The Issue Whether the Certificate of Need application of the South Broward Hospital District (CON 9459) to establish a 100-bed hospital in Health Planning District 10, Broward County, should be granted by the Agency for Health Care Administration?
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency with the authority to review and issue Certificates of Need in Florida. SBHD, the Applicant The applicant in this proceeding is South Broward Hospital District ("SBHD" or the "District"). Created by the Legislature in 1947 "at the request of voters to meet the healthcare needs of the South Broward community" (District No. 2, Vol. 1, pg. 7), SBHD is a special taxing district. The District receives tax revenues in order to support SBHD as the health care provider of last resort in South Broward County with a long demonstrated history of serving medically indigent patients. Id. From its inception in 1947 to today with the support of local tax revenue, the mission of SBHD has remained unchanged: to provide health care to all residents of the community regardless of ability to pay. There are three acute care hospitals in the "Memorial Health Care System" operated by SBHD: Memorial Regional, Memorial Pembroke Pines and Memorial West. These three hospitals make the District the dominant provider of health services in south Broward County. The District's market share of admissions to hospitals located in south Broward County is 85%. The other 15% of hospital admissions are to Hollywood Medical Center. (These percentages do not account for admissions of South Broward County residents to hospitals outside of the borders of SBHD.) Memorial Regional Hospital, a Medicaid disproportionate provider, is located 13.6 miles from the proposed Miramar hospital site. Without question, the predominant provider of care to indigent patients in south Broward County, Memorial Regional is licensed for 489 acute care beds. Memorial Regional had an acute care occupancy rate of 76.5% in 2000. From time-to-time in recent years, it has experienced unacceptably high occupancies particularly within individual units. It presently has patient care units that often operate above capacity, resulting in patient flow problems within the hospital. Memorial West Hospital, located 5.7 miles from the proposed Miramar site, is currently licensed for 164 acute care beds. It had an acute care occupancy rate of 88.9% in 2000. Memorial West currently operates 14 "labor-delivery- recovery" observation beds ("LDR" beds) that are not among the hospital's licensed beds. The hospital has recently received a CON for 36 additional beds to be utilized for acute care and further authorization via a CON exemption to add another 16 beds licensed for acute care provided certain occupancy levels are achieved. These additional 52 licensed beds are projected to become operational in 2002. Furthermore, Memorial West is adding 36 additional LDR beds and 20 acute care observation beds and doubling the size of its emergency room. When the expansion is complete, Memorial West will have 216 acute care beds, 20 acute care observation beds and 50 LDR beds. As matters stood at the time of hearing, peak occupancies in some departments at Memorial West such as obstetrics, routinely exceeded 100%. With the additional beds slated for opening in 2002, demand for acute care services in southwest Broward County will continue to produce high occupancy rates at Memorial West. It is reasonably projected that the growth in demand for acute care services in southwest Broward County with the additional beds will cause Memorial West to operate at 87% occupancy in 2005 and 99% occupancy in 2010 unless the hospital proposed by SBHD for Miramar is built. Memorial West opened in 1992 as a 100-bed hospital, in part fulfilling SBHD's vision to expand services into what was then projected to be a rapidly growing southwest part of the county, a suburban area more affluent than the District as a whole. Approved by AHCA's predecessor, SBHD's strategy in opening Memorial West was to gain access to this more affluent suburban market in order to help off-set the rising care of indigent care. The strategy has worked. Memorial West has made a profound contribution to the financial success and viability of the District. In 2001, Memorial Hospital West accounted for almost half of the District's bottom line profit. The profitability of Memorial West has allowed the District to continue to provide growing levels of indigent care, while at the same time decreasing tax millage rates. In fact, the millage rates levied by the District have decreased three times since Memorial West opened. During this same period of decreasing millage rates, the District has been able to increase its ratio of uncompensated care to tax revenues from 3-1 to 5-1. The District's third hospital, Memorial Hospital Pembroke was leased by the District for the first time in 1995. Now leased until June 2005 from HCA, Inc., HCA announced its intention at hearing to re-take the facility so that the District will lose Memorial Pembroke as one of its hospitals at the expiration of the lease. Licensed for 301 beds, Memorial Pembroke is located 10.6 miles from the proposed Miramar site. Memorial Pembroke's occupancy rate from July 1999 to June 2000 was 26.2%. This low rate of occupancy is due, at least in part, to significant physical plant constraints and deficiencies. Although licensed for 301 beds, the physical plant can only reasonably support 149 beds. When its daily census reaches 140 patients, the hospital's operational and support systems begin to fail. Prior to 1995, Memorial Pembroke was operated by a series of for-profit owners. Just as it does now, Memorial Pembroke suffered from chronically low utilization under all prior management. Before the District leased the facility from Columbia-HCA, the hospital had become stigmatized in the community; many patients and physicians were reluctant to use it. Due to a number of factors (some tangible, such as an out-of-date physical plant - others intangible) that stigma continues today. The District has invested considerable management and financial resources to improve the quality of care, the condition of the facility and the community reputation of Memorial Hospital Pembroke. Because the hospital serves as a "safety valve" for the high utilization at the District's other hospitals, especially Memorial West, Memorial Pembroke's census between 1995 and 2000 has been on the rise. Nonetheless, the facility continues to be regarded as a "second tier" hospital and to suffer a stigma within the community. Whatever the source of the stigma afflicting Memorial Pembroke, it is unlikely that occupancy rates at Memorial Pembroke will dramatically improve unless significant and substantial investment is made in the hospital. It does not make sense for SBHD to make such an investment since it will lose the facility in three years. Whether HCA will make the investment required to cure the facilities utilization woes remains an open question. (See paragraphs 103 and 104, below.) Through the three hospitals in the Memorial Healthcare system, Regional, West and Pembroke, and a number of clinics that are off-campus, the District provides a full range of health care services to residents of south Broward County. These include: general acute care; tertiary care; adult and pediatric trauma care under trauma center designation; a specialty children's hospital designated by the state as a Children's Medical Services provider for children with special needs for cardiac care, hematology and oncology, and craniofacial services; outpatient services; and primary care services. The District is the only provider, moreover, of many health care services within the boundaries of the South Broward Hospital District, all of Broward County south of SW 36th Street. (The North Broward Hospital District includes all of Broward County north of SW 36th Street.) These services include obstetrics, pediatrics, neonatal intensive care, adult and pediatric trauma at a Level I trauma center, and teen pregnancy prevention and education. Consistent with its mission, the District also operates the only system of primary care clinics for the indigent in the South Broward Hospital District. The District is clearly the safety net provider of acute care hospital and other services for south Broward residents. In 1999, the District provided 5.9% of its total revenue or approximately $63 million in charity care and 5.4% or approximately $58 million to Medicaid recipients. During the same time period, Cleveland Clinic in terms of total revenue provided 1% charity care and 1.8% to Medicaid recipients while Westside provided 0.6% charity and 2.3% Medicaid. In dollars worth of care devoted to indigent and Medicaid patients, SBHD provides over ten times more Medicaid and indigent care than Cleveland Clinic and Westside combined. Tax revenues, although supportive of the District's ability to maintain its mission, do not come close to compensating the District in full for the care it provides to charity and indigent patients. In fact, the District expends five dollars in uncompensated care for every dollar of tax revenue it receives. Still, as a significant source of income to the District, these tax dollars contribute to SBHD's robust financial health. Cleveland Clinic Cleveland Clinic Hospital is owned by TCC Partners, a partnership between the Cleveland Clinic Foundation and Tenet Healthcare Systems. Originally located in northeast Broward County in Pompano Beach, Cleveland Clinic obtained approval in 1997 to relocate its 150 beds to Weston near the intersection of I-75 and Arvida Parkway. Operation at the site of the relocation began in July of 2001. The new site is within one of the ten-zip codes SBHD has chosen as the proposed primary service area for its new hospital in Miramar, but it is outside the South Broward Hospital District. The new site of Cleveland Clinic is in the North Broward Hospital District, 1.5 miles to the north of the boundary line between the two hospital districts that divides Broward County into two distinct health care markets. Cleveland Clinic has an established history as a regional and national tertiary referral center. It is also an advanced research and education facility that benefits from the outstanding reputation of the Cleveland Clinic Foundation and the hospitals under its umbrella. Cleveland Clinic is not a typical community hospital. It follows a distinctive model of medicine based on a multi- disciplinary approach and a closed medical specialty staff. The medical staff is open to community primary care physicians but not to community specialists or sub-specialists. All of the specialists on its staff are salaried employees of the Cleveland Clinic. This means that physician specialists who are not employees of the Clinic do not have privileges to admit or treat patients at the Cleveland Clinic Hospital. The Cleveland Clinic offers tertiary acute care services, such as kidney transplantation and open-heart surgery. It also provides specialty services in colorectal surgery, voiding dysfunction and limb reattachment. Among its specialty programs are an adult spine program, an acute stroke program, an epilepsy clinic, and an orthopedic center of excellence in sports medicine. At the time of hearing and since opening, Cleveland Clinic's average daily census has been approximately 44 patients. Westside Founded 26 or so years ago in what was then considered western Broward Count from the standpoint of population (hence its name), Westside is a 204-bed acute care hospital. Slightly less than nineteen miles from the proposed Miramar site, the site of the hospital is "now somewhat central [to Broward County]" (Westside No. 39, p. 8), given the location of the population today and the growth that has occurred to the west of Westside. Westside, like Cleveland Clinic, is in the North Broward Hospital District. It is located in the City of Plantation on West Broward Boulevard. Among the variety of acute care services offered by Westside is open heart surgery ("OHS"). The OHS program, implemented two years ago has increased the hospital's occupancy rate to a near 70%. (In 2000, the hospital had an acute care occupancy rate of 69.3%). The occupancy rate is expected to increase as the open heart surgery program expands and matures. Recent capacity constraints in the ICU, for example, led to a capital project to expand the unit "about a year and a half ago." (Id. at 13). With regard to questions about whether the hospital had experienced capacity constraints or "bottlenecks" in units, Michael Joseph, the chief executive officer of Westside, answered this way: We did in tele, and that's when we did the overflow on the fifth floor. So at this time we are -- in the peak season of March, from time to time, sure. But on the annualized basis, we are in the 75 percent occupancy level. And sometimes there [are other issues] that all hospitals go through. (Id., at 14). At the time of Mr. Joseph's deposition, October 23, 2001, for the most recent year the average daily census has been "in the 175 range." (Id.) At present, therefore, Westside's occupancy is close to ideal. Westside is financially strong. It had strong financial performance in 2000 and at the time of hearing was expected to perform strongly in 2001. Replication of West Faced with both the potential loss in 2005 of Memorial Pembroke and the high occupancies at Memorial Regional and Memorial West, SBHD began investigating the opportunity to replicate the Memorial West model of success. During the investigation, the District came to believe what it suspected from obvious signs: there is a large and growing population to be served in the Miramar area. Although land was limited, the District was able to purchase within the City of Miramar a 138-acre parcel. The parcel is the site of the subject under consideration in this proceeding as detailed in CON Application 9459: SBHD's proposed project. SBHD's Proposed Project The District proposes to construct a 100-bed acute care hospital at the intersection of SW 172nd Avenue and Pembroke Road. The site is a large one. It has sufficient land available to serve ultimately as a "health park" with medical office buildings, outpatient facilities, and additional health care related facilities typical of a modern medical campus. If, on the other hand, the District decides it is in its best interest to "sell off balances" (tr. 486) of the property, it retains that option. The hospital will provide basic acute care services and be composed of 80 adult medical/surgical, 8 pediatric, and 12 obstetric beds. On the third floor, the hospital will have 28 observation status beds, in addition to its 100 