The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 31st day of July, 2018.
The Issue Whether the second and third sentences of Rule 59C-1.033(7)(c), Florida Administrative Code, are invalid? If so, whether they may be severed from the remainder of the Rule?
Findings Of Fact Subparagraph (7)(c) of the Rule states: Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery operations. In determining whether this condition applies, the Agency will calculate (Uc x Px)(OP + 1). If the result is less than 350, no additional open heart surgery program shall normally be approved. (Emphasis supplied to indicate the challenged portion of the Rule.) The first sentence sets forth the objective and intent of subparagraph (7)(c) of the Rule: unless there are "not normal circumstances," a new open heart surgery program will not be approved in a district if the approval would reduce the volume below 350 procedures annually at any existing OHS provider in the district. This is the intent and objective of the sentence despite the use of the word "an" to modify the term "existing adult open heart surgery program in the district" used toward the end of the sentence. As was testified by the Agency representative: [T]he entire notion of the rule, the entire intent of the rule is that existing providers maintain the 350 level. I mean, [there's] no question about that, so that has to be considered. (Tr. 3287). Indeed, intent that it is desirable for individual existing OHS providers to perform 350 procedures in 12-month periods is expressed elsewhere in the Rule. And that goal is so desirable, in fact, that new programs in a district are not under normal circumstances to be approved if the 350 level has not been met recently by an existing provider in the district: (7) Adult Open Heart Surgery Program Need Determination. (a) A new adult open heart surgery program shall not normally be approved in the district if any of the following conditions exist: * * * One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 3 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 3 months prior to the beginning date of the quarter of the publication of the fixed need pool; . . . Rule 59C-1.033, F.A.C., (e.s.). Given the clear intent of the Rule as a whole and of the first sentence of subparagraph (7)(c), the formula in the challenged portion of the Rule (the "formula"), should be used to measure and determine whether the approval of a new OHS program would reduce the annual volume of OHS procedures at any existing OHS provider below 350. Under the formula, adult open heart surgeries are projected for each service district. The resulting number is divided by the number of existing OHS programs plus one new OHS program. If calculation results in a number less than 350, the third sentence of the subparagraph purports to carry out the intent of the first sentence of subparagraph (7)(c), that is, "no additional open heart surgery program shall normally be approved." For example, assume 3000 OHS are projected for a service district with five existing programs. Under the formula, 3000 would be divided by six (the existing five plus the proposed program). The result is 500, and the operation of the subparagraph does not prohibit a new OHS program. If, on the other hand, a volume for the district of 3000 were projected and there were eight existing providers, the addition of a ninth program would bring the average below 350 and, by operation of the third sentence, prohibit the approval of a new program. The challenged portion of the Rule, however, does not necessarily implement the objective of the first sentence of subparagraph (7)(c). The calculations in the challenged portion do not determine whether the volume at any specific provider would fall below 350 as the result of a new program. Instead, the calculations measure only the "average" volumes at existing programs plus one new one. A program operating slightly above 350 (such as CRMC), with the addition of a new program (such as the one proposed by Venice) in close enough proximity that their primary service areas significantly overlap, could drop below 350, even though the number of OHS procedures in the district is calculated district-wide to increase and even though the average calculated by the formula exceeds 350. Such a result increases in likelihood when one of the providers in the district (such as Memorial) is projected to have volume significantly above 350. Illustrations of the ineffectiveness of the challenged portion for achieving the clear objective set forth in the first sentence of subpararaph (7)(c) are in CRMC Exhibit no. 58. For example, in 1997, existing OHS providers in District 8 had an average volume of 716. That year CRMC performed only 369 OHS procedures. Had Venice commenced an OHS program in 1997, adverse impact analysis and service area overlap as used by Mr. Baehr in this proceeding show that CRMC would have dropped below 350 procedures in 1997, while the district average would have remained well above 350 despite the addition of a new program.
The Issue Whether the Petitioner University Community Hospital's certificate of need application to establish a cardiac catheterization laboratory and open heart program in Tampa, Florida, should be approved.
Findings Of Fact On August 11, 1982, the Petitioner University Community Hospital, a non-profit hospital, (hereafter Petitioner or UCH) filed an application for a certificate of need (hereafter CON) to expend some $934,000 to establish cardiac catheterization and open heart surgical services at its 404 bed facility located at 3100 East Fletcher Avenue, on the north side of Tampa, approximately 9 miles from the Intervenor Tampa General Hospital (hereafter TGH or Tampa General). Petitioner's CON application was reviewed by the Respondent Department of Health and Rehabilitative Services (hereafter Respondent or Department) under Rule 10-5.11, Florida Administrative Code, and compared with other facilities in the Health Systems Agency, Region IV, which consisted of Pasco, Pinellas, Manatee and Hillsborough Counties. On November 30, 1982, the Department denied the Petitioner's application. The basis for the Department's denial as reflected in the State Agency Action Report, was that two hospitals in Health Services Area IV, Medical Center and Morton Plant, were below the 350 open heart procedures threshold required by Rule 10-5.11(16), Florida Administrative Code. Since Petitioner was not entitled to a CON for open heart surgery, it was not entitled to a CON for cardiac catheterization because Rule 10-5.11(15), Florida Administrative Code, which was in existence when Petitioner's application was reviewed, required that an applicant for cardiac catheterization must be able to offer open heart surgery. Following the Department's denial of Petitioner's application and prior to the final hearing, the Legislature abolished the Health Systems Agency Regions and provided instead that health planning be based on HRS Districts. Intervenor TGH, a 611 bed public hospital located on Davis Island in downtown Tampa, in the same service area as the Petitioner, and presently offering cardiac catheterization and open heart surgical services, intervened in this proceeding on the side of the Department. The Need for Cardiac Catheterization Services In the Service District Prior to the final hearing, the Department admitted to the need for an additional cardiac catheterization laboratory in Hillsborough and Manatee counties. See Petitioner's Exhibit 17. There are presently three adult cardiac catheterization labs in Hillsborough-Manatee, two at TGH and one at St. Joseph's Hospital. In the five- county area, Lakeland Regional has an approved and existing program for a total of four programs. Applying the methodology set forth in Rule 10-5.11(15), Florida Administrative Code, the Petitioner has established that a need exists for at least one additional cardiac catheterization lab regardless of whether the service district is defined to include two or five counties. As projected and calculated by Thomas Porter, a Department witness who utilized the rule methodology, five catheterization labs are need in the five-county area by the year 1985. However, based on historical data, the need formulated pursuant to the rule is probably understated. Porter's testimony was confirmed by Dr. Warren Dacus, a hospital planning consultant, who after obtaining population and projection figures from the Department and the University of Florida, Bureau of Business and Economic Research, concluded that a need existed for one additional catheterization lab in 1985 in Hillsborough and Manatee Counties. On June 16, 1983, the Department approved a CON application filed by Tampa Heart Institute (hereafter THI) which authorized the establishment of three cardiac catheterization labs. The Department's proposed agency action to award a CON to THI was challenged by the Intervenor Tampa General and St. Joseph's Hospital and is presently the subject of a pending administrative proceeding. The CON granted to THI was based on the Department's assumption that most, if not all, of its patients would come from Latin America. THI's CON application presented a unique set of circumstances which fell outside the methodology normally considered during CON reviews. Since the CON proposed to be granted to THI was administratively challenged and was based on the assumption that patients would be drawn from outside any defined service district, it is logically inconsistent and legally inappropriate to consider THI's three cardiac catheterization labs in the instant proceeding. If the CON is granted to the Petitioner, there will be sufficient utilization of the cardiac catheterization laboratory to insure quality of services as required by Rule 10-5.11(15)(i), Florida Administrative Code. Based on previous referrals to other hospitals and historical data obtained from other hospitals in the district, the Petitioner can expect to perform in excess of 300 cardiac catheterization procedures annually for the next three years following initiation of the service. The Need for an Open Heart Surgical Program in the Service District In the Hillsborough-Manatee Service District, two open heart programs presently exist, one program is located at St. Joseph's Hospital, the other is at Tampa General. The formula found at Rule 10-5.11(16), Florida Administrative Code, provides that the number of open heart procedures projected to be done in a future year is determined by multiplying the number of procedures per 100,000 population performed in the service area in 1981 by the projected population in the service area in the future year. No additional programs will normally be approved if such program will reduce the volume of an existing program below 350 surgery cases. In the service distract represented by the two-county area, there is a need for four open heart surgical programs by 1985. Using the methodology found at Rule 10-5.11(16), Florida Administrative Code, the two-county area requires the capacity to perform 1,433 open heart surgeries in 1985, which establishes a need for four programs. Although the addition of an open heart program at UCH would draw certain patients from both St. Joseph's and Tampa General, the number of open heart surgeries performed at St. Joseph's and Tampa General would not fall below 350 per year if UCH were granted a CON. In the five-county area which includes Hillsborough, Manatee, Polk, Highlands and Hardee counties, 1,587 open heart surgical procedures are projected for 1984 and 1,623 for 1985. Applying the rule methodology a need exists for five open heart programs in 1984 and 1985. Three programs, Tampa General, St. Joseph's and Lakeland Memorial Medical Center, presently exist or are approved in the five-county area. The petitioner has demonstrated a sufficient projected volume of open heart surgeries to assure quality of service under Rule 10-5.11(16)(e)(4), Florida Administrative Code. UCH can expect to perform in excess of 200 adult open heart surgical procedures during its first year of operation and within three years after initiation of the service. Moreover, UCH's surgery program will be capable of providing 500 open heart operations per year. In 1981, Lakeland Memorial performed 81 open heart surgical procedures which is significantly below the 350 procedures required by the rule. UCH's proposed program would have little if any effect on the open heart program at Lakeland Memorial, or its ability to meet minimum service levels now or in the foreseeable future. The 350 procedures per year threshold is required to ensure that cardiac surgery teams and staff remain proficient so that patient care is not jeopardized. If, due to the low number of procedures performed at Lakeland Memorial, patient care is being jeopardized, the purpose of the rule is not served by denying a CON to the Petitioner on such a basis since the grant or denial of the instant CON would have no effect on Lakeland Memorial's ability to meet the threshold. UCH's non-invasive coronary procedures including echocardiograms, stress testing and halter monitoring have been utilized by patients to a noteworthy degree. The levels of utilization for these non-invasive tests at UGH in comparison to Tampa General and St. Joseph's are as follows for the period July, 1980 to June, 1981: echocardiogram, UCH 1021, Tampa General 1,175, St. Joseph's 539; stress testing, UCH 598, Tampa General 490, St. Joseph's 371; halter monitoring, UCH 618, Tampa General 328, and St. Joseph's 290. A direct relationship exists between the volume of non-invasive coronary procedures and invasive catheterization procedures that can be expected to be performed at UCH. Approximately 30 percent of the patients at UCH are referred to other hospitals for invasive procedures following non-invasive testing. Transferring patients between hospitals for invasive procedures after non-invasive testing lessens the quality of patient care and increases the probability of duplication of testing, thus increasing health care costs. The Adequacy of she Petitioner's Proposed Facility UCH's proposed facilities for open heart and cardiac catheterization services are adequate for their intended purposes. The proposed plans and equipment lists for the cardiac catheterization lab and open heart surgical program are acceptable from a medical and planning perspective, and are similar to other facilities offering such services. UCH has or if the CON is approved will have, the necessary staff and equipment to meet the requirements of Rules 10-5.11(15)(g) and 10-5.11(16)(c), Florida Administrative Code. The Petitioner will provide the training programs set forth at Rule 10-5.11 (15)(i)(3), Florida Administrative Code. The catheterization lab will maintain the hours of operation specified in Rule 10-5 11 (15)(h)(2), Florida Administrative Code, and the open heart surgery program will operate in accordance with the requirements of Rule 10- 5.11(16)(d)(2) and (3), Florida Administrative Code. The Petitioner is accredited by the Joint Commission on Accreditation of Hospitals as required by Rules 10-5.11 (15)(i)(1) and 10-5.11 (16)(e)(1), Florida Administrative Code. The Petitioner has a written plan projecting case loads, and projecting space, support, equipment and supply needs as required by Rule 10- 5.11(16)(e)(5), Florida Administrative Code. The Financial Feasibility of the Petitioner's Proposed Cardiac Program UCH's proposed open heart surgery program and cardiac catheterization lab are financially feasible. Funds for the project are available and no long term debt exists since the projects are to be funded out of cash. Projected net income from the service is in the 5 percent range which is conservative for a not-for-profit hospital which requires a degree of profitability to ensure that sufficient revenue is generated to meet expenses. The projected costs for the proposed cardiac catheterization lab are reasonable. The proposed renovation of the lab is part of a general large scale renovation for which UCH has secured a binding contract for the amount specified in the application. The equipment and personnel budget for the lab is also reasonable. Based upon a comparison of the proposed charges at UCH with the projected 1984 charges at Tampa General, UCH offers the least costly alternative for providing cardiac catheterization and open heart surgery services. For example, at Tampa General, the projected charge for cardiac surgery, exclusive of charges for room and ancillary services, is $1,711 compared to $1,244.81 at UCH. For cardiac catheterization, the projected 1984 charge at Tampa General is $1,338 as compared to $1,093.75 at UCH. The Petitioner's charges and proposed charges for cardiac catheterization, open heart surgery and other hospital services are comparable to other similar hospitals in the service district, and accordingly, the Petitioner has established that the requirements of Rules 10-5.11(15)(j) and 10- 5.11(16)(f)(2), Florida Administrative Code have been met. Petitioner's Proposed Cardiac Program and its Effect on Tampa General The Hillsborough County Hospital Authority, a public agency which was created by special act of the Legislature, see Chapters 67-1498 and 80-510, Laws of Florida, is required by law to treat indigent patients who are in need of immediate or emergency medical treatment. Hillsborough County is required to reimburse the Hospital Board of Trustees for the full cost 2/ of any hospital or related services provided patients properly certified as indigent. Tampa General has experienced severe monetary problems as a result of its role as provider of free medical care to indigent residents of Hillsborough County. Unfunded patients have averaged 80-100 admissions per week at a cost of $280,000-$350,000 per week to the hospital. Approximately 30 percent of the claims that the hospital files with Hillsborough County for reimbursement of indigent expenses are rejected. As a result, Tampa General has been forced to subsidize its cost of providing indigent care through added charges passed on to paying patients. Since the Hospital Authority has no taxing power, Tampa General is dependent upon funds provided by the County. Among public hospitals in Florida's major urban areas, Tampa General receives the least amount of financial assistance from local government. Tampa General has budgeted $24 million worth of free care for 1984 and this amount is projected to increase through 1988. The amount of free care provided to indigents at Tampa General is approximately 16 percent of gross revenues. Tampa General utilizes the profits it derives from the operation of its cardiac programs to subsidize the considerable amount of free care that it provides to indigent residents of Hillsborough County. In 1981, Tampa General embarked on an ambitious expansion program in order to attract additional paying patients and to remain competitive with other private hospitals in the community. In order to finance this project, the Authority issued bonds in the amount of $160,260,000. In deciding to issue these bonds, the Authority considered the revenues generated by the hospital's cardiac programs which constitute 17-18 percent of total net revenues and the relative lack of competition from other coronary programs in the Hillsborough area. In the absence of adequate funding by the State and/or County, Tampa General's cardiac program is an essential element in the hospital's plan to continue to provide free care to indigents. The subsidization or contribution margin of the cardiac program helps offset the bad debt of indigent costs which are not being reimbursed by local government. The amount of subsidization or contribution margin for each cardiac procedure performed at Tampa General in 1984 was $3,721 and is projected to increase to nearly $5,700 in 1988. However, notwithstanding the monies projected by Tampa General which it expects to be contributed by its cardiac program, it is likely that third- party payers will follow the federal government in adopting a prospective payment system based on diagnosis related groups of illnesses which will limit the amount of revenues which can be collected from private pay patients. Assuming that this occurs, the amount of subsidization derived from cardiac programs at Tampa General will be significantly decreased regardless of the outcome of the instant proceeding. The evidence regarding the effect of UCH's proposed cardiac program on Tampa General's existing program is unclear. Unquestionably, some of the patients which would have gone to Tampa General for cardiac care will go to UCH if its program is established. However, since cardiac catheterizations are increasing in volume and a direct relationship exists between cardiac catheterizations and open heart surgery, it can be concluded that while Tampa General's rate of growth would decrease, it is unclear whether its present volume would decrease significantly below existing levels. No evidence was presented that Tampa General's cardiac catheterization and open heart programs would decline below the thresholds established by rule if UCH's application were granted. The financial problems facing Tampa General are clearly serious. The hospital has taken drastic steps to attempt to control costs including eliminating staff positions and severely restricting indigent access to health care. Tampa General's problems existed prior to UCH's application for a CON and will likely continue regardless of whether the Petitioner's CON is approved. The long-term solution of Tampa General's financial problems should not be dependent upon whether UCH prevails in this proceeding. If Tampa General is to fulfill its mission as a public hospital, it must be assured of reliable and consistent course of funding for all of its operations. In enacting Chapter 80-510, Laws of Florida, the Legislature intended that the cost of indigent hospital care in Hillsborough County be borne by all of the citizens of the County, and not primarily by paying patients who by circumstance or otherwise, find themselves at Tampa General. Tampa General's reliance on its cardiac programs to finance its long- term debt and offset its indigent care losses is dependent on the existence of two factors: first, Tampa General must maintain what is essentially a monopoly on the services to be guaranteed a supply of paying cardiac patients and second, it must have the ability to pass on to its paying cardiac patients the amount needed to subsidize its other operations. Tampa General, however, no longer maintains a monopoly on cardiac programs in the Hillsborough area as evidenced by the certificate of need awarded to St. Joseph's. Moreover, the Department has stated its intention to authorize another open heart program and three catheterization labs at Tampa Heart Institute. The prospective reimbursement system implemented by the federal government which is expected to be followed by private insurers will further limit Tampa General's ability to generate excess revenues from private-pay coronary patients. The result of the inability of Tampa General to secure a long-term solution to its problems of unreimbursed indigent care is reflected in the institution of a policy limiting indigent admissions to the most serious cases. Due to this new policy limiting admissions at Tampa General to emergencies, Tampa General's and UCH's policies regarding coronary care for indigents are essentially the same. The Petitioner's Compliance with Section 381.494(6)(c), Florida Statutes It was uncontroverted that UCH's proposed cardiac services are consistent with the state health plan. Since the Department has not yet promulgated as a rule the health systems' plan for the District, the parties agree that the question of the Petitioner's compliance with the local plan is not an issue in this case. See Section 381.494(6)(c)(1), Florida Statutes. The proposed cardiac program has been approved by UCH's Board of Directors, and is an appropriate progression considering the size of UCH and the mix of cardiologists and patients at the facility. See Rule 10-5.11(2), Florida Administrative Code. The Petitioner has carried its burden by demonstrating a need for cardiac catheterization and open heart surgical services regardless of whether the service district is defined as a two or five-county area. See Section 381.494 (6)(c)(2), Florida Statutes. Utilizing a two-county area including Hillsborough and Manatee counties, the projected population in 1985 is 890,000. The 1981 use rate was 276.4 cardiac catheterization procedures per 100,000 population. Multiplying the 1981 use rate by the projected population, 2,640 catheterization procedures are projected for 1985. Dividing 2,460 by the threshold number 600, results in a need for 4.1 catheterization labs in Hillsborough and Manatee counties in 1985. Presently, three existing and approved catheterization laboratories exist in Hillsborough and Manatee counties, one at St. Joseph's and two at Tampa General. A need, therefore, exists for an additional catheterization laboratory in the two-county area. 3/ In the five-county area which includes Hillsborough, Manatee, Polk, Hardee and Highlands counties, the projected population for 1985 is 1,330,400. The 1981 use rate was 207 procedures per 100,000 population. A total of 2,693 and 2,754 procedures are projected for 1984 and 1985, respectively. Dividing 2,754 by 600 demonstrates a need in 1985 for five laboratories while four presently exist or are approved in the five-county area, one at St. Joseph's, two at Tampa General and one at Lakeland Memorial. Petitioner has therefore demonstrated a need for an additional cardiac catheterization services in the five-county area. In considering the need for open heart surgery services in the two- county area and utilizing the projected population of 890,000 and a use rate of 160.99, the projected number of open heart procedures in 1985 is 1,433. When 1,433 is divided by 350, a need exists for four open heart surgery programs in Hillsborough and Manatee counties in 1985. Since there are only two existing and approved programs in the two-county area, the Petitioner has demonstrated a need for two additional open heart surgical programs by 1985. In the five-county area, the projected 1985 population is 1,330,400. The 1981 use rate was 122 procedures per 100,000 population. Multiplying the projected population by the use rate results in 1,623 open heart procedures projected in 1985. When 1,623 is divided by 350, a need is established for five open heart surgical programs by 1985. Since only three existing or approved programs are in place, the Petitioner has demonstrated a need for two additional open heart programs in the five-county area by 1985. The Petitioner presently performs a significant number of non-invasive cardiac procedures. It was uncontroverted that UCH provides quality of care to its patients. If the Petitioner's application is approved, it can be assumed that present acceptable quality of care standards will be met in the operation of the program. See Section 381.494(6)(c)(3), Florida Statutes. The proposed project is financially feasible, and UCH has the ability to attract sufficient nurses and support staff to operate both programs. See Section 381.494(6)(c)(8) and (9), Florida Statutes. The Petitioner has argued throughout this proceeding that the initiation of cardiac service at its facility will foster competition thereby reducing health care costs in Hillsborough County. If price competition in fact existed under the present system of health care delivery, lower costs would be expected. However, with rare exception, health care consumers do not select hospitals nor do they pay their own hospital bills. Rather, third-party payers, including the federal government and private insurance companies, are responsible for reimbursing hospitals for patient costs and physicians generally determine which hospital is utilized by a patient. In an understandable effort to control health care costs, the federal government and the state have enacted a complex regulatory scheme for health care providers which limits competition and places the burden on providers of establishing that a need exists in a given area for a proposed service. To a significant extent, this scheme protects the financial interests of existing providers. This process can have an unfortunate side-effect of limiting the choices available to health care consumers and eventually could result in a diminished quality of health care. 4/ While the presence of additional hospitals in an area does not necessarily result in lower health care costs, it does create potential competition for patients through physician referrals. Hospitals have an incentive to provide quality care including state of the art equipment and competent staff, to ensure that they attract their share of patients. As a result, the preferences of physicians and health care consumers should have a greater impact in an area where health care services exist at more than one facility. The difficulty encountered in CON proceedings is attempting to balance the legitimate needs of health care consumers with the state's efforts to control costs by discouraging the duplication of unnecessary services. The Petitioner has demonstrated that its proposal is cost-effective, and should foster innovation and improvement in the delivery of health services in the service area as required by Section 381.494(6)(c)(12), Florida Statutes. The assertion by Tampa General that the expansion of its facility represents a less costly alternative is too speculative to be considered in this proceeding. While TGH is in the process of a $300,000 conversion of a pediatric catheterization lab to an adult lab, this fact was apparently either unknown or not considered by the Department at the time of the final hearing since HRS witnesses stated that Tampa General has only two adult labs.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Health and Rehabilitative Services enter a Final Order granting a CON to Petitioner University Community Hospital to establish a cardiac catheterization laboratory and open heart surgical program in Tampa, Florida. DONE and ENTERED this 5th day of March, 1984, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of March, 1984.
The Issue Whether any of the applications of Oak Hill Hospital, Citrus Memorial Hospital, or Brooksville Regional Hospital for adult open heart surgery programs should be granted?
