing programs to fill the unmet needs. VITAS also drew on the knowledge of the 18 VITAS employees currently living in Hillsborough. To address the needs it identified in SA 6A, VITAS proposes a broad array of programs and services to be offered in Hillsborough which are specifically targeted to increase the availability and accessibility of hospice services for underserved groups and Hillsborough residents more broadly. To demonstrate its commitment, VITAS conditioned its CON application on providing the following 20 programs and services in SA 6A: VITAS Pulmonary Care Program. VITAS Cardiac Care Program. Clinical research and support for caregivers of patients with Alzheimer’s and dementia. VITAS Sepsis Care Program. Veterans programs, including achieving Level 4 commitment to the We Honor Veterans program within the first two years of operation in SA 6A. Bridging-the-Gap Program and Medical/Spiritual Toolkit, which is an outreach and end-of-life education tool for African American and other minority communities. ALF Outreach and CORE Training Program. Palliative care resources and access to complex and high acuity services, including engaging area residents with serious illness in advance care planning and goals of care conversations, as well as offering palliative chemotherapy, inotrope drips and radiation to optimize pain and symptom management as appropriate. Provider clinical education programs for physicians, nurses, chaplains, HHA’s and social workers. Quality and Patient Satisfaction Program, including hiring a full-time Performance Improvement Specialist within the first six months of operation dedicated to supporting quality and performance improvement programs for the 6A hospice program. VITAS staff training and qualification, ensuring the medical director covering SA 6A will be board-certified in hospice and palliative care medicine. Hospice office locations. Deployment of a mobile van to increase access and outreach to rural counties. VITAS will not solicit donations. Outreach and end-of-life education for 6A residents experiencing homelessness, food insecurity, and limited access to healthcare, including advanced care planning for area homeless shelter residents and a partnership to provide a grant for housing and food assistance with a community organization. $5,000 will be distributed during the first two years to the Hispanic Services Coalition or similar qualified organization for promoting academics, healthy communities and engagement of Latinos. Outreach program for underserved residents of SA 6A. Educational grant, to the University of South Florida Foundation including $250,000 for fellowships, scholarships, education and workforce development as well as $20,000 for diversity initiatives. Inpatient hospice house and shelter for natural disasters and hurricanes. Medicaid Managed Care education Services beyond the hospice benefit, including, among others: 24/7 Telecare Program and access to admission on evenings and weekends, including outreach and end-of-life education for residents experiencing poverty, food insecurity, homelessness and/or food insecurity, including nutrition services, advanced care planning for shelter residents, and housing assistance. Hospice Education and Low Literacy (HELLO) Program. Multilingual education materials in several languages including Spanish, Chinese, Korean, Portuguese, Russian, Vietnamese and Creole. CAHPS Ambassador Program to generate interest, awareness and encourage ownership by team members of their team’s performance on CAHPS survey results. Community outreach and education programs. Partnership with a local college for fellowships, scholarships, education and workforce development and diversity initiatives. VITAS’s application contains approximately 50 letters supporting its proposed program, the vast majority of which are from hospitals, nursing homes, ALFs, physicians, and community organizations in Hillsborough County with direct hospice experience. VITAS obtained these letters of support as part of its community-oriented needs assessment, and they attest to the community’s confidence in VITAS’s ability to meet hospice care needs in Hillsborough. Included are letters of support from Cynthia Chavez, Executive Director at Hudson Manor Assisted Living; Brian Pollett, Administrator at Ybor Health and Rehabilitation Center; and Dr. Jorge Alfonso, Regional Chief Medical Officer at Dedicated Senior Medical Center. All three providers expressed a local need to address high acuity patients, including greater access to continuous home care. Statutory and Rule Review Criteria The review criteria are found in sections 408.035, 408.037, and 408.039, and rules 59C-1.008 and 59C-1.0355. (Prehearing Stipulation). Section 408.035(1) - Need for the health care facilities being proposed There are currently two licensed hospice programs in hospice SA 6A, and a need for one additional hospice program, as calculated using the need methodology found in rule 59C-1.0355(4), and published by AHCA, without challenge. AHCA’s need calculation compares reported hospice admissions during the base year with projected admissions in the horizon year and finds need if the difference between base and horizon year admissions exceeds 350, assuming there are no recently-licensed or CON-approved hospice programs in the service area. In this case, AHCA’s calculation revealed a net need of 863 hospice admissions for the January 2021 planning horizon. Each Applicant has put forth a proposal to meet the calculated need for one additional hospice program in Hillsborough. None of the applicants are advocating the approval of more than one new program. Section 408.035(2) – Availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district. It is undisputed that quality hospice services are available in Hillsborough today through existing providers LifePath and Seasons, including for patients of all ages and with essentially all end-stage disease processes, as well as for patients of all demographic groups. Relevant data demonstrates discharges to hospice in Hillsborough for a wide range of diagnoses and demographic groups, including African American and Hispanic patients, non-cancer and cancer patients, both over and under age 65; patients with end-stage cardiac disease; end-stage pulmonary disease and dementia, including Alzheimer’s disease, among others. However, despite the availability of quality hospice services, some patients simply are not accessing hospice services at the rate expected in SA 6A, as reflected by low penetration rates and low discharge-to-hospice rates, particularly within certain major disease categories and demographic groups, including Hispanic and African American residents. All three applicants agreed that the underutilization is concentrated among certain patient populations, including demographic groups and disease groups. Generally, all three applicants agreed that the Hispanic, African- American, veteran, and homeless populations are currently underserved in Hillsborough. In addition, Suncoast points to the need for a specialized pediatric hospice program in SA 6A; Cornerstone argues that non-cancer patients younger than age 65 are in need of enhanced access, as are residents of smaller ALF’s; and VITAS asserts that patients with respiratory, sepsis, cardiac, and Alzheimer’s diseases are underserved, as are patients requiring continuous care and high acuity services, such as high-flow oxygen. VITAS’s argument is based largely on a claim that the existing providers are not providing “any measurable continuous care,” as well as hearsay reports from area hospitals indicating a lack of high-acuity services available through existing hospice providers. However, VITAS’s health planning expert conceded that, in fact, existing providers are offering continuous care, and she was unable to quantify any purported dearth of continuous care in Hillsborough as compared to other providers or the statewide average. The record establishes that continuous care is part-and- parcel of the hospice benefit, and there was no evidence presented at final hearing to support the claimed lack of availability of that service from existing providers. Based on the foregoing, the evidence tended to show quality hospice care is available in SA 6A, that it is underutilized, and that the underutilization is driven by accessibility challenges among particular patient groups, and supports AHCA’s determination that another hospice program is needed in Hillsborough. Section 408.035(3) - Ability of the applicant to provide quality ofcare and the applicant’s record of providing quality of care Cornerstone is the only applicant accredited by the Joint Commission, which is a national symbol of quality that reflects its commitment to meeting high quality performance standards. Cornerstone’s Joint Commission accreditation, which was just recertified in 2020, and the accompanying high standards of quality care, will carry over to its new SA 6A program. As a new entity, Suncoast is not Joint Commission accredited, but conditions its application on achieving such accreditation by the end of year two. Suncoast Pinellas is Joint Commission accredited, and indeed, is one of only a handful of hospices nationwide, along with Cornerstone, to hold Joint Commission accreditation and/or certification. While VITAS represents that some affiliated VITAS hospice programs are Joint Commission accredited, VITAS, the applicant here, is not accredited by the Joint Commission, and makes no representation that it will seek or attain such accreditation for its new hospice program in SA 6A. There are two universal metrics codified in federal law that are used as a proxy for assessing the quality of care offered by hospice programs— Hospice Item Set (“HIS”) scores and Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) survey scores. See 42 C.F.R. § 418.312; see also § 400.60501, Fla. Stat. (2020). CAHPS surveys are a subjective metric sent to family members and other caregivers months after a patient's death. The survey asks respondents to provide ratings like: “would definitely recommend,” “would probably recommend,” “would probably not recommend,” and “would definitely not recommend.” It also seeks yes or no responses to statements like: the hospice team “always communicated well,” “always provided timely help,” “always treated the patient with respect,” and “provided the right amount of emotional and spiritual support.” It also asks if the patient always got the help they needed for pain and symptoms, and if “they” received the training they needed. The CAHPS survey was created by CMS in conjunction with the Agency for Healthcare Research and Quality to measure and assess the care experience provided by a hospice. The purpose of the Hospice Compare Website is to allow the public to compare quality scores for CAHPS among different hospice providers. CAHPS scores are one measure of quality that is intended to allow for comparison across hospice programs. Significant time at final hearing was dedicated, through multiple witnesses, to discussing the strengths and weaknesses of CAHPS scores as a measure of quality. Ultimately, the greater weight of the evidence supports that CAHPS scores are an indicator of quality, but are not the only consideration, and suffer from limitations that prohibit drawing distinctions from minor differences in scores. The three applicants’ CAHPS scores are summarized in this chart: (Suncoast Ex. 42, BS p. 12203) While it is true that Suncoast Pinellas’s scores on all CAHPS measures are higher than those of Cornerstone, the slight difference between Suncoast Pinellas and Cornerstone is not significant given the subjective nature of the survey instrument. However, both Suncoast Pinellas and Cornerstone do score significantly higher than VITAS on most measures. Cornerstone’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to three points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. As a new entity, Suncoast does not have CAHPS scores. Suncoast Pinellas’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to two points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. In contrast, VITAS’s CAHPS scores fall below the state average on all eight metrics, fall five to seven points below the state average on seven of the eight metrics, and its average CAHPS score for all measures combined falls five points below the state average. Cornerstone and Suncoast Pinellas are within one to three points of each other on every CAHPS metric. The difference in scores between Cornerstone and Suncoast Pinellas is not statistically significant or meaningful, particularly given the shortcomings of CAHPS scoring. VITAS’s CAHPS scores are below both Cornerstone and Suncoast Pinellas, falling six and eight points below Cornerstone and Suncoast Pinellas, respectively, on the average of all CAHPS metrics. This difference is meaningful, particularly when viewed in the context of VITAS’s history of substantiated complaints discussed below. HIS scores, which assess documentation of various items, are more a process or compliance measure than a quality measure. Suncoast Pinellas’s HIS scores exceed the state and national average on all metrics, albeit most scores are within two points of the state average. Cornerstone’s HIS scores are on par with state averages on most metrics and meet or exceed the national average on every metric, except Pain Assessment. Cornerstone has worked to substantially improve its Pain Assessment score through better documentation protocols, raising its score from 52.1 to 89.1 in the last few years, and is implementing a new Electronic Records Management system to further improve its scores. VITAS’s HIS scores are on par with state averages on most metrics, and meet or exceed the national average on all metrics except Visits When Death Imminent. VITAS scores 68.4 on Visits When Death Imminent compared to the state and national averages of 83.2 and 82.4, respectively. As measured by the HIS scores, there was no credible, persuasive testimony establishing a meaningful difference among the three applicants. In contrast to