licensed beds. The design of the hospital is cost efficient. It meets all license and life safety code requirements. All patient rooms are private and meet the square footage requirements of AHCA's license standards. The hospital design, costs, and methods of construction are reasonable. The project has several goals. First, it is intended to provide increased access to affordable and quality health care for the residents of southwestern Broward County. Second, the project will allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization. Third, the project will replace the loss of Memorial Pembroke. Finally, the project will give the District a second financial "engine that drives the train" (tr. 141) in the manner of Memorial West. The project will enable the District to maintain its financial strength and viability and continue to serve so effectively as the safety net provider for the indigent in South Broward County. Stipulated Facts In their prehearing stipulation, filed on October 31, 2001, the parties stipulated to the following: On January 26, 2001, AHCA published a fixed need pool for zero additional acute care beds in District 10, Broward County, for the January 2001 batching cycle. The South Broward Hospital District ("SBHD" or "District") timely and properly filed a Letter of Intent, initial CON Application, and Omissions Response in the batching cycle. On May 16, 2001, AHCA filed a Notice of Intent to issue the CON together with a State Agency Action Report ("SAAR") recommending approval of the CON for the proposed hospital. AHCA's Notice of Intent to approve the CON for the proposed hospital was challenged by Cleveland Clinic and Westside. Hollywood Medical Center ("HMC") also filed a petition challenging the preliminary approval but later withdrew as a party from these proceedings. Broward County has been divided by the Florida Legislature into two hospital taxing districts. The SBHD includes all areas of the county south of SW 36th Street, and the North Broward Hospital District ("NBHD") includes all areas north of the demarcation line. SBHD, Cleveland Clinic, and Westside each have a history of providing high quality of care. All of SBHD's hospital facilities are JCAHO accredited. Accordingly, the quality of care provided by these parties is not at issue in this proceeding except as it may be impacted by staffing issues. The proposed staffing and salary projections included on Schedule 6 of CON Application No. 9459 are reasonable and are not in dispute, although the parties specifically preserved the right to present evidence concerning the SBHD's ability to recruit the staff projected, and whether the projected salaries will cause or accelerate the loss of staff at existing hospitals. The parties agree that the SBHD has available management personnel and funds for capital and operating expenditures. However, Petitioners assert that the District's use of such resources for this project is neither wise nor prudent and is not in keeping with appropriate health planning principles. The parties agree that the SBHD has a history of providing health care services to Medicaid patients and the medically indigent. (Section 408.035(11), Florida Statutes.) However, Petitioners do not agree that proposed Miramar Hospital can meet the levels of charity care proposed in the application for the Miramar Hospital. With regard to Schedule 1 of the Application, the parties stipulate that the Land Costs (lines 1-11) are reasonable and are not disputed; and the Project Development Costs (lines 26-31) are reasonable and not disputed. The parties agree that Schedule 3 of the Application (sources of funds) is reasonable and not disputed. The SBHD does not contest Petitioners standing in this proceeding. At hearing, the parties stipulated that SBHD has the ability to recruit and retain the staff needed for the proposed hospital. The parties also stipulated that the SBHD has in place the staff recruitment and retention programs described at pages 132-139 of the CON application. The stipulation at hearing did not preclude either Westside or Cleveland Clinic from presenting evidence with respect to the impact of the SBHD's recruitment on other programs and other hospitals. No Numeric Need As indicated by the AHCA Bed Utilization Data for CY 2000, the occupancy rate in Broward County was 48.42%. There is, moreover, a surplus of 1,786 beds. This surplus has been increasing over time and has grown by nearly 60 beds between the January 2001 and July 2001 planning horizons. The hospitals within the District's proposed primary service area had an occupancy rate of 53% in the July 2001 planning horizon and a surplus of 456 beds, a number "somewhat proportionate to the distribution of patient days as well as licensed beds within the district." (Tr. 1639.) If the 152 non- functional beds at Memorial Pembroke are deducted from the surplus then the surplus is 304 beds. Not surprisingly therefore, the Agency's fixed need formula for acute care beds produced a fixed need of zero beds in Health Planning District 10 for the January 2001 batching cycle. (Broward County composes all of Health Planning District 10). The fixed need pool of zero was published by the Agency in January of 2001. Again in July 2001, AHCA published a fixed need for zero acute care beds in Health Planning District 10. In light of the zero fixed need pool, SBHD bases its application for the proposed Memorial Hospital Miramar on "not normal circumstances." Not Normal Circumstances "Not normal circumstances" are not defined or limited by statute or rule. Nonetheless, a number of "not normal" circumstances have been recognized repeatedly by AHCA . These recognized "not normal circumstances" are generally grouped into categories of access, quality and cost-effectiveness. None of them are present in this case. "There [are] no financial access, geographic access or clinical access circumstances [in this case] that rise to the level of not-normal circumstances." (Tr. 1633). Nor are there any quality or cost-effectiveness deficiencies claimed by the District in its application. The District bases its claim of "normal circumstances" on eight factors. They are: 1) explosive population growth; 2) a mal-distribution of beds within the health planning district; the effects of not having a hospital facility in the area proposed; 4) continued and projected high occupancies at nearby hospitals; 5) inability to expand inpatient capacity at the nearby hospitals with high occupancy rates; 6) the limited functionality and uncertain future of one of the hospitals that might serve the area where the new hospital is proposed to be located; 7) the increasing retraction of access for residents to other hospitals; and, 8) the need to assure that the applicant will remain a strong competitor able to fulfill its unique role and mission that would be served by granting the application. Population Growth Broward County is one of the fastest growing counties in the United States. "According to the census 2000 data, [over the last decade] it was the fastest growing county in all of the United States based on total population gain . . . ." (Tr. 617.) The population growth was spurred in the latter part of the previous decade by the devastation wreaked by Hurricane Andrew in 1992. The hurricane's south Dade County victims used insurance proceeds to move to southwest Broward County. This migration helped to produce growth in southwest Broward County at a faster rate than the county as whole in the decade of the nineties. Growth in pockets of southwest Broward during this period of time has been phenomenal. For example, Pembroke Pines population increased 109 percent between 1990 and 2000. For the same time period, the population of Miramar (now the second fastest growing municipality in Florida) increased 78 percent. This growth was more than just steady during the 10 years before 2000; as the decade proceeded, the growth rate accelerated. In short, it is not a misnomer to describe the population increase in southwest Broward County and the Miramar area during the last decade as "explosive." (Tr. 626) With its attendant residential and commercial development, it has transformed southwest Broward County from a rural community into a suburban one. Population growth in southwest Broward County is expected to continue into the future. Substantial land in the area is under development or is available for residential development. By 2006, the population is projected to grow to 337,000, from the 2000 population of 289,000. This rate, while not comparable to the explosive rate in some pockets of the county in the last decade, is not insignificant. By way of contrast, the projected growth rate of 16.7% over the next five years in southwest Broward compares to a projected rate for the county as a whole of 8.4% and for Florida of 7.1%. In and of itself, the projected population growth in southwest Broward County is not a "not normal" circumstance. However one might characterize the projected growth rate in southwest Broward County, moreover, the acute care hospital bed need rule takes population into account in its calculations and projections. But, the bed need formula does not take into account the significant number of beds at Memorial Pembroke that are not functional. Nor does it take into account that Cleveland Clinic is not a typical community hospital. Nor does it take into account other factors such as that Memorial West and Memorial Regional are experiencing capacity problems or the division of the health planning district into two hospital taxing districts recognized as distinct medical markets, a recognition out of the ordinary for health planning districts in Florida. A geographical fact pertinent to arguments made by Cleveland Clinic and Westside with regard to the location of the population is that Memorial Miramar's proposed primary service area is divided by Interstate 75, a north-south primary travel corridor. On a percentage basis, there is faster population growth projected for areas west of I-75. But for the foreseeable future, the actual number of people populating the area west of I-75 will remain less than the number east of I-75. The area west of I-75, with the exception of one zip code in which a retirement center has been built, has a younger projected population that should produce lower use rates and average lengths of stay in hospitals than the area east of I-75. The support these facts lend to the District's opponent's arguments that bed need is greater east of I-75 than west is diminished by the absence of any hospitals west of I-75 in the South Broward Hospital District and the presence of four hospitals in the hospital district east of the interstate. Distribution of Beds Consistent with the recognition by the Legislature, AHCA, and its predecessor state agency, north and south Broward County are two distinct medical markets demarcated by the division of the county into two hospital districts. There are 3.52 beds per 1000 population in the North Broward Hospital District, 2.35 in the south. A greater number of under-utilized acute care beds are located in the northern half; a greater percentage of highly utilized hospitals are located in the southern half. Of the four hospitals located in south Broward County, both Memorial Regional and Memorial West had average annual occupancies in excess of 80% in the calendar year 2000. By contrast, of the 13 hospitals located in the northern half of the County, none had occupancy in excess of 80%, and only one had an average annual occupancy in excess of 70%. These statistics point toward an over-distribution within the health planning district of beds in the north and an under-distribution in the south. At the same time, beds are distributed between the two hospital districts in approximate proportion to the number of patient days experienced by each. In 2000, NBHD had 71% of the patient days for District 10 and 73% of the acute care beds. As one might expect, therefore, the relationship between patient days and acute care beds during the same period was similar for the SBHD: 28.9% of the patient days for District 10 and 27% of the beds. An analysis of bed to population ratio is only meaningful when occupancy rates are also considered. Occupancy rates are mixed in the south part of the county: very high for some, especially Memorial West, and very low for Memorial Pembroke. This breadth of this disparity is unusual. Effects of No Hospital in Miramar Thirty to 60 minutes to reach an acute care hospital is a reasonable driving time in an urban area. There are five existing acute care facilities within 30 minutes of southwest Broward County. In fact, most of the residents in Memorial Miramar's proposed service area are within 15 minutes or less of an existing acute care facility. Nonetheless, without a hospital in Miramar, residents must leave their immediate community to gain access to acute care services. As a matter of sound health planning, "[n]ot every city, town or hamlet can or should have its 'own' hospital." So correctly posit Cleveland Clinic and Westside. See pgs. 13-14, Cleveland Clinic and Westside PRO. But as the City Manager of Miramar wrote, "[t]he addition of a new hospital is one of the last missing links in the City [of Miramar]'s master plan . . . The city is looking to build the best possible future for its residents." District Ex. 2, Attachment G. A new hospital in Miramar would not only be a featured complement of the City of Miramar's plans for the future, it would also enhance access to acute care services and address access concerns caused by skewed utilization among the SBHD hospitals due to the unusual state of affairs at Memorial Pembroke and the high demand at West. Of great concern is that residents of southwest Broward County in need of emergency services are sometimes not able to gain access to those services at Memorial West, the closest available hospital. Memorial West operates the third busiest Emergency Department in Broward County with 65,000 visits in 2001. In Calendar Year 2000, Memorial West's emergency room went on diversion 123 times, averaging 7.7 hours per diversion. In the first months of 2001, the hospital went on diversion 89 times, with an average diversion time of 16.3 hours. These diversions have a dual effect. They mean that patients wait longer for beds. They also mean that providers of emergency medical services in ambulances are forced out of the community for extended periods of time unable to render services within the community that may be needed during that time. Diversions at Memorial West are becoming more and more problematic. Wait times are getting longer; the total time on diversion is growing. At first blush, the problems