Findings Of Fact District 3 Extended across the northern half of the state with a reach from central Florida to the Georgia line, District 3 is the largest in land area of the eleven health service planning districts created by the Florida Legislature. See Section 408.032(5), Florida Statutes. Sites of the three hospitals whose futures are at issue in this proceeding are in two of the sixteen District 3 counties: Citrus County and at the southern tip of the district, Hernando County. The three hospitals aspire to join the ranks of District 3's six existing providers of adult open heart surgery programs. Three of the existing providers are in Alachua County, all within the incorporated municipality of Gainesville: Shands at Alachua General Hospital, Shands at the University of Florida, and North Florida Regional Medical Center. Two of the existing providers are in Marion County: Munroe Regional Medical Center and Ocala Regional Medical Center. The sixth provider, opened in November of 1998 as the most recently approved by AHCA in the district, is in Lake County: the Leesburg Regional Medical Center. The CON status of the two Ocala providers is somewhat unusual. Located across the street from each other in downtown Ocala, they share virtually the same medical staff. Pursuant to a Stipulation and Settlement Agreement with the State of Florida, the two have offered adult open heart surgery services since 1987 under a single certificate of need issued for a joint program that reflects their proximity and identity of medical staff. The Agency's view of the arrangement has evolved over the years. It now holds the position that Munroe Regional and Ocala Regional operate independent programs. Accordingly, AHCA lists each as separate programs on its inventory of adult open heart services in District 3. Nonetheless, the two operate as a joint program pursuant to the Settlement Agreement and under state sanction reflected in the agreement, that is, they derive their authority to offer adult open heart surgery services from a single certificate of need. Other than a change of attitude by the Agency, there is nothing to detract from the status they have enjoyed since the agreement reached with the state in 1987: two hospitals operating a joint program under a single certificate of need. The three Gainesville providers all operated at an annual volume of less than 350 procedures during the reporting period that was most current at the time of the filing of the applications by the three competitors in this case. Those competitors are: Citrus Memorial, Oak Hill, and Brooksville Regional. Citrus Memorial, Oak Hill, Brooksville Regional Citrus Memorial Health Foundation, Inc., is a 171-bed, not-for-profit community hospital located in Inverness, Florida. HCA Health Services of Florida, Inc., d/b/a Oak Hill Hospital is a 204-bed hospital located in Oak Hill, Florida. Hernando HMA, Inc., d/b/a Brooksville Regional is a 91- bed hospital located in Brooksville, Florida. Hernando HMA, Inc. (the applicant for the program to be sited at Brooksville Regional) also operates a second campus under a single hospital license with Brooksville Regional. The 75-bed campus is in southern Hernando County in Spring Hill. Citrus and Hernando Counties Citrus Memorial is in Citrus County to the south of the cities of Gainesville and Ocala, the sites of five of the existing providers of adult open heart surgery in the district. Further south, Oak Hill and Brooksville Regional are in Hernando County. Although adjacent to each other along a boundary running east-west, the county line is a natural divide, north and south, with regard to service areas for open heart surgery. Substantially all Citrus County residents, including Citrus Memorial patients, receive open heart surgery and angioplasty services at one of the two Ocala providers to the north. In contrast, almost all Hernando County residents (94 percent) receive open heart services at Bayonet Point, a provider in Health Planning District 5 to the south of Hernando County. The neatness of this divide would be disrupted by the approval of the application of Brooksville Regional. Brooksville's application includes part of south Citrus County in its designated primary service area, an appropriate choice because of Brooksville Regional's location on Route 41 with good access to Citrus County. At present, however, the divide between north and south along the Citrus/Hernando boundary remains a Mason-Dixon line of open heart surgery service areas. During the year ended September 1999, for example, 408 Citrus County residents received open heart surgery in Florida. Of these, 85 percent received them in Ocala at one of the two providers there. During the same period, 618 Citrus County residents underwent angioplasty, with 89.7 percent of them going to the two Ocala providers. During the year ended March 1999, 698 Hernando County residents underwent open heart surgery at Florida Hospitals. Of the 663 residents of Oak Hill's primary service area, 94.3 percent received services at Bayonet Point in District 5. Similarly, of the 779 Oak Hill primary service area residents receiving angioplasty, 93.8 percent went south to Bayonet Point. Brooksville Regional projects that 10 percent of its OHS/angioplasty volume will be from Citrus County. Still, 90 percent of the volume is projected to be from Hernando County. Thus, even with the threat posed by Brooksville's application to the divide at the Citrus/Hernando boundary, the overwhelming percentage of Brooksville's patients will be from south of the Citrus-Hernando boundary. In sum, there is de minimis competition between would- be-provider Citrus Memorial and the providers to the north vis- a-vis would-be-providers Oak Hill and Brooksville Regional and the providers to the south in the arena of open heart surgery services needed by residents of the district. Bayonet Point Under the umbrella of HCA Health Services of Florida, Inc., Bayonet Point is a provider of open heart surgery services in Pasco County. Only thirty minutes by road from its sister HCA facility Oak Hill and 45 minutes from Brooksville Regional, Bayonet Point captures approximately 94 percent of the open heart surgery patients produced among the residents of Hernando County. Although its location is in a county that is only one county to the south of the two Hernando County hospitals, Bayonet Point is in a different health planning district. It is in District 5 on its northern edge. The residents of Hernando County who receive open heart surgery services at Bayonet Point, a premier provider of adult open heart surgery services in the state of Florida, are well served. Operating at far from capacity, the quality of its open heart program is excellent to the point of being outstanding. Position of the Parties re: "not normal" circumstances The Agency's Open Heart Surgery Rule, Rule 59C-1.033, Florida Administrative Code (the "Rule") establishes a need methodology and criteria applicable to review of certificate of need applications for the establishment of adult open heart surgery programs. The Rule also governs a hospital's ability to offer therapeutic cardiac catheterization interventional services (i.e., coronary angioplasty). Pursuant to Rule 50C- 1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of coronary angioplasty must be located within a hospital that provides open heart services. Applying the methodology of Rule 50C-1.033 (the "Rule"), AHCA determined that a "fixed need pool" of zero existed in District 3 for the July 2002 planning horizon. Calculation under the formula in the Rule produced a fixed need pool of one. Several District 3 programs, however, did not have an annual case volume of 350 or more procedures. The Rule's methodology requires that calculated numeric need be zeroed out whenever there are existing programs in a district with a sub- 350 annual volume. (See Section (7)(a)2., of the Rule.) As required, therefore, the Agency published a numeric need of zero for the applicable planning horizon. The determination of zero numeric need was not challenged and so became final. Their aspirations confronted with a numeric need of zero, Citrus Memorial, Oak Hill and Brooksville Regional, nonetheless, each filed applications seeking the establishment of adult open heart surgery programs. As evidenced by the Agency's initial decision to grant Citrus Memorial's application and by its change of position with regard to Oak Hill's application, the Agency is in agreement that "not normal" circumstances exist to justify granting the applications of both Citrus Memorial and Oak Hill. Thus, while the parties may differ as to the precise identification of those circumstances, all agree that there are circumstances that support the approval of at least one application (and perhaps two) for an adult open heart surgery in District 3 for the July 2002 planning horizon. It is undisputed that a new OHS program in Hernando County would have no effect on the three existing programs located in Gainesville that perform less than 350 procedures annually. This circumstance is a "not normal" circumstance, as previously found by the Agency. It allows an application's approval in the face of the Rule's dictate that the Agency will not normally approve an application when an existing provider falls below the 350 watermark. It is not, however, a circumstance that compels the award of a CON to any of the parties as in the case of "not normal" circumstances typically recognized by the Agency. (An example of such a circumstance would be an access problem for a specific population.) Rather, it is a circumstance that allows the Agency to overcome the zeroing-out effect of the Rule that demanded a fixed-need pool of zero. It is a circumstance that allows AHCA to award an adult open heart surgery CON to one of the Hernando County hospitals provided there is a demonstration of need. There are no typical "not normal" circumstances that support any of the applications. There are no geographic, economic or clinical access problems for the residents of the any of the primary service areas of the three applicants that rise to the level of "not normal" circumstances. Nor would granting the applications of any of the three support cost efficiencies. In the case of Oak Hill, moreover, granting its application would both reduce the operating efficiencies at Bayonet Point and increase the average operating cost per case at Bayonet Point. Approval of an application is not compelled by the "not normal" circumstance that exists in this case. The "not normal" circumstance simply clears the way for approval provided there is a demonstration of need. Stipulated Matters The parties stipulated that all applicants have a good record of providing quality of care and that all sections of the respective applications addressing that issue be admitted into evidence without further proof so as to establish record of quality of care. Accordingly, the parties stipulated that each application satisfies Section 408.035(1)(c) as to "the applicant's record in providing quality of care." The parties stipulated that, subject to proving their ability to generate the open heart surgery and angioplasty volumes projected in their respective applications, each applicant has the ability to provide adequate and reasonable quality of care for those proposed services. Accordingly, subject to the proof involving service volume levels, each application satisfies Section 408.035(1)(c) as the "ability of the applicant to provide quality of care . . .". The parties stipulated that all applicants have available and adequate resources, including health manpower, management personnel, and funds for capital and operating expenditures in order to implement and operate their proposed projects. Furthermore, they stipulated that all sections of their respective applications relating to those proposed projects and all sections of their respective applications relating to those issues were to be admitted into evidence without proof. Accordingly, all applications satisfy that portion of Section 408.035(1)(h), Florida Statutes (1999) related to the availability of resources. The parties stipulated that all applications satisfy, and no further proof is required to demonstrate, immediate financial feasibility as referenced in Section 408.035(1)(i), Florida Statutes (1999). The parties stipulated that the costs and methods of proposed construction, including schematic design, for each proposed project were not in dispute and were reasonable, and that all sections of each application related to those issues were to be admitted into evidence without further proof. (Stip., p.3.) Accordingly, each application satisfies Section 408.035(l)(m), Florida Statutes (1999). The parties stipulated that each application contained all documentation necessary to be deemed complete pursuant to the requirements of Section 408.037, except that Section 408.037(b)3. is still at issue regarding operational financial projections (including a detailed evaluation of the impact of the proposed project on the cost of other services provided by the applicant). The parties stipulated that each applicant satisfied all of the operational criteria set forth in the Rule (those operational criteria being encompassed in subsections 3, 4, and 5). Accordingly, it is undisputed that each applicant will have the support services, operational hours, open heart surgery team mobilization, accreditation, availability of health personnel necessary for the conduct of open heart surgery, and post- surgical follow-up care required by the Rule in order to operate an adult open heart surgery program. The Hernando County Hospitals Oak Hill Oak Hill is located on Highway 50, in the southern part of Hernando County, between the cities of Brooksville and Springhill. Oak Hill's licensed bed compliment includes 123 medical/surgical beds, 24 ICU beds, 50 telemetry beds, and 7 beds for obstetrics. Oak Hill provides an array of medical services and specialties, including: cardiology, internal medicine, critical care medicine, family practice, nephrology, pulmonary medicine, oncology/hematology, infectious disease treatment, neurology, pathology, endocrinology, gastroenterology, radiation oncology, and anesthesiology. Board certification is required to maintain privileges on the medical staff of Oak Hill. Oak Hill's six-story facility is situated on a large campus, and has been renovated over time so that the hospital's physical plant permits the provision of efficient care for patients. Oak Hills's surgery department has five operating rooms, plus a cystoscopy room. The department performs approximately 7,800 surgeries annually, a figure that demonstrates functional efficiency. Oak Hill is JCAHO accredited, with commendation. Recently named one of the nation's top 100 hospitals for stroke care by one organization, it has also received recognition for the excellence of its four intensive care units. Oak Hill's cancer program is the only one to have received full accreditation from the American College of Surgeons within a six-county contiguous area. Oak Hill recently expanded its emergency department and implemented a fast track program called Quick Care. The program is designed to treat lower acuity patients more rapidly. Gallup Organization surveys reflect a 98 percent patient satisfaction rate with the emergency department, the eighth best rate among the approximately 200 HCA-affiliated hospitals. During 1999, the emergency department treated 24,678 patients. During the same period, 376 patients presented to Oak Hill's emergency department with an acute myocardial infarction, and there were 258 such patients during the first eight months of 2000. Oak Hill operates a mature cardiology program with ten Board-certified cardiologists on staff. Eight of the ten perform diagnostic cardiac catheterizations in the hospital's cath laboratory. Oak Hill's program is active with regard to both invasive and non-invasive cardiology. The non-invasive cardiology laboratory offers a variety of services, including echocardiography, holter monitoring, stress testing, electrocardiography, and venous, arterial and carotid artery testing. The invasive cardiology laboratory has been providing inpatient and outpatient cardiac catheterization services since 1991. During calendar year 1999, Oak Hill saw 1,671 diagnostic cardiac catheterization procedures and transferred 619 cardiac patients to Bayonet Point, 258 for open heart surgery, 311 for angioplasty, and 50 patients for cardiac catheterization. The volume of catheterization procedures at Oak Hill has led to the construction of a second "cardiac cath" laboratory suite, scheduled for completion in May of 2001. The cath lab's medical director (Dr. Mowaffek Atfeh, the first interventional cardiologist in Hernando County) has served in that capacity since inception of the lab in 1991. The cath lab equipment is state-of-the-art. Oak Hill's cath lab provides excellent quality of care through its Board-certified cardiologists and the dedication and experience of its well- trained nursing and technical staff. Brooksville Regional Originally a 166-bed facility operated by Hernando County, 75 of the beds at Brooksville Regional were moved in 1991 to create a second facility at Spring Hill. A few years later, the facilities went into bankruptcy. The bankruptcy proceeding concluded in 1998, with operational control of both facilities being acquired by Hernando HMA, Inc. ("Hernando HMA"). The CON applicant for the adult open heart surgery program to be sited at Brooksville Regional, Hernando HMA is a wholly-owned subsidiary of Health Management and Associates, Inc. ("HMA"), a corporation located in Naples, Florida, and whose shares are traded publicly. Under the arrangement produced by the bankruptcy proceeding, Hernando County retained ownership of the buildings and the land. Hernando HMA, in turn, operates the facilities per a long-term lease with the County. Hernando HMA operates the Brooksville Regional and Spring Hill Campuses under a single hospital license issued by AHCA. The two campuses therefore share key administrative staff, including their chief executive officer. They share a single Medicare provider number and they have a common medical staff. HMA (Hernando HMA's parent) operates 38 hospitals throughout the country, many in the State of Florida. Among the 38 is Charlotte Regional Medical Center in Charlotte County, an existing provider of adult open heart surgery and recently recognized as one of the top 100 OHS programs in the country. Charlotte Regional will be able to assist Brooksville Regional with staff training and project implementation if its application is approved. An active participant in managed care contracting, Hernando HMA is committed to serving all payer groups, including Medicaid and indigent patients. It recently qualified as a Medicaid disproportionate share provider. It also serves patients without ability to pay. In fiscal year 2000, it provided $5 million of indigent care. Under the lease agreement Hernando HMA has with Hernando County, it must continue the same charity care policies as when the facilities were operated by the County. Hernando HMA must report annually to the County to show compliance with this charity care obligation. Also under the lease, Hernando HMA is obliged to invest $25 million in renovations and improvements to the two facilities over a 5-year period. About $10 million has already been invested. If the adult open heart surgery program is granted this would nearly satisfy the $25 million obligation. The County reserves to itself certain powers under the lease. For example, the County reserves the authority to pre- approve the discontinuation of any services currently offered at these facilities. Also, if Hernando HMA seeks to relocate either of the two, the County retains the authority whether to approve the relocation. The Spring Hill facility is located in the southwest portion of Hernando County, very near the Pasco County line. It is a general acute care facility, offering a full range of cardiology and other acute care services. Spring Hill was recently approved to add the tertiary service of Level II Neonatal Intensive Care. The Brooksville facility is located in the geographic center of Hernando County. Its service area is all of Hernando County and southern Citrus County. Brooksville is a full- service, general acute care facility. It offers services in cardiology, orthopedics, general surgery, pediatrics, ICU, telemetry, gynecology, and other acute services. Brooksville Regional has 91 acute care beds. Normally, the beds are used as 12 ICU beds, 24 telemetry beds, and 55 medical/surgical beds. During its peak annual period of occupancy, Brooksville has the capability to use up to 40 beds for telemetry purposes. The hospital has ample unused space and facilities associated with its 91 beds that resulted from the move of the 75 beds to create the Spring Hill campus. Brooksville Regional offers full scope cardiology services and technologies, including diagnostic cardiac catheterization. Just as in the case of Oak Hill, the cardiac cath lab is state-of-the-art. The only cardiac services not offered at the hospital are open heart surgery and angioplasty. The quality of cardiology and related services at Brooksville Regional are excellent. The equipment, the nursing staff, the allied health professional staff, and the technology support services are very good. The medical staff is broad- based and highly qualified. Brooksville Regional offers substantial educational and training programs for its nursing staff and other personnel on staff. Brooksville Regional routinely treats patients in need of OHS or angioplasty services. Nearly 400 patients per year receive a diagnostic cardiac cath at Brooksville Regional and are then transferred for open heart surgery or angioplasty. The vast majority of these patients are transferred to Bayonet Point, about 45 minutes away. In addition to transfers of patients following diagnostic catheterization, Brooksville Regional transfers about 120 patients per year to Bayonet Point who have not had such services. These patients fall into two categories: (1) high- risk patients, and (2) persons presenting at Brooksville's emergency room in need of angioplasty or open heart surgery. The Proposals Citrus Memorial By its application, Citrus Memorial proposes to establish a program that will provide adult open heart surgery and angioplasty services. There is no dispute that Citrus Memorial has the ability to provide adequate and reasonable quality of care for the proposed project (just as per the stipulation of the parties, there is no dispute that all of the applicants have such ability.) There is also no dispute that each applicant, including Citrus Memorial, will have all of the staff, equipment and other resources necessary to implement and support adult open heart surgery and angioplasty services. The ability to provide high quality care stems, in part, from Citrus Memorial's contract with the Ocala Heart Institute. Under the contract the Institute will provide supervision of the implementation and ongoing operations of the Citrus Memorial program. This supervision will be provided under the leadership of the president of the Institute, cardiovascular surgeon Michael J. Carmichael, M.D. The contract between Citrus Memorial and the Ocala Heart Institute is exclusive. Citrus Memorial will not extend medical staff privileges to any cardiovascular surgeon not affiliated with the Ocala Heart Institute unless approved by the Institute. The Ocala Heart Institute (whose physician members include not only cardiovascular surgeons, but also cardiovascular anesthesiologists and invasive cardiologists) has similar exclusive contracts for the operation of adult open heart surgery programs at Monroe Regional Medical Center and at Ocala Regional Medical Center and at Leesburg Regional Medical Center. At these three hospitals, the Institute's physicians have consistently produced excellent outcomes. The Ocala Heart Institute produces these results not just through the skills of its physicians but also through the use of the same clinical protocols at each hospital governing the provision of open heart surgery. Citrus Memorial proposes to follow identical protocols at its facility. Excellent open heart surgery outcomes for the Institute's physicians are also the product of standardized facility design, equipment and supplies. The standardization of design, equipment, supplies, and protocols has the added benefit of clinical efficiencies that reduce costs and shorten lengths of stay. Beyond supervision of the initial implementation of the program, the Ocala Heart Institute will provide the medical directorship for Citrus Memorial's program. In cooperation with Munroe Regional, the directorship's 24-hour-a-day, 7-days-a-week coverage of the program will include scheduled case, emergency case, and backup coverage by cardiovascular surgeons, cardiovascular anesthesiologists, perfusionists, and interventional cardiologists. The Ocala Heart Institute will provide education and training to Citrus Memorial's medical staff and other hospital personnel as appropriate. The Institute's obligations will include continually working to improve the quality of, and maintain a reasonable cost associated with, the medical care furnished to Citrus Memorial's open heart surgery and angioplasty patients, consistent with recognized standards of medical practice in the field of cardiovascular surgery. The contract with the Ocala Heart Institute ensures to the extent possible that Citrus Memorial will have a high- quality adult open heart surgery program. Oak Hill Through approval of its application to establish an adult open heart surgery program at its facility, Oak Hill hopes Hernando County residents who now must travel outside the county to receive open heart and angioplasty services will be better served. In particular, Oak Hill hopes to provide these services to the residents of the six zip code area that comprise its primary service area ("PSA"). Containing 75 percent of the county's population, Oak Hill's PSA also encompasses the county's concentration of recent growth. Oak Hill's administration is committed to the proposal contained in its application. It has the support of the hospital's Board of Trustees and medical staff. Not surprisingly, the proposal enjoys a measure of popularity in the county. A petition in support of a program at Oak Hill drew 7,628 signatures from residents of Hernando County. This popularity is based in the fact that residents now must leave District 3 (albeit Bayonet Point in District 5 is close to Oak Hill and closer for many residents of south Hernando County) to receive open heart and angioplasty services. The number of affected residents is substantial. In 1999, for example, over 600 cardiac patients were transferred by ambulance from Oak Hill to Bayonet Point. A greater number of patients traveled on a scheduled basis to Bayonet Point for cardiac care. The vast majority of Hernando County residents and Oak Hill primary service area residents in need of OHS services receive them at Regional Medical Center-Bayonet Point. HCA Health Services of Florida, a subsidiary of HCA-The Healthcare Company ("HCA") holds the Bayonet Point license. It also is the licensee of Oak Hill and other hospitals in Florida including North Florida Regional and Ocala Regional. Bayonet Point (Regional Medical Center-Bayonet Point) is an acute care hospital in Hudson. Hudson is in Pasco County, the county immediately to the south of Hernando County. Although in a separate health planning district (District 5), Bayonet Point is relatively close to Oak Hill, 17 miles to the south. Bayonet Point's open heart surgery program experiences the fourth highest case volume in the state. The program is recognized as one of the top two programs in the state. It enjoys a national reputation. For example in July of 1999, it was ranked 50th in the nation in cardiology and heart surgery in U.S. News and World Report's list of "America's Best Hospitals." Oak Hill, as a sister hospital of Bayonet Point under the aegis of HCA, plans to develop its program in cooperation with Bayonet Point and its cardiovascular surgeons so as to bring the high quality program at Bayonet Point to Oak Hill's community and patients. A prospective operational plan for the adult open heart surgery program has been initiated by Oak Hill with assistance from Bayonet Point. Oak Hill, unlike Citrus Memorial, did not present evidence concerning the specific duties to be imposed on each physician group under contract. Nor did Oak Hill present evidence as to whether and how those groups would create and implement the type of standardization of protocols, facility design, equipment, and supplies that Citrus Memorial's program will rely upon for high quality and reduced costs. Nonetheless, it can be expected that the cooperation of Oak Hill and Bayonet Point, as sister HCA hospitals, will continue through the development and implementation of appropriate staff training, policies, procedures and protocols in the establishment of a high quality program at Oak Hill. Oak Hill's achieved volume in its open heart surgery program, if approved, will be at the direct expense of Bayonet Point. Its approval will increase the operating costs per case at Bayonet Point. Patients transferred from Oak Hill to Bayonet Point for OHS and angioplasty receive excellent outcomes. Patients are transferred to Bayonet Point for OHS and angioplasty smoothly and without delay particularly because Bayonet Point operates a private ambulance system for the transport of cardiac patients to its hospital. Two groups of cardiovascular surgeons are the exclusive cardiovascular/thoracic surgeons at Bayonet Point. Although, at present, there are no capacity constraints at Bayonet Point, both groups support a program at Oak Hill and are committed to participate in an open heart surgery program at Oak Hill. If approved, Oak Hill will enter similar exclusive contracts with the two groups. Raymond Waters, M.D., a cardiovascular surgeon, heads one of the groups. He has performed open heart surgery at Bayonet Point since its inception and is largely responsible for the development of the surgery protocols used there. Dr. Waters has consulting privileges at Oak Hill. In addition to consulting there, Dr. Waters presents medical education programs at Oak Hill. Forty to 50 percent of Dr. Waters' patients come from Hernando County and Oak Hill Hospital. Dr. Waters and his group strongly support initiation of an open heart surgery ("OHS") program at Oak Hill. Their support is based, in part, on the excellence of the institution, including its physical structure, cath labs, intensive care units, nursing staff, medical staff, and the state of its cardiology program. Dr. Waters and his group are prepared to assist in the development of an open heart surgery program at Oak Hill, and to assure appropriate surgery coverage. Oak Hill will create a Heart Center at the hospital to house its OHS program. All diagnostic and invasive cardiac services will be located in one area of the hospital to ensure efficient patient flow and access to support services. The center will occupy existing space to be renovated and newly constructed space on the first floor of the facility. Two new cardiovascular surgery suites, with all support spaces necessary, will be constructed, along with an eight-bed cardiovascular intensive care unit. The hospital's two state- of-the-art cardiac catheterization laboratory suites are available for diagnostic procedures and angioplasty procedures. A large waiting area and cardiac education/therapy room will also be constructed. Open heart surgery patients will progress from the OR to the new CVICU for the first 24-28 hours after surgery. From the CVICU, the patient will be admitted to a thirty-bed telemetry monitored progressive care unit, located on the second floor. Currently a 38-bed medical/surgical unit, thirty of the beds will remain as PCU beds. Eight beds will be relocated to create the CVICU. The PCU will provide continued care, education and discharge planning for post open heart surgery and angioplasty patients. Oak Hill will also implement a comprehensive cardiac rehabilitation program for both inpatients and outpatients. Brooksville Regional Like Oak Hill, part of the purpose of the Brooksville Regional proposal is to provide more convenient OHS and angioplasty services to Hernando County residents in need of them, 94 percent of whom now travel to Bayonet Point in Pasco County for such services. In addition to proposing improvements in patient convenience and access, Brooksville Regional sees its application as increasing patient choice and competition in the delivery of the services. Indeed, patient choice and competition for the benefit of patients, physicians and payers of hospital