CAHPS and HIS scores, the number and substance of complaints substantiated against each applicant by AHCA is a more direct indicator of quality of care. Suncoast has no prior hospice operations history, and therefore no prior substantiated complaints. Suncoast Pinellas has had only three substantiated complaints since 2008, and none since 2013. Cornerstone has only two substantiated complaints since 2008, and only one since Mr. Lee took over as CEO of Cornerstone in late 2012. VITAS has 73 substantiated complaints since 2008, including 10 substantiated complaints in the three years ending November 20, 2019, just prior to submission of the CON application at issue here. Between November 20, 2019, and June 17, 2020, VITAS had five additional substantiated complaints. VITAS’s health planning expert, Ms. Platt, also considered all AHCA survey deficiencies, whether based upon a complaint, life safety survey, or otherwise. Ms. Platt’s analysis demonstrates that VITAS had 80 such surveys with deficiencies since 2012, including 26 between January 2018 and June 2020. VITAS argues that its greater number of substantiated complaints are the consequence of higher patient volumes than Suncoast and Cornerstone. However, even taking into consideration the greater number of patient days provided by VITAS, VITAS had infinitely more surveys with deficiencies in 2019 than Cornerstone, which had zero. And VITAS had five times as many surveys with deficiencies for 2018 and 2019 as Cornerstone. A comparison of VITAS to Suncoast Pinellas yields similar results, with VITAS having significantly more surveys with deficiencies than Suncoast Pinellas, even when taking into consideration the greater number of patient days provided by VITAS. Complaints substantiated against VITAS demonstrate failures in many areas of patient care, including some of the specific aspects of hospice care at which VITAS claims to excel beyond other providers, such as after- hours care, the provision of continuous care, and care to patients wherever they live, including smaller ALFs. For example, a substantiated complaint against VITAS in November 2019 included a finding of “immediate jeopardy”—the most severe level of deficiency possible—for a patient who failed to receive proper care after-hours at end-of-life, resulting in a particularly painful death for the patient, and an excruciating experience for the patient’s daughter who witnessed her mother’s painful death, unaccompanied by hospice personnel. Two additional substantiated complaints from January and February 2020 found deficiencies in VITAS’s care to patients on continuous care, including one where the VITAS nurse had headphones in and was not paying attention when the patient fell. Indeed, VITAS’s own internal review of the substantiated complaint involving the patient who fell confirmed an upward trend in falls among VITAS patients. And, as recently as June 2020, a separate substantiated complaint found that VITAS abandoned a patient on continuous care, requiring the patient to be transferred to the hospital rather than continue to receive care in the “small ALF” where the patient resided. VITAS acknowledged the patients at issue in the substantiated complaints discussed at final hearing did not receive quality hospice care. Those five examples are only a sampling of the complaints substantiated against VITAS, and the others demonstrate similar quality deficiencies. The number of substantiated complaints weighs in favor of Cornerstone and Suncoast, and heavily against VITAS with regard to record of providing quality of care. There is no meaningful difference between Cornerstone and Suncoast in regard to substantiated complaints, and neither is entitled to preference in this regard. On balance, among the three applicants, the quality of care provided by Suncoast and Cornerstone is on equal footing, with both having a distinct advantage over VITAS. Section 408.035(4) - Availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Section 408.035(6): The immediate and long-term financial feasibility of the project The parties stipulated that each of the applicants have available funds for capital and operating expenditures in the short term for purposes of project accomplishment and operation. Suncoast demonstrated that it has the resources to accomplish its proposed project. Suncoast provided detailed descriptions of the personnel that would be required to successfully implement its proposed program. Suncoast has reasonably projected the types of staff necessary to operate Suncoast in year 1 and 2 of operation. At hearing, Suncoast witnesses credibly described the roles of the staff contained in Suncoast’s Schedule 6, including the roles of administrator, care team manager, administrative assistant, regional hospice scheduler, business development liaisons, physicians, program director, nurses, hospice aides, respiratory therapists, staff for the mobile van in Condition 2 of its application, community partnership specialists, social workers, patient social team lead, chaplain, volunteer coordinator, and senior staff nurse. Suncoast’s financial expert, Armand Balsano, testified that part of his role in preparing Suncoast’s CON application was working with Suncoast Pinellas’s Chief Financial Officer, Mitch Morel, to develop Suncoast’s financial projections that were included on Schedules 1 through 8 of the application. Mr. Balsano, in collaboration with Mr. Morel, utilized Suncoast Pinellas’s internal financial modeling system to develop the financial schedules and financial narrative for the application. Mr. Balsano credibly testified that financial Schedules 1 through 8 are accurate and reasonable. Suncoast projects admissions of 460 patients for project year one and 701 patients for project year two. Suncoast’s health planner, David Levitt, developed Suncoast’s projected admissions based on experience of other providers entering a market with two existing providers. Suncoast’s projected number of admissions for years one and two are reasonable projections of admissions for a new hospice program in Hillsborough. Suncoast was criticized as having a lackluster record for admissions in its existing Pinellas hospice. While it is true that Suncoast Pinellas’s admissions declined slightly from 2013 to 2014, the overall trend has been one of increasing admissions. For example, based on Medicare claims data, from 2005 to 2019, Suncoast Pinellas’s admissions grew from 4,679 to 6,534.10 Financial feasibility may be proven by demonstrating the expected revenues and expenses upon service initiation, and determining whether a shortfall or excess revenue results. The projection of revenue is not complicated for hospice services. The vast majority of hospice care, more than 90%, is funded by the Medicare Program which pays uniform rates to all hospice providers. Mr. Balsano testified that Suncoast’s projected revenues in Schedule 7 are based on the revenues that are currently realized for the various payer categories, including Medicare, Medicaid, Commercial, and self-pay. Mr. Balsano credibly testified that the assumptions reflected on Schedule 7 of Suncoast’s CON application are reasonable and appropriate. 10 Suggestions by VITAS and Cornerstone that Suncoast’s internal data indicate a history of low utilization or inaccurate reports to AHCA are without merit. Mr. Sciullo credibly testified that the data reported to AHCA is the most accurate admissions data. Mr. Sciullo further credibly testified that the Utilization Trend Reports contained in Cornerstone’s exhibits 82 through 88, relied on by VITAS and Cornerstone, contain duplicate hospice admissions and admissions from non-hospice programs such as Suncoast’s home health program. Mr. Sciullo also credibly testified that the most accurate admissions numbers reported to AHCA are not generated from the Utilization Trend Reports. Rather, the admissions numbers reported to AHCA are produced by Suncoast’s reimbursement department. Mr. Sciullo’s testimony under cross examination demonstrated a confident and credible understanding of the nuances of the Utilization Trend Reports. Additionally, the suggestion that Suncoast would intentionally under-report admissions to AHCA lacks credibility because hospice providers in Florida are incentivized to report higher numbers of admissions. In Year 2, Suncoast projects net operating revenue of $7,138,000, which breaks down to approximately $172 per day of overall net revenue per patient day. Mr. Balsano’s credibly testified that this is a reasonable forecast of net operating revenue. Projected expenses were also reasonably projected by Suncoast. Mr. Balsano testified that Suncoast’s projected income and expenses in Schedule 8A includes salaries and wages, fringe benefits, medical supplies and ancillary services, and approximately 1.5% of inpatient days. Suncoast also included a separate allowance for administrative and overhead cost. Suncoast also allocated $752,000 in management fees to account for “back office services” and other support services that would be provided to the Hillsborough program through the Empath home office. Mr. Balsano arrived at this number by determining that a reasonable assessment would be the cost per patient day of $18, as reflected on Schedule 8 for year two. Mr. Balsano credibly testified that, for a startup program, it is appropriate to include the costs associated with services provided by the corporate office because one must be cognizant of what services are provided locally, and what services will be provided through the corporate office. Mr. Balsano further testified that it would not be reasonable to assume that 100% of the costs associated with corporate services to a new hospice program would be fixed. As Mr. Balsano explained, the variable costs must be accounted for as well. Mr. Balsano credibly testified that Suncoast’s net profit in year two as reflected in Schedule 8A is $615,416. It is found that Suncoast has reasonably projected the revenues and expenses associated with its proposed hospice, and that Suncoast’s proposal is financially feasible in the long term. Cornerstone projected admissions of 448 patients in year one, and 819 patients in year two, for the highest year two admissions of the three applicants. In comparison, Suncoast projected admissions of 460 patients in year one and 701 in year two, while VITAS projected 491 patients in year one and just 593 in year two. Cornerstone’s projected admissions were developed by health planning experts Roy Brady and Gene Nelson based on the experience of recent new hospice programs in the state of Florida, were discussed and confirmed by Cornerstone personnel prior to being finalized, and are a reasonable projection of admissions for years one and two of operations in Hillsborough. Despite the highest anticipated year two admissions, Cornerstone’s projection still fell below the SA 6A service gap of 863 patients and therefore did not, standing alone, establish any greater adverse impact on area providers than Suncoast or VITAS. Cornerstone emphasized its mission as an organization, and intent for this proposal, to expand penetration by resolving unmet need as opposed to capturing patients already served by existing providers. The adverse impact analysis in Cornerstone’s application therefore represents a worst-case scenario by assuming all of its patients otherwise would be served by existing providers, a premise undercut by the substantial published need. Using this approach, Cornerstone anticipated that LifePath would bear the overwhelming burden of its entry into Hillsborough, with a projected adverse impact on LifePath of 408 patients in year one, and 747 in year two. Cornerstone anticipated adverse impact to Seasons of 39 patients for year one, and 72 patients for year two. Even in this worst-case scenario, existing [Remainder of page intentionally blank] providers’ volumes in Cornerstone project years one and two exceed their historical volumes.11 Cornerstone has available health personnel and management personnel for project accomplishment and operation. Cornerstone’s existing staff, as well as its projected incremental staff for the new program, is reflected in schedule 6A of its application. The projected incremental staff shown in schedule 6A is based on established ratios and methodologies Cornerstone uses in its existing hospice programs. The projected incremental staff is all the incremental staff Cornerstone will need to establish the new program in Hillsborough, and combined with its existing personnel, are sufficient to achieve program implementation as proposed in the application. Both Suncoast and VITAS criticized Cornerstone’s financial projections as flawed because they did not present the fully allocated costs of the project. According to Mr. Balsano, Cornerstone’s projected profit margin is unreasonable and, in fact, is “an extreme outlier.” As he explained, Cornerstone’s financial schedules make no allocation of shared service costs for critical services to be provided by the home office. According to Suncoast and VITAS, this omission is unreasonable when viewed in context with Cornerstone’s Schedule 6, which does not allocate any FTEs to back office support services. Not shown are the expenses Cornerstone will incur for finance, billing, revenue cycle, accounts receivable, payroll, human resources, 11 Relative adverse impact on existing hospice programs of competing applicants has been used as a dispositive factor for favoring one applicant over another. See, Hospice of Naples, Inc. v. Ag. for Health Care Admin., DOAH Case No. 07-1264, ¶ 274 (Fla. DOAH Mar. 3, 2008; Fla. AHCA Jan. 22, 2009) (“One factor outweighs all others, however, in favor of VITAS. VITAS's application will have much less impact on HON and its fundraising efforts and in turn on the high-quality services that HON presently provides in Service Area 8B.”). However, as noted here, neither of the existing providers presented evidence as to the relative impact that any of the applicants would potentially have on its existing operations, or whether such impacts would be material. Accordingly, there