appear to be less significant at Memorial West than they might be elsewhere in District 10 because of its low "emergency room visits to hospital admissions" ratio. The Health Planning District average shows that about 20% of emergency room patients are admitted to the hospital. At Memorial West, the ratio is 8.7%, the lowest in the County. While normally this might reflect that patients visiting Memorial West have a lower acuity than patients visiting emergency rooms district-wide, the lower ratio for Memorial West is due, at least in part, to the high volume of pediatric patients seen at West who are transferred to Joe DiMaggio's Children's Hospital. The pediatric transfers, in the words of Frederick Michael Keroff, M.D., a Board-certified emergency physician who has worked in hospital emergency departments in South Florida for 24 years, create a false sense of what is actually being seen on the adult side of the emergency room department. On the adult side . . . [the ratio] varies somewhere between 12 and 16 and a half percent which is comparable with any other facility. . . . [W]hen you mix in such a large pediatric population into the adult population, obviously it dilutes out the number and drops [the ratio] down . . . . (Tr. 2568.) A solution to emergency room diversion at Memorial West and an alternative to the construction of Memorial Miramar proposed by Cleveland Clinic and Westside is more SBHD urgent care centers in the Miramar area. SBHD operates seven urgent care centers. Of these seven, the proposed Miramar PSA has only one. Additional urgent care centers more readily accessible in the 10 zip code area that comprises Memorial Miramar's PSA might reduce the number of visits to the ER at Memorial West. But they might not. Patients don't self-triage when they are presented with a problem. They go to the hospital. [Triage is a medical decision.] Patients usually come to the hospital, even [with] urgent care centers down the block, because they don't know what the problem is and they allow the hospital to make the decision about what the problem is. (Tr. 2571.) Additional urgent care centers would not solve the problem created when diversion is a result of the lack of acute care beds for Memorial West ER patients who need to be admitted to the hospital for treatment beyond that provided in the ER. Cleveland Clinic hospital is not likely to offer much of an alternative. Because of the closed nature of the Cleveland Clinic specialty staff, it will not be a hospital of choice for community physicians in the South Broward Hospital District. Nor will it be a hospital of choice for patients able to elect the hospital at which to seek emergency services. It is apparent from the demand on Memorial West, despite the number of beds and other emergency departments within acceptable reach, that a Memorial West-type facility is what the residents of southwest Broward County prefer and opt for even if it means they have will have to wait for emergency services. In cases of patients transported from southwest Broward County via ambulances forced to go to Cleveland Clinic in Weston to deliver patients in need of emergency services, the transport presents difficulties of their own. It is not efficient management of emergency services due to their very nature to require ambulances to leave their service areas. There are no clear solutions to the problems emergency room diversions present for patients, their families, physicians, and the emergency medical system in general in southwest Broward County other than construction of new acute care hospital in Miramar. Construction of a new acute care hospital in Miramar will help to alleviate the high occupancies and emergency room diversions currently experienced at Memorial West. It will reduce disruptions to Miramar residents and will provide an easily accessible alternative to southwest Broward County residents, thereby enhancing access to emergency services. High Occupancy Rates at West and Regional The current and reasonably-projected high occupancies at Memorial West and Memorial Regional are extraordinary circumstances for a health planning district with as many excess beds as District 10. The calculation under AHCA's formula for hospital bed need for the January 2001 batching cycle yielded an excess of 1,717 beds. Calculation by the Agency using the same formula for the July 2001 batching cycle showed an excess of 1,786 beds or 59 more excess beds than just six months earlier. The import of these results was described at hearing by Scott Hopes, Westside's expert health planner: Obviously when you have a situation like this, the default is a zero published fixed need which is what was published. But the importance here is that there are so many excess beds. And if you look also on the line [of Westside Ex. 23] that deals with occupancy rate, the occupancy rate is about 48 percent, and it hasn't varied much between the six-month period. In fact, the occupancy rate in Broward County has been under 50 percent for some quite sometime. (Tr. 2076-7). It is extraordinary that a health planning district with so many excess beds would also have two hospitals, Memorial West and Memorial Regional, with capacity problems. Memorial West, by any standard, is a successful hospital. Since it opened in 1992, the inpatient volume there has tripled. Opening as a 100-bed facility, Memorial West now has 184 licensed beds, an expansion aimed to meet the demand for its services. As alluded to elsewhere in this order, because there are often not enough available acute care beds at Memorial West, some patients have to wait in the ER six hours or more. It is not unusual for more than 40 patients to wait at one time. Despite these conditions, patients, when offered the opportunity for a transfer to another hospital, rarely accept the offer. More often than not the patients do not wish to go. The reputation of Memorial Hospital West, the loyalty factor, if you will, to Memorial, to the medical staff, the patients want to remain at the facility. (Testimony of Memorial West Administrator Ross, Tr. 152-3.) Memorial West plans expansion but even with its current planned bed expansion, it is reasonable to expect it to reach unacceptably high occupancy rates by 2006 if Memorial Miramar is not built. Furthermore, the only obstetric programs in south Broward are at Memorial West and Memorial Regional. Memorial West performed 4,400 births last year, and its obstetrics unit often operates in excess of 100% occupancy. The only constraint on additional births at West is the limited physical capacity of the facility. Memorial Regional experienced even more births last year than West with about 5,000 deliveries. Memorial Regional is operating at or exceeding its functional capacity in other departments. The current medical/surgical occupancy at Memorial Regional is approximately 80% year round. Some units experience much higher occupancies. The intensive care unit's occupancy frequently exceed 100%, as does the cardiac telemetry unit. In certain medical/surgical units, peak occupancy is as high as 125%. Memorial Regional's capacity to handle its high patient volume is limited by certain factors. Semi-private rooms are limited to use by members of the same sex. As a tertiary facility, there are specialty patients who must be served by nurses trained in that patient's specialty, with appropriate monitoring equipment. Without approval of Memorial Hospital Miramar, Memorial Regional will reach 85% occupancy by 2008 and 88% occupancy by 2010. These occupancy rates create an inefficient and untenable environment in which to deliver the mix of specialized and tertiary services offered by Memorial Regional. The overcrowding at Memorial West and Memorial Regional is dramatic and continuing. There are simply more patients seeking care at these hospitals than the hospitals can serve appropriately. This overcrowding exists despite the excess of acute care beds within the health planning district. In sum, despite the plentiful nature of the number of acute care beds in the health planning district, a need exists to either decompress Memorial Regional and Memorial West by some means such as the proposed new hospital in Miramar or to expand one or both of the two hospitals by way of new construction or conversion of LDR and observation beds. A decompression alternative to the new hospital is to transfer beds from existing hospitals to create a satellite hospital. Because of high occupancy rates at West and Regional and because Pembroke's lease will expire in 2005, transfer of existing beds is not a feasible option. That leaves expansion, as the only alternative to a new hospital in Miramar. Cleveland Clinic and Westside argue there are ample opportunities at the two hospitals for expansion. Expansion New Construction In pre-CON application evaluation, SBHD commissioned a study from Gresham, Smith and Partners, an architecture firm. The firm studied the three Memorial facilities to determine whether expansion of the acute care bed complement at any of them was feasible. In a "Memorial Health System Facility Expandability and Master Plan Review Report" the firm concluded that it was clearly not feasible to expand either Memorial Pembroke or Memorial Regional and there were problems with expanding Memorial West. With significant problems including its aged plant and its uncertain future, expansion at Memorial Pembroke would not be cost-effective. It would cost $31 million in capital improvements to maintain Pembroke's functional capacity at 149 beds. If the present location of nursing administration, hospice and other necessary services were moved out of the hospital, the hospital's function could be expanded to 215 beds. No evidence was presented with regard to the advisability of moving those services or the additional costs associated with this alternative. HCA's willingness to make the investment necessary to renovate the facility at Pembroke was not supported by any specifics. HCA's announced its intention, "to take the hospital back at the end of the lease and run it," (tr. 1511-2) but, in fact, the company has not taken any action to evaluate the potential for assuming operation of the hospital in 2005. Nor has it even begun the process it must go through before final decisions are made. The overarching intention to "re-take the hospital and run it," at this point in time, does not mean HCA will be willing to make the investment necessary to renovate the facility either during the term of SBHD's lease or afterward. It still needs to "do a very detailed discounted cash flow analysis to make a final decision on the investment needed and the return on that investment." (Tr. 1514.) Memorial Pembroke's uncertain future makes it an unlikely candidate for expansion. However unlikely such a result, with the problems that afflict Memorial Pembroke, there is, moreover, no guarantee that HCA's intended analysis will convince it even to continue operation of the hospital. Memorial Regional has different problems from Memorial Pembroke. It takes up an entire block surrounded by residential property and parking garages. There is almost no opportunity for growth on the site. Of the few areas that could be expanded vertically, only one would be conducive to bed addition. "[I]t is so remote, it doesn't tie back to the main nursing care areas." (Tr. 482.) Expansion at Regional would also be plagued with concurrency problems and zoning issues. Of the three hospitals, Memorial West presents the best option for expansion. A facility master plan for Memorial West provides for the addition of a patient tower on the north side of the facility ("the north tower"). The addition of the north tower could add as many as 50 beds to Memorial West at a cost substantially less than the construction of Memorial Miramar. Still, SBHD's architects, Smith and Gresham, concluded that expansion of the size necessary to alleviate the overcrowding at West was not cost-effective. The force of the Smith and Gresham opinion is tempered by the firm's standing to benefit financially to a much more significant degree if Memorial Miramar is built than if the planned-for tower is constructed to add 50 beds to Memorial West. But the opinion is not groundless. Put simply, construction of an additional tower at West is no simple solution to its capacity problems. The tower was planned for maternal services but like the minimal opportunity for expansion at Regional, it would be "remote from the rest of the nursing function . . . [it would, moreover] trigger huge upgrades to the infrastructure." (Tr. 480.) The hospital site is constricted already because of additions that have almost completely built out the campus. A new north tower would add inefficiencies in hospital operations because of the increase in travel distance for materials delivery and meeting the dietary needs of patients. Despite the master plan for growth, an improvement the size of the north tower would begin to turn West into another Memorial Regional: a huge hospital, overdeveloped for its site. The improvement, like every improvement thereafter, would require patient shuffles and disruptions in patient care. Like Memorial Regional, expansion at West, too, would have concurrency issues and could create a land use dispute with neighbors, the outcome of which is uncertain. In light of these obstacles, SBHD prefers the option of constructing the new hospital in Miramar over expansion at West. There is, however, in the view of SBHD's opponents, another option for expansion of existing facilities: conversion of LDR and observation beds. Expansion through conversion of LDR and Observation Beds Cleveland Clinic and Westside contend that another option to relieve overcrowding is conversion of observation and LDR beds to acute care hospital beds. But these beds are used to meet the need of observation and maternity service patients. There are patients who need closely supervised medical care but whose care has not been determined to require admission to the hospital. Observation patients, sometimes referred to as "23 hour" patients, may suffer from various conditions, including chest pain, fever, abdominal pain, rectal bleeding or nausea. Given the high number of births at Memorial West, many obstetrical patients present at the hospital in "false labor" or for antipartum testing, complications of pregnancy, or symptoms that should be treated as observation or on an inpatient basis. It would be impractical for Memorial West to convert observation and maternity service beds, whether existing or still planned for, to inpatient acute care beds. If these beds were converted, Memorial West would find itself once again in its present straits of not enough beds for