services are the cornerstone of Brooksville Regional's application. There is support for the proposed program from the community and from physicians. For example, Dr. Jose Augustine, a cardiologist and Chief of the Medical Staff at Oak Hill since 1997, wrote a letter of support for an open heart program at Brooksville Regional. Although he believes Hernando County would be better served by a program at Oak Hill, he wrote the letter for Brooksville Regional because, "if Oak Hill didn't get it, [he] wanted the program to be here in Hernando County." (Oak Hill No. 12, p. 43.) Consistent with his position, Dr. Augustine finds Brooksville Regional to be an appropriate facility in which to locate an open heart program and he would do all he could to support such a program including providing support from his cardiology group and encouraging support other physicians. But Brooksville Regional offered no evidence regarding the identity of its cardiovascular surgeons. Hernando HMA proposes to construct a state-of-the-art building of 19,500 square feet at Brooksville Regional to house its OHS program. Two OHS operating rooms will be built. Eight CVICU beds will be used for the program, to be converted from other licensed beds. A second cath lab will be added. The total project cost is nearly $12 million. Brooksville Regional proposes to serve all of Hernando County. In addition, 10 percent of its volume is expected to come from Citrus County. Brooksville Regional commits to serving all payer groups with the vast majority projected to be Medicare, Medicare HMO/PPO and non-Medicare managed care. Brooksville lists two specific CON conditions in its application. First, it commits to over 2 percent for charity care and 1.6 percent for Medicaid. Second, it commits to establishing the OHS program at Brooksville's existing facility, located at 55 Ponce de Leon Boulevard in the City of Brooksville. The second of these two was reaffirmed unequivocally at hearing when Brooksville introduced testimony that if Brooksville's CON application is approved, its OHS program will be located at Brooksville's existing facility. Need In Common One "not normal" circumstance exist that supports all three applications: the lack of effect any approval will have on the sub-350 performers in the district. Which, if any, of the three applicants should be awarded an adult open heart surgery program, therefore, is determined on the basis of need and that determination is to be made in the context of comparative review. Benefits of Increased Blood Flow Lack of blood flow to the heart caused by narrowed arteries or blood clots during a heart attack, results in a loss heart of muscle. The longer the blood flow is disrupted or diminished, the more heart muscle is lost. The more heart muscle lost, the more likely the patient will either die or, should the patient survive, suffer a severe reduction in the quality of life. The key to prevent the loss of heart muscle in a heart attack is to restore blood flow to the heart through a process of revascularization as quickly as possible. Cardiovascular surgeons and cardiologists make reference to this phenomenon through the maxim, "time is muscle." The faster revascularization is accomplished the better the outcome for the patient. Those who treat heart attack patients seek to restore blood flow within a half hour of the onset of the attack. Revascularization within such a time frame maximizes the chance of reducing permanent damage to the heart muscle from which the patient cannot recover. Achievement of revascularization between 30 minutes and 90 minutes of the attack results in some damage. Beyond 90 minutes, significant permanent damage resulting in death or severe reduction in quality of life is likely. The three primary treatment modalities available to a patient suffering from a heart attack are: 1) thrombolytics; 2) angioplasty and 3) open heart surgery. Thrombolytic therapy is the standard of care for the initial attempt to treat a heart attack. Thrombolytic therapy is the administration of medication, typically tissue plasminogen ("TPA") to dissolve blood clots. Administered intravenously, the thrombolytic begins working within minutes in an attempt to dissolve the clot causing the heart attack and, therefore, to prevent or halt damage to the heart muscle. Thrombolytic therapies are successful in restoring blood flow to the affected heart muscle about 60 to 75 percent of the time. In the event it is not successful or the patient is not appropriate for the therapy, the patient is usually referred for primary angioplasty, a therapeutic cardiac catheterization procedure. Cardiac catheterization is a medical procedure requiring the passage of a catheter into one or more cardiac chambers with or without coronary arteriograms, for the purpose of diagnosing congenital or acquired cardiovascular diseases, and includes the injection of contrast medium into the coronary arteries to find vessel blockage. See Rule 59C-1.032(2)(a), Florida Administrative Code. Primary angioplasty is defined as a therapeutic cardiac catheterization procedure in which a balloon-tipped catheter inflated at the point of obstruction is used to dilate narrowed segments of coronary arteries in order to restore blood flow to the heart muscle. Rule 59C-1.032(2)(b), Florida Administrative Code. More often now, in the wake of cardiac care advances, a "stent" is also placed in the re-opened artery. A stent is a wire cylinder or a metal mesh-sleeve wrapped around the balloon during an angioplasty procedure. The stent attaches itself to the walls of the blocked artery when the balloon is inflated, acting much like a reinforced conduit through which blood flow is restored. Its advantage over stentless angioplasty is improved blood flow to the heart and a reduction in the likelihood that the artery will collapse in the future. In other words, a stent may prevent substantial re-occlusion. The development of stent technology has led to dramatically increased angioplasty procedure volumes in recent years and the trend is continuing. Based on mortality rates, studies suggest that immediate angioplasty, rather than thrombolytic treatment, is the preferred treatment for revascularization. When thrombolytic therapy is inappropriate or fails and a patient is determined to be not a candidate for angioplasty, the patient is referred for open heart surgery. Under the Open Heart Surgery Rule, Rule 59C-1.032, Florida Administrative Code, a cardiac catheterization program that includes the provision of angioplasty must be located within a hospital that also provides open heart surgery services. Open heart surgery is a necessary backup in the event of complications during the angioplasty. The residents of Citrus Memorial's primary service area (and those of Oak Hill's and Brooksville Regional's), therefore, do not have immediate access (that is access to a hospital in their county of residence) to not just open heart surgery services but to angioplasty services as well. In addition to increased benefits to the residents of the proposed service areas, much of the need in this case is based on a demonstration of geographic access problems. For example, population concentration and historical utilization of open heart surgery services in the district demonstrate that the open heart surgery programs in the district are maldistributed. At the same time, the Bayonet Point program's service by virtue of both superior quality and proximity to Hernando County ameliorates the effect of the maldistribution of the programs intra-district particularly with regard to the residents of Hernando County. The four southernmost of the 16 counties in the district (Citrus, Hernando, Sumter and Lake) account for approximately 41 percent of the total adult population and 53.5 percent of the population aged 65 and over within District 3 as a whole. The super majority of aged 65 and over population in these counties is of great significance since that population is the primary base of those in need of adult open heart surgery and angioplasty. This same base accounts for 57 percent of the total annual open heart surgeries performed on district residents. For District 3 as a whole, 27 percent of the adult population is aged 65 and older. In comparison, 38.2 percent of Citrus County residents fall within that age cohort, 37.2 percent of Hernando County residents and 33.3 percent of residents in Lake and Sumter Counties combined fall within that age cohort. In contrast, in the northern part of the district, the counties closest to the three Gainesville open heart surgery programs (Columbia, Hamilton, Suwanee, Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union) contain a combined basis of 32.4 percent and Putnam County contains 24.7 percent of the District 3 population aged 65 and over. The overall District 3 open heart surgery use rate (number of surgeries per 1,000 population age 15 and over) is 3.47. Yet, the combined use rate for Columbia, Hamilton, and Suwanee Counties is 1.96, the combined use rate for Alachua, Bradford, Dixie, Gilchrist, Lafayette, Levy, and Union Counties is 1.55, and the Putnam County use rate is 2.05. More specifically, the northern county use rates are significantly below the use rates for the remainder of District 3 counties. Marion County is 4.12. Citrus County is at 4.26. Hernando County is at 6.41. Lake and Sumter Counties are at 4.31. Transfers Drive time is but one component of the total time necessary to effectuate a patient transfer. Additional time is consumed in making transfer and admission arrangements with the receiving hospital, awaiting arrival of an ambulance to begin transport, and preparing and transferring the patient into and out of the ambulance. Time delays that necessarily accompany hospital-to-hospital transfers can be critical, clinically. The fact that a facility-to-facility transfer is required means that the patient is at relatively high risk. Otherwise, the patient would be sent home and electively scheduled later. The need to travel outside the community carries other adverse consequences for patients and their families. Continuity of care is disrupted when patients cannot receive hospital visits from their regular and trusted physicians. Separation from these physicians increases stress and anxiety for many patients, and patients heal better with lower levels of stress and anxiety. Further, most OHS patients are elderly, and travel by their spouses to another community to visit is stressful and difficult at best, sometimes impossible. The elderly loved ones of the patient also tend to have health problems and, even when able, the drive to the hospital is stressful. District 3 Out-migration A high volume of OHS patients leave District 3 for OHS services. During the year ended March 1999, there were a total of 3,520 District 3 residents discharged from Florida hospitals following OHS. Only 2,428 of those OHS cases were reported by hospitals located within District 3. An outmigration rate of 31 percent, on its face, is indicative of a district geographic access problem. The problem is mitigated, however, by an understanding that most of the outmigration is of Hernando County residents who are able to travel or are transferred to Bayonet Point, a provider within 30 to 45 minutes driving time from the two Hernando County applicants in this proceeding. Citrus Memorial Volume Projections and Financial Feasibility Citrus Memorial reasonably projects an open heart surgery case volume of 266 for the first year of operation, 313 for the second year, and 361 for the third year. Citrus Memorial reasonably projects an angioplasty case volume of 409 for the first year of operation, 481 for the second year, and 554 for the third year. The Citrus Memorial program is financially feasible in the long term. It will generate approximately $1 million in not-for-profit income by the end of the second year of operation ($327,609 from open heart surgery cases, and $651,323 from angioplasty cases). Increased Access in Citrus County The two Ocala hospitals are approximately 30 miles from Citrus Memorial. With traffic, the normal driving time from Citrus Memorial to the hospitals is 60 minutes. The driving time from Oak Hill to Bayonet Point is normally 29 minutes or about half the time it takes to get from Citrus Memorial to one of the Ocala providers. The drive time from Brooksville Regional to Bayonet Point is approximately 45 minutes, 25 percent faster than the driving time from Citrus Memorial to the Ocala hospitals. Myocardial infarction patients for whom thrombolytic therapy is inappropriate or ineffective who present to the emergency room at Citrus Memorial, on average, therefore, are exposed to greater risk of significant heart muscle damage than those who present to the emergency rooms at either Oak Hill or Brooksville Regional. The delay in transfer for a Citrus Memorial patient in need of angioplasty or open heart surgery can be compounded by the ambulance system in Citrus County. There are only 7 ambulances in the system. If one is out of the county, the provider of ambulance services will not allow another to leave the county until the first has returned. Citrus Memorial presented medical records of 17 cases in which transfers took more than an hour and in some cases more than 3 hours from when arrangements for transfers were first made. There was no testimony to explain the meaning of the records. Despite the status of the records as admissible under exceptions to the hearsay rule and therefore the ability to rely on them for the truth of the matters asserted therein, the lack of expert testimony diminishes the value of the records. For example in the first case, the patient presented at the emergency room on June 14, 1999. Treatment reduced the patient's chest pain. In other words, thrombolytics appeared to be beneficial. The patient was admitted to the coronary care unit after a diagnosis of unstable angina, and cardiac catheterization was ordered. On June 15, the next day, at about 11:40 a.m., "just prior to going down to Cath Lab, patient developed severe chest pain." (Citrus Memorial Ex. 16, p. 1017.) Following additional treatment, the chest pains were observed half an hour later to be "better." (Id.) Several hours later, at 1:45 p.m., that day, transfer to Ocala Regional was ordered. (Id., p. 1043). The patient's progress notes show that the transfer took place at 3:45 p.m., two hours after the order for transfer was entered. Whether rapid transfer was required or not is questionable since the patient appears to have been stabilized and had responded to thrombolytics and other therapy. In contrast, the second of the 17 cases is of a patient whose "risk of mortality [was] . . . close to 100%." The physician's notes indicate that at 1:10 p.m. on August 8, 1999, "emergency cardiac cath [was] indicated [with] a view toward revascularization." (Citrus Memorial Ex. 16, p. 1093). The same notes indicate after discussion between the physician and the patient and his spouse "that transfer itself is risky, but that risk of mortality [if he remained at Citrus Memorial] . . . is close to 100 percent." Although these same notes show that at 1:10 p.m., the patient's transfer had been accepted by the provider of open heart surgery, it was not until 3:30 p.m., that the "Ocala team" (id., at 1113) was shown to be present at Citrus Memorial and not until 3:45 p.m., that the patient was "transferred to Ocala." (Id.) Given the maxim that "time is muscle," it may be assumed that the 2-hour and 45- minute delay in transfer from the moment the patient was accepted for transfer until it occurred and the ensuing time thereafter for the drive to Ocala contributed to significant negative health consequences to the patient. Whatever the value of the 17 sets of medical records, they demonstrate that transfers from Citrus Memorial on occasion take up time that is outside the 30-minute and 90-minute timeframes for avoiding significant damage to heart muscle or minimizing such damage to heart attack patients for whom angioplasty or open heart surgery procedures is indicated. Citrus Memorial also presented twenty sets of records from which the "emergent" nature of the need for angioplasty or open heart intervention was more apparent from the face of the records than in the 17 cases. (Compare Citrus Memorial Ex. No. 16 to No. 17). These records reveal transport delays in some cases, lack of immediate bed ability at the Ocala hospitals in others, and in some cases both transport delays and lack of bed availability. In 16 of the cases, it took over 90 minutes for the patient to reach the receiving hospital and in 13 of the cases, it took 2 hours or more. It would be of significant benefit to some of those who present to Citrus Memorial's emergency room with myocardial infarctions to have access to open heart surgery services on site should thrombolytic therapy be inappropriate or prove ineffective. Other Access Factors Besides time considerations, there are other factors that provide comparisons related to access by Citrus Memorial service area residents on the one hand and Hernando County residents to be served by either Oak Hill or Brooksville Regional on the other. Among the other factors relied on by Citrus Memorial to advance its application is a comparison of use rate. The use rate per 1,000 population aged 15 and over for Hernando County is 6.08, compared to 4.13 for Citrus County. "[B]y definition" (tr. 458), the use rates show need in Hernando County greater than in Citrus County. But the use rates could indicate an access problem financially or geographically. In the end, there are a lot of components that make up the use rate. One is obviously the age of the population and underlying heart disease, two, . . . is the physician practice patterns in the county. [S]tudies . . . show that [in] two equivalent populations, . . . one with a very conservative medical community that . . . hospitalizes more frequently . . . [versus] another . . . where the physicians hospitalize less frequently for the same situation or who use a medical approach versus a surgical approach. (Id.) While there may be one possible explanation for the lower use rate in Citrus County than in Hernando County that favors Citrus Memorial, a comparison of use rates on the state of this record is not in Citrus Memorial's favor. Other factors favor Citrus Memorial. In support of its open heart surgery and angioplasty volumes, for example, Citrus Memorial reasonably projects an 80 percent market share for such services from its primary service areas. In contrast, Oak Hill projected a much lower market share from its primary service area: 58 percent. The lower market share projection by Oak Hill is due to the proximity of the Bayonet Point program to Hernando County. The difference in the two projections reveals greater demand for improved access in Citrus County than in Hernando County. This same point is revealed by projected county outmigration. Statewide data reveals that the introduction of open heart surgery services within a county causes a county resident generally to stay in the county for those services. Yet with a new program in Hernando County, Bayonet Point is still projected reasonably to capture one-half of the open heart surgeries and angioplasties performed on Hernando County residents, further support for the notion that Hernando County residents have adequate access to open heart surgery services through Bayonet Point's program. As to angioplasty demand, Oak Hill projected an angioplasty/open heart surgery ratio of 1.3. Citrus Memorial's ratio is 1.5. Geographic access limitations also adversely affect continuity of care. To have open heart surgery performed at another hospital, the patient will have to travel for pre- operative, operative, and post-operative follow-up services and duplication of tests. This lack of continuity of care often results in the patient's primary and specialty care physicians not following the patient and not being involved with all phases of care. In assessing travel time and access issues for open heart surgery and angioplasty services, travel time and distance present not only potential hardship to the patient, but also to the patient's family and friends who accompany and visit the patient. These issues are of particular significance to elderly persons (be they the patient, family member or friend) who do not drive and must rely on others for transport. Financial Access - Indigent Care Consistent with its mission as a community not-for- profit hospital, Citrus Memorial will accept any patient who comes to the hospital regardless of ability to pay. In 1999, Citrus Memorial provided approximately $4.9 million in charity care, representing 3.6 percent of its gross revenues. Citrus County provided Citrus Memorial with $1.2 million dollars in subsidization, part of which was allotted to capital construction and maintenance, part of which was allotted to charity care. Subtracting all $1.2 million, as if all had been earmarked for charity care, from the charity care, the dollar amount of Citrus Memorial's out-of-pocket charity care substantially exceeds the dollars for the same period provided by Oak Hill ($1.3 million) and by Brooksville Regional ($935,000). The percentage of gross revenue devoted to charity care is also highest for Citrus Memorial; Brooksville Regional's is 1.1 percent and tellingly, Oak Hill's, at 0.6 percent is less than one-quarter of Citrus Memorial's percentage of out-of- pocket charity care. "[C]learly Citrus has a much stronger charity care credential than does either Oak Hill or Brooksville Regional." (Tr. 241). But this credential does not carry over into the open heart surgery arena. As a condition to its CON, Citrus Memorial committed to a minimum 2.0 percent of total open heart surgery patient days to Medicaid/charity patients. The difference between Citrus Memorial's commitment and that of Oak Hill's and Brooksville Regional's, both standing at 1.5 percent, is not nearly as dramatic as past performance in charity care for all services. The difference in the comparison of Citrus Memorial to the other applicants between past overall charity care and commitment to future open heart services for Medicaid and charity care is explained by the population that receives open heart and angioplasty services. That population is dominated by those over 65 who are covered by Medicare. Competition Citrus Memorial's current charges for cardiology services are significantly lower than comparable charges at Oak Hill or Brooksville Regional. A comparison of the eight cardiology-related DRGs that typically have high volume utilization reveals that Oak Hill's gross charges are 62 percent greater than Citrus Memorial's gross charges. A comparison of gross charges is not of great value, however, even though there are some payers that pay billed charges such as "self-pay" and indemnity insurance. When managed care payments are a function of gross charges then such a comparison is of more value. On a net revenue per case basis for those DRGs, Oak Hill's net revenues are 10 percent greater than Citrus Memorial's. A 10 percent difference in net revenues, a much narrower difference than the difference in gross charges, is significant. Furthermore, it is not surprising to see such a narrowing since most of the utilization is covered by Medicare which makes a fixed payment to the provider. A comparison of projections in the applications reveals that Oak Hill's gross revenue per open heart surgery cases will be 164 percent greater than Citrus Memorial's gross revenue per such case. Oak Hill's net revenue per open heart surgery case will be 32 percent greater than Citrus Memorial's net revenue per such case. A comparison of projections in the applications also reveals that Oak Hill's gross revenue per angioplasty case will be 74 percent greater than Citrus Memorial's and that Oak Hill's net revenues per angioplasty case will be 13 percent greater than Citrus Memorial's. If a program is established at Oak Hill, there will be a hospital within District 3 with a new open heart surgery program. But what Oak Hill, under the umbrellas of HCA, proposes to do in reality is to take a quarter of the volume from [Bayonet Point, a] premier facility to set up in a sense a satellite operation at a facility . . . 16 miles away . . . [when] those patients already have an established practice of going to the premier tertiary facility . . . [ and when the two enjoy] a very strong positive relationship. (Tr. 1434). Such an arrangement will do little to nothing to enhance competition. Comparing Citrus Memorial and Brooksville Regional gross revenues on the basis of the same cardiology-related DRGs reveals that Brooksville's gross charges are 83 percent greater than Citrus Memorial's charges. A comparison of projections in the applications reveals that Brooksville Regional's gross revenue per open heart surgery case will be 147 percent greater than Citrus Memorial's and the Brooksville's net revenue per open heart surgery case will be 45 percent greater than Citrus Memorial's. A comparison of projections in the applications reveals that Brooksville's gross revenue per angioplasty case will be 36 percent greater than Citrus Memorial's and that Brooksville's net revenue per angioplasty case will be 7 percent lower than Citrus Memorial's. Impact of a Citrus Memorial Program on Existing Providers Citrus Memorial reasonably projected that by the third year of operation, a Citrus Memorial program will take away 100 cases from Ocala Regional. In 1999 Ocala Regional had an open heart surgery volume of 401 cases. In 2000, its annual volume was 18 cases more, 419. This is a decline from both the immediately prior two-year period, 1997 to 1998 and the two-year period before that of 1995 to 1996. The volume decline for the two-year period 1999 to 2000 compared to the previous two-year period, 1997 to 1998 is not at all surprising because of "two big factors." (Tr. 97). First, in 1997 and 1998, Ocala Regional was used as a training site for the development of Leesburg Regional's open heart surgery program that opened in December of 1998. In essence, Ocala Regional enjoyed an increase in the volume of cases in 1997 and 1998 when compared to previous years and a spike in volume when compared to both previous and subsequent two-year periods because of the 1997-98 short-term "windfall.) (Id.) Second, Ocala Regional was a Columbia-owned facility. In 1999 and thereafter, "Columbia developed a lot of bad publicity because of some federal investigations that were going on of the Columbia system." (Id.) The publicity negatively affected the hospital's open heart surgery volume in 1999 and 2000. The second factor also helps to explain why Ocala Regional's volume in 1999 and 2000 was lower than in 1995 and 1996. There are other factors, as well, that help explain the lower volume in 1999 and 2000 than in 1995 and 1996. In any event if impact to Ocala Regional, alone, were to be considered for purposes of the prohibition in Rule 59C- 1.033(7)(c), that a new program will not normally be approved if approval would reduce 12-month volume at an existing program below 350, then the impact might result in veto by rule of approval of a program at Citrus Memorial. But Ocala Regional is but one hospital under a single certificate of need shared with another hospital across the street from its facility: Munroe Regional. Annualization for 1999 of discharge data for the 12 months ending September 30, 1999 shows that Munroe Regional enjoyed a volume of 770 cases. There is no danger that the program carried out by Ocala Regional and Munroe Regional jointly under a single certificate of need will fall below 350 procedures annually should Citrus Memorial be approved. Oak Hill Need for Rapid Interventional Therapies and Transfers A high number of residents of Oak Hill's proposed service area present to its emergency room with myocardial infarctions. Many of them would benefit from prompt interventional therapies currently made available to them at Bayonet Point. Over 600 patients annually, almost two patients every day, must be transferred by ambulance from Oak Hill to Bayonet Point for cardiac care. A significant number of them would benefit from interventional therapy more rapidly available. The travel time from Oak Hill to Bayonet Point is the least amount of time, however, of the travel time from any of the three applicants in this proceeding to the nearest existing open heart provider; Brooksville Regional to Bayonet Point or Citrus Memorial to one of the Ocala providers. The extent of the benefit, therefore, is difficult to quantify and is, most likely, minimal. As with the other two applicants, thrombolytic therapy is the only method of revascularization currently available to Oak Hill's patients because Oak Hill is precluded by Agency rule and clinical standards from offering angioplasty without on-site open heart surgery backup. The percentage of MI patients who are ineligible for thrombolytic therapy, coupled with the percentages of patients for whom thrombolytic therapy is ineffective, are extremely significant given the high number of MI patients presenting to Oak Hill's emergency room. During 1998, 418 patients presented to Oak Hill's ER with an MI, and 376 MI patients presented in 1999. During the first eight months of 2000, 255 MI patients presented to Oak Hill's ER, an annualized rate of 384. Conservatively, thrombolytic therapy is not effective for at least 10 percent of patients suffering from an acute MI, either because patients are ineligible to receive the treatment or the treatment fails to clear the blockage. Accordingly, it may be conservatively projected that at least 104 patients who presented to Oak Hill's ER between 1998 and August 2000 (10 percent of 1049) suffering an MI were in need of angioplasty intervention for which open heart surgery backup is required. Most patients are diagnosed as in need of OHS or angioplasty as a result of undergoing a diagnostic cardiac catheterization. Oak Hill performs an extremely high volume of cardiac cath procedures for a hospital that lacks an OHS program. In 1999, for example, it performed 1,641 cardiac catheterizations. This is a higher volume than experienced by any of six hospitals during the year prior to which they recently implemented new OHS programs. If Oak Hill had an OHS program, most of the patients at Oak Hill determined to be in need of angioplasty or OHS could receive those procedures at Oak Hill. Such an arrangement would avoid the inevitable delay and stress occasioned by a transfer to Bayonet Point or elsewhere. Furthermore, if Oak Hill had an OHS program then those patients in need of diagnostic cardiac catheterization and angioplasty sequentially would have immediate access to the interventional procedure. The need is underscored for those patients presenting to Oak Hill's ER with myocardical infarctions who do not respond to thrombolytics because, as stated earlier in this order, access to angioplasty within 30 minutes of onset is ideal. Oak Hill transfers an extremely high number of cardiac patients for angioplasty and open heart surgery. In 1999, Oak Hill transferred 258 patients to Bayonet Point for open heart surgery, and 311 for angioplasty/stent procedures. Of course, most OHS patients are scheduled on an elective basis for surgery, rather than being transferred between hospitals, as is evident from the fact that during the 12-month period ending March 1999, 698 Hernando County residents underwent OHS. For now, Oak Hill patients determined to be in need of urgent angioplasty or open heart surgery must be transferred by ambulance to an OHS provider which for the vast majority of patients is Bayonet Point. Approximately 17 miles south, the average drive time to Bayonet Point from Oak Hill is 30 minutes but it can take longer when on occasion there is traffic congestion. Once the transfer is achieved and patient receives the required procedure, the drive can be difficult for the patient's family and loved ones. Community members often express to physicians and hospital staff their support and desire for an OHS program at Oak Hill. Many believe travel outside Hernando County for those services is cumbersome for loved ones who are important to the patient's healing process. The community support and demand for these services is evidenced by the 7,628 resident signatures on petitions in support of Oak Hill's efforts to obtain approval for an OHS program. While a program at Oak Hill would be more convenient, Oak Hill did not demonstrate a transfer problem that would rise to the level of "not normal" circumstances. Because of Oak Hill's relationship with Bayonet Point, Bayonet Point's proximity and excess capacity, coupled with the high quality of the program at Bayonet Point, Oak Hill's case is more in the nature of seeking a satellite. As one expert put it at hearing, [Oak Hill] is, in fact, a satellite. And my question is, [']What's the wisdom of doing that if you don't have the problems that normally are being addressed when you grant approval of a program?