is no evidentiary basis for providing an advantage to one or another of the applicants based upon consideration of adverse impact. and contract negotiations, among others. Notably, hospice providers include home office costs as part of their Medicare cost reports filed with CMS.12 Because Cornerstone did not allocate home office costs in its application, its profit margins are substantially higher than all other applicants for the October 2019 Batching Cycle. While most applicants fall within the $100,000 – $500,000 range, Cornerstone projected a staggering $4.9 million profit margin. There is nothing in the CON application form or instructions that require that financial projections be presented on a “fully allocated” basis. Notably, in its review of the financial projections, AHCA determined that each applicant’s proposed program appeared to be financially feasible in the long-term. Cornerstone’s financial feasibility analysis included consideration of payer mix, level of service mix, admissions, average lengths of stay, patient days and incremental staffing needs, among others, and focused on the resulting incremental revenues and expenses generated by addition of the new program in Hillsborough. Cornerstone’s projected admissions are reasonable and appropriate for the proposed new program in Hillsborough. Cornerstone’s proposed incremental staff, combined with its existing staff, is sufficient for project accomplishment and operation. Cornerstone’s projected payer mix is based upon consideration of Cornerstone’s own historic experience, the demographics and recent hospice payer characteristics of Hillsborough, and consideration of Cornerstone’s goal to serve the non-cancer under-65 population, which may reduce Medicare 12 In terms of its budgeting process, Cornerstone has one “bucket” for its administrative overhead/home office expenses and then separate buckets for each of its hospice programs. Home office expenses include human resources, IT, compliance, and facility maintenance. Cornerstone does not allocate its home office expenses to each of its hospice programs within its internal books. However, when an audit is performed, the performances of each hospice program and the home office expenses are all included, and the home office expenses are allocated to each of its hospice programs. levels slightly from what they otherwise may be, and is reasonable and appropriate for its proposed hospice program in Hillsborough. Cornerstone’s projected level of service mix and average length of stay are based upon Cornerstone’s historical experience, and are reasonable and appropriate for the proposed hospice program in Hillsborough. Likewise, Cornerstone’s projected revenues as set forth in schedule 7A are based upon the projected volumes, service level mix, payer mix projections, and Medicare service level specific rates, and are a reasonable projection of revenues for the proposed project in Hillsborough. Cornerstone has established the long-term financial feasibility of its proposed SA 6A program. VITAS’s financial projections were prepared through the work of an internal team led by Lou Tamburro, Vice President of Development for VITAS. VITAS reasonably based these projections on the successful opening and ramp up of new hospice programs in Service Areas 1, 3E, 4A, 6B, 7A, 8B, and 9B, and other Florida communities. VITAS has a clear understanding of what startup costs will be, and it was appropriate for VITAS to rely on its past history of success in developing these projections. VITAS projects admissions of 492 patients for project year one and 593 patients for project year two. Mr. Tamburro developed the projected admissions using an internal model based upon VITAS’s prior experience. While Mr. Tamburro is an expert in health finance, not health planning, Ms. Platt reviewed VITAS’s projections and credibly concluded they are reasonable. VITAS proposes to dedicate more resources to SA 6A than the other two applicants in the second year of operations; 74% of that expense is focused on direct patient care, with only 23% associated with administrative and overhead, and 2% property costs. In contrast, Suncoast and Cornerstone only dedicate 54% and 56%, respectively, of their expenses on direct patient care and 41% and 42%, respectively, on administrative and overhead. However, VITAS’s higher direct patient care costs are at least partially explained by the larger number of clinical and ancillary FTE’s associated with the higher levels of continuous care projected by VITAS than either Suncoast or Cornerstone. As would be expected, VITAS also projects to admit a larger number of high acuity patients than Suncoast or Cornerstone. Given VITAS’s vast experience in the start-up and operation of hospice programs, including 16 within Florida, there is no reason to doubt that the VITAS Hillsborough program would be financially feasible in the long term. The following table summarizes the three applications’ financial metrics: Cornerstone Suncoast Vitas Total Project Costs $286,080 $703,005 $1,134,149 Operating Costs Yr.2 $6 million $5.7 million $8.6 million Net Profit Yr.2 $4,972,346[13] $615,416 $154,913 Proj. Admits Yr. 2 819 701 593 Routine Home Care 95.4% 97.5% 94% General Inpatient 3.5% 1.5% 2.5% Continuous Care 0.3% 0.5% 3.5% Respite 0.8% 0.5% 0% Section 408.035(5) The extent to which the proposed services will enhance access to health care for residents of the service district; and Section 408.035(7) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. Rule 59C-1.0355 and the criteria for determination of need for a new hospice program found within that rule, is predicated upon the notion that, 13 As noted, Cornerstone’s relatively large profit margin is a function of its incremental cost, versus fully allocated cost, financial projections. when need exists, approval of an additional program will foster competition beneficial to potential and prospective hospice patients in the service area. As between the three applicants, Suncoast did the most thorough and extensive analysis of the current needs of the Hillsborough population. This effort was driven by the fact that Suncoast had recently applied for a new hospice program in neighboring Pasco County, and was denied in favor of a competing applicant. In that case, Administrative Law Judge Newton specifically faulted Suncoast for failing to carefully evaluate the hospice needs of Pasco County residents: Suncoast, in effect, proposes a branch operation for Pasco County. Suncoast did not conduct the focused, individualized inquiry into the needs of Pasco County that Seasons did. Nor did it begin developing targeted ways to serve the needs or begin establishing relationships to further that service. The Hospice of the Fla. Suncoast v. Ag. For Health Care Admin., Case No. 18- 4986, ¶ 126 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 16, 2019). As explained by Mr. Sciullo at hearing, Suncoast took the above criticism to heart, and determined to conduct an exhaustive evaluation of the hospice needs in SA 6A, and to formulate a strategy for addressing those needs. Specifically, Suncoast’s intent was to identify issues and gaps in services facing residents of Hillsborough, and to enable a dialogue with existing community partners and providers in order to create shared solutions. As part of this comprehensive effort, Suncoast met with more than 50 key individuals and organizations, representing a broad range of general and special populations within the county. This effort resulted in the development of collaborative strategies and action plans to fill the gaps and meet the unmet need for additional hospice services in Hillsborough, as reflected in the Suncoast application conditions. In contrast to Suncoast, Cornerstone did not conduct its own needs assessment, but rather relied on the community needs assessments prepared by the HCDOH and two area hospitals. Moreover, rather than reaching out to the Department of Health and to the area hospitals that prepared those assessments to conduct further research or seek their support of its CON application, Cornerstone simply “verified that their documentation was thorough enough.” Cornerstone’s limited outreach effort in Hillsborough is further demonstrated by the letters of support submitted with its CON application. While Suncoast obtained letters of support from the HCDOH and numerous hospitals and community organizations in Hillsborough, Cornerstone failed to obtain a single letter of support from any hospital in Hillsborough. Despite submitting approximately 150 letters of support (many of which were form letters, and letters from Cornerstone employees), Cornerstone failed to obtain any letters from the Hispanic community, the African American community, the HIV community, the migrant community, or organizations that assist the homeless, unlike Suncoast. As Mr. McLemore testified, “a large part” of the review criteria is “hav[ing] the commitment from the organizations in the service area. I think that’s where – a little bit where Cornerstone was a little off base. They did have a bunch of letters of support, but again, they were not specific to the service area.” Mr. McLemore further testified that, rather than a large pile of letters, he was looking for letters “that are definitely from hospitals, nursing homes and civic organizations, healthcare organizations in the area.” Cornerstone’s failure to conduct meaningful and thorough outreach efforts in Hillsborough is also demonstrated by its generic list of CON application conditions. As multiple Cornerstone witnesses acknowledged, the services Cornerstone is proposing to offer in Hillsborough are identical to the services Cornerstone already offers in its existing service areas. Specifically, Cornerstone conditions its application on Hispanic outreach, bilingual volunteers, multiple office locations within a service area, complementary therapies, veterans-specific programming, bereavement counseling for parents, cooperation with local community organizations, a separate foundation account for the specific service area, and continuing education programming, all of which are services that Cornerstone already offers in its existing service areas. Thus, unlike Suncoast, which used the existing community health needs assessments as a starting point for its own comprehensive needs assessment, and proposed conditions that are reflective of the unique needs of Hillsborough, the conditions proposed by Cornerstone are almost identical to the services Cornerstone currently provides elsewhere. Cornerstone’s plan to serve Hillsborough in phases does not immediately address the unmet need for hospice services countywide. Cornerstone will not send its marketing team to facilities and other referral sources in those phased areas until Cornerstone has completed each phase of its plan. Although Cornerstone’s witnesses testified that Cornerstone will not turn away referrals from parts of the county before Cornerstone begins operations in those areas, they also confirmed that Cornerstone will not actively seek referrals from other phased areas until it is ready to move into those areas. Unlike Suncoast, and to a lesser extent VITAS, there is no evidence that Cornerstone conducted a thorough needs assessment of SA 6A before developing its phased implementation plan. Cornerstone simply looked at a map of where existing providers have offices and decided to start elsewhere. Likewise, Cornerstone did not conduct any independent assessment of the needs of the four different geographic areas of its plan to determine whether Cornerstone will be capable of serving all of the county’s residents immediately upon CON approval. Further, Cornerstone did not conduct any review or analysis of comparable start-ups in Florida when preparing its SA 6A CON application. VITAS undertook an analysis of information from a variety of sources, including meetings with various individuals within Hillsborough regarding the perceived gaps in care. Based on this review, VITAS identified a number of patient groups with purported unmet needs: African American and Hispanic populations; migrant workers; patients residing in the eastern and southern parts of the county who are not accessing hospice at the same rate as other parts of the subdistrict; patients with respiratory, sepsis, cardiac, and Alzheimer’s diagnoses; patients requiring continuous care and high acuity services such as Hi-Flow oxygen; patients requiring admission in the evening or on weekends; and patients residing in small, less than 10-bed, ALFs. VITAS proposed a number of solutions to address the purported needs identified in Hillsborough, and largely included those proposed solutions as conditions of its application. However, VITAS failed to identify a specific operational plan for Hillsborough. The purported gaps in care and solutions identified in VITAS’s application for Hillsborough largely mirror those identified in its application for Service Area 2A that was submitted during the same cycle, despite significant differences between the makeups of those two service areas. VITAS’s application included 47 letters of support. Many of the letters are from persons and organizations outside Hillsborough, and even include a letter from one of VITAS’s employees, Kellie Newman, and two letters in support of its 2A application. At hearing, VITAS offered testimony from letter of support authors Mary Donovan and Margaret Duggar. Ms. Donovan lives in Miami and is VP for Caregiver Services, Inc., a nurse staffing agency that contracts with VITAS in other areas of the state and hopes to do so in Hillsborough. Ms. Duggar is the President of MLD & Associates, Inc., located in Tallahassee, which is a management firm that serves as executive staff for a number of entities. Neither of these letters is probative of VITAS’s ability to meet the hospice needs of Hillsborough residents. Ultimately, the applicants all agreed that the unmet need in SA 6A is not purely numeric: it is concentrated among certain patient populations, including Hispanic and migrant communities; non-cancer patients