observation purposes particularly for obstetrical patients for whom there is little choice where to obtain obstetrical services in the South Broward Hospital District. Limited Functionality and Uncertain Future of Memorial Pembroke Memorial Pembroke has undergone seven ownership changes since it first opened. Perceived as a hospital where neither patients nor physicians want to go, it has suffered from a stigma within the community. Even with recent gains in utilization, it achieved an occupancy rate of only 24% in calendar year 2000. Pembroke suffers from physical and infrastructure limitations that reduce its functional bed capacity to 149 beds. Its mechanical and heating, ventilation and air conditioning systems are outdated and inadequate. For example, a primary generator is vented to the outside by a 6-foot hole in the ceiling. The electrical panels are at absolute capacity. The first floor has an outdated, plenum air return with no ducts in the ceiling. The generators have transfer switches that require them to be turned on manually. Facilities management personnel are reluctant to do so for safety reasons. The semi-private patient rooms at Pembroke are too small for modern care and do not have adequate space for the monitors, IV equipment, pumps and other technology required by today's health care delivery system. Many rooms do not have showers. The hospital has a number of three bed wards woefully outdated by the standards of modern care. It would cost $31 million in capital improvements to simply maintain Pembroke's functional capacity at 149 beds, to upgrade the facility to bring it into compliance with existing code and to otherwise modernize inadequacies. Whether Pembroke will continue to operate after 2004 is unknown. While HCA stated its intention to do so, it has not made a final decision to assume operations. It still needs to conduct a financial analysis sufficiently detailed to determine whether the necessary expenditures to bring the hospital up to par are practical. Any capital investment by HCA in excess of $1 million requires the approval of HCA's national office, approval that has not yet been provided. The level of capital investment required at Memorial Pembroke is significant and it cannot be assumed that HCA will make this investment. (See paragraph 89, above.) Increasing Retraction for Access in SW Broward Of the three hospitals located within the ten zip codes that constitute southwest Broward County: Memorial West, Memorial Pembroke and Cleveland Clinic, each poses some manner of access impediment for the residents of the area. Memorial West is overcrowded. Memorial Pembroke's future is uncertain, its present clouded by significant physical plant problems and stigma that keeps its occupancy low. Cleveland Clinic's distinctive character, its closed specialty staff and its regional, national and international draw discourages utilization by southwest Broward residents seeking routine acute care hospital services at a community hospital. The Cleveland Clinic medical staff is open to community primary care physicians. "[W]ith the qualification that if there's a specialty for some reason that is not adequately manned, the clinic can go out and contract with community physicians to provide the services" (District No. 55, p. 39), the Cleveland Clinic medical staff is not open to community specialists or sub-specialists. Its specialty and sub- specialty staff, therefore, is closed. The medical staff building, moreover, located on the campus is also closed to community practitioners even to those primary care physicians with privileges at the hospital to manage their patients care. Like the specialty medical staff, the building is restricted to Cleveland Clinic salaried specialists. Due to the closed nature of the specialty staff at Cleveland Clinic, any patient admitted to the Cleveland Clinic hospital will be seen by a Cleveland Clinic physician. This sets up reluctance on the part of community physicians to use the Cleveland Clinic hospital. As expressed by the hospital's CEO, "it's sometimes difficult to convince a primary care physician that he needs to change his referral patients, so yes, there is some concern [about the willingness of community physicians to utilize the hospital]." Id., p. 40. In multiple prior CON applications approved by AHCA, Cleveland Clinic projected that up to 30% of its patients would come from outside Broward County and that it would draw patients from throughout Broward County, rather than having a more traditional, limited service area typical of a community hospital. Patient origin data for Cleveland Clinic when at its old location in Pompano Beach shows the hospital, unique among Broward County hospitals, has a broad county-wide, regional and national draw. While all other hospitals in Broward County can identify fewer than 25 zip codes that generate the first 75% of patient admissions in 1999, 60 zip codes generated the first 75% of Cleveland Clinic's admissions. Similarly, while all other hospitals in Broward County can identify fewer than 25 zip codes that generate the first 90% of their patient admissions in 1999, the first 90% of patient admissions at Cleveland Clinic's hospital were generated by no less than 287 zip codes. Cleveland Clinic presented evidence of its intention to be available to the local community. It has marketed in Broward County by means of newspaper and television advertisements and various community programs. It has also conducted outreach and training programs with the emergency medical service providers in the Broward County area, not only to improve the quality of care for the patients of Broward County but also to educate the emergency medical service providers about Cleveland Clinic. The patient origin data for Cleveland Clinic's first three months of operation in Weston, however, verifies its continued broad draw. This data shows that within Broward County, only 30% of patients originated within the 9 southwest Broward zip codes that Cleveland Clinic identifies as its "immediate service area"; the other 70% of its patients come from outside the immediate service area. Cleveland Clinic is not a typical community hospital. Its previous CON applications have been granted in part on its unique characteristics. Whether its image or persona will change with the move to Weston to attract more patients from southwest Broward County is an open question. Given its nature and the focus of the health care it is likely to deliver, however, it is not likely that it will be utilized regularly by residents of southwest Broward County seeking routine hospital care either because not their hospital of choice or because of community physician referral patterns. h. Assurance that SBHD Can Fulfill its Mission The final "not normal" circumstance relied on by SBHD relates to the affluence of the patients in southwest Broward County and the profits that are reasonably expected to be generated by virtue of the proposed hospital's location in this affluent area. The expected profits will both subsidize SBHD's charity care and support its ability to be competitive. The importance of SBHD remaining competitive and able to serve the indigent in Broward County was explained at hearing by Jeffrey Gregg, Chief of AHCA's Bureau of Health Facility Regulation: [A]s a major indigent care provider for the State of Florida, [SBHD is] providing a service that extends far and wide that benefits everyone. In our state we have indigent care concentrated in relatively few facilities … [I]t is a very important resource that needs to be nurtured and protected to the greatest extent possible because it is fragile and vulnerable. We have many uninsured people in the state, somewhere between two and three million. It is reasonable to expect now with the economic downturn that we are going to be seeing an increase in uninsured people, so the value of hospitals that function as safety net providers is . . . very important. (Tr. 1240-1). This rationale supported the District's CON application for Memorial West. Because of SBHD's financial success to which Memorial West has been a major contributor, SBHD has achieved a significant degree of financial stability in this day of decreasing reimbursements, managed care, and increased health care costs. It is not contested that its financial position is sound. For fiscal year 2002, SBHD was running ahead of revenue and profit projections at the time of hearing. Nonetheless, if hospitals are constrained and the payor mix becomes less favorable, financial conditions can change quickly. Only three years ago, the District posted an $18 million debt. The capacity constraints at Memorial West will limit its ability to generate additional profits. At the same time, the District must accept all charity care patients. This requirement coupled with capacity constraints has the potential for an unfavorable payor mix for the District. The addition of Memorial Miramar will help to ensure that the District maintains its strong market position and will sustain a favorable payor mix. The profits expected to be generated by Memorial Miramar will ensure that the District can continue to provide care to the indigent without raising, and perhaps by lowering, the tax rate for the tax payers of Broward County. The Proposed Primary Service Area The District's proposed primary service area ("PSA") is a 10 zip code area in southwest Broward County. It excludes zip codes in Dade County that might have been included as well as the eight easternmost zip codes in south Broward County. Usually a set of contiguous towns or minor subdivisions or zip codes that represent a substantial majority of a hospital's patients, there is no single way of defining a hospital's primary service area. Some health planners use a region from which 75% of the patients come but a range of 60 to 80 percent is not unreasonable. There are other approaches to defining primary service areas: zip codes, for example, in which a threshold level of market share was achieved or that account for a minimum percentage of the hospital's patients. While one method may be more usual than another, any of a number of ways of defining a PSA may be reasonable. Cleveland Clinic's health planner, Ms. Patricia Greenberg sees Dr. Finarelli's PSA for the Miramar hospital as not rational from the perspective of health planning. The zip codes Dr. Finarelli chose include a number that are to the east of Memorial West. Ms. Greenberg asserts that it is unlikely that patients will drive from the east past Memorial West in order to reach Memorial Miramar. It would have made much more sense, in her view, for the PSA to have included three zip codes to the north of the PSA in western Broward County: zip codes 33327, 33326 and 33325. But these zip codes, entirely within North Broward Hospital District, are not South Broward Hospital District zip codes. Nor are three other zip codes that Ms. Greenberg sees for the Miramar PSA as more rational choices than zip codes east of Memorial West that Dr. Finarelli chose. Ms. Greenberg's other choices outside Dr. Finarelli's PSA are not only not in the hospital district, they are not in AHCA Health Planning District 10. They are in Dade County. Determinations of bed need do not always rise and fall on the selection of the primary service area. To the contrary, as Dr. Finarelli stated at hearing, "[h]ow and where the boundaries are drawn between the primary and secondary service area is less important [than] making sure that any analysis of bed need and demand incorporates both the primary and secondary service areas." (Tr. 724). This statement loses its potency, however, and the import of the choice of the primary service area is raised in light of the population-based bed need projections made by Dr. Finarelli within the PSA in support of the application. Population Based Bed Need Projections within the PSA Dr. Finarelli conducted a standard population based bed need analysis to determine the gross bed need within the PSA selected for the proposed hospital. His bed need calculations were computed separately for adult medical, surgical, pediatric and obstetric beds. The assumptions used by Dr. Finarelli were reasonable and appropriate. The level of detail in Dr. Finarelli's model was described by another of SBHD's expert health planners who testified in this case, Mr. Balsano and who has been qualified as an expert in health planning and health care financial feasibility approximately 20 times over the last decade, as the most detailed model he had ever seen. Dr. Finarelli's analysis accounted for the current and projected population as well as the current and projected hospital discharge rate per 1000 population within the PSA. Multiplying the population (in thousands) by the discharge rate yields the total number of current and projected hospital discharges by PSA residents for the planning horizon. The total number of hospital discharges was then multiplied by an appropriate average length of stay ("ALOS") to determine the total number of current and projected patient days by PSA residents. The total patient days were divided by 365 (days in the year) to arrive at the current and projected hospital average daily census ("ADC"). Finally, the ADC was divided by the desired 75% occupancy rate to arrive at a gross bed need for the PSA. The calculations result in a projected need in the 2006 planning horizon for a total of 457 acute care beds; including 386 adult medical surgical, 25 pediatric, and 46 obstetric beds. Based only on projected population growth within the PSA, there will be an incremental gross bed need for 75 acute care beds; 67 medical/surgical, 3 pediatric and 5 obstetric. Existing Inventory and Bed Supply The three hospitals located within the 10 zip code PSA have a total of 667 licensed acute care beds, existing or approved. Including the 36 approved and 16 conditionally approved beds at West, Memorial West has 216 beds. Memorial Pembroke has 301 and there are 150 licensed beds at Cleveland Clinic. This total, however, is "simply not a reasonable or realistic measure of how many beds in those three hospitals are truly available to the residents of Southwest Broward County . . . ." (Tr. 837-8.) Patient origin statistics and representations made by Cleveland Clinic in its certificate of need applications bear out that it is not a typical community hospital. Appropriate to its mix of tertiary services and its focus on education and research, it has a broad service area reaching far beyond Broward County. Consistent with the nature of the hospital, in its first three months of operation at Weston, 35% of its patients came from outside Broward County and only 16% have come from southwest Broward County or the 