['] In other words, if you don't have transfer issues [that rise to the level of "not normal" circumstances], if you don't have access issues, if you're not achieving any price competition, if it's not particularly cost effective, why would you [approve Oak Hill]? (Tr. 1537-38). Oak Hill's Projected Utilization Oak Hill projected a range of 316 to 348 OHS cases during its first year, and by its third year a range of between 333 and 366 cases. Those volumes are sufficient to ensure excellent quality of care from the beginning of the program, particularly with the involvement of the Bayonet Point surgeons. Oak Hill defined its primary service area (PSA) for OHS based on historic MDC-5 cardiology related diagnosis discharges from its hospital. For the 12-month period ended March 1999, over 90 percent of Oak Hill's MDC-5 discharges were residents of six zip codes, all in the vicinity of Oak Hill Hospital and within Hernando County. Accordingly, that area was chosen as the PSA for projecting OHS utilization. Out-of-PSA residents accounted for only 8.9 percent of Oak Hill's MDC-5 discharges, and of these, 1.5 percent were out-of-state patients, and 4.9 percent were residents from other parts of District 3. For the year ending ("YE") March 1999, Oak Hill had an MDC-5 market share of 40.9 percent within its PSA, without excluding angioplasty, stent, and OHS cases. If angioplasty, stent, and OHS cases are excluded, Oak Hill's PSA market share was 52.7 percent. In order to project OHS service demand, Oak Hill examined the population projections for 1999 and 2004 for District 3, and for Oak Hill's PSA. The analysis was based on age-specific resident populations and use rates, to serve as a contrast to the Agency's projections. The numeric need formula in the OHS Rule utilizes a facility based use rate derived by totaling all of the reported OHS cases performed by hospitals within a District during a given time period, and then dividing those cases by the adult population aged 15 and over. While a facility-based use rate measures utilization in those District hospitals, however, it does not measure out-migration. Nor does it reflect the residence of the patients receiving those services. On the other hand, a resident-based use rate identifies where patients needing OHS actually come from, and permits development of age specific use rates. For example, the resident-based use rates reflects that the southern portion of District 3 has a much higher concentration of elderly persons than does the northern portion of the District, and reveals extremely high migration out of the District for OHS services. Oak Hill's PSA is more elderly than the District 3 population as a whole. In 1999, 32.8 percent of the Oak Hill PSA population was aged 65 or over, as opposed to only 21.5 percent for District 3 as a whole, with similar results projected for the population in 2004, the projected third year of operation of Oak Hill's program. Based on the district-wide use rate resulting from the OHS Rule need methodology, Hernando County would be expected to generate 276 OHS cases in the planning horizon of July 2002 (use rate of 2.3 per 1000 adult population). Application of this OHS Rule use rate to Hernando County clearly understates need if resources to meet the need are considered within the isolation of the boundaries of District 3. For example, the OHS Rule based projection of 276 OHS cases in 2002, is far below the actual 664 Hernando County resident OHS discharges during YE March 1998, and the 698 OHS cases during YE March 1999. While the facility-based district-wide use rate was 2.3, the Hernando County resident-based use rate was 6.45 per 1000 population. The fact of increasing use rates with age is demonstrated by the Hernando County resident use rate of 6.95 for ages 55-64, increasing to 12.01 for ages 65-74, and increasing again to 14.95 for age 75 and over. But focusing on Hernando County use rates within District 3 ignores the reality of the proximity of an excellent program at Bayonet Point. Oak Hill reasonably projected OHS demand in its PSA by examining the age-specific use rates of residents in the southern portion of District 3, which experienced an overall use rate of 4.55 for the year ending March 1999. Those age-specific use rates were then applied to the age-specific population forecast for each of the three horizon years of 2002 through 2004, resulting in an expected PSA demand for OHS of 547 cases in 2002, 561 cases in 2003, and 575 cases in 2004. Those projections are conservative given that 663 actual open heart surgeries were reported among PSA residents during the YE March 1999. The same methodology was used to project angioplasty service demand in the PSA, resulting in an expected demand ranging from 721 cases in 2002 to 758 cases in 2004. Oak Hill then projected its expected OHS case volume by assuming that its first year OHS market share within its PSA would be the same as its MDC-5 market share, being 52.7 percent. Oak Hill next assumed that by the third-year operation its market share would increase to equal its current cardiac cath PSA market share of 57.9 percent. It further assumed that it would have a non-PSA draw of 8.9 percent, which is equal to its current non-PSA MDC-5 market share. Oak Hill reasonably expects that 91.1 percent of its OHS cases would come from within its six zip code PSA, with the remaining 8.9 percent expected to come from outside that area. Oak Hill then projected an expected range of OHS discharges during its first three years of operation by using both a low estimate and a high estimate. The resulting utilization projections reflect a low range of 316 OHS cases in 2002, 324 cases in 2003, and 333 cases in 2004. The high range estimate for the same years respectively would be: 348, 357, and 366 cases. The same methodology was used to project angioplasty cases, resulting in the following low range: 417 cases in 2002; 428 in 2003; and 438 in 2004. The expected high range for the same respective years would be: 458, 470, and 482. Oak Hill's OHS and angioplasty utilization projections are reasonable. Long-term Financial Feasibility Long-term financial feasibility is defined as a demonstration that the project will achieve and maintain financial self-sufficiency over time. Oak Hill's projected gross charges were based on Bayonet Point's charge structure. The projected payer mix was based on Oak Hill's cardiac cath experience. Projected net reimbursement by payor source was based on Oak Hill's experience for Medicare, Medicaid, and contractual adjustment history. Oak Hill's expenses were projected on a DRG specific basis using information generated by the cost accounting system at Bayonet Point. The use of Bayonet Point's expense experience is a reasonable proxy for a number of reasons. Its patient base is comprised of patients who are reasonably expected to be the base of Oak Hill's patients. Management there is similar to what it will be at an Oak Hill program. And, as stated so often, the two facilities are relatively close in location. To account for differences between Bayonet Point's expenses and Oak Hill's project costs, interest and depreciation, adjustments were made by Oak Hill as reflected in its application. As a means of compensating for fixed costs differentials between the two hospitals, Oak Hill added its salary costs projected in Schedule 6 to the salary expenses already included in Bayonet Point's costs. (Schedule 6 nursing, administration, housekeeping, and ancillary labor costs exceeded $3 million in the first year of operations.) This counting of two sets of salary expenses offsets any economies of scale cost differential that may exist between the OHS programs at Bayonet Point and Oak Hill. A reasonable 3 percent annual inflation factor was applied to both projected charges and costs. The reasonableness of Oak Hill's overall approach is supported by Citrus Memorial's use of a substantially similar pro forma methodology in modeling its proposed program on Munroe Regional Medical Center. Oak Hill reasonably projects a profit of $1.38 million in the first year of operation, and that profitability will increase as the case volumes grow thereafter. An Oak Hill program will cost Bayonet Point (a sister HCA hospital) patients and may diminish the corporate profits of the two hospital's parent corporation, HCA Health Services of Florida, Inc. It is clear from the parent's most recent audited financial statements, however, that it has ability to absorb a lower level of profit from Bayonet Point without jeopardizing the financial viability of Oak Hill. Brooksville Regional argues that the financial impact to Bayonet Point of an Oak Hill program demonstrates that the Oak Hill application is nothing more than a preemptive move to stifle competition. Oak Hill, in turn, characterizes its proposal as a sound business judgement to compete with non-HCA hospitals in District 3. Whatever characterization is applied to the Oak Hill proposal, it is clear that it is financially feasible in the long term. Other Statistics The AHCA population estimates for January 1, 1999, show a Hernando County population of 108,687 and a Citrus County population of 98,912. The same data sources show the "age 65 and over" population (the "elderly") in Hernando to be 40,440 and in Citrus to be 37,822. During the year 2000, there were 2,545 more people aged 65 and over in Hernando County than in Citrus County. By the year 2005, the difference is expected to be 3.005. The total change in the elderly population between 2000 and 2005 is projected to be 4,109 in Citrus County and 4,614 in Hernando County. Generally, the older the population, the older the OHS use rate. Comparatively, then, Hernando County has the larger population to be served both now, and in all probability, in the foreseeable future. Oak Hill has the largest cardiology program among the applicants. For the 12-month period ending September 1999, MDC- 5 discharges were 1,130 at Brooksville Regional, 2,077 at Citrus Memorial and 2,812 at Oak Hill. The combined Brooksville and Spring Hill Regional Hospital MDC-5 case volume of 2,238 is below Oak Hill's MDC case volume for the same period. Oak Hill is the largest cardiac cath provider among the applicants. For the 12-month period ending September 2000, Citrus Memorial reported 646 cardiac catheterization procedures and Brooksville Regional reported 812. Oak Hill reported 1,404 such procedures, only sixty shy of a volume double the combined volume at the other two applicants. The level of ischemic heart disease in an area is indicative of the level of open heart surgery needed by residents of the area. The number of ischemic heart disease cases by county during the 12-month period ending September 1999 were: 1,038 for Alachua; 1,978 for Citrus; 2,816 for Marion; and, Hernando, 3,336. During the 12-month period ending September 1999, 657 Hernando County residents underwent OHS at Florida hospitals, while only 408 residents of Citrus County did so. Similarly, 948 Hernando County residents had angioplasty, while only 617 Citrus County residents underwent angioplasty. For the year ending June 30, 1999, the Citrus County OHS use rate was 4.26 per 1,000 population, substantially lower than the Hernando County use rate of 6.41. A comparison of the use rates for the year ending September 30, 1999, again shows Hernando County's use rate to be higher: 4.13 for Citrus, 6.08 for Hernando. Hernando County also experiences a higher cardiovascular mortality rate than does Citrus County. During 1998, the age-adjusted cardiovascular mortality rate per 100,000 population for Citrus was 330.88 and 347.40 for Hernando. During 1999, those mortality rates were 304.64 in Citrus and 313.35 in Hernando (consistent with the decline between 1998 and 1999 for the state as a whole). The Hernando mortality rates greater than Citrus County's indicate a greater prevalence of heart disease in Hernando County than in Citrus County. Most importantly, during 1999, Oak Hill transferred 619 patients to Bayonet Point for cardiac intervention - 258 for open heart surgery, 311 for angioplasty/stent, and 50 for cardiac cath. Brooksville Regional transferred a combined 383 patients after diagnostic cardiac catheterization to other hospitals for either angioplasty or OHS. Brooksville Regional has 91 licensed beds, Citrus Memorial has 171 beds and Oak Hill has 204 beds. Although with Spring Hill one could view Brooksville Regional as "two hospital systems with 166 beds under common ownership and control" (Tr. 1544), at 91 beds, Brooksville would become the smallest OHS program in the state in terms of licensed bed capacity, Hospitals of less than 100 beds are not typically of a size to accommodate an OHS program. There might be dedicated cardiovascular hospitals of 100 beds or less with capability to support an open heart surgery program, but "open heart surgical services in [a general, surgical-medical hospital of less than beds] would overwhelm the hospital as far as the utilization of services." (Tr. 126). Oak Hill's physical plant, hospital size, number of beds, medical staff size, number of cardiologists, cath lab capacity, number of cath procedures, number of admissions, and facility accessibility to the largest local population are all factors in its favor vis-à-vis Brooksville Regional. In sum, Oak Hill is a hospital more ready and appropriate for an adult open heart surgery program than Brooksville. Alternatives As an alternative to its CON application, Oak Hill considered the possibility of seeking approval of a program to be shared with Bayonet Point. Learning that the Agency looks with disfavor on inter-district shared adult open heart surgery programs, Oak Hill decided to seek approval of a program independent of Bayonet Point but one that would rely on Bayonet Point's experience and expertise for development, implementation and operation. Bed Capacity Brooksville contends that Oak Hill lacks sufficient bed capacity to accommodate the implementation of an OHS program in conjunction with its projected-related increased admissions. Brooksville relied on an Oak Hill daily census document, focusing on the single month of January, arguing that the document reflected that Oak Hill exceeded its licensed bed capacity on 5 days that month. The licensed bed capacity, however, was not exceeded. Observation patients, who are not inpatients, and not properly included in the inpatient count, were included in the counts provided by Brooksville. Seasonal peaks in census during the winter months, particularly January, are common to all area hospitals. Similarly, all hospitals experience a higher census from Monday through Thursday, than on other days. Oak Hill has adequate capacity and flexibility to accommodate those rare occasional days during the year when the number of patients approaches its number of beds. Patients are sometimes hospitalized for "observation," and when so classified are expected to stay less than 24 hours. Typically, Oak Hill places such patients in a regular "licensed" bed, so long as such beds are available. There are other areas in the hospital suitable for observation patients, including: 12 currently unused and unlicensed beds adjacent to the cardiac cath recovery area; six beds in the ER holding area; eight beds in the ER Quick Care Unit; and additional beds in the same day surgery recovery area. Observation patients can be cared for appropriately in these other areas, a routine hospital practice. Peak season census is "a fact of life" for hospitals, including Oak Hill and Brooksville. Oak Hill has never been unable to treat patients due to peak season demands. January is the only month during the year when bed capacity presents a challenge at Oak Hill. If necessary, Oak Hill could coordinate patient admissions with Bayonet Point to ensure that all patients are appropriately accommodated. Oak Hill can successfully implement a quality OHS program with its current bed capacity. In fact, all parties have stipulated to Oak Hill's ability to do so. Moreover, should it actually come to pass in future years that Oak Hill's annual average occupancy exceeds 80 percent, it may add up to 20 licensed beds on a CON exempt basis. Brooksville Regional Factors favoring Brooksville over Oak Hill Bayonet Point is the dominant provider of OHS/angioplast to residents of Hernando County. As a non-HCA hospital, a Brooksville program (in contrast to one at Oak Hill) would enhance patient choice in Hernando County for hospitals and physicians, and would create an environment for price and managed care competition. Other health planning factors that support Brooksville Regional over Oak Hill are the locations of the two Hernando County hospitals and the ability of the two to transfer patients to Bayonet Point. Patient Choice and Competition Of the OHS/angioplasty services provided to Hernando County residents, Bayonet Point provides 94 percent, the highest county market share of any hospital that provides OHS services to residents of District 3. Indeed, it is the highest market share provided by any OHS provider in any one county in the state. The importance of patient choice and managed care competition has been acknowledged by all the parties to this proceeding. If Brooksville Regional's program were approved, Hernando County residents would have choice of access to a non- HCA hospital for open heart and angioplasty services and to physicians and surgeons other than those who practice at Bayonet Point. This would not be the case if Oak Hill's program was approved instead of Brooksville's. Price Competition Although Brooksville is not a "low-charge provider for cardiovascular services" (tr. 1347), approving Brooksville creates an environment and potential for price competition. A dominant provider in a marketplace has substantial power to control prices. Adding a new provider creates the motivation, if not the necessity, for that dominant provider to begin pricing competitively. A dominant provider controls prices more than hospitals in a competitive market. Bayonet Point's OHS charges illustrate this. Approving Brooksville's application creates an environment for potential price competition with Bayonet Point, whereas approving Oak Hill's application, whose charges are expected to be the same as Bayonet Point's, does not. Managed Care Contracting Just as competitive effects on pricing are reduced in an environment in which there is a dominant provider, so managed care contracting is also affected. Managed care competition depends not just on competition between managed care companies but also on payer alternative within a market. If a managed care company is forced to deal with one health care provider or hospital in a marketplace, its competitive options are reduced to the benefit of the hospital that enjoys dominance among hospitals. "[T]he power equation moves much more strongly in that type of environment towards the provider [the dominant hospital] and away from the managed care companies." (Tr. 1471). Managed care companies who insure Hernando County residents have no alternative when it comes to open heart surgery and angioplasty services but to deal with Bayonet Point. With a 94 percent share of the Hernando County residents in need of open heart and angioplasty services, there is virtually no competition for Bayonet Point in Hernando County. The managed care contracting for both Bayonet Pont and Oak Hill is done at HCA's West Florida Division office, not at the individual hospital level. Approving Oak Hill will not promote or provide competition for managed care. Approving Brooksville, on the other hand, will provide managed care competition over open heart and angioplasty services in Hernando County. Ability to Transfer Patients While transfers of Hernando County patients always produce some stress for the patient and are cumbersome as discussed above for the patient's loved ones, there is no evidence of transfer problems for Oak Hill that would rise to the level of "not normal" circumstances. Outcomes for patients transferred from Oak Hill to Bayonet Point on the basis of morbidity statistics, mortality statistics, length of stay, patient satisfaction, and family satisfaction are excellent. It is not surprising that sister hospitals situated as are Oak Hill and Bayonet Point would enjoy minimal transfer delays and access problems encountered when patients are transferred. Transfers between unaffiliated hospitals are not normally as smooth or efficient as between those that have some affiliation. Unlike Oak Hill's patients, Brooksville patients, for example, are never transported for OHS/angioplasy by Bayonet Point's private ambulance. Other than in emergency cases, Bayonet Point decides the date and manner when the patient will be transferred. But just as in the case of Oak Hill, there is no evidence of transfer problems between Brooksville Regional and Bayonet Point that would amount to an access problem at the level of "not normal" circumstances. Outmigration As detailed earlier, there is extensive outmigration of Hernando County residents to District 5 for open heart and angioplasty procedures. The outmigration pattern on its face is in favor of both applications of Oak Hill and Brooksville. The outmigration from Hernando County, however, is of minimal weight in this proceeding since Bayonet Point is so close to both Oak Hill and Brooksville. The patients at the two Hernando hospitals have good access to Bayonet Point, a facility that provides a high level of care to Hernando County residents in need of open heart surgery and angioplasty services. The relationship is inter-district so that it is true that there is outmigration from District 3. Outmigration statistics showing high outmigration from a district have provided weight to applications in other proceedings. They are of little value in this case. Location of the Two Hernando Hospitals Brooksville is located in the "dead center" (Tr. 1290) of Hernando County. With good access to Citrus County via Route 41, it is convenient to both Hernando County residents and some residents of Citrus County. It reasonably projects, therefore, that 90 percent of its open heart/angioplasty volume will be from Hernando County with the remaining 10 percent from Citrus. Oak Hill is located in southwest Hernando County, closer to Bayonet Point than Brooksville. Oak Hill's primary service area is substantially the same as that part of Bayonet Point's that is in Hernando County. Oak Hill does not propose to serve Citrus County. Brooksville, then, is more centrally located in Hernando County than Oak Hill and proposes to serve a larger area than Oak Hill. Financial Feasibility (long-term) Brooksville has operated profitably since its bankruptcy. In its 1999 fiscal year, the first year out of bankruptcy, Hernando HMA earned a profit of $3 million. In fiscal year 200, Brooksville's profit was $6 million. OHS programs are generally very profitable. There is no OHS program in Florida not generating a profit. Brooksville's projected expenses and revenues associated with the program are reasonable. Schedule 5 in the Brooksville application contains projected volumes for OHS/angioplasty. The payer mix and length of stay were based on 1998 actual data, the most recent data for a full year available. The projected volumes are reasonable. The projected volumes are converted to projected revenues on Schedule 7. These projections were based on actual 1998 charges generated for both Hernando and Citrus County residents since Brooksville proposes to serve both. These averages were then reasonably projected forward. Schedule 7 and the projected revenues are reasonable. These projected volumes and revenues account for all OHS procedures performed in Hernando and Citrus Counties in 1998 even though effective October 1, 1998, the DRG procedure codes for OHS procedures were materially redefined. Thus, when Brooksville's schedules were prepared using 1998 data, only 3 months of data were available using the new DRG codes. Brooksville opted to use the full year of data since using a full year's worth of data is preferable to only 3 months. Similarly, the DRGs for angioplasty both as to balloon and with stent were re-classified. Again, Brooksville opted to use the full year's worth of data. Brooksville's expert explained the decision to use the full year's worth of data and the effect of the DRG reclassification on Brooksville's approach, "We've captured all the revenues and expenses associated with these open heart procedures and just because the actual DRGs have changed, doesn't . . . impair the results because both revenues and expenses are captured in these projections." (Tr. 1651). Schedule 8 includes the projected expenses. It included the health manpower expenses from Schedule 6 and the project costs from Schedule 1. The remaining operating expenses were based upon the actual costs experienced by all District 3 OHS providers generated from a publicly-available data source, and then projected forward. As to these remaining operating costs, consideration of an average among many providers is far preferable to relying on just one provider. Schedule 8 was reasonably prepared. It accounts for all expense to be incurred for all types of OHS and angioplasty procedures. It is based on the best information available when these projections were prepared and are based on 12 months of actual data. Even if the projections of the schedules are not precise because of the re-classification of DRGs, they contain ample margins of error. Brooksville's financial break-even point is reached if it performs 199 OHS and 100 angioplasty procedures. This low break-even point provides additional confidence that the project is financially feasible. Brooksville demonstrated that its proposed program will be financially feasible.
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 grants the application of Citrus Memorial (CON 9295) and denies the applications of Oak Hill (CON 9296 )and Brooksville Regional (CON 9298). DONE AND ENTERED this 4th day of October, 2001, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 2001. COPIES FURNISHED: Diane Grubbs, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. East College Avenue Post Office Box 1838 Tallahassee, Florida 32302-1838 Stephen A. Ecenia, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Tallahassee, Florida 32302-0551 James C. Hauser, Esquire Metz, Hauser & Husband, P.A. 215 South Monroe Street, Suite 505 Post Office Box 10909 Tallahassee, Florida 32302 John F. Gilroy, III, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
Conclusions Sovereign immunity extends to “corporations primarily acting as instrumentalities . . . of the state, county, or municipalities.” See § 68.28(2), F.S.; Pagan v. Sarasota County Public Hospital Board, 884 So.2d 257 (Fla. 2d DCA 2004). MRHS was deemed to be an instrumentality of the hospital district by the Attorney General in an opinion dated December 8, 2006 and the circuit court in Marion County has reached the same conclusion in several cases. As a result, MRHS is entitled to sovereign immunity under § 768.28, F.S. The public policy basis for extending sovereign immunity to private entities such as MRHS has recently been questioned by two appellate courts. See University of Florida Board of Trustees v. Morris, 32 Fla. L. Weekly D1803 (Fla 2d DCA July 27, 2007) (Altenbernd, J., concurring), rev. denied, 2008 Fla LEXIS (Fla. Jan. 7, 2008); Andrews v. Shands at Lakeshore, Inc., 33 Fla. L. Weekly D30 (Fla 1st DCA Dec. 20, 2007). The nurses are employees of MRHS and they were acting within the scope of their employment when providing services to Tyler. As a result, the nurses’ negligence is attributable to MRHS. The nurses had a duty to provide competent medical care to Tyler. They breached this duty and violated the standards of care for nursing personnel by failing to report the cyanotic episodes to Dr. Pierre and by failing to properly perform the four-extremity blood pressure test. The nurses’ actions and inactions contributed to the delayed diagnosis of Tyler’s heart condition. However, Dr. Pierre’s failure to order an immediate cardiology consultation when she detected a heart murmur shortly after Tyler’s birth also contributed to the delayed diagnosis of Tyler’s heart condition. The delayed diagnosis of Tyler’s heart condition led to his “crash” on December 16 because it is more likely than not that Tyler would have been transferred to Shands or another tertiary facility had his condition been diagnosed sooner. Tyler was not a candidate for the second and third stages of the Norwood procedure because of the damage caused by the “crash,” and he also suffered brain damage during the “crash” that caused his developmental delay. The amount of damages agreed to by MRHS is reasonable, even though Dr. Pierre likely shares some of the responsibility for Tyler’s condition. Indeed, the life care plan prepared for Tyler reflects that the cost of a transplant is between $650,000 and $700,000 and Tyler is expected to require multiple transplants over the course of his life. Moreover, the non-economic damages (e.g., pain and suffering) of Tyler and his parents could very well have exceeded the settlement amount had the case gone to jury trial. LEGISLATIVE HISTORY: This is the first year that this claim has been presented to the Legislature. ATTORNEYS’ FEES AND LOBBYIST’S FEES: The claimants’ attorney provided an affidavit stating that that attorney’s fees will be capped at 25 percent of the amount awarded by the claim bill in accordance with §768.28(8), F.S. Lobbyist’s fees are not included in the 25 percent attorney’s fees. Lobbyist’s fees will be an additional 4 percent of the amount awarded by the claim bill, which would be $28,000 based upon the $700,000 claim. The Legislature is free to limit the fees and costs paid in connection with a claim bill as it sees fit. See Gamble v. Wells, 450 So. 2d 850 (Fla. 1984). The bill does so by stating that “[t]he total amount paid for attorney’s fees, lobbying fees, costs and other similar expenses relating to this claim may not exceed 25 percent of the amount awarded [by the bill].” If this language remains in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants will receive a total of $525,000, with $393,750 going into Tyler’s special needs trust and $131,250 going to his parents. The remaining $175,000 will go to attorney’s fees, costs, and lobbyist’s fees. If this language was not in the bill (and the bill is amended as recommended below to reflect the allocation approved by the circuit court), the claimants would receive approximately $362,000, with approximately $271,500 going into Tyler’s special needs trust and approximately $90,500 going to his parents. The claimants’ attorney would receive a total of approximately $310,000 ($175,000 for attorney’s fees and approximately $135,000 for costs), and the lobbyist would receive $28,000. OTHER ISSUES: The bill identifies the Marion County Hospital District as the entity responsible for payment of the claim. The parties agree, and I recommend that the bill be amended to reflect MRHS as the entity responsible for payment because it is responsible for operating the hospital pursuant to a lease from the hospital district. The bill requires the entire claim to be paid into Tyler’s special needs trust. The parties agree, and I recommend that the bill be amended to require payment of the claim in accordance with the allocation approved by the circuit court, i.e., 75 percent into Tyler’s special needs trust and 25 percent to his parents. The bill requires any funds remaining in Tyler’s special needs trust upon his death to revert to the General Revenue Fund. The parties agree, and I recommend that the bill be amended to remove this language because the bill is being paid from the hospital’s funds, not State funds. The bill should be also amended to include the standard language requiring payment of Medicaid liens prior to disbursing any funds to the claimants. See § 409.910, F.S. RECOMMENDATIONS: For the reasons set forth above, I recommend that Senate Bill 68 (2008) be reported FAVORABLY, as amended. Respectfully submitted, cc: Senator Charlie Dean Representative Marcelo Llorente Faye Blanton, Secretary of the Senate T. Kent Wetherell Senate Special Master House Committee on Constitution and Civil Law Tony DePalma, House Special Master Counsel of Record
The Issue The issue for determination is whether an agency statement, and criteria used in support of the statement, constitute a rule under Subsection 120.52(16), Florida Statutes (1993), whether the statement and criteria have been adopted as a rule pursuant to Section 120.54, Florida Statutes (1993), and whether the statement and criteria violate Subsection 120.535(1), Florida Statutes (1993).