under age 65, including those with dementia, Alzheimer’s, respiratory, and cardiac disease; and lower income groups. Each applicant tailored their proposal to address the perceived, underlying access barriers accordingly. Two primary theories concerning the source of access barriers in Hillsborough developed at final hearing: (a) that access barriers, and hence, unmet need in the service area stem from a lack of access to relevant hospice services through existing providers once a patient has entered hospice care; and (b) that access barriers, and hence, unmet need in Hillsborough, stem from a lack of outreach and education necessary to bring awareness of hospice services to Hillsborough residents so that they access hospice services in the first place. All three applicants proposed to tailor their hospice services and programming to the particular residents of Hillsborough. But Suncoast’s proposal and conditions focused more heavily on outreach and education to bring geographically and culturally-driven awareness of the hospice benefit to patients appropriate for hospice. As noted, Suncoast also did a more comprehensive needs analysis, which allowed Suncoast to focus its CON conditions on those segments of the Hillsborough population most in need of improved access to hospice services. Among the applicants, Suncoast alone proposes to implement a dedicated pediatric hospice program, which is not currently offered in Hillsborough. Dr. Stacy Orloff, accepted as an expert in pediatric hospice care, confirmed in her testimony the following: Suncoast's pediatric hospice program includes a dedicated integrated care team comprised of a fulltime pediatric nurse with more than 25 years’ hospice experience, a pediatric medical director, a full-time licensed social worker, a team assistant, a volunteer coordinator and a pediatric team leader. Additionally, there are part-time staff members including LPNs and CNAs with dedicated pediatric hospice experience. This is an important distinction, as many hospice programs claim to provide pediatric hospice services, but oftentimes they utilize the same care teams that provide care for adult patients. Suncoast's longstanding expertise and network of community partners for its pediatric program will ensure that the proposed pediatric hospice program fits the specific needs of the pediatric patient and family. Suncoast will use a combination of existing staff and PRN assistance until the pediatric caseload is large enough to warrant addition of new team members in Hillsborough County. Suncoast's existing pediatric hospice team has a strong relationship with St. Joseph's Children's Hospital, which it will utilize to expand its network of pediatric providers to increase hospice awareness and utilization in Hillsborough. Suncoast conditions its application on purchasing a $350,000 mobile van, the “Empath Mobile Access to Care,” to conduct mobile outreach activities in Hillsborough for ethnic-specific programming and outreach to homeless. VITAS also conditioned its application on a “Mobile Hospice Education Unit” van, and included photos of similar vans that it operates in other service areas. The Suncoast van will be staffed by a full-time bilingual LPN and a full-time social worker prepared to discuss advanced care planning and education, and will be equipped with telehealth technology capable of linking with the Empath Care Navigation Office. In contrast, VITAS did not explain how its van will be staffed, or whether any of the staff will be clinicians. Indeed, from the photos included in the application, the van appears to be more of a mobile advertisement for VITAS, than it does a tool for hospice education and outreach. VITAS attempted to differentiate its proposal by pointing to disease- specific programming for patients with pulmonary and cardiac conditions, Alzheimer’s, and sepsis. But, Cornerstone and Suncoast are also capable of caring for patients with those conditions. And, specific to sepsis programming—a feature of VITAS’s presentation at final hearing— septicemia is not usually the primary reason a patient enrolls in hospice. Instead, sepsis is a complication of another terminal condition for which a patient is admitted to hospice, and therefore does not represent a need unto itself. VITAS further attempted to differentiate its program by pointing to its comparatively longer average length of stay, arguing that longer average lengths of stay are indicative of greater access and quality. However, this notion was countered by credible testimony that longer lengths of stay, along with a higher percentage of live discharges and higher 30-day readmission rate, may, alternatively, represent targeting of patients unlikely to experience the types of access barriers at which CON is aimed, and may be indicative of lower quality and higher costs. And VITAS’s healthcare planning expert did not conduct an analysis, and offered no opinion, as to the specific cause of VITAS’s comparatively longer length of stay. Taken together, the evidence was inconclusive as to whether longer lengths of stay reflect access enhancements generally, or as applied to VITAS’s proposal. Section 408.035(9) - The applicants’ past and proposed provision of health care services to Medicaid patients and the medically indigent. Rule 59C-1.0355(2)(f) provides that hospice services must be available “to all terminally ill persons and their families without regard to age, gender, . . . cost of therapy, ability to pay, or life circumstances.” Consistent with rule, hospice providers must provide care to Medicaid patients. Medicaid pays essentially the same for hospice care as does Medicare. As such, there is no financial disincentive to accept Medicaid hospice patients. VITAS and Cornerstone both have a history of providing Medicare, Medicaid, and medically-indigent care; Suncoast’s affiliated entity, Suncoast Pinellas, has a similar history, and all three applicants propose to provide care to Medicare, Medicaid, and the medically indigent. While the three applicants project that they will experience different payor mixes for Medicaid and indigent patients, there is no evidence in this record that any of the applicants have discriminated against such patients in the past, or would do so in their Hillsborough program. Cornerstone argues that it is entitled to preference over Suncoast because Cornerstone’s projected percentage of Medicaid and medically indigent admissions (6%) is almost double that of Suncoast (3.3%). However, Cornerstone’s projection is exactly that: a projection of the payor mix it may experience in its new program. Significantly, Cornerstone did not commit to a 6% Medicaid/indigent payor mix within its CON conditions, and therefore that level of Medicaid/indigent admissions is unenforceable. Rather than the applicants’ projected payor mixes, what is significant are plans to reach out to the Medicaid and charity care population to improve their knowledge about, and use of, hospice services. Suncoast’s application presents a specific plan for doing exactly that. All of the applicants have proposed programs for outreach to financially disadvantaged communities within Hillsborough, and none of the applicants are entitled to preference under this criterion. Rule 59C-1.0355(4)(e) – Preferences for a New Hospice Program.Preference shall be given to an applicant who has a commitment to serve populations with unmet needs. Each applicant expressed a commitment to provide hospice services to populations with unmet needs. And to a greater or lesser extent, each applicant conducted an analysis of the specific populations with unmet needs in Hillsborough. No evidence was presented to establish that care for hospice patients with the varying identified conditions or within the various demographic groups is not available in Hillsborough. Rather, the evidence demonstrates that patients are not accessing hospice services, despite their availability to residents of Hillsborough. Among the three applicants, Suncoast best demonstrated a plan for enhancing access to quality hospice care for these populations, as well as a track record of past experience with enhancing access to quality hospice services for these populations. Preference shall be given to an applicant who proposes to provide the inpatient care component of the Hospice program through contractual arrangements. Each of the applicants propose to provide the inpatient care component of the hospice program through contractual arrangements, and presented testimony regarding their ability to do so. Likewise, all three applicants presented letters from entities in Hillsborough regarding their purported willingness to contract for the inpatient care component of the hospice program. However, no applicant presented non-hearsay evidence from any entity within Hillsborough regarding a willingness to contract for the inpatient care component of the hospice program. The applicants are on equal footing in terms of the ability to contract for inpatient care. Notwithstanding its intention to provide the inpatient component of the hospice program through contractual arrangements, VITAS conditioned its application on applying for a CON to construct an inpatient hospice house within the first two years of operation. However, VITAS presented no evidence to establish the need for an additional inpatient hospice house in SA 6A, and no evidence was presented to demonstrate that an inpatient hospice house is a more cost-effective alternative to contracted beds. The proposals by Cornerstone and Suncoast to contract for the inpatient component of the hospice program represent a better use of existing resources than that of VITAS, which will incur the expense of a freestanding hospice house for its proposed program. On balance, this preference weighs equally in favor of Cornerstone and Suncoast, and against VITAS. Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each applicant presented evidence of a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. However, the programs proposed by Suncoast to address the needs of these populations are more precisely targeted than those of the other applicants, and Suncoast is therefore entitled to preference. Proposals for a Hospice service area comprised of three or more counties. SA 6A is comprised of a single county, Hillsborough. This preference is therefore not applicable in this case. Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare. All three applicants propose to provide services in Hillsborough that are not specifically required or paid for by private insurance, Medicaid, or Medicare. The added services beyond those covered by private insurance, Medicaid, or Medicare as proposed by the applicants differ slightly, but on balance, weigh equally in favor of approval of each applicant. Rule 59C-1.0355(5) – Consistency with Plans. Each of the applicants conducted an analysis of the needs of Hillsborough residents and included evidence within their applications and through testimony at final hearing regarding the consistency of their respective plans with the needs of the community. However, Suncoast’s evaluation of the needs specific to Hillsborough was more thorough, and its application is best targeted at meeting the identified needs. Rule 59C-1.0355(6) – Required Program Description. Each applicant provided a detailed program description in its CON application. The elements of the program descriptions are discussed above in the context of the various statutory and rule criteria. Ultimate Findings Regarding Comparative Review Suncoast conducted the most comprehensive evaluation of the end of life care needs of Hillsborough residents, and developed targeted programs and services to address those needs. Those programs and services are identified as CON conditions, and are enforceable by AHCA. The depth and breadth of Suncoast’s commitments to the residents of Hillsborough exceed those of Cornerstone and VITAS. Unlike the other applicants, Suncoast offers needed programs which are not currently available in Hillsborough, including a dedicated pediatric hospice program, and enhanced transportation options for persons living in rural areas of the county. Suncoast and Cornerstone are comparable in terms of history of providing quality care. VITAS is inferior in this regard, as evidenced by the numerous confirmed deficiencies in recent years. Undoubtedly, VITAS has redoubled its efforts to improve quality in response to the numerous confirmed deficiencies and complaints, but based upon the record in this case, Suncoast and Cornerstone have a better history of providing quality care. Suncoast would be able to commence operations in SA 6A more quickly than Cornerstone or VITAS. It has connections with other healthcare providers in Hillsborough and could easily transition to that adjacent geographic area. All three proposals would enhance access to hospice services in the county, but Suncoast’s program would be the most effective at enhancing access. A careful weighing and balancing of the statutory review criteria and rule preferences favors approval of the Suncoast application, and denial of the Cornerstone and VITAS applications. Upon consideration of all the facts in this case, Suncoast’s application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Suncoast Hospice of Hillsborough, LLC’s, CON No. 10605 and denying Cornerstone Hospice and Palliative Care, Inc.’s, CON No. 10602 and VITAS Healthcare Corporation of Florida’s, CON No. 10606. DONE AND ENTERED this 26th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Marc Ito, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 2021. Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge, Ecenia & Purnell, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 Elina Gonikberg Valentine, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Allison Goodson, Esquire GrayRobinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Maurice Thomas Boetger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC Suite 3600 303 Peachtree Street Northeast Atlanta, Georgia 30308 D. Carlton Enfinger, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue is whether Suncoast's application for a Certificate of Need (CON) to establish a new hospice program in Service Area 6C should be approved.