10 zip code PSA used by SBHD in its application for the Miramar hospital. Based on available data and information, it is reasonable to project that Cleveland Clinic will draw approximately 26% of its patients from within Memorial Miramar's PSA. It is reasonable, therefore, to allocate 26% of Cleveland Clinic's 150 beds to meet the population based demand for adult medical surgical beds in the PSA, for a net contribution of approximately 40 beds. With its functional capacity of 149 beds, it is not reasonable to consider all of the 301 beds at Memorial Pembroke. Fifty-four percent of its patients come from within the Memorial Pembroke PSA. The product of 149 beds multiplied by 54% is approximately 80 beds available to meet the population-based demand of the residents of southwest Broward County. There is, moreover, some doubt about whether any beds will be available at Memorial Pembroke after the expiration of SBHD's lease with HCA. Given the stigma Memorial Pembroke suffers and its uncertain future, an estimate of 80 beds is a reasonable projection for the number of beds at the hospital available to meet the needs of the residents of southwest Broward County. With 65% of its patients coming from within the proposed PSA for the Miramar Hospital, Memorial West is the hospital of choice for the residents of the proposed PSA. With 186 adult medical surgical beds, 120 meet the needs of patients coming from Miramar's PSA. Thus, there are approximately 240 adult medical surgical beds (120 at West, 80 at Pembroke and 40 at Cleveland Clinic) available to meet the projected need of 386 adult medical surgical beds in the 2006 planning horizon. Subtracting the 240 beds from the 386 needed yields a net need of 146 beds to serve residents of the Miramar PSA. Although some patients will continue to seek services outside the PSA, Dr. Finarelli's projection that there is a sufficient net need to support the 80 adult medical surgical beds proposed at Memorial Miramar is reasonable. Building Memorial Miramar will help reduce the percentage of people who leave the area for acute inpatient adult medical surgical services from its current level of about 50% to approximately 25%. This will improve access to health care for the residents of southwest Broward County. Memorial West is the only provider of obstetrical services in southwest Broward County, and only one of two in all of south Broward (the other being Memorial Regional). Both Memorial West and Memorial Regional are operating above capacity in their obstetrical units. In calendar year 2000, Memorial West's 24-bed obstetric unit operated at 130% occupancy. Hollywood Medical Center recently closed its obstetric unit thereby increasing the pressure on Memorial Regional and Memorial West to provide services to area patients. With a projected gross need for 46 obstetric beds in the planning horizon, there is a net need for at least 22 more obstetric beds. The proposed 12-bed unit at Memorial Miramar will help to meet that need. Memorial Hospital West's 6-bed pediatric unit is the only unit of its kind in southwest Broward County. The only other provider of pediatric services in all of south Broward is Memorial Regional's Joe DiMaggio Children's Hospital. Dr. Finarelli reasonably projects that one-half of the pediatric patient beds needed in southwest Broward would continue to be filled by Joe DiMaggio's Children Hospital. This leaves a net need for at least 7 pediatric beds in southwest Broward; the proposed 8-bed unit at Memorial Miramar will fill that need. Patient Days, Utilization and Market Share Projections To project utilization and market shares for the proposed hospital, Dr. Finarelli used a geographic area comprised of 28 zip codes that represent the primary and secondary service areas of the proposed hospital. The areas are expected to account for 90% of the hospital's admissions. The 28 zip codes were divided by Dr. Finarelli into four geographic clusters: the 10 zip code PSA or "Southwest Broward", 9 zip codes in "Other South Broward", 3 zip codes in "North Broward" and 6 zip codes in north Dade County or "Select North Dade." Based on historical and current data and market trends, Dr. Finarelli assigned current and projected inpatient market shares in each zip code cluster to each hospital in south Broward County and to select hospitals in north Broward County and north Dade County, with and without the existence of Memorial Hospital Miramar. He also assigned market shares and projected patient days separately by service category for adult medical/surgical, obstetric and pediatric services. Dr. Finarelli's market share assumptions for the proposed hospital were as follows: for Southwest Broward County in the Adult Service Category, 6% and 18%, in OB, 7% and 20%, in Pediatrics, 7% and 20%, all for the years 2005 and 2010, respectively; for Other South Broward County, in the Adult Service Category, 0.3% and 1%, for OB, 0.3% and 1%, for pediatrics, 0% and 0%, all for the years 2005 and 2010, respectively; for North Broward in the Adult Service Category, 0.6% and 2%, for OB, 0.8% and 3% and for pediatrics, 0.8% and 3%, all for the years 2005 and 2010, respectively; and for Select North Dade, in the Adult Service Category, 0.8% and 2.5%, for OB, 1% and 3%, and for pediatrics, 0.8% and 2.5%, all for the years 2005 and 2010, respectively. Taking into account available data and projected trends in each of the zip code clusters, these market share projections are reasonable. Dr. Finarelli applied his market share assumptions to overall projections of hospital discharges for each zip code cluster to arrive at the projected number of discharges for the proposed hospital in its first and second year of operation. He included an additional 9% to 10% in projected discharges to account for patients admitted from outside the 28 zip codes, such as patients from areas elsewhere in Broward, Dade, other parts of Florida and out of state. It is typical for hospitals in Broward County to receive approximately 10% of patients from outside of their primary and secondary service areas. By multiplying the projected number of hospital discharges by a reasonable length of stay for each category of service, Dr. Finarelli arrived at his projections of patient days. His "average length of stay" assumption was less than the District average. These calculations demonstrate that Memorial Miramar will have total acute care utilization of 19,958 patient days in its first full year of operation, and 25,503 patient days in its second full year of operation. Dr. Finarelli's projections of market shares, admissions and patient days for the new hospital appear to be reasonable. The Statutory Criteria Section 408.035, Florida Statutes, provides the review criteria for CON applications. The parties agree that subsections (3) and (4) are not in dispute. Section 408.035(1) concerns whether the proposed project is supported by and consistent with the applicable district health plan (the "Plan"). The Plan contains recommendations, preferences and priorities. The majority of the preferences and priorities contained in the Plan are not applicable to this application. The Plan recommends that there should be a reduction of licensed beds in Broward County until a ratio of 4.0 beds per 1,000 population is less than 4.0 beds per thousand and/or an overall occupancy rate of 85% is achieved. Although the bed population ratio is less than 4.0 beds per thousand, the annual occupancy rate is below 50%. This criterion, quite obviously, is not met by SBHD. But its importance diminishes in light of the "not normal" circumstances in support of the application, particularly the overcrowding at Memorial West and Regional. The Plan states that "priority consideration for initiation of new acute care services or capital expenditures shall be given to applicants with a documented history of providing services to medically indigent patients or a commitment to do so." SBHD promises to provide 3.21% of gross revenue for charity care and 4.14% of its patient days for Medicaid patients at Memorial Pembroke. These figures are not unattainable. Memorial West provided 3.2% of its revenues toward charity care in the most recent year. The effect of the expiration of SBHD' lease without renewal at Memorial Pembroke may increase pressure on Memorial Miramar's charity care services. On the other hand, in light of Memorial West's history in meeting its charity care commitment and the relative affluence of the Miramar's PSA, there is some question as to whether Memorial Miramar can meet the commitment contained in the application. West has fallen far short of its 7.0% commitment. Less than 1% of its admissions were charity care admissions between 1997 and 2000 and only 2.6% of its gross revenues were for charity care in 1999, for example. Whatever West's experience bodes for Miramar's future, it is clear that SBHD has a documented history of providing services to the medically indigent. It is committed, moreover, to do so throughout the hospital district whether it achieves its commitment at Memorial Miramar or not. The preferences of the Plan related to the provision of care for the indigent is clearly met by SBHD. Section 408.035(2) addresses the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the service district of the applicant. There is no problem with quality of care in the district. The extent of utilization of all the facilities in the district is not high. Nonetheless, there is an access problem that constitutes not normal circumstances. Memorial West, in particular, is overcrowded. A new hospital in Miramar will enhance access for the residents of the hospital district who want to access one of the District's hospitals and so directly meets the criterion in Section 408.035(7), the "extent to which the proposed services will enhance access to health care for residents of the service district." Section 408.035(5) addresses the needs of research and educational facilities including facilities with institutional training programs and community training programs for health care practitioners at the student, internship and residency training levels. The District's affiliation with medical schools provides some satisfaction with this criterion but on balance, SBHD receives little credit under this criterion. Section 408.035(6), Florida Statutes is "[t]he availability, of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." The parties stipulated that SBHD has the ability to recruit and retain the staff needed for the proposed hospital. Cleveland Clinic and Westside argue that SBHD's recruitment of staff will have a detrimental impact on existing providers. A shortage of skilled nurses and other allied professionals exists nationally, in Florida and in Dade and Broward Counties. The nursing shortage has intensified in recent years due to the decline in the number of licensed nurses further compounded by a drop in the number of nurses enrolled in nursing schools. As a result it has become increasingly difficult for hospitals to fill nursing vacancies. In order to ensure adequate staffing in the midst of the nursing shortage, especially during the peak season of late fall and the winter months, Westside and Cleveland Clinic are forced to utilize "agency" or "pool" nursing personnel. These nurses command higher wages than non-agency nursing personnel. The District's application projects a need for 128 registered nurses who will be full-time employees ("FTE"s). This need increases to 167. New hospitals are usually able to attract staff from other facilities who prefer to work with new equipment in a new setting. Recruitment of personnel to staff the Miramar Hospital will come at the expense of existing providers such as Cleveland Clinic and Westside. Subsection (8) of the Review Criteria is "[t]he immediate and long-term financial feasibility of the proposal." The District has the financial resources to construct the hospital and meet start-up costs. There was no challenge to SBHD's demonstration of short-term financial feasibility. Projections of revenues and expenses were based on SBHD experience at Memorial West and its other hospitals. These projections are reasonable. Based on Dr. Finarelli's patient day projections, showing a net profit of $1.6 million in year 2, the project is feasible in the long-term. Subsection (9) of the Review Criteria is "[t]he extent to which the proposal will foster competition that promotes quality and cost-effectiveness." Aside from the impact the new facility will have on Cleveland Clinic and Westside's ability to recruit and retain staff, the evidence failed to show that either Cleveland Clinic or Westside would suffer significant impact if SBHD's application is approved. No matter which experts projections of lost case volume are accepted, both Cleveland Clinic and Westside should generate substantial net profits. The future of Memorial Pembroke, after the expiration of the current lease, is too speculative to factor into the impact to HCA. Subsection (10) of the Review Criteria relates to the costs and methods of the proposed construction. The District satisfies this criterion. (See paragraph 34, above). Subsection (11) addresses the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. As stated above, while there is legitimate doubt whether or not SBHD can meet the conditions it proposes in its application, there is no question about its past provisions of services to Medicaid patients and the medically indigent. Rule Criteria There are two rule criteria that relate to the application. Rule 59C-1.038, acute care bed priority considerations and Rule 59C-1030, additional review criteria. Under the Rule 59C-1.038 there are two priorities, only the first of which (documented history of providing services to medically indigent patients or a commitment to do so) is applicable. Stated in the disjunctive, just as its corollary statutory criterion, SBHD clearly meets the criterion based on its documented history regardless of the case Cleveland Clinic and Westside present relative to doubts based on the history of condition compliance at Memorial West. The criteria in Rule 59C-1.030 generally address the extent to which there is a need for a particular service and the extent to which the service will be accessible to underserved members of the population. The application did not identify an underserved segment of the population that is in need of the services proposed for Memorial Miramar. As for the remainder of the criteria under the rule, there is a need for the proposed project as concluded below in this order's conclusions of law.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration grant South Broward Hospital District's CON Application 9459 to establish a 100-bed acute care hospital in southwest Broward County. DONE AND ENTERED this 3rd day of July, 2002, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 2002. COPIES FURNISHED: C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Stephen A. Ecenia, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 Robert A. Weiss, Esquire Parker, Hudson, Rainer & Dobbs, LLP The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 F. Philip Blank, Esquire Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 George N. Meros, Jr., Esquire Michael E. Riley, Esquire Gray, Harris & Robinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Gerald L. Pickett, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether Certificate of Need (CON) Application No. 10130, filed by Florida Regional Medical Center (FRMC) for an 80-bed acute-care hospital in Palm Beach County, Florida, Agency for Health Care Administration (AHCA) health planning district 9, sub-district 9-4, satisfies, on balance, the applicable statutory and rule criteria.