Findings Of Fact Sacred Heart initiated this proceeding by filing a Petition alleging that, in reviewing the Baptist application, AHCA developed a statement which violates the provisions of Section 120.535(1), Florida Statutes, because the statement should have been promulgated as a rule. The statement, as described by Sacred Heart, is as follows: The Agency may, in its discretion, approve a CON application to establish an adult open heart surgery program notwithstanding findings by it that: 1) Need is not indicated pursuant to Florida Administrative Code Rule 59C-1.033(7)(c), i.e., approval of a new program will reduce the 12 month total to an existing adult open heart surgery program in the district below 350 open heart surgery operations; (2) the applicable fixed need pool for adult open heart surgery programs in the District is zero; and, (3) the application failed to demonstrate "not normal" circumstances justifying the approval of its application. By contrast, Rule 59C-1.033(7)(c) establishes the formula for determining numeric need and also provides: (c) Regardless of whether need for a new adult open heart surgery program is shown in paragraph (b) above, a new adult open heart surgery program will not normally be approved for a district if the approval would reduce the 12 month total at an existing adult open heart surgery program in the district below 350 open heart surgery opera- tions. . . . In reaching the preliminary decision to approve the Baptist application, various AHCA staff considered and discussed the facts presented, and the merits of the Baptist application. Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2677, at Sacred Heart as 2053, and at HCA West Florida as 1915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts. Baptist and AHCA contend that the intent to approve the application is predicated upon the exercise of AHCA's discretion to determine whether the circumstances justify a departure from the "normal" operation of the rule methodologies. As stated by Baptist and AHCA, this position is not inconsistent with the wording of the rule, but reflects a disagreement with Sacred Heart over what constitutes not normal circumstances. AHCA interprets Rule 59C-1.033 as giving the agency flexibility, in the exercise of its professional judgment, to approve open heart surgery applications when the rule methodology does not result in a numeric need for a new program, and/or the calculation intended to assure the 350 minimum procedures for established providers yields a lower number. Both sections of the open heart surgery rule have been upheld with the not normal circumstances provisions included. St. Mary's Hospital v. HRS, 13 FALR 2096 (F.O. 5/1/91). In the review of certificate of need applications, the weight to be accorded a particular statutory or rule criterion varies based upon the facts and circumstances of each case. If an earlier application is denied, and a new one submitted, the weight to be afforded certain criterion in the review of the more recent application may be different if the facts and circumstances are different. It is not consistent, however, for AHCA to treat the same facts differently, or to reach different conclusions of law on the same facts. In 1987, the agency responsible for CON regulation, denied a Baptist application, in the absence of numeric need, for the express purpose of protecting the 350 volumes at existing providers. In the preceding 12 months, there were 45 emergency angioplasties performed at Baptist, Sacred Heart's open heart surgery volume was 291, and West Florida Regional's was 344. The Baptist application was denied in a SAAR, which is replete with the references to the relationship of volume to quality, and which concludes: There is insufficient need for a third open heart surgery program in District One. It would lower the average number of procedures below the 350 recommended in the Rule and it would have a negative impact on existing providers. SAAR, CON Action No. 5120 at p.17. In early 1990, another Baptist application for an open heart surgery CON was denied. Using the preferences from the 1989 state health plan, the agency found that Baptist was (1) in a large county with a higher than average elderly population, (2) a disproportionate share provider, which would serve patients regardless of their ability to pay, (3) large enough to propose a fixed price structure for 3 years, and (4) capable of providing all the supplementary procedures for a complete cardiac program. Baptist was also found to have met the quality of care standard and to have the resources to implement the program. In addition, the fixed rate proposal was viewed as enhancing competition. The agency recommended denial, after finding no need for the project, no enhanced access or quality of care benefits and that existing providers volumes would fall below 350. The 1989 state health plan is also applicable to the review of CON 7184. Using the same 1989 preferences, the findings on the preferences in this case are essentially the same, except that the elderly population in Escambia is now below the state-wide average. See, DOAH Cases Nos. 93-4886 and 93-4887, Findings of Fact 53-60 (R.O. 11/18/94). By 1992, the use rate indicated a need for 2.48 open heart surgery programs in District One. Baptist asserted as "not normal" circumstances: (1) scheduling difficulties at Sacred Heart, (2) its status as a Level II trauma center, and (3) a fixed price structure at 85 percent of the average rate per DRG for the two existing providers. In its analysis of Baptist's asserted "nor normal" circumstances, the agency noted that "[a]pparently, Baptist has made no attempt to refer cases to West Florida Regional." The agency rejected the assumption that a trauma center has a need for open heart surgery services. The agency treated the proposed pricing structure as one reason for concluding that Baptist's proposed open heart program would reduce patient volumes at Sacred Heart and West Florida Regional. See, SAAR CON Action No. 6774, pp. 3-5. In this case, AHCA made a mistake of fact and failed to follow its precedents in determining not normal circumstances. See, Finding of Facts 16 and 17, supra. Due to the regulatory scheme which establishes the certificate of need review process and the criteria in statutes and rules which have be weighed and balanced, it is impossible to have a rule which would describe every set of circumstances which would justify departure from the "normal" operation of a rule methodology. The agency has, however, described the conditions which should be alleviated by the approval of a CON under not normal circumstances. In the 1987 CON 5120 SAAR, the agency found: There is no accessibility problem, geographic, programmatic or financial, noted by the applicant or the Local Health Council, for patients in District One for open heart surgery. SAAR, CON Action No. 5120 at p.6. The "not normal" circumstance claimed by Baptist do not involve access problems for District 1 residents and have been rejected as such by the agency in the past.
The Issue Whether the adult open heart surgery rule in effect at the time the applications were filed until January 24, 2002, or the rule as amended on that date applies to this case. Whether either or both, Lifemark Hospital of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") and Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") demonstrated the existence of not normal circumstances for the issuance of certificates of need ("CONs") to establish adult open heart surgery programs in Dade County.
Findings Of Fact The Agency for Health Care Administration ("AHCA") administers the certificate of need ("CON") program for health care facilities and services in Florida. Section 408.034, Florida Statutes. Aventura Hospital Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") is the applicant for CON No. 9395 to establish an adult open heart surgery program in Dade County, in AHCA District 11. Aventura Hospital is a 407-bed community hospital located in the recently incorporated City of Aventura in northeast Dade County. It is approximately one mile west of the Atlantic Ocean on U.S. Highway 1, three-tenths of a mile south of the Broward/Dade County line. It is halfway between Fort Lauderdale and downtown Miami. Aventura Hospital is owned by the Hospital Corporation of America ("HCA"), which operates hospitals in 30 states and 3 countries, including 40 hospitals in Florida. The 407 beds at Aventura Hospital include 327 acute care beds, 32 adult psychiatric beds, 24 adult substance abuse beds, and 24 obstetrics beds. Services, in addition to those provided in the specialty beds, include general medical/surgical services, oncology, a breast diagnostic center, children's after-hours walk in clinic, comprehensive cancer center, dialysis, intensive care, orthopedics, inpatient and outpatient surgery, and physical, speech and occupational therapies. It is a Baker Act facility. The Aventura Hospital staff has from 700 to 750 medical doctors, and 1,200 to 1,300 employees. The emergency room ("ER") has approximately 34,000 annual visits. According to one ER physician on the staff, the average age of patients presenting at the Aventura Hospital ER is 84 years old. That results in a higher than average hospital admission rate from the ER, 35 to 40 percent, as compared to 15 percent nationally. The staff includes 52 clinical cardiologists, 27 invasive cardiologists and five cardiovascular thoracic surgeons. They currently perform, at Aventura Hospital, inpatient and outpatient cardiac catheterizations ("caths"), pacemaker implants, echocardiograms, cardiac stress and cardiac nuclear testing, diagnostic and transesophageal echocardiograms, diagnostic and interventional vascular surgeries. For the 12 months ending June 30, 2001, 422 open heart patients left the Aventura Hospital's primary service area for their surgeries, and 1,132 received cardiac cath procedures. At Aventura Hospital, from April 1999 through March 2000, 178 diagnostic cardiac caths were performed. In terms of total cardiology services, Aventura Hospital is the largest non-open heart provider in the District, ranking second to Mount Sinai Medical Center ("Mount Sinai"). In calendar year 2001, there were 3,489 cardiovascular disease discharges from Aventura Hospital. The boundaries of the primary service area, from which Aventura Hospital draws most of its patients, are Hollywood Boulevard to the north, U.S. Highway 441 to the west, the Bal Harbour/Miami Shores communities near 125 Street to the south and the Atlantic Ocean to the east. Parkway Regional Medical Center ("Parkway Regional") in Dade County, and Memorial Regional Medical Center ("Memorial Regional") in Hollywood, in Broward County, are the closest hospitals to Aventura Hospital. The primary service area has a population of approximately 250,000 residents and includes growing retirement communities such as Sunny Isles Beach, Hallandale Beach, Southeast Hollywood, North Miami Beach, part of Miami Shores, and Bal Harbour. Parkway Regional and Aventura reported a combined total of 1,721 ischemic heart diseases (IHD) discharges in calendar year 2000. IHD is the diagnostic category for patients experiencing a narrowing of the arteries who are most likely ultimately to require open heart surgery. An international patient services department at Aventura Hospital assists patients, particularly from Canada, and Central and South America. Aventura Hospital is a member of the Miami Medical Alliance, also known as Salud Miami, which has promoted Miami as a destination for health care. Miami Heart Institute (Miami Heart), Mount Sinai, Baptist Hospital (Baptist), South Miami Hospital (South Miami), Miami Children's Hospital and Jackson Memorial Hospital (Jackson Memorial) are among the members of the Alliance. At the time the CON application was filed, Aventura Hospital was scheduled for expansion with the addition of a three-story tower and other capital projects costing an estimated $50 million. Subsequently, in December 2001, Aventura Hospital received approval from HCA for the expenditure of an additional $80 million to build the tower up to nine stories immediately, with the structure capable of ultimately being increased to 12 stories. It is expected to be able to withstand a direct hit from a Class V hurricane. In the past, Aventura Hospital has been entirely evacuated twice due to hurricane warnings. When construction is complete, the ER will be approximately three times larger, relocated to the first floor of the new tower, and projected to receive 50,000 visits annually. Ten new operating rooms on the second floor will include two that are properly-sized for cardiovascular surgeries. Because of higher ceilings in the new tower, the second floor of the new building will connect to the third floor of the existing building, on which the cardiac cath lab and related diagnostic equipment is located. If the open heart program is approved, a ten-bed cardiovascular intensive care unit ("CVICU") will be added to the second floor of the new building, and a second cardiac cath lab will be constructed. A dedicated elevator will connect the surgery suites to a 42-bed intensive care unit ("ICU") on the third floor. The remaining floors will consist of single patient rooms equipped or capable of being equipped for telemetry monitoring. The projected building cost for the portion of the construction related to the open heart surgery program is $3 million. Mount Sinai which purchased Miami Heart from HCA, has agreed to close one of its two open heart surgery programs within one year following the issuance of an adult open heart surgery CON to Aventura Hospital. Otherwise, Mount Sinai is committed to operate both programs for five years from June 30, 2000. Jeffrey Gregg, the head of the CON program at AHCA testified that he believes that it is "unprecedented" for an applicant to submit a letter from an existing provider committing to close a program. (Tr. 3061). Aventura Hospital has also offered to commit to providing 2.5 percent of the patient days generated by the adult open heart surgery program to Medicaid and charity patients. Palmetto General Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") is an applicant for CON No. 9394 to establish an adult open heart surgery program, also in Dade County, AHCA District 11. Palmetto General is a 360-bed acute care hospital located in the City of Hialeah in northwest Dade County at the intersection of 122nd Street, Northwest, and the Palmetto Expressway. Palmetto General is an affiliate of the Tenet Health Care Corporation ("Tenet"), which operates 16 hospitals in Florida, five in Dade County. They are, in addition to Palmetto General, Hialeah Hospital, North Shore Medical Center, Parkway Regional in northern communities, and Coral Gables Hospital in the south. Tenet owns Florida Medical Center, which has an adult open heart surgery program in Broward County. Tenet also operates the open heart program at the Cleveland Clinic in Broward County. The 360 beds at Palmetto General are divided into 253 acute care beds (excluding obstetrics and pediatrics), 48 adult psychiatric beds, and 10 neonatal intensive care beds. Services available on the Palmetto General campus include outpatient imaging and surgery, psychiatry, oncology, rehabilitative therapies, and intensive care. Palmetto General has a staff of 600 physicians, 350 of whom are on the active staff, and 1,500 employees. Palmetto General has approximately 40 cardiologists on staff, 19 of whom are invasive cardiologists. The services available include ultrasound, exercise testing, arrhythmia studies, including halter monitoring and electrophysiology, surgical insertions of pacemakers and defibrillators, and diagnostic cardiac caths. For the 12 months ending June 30, 2001, 1,658 cardiac caths and 668 open heart procedures were performed on patients from the Palmetto General primary service area. At Palmetto General, there were 528 diagnostic cardiac caths performed from April 1999 through March 2000, making it the largest cardiac cath provider in Dade County, which does not also have an open heart program. In calendar year 2001, there were 3,089 cardiovascular disease discharges from Palmetto General. The primary service area for Palmetto General includes the communities of Hialeah, Hialeah Springs, Miami Lakes, and portions of Opa Locka. Approximately 450,000, or 22 percent of the 2.2 million people living in District 11, live in the Hialeah area, over 50,000 are over 65 years old. The 65 and older population in the Palmetto General primary service area is projected to increase by 10 percent by 2005. Seventy to 80 percent of the residents of Palmetto General's primary service area are Hispanic, many first-generation. Most of the staff and employees of Palmetto General are Hispanic or speak Spanish. In addition to Palmetto General, the primary service area includes two other hospitals, Hialeah Hospital and Palm Springs General Hospital ("Palm Springs General"). Of the three, only Palmetto General has a cardiac cath lab. About 400 suspected heart attack patients are treated in the ER at Palmetto General each year. The ER has approximately 60,000 annual visits. It is the third busiest ER in the county. Although the use rate for open heart surgery has been flat or declining throughout the district, it has increased in the Palmetto General service area. While District 11 had an absolute increase of 51 open heart cases from 1999 to 2000, there was a 91-case increase in the Palmetto General service area. Together Palmetto General, Hialeah Hospital, and Palm Springs reported 2,206 IHD discharges, 982 of those from Palmetto General. Subsequent to filing the open heart CON application, Palmetto General developed a $23 million master facility plan of capital expenditures to upgrade the facility in response to operational deficiencies and capacity constraints. Tenet approved the expenditure of $6 million in the first year. When entirely implemented, the plan will result in doubling the size of the ER, expanding maternity labor and delivery areas, building a new 18-bed intensive care unit with space to add ten more beds later, and refurnishing existing operating rooms and adding three more. Palmetto General also, in 2002, experienced significant discord among the medical staff which apparently has been resolved with a change in the hospital's senior management. Palmetto General maintains that its master facility plan is independent of its plans for an open heart surgery program, although the master plan supports and facilitates that proposal. Mount Sinai and Aventura Hospital contend that Palmetto General has impermissibly amended the architectural plans for the open heart surgery program. The plans, as submitted in the CON, showed the addition of two open heart operating rooms on the ground floor, with an area of shelled-in space, and mechanical/electrical space, and part of the roof, above that on the first floor, and an elevator and corridor on the second floor within the same area designated as being within the scope of work. A separate area of work, on the schematic drawing of the second floor, showed a four-bed CVICU. On the master facility plan, the two open heart surgery operating rooms are in the same location but reconfigured. The space above is still shown as shelled-in and it may have columns. On the second floor, the four-bed CVICU for open heart patients is no longer a separate unit but is included in an existing ten- bed CVICU. The CVICU is adjacent to the existing cardiac cath lab and to an area shown for cath lab expansion, previously a part of the roof on the CON drawing. As a result of the use of the existing space for the CVICU, the total area devoted to the open heart program is reduced in size. Although the two open heart operating rooms are reconfigured and the four-bed open heart CVICU will not be an entirely separate unit, the concept for the open heart surgery program is essentially unchanged. Construction detailed drawings of the master plan were expected to be completed in January 2003. If the open heart surgery program CON is approved, Palmetto General will commit to providing 7.5 percent of open heart and angioplasty services to Medicaid and charity care patients. Existing District 11 Providers Baptist, Cedars Medical Center ("Cedars"), Jackson Memorial, Mount Sinai, Miami Heart, Mercy Hospital ("Mercy"), South Miami, and Kendall Medical Center ("Kendall") are the eight hospitals in Dade County which have open heart surgery programs. Mount Sinai and Miami Heart are, as previously noted, both owned by Mount Sinai. They are located within two miles of each other on Miami Beach, near the Julia Tuttle Causeway. Jackson Memorial which, like Mount Sinai, is a University of Miami Medical School teaching hospital is located in downtown Miami, across the street from Cedars and near Mercy. Kendall is further south and west. South Miami and Baptist are in South Central Dade County. In the summer and fall of 2000, when AHCA published the fixed need pool, and Aventura Hospital and Palmetto General filed their applications, four of the eight open heart programs in Dade County were operating at volumes below 350 cases a year. In 1999, those programs and volumes were Cedars, with 340 surgeries, Jackson Memorial with 332, South Miami at 211, and Kendall with 187. In 2001, Cedars increased to 361 open heart cases and Jackson Memorial reported 513. The programs at Kendall and South Miami have continued to operate below 350 cases a year. The volume at Kendall was 184 in 2000, and 295 in 2001. South Miami reported 175 and 148 in calendar years 2000 and 2001, respectively. Like Aventura Hospital, Cedars, and Kendall are owned by HCA. South Miami and Baptist Hospital, which are 3.5 miles apart, are both affiliated with the Baptist health care system. Because volumes were below 350 at existing programs, AHCA published a numeric need for zero additional programs in District 11 for the January 2003 planning horizon. The rule on numeric need, as revised on January 24, 2002, reduced the minimum volume for existing providers to 300 open heart surgeries for the 12-month period specified in the rule, although it implicitly increased the expected size of each existing program to 500 cases by increasing the divisor in the numeric need formula. Under either rule, the applicants must demonstrate the existence of not normal circumstances for the approval of any additional open heart surgery programs in the district. Under the old rule, with 350 as the divisor in the formula, the numeric calculation, before being reduced to zero because of low volume programs, resulted in a need for 2.1 additional programs. That number is a negative one under the new rule. Aventura Hospital projected that its open heart surgery volumes would be 240, 312, and 347 during the first three years of operations, anticipating these to be the years ending in September of 2004, 2005, and 2006, respectively. Palmetto General projected volumes of 148, 210, and 250 open heart surgeries and 225, 230, and 310 angioplasties, in the first three years. From 1996 to 2001, the total annual volume of open heart surgeries in District 11 declined by 346, from 3,821 in 1996, to 3,421 in 2000, then increased slightly to 3,475 in 2001. Therefore, if Aventura Hospital and Palmetto General achieve projected volumes, it will result largely from redirecting cases from existing providers including one that would close if Aventura's CON is approved. The declining open heart volumes also reflects a technological improvements and a shift to less invasive angioplasty procedures. The number of angioplasties performed in District 11 increased from 6,384 in 2000, to 7,682 in 2001. Mount Sinai and Miami Heart Mount Sinai is one of six statutory teaching hospitals in Florida, with 19 accredited training programs, including residencies and fellowships. The cardiovascular and thoracic surgery residency program is shared with Jackson Memorial. In addition to the University of Miami, Mount Sinai is affiliated with the medical schools at Nova Southeastern University, Barry University, and the University of South Florida. Mount Sinai has the largest open heart volume in District 11, with over 40 percent of the total volume. It also has the broadest geographical draw for patients, with only 60 percent of the cases originating from the District. In the year from April 1999 to March 2000, Mount Sinai reported performing 1,034 adult open heart surgeries and 4,318 adult inpatient cardiac caths. In calendar years 2000 and 2001, the volume of open heart surgeries at Mount Sinai remained virtually constant at 980 and 976, respectively. Angioplasties increased during that same period of time from 1,037 to 1,067. At Miami Heart, from April 1999 through March 2000, 483 open heart surgeries and 4,179 cardiac caths were performed. The combined total of therapeutic cardiac caths or angioplasties performed at Mount Sinai and Miami Heart is approximately 2,500 a year. There is evidence that Mount Sinai has begun to phase-out open heart cases at Miami Heart where the volume dropped to 390 surgeries in 2000, and to 296 in 2001. In a travel time study commissioned by Mount Sinai, the drive time from Palmetto General ER to Mount Sinai ER was 28 minutes to travel the 15.5 miles. From various zip codes within the Palmetto General service area to the Mount Sinai ER, travel times ranged from 14 minutes to 36 minutes. Driving times from Aventura to Mount Sinai ranged from 18 to 37 minutes. Due to its close proximity, to Mount Sinai, it reasonably should take approximately the same driving time to reach Miami Heart. In an Aventura Hospital survey of transfers of high- risk cardiac patients, the average times were estimated to range from 59 minutes from Aventura Hospital to Mount Sinai and 1 hour and 26 minutes from Aventura Hospital to Miami Heart Institute. Those times must include more than actual drive time, otherwise the differences between Mount Sinai and Miami Heart would not be so significant. One would also anticipate that, while under common ownership, transfers from Aventura Hospital to Miami Heart would have been less cumbersome. The accompanying narrative in the CON suggests that time frames may have been counted from the time the decision to transfer is made to the time the patient arrives at the receiving facility. The testimony regarding the data compilation process was vague and inadequate and, therefore, the conclusions are unreliable. The Mount Sinai study showed travel times of 27 minutes to Miami Heart and 28 minutes to Mount Sinai from Palmetto General. That difference of one minute is confirmed in data underlying Aventura Hospital time travel study. Based on projected volumes, prior transfers, referral patterns and market shares, an open heart program at Palmetto General will reduce the volumes at Mount Sinai and Miami Heart by 92 to 107 open heart surgeries a year, for a financial loss of $1.6 million. An open heart program at Aventura is expected to reduce the combined volume at Mount Sinai and Miami Heart by 196 cases. A combined reduction of approximately 300 cases and the closure of one of the programs would leave the remaining Mount Sinai program at approximately 900 open heart cases, with a loss of $4.7 million. Mount Sinai was projected to experience a net loss from operations of $32 million in 2002. There was testimony that overall financial management and the potential for profitable operations have improved. Despite the fact that an Aventura program will have almost double the adverse impact of one at Palmetto General, Mount Sinai, in the asset purchase agreement resulting in its acquisition of Miami Heart from HCA, agreed not to contest the application filed by Aventura Hospital. Jackson Memorial Jackson Memorial is the hospital designated to provide indigent care in Dade County, through a public health trust funded by a portion of sales taxes. In the 12 months ending March 2000, 334 open heart surgeries and 3,644 cardiac caths were performed at Jackson Memorial. In 2000 and 2001, the open heart volume increased to 438 and 513 surgeries, respectively. The Mount Sinai travel time study, showed that the distance from Palmetto General to Jackson Memorial was 10.7 miles and that the average drive took 22 minutes. Jackson Memorial will lose an estimated 46 cases to Palmetto General, in the third year of an open heart program in 2004, and 12 cases to an Aventura Hospital program, or a combined total of approximately 60 cases a year. Mercy Mercy had a volume of 412 open heart surgeries and 2,704 cardiac caths, from April 1999 through March 2000. In calendar year 2000 and 2001, the open heart volumes at Mercy were 492 and 478, respectively. The average driving time from Palmetto General to Mercy ranged from 24 minutes to 38 minutes, averaging 27 minutes in Mount Sinai's expert's study. If Palmetto General is approved, a reduction of 44 open heart cases is expected at Mercy. An Aventura Hospital program is expected to result in a five-case reduction at Mercy. Cedars The volume at Cedars was 316 open heart cases from April 1999 through March 2000. In calendar years 2000 and 2001, the volume increased to 334 and 361 open heart surgeries, and to 1,323 and 1,468 angioplasties, respectively. The average driving time to Cedars, from Palmetto General, was 23 minutes, in the Mount Sinai travel time study, with a range of drive times from 17 minutes (starting at 4:19 a.m.) to 30 minutes (starting at 7:06 a.m.). If Palmetto General is approved to become an open heart provider, Cedars' volume is expected to be reduced by 20 surgeries. If Aventura Hospital becomes an open heart provider, Cedars' volume will be reduced by an estimated 14 cases. Kendall Kendall had a volume of 180 open heart cases for the year ending March 2000. Kendall has consistently been a low volume open heart provider, increasing from 136 surgeries in 1989, to 295 in 2001. Kendall is located in southwestern Dade County, well beyond the primary service areas of Palmetto General and Aventura Hospital. The common feature shared with Palmetto General is that Kendall is also considered an Hispanic or Spanish-speaking hospital, although every hospital in Dade County is staffed to serve Spanish-speaking patients. Mount Sinai's study found the average drive time from Palmetto General to Kendall to be 23 minutes, covering 14.6 miles. Estimates of case reductions at Kendall are six if Palmetto General is approved and one if Aventura Hospital is approved. South Miami and Baptist South Miami reported a volume of 199 open heart cases for the year ending March 2000. The volume of open heart surgeries has been low, over the years, from 132 in 1989, to 148 in 2001, never exceeding 215 cases in any one year. South Miami has become a referral center for complex, multi-vessel angioplasties. Angioplasties increased, at South Miami, from 723 in 2000, to 837 in 2001. Like Kendall, South Miami and Baptist have no overlap with the primary service areas of Aventura Hospital and Palmetto General. If Palmetto General offers open heart services, then South Miami would lose approximately nine cases in the third year of operations. If Aventura Hospital's CON is approved, then South Miami would lose an estimated two cases that year. The volumes at Baptist, from April 1999 through March 2000, were 472 open heart surgeries and 4,730 cardiac caths. The Baptist volume of open heart cases declined to 428 in 2000, and 408 in 2001. Baptist's volume is expected to decline by 14 cases lost to Palmetto General, and two to Aventura Hospital. Existing District 10 Providers Mount Sinai, in its proposed recommended order, suggested that Memorial Regional, the Cleveland Clinic, and Florida Medical Center all in Broward County, are available open heart providers for northern Dade County residents. Tenet operates the open heart program at the Cleveland Clinic, which is 17 miles north of Palmetto General. The average travel time to the Cleveland Clinic, in the Mount Sinai study, was 26 minutes, but that is unreliable because it includes one run where the driver