Findings Of Fact Numeric Need for One Hospice in Service Area 6C The Agency determined that there is need for one new hospice program in Service Area 6C in the "Other Beds and Programs" Second Batching Cycle 2006. On October 6, 2006, an FNP of one in Service Area 6C (Manatee County) for the January 2008 Hospice Planning Horizon was published by AHCA in Volume 32, No. 40 of the Florida Administrative Weekly. The published FNP was not challenged. Not an Aberration In the six consecutive batching cycles commencing with the October 2006 cycle and ending with the April 2009 cycle, AHCA's numeric need methodology yielded a number of un-served patients who would elect hospice services that was 350 or greater (see paragraph 34, below) in three batching cycles: October 2006, April 2007, and October 2008. Rather than an FNP of one, however, an FNP of zero was published for the April 2007 and October 2008 batching cycles. The FNPs of the two cycles were "zeroed out" because Suncoast's application had been approved earlier and the approval was still pending. See para. 41, below. The Parties Suncoast Suncoast is the approved applicant for a new hospice program in Service Area 6C. Founded in 1977 and started by a group of volunteers, Suncoast is a not-for-profit, full-service community hospice. It has been a provider of hospice services in Service Area 5B (Pinellas County), a service area adjacent to 6C, since 1978. Except for a Pinellas County hospice that exclusively serves and limits its admissions to veterans, Suncoast is the sole provider of hospice services in Pinellas County. From inception, Suncoast's mission has been to provide assistance to anyone affected by death, dying, grief, or bereavement within the community it serves. Suncoast has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 5B. It is Medicare and Medicaid Certified. Agency for Health Care Administration The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated "as the state health planning agency for purposes of federal law . . . ." § 408.034(1), Fla. Stat. It is also "the single state agency [in Florida authorized] to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." Id. TideWell TideWell, the Petitioner in this administrative proceeding, challenges the Agency's preliminary approval of Suncoast's application. TideWell is a not-for-profit, full-service community hospice, founded in 1980. Licensed to provide hospice services in contiguous Service Areas 6C (Manatee County), 8D (Sarasota County) and 8C (Charlotte and DeSoto Counties), TideWell is Medicare and Medicaid Certified. TideWell began serving Manatee County in 1988. Currently the sole provider of hospice services in the county, TideWell has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 6C. Tidewell: Quality of Care, Commitments, and Programs TideWell is accredited by the Community Home Care Accreditation Program ("CHAP"), with special CHAP Commendations for the quality and the use of technology in its program. CHAP is a national accrediting organization whose standards exceed State and Federal licensure standards. CHAP has been authorized by Medicare and Medicaid to "deem" hospice programs to be in compliance with Medicare and Medicaid survey standards. CHAP Accreditation is confirmation that all of TideWell's services delivered in Manatee County are of the highest quality, and that TideWell has the infrastructure in place to ensure high-quality services in the future, as independently measured against national standards for best practices. It is expensive for TideWell to maintain the high levels of quality for which it has been recognized by CHAP. For example, TideWell financially supports Master's level education for its licensed clinical social workers. For its nurses and nurse's aides, it conducts review courses for their certification and pays for their exams if they pass them. Those achieving certification are rewarded with 3 percent pay increases. TideWell has made significant capital commitments in Manatee County. Three branch offices have been strategically located to serve the northeast, northwest, and southern parts of the County. Two of the branch offices are owned by TideWell, and the third is leased for 5 years. TideWell has also built two strategically located freestanding hospice inpatient facilities in Manatee County. TideWell has located its Manatee County hospice services and community outreach efforts to be geographically available and programmatically accessible. TideWell examines Manatee zip code data annually in order to plan the locations for its offices, clinical services, community bereavement services, pre-hospice services, and outreach, so as to best anticipate and serve population growth. Beyond hospice services, TideWell offers a continuum of pre-hospice programs to address the needs of persons who may not be hospice eligible or who do not desire to elect hospice. None of these pre-hospice programs are required as part of a licensed hospice program. Among the pre-hospice programs is Footprints, a program for children started in 2001. Partners in Care ("PIC") is a Medicaid Waiver program that provides highly specialized pediatric palliative care services to patients determined by Children's Medical Services to be eligible. Transitions is a companionship program, started in 2003, for persons with a terminal diagnosis who have not elected hospice, but who need companionship services and psychosocial support with their illness. TideWell Connect is similar to Transitions but also provides palliative care addressed to physical symptoms relief and management. Palliative Care Partners is a program started in 2005 to provide hospice palliative care expertise on a consultative basis to non-hospice patients in acute care hospitals and their homes. None of TideWell's programs along the pre-hospice continuum were implemented as a result of competitive pressure. Rather, each program was developed over time, as TideWell incrementally achieved increased economies of scale in Manatee County sufficient to support these programs. TideWell's Collaboration with All Children's Hospital Pediatrics is a tertiary service. All Children's Hospital serves a five-county area, including Pinellas and Manatee, providing local health care providers with tertiary pediatric acute care resources. TideWell collaborates with All Children's to provide palliative consultations and care to terminally and chronically ill children, participates in the PIC program and provides a sophisticated array of outreach pediatric services to pre-hospice pediatric patients. The level and nature of the services requires the retention of difficult-to- find, highly-qualified pediatric clinicians. TideWell's economies of scale allow it to provide this service, even though the number of children who require it in TideWell's service area is small. At the time of the hearing, TideWell had resources available to handle a caseload of 50 pediatric patients, with an actual census of two patients. TideWell has an active volunteer program in Manatee County, currently composed of 220 volunteers. It offers frequent and conveniently located training classes for new volunteers and has developed a nationally-recognized teen volunteer program. Because TideWell is CHAP accredited, its volunteer program must meet high national standards and be subject to independent verification of best practices. TideWell offers a stratified community bereavement program that addresses the unique issues for survivors associated with various types of death, such as loss of a parent or infant death, and cause of death--e.g., suicide and or death due to trauma. TideWell has a thanatologist and staff of highly trained and experienced grief specialists stationed in Manatee County. They provide grief support to the community, including school counseling, family retreats, support groups, and teen bereavement programs. TideWell has demonstrated that it has the ability to grow geographically and programmatically to meet the clinical needs of patients and referral sources for hospice services in Manatee County. TideWell offers substantially all non-hospice programs proposed by Suncoast. TideWell program enhancements may differ in name, but are substantively similar or virtually identical to services promised by Suncoast. Florida Model Hospices Suncoast and TideWell are "Florida model" hospices. Florida model hospices are usually not-for-profit charitable entities. They strive to achieve revenue (including donations) in excess of expenses so that they have the financial capability of providing services that are typically unfunded or under-funded. One method employed by Florida model hospices to achieve the revenue necessary to fund otherwise under-funded services is through economies of scale. Economies of scale were defined by Mr. Balsano at hearing as: achieving "additional volume [without] . . . having . . . costs go up . . . proportional with volume." Tr. 387. Achievement of economies of scale is especially important in the environment of revenue reduction that prevailed at the time of hearing. That environment is reasonably expected to continue for the immediate future. Due to relative size, Suncoast enjoys greater economies of scale than does TideWell. Suncoast, for example, has an average daily census double the size of TideWell's. It has roughly 1600 employees compared to TideWell's 900 employees. And its volunteer program with 2,800 volunteers has more than twice as many volunteers as TideWell's 1,100. Medicare: Primary Payer The primary payer for hospice services is Medicare. Authorized in 1982, the Medicare benefit covers reasonable and necessary palliative treatments to the hospice patient on a per diem basis for each day the patient is in hospice. The Medicare benefit is comprehensive, providing virtually all a patient and family need during the period of hospice care. Florida law recognizes hospice patients with a prognosis of one year or less. To qualify for Medicare, however, the patient must be certified as having a prognosis of six months or less if the illness runs its ordinary course. Stipulated Facts In the Pre-hearing Stipulation filed July 29, 2009, the parties stipulated to the following facts: AHCA's rule formula resulted in a numeric need for one new hospice program in Manatee County in the batch cycle for which Suncoast's Application No. 9964 was submitted. Suncoast's letter of intent, initial application and omissions response for Application No. 9964 were timely filed by Suncoast with the appropriate filing fee; and the application was deemed complete by AHCA. Suncoast has a record of providing high quality care. Suncoast has demonstrated immediate financial feasibility. Suncoast has a record of providing services to Medicaid and indigent patients. The estimated startup project costs on Schedule 1 of the application are reasonable for the project as proposed. Pre-hearing Stipulation at 2. Conditions in the Application Approval of Suncoast's application is predicated on 14 conditions. The 14 conditions appear in an attachment to Schedule C of the application. See Suncoast Ex. 1, Vol. 1, at SC 0221- 0222. The Hospice Programs Rule Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs" Rule) governs hospice programs. The Hospice Programs Rule regulates several aspects of hospice programs including the establishment of new hospice programs. See Fla. Admin. Code R. 59C-1.0355(1). The criteria for the determination of need for a new hospice program are set out in Section (4) of the Hospice Programs Rule. The section is divided into five subsections: (a) "Numeric Need for a New Hospice Program"; (b) "Licensed Hospice Programs"; (c) "Approved Hospice Programs"; (d) "Approval Under Special Circumstances"; and (e) "Preferences for a New Hospice Program." Fla. Admin. Code R. 59C-1.0355(4). Among the special circumstances that support approval of a CON application for a hospice program is a finding that there exists an un-served population in the service area. Suncoast's application does not seek approval under any of the special circumstances listed in the Hospice Programs Rule. Rather, it seeks to show that it qualifies to establish a new hospice program in response to published numeric need. Subsection (a) declares "[n]umeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater." Fla. Admin. Code R. 59C-1.0355(4)(a). The subsection then sets out a formula for calculating an FNP or "net need." See id. The formula incorporates four different categories of patients: those under 65 years of age whose deaths are "cancer deaths"; those 65 years of age and over whose deaths are "cancer deaths"; those under 65 years of age and whose deaths are "from all causes except cancer"; and, those 65 years of age and over whose deaths are "from all causes except cancer." The calculation under the formula was described by Mr. Sullivan at hearing: First it looks at statewide averages and it then calculates the penetration rate for the local service area. It looks at the actual number of admissions that occurred in that service area in the most recent period for which data is available and then divides that by the number of deaths from the most recent period that's available. So there's basically two different penetration rates. There is a state average and then there is a local actual rate. The State then projects forward the number of deaths that it expects 18 months in the future in that particular geographic region . . . they calculate a three-year historical death rate. They look back at the three most recent years, calculate an average death rate in each of those categories, and then applies that to projected population going 18 month out into the future. * * * And then the state applies the statewide average death rates to the projected number of deaths to see . . . the expected number of hospice patients 18 months down the road -- and subtracts from that number the actual number of patients who were served in the service