Findings Of Fact The Parties The Applicant and affiliates The applicant in this case, FRMC, is a Florida, for- profit, corporation formed for the purpose of filing CON Application No. 10130. FRMC is a wholly-owned subsidiary of Tenet Healthcare Corporation (Tenet). Tenet is one of the largest, for-profit, hospital organizations in the nation. It operates 49 hospitals throughout the country. Tenet owns and operates five hospitals in Palm Beach County: Palm Beach Gardens Medical Center (PBGMC), St. Mary’s Medical Center (St. Mary's), Good Samaritan Medical Center (Good Samaritan), West Boca Medical Center, and Delray Medical Center. PBGMC, St. Mary's, and Good Samaritan are all located in AHCA sub-district 9-4, in the northern half of Palm Beach County. The three hospitals have a combined total of 854 licensed, acute-care beds making up approximately 60% of the licensed, acute-care beds in the sub-district. Jupiter Medical Center JMC is a stand alone, not-for-profit, 163-bed, acute- care hospital in sub-district 9-4 located on a 30-acre campus at 1210 Old Dixie Highway, Jupiter, Florida 33458. JMC also owns and operates a 120-bed, skilled-nursing facility on that campus. JMC is approximately three miles from FRMC's proposed location. West Palm and affiliates West Palm is a 245-bed, acute care, for-profit hospital located at 2201 45th Street, West Palm Beach, Florida 33407, approximately 12 miles from FRMC's proposed location. Its 245 beds include 157 acute-care beds and 88 specialty psychiatric beds. West Palm is affiliated with Hospital Corporation of America (HCA) which operates 163 hospitals in 20 states and Great Britain. HCA’s East Coast Division includes 14 hospitals in South Florida and the Treasure Coast, including two hospitals in addition to West Palm in Palm Beach County: Palms West Hospital (Palms West), located in Loxahatchee, AHCA sub-district 9-4; and JFK Medical Center (JFK), located in Atlantis, sub- district 9-5. Agency for Health Care Administration AHCA is the state health-planning agency responsible for administering the certificate of need (CON) program under the Health Facility and Services Development Act, sections 408.031-.0455, Florida Statutes, and related administrative rules found in chapters 59C-1 and 59C-2 of the Florida Administrative Code.5/ The Proposal Overview FRMC's CON Application No. 10130 (CON Application, Proposal, or proposed hospital) is for "the establishment of a new, general acute-care hospital of 80 licensed beds," to be composed of 64 general, medical-surgical beds and 16 intensive care unit (ICU) beds. The proposed hospital is to be located in Palm Beach Gardens, Palm Beach County, AHCA planning district 9, sub-district 9-4. The proposed service area is a ten zip code area with nine of the zip codes in northern Palm Beach County and one in southern Martin County. The Proposal states that "FRMC's CON application represents the first phase of a multi-year development project that is anticipated to result in an academic teaching and research hospital of 200 beds to serve the long-term needs of residents of District 9 and potentially other parts of the State." According to the Proposal, "[t]he first phase of the Hospital's development will be geared toward providing routine medical/surgical services to residents of the immediate area as well as a platform for its future role as an academic medical center and teaching hospital." The Proposal also states that "[n]on-Tertiary types of cases for adults [15 years old and older] are the focus of the proposed [FRMC] during its initial operation and the basis upon which this CON application is being submitted." FRMC defines the "non-tertiary" acute-care services planned to be offered by excluding psychiatric, substance abuse, inpatient rehabilitation, open-heart surgery, major cardiovascular surgery procedures, therapeutic cardiac catheterization, neonatal intensive care, burn care, transplants, neurosurgical and selected spinal surgery procedures, and major significant trauma services. There is a list of diagnostic-related groups (DRGs) attached to the CON Application which further describes additional tertiary services, as well as non-tertiary obstetrical services, that are specifically excluded from the Proposal. In addition, the Proposal explains that no pediatric services will be offered because of the proximity of St. Marys, which offers pediatrics. There is no indication in the CON Application whether the excluded services will ever be offered. The Proposal discusses a "20 Year Build-Out Plan," and maintains that it is appropriate to consider the vision of FRMC becoming a 200-bed, teaching hospital in cooperation with The Scripps Research Institute (Scripps) and Florida Atlantic University (FAU). The CON Application states, however, that "[e]stimation of the parameters of bed need 20 years into the future is speculative and . . . not specifically subject to CON review at this time ” The Proposed Site The site for the proposed hospital is in zip code 33418, between I-95 and Military Trail, on the south side of Donald Ross Road. The proposed hospital would be located on a 70-acre parcel of land owned by Palm Beach County within an 863- acre tract of undeveloped land known as the Briger Tract, east of I-95 in Palm Beach County. The 70-acre parcel is located just south of Donald Ross Road in Palm Beach Gardens, directly across the road from Scripps, FAU Wilkes Honors College MacArthur campus, and the Max Planck Florida Institute. The proposed hospital would occupy approximately 30 acres of the 70- acre parcel. Zoning for the site of the proposed hospital is not an issue in this proceeding. Palm Beach County leases the 70-acre parcel to Scripps for an annual lease payment of $1. The ground lease expires in 2021, but Scripps has an option to purchase the 70-acre parcel for $1 prior to the end of the lease if it meets certain covenants relating to job growth based on operations. If FRMC is constructed on the site, jobs associated with that project will count toward Scripps' job creation goal. On July 25, 2011, Scripps and Tenet entered into a letter of intent (Letter of Intent) regarding the proposed hospital which anticipates that Tenet will sublease the proposed hospital site from Scripps. Under the Letter of Intent, it is contemplated that Tenet will pay Scripps approximately $5,000,000 annually as a combined payment for the sublease, participatory interest distributions, and mission support payments. The commercial value of the sublease is between $560,000 to $680,000 annually. Stated Goals for the Project First, the CON Application states that FRMC is needed to decompress PBGMC and resolve access issues that patients and physicians currently experience there. FRMC proposes that all of its inpatients will be patients “redirected” from PBGMC, and states that, therefore, “[t]he impact of the new hospital will be limited solely to Palm Beach Gardens Medical Center.” According to FRMC, the "decompression" will allow PBGMC to “modernize for the future by re-configuring the space vacated by the non-tertiary patients who will use the new Florida Regional Medical Center.” Second, the CON Application states that the proposed hospital is designed to provide a unique blend of treatment, teaching, and research with the collaboration of Scripps, FAU, and FRMC. According to FRMC, the project will not only meet the needs of Scripps and FAU, but will also advance and improve health care in northern Palm Beach County. AHCA’s Preliminary Review and Approval Tenet met with AHCA officials twice before the CON Application was filed. The first meeting included representatives from Tenet and Scripps and the chief of AHCA's CON unit, Jeff Gregg. During the first meeting, Scripps indicated that the proposed hospital would not be just “another community hospital in Palm Beach County,” but rather a facility to further Scripps’ “translational research”6/ that would complement Scripps’ existing resources. The CON Application, however, does not specify whether or how FRMC would further Scripps’ translational research. At the second meeting, representatives from Tenet and Scripps and the president of FAU met with Mr. Gregg and AHCA Secretary Elizabeth Dudek. The President of FAU suggested that the proposed hospital would become a "facility of regional impact" that would "offer services that [are comparable to or] even differ from those that are available at academic medical centers in Miami-Dade County." Neither the CON Application nor the evidence, however, supports a finding that FRMC would offer services comparable to those that are available at academic medical centers in Miami-Dade County. After the CON Application was filed, AHCA undertook its review and made its preliminary determination, which are detailed in the State Agency Action Report (SAAR). The SAAR was primarily authored by AHCA CON unit manager, James McLemore, and edited by Mr. Gregg. Although draft SAARs often contain a recommendation whether to approve or deny an application, the draft SAAR for the Proposal did not contain such recommendation. Mr. Gregg felt that whether the CON should be granted was a close call. He discussed the Proposal and draft SAAR with Secretary Dudek and then, at Secretary Dudek's suggestion, Mr. Gregg drafted the following language which was incorporated into the final version of the SAAR: . . . . However, the most important factor in project approval is FRMC’s commitment to develop a world-class research and teaching hospital that has the potential to become a regional rather than a local community resource. The coalition of organizations associated with the proposed facility must work together on an ongoing basis to ensure that the population gains access to services that it would otherwise not have. There is no need for an additional small community hospital that offers basic services. Contrary to the language in the SAAR, there is no “commitment to develop a world-class research and teaching hospital” in the CON Application, and the evidence does not support such a finding. Rather, the evidence only supports a finding that FRMC, Scripps, and FAU had a vision of collaboration in the future. The Letter of Intent between FRMC and Scripps regarding the proposed hospital, by its terms, is not binding, and the parties to the letter of intent "acknowledge that it would be imprudent and unreasonable to rely on the expectation of entering into a contract regarding the subject matter of this letter." At the final hearing, Mr. Greg reiterated AHCA's preliminary determination that there "is no need for an additional small community hospital that offers basic services." He confirmed that such determination was based upon AHCA's consideration of the applicable statutory and regulatory criteria in view of the proposal for an 80-bed, acute-care hospital serving the ten zip code service area. Statutory and Rule Review Criteria The statutory criteria for reviewing CON applications for new hospitals are found in section 408.035, Florida Statutes. Before 2004, section 408.035 review criteria included: The needs of research and educational facilities, including, but not limited to, facilities with institutional training programs and community training programs for health care practitioners and for doctors of osteopathic medicine and medicine at the student, internship, and residency training levels. § 408.035(5), Fla. Stat. (2003). In 2004, however, the quoted provision was deleted from the CON review criteria. See ch. 2004-383, § 5, Laws of Fla. The 2004 changes also removed the requirement that existing facilities undergo CON review for increasing the number of their acute-care beds, so that now, after notifying AHCA, existing acute-care hospitals can generally add acute-care beds without CON review. Id., § 6 (amending § 406.036). In 2008, the Florida Legislature further modified section 408.035 by limiting the criteria applied to CON applications for general hospitals to "only the criteria specified in paragraph (1)(a), paragraph (1)(b), except for quality of care in paragraph (1)(b), and paragraphs (1)(e),(g), and (i) [of section 408.035(1)]." See ch. 2008-29, § 1, Laws of Fla. As a result of the 2008 amendments, the statutory review criteria found in section 408.035(1), which are no longer applicable to CON applications for general hospitals, are: The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. (f) The immediate and long-term financial feasibility of the proposal. (h) The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction. The statutory CON review criteria in section 408.035 that remain applicable to general hospital applications since the 2008 amendments are subsections 408.035(1): The need for the health care facilities and health services being proposed. The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. (e) The extent to which the proposed services will enhance access to health care for residents of the service district. (g) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. (i) The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. Each of the applicable review criterion under section 408.035(1)(a), (b), (e), (g), and (i), as related to the facts of this case is discussed under separate headings, below. Section 408.035(1)(a): The need for the health care facilities and health services being proposed. AND Section 408.035(1)(b): The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant. The analyses under subsections 408.035(1)(a) and (1)(b) are generally combined. For instance, in applying the statutory review criteria to the CON Application, the SAAR cites subsections 408.035(1)(a) and (1)(b) in framing the issue as: "Is need for the project evidenced by the availability, accessibility, and extent of utilization of existing healthcare facilities and health services in the applicant's service area?" Following the 2004 changes in the CON law, AHCA repealed its rule relating to the need for acute-care beds.7/ As a result, AHCA does not presently have a need methodology for acute-care hospitals or acute-care beds. Florida Administrative Code Rule 59C-1.008(2)(e)2. provides, in pertinent part: . . . . If an agency need methodology does not exist for the proposed project: The agency will provide to the applicant, if one exists, any policy upon which to determine need for the proposed beds or service. The applicant is not precluded from using other methodologies to compare and contrast with the agency policy. If no agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and Market conditions. While there is no evidence that AHCA has a written policy apart from statutory and rule criteria, Mr. Gregg has summarized AHCA’s “policy” regarding criteria for approval of a new hospital as requiring: One, a primary service area with a large and rapidly growing population base. Two, an expanding market in the applicant’s service area, especially the primary service area, which minimizes the impact on existing providers. And three, the benefit of enhanced access outweighs the adverse impact on existing hospitals. AHCA’s unwritten policy as expressed by Mr. Gregg is consistent with existing statutory and rule criteria. The required topics listed in rule 59C- 1.008(2)(e)2.a.