obviously had to speed, at 4:42 a.m., to average over 60 miles per hour. The staff at Cleveland Clinic is not predominantly Spanish-speaking. The medical staff is also closed so that only Cleveland Clinic doctors practice at that hospital. Patients have interruptions in their continuity of care when referred to an entirely different medical staff. In addition, the Cleveland Clinic is a referral hospital drawing patients from outside the area. It does not function as a community hospital. The Cleveland Clinic is not, therefore, an alternative provider for Dade County residents. At Memorial Regional, six miles north of Aventura Hospital, there were 766 open heart surgeries performed in one 12-month period in 1999 and 2000 and 641 in calendar year 2000. Twenty-six percent of the Aventura Hospital primary service area open heart surgeries were performed at Memorial Regional in 2001, as compared to 5 percent from the Palmetto General Area. Over 30 percent of the angioplasties performed on Aventura Hospital service area residents were performed at Memorial Regional in 2001, and less than 4 percent for Palmetto General service area residents. If Aventura Hospital is approved, the loss in volume from Memorial Regional would be approximately 103 cases a year. Aventura Hospital noted that Memorial Regional has experienced capacity problems. In Columbia Hospital Corporation of South Broward vs. AHCA, the administrative law judge found that the proposal to establish a new hospital in Miramar was intended to " . . . allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization." There is evidence that the relief resulting from the construction of the Miramar Hospital, will not alter the difficulties that Aventura Hospital-based doctors experience in gaining access to the cardiac cath lab at Memorial Regional. Florida Medical Center has approximately 450 open heart surgery cases a year. It is a Tenet facility in Western Broward County. The financial data from Florida Medical Center was used in Palmetto General's projections of income and expenses, but there was no evidence that Florida Medical Center's open heart program is a viable alternative to programs at either Aventura Hospital or Palmetto General. Review Criteria Subsection 408.035(1) - need in relation to applicable district health plan; 59C-1.030(2)(a)-(e) - need that the population has, particularly low income, ethnic minorities, elderly, etc.; relocation of a service; needs of medically underserved, Medicare, Medicaid and indigent persons; and Subsection 408.035(11) - past and proposed Medicaid and indigent care. The District 11 health plan includes preferences for applicants seeking to provide tertiary services who have provided the highest Medicaid and charity care, and who have demonstrated the highest ongoing commitment to Medicaid and indigent patients. Aventura Hospital provided approximately 1 percent charity, 6 to 7 percent Medicaid and 17 percent Medicare in 2001. It qualified as a disproportionate share Medicare hospital. Aventura Hospital's proposed CON commitment is to provide a minimum of 2.5 percent of open heart surgery and angioplasty patient days to Medicaid and charity patients. Palmetto General is and, for at least the last ten years, has been a disproportionate share Medicaid and Medicare provider. Over 20 percent of the total care at Palmetto General has been given to Medicaid patients in recent fiscal years. The care to indigent patients was approximately $8 million in one year. In this regard, Palmetto serves as a "safety net" hospital for poor people, like Jackson Memorial and Mount Sinai. Palmetto General will meet the needs of ethnic minorities, and more Medicaid, low income and indigent patients. Aventura Hospital is serving an older population and, in effect, would be relocating an open heart program from Miami Heart. In a service like open heart surgery, Medicare is the dominant payor. Subsection 408.035(2) - availability, quality of care, accessibility, extent of utilization of existing facilities in the district; Rule 59C-1.033(4)(a) - two-hour travel time; and Subsection 408.035(7) - enhanced access for residents of the district. The applicants contend that the existing programs in the district are geographically maldistributed to the detriment of the residents of northeast and northwest Dade County. They also contend that those access issues outweigh the fact that district residents can reach open heart providers within the two- hour travel time standard in the open heart rule. In its proposed recommended order, Mount Sinai noted that if Dade County is divided in half using " . . . State Road 836 (also known as the Palmetto Expressway), which runs east-west in the center of the County, near Miami International Airport . . . ," there are four existing open heart providers in the north and four in the south. This statement must be inaccurate because Palmetto General's location was described as being on the Palmetto Expressway with no existing open heart providers in the same service area. The existing programs in District 11 are inappropriately dispersed geographically to serve the population, as it is distributed throughout Dade County. The Hialeah area, with 22 percent of the population, is larger than 14 counties in Florida which have at least one open heart surgery program. The population in the Aventura Hospital primary service area, 250,000 residents, is roughly half that of Hialeah, but is equal to or larger than five counties in Florida which have open heart surgery programs. If the applicants' patients are not transferred to other hospitals, then the volume of open heart procedures at those hospitals will decline. The medical literature and experts in the field demonstrate a relationship between volume and quality. In Florida, the old rule and new rule set the minimums for existing providers at 350 and 300, respectively. If Aventura Hospital's open heart CON is approved, almost 200 surgeries will be lost from Miami Heart and Mount Sinai, approximately half of that from the program that will be closed, and just over 100 from Memorial Regional. The effect on the low volume providers will be negligible, one lost case to Kendall and two from South Miami. Based on its projections, Aventura Hospital expects to reach 347 open heart surgeries in its third year of operation. Even assuming that most of the cases would be redirected from other providers, the projection is aggressively based on the assumption that Aventura Hospital will have a market share of 87 percent of its primary service area. If Palmetto General's open heart CON is approved, the greatest impact will also be on Mount Sinai and Miami Heart, a loss of approximately 100 surgeries a year, and on Jackson Memorial, a loss of 46 surgeries a year. Palmetto General projected that it would reach a volume of 250 open heart surgeries by the end of the third year of operations. South Miami would lose nine and Kendall would lose six open heart cases. Neither an Aventura nor a Palmetto area program will keep the existing low volume providers below 300 or 350 open heart surgeries. With or without them, South Miami and Kendall are expected to continue to operate below the objective set by the open heart rule. The absence of a material adverse impact on low volume providers is the result of the absence of any overlap in the service areas of the applicants and South Miami and Kendall. In District 11, only Cedars is likely to end up having open heart surgery volumes in a range between 300 and 350 cases as a result of the approval of both programs. Difficulties and delays in patient transfers for open heart or angioplasty services were raised as possible not normal circumstances in Dade County. Aventura Hospital witnesses presented anecdotal evidence of patients who could have benefited from the availability of angioplasty and open heart case without transfers. The evidence was inadequate to demonstrate that access to existing facilities is not available within a reasonable time. Palmetto General provided a review of medical charts to show patients whose outcomes would have been improved if it had an open heart program. Physicians who testified about those patients differed in their conclusions concerning the urgency of transfers, the need for primary angioplasty or thrombolytics, and the causes of delays. No medical records indicated patient outcomes after they were transferred. Aventura Hospital and Palmetto General also contend that the residents of their primary service area are at a disadvantage by not having timely access to primary angioplasty for patients who are having heart attacks. Treatment in their ERs is limited to administering thrombolytic or clot-busting drugs in an effort to save heart muscle. Increasingly, research has shown the benefits of primary angioplasty over thrombolytics as the most effective treatment to restore blood flow to heart muscle. The benefits include lower mortality rates and few complications, and are enhanced if the "door-to-balloon" time is less than 90 minutes. In Dade County, transfer times typically range from two to five hours, including the time to contact a receiving facility, to find a receiving physician, to receive insurance authorization, to summon an ambulance, and to prepare the patient medically for transfer, as well as the actual travel time. Research also shows that the quality of an open heart surgery program continues to be linked to its volume. In Florida, AHCA has not revised its rules either to provide for angioplasty services without open heart surgery back-up, or to reduce the tertiary designation of open heart surgery programs. Therefore, the need for more timely access to angioplasty is rejected as a not normal access issue. Palmetto General, due to operational difficulties is unlikely to meet the 90-minute reperfusion goal. In fact, most hospitals with open heart programs do not. Palmetto General does not plan to construct a second cardiac cath lab for use at the time it establishes an open heart program. Mount Sinai witnesses questioned the ability of a hospital with one cath lab to provide emergency primary angioplasty services. An additional cath lab is not required in the open heart rule and, while difficulties in scheduling are likely to occur, successful open heart programs have been operated with one cath lab initially, including Tenet-operated Delray Medical Center. Palmetto General can, when needed, construct a second cardiac cath lab in approximately six months without CON review. AHCA has not revised the open heart surgery rule to respond to the development of primary angioplasty as a preferred treatment. By its adoption of a new rule maintaining the link between angioplasty and open heart surgery, and maintaining the tertiary nature of open heart surgery, AHCA has placed the State of Florida on the side of the debate which is more concerned about the link between volumes and quality in open heart programs. Palmetto General also attempted to demonstrate the existence of access constraints at Jackson Memorial. The evidence showed discrepancies in lengths of stay, with indigent patients generally hospitalized longer. But those discrepancies were subject to other interpretations, including the possibility that indigent patients are more sick because lengths of stay were longer before and after indigent patients are transferred to and from Jackson Memorial. The maldistribution of open heart programs in Dade County as compared to the areas of significant population growth is a not normal circumstance affecting the availability, access, extent of utilization, and quality of care of existing facilities in the district. The commitment to the closure of an existing program is also a not normal circumstance in favor of the Aventura Hospital proposal. Subsection 408.035(3) - applicant's quality of care; Rule 59C- 1.030(2)(f) - accessibility of facility as a whole; Subsection 408.035(10) - costs and methods of construction. The parties stipulated that both Aventura Hospital and Palmetto General have a record of providing quality care with regard to the scope and intensity of services provided historically, and that both are accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties also stipulated that both applicants can establish quality perfusion services and recruit qualified perfusionists at the costs identified in their applications. Palmetto General failed to identify any surgeons who would staff their proposed open heart program. Two cardiac surgeons in a group which submitted a letter of interest included in the Palmetto General CON application were killed in a car accident a month before the final hearing. While the absence of named surgeons affects the certainty of referrals, there is no requirement, in AHCA rules, that surgeons be named in CON applications. One board-certified and a second at least board-eligible surgeon must be on the hospital staff if it starts an open heart program. Tenet has the resources and the senior management at Palmetto General has the experience to recruit qualified medical and nursing staff. The plan for a four-bed CVICU at Palmetto General was criticized as allocating too few beds for open heart surgery patients. Using the normile statistical methodology, one expert witness testified that a six-bed CVICU is required to accommodate the expected patient census in the third year of an open heart program. Using an average daily census of 1.43 patients and a target occupancy rate of 70 percent in the four-bed CVICU, however, only two beds are needed in the first year. Subsequently, as needed, acute care beds may be converted to ICU beds without CON review. Subsection 408.035(4) - needs that are not reasonably and economically accessible in adjoining areas. Mount Sinai contends that the residents of the Aventura and Hialeah areas reasonably and economically receive open heart services in Broward County. The statistical data and evidence of capacity constraints, even after the Miramar hospital is constructed, and the closure of one of the programs that residents of the Aventura Hospital primary service area have relied on and its relocation to their area, is more appropriate than increasing their reliance on Memorial Regional. The evidence does not demonstrate that the residents of the Palmetto General service area have reasonable access to Cleveland Clinic, Memorial Regional or any other Broward County hospital with an open heart surgery program. Subsection 408.035(5) - needs of research and educational facilities. Aventura Hospital is not a statutory teaching hospital. It does have podiatry, nursing, and occupational and physical therapy students training at the hospital. Residents and interns from the primary care program at Nova Southeastern University, from the Barry University School of Podiatry, and area nursing and technical schools receive some of their training at Palmetto General. Although one rating service places Palmetto General in the category of a teaching hospital, it is not a statutory teaching hospital. A program at Aventura Hospital will have a greater adverse effect on Mount Sinai, while one at Palmetto General will have a greater adverse effect on Jackson Memorial. Both Mount Sinai and Jackson Memorial are statutory teaching hospitals. Subsection 408.035(6) - management personnel and funds for project accomplishment; Subsection 408.035(8) - immediate and long term financial feasibility. Both Aventura Hospital and Palmetto General have adequate funds and experienced management to establish open heart surgery programs. In the pre-hearing stipulation, the parties agreed that the applicants have sufficient available funds for capital and operating expenses to initiate open heart surgery programs and to operate the programs, in the short term, until financially self- sufficient. Aventura Hospital reasonably projected net profits of approximately $543,000 from an open heart program in the first year of operation, and $1 million in the second year. Aventura Hospital reasonably relied on the experiences of other HCA open heart providers in the area, particularly Miami Heart and JFK Medical Center in Palm Beach County. Mount Sinai questioned the reasonableness of Palmetto General's projection that it will generate higher profits than Aventura Hospital with lower case volumes. It also questioned Palmetto General's ability to attain the volumes projected. Palmetto General projected a net profit of just over $700,000 in the first year, $1.18 million in the second year, and $1.5 million in the third year, with 148 open heart cases in the first year, 210 in the second year, and 250 in the third year. By comparison, Aventura Hospital's first three-year projections for open hearts were 240, 312, and 347. Aventura's projected volume was potentially overstated in view of the experience at HCA facility Columbia Westside in Broward County which has achieved approximately half the open hearts projected. But the differences in projections reasonably reflect Aventura's draw from a smaller but older population and Palmetto General's draw from a larger, poorer but younger population. Palmetto General's projected volumes are reasonable considerating the number of actual open heart surgeries, 668, originating from its primary service area in the 12-months ending in June 2001. Palmetto General reasonably and conservatively based its reimbursement rates on those received at Florida Medical Center in Broward County, which actually has a lower reimbursement rate than Dade County. Mount Sinai also demonstrated that charges at three South Florida Tenet facilities, Delray Medical Center, North Ridge Medical Center, and Florida Medical Center were significantly higher than those at Mount Sinai. But those facilities operate successfully in competitive markets in Districts 9 and 10, which supports the testimony that, for open heart surgery, charges are not very relevant. Most compensation is derived from fixed-rate reimbursement from Medicare. Subsection 408.035(9) - extent to which proposal fosters competition that promotes quality and cost effectiveness. In the District, HCA, the parent of Aventura Hospital, after the sale of Miami Heart, continues to operate Cedars, which has exceeded 350 cases for the first time in 2001, and Kendall, which at 295 cases in 2001, has been a chronically low volume open heart provider. That would raise doubts about the projected volumes at Aventura Hospital, but for the demographics of its location and the closure and, in effect, proposed relocation of the Miami Heart program to a more geographically appropriate area of the District. The relocation, therefore, makes the proposal a "wash" resulting in no net increase in programs or competition in the District. By contrast, the approval of a program operated by Tenet which has five Dade County hospitals, none with an open heart program, does introduce a new provider into the market in a location with special needs due to the larger critical mass of people, their ethnicity, relative poverty and fewer, more distant alternate open heart providers. Subsection 408.035(12) - nursing home beds. The criterion related to nursing home beds, by stipulation of the parties, is inapplicable to this case. Summary of Findings On balance, Palmetto General is preferable as the hospital with the larger critical mass of population, the status as a disproportionate share provider of Medicaid and Medicare, the improved geographical access for a large ethnic group with relatively high IHD and heavy demands for services, including cardiac care services in its ER and in the ERs of other hospitals within its primary service area. In addition, the detriment to existing providers, predominantly Mount Sinai and Jackson Memorial will not reduce the volumes below 350 open heart cases. On balance, the Aventura Hospital proposal, while less compelling, because it is not a Medicaid disproportionate share hospital, is not a new entrant to the market, and has a population which is half that in the Palmetto General primary service is also entirely approvable. The hospital has facilities superior to those at Palmetto General. It is better prepared to implement an open heart program, with plans to open a second cardiac cath lab immediately and with the cardiothoracic surgeons identified for the program. Within its service area population, Aventura Hospital has a large population of elderly people, who present to its hospital with symptoms of heart attacks. The troubling adverse impact on Memorial Regional is offset by the evidence of crowding and scheduling difficulties specifically in the Memorial Regional cardiac cath lab. The troubling adverse impact on the combined Miami Heart and Mount Sinai programs is offset by the Asset Purchase Agreement which contemplated the relocation of at least a portion of the Miami Heart cases to Aventura Hospital. Even with the additional loss of 100 open heart cases to Palmetto General, Mount Sinai will remain the largest Dade County provider, retaining from 900 to 1,000 annual open heart cases. The approval of both applications will improve access to open heart surgery and angioplasty care in District 11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered issuing CON Application No. 9394 to Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital, and CON Application No. 9395 to Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center. DONE AND ENTERED this 14th day of April, 2003, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 2003. COPIES FURNISHED: Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Geoffrey D. Smith, Esquire Sandra L. Schoonover, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that petitioner's applications for certificates of need to institute cardiac catheterization and open heart surgery services be GRANTED. Respectfully submitted and entered this 15th of January, 1979, in Tallahassee, Florida. DIANE D. TREMOR Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Kenneth F. Hoffman Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 Robert M. Eisenberg District IV Legal Counsel Post Office Box 2417-F Jacksonville, Florida 32231 Charles Collette Art Forehand, Administrator Assistant General Counsel Office of Community Medical Department of HRS Facilities 1317 Winewood Boulevard Department of HRS Tallahassee, Florida 32301 1323 Winewood Boulevard Tallahassee, Florida 32301
Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws in Florida. On February 5, 1993, AHCA published a need for one additional adult open heart surgery program in District 9. AHCA defines open heart surgery as a "tertiary health service" which, due to complexity, cost, and the relationship between volume and quality of care should be concentrated in a limited number of hospitals. Rule 59C-1.002(66), Florida Administrative Code. District 9 is located generally along the southeast coast of Florida and includes Palm Beach, Indian River, Martin, St. Lucie, and Okeechobee Counties. Palm Beach is the county at the southern end of District 9. The parties have referred to the counties other than Palm Beach, as the four northern counties. Martin County is north of Palm Beach, and St. Lucie, Okeechobee, and Indian River are further north. The applicants in this proceeding, seeking to establish an additional District 9 adult open heart surgery program, are Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center, Inc. ("Lawnwood"), St. Mary's Hospital, Inc. ("St. Mary's"), and Martin Memorial Medical Center, Inc. ("Martin Memorial"). Lawnwood Regional Medical Center Lawnwood is a 335-bed for-profit hospital located in Ft. Pierce, in St. Lucie County. Lawnwood has CON approval for the construction of an additional 18 skilled nursing beds and 10 level II NICU beds. In addition to the 335 licensed beds, Lawnwood has 16 unlicensed bassinets for a total of 351. Lawnwood's 335 licensed beds include 60 psychiatric beds, located one and a half blocks away from the main Lawnwood building, at a facility called Harbor Shores. Lawnwood has 260 general acute care beds. When Lawnwood filed its application, its parent corporation was HCA, Inc., a subsidiary of the Hospital Corporation of America. HCA was also the parent corporation of the Medical Center of Port St. Lucie, the only other hospital in St. Lucie County, and of Raulerson Hospital in Okeechobee County. After the application was filed and prior to hearing, a subsidiary of Columbia Health Care Corporation merged with HCA. As a result of the merger, the administrator of Lawnwood also serves as the market manager assigned to coordinate the services offered at the three hospitals. Lawnwood is classified by the State as a disproportionate share provider of Medicaid-reimbursed services for financially needy patients. In 1993, 21 percent of its total patient days were attributable to Medicaid and 4 percent to charity. Lawnwood operates an outpatient cardiac catheterization ("cath") laboratory and, in 1992, received CON approval to perform inpatient cardiac caths in a lab which was scheduled to open in October 1994. The outpatient lab opened in 1988 at Lawnwood. In 1989, 561 cardiac cath lab procedures were performed at Lawnwood, 494 in 1990, 362 in 1991, and 468 procedures in 1993. Although 602 procedures were reported to the local health council in 1993, these were performed on 468 patients, which is the number consistent with reporting methods of other cath labs. As a result of the diagnostic caths, 45 patients were referred for open heart surgery, and 98 for angioplasties. Of the 45 patients referred for open heart surgery, 26 were actually scheduled for the procedure. Lawnwood proposes to establish an adult open heart surgery program for a total project cost of $4.99 million. The project includes construction of two dedicated operating rooms, renovations to provide a 4-bed dedicated recovery room, and conversion of 12 acute care beds to construct a 12-bed cardiovascular intensive care unit ("CVICU"). St. Mary's Hospital St. Mary's is a 430-bed not-for-profit hospital, which has been operated 55 years by the Franciscan Sisters, currently through a parent organization called the Allegheny Health System. St. Mary's is the largest hospital in District 9, and the largest provider of womens' and childrens' medical services in the district. St. Mary's is a designated regional perinatal intensive care center with level II and III neonatal intensive care units, and is the designated level II trauma center for the northern area of Palm Beach County. Like Lawnwood, St. Mary's is recognized by the State as a disproportionate share provider of services to Medicaid reimbursed and indigent patients. It is approximately sixth in the state in the provision of services to financially needy patients. St. Mary's cardiac cath lab began operation in February 1988. There were 267 inpatient and 116 outpatient cardiac caths at St. Mary's lab in 1991, 240 and 118 respectively in 1992, and 171 and 115 respectively from January to November 1993. St. Mary's operates a 10-bed coronary care unit. St. Mary's proposes to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. The project will include renovations to two existing operating rooms and to a recovery room area. Martin Memorial Medical Center Martin Memorial is a 336-bed not-for-profit acute care hospital, with an additional 17 nursery/bassinets which are not required to be in the total licensed beds. The ultimate parent corporation for the Martin Memorial facilities and its foundation is Martin Memorial Health Systems, a not-for- profit corporation with a volunteer community board of directors. Martin Memorial's beds are divided between two campuses, with 236 beds in Stuart, and 100 in Port Salerno. The Port Salerno hospital opened in September, 1992 and is approximately 8 miles south of Stuart. Included in the 236 beds at Martin Memorial in Stuart are 5 level II neonatal intensive care beds, 23 intensive care unit beds, 45 ventilator, telemetry or other monitored beds, and 134 medical/surgical beds. Martin Memorial's existing cardiac services include a cardiac cath lab which opened in 1989 and, that year, reported 250 procedures. Caths at Martin reached the highest volume, 905 in 1991, followed by 799 in 1992, and 867 in 1993. Martin Memorial proposes to establish an adult open heart surgery program in Stuart for a total project cost of $3,594,720. Martin's project includes a newly constructed open heart surgery suite adjacent to the cardiac cath lab and, as a back-up, renovation of an existing operating room. As a part of an approved, separate CON application, Martin proposes to renovate and expand to accommodate a 13-bed surgical intensive care unit ("SICU") with four private rooms dedicated as a cardiovascular intensive care unit ("CVICU"). The expenses associated with the four CVICU rooms are included in the total open heart surgery project costs. Existing Open Heart Surgery Providers In Or Adjacent To District 9 All of the existing adult open heart surgery programs in District 9 are in Palm Beach County, at Delray Community Hospital ("Delray"), JFK Medical Center, Inc. ("JFK"), and AMI Palm Beach Gardens Community Hospital, Inc. d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens"). The same services are also available in the adjacent districts to the north in District 7 at Holmes Regional Medical Center in Brevard County, and to the south in District 10 at AMI North Ridge General Hospital in Broward County. In addition, established referral patterns exist from District 9 to Miami Heart Institute in Dade County and Holy Cross Hospital in Broward County. All residents of District 9 have access to open heart surgery within two hours average drive time, which exceeds the geographic access standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Delray is located in southern Palm Beach County and is a level II trauma center for that area. JFK is a 369-bed not-for-profit hospital located in Atlantis, Florida, approximately midway between Boca Raton and West Palm Beach, in north central Palm Beach County. The corporation which owns and operates JFK, also is the parent of a fund-raising foundation, and other subsidiaries, some of which are for-profit corporations. JFK has had an open heart surgery program since 1987. JFK's two operating rooms are equipped and sized identically, and located in close proximity to the two room cardiac cath lab and the intensive care unit. JFK has the capacity to perform up to 1000 cases annually, while actual annual volumes at JFK have ranged from 350 to 370 cases. Palm Beach Gardens is a 204-bed for-profit hospital located in the northern part of Palm Beach County. It operates the oldest open heart surgery program in the district, having started in 1982 or 1983. In fiscal year 1992- 1993, there were 477 open heart surgery patients at Palm Beach Gardens, of which 173 resided in the four northern counties of the District. Palm Beach Gardens has 11 operating suites, 7 capable of being used for open heart surgeries, and 4 dedicated solely to open heart surgeries. The current capacity of Palm Beach Gardens is 900 open heart procedures a year. By adding staff, Palm Beach Gardens could reach a volume of 1100 cases a year. While Palm Beach Gardens has excess capacity in its operating rooms, at the peak of its seasonal demand, delays occur in scheduling non-emergency surgeries due to inadequate capacity in its 24-bed intensive care unit. Occupancy levels in the 24 beds were 112.5 percent in 1993, according to Treasure Coast Health Council data. Although Palm Beach Gardens also suggested that an 8-bed overflow unit supplemented the 24 beds, accounting reports do not reflect billings for their use as intensive care services. Comparison of Applicants and Applications Subsection 408.035(1)(a) -- need in relation to state and local plans The 1989 state health plan, Healthy Floridians, includes six preferences for the review of open heart surgery applications. The first preference favors applicants establishing programs in counties with a population over 100,000 and a higher percentage than statewide average of 18.8 percent elderly persons. All the experts in health planning