area. Tr. 407-409. If the number yielded by the calculation is 350 or greater, then an FNP of one is published subject to protective measures for newly-licensed hospices or approved but unlicensed hospices. See Fla. Admin. Code R. 59C-1.0355(4)(b) and (c). In instances in which these protective measures are invoked, the FNP of one is reduced to zero. The Hospice Program Rule does not allow the establishment of more than one new hospice in a service area at a time. That limitation, plus the protective measures for approved hospices and newly-licensed hospices discussed above, led Mr. Gregg to describe the methodology of the Hospice Program Rule for establishing a new hospice program as "inherently very conservative and very measured." Tr. 542. Death Rates and Penetration Rates Death rates declined in Manatee County from 2000 to 2005, but in the latter half of the decade, the number of deaths have been "pretty flat," tr. 410, with a small increase in 2007. As Mr. Sullivan put it at hearing, "[o]ne thing we know is the death rate ultimately is 100 percent for everybody. So there is a finite limit to how far death rates can fall." Id. The death rate in both Florida and Manatee County over the last decade sets up the potential for AHCA's numeric need methodology to yield a result that over-projects need. On the other hand, the penetration rate by hospices (percentage of deaths associated with hospice admissions) had increased at the time of final hearing every year for the previous 12 years. AHCA's numeric need methodology assumes a constant penetration rate. From the standpoint of penetration rates, the numeric need methodology tends to under-project need. Whatever its imperfections, AHCA's methodology is a reasonable method to establish a point of entry for a new provider of hospices services in a hospice service area. A Rebuttable Presumption From the perspective of health planning, a hospice FNP of "1" creates a presumption of need for one new hospice program. But the presumption is not conclusive; it is rebuttable. If a service area has an existing provider of hospice services, as does Service Area 6C with TideWell, then in terms of "incremental demand," an FNP of one creates a rebuttable presumption that the service area can support two providers in total, one of which is new. "Incremental demand" that is at issue is "future deaths." Tr. 467 The existence of an FNP of one new hospice program, however, does not relieve an applicant that aspires to fill the need from demonstrating that its application complies with and meets the statutory and rule criteria applicable to CON projects. Among the statutory criteria is one which relates directly to an FNP. It is found in paragraph (a) of Subsection (1) of Section 408.035, Florida Statutes: "The need for the health care . . . services being proposed." In response to the FNP of one, TideWell seeks to show in this proceeding that there is no need for a new hospice program in Service Area 6C and thereby rebut the presumption that there is a need for one set up by the FNP. Suncoast seeks to show that TideWell has not rebutted the presumption created by the FNP and that it is qualified to fill the need for one new hospice program under relevant statutory and rule criteria. TideWell takes issue with Suncoast's view of the application of some of those criteria, for example, by attempting to show through utilization data and projections that the impact of an approval will fall too heavily on TideWell. Updated Projected Hospice Admissions Suncoast updated projections in its CON application filed in 2006. The updated projections are reasonable. As of June 2009, it projected that there would be a total of 2,154 hospice admissions in Manatee County in 2011, which is hoped by Suncoast to be its second year of operation. Of these, Suncoast projected it would capture 452 if its application is approved. The remaining cases to be served by TideWell in 2011, therefore, is projected to be 1,702. TideWell achieved 2,006 Manatee admissions in calendar year ("CY") 2008. Using CY 2008 admissions as a benchmark, it is reasonable to project that Suncoast's entry into the market will reduce TideWell's admissions in CY 2011 by at least 304. Re-stated, instead of 2,006 admissions in the year 2011, TideWell can be reasonably expected to achieve only 1,702 admissions in CY 2011. The impact to TideWell caused by Suncoast's entry into the market, therefore, is reasonably expected to be at least 304 fewer admissions in CY 2011. Diversity Trends in Manatee County. Manatee County's population is reasonably projected to increase 1.73 percent each year from 2009 to 2015. Over the same time period, the population of persons under 65 is reasonably projected to increase 1.5 percent each year; the population of persons age 65 years and older, 2.5 percent each year. In Manatee County, the non-white population is growing more rapidly than the white population. Historically, the Hispanic population utilizes hospice services at a rate lower than the non-Hispanic population. In Manatee County, the Hispanic population is growing faster than the non-Hispanic population. From 2000 to 2005, the Hispanic population grew at a rate of 56.48 percent and non- Hispanic population grew at a rate of 11.07 percent. While Hispanic deaths are a relatively small portion of the overall deaths in Manatee County, the number of Hispanic deaths is increasing. From 2000-2005, deaths among the African-American population in Manatee County increased 7 percent while deaths in the white population decreased one percent. There are no data to determine the extent to which TideWell serves Hispanics or African-Americans. TideWell Penetration Rates in Manatee County For the six-year period from 2003 to 2008, penetration rates in both Manatee County and Florida have been on an upward trend. TideWell's penetration rate in Manatee County has increased every year over the period except for 2006 when it fell by two percent. Using round numbers, TideWell's penetration rates for the period were: 40 percent in 2003; 50 percent in 2004; 53 percent in 2005; 51 percent in 2006; 57 percent in 2007; and 59 percent in 2008. The drop-off in 2006 was compensated for by a steep increase of 6 percent between 2006 and 2007. Again using round numbers, the statewide penetration rate has increased every year of the six-year period from 48 percent in 2003 to 51 percent in 2004 to 52 percent in 2005 to 55 percent in 2006 to 59 percent in 2007 to 61 percent in 2008. The statewide penetration rate over the six-year period has been greater than TideWell's every year with the exception of 2005 when TideWell's penetration rate exceeded the statewide rate by one percent. With the exception of 2005, TideWell's rate over the six-year period has been between eight percent and one percent lower than the statewide penetration rate. For the last two years of the period, 2007 and 2008, TideWell's penetration rate has been roughly two percent lower than the statewide penetration rate. Suncoast's Penetration Rate in Pinellas County In contrast to the relationship of TideWell's penetration rate to the statewide penetration rate, data provided by Suncoast showed its penetration rate in Pinellas County to have exceeded the statewide penetration rate in the years closest to the submission of its application. In 2000 and 2001, Suncoast's penetration rate was nearly even with the statewide rate but it exceeded Florida's penetration rate by three percent or more for 2002, 2003 and 2004. In 2005, Suncoast's penetration rate exceeded the statewide rate by more than five percent. Statutory Criteria; Section 408.035 Review criteria for CON determinations are contained in paragraphs (a) through (j) of Subsection 408.035(1), Florida Statutes. (Not all of the criteria require findings. For example, paragraph (j) relates solely to nursing facilities.) The need for the health care facilities and services being proposed. As explained, above, the FNP of one establishes a rebuttable presumption of need. The presumption was not rebutted by TideWell. Availability, quality of care, accessibility and extent of utilization of existing health care services in the service district. Over the years, TideWell's admissions in Manatee County have grown significantly: from 792 admissions in 1996 to 2,006 in 2008. After a flattening of growth in 2004 and 2005, attributable to the impact of Hurricane Charlie, the more recent growth has been particularly significant. In 2006 Manatee County hospice admissions numbered 1,683; in 2007 there were 1,906; and, in 2008, there were 2,006. Suncoast's entry into the Manatee County market place will increase availability. If Suncoast enters the Manatee County market and achieves penetration rates in excess of the statewide average penetration rate as it has done in Pinellas County, it is likely that utilization rates will be higher than if TideWell remained the only provider of hospice services in Manatee County. The projected utilization of the proposed hospice program was estimated in Suncoast's application using historical and projected population data for Manatee County and three-year average death rates, applied to the appropriate age category, assuming some modest growth in number of future deaths. TideWell's penetration rate was assumed to increase by one percent per year, consistent with the trend in Manatee County and statewide. The number of hospice admissions in Manatee County was projected forward to 2008 and 2009; and the last step in Suncoast's projection methodology was to estimate what market share Suncoast would achieve. It was assumed that by the end of the second year of operation, Suncoast would achieve a market share of 21 percent. This was applied to the projected number of admissions. The projected utilization was updated before the hearing using more recent data and then compared to the track record of hospices in Service Areas with two hospices. Some Manatee County data had to be estimated because TideWell reports data to the state for its entire operation, serving three service areas. The result is 452 Suncoast admissions projected for 2011, the second year of operation. If Suncoast's projections are achieved, the projected reductions in TideWell's admissions in Manatee County leaves admissions at a figure (1,702) in excess of TideWell's 2006 admissions. TideWell provides high quality of care in Service Area 6C. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Suncoast has 18 interdisciplinary teams. Nurses, physicians, social workers, chaplains, home health aides, and volunteers comprise the teams. Team members often represent other disciplines: physical, occupational and speech therapy; dietary counselors; massage therapy; and those engaged in music therapy and other palliative arts. Hospice services address physical and medical needs, such as controlling pain, as well as psychological, spiritual and social needs of patients with life-limiting illnesses. They also provide care for families of the patients. Suncoast provides interdisciplinary team care where the patient lives, whether at a residence, nursing home, or assisted living facility or to the homeless. Suncoast has provided quality of care in the arena of hospice services and has the ability to continue to do so in Manatee County if its application is approved. Suncoast has on staff eight full-time physicians, five nurse practitioners, and one physician's assistant. In addition, contract and volunteer physicians work with the teams by serving patients as well as physician groups and by performing consults. Suncoast has 20 full-time clinically-trained chaplains and six part-time chaplains along with volunteer support and assistance from community clergy to provide direct patient care and follow-up with families in bereavement. Suncoast's interfaith community advisory councils assist in keeping up with service needs identified through faith communities. Florida Administrative Code Rule 59C-1.0355(4)(e)2. provides a preference for applicants that propose to provide inpatient care through contractual arrangements. Suncoast currently provides inpatient care through contractual arrangements, so it has experience doing so. Its application proposes the following: While a free-standing inpatient facility would not be feasible until the program matures in Manatee County, discussions with hospitals and nursing homes have made it clear that contracts for scatter-bed patients provision would be available. Discussion with Lakewood Ranch Medical Center revealed that they would be very interested in contracting for a hospice inpatient unit, staffed with personnel. Suncoast Ex. 1., Vol. 1, SC 0130. Contacted by Suncoast, Manatee County Hospital provided a tour of its facility to Suncoast personnel. Additionally, Westminster Retirement Community of Florida has two nursing homes in Manatee County and is willing to contract with Suncoast for beds in those facilities. Contracts have not been entered. Suncoast was among the first programs in Florida to develop a Hospice Veteran Partnership and has provided assistance to set up programs in various areas of the state and nationally. Suncoast has an affiliation with a Jewish-owned and operated nursing home to connect to the Jewish members of the community it serves. Suncoast's application has conditions to provide or enhance services to populations traditionally underserved by hospice. For example, Suncoast "agrees to condition [its] application on achieving … [p]rovision of an AIDS program that will collaborate with existing AIDS Service Organizations in Manatee County in meeting the needs of hospice patients with HIV." Suncoast Ex. 1, Vol. 1 at SC 0221. There are several conditions which relate to serving the Hispanic population of Manatee County, a traditionally underserved group. Suncoast promises to develop a community advisory committee to be composed of residents "reflective of the community whose purpose is to provide input and feedback about the needs of the Manatee County community and whose recommendations will be used in the future program development." Id. at SC 0222. If Suncoast does