-d., quoted above, are compatible with a combined analysis of the review criteria under subsections 408.035(1)(a) and (1)(b), and a discussion of each in view of the facts is organized under subheadings 1 through 4, below. 1. Population demographics and dynamics FRMC’s proposed primary service area is made up of the five zip codes immediately surrounding the proposed hospital, and its proposed secondary service area is derived from five adjacent zip codes.8/ Population growth in the proposed service area and sub-district 9-4 is estimated to be at an annual rate of approximately 1.4% throughout the five-year planning horizon from 2011 through 2016. While some evidence was presented indicating that the population growth in the proposed primary service area is greater than 1.4%, the evidence was insufficient to establish that the proposed primary service area has a large and rapidly growing population base. 2. Availability, [and] utilization and quality9/ of like services in the district, subdistrict or both In July 2011, there were 1,423 licensed, acute-care beds among seven hospitals located in AHCA district 9, sub- district 9-4, plus approvals for 14 more acute-care beds based upon notifications from JMC and West Palm to add 12 beds and two beds, respectively. Those notifications were voided in favor of subsequent notifications from JMC and West Palm in October, 2011, to add 45 and 29 acute-care beds, respectively. JMC’s intended addition of 45 new-licensed, acute-care beds includes renovation of existing space and the addition of an 80,000- square foot wing scheduled to open in the fall of 2015.10/ During calendar year 2010, sub-district 9-4’s overall acute-care bed occupancy averaged 54.22%. That number declined to 53.8% in 2011, leaving an average daily census of 657 empty, acute-care beds within the sub-district. Projected need in the proposed service area is not sufficient to support a new 80-bed, acute-care hospital. Rather, with population growth projected to be less than 1.5% and flat or declining utilization rates, the projected need for acute-care beds for the proposed hospital's five-year planning horizon is only 21 to 27 beds. 3. Medical treatment trends There is a general trend in the hospital industry away from inpatient utilization in favor of outpatient services. The trend is attributable to advances in medical care and technologies, as well as the move toward managed care and changes in reimbursement under Medicaid, Medicare, and the Affordable Care Act that focus on cost savings and efficiencies. In fiscal year 2011, 37.04% of the weighted revenue average for all acute-care hospitals in Florida came from outpatient services. The trend away from inpatient utilization is expected to continue. 4. Market conditions Discharge data for basic, non-tertiary, acute-care services within FRMC's proposed service area for fiscal years 2009 through 2010, show that JMC has the largest percentage of the market, with a total market share of approximately 39.6%, including 41.7% of FRMC’s proposed primary service area (PSA) and 35.2% of FRMC's proposed secondary service area (SSA). PBGMC follows with approximately 29.7% of the market (36% of the PSA and 17.1% of SSA); then St. Mary's with 5.6% (5.3% PSA and 6.1% SSA); Good Samaritan with 4.3% (4.7% PSA and 3.4% SSA); West Palm with 2.4% (2.2% PSA and 2.6% SSA); JFK with 2% (1.7% PSA and 2.5% SSA); Palms West with 1.8% (0.6% PSA and 2.5% SSA); and the remaining 14.8% of the market divided among all other hospitals. Market share figures derived from updated data presented at the final hearing were not appreciably different. FRMC's proposed PSA completely overlaps JMC's PSA and all of the zip codes making up FRMC's proposed PSA are within JMC's existing PSA. Despite the overlap, FRMC contends that the proposed hospital will not affect JMC's market share, nor other hospitals within the subdistrict except PBGMC, because all of FRMC's inpatient admissions will come from a "redirection" of 70% of PBGMC's non-tertiary inpatients. It is unlikely that FRMC will be successful in filling its beds with patients "redirected" from PBGMC without otherwise affecting the market. The greatest factors driving inpatient admissions are patient preference and emergency admissions, not redirection from existing hospitals. There is a substantial overlap between medical staffs at PBGMC and JMC, and it is likely that many of those physicians would obtain staff privilages at FRMC. PBGMC does not control where physicians with privilages at PBGMC admit patients. For instance, PBGMC's largest admitter of patients, Dr. Baqir Murtaza Syed, while in favor of the proposed hospital, has no intention of redirecting patients from PBGMC to the proposed hospital except in cases where there is an access problem or where complex services not available at PBGMC are offered at FRMC. While sharing some administrative functions through common ownership by Tenet, FRMC is not a satellite to PBGMC. Rather, it is designed to be a stand-alone hospital offering basic, non-tertiary services duplicative and not more complex than those general acute-care services available at both PBGMC and JMC. Section 408.035(1)(e): The Extent to Which the Proposed Services Will Enhance Access11/ to Health Care for Residents of the Service District According to the CON Application, FRMC will enhance programmatic access for patients at PBGMC by decompressing PBGMC, enhance geographic and programmatic access to emergency care and basic hospital services, and enhance access to programs and resources of a teaching and research hospital affiliated with FAU and Scripps. Each of these assertions is addressed under separate headings below. 1. Programmatic Access by Decompressing PBGMC The CON Application states that approval will "[e]nhance programmatic access to inpatient and outpatient [sic] at [PBGMC] by decompressing its patient census and allowing it to re-configure the facility's existing space for modernization projects." It also states that decompression will "ease the capacity constraints and crowding that routinely occurs during the peak season months of January — April . . . ." According to FRMC, PBGMC is landlocked and cannot grow horizontally or expand vertically, has no outpatient surgery rooms, and needs to expand seven of its nine operating rooms. In addition, the CON Application complains that the current 1,291-square feet per bed at PBGMC12/ is less than half of the average 2,814-square feet per bed for new, general acute-care hospitals. As previously discussed, however, "decompression" by "redirection" is unlikely. In addition, while seasonal fluxuations may increase average occupancy levels at PBGMC during peak season, total inpatient days at PBGMC have been declining, and the evidence does not otherwise show that present utilization has interfered with recent renovations. First built in 1963, PBGMC has been renovated over time to meet its needs. In addition to its 199 licensed, acute- care beds, PBGMC has three observation beds and leases 11 of its acute-care beds to an unrelated hospice provider. Sixteen of PBGMC's 199 acute-care beds can be converted into semi-private rooms, which would give PBGMC a 218-bed capacity, not including the 11 hospice beds. In contrast to the CON Application's assertion that PBGMC cannot be expanded, in 2009, the City of Palm Beach Gardens approved a site plan ("Site Plan") authorizing PBGMC to expand its emergency department by 10,000-square feet; expand its surgical suite by 3,800-square feet; add 5,000-square feet of storage; add 300 additional acute-care beds; increase its parking; and construct a new 50,000-square-foot medical office building up to 46-feet in height. PBGMC completed the 10,000- square-foot emergency department expansion in 2010, but has not pursued the other authorized Site Plan expansions. PBGMC is currently undergoing renovations to accommodate a nuclear camera and combine two operating rooms. There is no evidence that those renovations, or the 10,000- square-foot emergency department expansion, were hindered by current utilization. In addition, PBGC has not utilized potential additional excess capacity by, for instance, converting the 16 beds that can be converted to semi-private rooms. PBGMC, like JMC, experiences higher occupancy levels during "peak season" each year from January through March. Evidence indicates that, during peak season, PBGMC's overall occupancy levels approach 80%, with even higher utilization in some specialty units such as surgical and cardio intensive care units.13/ As all beds at PBGMC are private, however, this seasonal influx does not present gender or clinical conflicts. The CON Application asserts an even higher utilization for PBGMC during peak season using a formula to derive what FRMC describes as PBGMC's "functional occupancy." FRMC's formula for "functional occupancy," however, is not reliable. It only considers PBGMC's licensed beds and observation beds, without considering emergency room bays or other available areas. In addition, the data utilized in the formula was defective because it does not reflect the number of outpatients and observation patients on any given day, but rather only reflects the day of the month on which hospital services were billed. While maintaining that renovations are cost prohibitive, PBGMC has yet to develop a formal plan of renovation that would "modernize" PBGMC in the manner suggested by the CON Application. In fact, Tenet has not engaged architects or planners to come up with conceptual documents for such a project, and such renovations have not been discussed between Tenet and PBGMC's board of directors. On the other hand, in addition to evidence of unused, excess-bed capacity and the previously approved Site Plan, evidence at the final hearing reasonably suggested that the Site Plan could be modified to permit additional expansion and improvements. PBGMC has been designated as a Planned Unit Development and, as such, has greater planning and renovation flexibility. The evidence showed that the City of Palm Beach Gardens has been supportive of renovations at PBGMC in the past and would likely continue that support in the future. Further, at the final hearing, FRMC's statement that vertical expansion of PBGMC would be cost prohibitive was shown to be premised on a misinterpretation of the Florida Building Code. The misinterpretation erroneously concluded that provisions of the Florida Building Code, Existing would require the entire hospital to be brought up to new code standards if certain vertical and lateral load thresholds were exceeded. Those provisions, however, do not apply to hospitals and other state-licensed facilities, as clarified by the scoping provisions found at section 419 of the Florida Building Code/Building. 2. Geographic and Programmatic Access to Emergency & Basic Hospital Services According to FRMC, the project will make emergency department services more convenient to residents of the area and enhance geographic access to basic hospital services within the immediate vicinity of the proposed hospital. The proposed hospital, however, is only six miles from PBGMC's recently expanded emergency department and less than four miles from JMC. The emergency department at JMC includes 26 treatment bays with an adjacent 10-bed, clinical-decision unit available to handle any temporary emergency department overflow. These factors, together with evidence of existing available acute-care beds and services available within the proposed service area, do not support a finding that the proposed hospital will appreciably enhance access to emergency department or basic hospital services. 