testified that the term "elderly" in this preference means persons 65 years of age and older, which is consistent with the age group with the greatest demand for open heart surgery. St. Mary, Lawnwood, and Martin meet the preference. The 1993 population of Palm Beach County was 900,000, St. Lucie's was 162, 598, and Martin's was 108,089. The population age 65 and over as a percentage of total population was 24 percent in Palm Beach, 21.2 percent in Lawnwood, and 27.5 percent in Martin County. The second state preference is for applicants who can demonstrate the ability to perform at least 350 annual procedures within 3 years of initiating an open heart program. Lawnwood reasonably projected a total of 314 open heart surgery procedures in year one, 350 in year two, and 386 in year three. Lawnwood's utilization projections are conservatively based on the assumption that, by the third year, 70 percent of its open heart patients will come from St. Lucie and Okeechobee Counties, which are already in its primary service area. Martin Memorial's expert questioned Lawnwood's projected open heart volumes from Martin and Indian River Counties, based on its acute care and cath lab patient origins. In addition, traditional referral patterns show Indian River patients going north to Brevard and Orange Counties, while Martin County patients go south to Palm Beach, Broward, and Dade Counties. Considering the acute care and cath lab competition within the four northern counties, the absence in that area of any competition for an open heart surgery program, the relative success of Lawnwood's outpatient cath lab despite its limitations and competition, and its affiliation with Port St. Lucie and Raulerson hospitals, Lawnwood established the reasonableness of its projected utilization. Lawnwood also reasonably expects to reverse some of the 73.5 percent out-migration for open heart surgery by residents of the northern four counties. See, Findings of Fact 27, infra. Martin Memorial's projections of 249 cases in year one, 317 in year two, and over 350 in year three are also reasonable. Martin Memorial's underlying assumptions, that its open heart surgery market share will at least equal that of its acute care, that it will keep some patients previously referred from its cath lab, and that, it, like Lawnwood, would reverse some district out-migration, are also reasonable. Martin Memorial referred 172 patients from its cath lab for open heart surgery in 1993, in contrast to 45 from St. Mary's, and 41 from Lawnwood. Martin Memorial's projections are based on 1991-1992 use rates which declined in 1993. Despite the one year decline and some expert predictions of a continuing downward trend in use rates, Martin Memorial's projections are bolstered by the fact that its open heart surgery primary service area includes Port St. Lucie, which contains 40 percent of the population of St. Lucie County and is the fastest growing area of District 9. That area, which is closer to Stuart, but is located in the St. Lucie County community in which Lawnwood has an affiliate hospital, supports both the projections of Lawnwood and Martin Memorial, and could be served by an open heart surgery program at either facility. Although Martin Memorial's projected volumes are higher than and inconsistent with other projections made by Martin Memorial, the reasonableness of the projections was established. St. Mary's projected 171 open heart surgeries in year one, 265 in year two, and 363 in year three. The projections are based on the use of a gravity model designed to determine potential volume "attracted" to the program by using the size of the hospital and the proximity of patients as factors. The model used a zip code level analysis to take into consideration the fact that St. Mary's expects a sub-county primary service area, as a result of sharing the county with the three existing District 9 providers. The projected utilization was reduced, by St. Mary's expert, to take into consideration an expected start- up factor. There is, however, substantial expert testimony that the variables and/or the weight attributed to each variable included in this gravity model are inadequate to explain actual or potential volumes. There is substantial evidence that the size of a hospital is not reliable enough to be one of only two variables in a model. For example, JFK although larger than Palm Beach Gardens, only exceeded 350 cases in 1991-1992 by 16, when smaller Palm Beach Gardens with an older open heart surgery program reached 499 cases. The model also fails to consider actual physician referral patterns. St. Mary's projections and its ability to exceed 350 cases also depend on its ability to attract Medicaid patients over and above the patients projected by the gravity model. See, Findings of Fact 35, infra. The volume of diagnostic cardiac caths at St. Mary's is low and has declined over the past three years. In part, the volume is low because there is no open heart surgery back-up available in the event the diagnostic cardiac cath indicates that need. Cath patients suspected of needing more invasive procedures are diverted by referring physicians to hospitals with angioplasty and open heart programs. But that explanation of St. Mary's volumes apparently is incomplete, since, by contrast Boca Raton Community Hospital and Martin Memorial, which also have no open heart surgery back-up, have had more steadily increasing cardiac cath volumes. The fact that St. Mary's cath volumes are low and its open heart surgery projections unreliable is also attributable to the fact that St. Mary's is located 11 miles north of JFK and 5 1/2 miles south of Palm Beach Gardens, therefore, at a competitive disadvantage with these established programs. The third state health plan preference applies to proposals, for improving access for persons currently leaving the district. With almost half of Palm Beach County open heart surgery patients receiving the service outside the county, St. Mary's claims to be in the best location to reverse that trend if geographical access is the problem. St. Mary's also points to the convenience of access to its hospital, which is 2 miles from Interstate 95, the main north-south transportation corridor through the district. Approval of St. Mary's proposal will not, however, reverse out-migration to the extent that it is attributable to factors such as seasonal residency, established physician referral practices from northern areas of District 9 to providers in adjacent districts, and managed care contractual arrangements. Lawnwood is located in the largest, fastest growing, and most centrally located county of the northern four counties. St. Lucie County is adjacent to each of the other three northern counties, with Martin to the south, Okeechobee to the west, and Indian River to the north. The level of "out-migration," defined as those patients leaving the district to receive the service, increases dramatically from south to north in District 9, from 55 percent in Martin, 70 percent in St. Lucie, 80 percent in Okeechobee, to 100 percent in Indian River County. Considering growth in western St. Lucie County, the needs of St. Lucie and Okeechobee County residents, and the alternative to out-migration provided for both Indian River and Martin County residents, the Lawnwood location is superior to that of Martin Memorial in terms of the ability to improve access to the service. See, also Findings of Fact 23-24, supra. The fourth state preference for applicants with a history of providing disproportionate share Medicaid and charity care favors the applications of St. Mary's and Lawnwood, in that order. Martin Memorial argues that it also meets the disproportionate share criteria, which the preference requires, although it has not been designated by the State, which the preference does not require. Relying on the criteria in subsection 409.911(2), Florida Statutes, Martin claims to meet or exceed the disproportionate share requirements for 1990, despite the agency's reliance on 1989 data. Assuming, arguendo, that Martin is entitled to the preference, the comparative ranking of St. Mary's first, Lawnwood second, and Martin third remains the same. In addition, the preference looks at a history of disproportionate service, as does subsection 408.035(1)(n), in part, which Martin failed to establish. For 1991, St. Mary's provided 15.8 percent of total District 9 Medicaid, Lawnwood provided 11.7 percent, and Martin Memorial, 1.7 percent. Martin Memorial established that it treated a larger number of Medicaid patients with circulatory diseases as a proportion of Medicaid patients in Martin County, as compared to St. Lucie County residents treated at Lawnwood. However, the absolute number of circulatory disease Medicaid patients treated at Lawnwood was approximately two and half times the number treated at Martin Memorial. Statistical indicators, including per capita income and low income patients diagnosed with circulatory diseases, demonstrate that residents of St. Lucie and Okeechobee Counties are less affluent, and more medically needy than those in Palm Beach and Martin Counties. The fifth state preference favors the applicant offering a service with the highest quality of care at the least expense. The preference includes an explanation that larger facilities usually have more available resources to meet the preference. As the largest hospital with the lowest cost per case by the second year of the program, $22,659, St. Mary's best meets the preference. Martin's projected cost is $26,909 and Lawnwood's is $27,085. Martin Memorial's expert calculated total expenses per case at $23,221 for Martin Memorial, $22,615 for St. Mary's, and $23,645 for Lawnwood. St. Mary's projected charges of $50,600 in year one and $53,100 in year two. Lawnwood projected charges of $55,199 in year one, and $58,133 in year two. Martin Memorial projected charges of $55,594, in year one, $58,955 in year two. Total project costs were estimated at $2,166,351 for St. Mary's, $3,594,720 for Martin Memorial, and $4,995,039 for Lawnwood. Using either set of cost data or the projected charges, St. Mary's best meets this preference based on size, the lowest total project costs, and the lowest projected charges for open heart surgery services. Martin Memorial and Lawnwood have, as described by one expert, remarkably similar costs, and the same is true of projected average charges per case. The final state preference favors applicants who will include protocols for the use of innovative therapeutic alternatives to surgery for appropriate patients, including streptokinase and tissue plaminogen activator therapies. Lawnwood and Martin Memorial currently use streptokinase. St. Mary's performs emergency angioplasties, and uses streptokinase therapy. All three applicants meet the preference for providing and/or planning to provide alternative therapies to open heart surgery. The first District 9 local health plan allocation factor gives a priority for established cardiac cath programs. Based on expert testimony, a cardiac cath program exceeding 150 annual procedures is established. All the applicants exceed the minimum volume and, therefore, comply with the allocation factor. Martin Memorial has the highest volume in an operational inpatient and outpatient lab and, meets the allocation factor better than Lawnwood and St. Mary's. The other District 9 factor favors applicants with a documented commitment to provide services regardless of patient's ability to pay. Lawnwood projects 2.51 percent Medicaid and 1.5 percent charity care in year two. St. Mary's projects providing 5 percent Medicaid and 3.5 percent charity care in year two. Martin Memorial projects 2 percent Medicaid and 1.9 percent charity care in year two. St. Mary's best meets the factor, followed by Lawnwood, and then Martin Memorial. More Medicaid residents live in the primary service area of Lawnwood than that of Martin Memorial. Martin has filed CON compliance reports demonstrating difficulty in meeting prior CON Medicaid conditions due to the demographics of its service area. Subsections 408.035(1)(b) - availability, quality of care, efficiency, accessibility, extent of utilization of like and existing programs; 408.035(2)(b) - appropriate and efficient use of existing inpatient facilities; and 408.035(2)(d) - serious problems in obtaining care without proposed new program(s). With the exception of seasonal excess demand for Palm Beach Gardens' ICU beds, the evidence demonstrates there is excess capacity in existing District 9 providers. Geographic access to existing providers in or adjacent to the district is also reasonable. The quality of care at existing providers is excellent. St. Mary's asserts that its proposal will best assist in alleviating access barriers to open heart surgery for low income persons with limited geographic mobility. One expert estimated that 38 District 9 Medicaid patients needed, but did not receive, open heart surgeries in 1991, based on the use rates for commercially insured patients. In general, the highest density of population with a demand for invasive heart therapies and open heart surgeries is concentrated in southern and central Palm Beach County. However, expert testimony established that Medicaid patients are underserved for reasons, other than the policies of the existing providers. The evidence does not show that St. Mary's proposal can overcome these financial barriers. St. Mary's is a level II trauma center, and maintains that trauma patients in need of open heart surgery are at risk of death from having to wait for transfers. Transfers of patients from St. Mary's to Palm Beach Gardens or JFK for open heart surgery take from three hours to three days, averaging 8 to 12 hours, in approximately 30 percent of the cases. From May 1991 through January 1994, over 2600 trauma patients were treated at St. Mary's. Expert testimony, after review of medical records, indicates that from one to six patients needed open heart surgery, an insufficient number to constitute a not normal circumstance for the establishment of an open heart program at St. Mary's. Palm Beach Gardens' position that an additional adult open heart surgery program is not needed in District 9 is rejected. Open heart surgery use rates are not increasing nationally or in Florida. However, District 9 population is increasing, as is open heart surgery utilization for District 9 as a whole, and for Palm Beach, St. Lucie and Okeechobee Counites, while remaining static in Martin County and decreasing in Indian River. Palm Beach Gardens and JFK have demonstrated that in Palm Beach County, an additional open heart surgery program is not needed, and would be detrimental to existing programs. See, Findings of Fact 51-52. Subsection 408.035(1)(c) - quality of care The applicants, like the existing providers, are accredited by the Joint Commission on Accreditation of Healthcare Organizations. All of the applicants provide excellent quality care, as indicated by their accreditations and proposals, compromised only by their ability to achieve the projected volumes. See, Findings of Fact 23-26. Subsection 408.035(1)(d) - alternatives or outpatient facilities and 408.035(2)(a) - alternatives to inpatient services There are no alternatives or facilities other than acute care hospitals in which open heart surgeries can be performed. The criterion is inapplicable to this case. Subsections 408.035(1)(e) - economies of joint or shared facilities and 408.035(2(k) - modernization or sharing arrangements as alternatives to new construction. Martin Memorial is a part of a network of hospitals planning a more formalized affiliation to attract managed care contracts. Lawnwood is a part of a large corporate group, which can offer experience in establishing an open heart surgery program. Neither of these arrangements entitles the applicants to special consideration under the statutory criterion, as it has been construed by AHCA. In this case, each applicant is a separate acute care hospital. An alternative arrangement for a shared program was considered by Martin Memorial, but there is no showing that any proposal which improves access for the northern four counties could avoid the necessity for new construction. Subsection 408.035(1)(f) - needs for equipment and services not accessible in adjoining areas There is no evidence that any applicant proposes to provide a service not readily available in adjoining areas. On the contrary, each applicant proposes to offer an alternative within the district for residents who currently use providers in adjoining areas. See, Finding of Fact 27. Subsection 408.035(1)(g) - need for research and educational programs There is no evidence that any of the applicants will meet research or educational needs, or is a teaching hospital. AHCA has strictly construed the statutory criterion to apply to teaching hospitals. Subsection 408.035(1)(h) - availability of resources, including staff, management, and funds for capital and operating expenditures, including personnel required in Rule 59C-1.033(5)(b). The Cleveland Clinic has expressed an interest in providing surgeons for Martin Memorial's program, but no agreement has been formalized. Martin Memorial was criticized for not having a full-time infectious disease specialist, inadequate pulmonary and nephrology specialists, and for being unable to perform transesophageal echocardiology, all of which are necessary to support an open heart surgery program. St. Mary's was criticized for not planning to have nurses assigned exclusively to its open heart surgery team. Lawnwood has been unable to attract full-time coverage in thoracic, orthopedic, and neurosurgery. Despite these specific criticisms, each applicant has successful recruitment mechanisms and affiliations which will be enhanced by the presence of an open heart surgery program. The applicants' staffing and equipment proposals are reasonable. Both St. Mary's and Lawnwood are subsidiaries of larger organizations which include hospitals with open heart surgery programs. Subsection 408.035(1)(i) - immediate and long term financial feasibility St. Mary's has the ability to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. St. Mary's provided a pro forma of expected revenues and expenses to establish financial feasibility based on two factors which were challenged, the average length of stay ("ALOS") and the mix of payer classifications for patients. St. Mary's projected 10.3 days as the ALOS. JFK's experts suggested that a 13-day ALOS is more reasonable, particularly for a new program. JFK's actual experience was an ALOS of 16.1 days in 1988, 14.5 days in 1992, and 12.6 days by the year ending June 1993. Mature programs generally have lower ALOS than newer ones. Currently, ALOS in the District are 10.9 for Palm Beach Gardens, 12.5 for Delray, and 14.5 for JFK. JFK's assertion that St. Mary's initial ALOS will more likely be 13 days not 10.3 is reasonable. The fact that the ALOS will be longer than that projected in the pro forma means that expenses for the care of each patient will be greater, while revenues will not increase proportionately. Revenues are limited in fixed Diagnostic Related Group ("DRG") reimbursement categories, such as Medicare and managed care, which are the dominant payer groups, in contrast to the more flexible per diem reimbursement of commercial insurers. St. Mary's failed to include revenues and expenses for the construction period, anticipating only capital expenditures and start-up costs for implementing a new service. St. Mary's pro forma was based on a first year payer mix which includes 12.4 percent managed care and 11.6 percent commercial insurance in 1995. At JFK, the open heart surgery payor mix was 33 percent managed care and 9 percent commercial in 1993. St. Mary's underestimated the proportion of patients in the DRG-based managed care category, as compared to the per diem arrangements typical of commercial insurance. Taking into consideration increased expenses of $251,000 in year one and $409,000 in year two, due to adjustments from 10.3 to 13 days in the ALOS, and reduced revenues of $350,000 in year two, St. Mary's proposal is not financially feasible. The conclusion is also compelled by St. Mary's failure to establish the reasonableness of its utilization projections for the program. See, Finding of Fact 25. Martin Memorial has the funds necessary to establish an open heart surgery program for $3,594,720. Its pro forma shows revenues and expenses for the construction period, which are identical with or without the open heart surgery program. Martin Memorial's pro forma is flawed by double counting revenues from patients currently spending some time and revenues at Martin Memorial prior to transfers for open heart surgery. Revenues associated with pre-transfer stays must be deducted from revenues for open heart surgeries of average total lengths of stay. The amounts of over-stated revenues were not calculated by Palm Beach Gardens expert, and other criticisms of Martin Memorial's pro forma are rejected. Lawnwood, like St. Mary's, failed to include any construction period revenues and expenses in its pro forma. Lawnwood, as a separate legal entity, does not have the funds to establish its open heart surgery program, without relying on its parent, Hospital Corporation of America. The commitment of funds, represented by a letter dated April 30, 1993, indicated the source as either internally generated cash or available lines of credit. Lawnwood demonstrated its financial feasibility, in part, by showing that its open heart program's break-even point, at which expenses and revenues would be equal is 182 cases, well below projected utilization. See, Findings of Fact 23. Subsection 408.035(1)(j) - special needs and circumstances of health maintenance organizations The applicants do not propose to provide any different or special services for health maintenance organizations, nor is any applicant in this batch itself a health maintenance organization, as required by AHCA's interpretation to the statutory criterion. NME Hospitals, Inc., d/b/a West Boca Medical Center v. HRS, DOAH Case Nos. 90-7037 and 91-1533 (F.O. 4/8/92). Subsection 408.035(1)(k) - substantial, specialty services to non-residents of the service district Although the applicants propose to provide open heart surgery, which is one of the specialty services listed in the statute, they do not project that they will serve residents of other districts. The applications are not distinguishable on the basis of Subsection 408.035(1)(k), Florida Statutes. Subsection 408.035(1)(l) - impact on costs and effects of competition with existing providers. If St. Mary's proposal is approved and, as St. Mary's projects, two- thirds of its patients come from existing district providers, the program at JFK will be adversely affected. As the result of JFK's loss of approximately 106 cases, its net income could also be reduced up to $2.6 million. By contrast, programs at Lawnwood or Martin Memorial would have a negligible impact on JFK. The existing program at Palm Beach Gardens would suffer an adverse impact from the approval of programs at either St. Mary's or Martin Memorial. The adverse impact of a program at Martin Memorial is greater. Palm Beach Gardens could lose from 128 to 142 cases in the first year and from 179 to 198 cases in the third year in the worst case scenarios, depending on whether the use rate declines or remains constant. In addition, the further development of the VHA Network proposed by some District 9 hospitals, including Martin Memorial, as a means to attract managed care contracts, would enhance referrals to an open heart surgery program at Martin Memorial. Reasonable estimates of the financial loss to Palm Beach Gardens range between $2.8 and $3.1 million, although Palm Beach Gardens, with $9 million in annual income, would still be profitable. While the numeric calculations required in Rule 59C-1.033(7)(c), Florida Administrative Code, indicate that there will be enough total open heart surgeries to allow each of the existing providers to continue to exceed 350 operations, Palm Beach Gardens would be disproportionately, adversely affected by a program at Martin Memorial, as would JFK by a program at a St. Mary's. As the lowest volume provider, JFK is also at greater risk of dropping below the 350 minimum level established as indicative of the quality of care. Subsection 408.035(1)(m) - costs and methods of construction With total project costs of $4.99 million, Lawnwood's proposal to construct two new, dedicated operating rooms is the most expensive. Martin Memorial's cost of $3.59 million includes new construction of one and renovation of another operating room. St. Mary's low project cost of $2.16 reflects the fact that renovations rather than new construction is planned. The advantages of new construction, however, are that the size of the operating rooms will exceed general state requirements, and comply with recommendations developed specifically for open heart surgery. See, Findings of Fact 58, infra. Subsection 408.035(1)(n) - past and proposed service to Medicaid and medically indigent patients Based on history and proposed service, the applicants rank, in order, St. Mary's, Lawnwood, and Martin Memorial in complying with the criterion. See, Findings of Fact 28 and 32, supra. Subsection 408.035(1)(o) - continuum of care in multilevel system, including acute, skilled nursing, and home health care The applicants failed to distinguish their proposals on the basis of this statutory criterion. Other Criticisms of the Applications St. Mary's has a 16-bed intensive care unit, 4 of those beds will require no additional equipment to be used to provide post-operative care for open heart surgery patients. The 4 beds are located adjacent to the intended open heart surgery operating suite. The proposed 4-bed ICU was criticized for being too crowded, and inadequately designed to allow adequate patient observation and monitoring, and for not being dedicated solely to open heart surgery patients. The 16-bed unit has experienced over 90 percent occupancy rates, but some of those patients have required the staffing, but not the equipment available in the intensive care unit. St. Mary's acknowledged potential capacity problems, but has the ability to create additional step-down unit beds to relieve the ICU unit, when necessary. In addition, outpatient surgeries were scheduled to be performed in a separate facility beginning in July 1994. While some clinicians may prefer a separate ICU, there was no evidence of any requirements that open heart surgery patients receive post-operative care in a separate ICU, nor that the lack of a specialized unit means a lack of staff capable of caring for such patients. St. Mary's project involves the renovation of a total of 1731 square feet, 764 net square feet of that in the main operating room on the first floor. The back-up operating room at St. Mary's is 480 square feet, below the American College of Cardiologists' recommendation and 1992 Federal Guidelines of a minimum of 600 and up to 800 square feet. Despite the term "back-up," expert testimony established the need for regular use of both operating rooms, one for regularly scheduled procedures and one for emergencies which occur within the cardiac cath lab or the post-operative intensive care unit. The size of St. Mary's back-up operating room meets state requirements for operating rooms, which do not differentiate on the basis of the type of surgery. St. Mary's also demonstrated that open heart surgeries are performed in comparably sized or smaller operating rooms at JFK. The space allocated to Lawnwood's 4-bed open heart surgery recovery room was criticized as inadequate to accommodate the equipment and personnel required to monitor and, if necessary, to revive post-operative patients. The space allocated complies with state licensure requirements. Reconfiguration of the beds and equipment in the space is permissible, if necessary, in final construction documents which must be approved by AHCA. Lawnwood's proposal was also criticized because the CVICU will be located three stories above the surgical area and recovery rooms. There was no evidence that the location of the CVICU violated licensure requirements or compromised the quality of care. The use of restricted elevator access between the surgical/recovery area and the CVICU is reasonable. AHCA favored the applications of both Lawnwood and Martin over that of St. Mary's due to their locations outside Palm Beach County. Having been told by staff that it was then a "toss up" between the two, AHCA's Division Director selected Martin Memorial. The Division Director, Dr. James Howell, is a former Deputy District Administrator for AHCA District 9 and former County Health Director for Palm Beach County. In explaining his decision, Dr. Howell testified as follows: Q. Ultimately, sir, you recommended to Ms. Dudek that Martin be approved rather than Lawnwood; isn't that correct, sir? A. Yes, sir. In our mutual discussions we had a discussion about two. To be straightforward, the reason that I'd recommended Martin was that Martin is a long-term community hospital with local community responsiveness or local community board of directors, as far as I know, and that AHCA owned - now I believe, it's part of the Columbia system, was in St. Lucie County and was a newer hospital, and that, you know, I felt more comfortable with giving the first CON in the area to a group that had a long heritage and commitment to the area, even though I can tell you I can't say anything negative about AHCA in dealings with them. Q. Or Columbia? A. Or Columbia; right. I can't say anything. That's not meant to be prejudicial with them. They did a good job with us, with maternity/child health. Q. You did approach this batch, did you not, sir, with a bias towards Martin Memorial because you knew the institution had been there a long, long time and was a very stable institution; isn't that correct? A. That is quite correct, yes, sir. See, Transcript, p. 251. The court reporter's references to "AHCA" are corrected and understood, in this context, to refer to HCA or Hospital Corporation of America. The statutory and rule criteria, on balance, demonstrate that open heart surgery programs at Martin Memorial or Lawnwood are more likely to improve access, to meet projected volumes, and to be financially feasible. Of these two, however, Lawnwood is better situated to reverse district out-migration, and has to be preferred, under the state and local health plans and subsection 408.035(1)(n), Florida Statutes, for its history of providing a disproportionate share of its services to Medicaid and charity patients. Finally, the most significant distinction between the applicants is that the quality of care at existing providers, as measured by their volumes of open heart surgeries, will not be adversely affected by the approval of a new program at Lawnwood. Application Content AHCA accepted Martin Memorial's application, although two different letters of intent for mutually exclusive open heart surgery programs were filed simultaneously by Martin Memorial, one for a program shared with Indian River Memorial, and one for a separate program. Martin Memorial's application also, arguably exceeds the scope of its Board approval by including renovation of a portion of the surgical intensive care unit ("SICU"). AHCA accepted Martin Memorial's proposal to allocate the cost of 4 of 13 SICU beds to the open heart surgery project. As a practical matter, Martin Memorial's witnesses concede, the 4 beds cannot be constructed independently. The Board separately authorized the filing of an expedited CON for the SICU construction and renovations. In an Additional Motion For Summary Recommended Order Palm Beach Gardens' submitted correspondence between AHCA and Martin Memorial attempting to establish that the separate SICU CON has expired. AHCA accepted Lawnwood's application without a construction period pro forma, and without identification of the ultimate parent corporation of the subsidiary, Lawnwood Medical Center, Inc.