not implement the conditions, it will be subject to fines and other actions against its license. Suncoast has committed to serve populations whose needs are traditionally unserved. But there was no evidence that any of these groups are, in fact, un- served or underserved in Manatee County. Suncoast, unlike most hospices, has a caregiver program that allows patients with either a frail caregiver or no caregiver to remain at home to die. Suncoast also trains respite and substitute caregivers. Suncoast has a well-developed and in-depth pediatric hospice program. Suncoast has dedicated staff for this program, meaning they only work with children from the first encounter for admission throughout the care given to the pediatric patient. Suncoast's children's hospice team has an excellent working relationship with All Children's Hospital, a tertiary hospital for children that serves several counties, including both Pinellas and Manatee. Suncoast has partnered with the University of California on a five-year National Institutes of Health grant to study bereaved fathers and develop clinical practices specific to that group. Recently, Suncoast was selected to join a regional network to assist hospitals and hospices in starting pediatric hospice or palliative care programs. Under a grant through Children's Hospital and Clinics in Minneapolis, Minnesota, seven sites were selected to participate, Suncoast being the only hospice. After hearing many families lament the difficult choice of selecting hospice for a child, Suncoast responded to the needs of these families by developing children's palliative care services. Suncoast was also among the first hospices in Florida to provide services under the PIC Medicaid waiver program. The program provides palliative care while the child continues curative treatment. Suncoast provides community counseling services as part of its children's palliative care programs. Any family in Pinellas County, from a family dealing with an ill child undergoing curative care to a family bereaved by a tragedy as the result of an auto accident or shooting, can contact Suncoast and receive counseling support. Suncoast also established the Suncoast Children's Care Coalition--a group of community representatives of services to children that works as the eyes and the ears of the community to identify and advise on services to meet community need. Working with the State Victims' Association, Suncoast is actively involved in the adult and children's trauma network. Suncoast received an award for this work in May 2009. Suncoast's perinatal loss program is the only hospice program of its type in the country. Suncoast works very closely with volunteer doulas or birth coaches who receive at least eight hours of interdisciplinary care training to assist families that know their child is likely to be stillborn or not survive beyond labor and delivery. Doulas and children's programs counselors are matched with families to provide information and support. Suncoast provides adult palliative care services to reduce symptoms. Suncoast Supportive Care provides assistance through an interdisciplinary team for those whose life expectance is one year or less or who choose not to go into hospice or who otherwise would not qualify for hospice. Suncoast has relationships with several hospitals in Pinellas County for palliative care consults, and Suncoast's medical director is available for palliative care consults in any hospital. Suncoast also has a licensed home health agency to provide palliative care. Suncoast has palliative arts volunteers who provide services to patients, community program clients, and trainings and presentations to the community. Also known as complementary therapies, aromatherapy, massage therapy, music therapy, expressive arts, and energy works (or Reiki) are used in collaboration with western medicine to relieve symptoms. Suncoast has a partnership with American Stage, a local theatre in Pinellas County. The two collaborated on a play called "Vesta" in which the title character is a woman facing the end of life. After performances of the play, staff speak with the audience about the play and issues raised. Suncoast provides caregiver support through "caregiver coffee breaks." The programs are facilitated by a counselor and are offered at locations throughout the community and at varying times. The services are not reimbursed. Suncoast provides a number of specialized bereavement groups to the community. For example, Kindred Hearts is Suncoast's suicide survivor group, which puts out a monthly newsletter. Persons attend from around Tampa Bay, including Manatee and Hillsborough Counties, because they have not found anything else that meets their needs. In addition, Suncoast personnel are available to respond to grief crises in the community and beyond. Suncoast teams were in Mississippi and Louisiana after hurricane Katrina and assisted after 9/11 to help people cope with loss and grief. These services are not reimbursed. Suncoast has a children's bereavement program that extends to every school in Pinellas County and serves more than 2,000 children a year with loss and grief counseling. Suncoast provides four different bereavement camps. Camp Erin is a weekend bereavement camp for children ages 8-to- 15 years of age in Ellenton in Manatee County. For the past 14 years, Camp Hope has been a smaller camp for families. It provides bereavement for adults and children, both together and apart. "Cube," a bereavement retreat for teens, just completed its third year. Finally, there is a family fun day held each year with arts, crafts, entertainment, and activities that offer fun as well as support and networking for families with a child that has an illness or condition that is life-limiting. Suncoast's staff undergo intense learning for the first 9-to-12 months of employment. Employees are assigned to a mentor or preceptor who oversees their training. Initially, all disciplines receive at least six or eight hours in pain and symptom management, with an additional 12 hours for nurses, pharmacists and physicians. Follow-up education is provided at the two-year mark. Anywhere from 50-to-80 continuing education courses are provided each month. Additionally, all clinic staff are provided laptops on which various references are provided weekly. Diversity is an integral part of Suncoast. Most recently, diversity efforts have been combined into the Committee to Improve Cultural Awareness. The committee offers education internally and externally to increase understanding and respect for cultural differences. The committee meets monthly. It holds educational events, health fairs, and cultural events for staff and the community. Suncoast also has a Latino Advisory Council of members of the Latino community that helps identify needs of the Hispanic community. Suncoast has staff positions dedicated to outreach in the Latino and African-American communities. Suncoast recruits for diversity so that its employees reflect the community. Much of what Suncoast is able to provide is through the assistance of community volunteers. Suncoast has between 2,800 and 3,000 volunteers, including 400 teen volunteers in the Teen Volunteer program. Volunteers do everything from providing direct patient care to administrative support, fundraising, and outreach. Medicare requires that five percent of total patient hours of care be provided by volunteers. Suncoast exceeds that requirement by several percent. Volunteers receive an initial four-hour training to orient them to hospice and volunteerism. For volunteers desiring to perform patient care, an additional 16-to-18 hours of training is provided followed by mentored visits with the teams. Suncoast is able to recruit, train, and retrain volunteers in Manatee County. Suncoast HIV/AIDS services division, "ASAP," provides case management and a variety of service for adults and children who have HIV/AIDS or have a loved one with HIV/AIDS. Services range from providing condoms and safe sex education, to retreats, outings, counseling, and a personal needs pantry from which clients may obtain grocery and personal care items not covered by food stamps. Many of these services are not reimbursed. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Suncoast has approximately 1,600 employees. Suncoast and its six affiliated organizations have an annual budget of approximately $150 million. Suncoast is not the subject of any outstanding fines, liens or overpayments. Suncoast is financially efficient. Its operating expenses, including patient service expense, for fiscal year 2008 were $116.8 million. Its administrative and general expenses were just over $19 million, or 15 percent of total costs, a reflection of administrative efficiency. Schedule 1 of Suncoast's application shows "estimated project costs." Schedule 2 shows all of Suncoast's capital projects whether approved, under development, or planned, and the total capital commitment for both health care and other projects. Schedule 3 shows Suncoast's source of funds, and Schedule 4 depicts utilization of existing hospice by patient days. Each of the four schedules was accurate at the time the application was prepared. Schedule 6 of Suncoast's application presents a reasonable estimate of the staffing that would be required for Suncoast's proposed project. The staffing estimate includes six FTEs "to take care of the conditions for this particular certificate of need application," tr. 300-01, as well. The salaries shown on Schedule 6 are reasonable estimates of salaries for the staffing required to support the proposed project. The extent to which the proposed services will enhance access to health care for residents of the service district. Over the years it has operated in Pinellas County, Suncoast has proven that it is responsive to community needs for hospice services. Hospice programs began in the United States in 1974. Suncoast's program commenced in 1977 when a group composed of chaplains, educators, nurses, social workers, and local residents from "all walks of life," tr. 37, saw the need for hospice in Pinellas County. It was decided then that the program would be not-for-profit and that the mission would be to serve any person in the community affected by death, dying, grief, or bereavement, regardless of ability to pay. In keeping with its mission, Suncoast has multiple community advisory committees through which it identifies and meets community hospice needs. In 1981, for example, at a time when most home health agencies were turning down AIDS patients and hospitals were releasing them, Suncoast was one of the first programs to care for AIDS patients in their homes. A recent example of Suncoast's attempt to increase access to hospice services is its "Touch a Life" program. Aware of spreading financial stress in the community typified by community members' decisions to stop paying health insurance premiums, their difficulty in affording medication, and their forgoing needed visits to physicians, every member of the Suncoast organization was asked to touch a life in some way each week. Within three months of the commencement of the program, 10,000 community members had been contacted with the outreach effort. Suncoast's community service centers, dispersed throughout the community, are not only a resource for staff, but gathering places for the community with libraries, computers available for research, and volunteer staff. Suncoast is affiliated with Suncoast Institute, a national center for hospice education, research, and end-of-life care. The institute's mission is to improve the way individuals and communities care for each other in the last years of life. The institute provides training on a contractual basis, conference presentations, "train the trainer," tr. 247, sessions, and seminars via the Internet or webinars where individuals receive training to implement programs in their own communities. In 2008, Suncoast, together with Morton Plant East Hospital, became one of only three accredited clinical pastoral education programs in the nation with training in end-of-life care. Training occurs across the whole continuum of care, whether in a hospital, nursing home, or inpatient hospice care. At inception, Suncoast Institute had as a goal "trying to bridge the gap between academic research and practice." Tr. 253. It began networking with academicians at the University of South Florida (USF.) Today, along with other hospices including TideWell, the institute is part of a center at USF that studies end-of-life care. The center at USF oversees a research agenda that links community provider needs with academic disciplines to provide meaningful research useful in the promotion of hospice and palliative care. Suncoast has also participated through Suncoast Institute in collaboaration with university researchers at the University of Buffalo, Duke, Yale, Brown, Dartmouth, and various state university systems. The institute oversees student affiliations hosting 2,500-to-3,000 students a year that range from two-day observations to two-year internships, residencies, and fellowships. The affiliations span a broad spectrum of clinical disciplines such as pharmacy, nursing, social work and medicine and include non-clinical student affiliations in non- profit business management, finance, marketing, and community outreach. The institute has a local speakers' bureau and provides continuing education for professionals in the local community. It provides up to a million student hours a year of training in the community and with staff. Suncoast's community committees, outreach programs, its institute, and work in academic settings are likely to continue with as much vigor as in the past should its application be approved. Services Suncoast intends to provide will duplicate services offered by TideWell. Nonetheless, it is reasonable to expect that with two different, competing and perhaps at times collaborating hospices, access to hospice services in Manatee County will be enhanced should Suncoast's application be approved. The immediate and long-term financial feasibility of the