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 Certificate of Need 7245 to Lawnwood Medical Center, Inc., denying Certificate of Need 7244 to St. Mary's Hospital, Inc., and denying Certificate of Need 7243 to Martin Memorial Medical Center, Inc. DONE AND ENTERED this 13th day of March, 1995 in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4908 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner, Lawnwood's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in Findings of Fact 3. Accepted in Findings of Fact 16. Accepted in Findings of Fact 4. Accepted in Findings of Fact 5. 6-12. Accepted in or subordinate to Findings of Fact 27. 13. Accepted in Findings of Fact 13. 14-20. Accepted in or subordinate to Findings of Fact 27. Accepted in or subordinate to Findings of Fact 16 and 19. Accepted in Findings of Fact 24. 23-39. Accepted in or subordinate to Findings of Fact 27. 40-47. Accepted in or subordinate to Findings of Fact 34. 48-61. Accepted in or subordinate to Findings of Fact 28. 62-64. Accepted in relative terms or subordinate to Findings of Fact 27. 65-70. Accepted in or subordinate to Findings of Fact 28. 71-73. Accepted in part or subordinate to Findings of Fact 24 and 28. 74-86. Accepted in part or subordinate to Findings of Fact 2, 23 and 27. 87. Issue not reached. 88-94. Accepted in or subordinate to Findings of Fact 23. 95. Rejected in part and accepted in part in Findings of Fact 24. 96-100. Accepted in Findings of Fact 23. 101-105. Accepted in general in Findings of Fact 24. 106-111. Accepted in Findings of Fact 47. Accepted in general in Findings of Fact 22-29. Accepted in Findings of Fact 22. Accepted in Findings of Fact 23. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Accepted in relevant part in Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. 120-122. Accepted in or subordinate to Findings of Fact 31. 123-131. Accepted in or subordinate to Findings of Fact 5, 43, and 48. 132-133. Accepted in or subordinate to Findings of Fact 43. 134-146. Accepted in or subordinate to Findings of Fact 48. Accepted in or subordinate to Findings of Fact 45, 48 and conclusions of law 66. Accepted in or subordinate to Findings of Fact 48. 139-141. Accepted in or subordinate to Findings of Fact 29. 142-147. Accepted in or subordinate to Findings of Fact 48. 148-152. Accepted in Findings of Fact 8 and 53. Accepted in Findings of Fact 43. Subordinate to Finding of Fact 53. 155-164. Accepted in or subordinate to Findings of Fact 59. 165-173. Accepted in or subordinate to Findings of Fact 43. 174. Accepted in or subordinate to Findings of Fact 38 and 43. 175-176. Accepted in Findings of Fact 7. Accepted in or subordinate to Findings of Fact 38 and 43. Accepted in or subordinate to Findings of Fact 53. Accepted in or subordinate to Findings of Fact 43. 180-181. Accepted in Findings of Fact 38. 182-187. Accepted in Findings of Fact 61. 188. Rejected in Findings of Fact 61. Petitioner, Palm Beach Gardens' Proposed Findings of Fact. 1-3. Accepted in Findings of Fact 16-19. Accepted in Findings of Fact 5 and 8. Accepted in Findings of Fact 13 and 15. Accepted in Findings of Fact 9 and 12. Accepted in preliminary statement. Accepted in Findings of Fact 3. Accepted in Findings of Fact 3 and 16. 10-15. Accepted in or subordinate to Findings of Fact 61. Rejected in conclusions of law 69. Rejected in Findings of Fact 53. Rejected in Findings of Fact 2 and 27. 19-25. Accepted in or subordinate to Findings of Fact 16 and 33. 26. Accepted in or subordinate to Findings of Fact 34. 27-44. Accepted in or subordinate to Findings of Fact 52. 45-48. Accepted in or subordinate to Findings of Fact 18-19 and 27-28. 49-52. Accepted in or subordinate to Findings of Fact 51 and 52. 53. Accepted in general in Findings of Fact 27. 54-55. Accepted in or subordinate to Findings of Fact 33. 56-60. Accepted in or subordinate to Findings of Fact 34. 61. Rejected "substantially" in Findings of Fact 52. 62-72. Accepted in or subordinate to Findings of Fact 16, 27, and 33. 73-76. Accepted in or subordinate to Findings of Fact 27. 77-84. Accepted in or subordinate to Findings of Fact 52. 85-92. Accepted in or subordinate to Findings of Fact 27,28 and 34. 93-103. Accepted in or subordinate to Findings of Fact 28. 104-105. Accepted in Findings of Fact 31. 106. Accepted in Findings of Fact 32. 107-109. Accepted in or subordinate to Findings of Fact 28 and 32. 110-111. Accepted in Findings of Fact 22. 112-125. Accepted in or subordinate to Findings of Fact 23. 126. Accepted in or subordinate to Findings of Fact 5. 127-141. Accepted in Findings of Fact 23 and 24. 142. Rejected in Findings of Fact 7 and 23. 143-145. Accepted in or subordinate to Findings of Fact 7 and 23. 146-151. Issue not reached. 152-158. Accepted in or subordinate to Findings of Fact 24. 159-160. Accepted in Findings of Fact 27. 161-162. Accepted in Findings of Fact 28. Accepted in part in Findings of Fact 28. Accepted in or subordinate to Findings of Fact 29. 165-167. Accepted in or subordinate to Findings of Fact 29. 168-169. Accepted in Findings of Fact 30. 170. Accepted in Findings of Fact 21-30. 171-172. Rejected in general in Findings of Fact 47. 173. Accepted in Findings of Fact 47. 174-184. Rejected or subordinate to Findings of Fact 47. 185-187. Rejected or subordinate to Findings of Fact 43 and 47. 188-193. Accepted in Findings of Fact 47. 194-199. Subordinate to Finding of Fact 47. 200. Accepted in Findings of Fact 29. 201-208. Accepted in or subordinate to Findings of Fact 52. 209. Rejected. 210-218. Accepted in or subordinate to Findings of Fact 52. 219. Rejected conclusion as to "substantial" in Findings of Fact 52. 220-229. Accepted in or subordinate to Findings of Fact 52. 230. Rejected conclusion as to "substantial" in Findings of Fact 52. Petitioner, St. Mary's, Proposed Findings of Fact. 1-3. Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Facts 3 and 22. Accepted in or subordinate to Findings of Fact 9. Accepted in or subordinate to Findings of Fact 12. Accepted in or subordinate to Findings of Fact 10. Accepted in or subordinate to Findings of Fact 27. Accepted in Findings of Fact 2. 10-12. Accepted in or subordinate to preliminary statement and Finding of Fact 12. 13-14. Accepted in or subordinate to Findings of Fact 58. 15-17. Accepted in or subordinate to Findings of Fact 43. 18-24. Accepted in Findings of Fact 30. 25-26. Rejected in Findings of Fact 44-46. 27-29. Accepted in Findings of Fact 30. Rejected in Findings of Facts 44-46. 31-32. Accepted in or subordinate to Findings of Fact 44. 33-35. Accepted in or subordinate to Findings of Fact 43. 36. Accepted in or subordinate to Findings of Fact 56. 37 Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Fact 38. Accepted in or subordinate to Findings of Fact 58. Accepted in or subordinate to Findings of Fact 60. 41-44. Accepted in or subordinate to Findings of Fact 56 and 57. 45-54. Accepted in or subordinate to Findings of Fact 35. 55. Rejected in Findings of Fact 35. 56-57. Accepted in or subordinate to Findings of Fact 34. 58. Conclusion rejected, although access is limited by comparison to commercially insured patients, See, Findings of Fact 34. 59-66. Accepted in or subordinate to Findings of Fact 34. 67-73. Accepted in Findings of Facts 9, 28 and 32. Accepted in Findings of Fact 9. Accepted in Findings of Fact 32. Accepted in Findings of Fact 34. Rejected as significant benefit in Findings of Fact 34. Accepted (as both interests can be better accomplished) in Findings of Fact 27. Accepted in or subordinate to Findings of Fact 25. 80-81. Rejected in Findings of Fact 25. Accepted in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected as valid in Findings of Fact 34. 86-88. Accepted in Findings of Facts 27 and 36. 89-91. Accepted in part or subordinate to Findings of Fact 26. Rejected in Findings of Fact 26. Rejected in Findings of Fact 25 and 26. Accepted in Findings of Fact 22. Rejected in Findings of Fact 25-26. Rejected in general in Findings of Fact 27. 97-98. Accepted in or subordinate to Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. Rejected conclusion in Findings of Fact 35. Accepted in Findings of Fact 31 and 32. 103-104. Accepted in Findings of Fact 27. 105. Accepted in Findings of Fact 37. 106-107. Rejected in Findings of Fact 51. Accepted in or subordinate to Findings of Fact 51. Accepted in Findings of Fact 35. Rejected in Findings of Fact 47. Rejected in Findings of Fact 48. Rejected in Findings of Fact 24. Intervenor, JFK Medical Center, Inc.'s Proposed Findings of Fact. Accepted in Findings of Fact 9. Accepted in Findings of Fact 18. Accepted in or subordinate to Findings of Fact 12. 4-6. Accepted in or subordinate to preliminary statement. 7-9. Accepted in or subordinate to Findings of Fact 2. Accepted in or subordinate to Findings of Fact 16-19. Accepted in Findings of Fact 27. Accepted in relevant part in Findings of Fact 16 and 27. 13-19. Accepted in or subordinate to Findings of Fact 34. Accepted in Findings of Fact 18 Accepted in Findings of Fact 35. Accepted in Findings of Fact 19. 23 Accepted in relevant part in Findings of Fact 33. 24. Accepted in Findings of Fact 36. 25-27. Accepted in or subordinate to Findings of Fact 33. 28-31. Accepted in or subordinate to Findings of Fact 27. 32-34. Accepted in or subordinate to Findings of Fact 27 and 34. 35-44. Accepted in or subordinate to Findings of Fact 35. 45-48. Accepted in or subordinate to Findings of Fact 25. 49-50. Accepted in or subordinate to Findings of Fact 26. 51. Accepted in or subordinate to Findings of Fact 25. 52-57. Accepted in Findings of Fact 44-46. 58. Subordinate to Finding of Fact 44-46. 59-66. Accepted in or subordinate to Findings of Fact 51. 67-75. Accepted in or subordinate to Findings of Fact 59. 76-78. Rejected in Findings of Fact 59. 79-80. Accepted in or subordinate to Findings of Fact 25. 81-82. Rejected in or subordinate to Findings of Fact 57. 83-84. Accepted in or subordinate to Findings of Fact 52. 85. Accepted in Findings of Fact 43. 86-89. Accepted in or subordinate to Findings of Fact 58. Respondent, AHCA's Proposed Findings of Fact. 1. Accepted in general or subordinate to Findings of Fact 5-8. 2. Accepted in or subordinate to Findings of Fact 9-12. 3. Accepted in or subordinate to Findings of Fact 13-15. 4. Accepted in Findings of Fact 16 and 18. 5. Accepted in Findings of Fact 6 and 19. 6. Accepted in preliminary statement and Findings of Fact 2. 7. Accepted in Findings of Fact 31 and 32. 8. Accepted in Findings of Fact 31. 9. Accepted in or subordinate to Findings of Fact 7. Subordinate to Findings of Fact 7. Accepted in Findings of Fact 11 and 26. Accepted in or subordinate to Findings of Fact 14. 13,14. Accepted in or subordinate to Findings of Fact 6, 28 and 32. 15. Accepted in or subordinate to Findings of Fact 10, 28 and 32. 16,17. Accepted in or subordinate to Findings of Fact 28 and 32. Accepted in Findings of Fact 21-30. Accepted in Findings of Fact 22. 20,21. Accepted in part in Findings of Facts 23 and 24. Accepted in Findings of Fact 24. Accepted in or subordinate to Findings of Fact 25, 26 and 27. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Subordinate to Findings of Fact 29. Accepted in Findings of Fact 5, 9 and 13. Rejected conclusion in terms of other indicators in Findings of Fact 29. Accepted in or subordinate to Findings of Fact 5, 9, 13 and 29. Accepted in Findings of Fact 29. 30-33. Accepted in or subordinate to Findings of Fact 23-26. Accepted in Findings of Fact 30. Accepted in Findings of Fact 27 and 34-37. 36-37. Accepted in or subordinate to Findings of Fact 27. 38. Accepted in Findings of Fact 35. 39-42. Accepted in or subordinate to Findings of Fact 32 and 34. Accepted in Findings of Fact 18. Accepted in Findings of Fact 51. Accepted conclusion in Findings of Fact 52. 46-48. Accepted in Findings of Fact 23-26 and 38. Accepted in Findings of Fact 14 and 24. Accepted if last line changed from "St. Mary's" to "Lawnwood" in Findings of Fact 27, 36 and 37. 51-52. Accepted in Findings of Fact 40 and 61. Accepted in Findings of Fact 42. Accepted in Findings of Fact 29. Accepted in Findings of Fact 48. Accepted in Findings of Fact 44-46. Accepted in Findings of Fact 47. Accepted in Findings of Fact 29 and 51. Respondent, Martin Memorial's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in preliminary statement. Accepted in or subordinate to Findings of Fact 13. Accepted in or subordinate to Findings of Fact 9. 5-6. Accepted in or subordinate to Findings of Fact 5. Accepted in or subordinate to Findings of Fact 7, 11 and 14. Accepted in or subordinate to preliminary statement and Findings of Fact 19. Accepted in or subordinate to preliminary statement and Findings of Fact 18. Accepted in preliminary statement and Finding of Fact 1. Accepted in Findings of Fact 3 and 16. Accepted in or subordinate to Findings of Fact 23 and 24. Accepted in or subordinate to Findings of Fact 20. 14-15. Accepted in or subordinate to Findings of Fact 14. Accepted in or subordinate to Findings of Fact 15. Subordinate to Finding of Fact 13. Accepted in Findings of Fact 12. Accepted in relevant part or subordinate to Findings of Fact 8 and 49. 20-21. Accepted in Findings of Fact 61. Accepted in Findings of Fact 62. Accepted in preliminary statement and Finding of Fact 2. Accepted in Conclusions of Law 74. Accepted in Findings of Fact 52. Accepted in Findings of Fact 38. 27-28. Rejected conclusion that program is superior in terms of quality of care in Findings of Fact 38. 29-30. Accepted in or subordinate to Findings of Fact 43. Accepted in general or subordinate to Findings of Fact 43. Rejected in or subordinate to Findings of Fact 59. 33-34.. Accepted conclusion in Findings of Fact 43. 35-37. Accepted in or subordinate to Findings of Fact 23-26. 38-40. Conclusion rejected in substantial part in Findings of Fact 23. 41-43. Accepted in substantial part in Findings of Fact 24. 44. Accepted in Findings of Fact 47. 45-48. Accepted in or subordinate to Findings of Fact 48. 49-50. Rejected in Findings of Fact 66 and 67. 51-52. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion in part in Findings of Fact 23 and 24. Accepted in Findings of Fact 27. 55-59. Accepted in or subordinate to Findings of Fact 28 and 34. 60. Conclusion rejected in Findings of Fact 32. 61-62. Accepted in Findings of Fact 27. 63. Rejected in general in Findings of Fact 23 and 27. 64-65. Rejected as to alternatives for "residents most likely" to the extent that is inconsistent with need in relation to state plan, in Findings of Fact 27. Accepted in Findings of Fact 51 and 52. Accepted in or subordinate to Findings of Fact 52. Rejected in Findings of Fact 52. 69-70. Accepted in or subordinate to Findings of Fact 52. Accepted in Findings of Fact 22 and 30. Rejected conclusion in Findings of Fact 23 and 24. Accepted except last sentence in Findings of Fact 27. 74-75. Accepted in Findings of Fact 28. 76-77. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion or subordinate to Findings of Fact 29. Accepted in Findings of Fact 32. 80-82. Accepted in or subordinate to Findings of Fact 31. COPIES FURNISHED: W. David Watkins, Esquire 2700 Blair Stone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32314-6507 (Counsel for St. Mary's Hospital) Michael J. Cherniga, Esquire David C. Ashburn, Esquire Greenberg, Traurig, Hoffman, et al. Suite 2000 111 South Monroe Street Tallahassee, Florida 32302 (Counsel for Palm Beach Gardens Community Hospital) Elizabeth McArthur, Esquire 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 (Counsel for Lawnwood Medical Center) Leslie Mendelson, Esquire Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Byron B. Mathews, Jr., Esquire 201 South Biscayne Boulevard Suite 2200 Miami, Florida 33131 Robert A. Weiss, Esquire John M. Knight, Esquire The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether this case presents "not normal circumstances" that lead to award to St. Anthony's Hospital, Inc., of a certificate of need for an Open Heart Surgery program?
Findings Of Fact The parties and existing programs in District 5. St. Anthony's Hospital, Inc., the applicant for CON No. 7418 (the subject of this proceeding), is a not-for-profit corporation. Its facility, St. Anthony's Hospital, at which the adult open heart surgery program would be operated if CON No. 7418 were granted, is a 427-bed licensed general community hospital providing adult acute medical services in surgery, psychiatry and obstetrics. Located south of Ulmerton Road in Pinellas County, (generally considered "South Pinellas County,") St. Anthony's also provides home health care, family medicine clinics, outreach education, health screening and occupational health. Also located in South Pinellas County are Bayfront Medical Center, All Children's Hospital, and Northside Hospital. Northside is not a party to this proceeding although it recently received approval for a CON to provide open heart surgery services. Northside is located 6-1/2 to 7 miles from St. Anthony's and provides services in the same service area. Bayfront Medical Center, Inc., is one of two intervenors in this proceeding. Its facility, Bayfront Medical Center is a 518-bed, acute care, not-for-profit hospital located within the limits of the city of St. Petersburg and 1.7 miles from St. Anthony's. It offers cardiac, cancer and emergency services as well as a Level II trauma center. Bayfront also maintains a large women's and children's program, a rehabilitation center and a neurology program. Its cardiology program includes adult and pediatric cardiac catheterization, angioplasty and open heart surgery. But the open heart surgery program is shared with All Children's Hospital. Pre-operative and post-operative patient care is Bayfront's responsibility. The actual surgery takes place on the premises of All Children's. All Children's Hospital is a research hospital affiliated with the University of South Florida College of Medicine. Most importantly, and certainly most pertinent to this case, it is a dedicated Class II pediatric specialty hospital, one of two pediatric specialty hospitals in Florida, and one of only 47 in the nation. It provides, therefore, primary, secondary and tertiary care for children, in addition to the open heart surgery services it provides adults. Its cardiac surgery program was grandfathered under CON law to begin children's cardiac surgery in 1975. At the time of the grandfathering, All Children's was asked by state officials to consider adult cardiac surgery services as well. The hospital trustees and medical staff agreed and began a combined pediatric/adult open heart surgery program in 1976. As explained, above, the adult program is shared with Bayfront. All Children's Hospital is not a party to this proceeding. Largo Medical Center, Inc.'s facility, Largo Medical Center is a 256- bed, acute-care hospital specializing in cardiology and open heart surgery. Largo, the other intervenor in the proceeding, is located in AHCA's District 5 but outside South Pinellas County, as are two other open heart surgery programs: a program at Morton F. Plant Hospital in Clearwater and a program at HCA Bayonet Point/Hudson Medical Center located in Hudson in Pasco County. Morton F. Plant Hospital and HCA Bayonet Point/Hudson Medical Center are not participants in this proceeding. The Agency for Health Care Administration is the single state agency authorized by Section 408.034(1), Florida Statutes, to issue or deny certificates of need, "written statements ... evidencing community need for a new ... health service [such as an adult inpatient cardiac catheterization program.]" Section 408.032(2), Florida Statutes. Standing of the Intervenors. Over half of Largo's open heart surgery patients originate from St. Anthony's defined service area and 35 percent from South Pinellas County. If St. Anthony's achieves its projected volume, Largo likely will lose 35 percent of its open heart surgery patients in the third year of operation. A loss of that number of patients will contribute to a substantial loss of revenue to Largo. As concerns Bayfront's standing to intervene in this proceeding, St. Anthony's purpose in seeking a CON for an open heart surgery program is to obtain authorization for a program to take the place of the All Children's/Bayfront adult open heart surgery program. As counsel for St. Anthony's made clear in oral representation during hearing, whether made clear from the face of St. Anthony's application or not, the application is a "replacement application for Bayfront/All Children's [open heart surgery program]." (Tr. 208.) Filing of the CON application Under cover of a certification of its authorized agent dated September 17, 1993, St. Anthony's Hospital, Inc., filed an application for Certificate of Need 7418 with the Agency for Health Care Administration. The application seeks expansion of existing cardiology services at St. Anthony's health care facility in Pinellas County to include an on-site program for adult open heart surgery. d . Background This is not the first time St. Anthony's has initiated proceedings to obtain a CON for open heart surgery. It has filed applications before because of its concern that South Pinellas County is not being served appropriately by the adult open heart services program shared by Bayfront Medical Center and All Children's Hospital. In the application in this case, St. Anthony's describes its previous attempts in this way: ... St. Anthony's has on eight occasions, since 1987, applied for a Certificate of Need to provide open heart surgery services. Each application has either been denied, or was withdrawn by St. Anthony's based on represent- ations St. Anthony's received that All Children's/Bayfront shared program was adequate and appropriate to meet the needs of south Pinellas adult open heart patients. St. Anthony's has historically deferred to All Children's so as not to unnecessarily duplicate services. St. Anthony's Ex. 1, p 27. In CON application 7396, filed July 14, 1993, All Children's Hospital requested AHCA to allow the hospital "to discontinue services to the adult cardiac surgery population effective June 30, 1994 ...". St. Anthony's Ex. No. 20, attachment at p.7. The reason for the request was that All Children's had experienced and projected to continue to experience growth in its pediatric surgery caseload. Since "All Children's mission and legal responsibility lies with Florida's children ... the [hospital's] obvious difficulty ... [was] how to continue dealing with a growing pediatric patient load with decreasing availability of facilities." Id. At the same time, although not increasing as rapidly as children's surgery, the growth of the caseload for adult open heart surgery, as of the summer of 1993, was continuing in St. Petersburg. As a licensed pediatric hospital, All Children's opined in CON Application 7396, [W]e are unable to expand the adult program in even a moderate fashion and are unable to provide the true continuum of adult cardiac care that adult cardiologists and surgeons believe to be needed in the community. Only an adult licensed hospital can provide those services and allow for future growth. Id., at 8. With regard to the growing pediatric patient load threatened by decreasing availability of facilities, the application projected, "a true crisis within one year in the surgery, SICU area if adjustments are not made to alleviate the situation." Id. The crisis, however, did not materialize. As of June 20, 1994, nearly one year after the filing of the withdrawal application, the President and Chief Executive Officer of All Children's Hospital was of the opinion that there was not a crisis in the care of pediatric patients. Nor was there a crisis in the care of adult open heart surgery patients. In fact, adult open heart surgery patients were receiving very high quality care within one year of the projection of crisis made in the application. The application to terminate the open heart surgery program was withdrawn prior to June 20, 1994. All Children's withdrew the application in response to wishes expressed in the community that the program be continued. Nonetheless, St. Anthony's viewed the representations made by All Children's in CON application 7396 to "impeach any continued suggestion by All Children's or Bayfront that the existing shared services agreement is a normal or appropriate setting for adult open heart services." St. Anthony's Ex. No. 1, pg. 27. It filed, therefore, the application that initiated this proceeding. Transfer Stress and Limitations of the All Chidren's/Bayfront OHS program. After pre-operative care at Bayfront, adult open heart surgery patients are transferred through an enclosed corridor connecting Bayfront to All Children's. The same corridor is used to transfer the patients back to Bayfront for appropriate post- operative care following the surgery and intensive care at All Children's. Patients typically suffer stress when being transferred from one institution to another. They certainly suffer "transfer stress" when being transferred from St. Anthony's to Bayfront for open heart surgery in the All Children's/Bayfront program, just as they would suffer stress in transfers from Bayfront to St. Anthony's were St. Anthony's application to be granted and were the St. Anthony program to take the place of the All Children's/Bayfront program. Typical transfer time, however, between Bayfront and All Children's is only about five minutes. Most patients do not realize they are going from one institution to another. Although the arrangement is less than ideal, it is doubtful that open heart surgery patients suffer stress due to the transfers from Bayfront to All Children's and back again. There are, however, some drawbacks with regard to angioplasty patients in the All Children's adult program. Ambulation of angioplasty patients cannot be appropriately observed postoperatively at All Children's because there are not telemetry facilities available at All Children's for observation. There are such facilities at Bayfront and the patients may be observed there post- operatively once out of the intensive care unit at All Children's. Carlos M. Estevez, M.D., is a cardiologist with St. Petersburg Medical Clinic with active privileges at St. Anthony's, Bayfront, All Children's and Edward White Hospital. Beds have been unavailable postoperatively for adult therapeutic anigoplasty patients of his on occasion at All Children's. The patients have been required to be transferred to Bayfront or back to St. Anthony's, with French sheaths in their groin, a less- than-ideal situation. Dr. Estevez' therapeutic anigoplasty patients requiring open heart backup at All Children's are typically discharged from All Children's after spending the night in the intensive care unit. For the average angioplasty patient, intensive care services are an overutilization of services. Dr. Estevez believes "crisis" would be a fair term to describe the current situation for his angioplasty patients in the All Children's/Bayfront program. Not Normal Circumstances Part of CON review is to look for factors the application shows to be "beyond the norm," or "any unusual circumstances." AHCA's interrogatory answer responded with regard to defining "not normal circumstances," in this way: There is no definition for "not normal circum- stances." In the absense (sic) of a projected numeric need pursuant to a fixed pool publication, an applicant may demonstrate valid need, justi- fiable evidence of situations or occurrences in a service area which are not accounted for such as access problems, which may support approval. St. Anthony's Ex. 7, p. 9. Circumstances of the All Children's/Bayfront Program. As a dedicated Class II pediatric specialty hospital, All Children's, alone, cannot provide the continuum of care needed by adult open heart surgery patients. Its provision of services, as stated above, is limited to surgery and postoperative intensive care. Other services in the continuum of care required by adult open heart surgery patients include admission to an emergency room, and pre-operative coronary care as well as post-operative care (other than intensive care) all the way through cardiac rehabilitation. The components of the continuum other than the actual surgery and post-op intensive care are provided by Bayfront and other hospitals. Despite All Children's inability to provide "continuum of care," by itself, to adult open heart surgery patients, the care provided the open heart surgery patient in the All Children's/Bayfront program is of high quality. All Children's physical site is limited for future growth both as to the adult open heart program and its pediatric programs. The physical outer limits of the hospital building are right on the property line, "all the way around. It has no room to expand." St. Anthony's Ex. No. 20. But for physical limitations, All Children's pediatric services would expand because the need for expansion in the pediatric program exists. The inability of the pediatric programs to expand compromises All Children's mission: pediatric care in a hospital dedicated to pediatrics. The adult open heart surgery program, if withdrawn, would free All Children's somewhat for further pediatric program growth both as to resources and space. But All Children's is no longer trying to withdraw from the program. All Children's board of trustees believes that only an adult licensed hospital can provide the continuum of care needed for adult open heart surgery patients and allow for future growth. Moreover, it is not possible to put together a competitive adult open heart pricing structure for the continuum of care that one hospital could provide when adult open heart surgery patients are being transferred from All Children's to and from other hospitals in order to provide the full continuum of care. AHCA's Response to the Application. AHCA's response to the application was denial based on a determination of no need to support the application. After review, AHCA determined that the application did not demonstrate that St. Anthony's could support sufficient volume even were the All Children's/Bayfront program to become non-operational. There was, however, an even more fundamental objection to granting the application on the part of the agency. As Elizabeth Dudek, Chief of the Certificate of Need and Budget Review sections of the agency, explained with regard to St. Anthony's premise that the application seeks to have its program "replace" the All Children's/Bayfront adult open heart surgery program, I don't understand that premise. I don't understand it because, one, the All Children's/ Bayfront program is still operational. There is no indication that the All Children's/Bayfront program has somehow indicated that it would relinquish its program volume to St. Anthony's. dditionally, ... by law they wouldn't be able to [accomplish a transfer] through the CON program, you can't transfer [or replace] a program ... Tr. 1534, ll. 2-12. Need. For those in need of open heart surgery services in South Pinellas County, there is another facility in South Pinellas County at which the services can be obtained: Northside. As for all of AHCA District 5, there are other facilities at which open heart surgery services are available. There is no evidence, despite the inability of the All Children's/Bayfront adult program to expand, that the needs of those requiring high quality open heart surgery services in South Pinellas County or AHCA District 5 are going unmet.