proposal. Suncoast is a financially strong organization. Its most recent audited financial statement for the fiscal year ending September 30, 2008 shows $15,142,000 in cash and cash equivalents of $7,567,000. The approximate sum of the two, $22.6 million, is a healthy financial reserve. Unrestricted net assets shown in its Consolidated Statements of Financial Position for 2007 (revised) and 2008, see Suncoast Ex. 38, moreover, were $35,309,089 as of September 30, 2008. Suncoast has the cash on hand to finance the proposed project. The parties have stipulated to the short-term financial feasibility of Suncoast's proposal. As for determining long-term financial feasibility, Mr.Balsano, Suncoast's expert in health care finance, used a model developed on a fixed and variable expense basis. It incorporated accounts at the existing Suncoast Hospice in Pinellas County and "looked towards consistency in some of the revenue and expense relationships." Tr. 331. It made adjustments, however, for operations in Manatee County for patient care costs and some other operating costs, taking into account administrative resources that would be shared with its Pinellas County operations. Assumptions made by Mr. Balsano were reasonable. As source documents, the model used the Suncoast 2007 budget. It identified unique capital costs of depreciation associated with opening a hospice in Manatee County; supply expenses and revenue on a per-patient-day or per-admission relationship were assumed to be similar to those of Suncoast's Pinellas County operations. The model was used to develop Schedule 7A of the application, which calls for projected revenues from operating years 1 and 2, and Schedule 8A, which calls for projected income and expenses for the same operating years. Schedule 8A of the application projects a net operating loss at the end of the second operating year of $269,689. Included in the loss are expenses of approximately $250,000 for uncompensated care that Suncoast has committed to provide. Suncoast will provide $358,933 in non-operating revenues which will not only cover the "uncompensated care" loss but will produce a net profit in the second year of operation attributable to the Manatee County operations of $89,244. The contribution of non-operating revenues enables Suncoast to provide service beyond the Medicare benefit. Suncoast's proposal is financially feasible in the long term. The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. If its application is approved, Suncoast will compete with TideWell in Manatee County. Competition from Suncoast, a mission driven, not-for-profit, organization, should promote quality in Manatee County. In contrast to a for-profit organization that would seek to maximize profits by taking as many patients as possible whether at TideWell's expense or not, Suncoast is more likely to attempt to complement the programs offered by TideWell. There is potential for Suncoast to "add value to [the] service area," tr. 443, as Mr. Sullivan phrased it at hearing. It is reasonable to expect that added value will promote quality of care. Suncoast and TideWell have collaborated in the past. Whether the two will continue to collaborate should Suncoast's application be approved is an open question. Given the nature of their operations, however, there is a strong possibility of collaboration. If it continues, there will be an opportunity to achieve efficiencies. (i) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Suncoast has a long history of providing hospice services to Medicaid patients and the medically indigent. Consistent with its mission, Suncoast has made a conscious decision to provide needed services to hospice patients, whether fully reimbursed or not. These include instances where patients have some level of insurance but not all services are covered or cases where specific covered services are under-reimbursed. It also includes instances of when the patient has no ability to pay. In its fiscal year ending September 30, 2006, Suncoast provided uncompensated care totaling $11.5 million. In its fiscal year ending September 30, 2008, Suncoast provided uncompensated care totaling roughly $11.7 million. During 2006, a total of five percent of Suncoast's patient days were reimbursed by Medicaid and five percent were un-reimbursed charity care. At the time of hearing, Suncoast continued to provide charity care and Medicaid-reimbursed services at or above those levels. In fiscal year 2008, Suncoast's loss from continuing operations was $1,370,000. It received funding from the Suncoast Foundation in that year that was more than enough to cover the loss. Including all program expenses, both reimbursed and un-reimbursed, and all revenues from reimbursement or support from the community for non-reimbursed programs, Suncoast has operated at a profit. Suncoast's past profitability is indicative of the likelihood that it will continue to be able to provide Medicaid services and charity care at levels it has provided in the past. Because many of its programs are not funded through reimbursement by Medicare or private insurance, Suncoast has a fund-raising foundation. The Suncoast Foundation works to support the mission and programs of Suncoast and its affiliates. Its net assets at hearing were $31,690,000. The foundation will coordinate funding in Manatee County by using a community-based, relationship-based approach. The foundation has been successful in the past. In 2007, for example, the foundation raised approximately $9.3 million in contributions to fund its programs that did not generate adequate revenue. The foundation has diverse revenue sources. It receives revenue from contributions, bequests, investment income, rental income, thrift stores, and other fundraisers. In the fiscal year ending September 30, 2008, the foundation received total revenues of approximately $1.7 million from thrift stores alone that netted approximately $750,000. It is reasonable to expect, in light of Suncoast's history and recent performance, that approval of its application will assist in enhancing access to Manatee County's Medicaid patients and medically-indigent patients. Impact to TideWell TideWell is a financially healthy organization. Based on projections found reasonable in this order, approval of Suncoast's application will leave TideWell with a substantial number of Manatee County admissions. TideWell's Manatee County admissions after Suncoast's approval will likely exceed the number of admissions of more than 90 percent of all hospices nationally. Evidence presented reflected two ways of analyzing the impact of the application's approval on TideWell. The first, stressed by TideWell, is impact on its operations in Manatee County. The second, preferred by Suncoast, is impact on the entire entity of TideWell, that is, considering its operations in Charlotte and DeSoto Counties, Service Area 8A, and on its operations in Sarasota County, Service Area 8D, as well as its operations in Manatee County. Impact in Manatee County Alone A Growing Market. The Manatee County market for hospice services has grown because of increasing penetration rates. The "Baby Boom" generation will begin turning 65 in 2011. Despite recent flatness in the death rate, the number of deaths in Manatee County is likely to stabilize or increase forward of the data produced at hearing. The trend in hospice admissions is an upward one both in the state as a whole and in Manatee County. Between 2003 and 2008, the number of hospice admissions in Manatee County increased by 48 percent, "far in excess of any population growth." Tr. 986. The combination of factors that determines hospice admissions indicate that the demand for hospice services in Manatee County is likely to increase. TideWell Quality of Care Post-Suncoast Approval. TideWell maintains that if its admissions were reduced to an annual number of 1,702, as projected by Suncoast, its quality of care in Manatee County will be diminished. There is no evidence that for the years 2004, 2005, and 2006, when it had fewer admissions than 1,702, TideWell provided care that was less-than-excellent quality of care. As Mr. Davidson put it at hearing, however, "[TideWell] was providing the best quality of care it could consistent with its volumes." Tr. 795. Mr. Davidson's testimony with regard to quality of care based on reduced volume should Suncoast's application be approved was consistent with Ms. Maisto's testimony about programs that would be eliminated and jobs lost at TideWell should the application be approved. The cuts in programs and jobs are shown on TideWell Exhibit 19 and the exhibit is supported by testimony from Ms. Maisto. See Tr. 662-672. But Ms. Maisto's testimony and the exhibit are dependent on TideWell's financial impact analysis. Tidewell's Financial Impact Analysis. TideWell predicts a financial loss to TideWell of approximately $1.3 million in the second year of Suncoast's operation in Manatee County. There is no doubt that there will be a financial impact to TideWell as the result of a reduction in volume in Manatee County admissions, but TideWell overstates the projected impact. Furthermore, the impact to TideWell from the loss of Manatee County cases overlooks TideWell's status as a provider of hospice services in several service areas other than Service Area 6C. Impact on the Entity TideWell TideWell serves four contiguous counties: Manatee, Sarasota, Charlotte, and DeSoto. Most of TideWell's hospice activity is outside of Manatee County. In 2008, for example, 29 percent of TideWell's admissions were in Manatee County and 25 percent of its revenues were from Manatee County. TideWell's management views the organization in the aggregate. The view is supported by other indicia. TideWell has one license, one accreditation, one Medicare provider number and its programs are on an organization-wide basis. Likewise, when AHCA conducts surveys of TideWell, it does not limit its inquiry to Manatee County operations; it surveys all of TideWell. Prior to 2009, TideWell did not track financial performance by the counties it served. It accounted for the organization as a whole over the four counties served. Manatee County is not the leading region for TideWell. Sarasota County is regarded by TideWell as its "core business," Suncoast Exhibit 91, at 41, or as the most successful of the four counties it serves. TideWell's assessment is supported by the revenue generated from each county. Sarasota's gross revenue from operation is double the gross revenue from operations of the other three counties combined. TideWell's admissions have grown over the recent past in the three counties it serves that are Manatee County's neighbors. From 2003 to 2008, TideWell's admissions in Sarasota, Charlotte, and DeSoto Counties increased from 3,313 to 4,828. For Suncoast's second year of operation (considering TideWell's loss of admissions in Manatee County), Mr. Balsano projected that total admissions volume for TideWell as an entity in 2011 would be up 3.6 percent over 2008 and revenue would be increased 4.9 percent in the amount of $4,221,800. The projections are based on the assumption that TideWell's growth in admissions from Sarasota, Charlotte and DeSoto Counties would be only half of historical growth. The projections are reasonable. Reasonably projected growth in TideWell's admissions for all four counties and the concomitant reasonably projected increase in revenues mitigates the impact to TideWell's admissions and revenues if Suncoast's proposed hospice in Manatee County is approved. Impact on Charitable Donations TideWell's charity care and unfunded services in Manatee County are not fully covered by donations but the two types of services depend on donations for funding. They are the types of care and services which would be cut should funding levels require cuts within the organization. In fiscal year 2007, TideWell received $823,000 in charitable contributions from Manatee County. The bulk of TideWell's charitable contributions, however, come from outside Manatee County. For the same time period, fiscal year 2007, TideWell received more in charitable donations from outside the four counties than it received from Manatee County: approximately $1 million. From Sarasota County, alone, in fiscal year 2007 TideWell received $5 million, more than five times the amount of Manatee County donations. To make up for lost revenue from the impact of lost admissions in Manatee County, TideWell will need to attempt to increase donations. It is reasonable to expect that memorials and bequests associated with patients lost to Suncoast will be made to Suncoast. An increase in donations, therefore, will not be easily achieved. But it is not reasonable to expect that every charitable dollar raised by Suncoast in Manatee County will be a charitable dollar lost by TideWell. TideWell and Suncoast already compete for charity dollars in Manatee County. (As of January 2008, Suncoast Foundation had 200 active donors from Manatee County.) Without doubt, that competition will sharpen if Suncoast's application is approved. Nonetheless, the impact to TideWell's receipt of charitable contributions is not likely to be so material as to require denial of Suncoast's application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a final order that approves CON 9964, the application of Hospice of the Florida Suncoast, Inc., to establish a new hospice program in Service Area 6C, Manatee County. DONE AND ENTERED this 26th day of February, 2010, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 2010. COPIES FURNISHED: Robert D. Newell, Jr., Esquire Newell, Terry & Douglas, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Lorraine M. Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop No. 3 Tallahassee, Florida 32308 Paul H. Amundsen, Esquire Julia E. Smith, Esquire 502 East Park Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Thomas W. Arnold, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308-5403 Justin Senior, General Counsel Agency for Health Care Administration Fort Knox Building, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308