3. Access to Programs and Resources of a Teaching and Research Hospital The CON Application states that "[t]he vision for FRMC is to expand the opportunities for clinical research, graduate medical education and medical surgical services while providing even better access to state-of-the-art medical care." It further states: The location of a medical center next to the Scripps Florida Research Institute and FAU's MacArthur campus will foster the positive relationship between science and medicine. Academic medical centers play a pivotal role in the effort to expand access to undergraduate and graduate medical education in the state that benefits students, faculty, and patients. Florida Regional Medical Center will be one of the clinical training sites for FAU's medical students and residents. Thus, programmatic access will be further enhanced by the opportunities to improve the health of the area's residents as well as to train the next generation of physicians and scientists. The CON Application further observes that "District 9 is one of the five districts in Florida without a statutory teaching hospital." Aside from the fact that the need for research and educational facilities has been removed from CON review criteria, and notwithstanding FRMC's acknowledgement that consideration of bed need beyond its immediate plans for an 80- bed, general acute-care hospital is "speculative," the evidence was insufficient to show that FRMC could reach its suggested goals with regard to research and education. Although the CON Application discusses Florida's nine statutory teaching hospitals, FRMC is not envisioned as a statutory teaching hospital. Rather, discussion of the statutory teaching hospitals was included in the application because data from those facilities were used as "parameters" in evaluating the need for FRMC's 20-year vision of a 200-bed facility. With regard to clinical research, the Proposal states that it will establish a clinical research program that will provide a crucial link to Scripps' research efforts. There is an apparent discrepancy, however, between FRMC's concept of the proposed program and Scripps' expectations. The Proposal only commits to the hiring of one full- time equivalent employee as a "research program coordinator." According to Tenet's chief executive officer over Florida Special Projects, the coordinator would be responsible for "setting up the programs" and assisting with the "enrollment of patients, collection of data, completion of reports and compliance with regulations pertaining to clinical research." In contrast, Scripps envisions the proposed research program coordinator as one who would serve a more general role geared toward learning about Scripps "and to know what the hospital is doing and to connect researchers for potential research topics." Scripps believes, and the evidence shows, that clinical studies are complex activities with multiple phases that require a number of staff to coordinate enrollment, interaction with institutional review boards, and protocol compliance.14/ Tenet hospitals in Palm Beach County, however, have no special expertise in enrolling patients and managing clinical research activities. FRMC did not otherwise provide evidence detailing the clinical research program or programs contemplated by the Proposal. In sum, evidence of FRMC's commitment to provide a crucial link to Scripps' research efforts is lacking. Evidence adduced at the final hearing casts doubt on FRMC's ability to become, in the foreseeable future, "one of the clinical training sites for FAU's medical students and residents." While FRMC and FAU have entered into a memorandum of understanding (MOU) which recites FAU's intention to sponsor graduate medical education (GME) and FRMC's intention to accept FAU medical students, FRMC's ability to do so is dependent upon it joining or affiliating with other entities under the FAU College of Medicine GME Consortium Agreement that exists to coordinate and promote the development and implementation of GME in South Florida (the GME Consortium Agreement). FAU is a party to the GME Consortium Agreement, along with Bethesda Memorial Hospital, Boca Raton Regional Hospital, and three Tenet hospitals, which include Delray Medical Center, West Boca Medical Center, and St. Mary's Medical Center. Paragraph B.2. of the MOU provides: GME: Pursuant to the agreement governing the GME Consortium, the admission of additional member institutions to the GME Consortium, as well as the addition of other hospitals and participating sites that may affiliate with the GME Consortium, is subject to the unanimous vote of all members of the GME Consortium, in each member's sole and absolute discretion. FRMC will submit a request to join the GME Consortium and obtain full consideration by the GME Consortium before offering any GME program(s) independently or in concert with any other entity. FRMC will also submit a request to the GME Consortium to be a rotational or participating site for FAU's Residents, as further described in subsequent master affiliation agreements or program letters of agreement as required by the ACGME [Accreditation Council for Graduate Medical Education]. At least one party to the GME Consortium Agreement, Boca Raton Regional Hospital, would not vote in favor of admitting FRMC as a member or participant under the GME Consortium Agreement.15/ The GME Consortium Agreement has a five-year term ending December 1, 2016, with automatic one-year renewals thereafter. The American Association of Medical Colleges (AAMC) is a national association representing medical schools and major teaching hospitals in the United States. Although not defined under Florida Law, the term "academic medical center" is understood by AAMC to refer to large hospitals, generally offering tertiary and more complex services, which are affiliated with and often on the same campus as a medical school. The size of the proposed hospital and complexity of the medical services proposed to be offered by FRMC are less than typical for an academic medical center as recognized by AAMC. FRMC does not even have a target date as to when it may offer services other than the general, non-tertiary hospital services that form the basis of the CON application. Section 408.035(1)(g): The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost- Effectiveness Tenet is currently the dominant provider in the proposed service area, with five hospitals in Palm Beach County, including three hospitals located in AHCA sub-district 9-4 with 854 acute-care beds between them, including PBGMC, St. Mary’s, and Good Samaritan. Rather than increasing competition, the addition of FRMC would likely further Tenet’s dominance, thereby decreasing competition. As a large hospital system, Tenet has an advantage over non-affiliated hospitals, such as JMC, in negotiating favorable reimbursement rates with commercial insurers, including managed-care plans. The ability to negotiate favorable rates translates into a better “payor mix” with richer reimbursement from private insurance and less from fixed rate, non-negotiable, governmental programs such as Medicaid and Medicare. Rather than showing that approval of FRMC would promote cost effectiveness, the evidence indicates that another Tenet facility within sub-district 9-4 could further boost Tenet’s negotiating leverage, resulting in a higher payment structure16/ within the area for FRMC’s services reimbursed by private insurance. These factors, together with the fact that the CON Application was submitted for approval of a facility with a focus on non-tertiary acute-care services amply available in the area, do not support a finding that the proposed hospital will foster competition that promotes quality and cost-effectiveness. Moreover, as further discussed under the heading "Adverse Impact," below, approval of the proposed hospital would have a negative impact on both JMC and West Palm. Section 408.035(1)(i): The Applicant’s Past and Proposed Provision of Health Care Services to Medicaid Patients and the Medically Indigent As noted in the CON Application, “[FRMC] is newly incorporated and not an existing healthcare provider with a historical track record of utilization.” As a Proposed CON Condition, FRMC states that it “will provide a minimum of 4% of its total annual patient days to a combination of Medicaid, Medicaid HMO, and Charity patients.” In 2010, 6.3% of the total combined patient days in the proposed service area for non-tertiary, non-OB, adult services were Medicaid, Medicaid HMO, and charity patient days. As FRMC’s proposed 4% condition is less than the 6.3% actually served in the proposed service area in 2010, based on patient days, the evidence does not support a finding that the proposed hospital will enhance access for the medically indigent or underserved. Adverse Impact FRMC contends that there will be no adverse impact from the proposed hospital because its patients will come from a 70% “redirection” of PBGMC’s patients. As previously discussed, however, PBGMC does not have the ability to direct where patients are admitted for hospital care. As FRMC's success in redirection without affecting the market is unlikely, its assumption that neither JMC nor West Palm will lose patients to FRMC is unreasonable.17/ JMC JMC has a good reputation in its community and enjoys strong patient satisfaction and loyalty. As part of its mission to care for the health and welfare of its community, some of the needed services which JMC offers are not profitable for JMC, including obstetric services. No other hospital in north Palm Beach County provides obstetric services. JMC also provides benefits beyond the direct provision of hospital services. In 2011, JMC provided $3 million in charity care, $3.5 million in Medicaid underfunding, plus uncompensated services valued at $1.3 million through the operation of specialty healthcare clinics, including a diabetes clinic and oncology services clinics. JMC also expends approximately $300,000 each year for health education programs and community health screenings. In addition, JMC provides support to the Jupiter Volunteer Health Clinic, a free clinic established through collaboration with the Town of Jupiter, local physicians, Palm Beach County, and the community volunteer organization known as "El Sol." Despite the affluence in northern Palm Beach County, there is also a substantial population of poor without health insurance. The clinic is particularly important because there are no primary care doctors in northern Palm Beach County who accept Medicaid patients in their practice. Patients are often lined up outside the clinic before it opens. Clinic patients that require hospital admission are admitted to JMC. Even though JMC has a reputation for community service and patient loyalty, the establishment of FRMC would have a material effect on JMC’s operations. Proximity of a proposed facility to an existing hospital significantly affects the potential for adverse impact. JMC is the closest hospital to FRMC’s proposed site. The likelihood that JMC will lose patients to FRMC is increased by the fact that FRMC proposes to offer the same services, with the exception of obstetrics, as currently offered by JMC. In addition, there is currently substantial overlap between the medical staffs of JMC and PBGMC. FRMC anticipates that it will be staffed primarily by physicians who now practice both at JMC and PBGMC. The overlap of the medical staffs is yet another factor demonstrating the potential adverse impact on JMC, as many physicians who currently practice at PBGMC and JMC are likely to obtain medical staff privileges and admit a substantial number of their patients to FRMC, including patients they would otherwise admit to JMC. As an independent, not-for-profit, community provider, JMC's operating margins are very thin at 1.5% to 2% annually. JMC would lose a substantial number of inpatient admissions if the proposed hospital is approved. JMC reasonably anticipates the loss of 1,533 cases to FRMC in the first year of operation of the new hospital. There is insufficient population growth in FRMC's proposed service area to offset this adverse impact. Applying JMC's current contribution margin to JMC's projected lost patient volume results in a projected adverse impact to JMC of $11,254,000 in combined inpatient and outpatient lost contribution margin, including a projected loss of up to $5,000,000 of inpatient contribution margin, in the first year of operation of FRMC. While the ability to negotiate favorable payment rates is critical to the financial viability of all hospitals, it is particularly crucial for small, stand-alone, community hospitals like JMC. As the only hospital in its primary service area, JMC presently enjoys some leverage in negotiating terms with private insurers and managed care companies. The establishment of FRMC will eliminate JMC’s geographic advantage and erode JMC's ability to achieve favorable payment rates. The anticipated adverse financial impact on JMC will interfere with JMC's ability to invest in technology and human resources, and will threaten the viability of the Jupiter Volunteer Health Clinic. The evidence is insufficient to show that approval of FRMC will bring countervailing benefits to the community that would offset the adverse impacts on JMC. WEST PALM Although West Palm stands to lose fewer cases than JMC if FRMC is approved, the adverse impact on West Palm is substantial, especially considering its current financial condition. West Palm incurred a bottom line net loss of $7,502,651 in 2011, with a negative operating margin of $14,002,922. If FRMC is approved, a reasonable estimate of lost cases shows that West Palm will lose 118 discharges to FRMC in 2014, 120 discharges in 2015, and 122 in 2016. The 122 lost cases in 2016 amount to 466 patient days. For 466 lost patient days, West Palm’s combined lost contribution margin is estimated at $886,377.18/
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency for Health Care Administration issue a Final Order denying CON Application No. 10130. DONE AND ENTERED this 30th day of April, 2013, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2013.
Findings Of Fact Applicant made application for a certificate of need under the provisions of Sections 381.493-381.497, Florida Statutes, 1975, which application was submitted to the Bureau of Community Medical Facilities on November 24, 1975, and accepted as complete by the Bureau on December 2, 1975. The application sought a certificate of need for the construction of a 200-bed hospital in Bayonet Point Community, Pasco County, Florida, approximately 6 miles north of New Port Richey, Pasco County, Florida. Mr. Art Forehand is the person within the Bureau of Community Medical Facilities responsible for the decision to issue or to deny such a certificate of need. After its initial submission to the Bureau the application was reviewed and analyzed by the staff of the Health Systems Agency, and more specifically by the Pasco Sub-Council Health Facilities Committee. This subcommittee voted on January 5, 1976, to recommend denial of the application. On January 12, 1976, the Pasco County Sub-Council of the Florida West Coast Health Planning Council likewise voted to recommend denial of the application. On January 20, 1976, following a public hearing before the Trustees of the Florida West Coast Health Planning Council, the Health Systems Agency, said Trustees voted five to one to recommend that the application be approved. Subsequent to the above action, the Bureau of Community Medical Facilities, through Mr. Art Forehand, referred the application to the State Hospital Advisory Council for separate review. That Council held public hearings on February 19 and 20, 1276. At the conclusion of those hearings of the State Hospital Advisory Council, a motion for that Council to recommend denial of the application failed to carry by a four to four vote. A subsequent motion to recommend approval of the application likewise failed by the same four to four vote. A second attempt to recommend approval of the application also failed to carry by the same vote. At that point the State Hospital Advisory Council appointed an informal subcommittee consisting of two approving members of the Council and two disapproving members of the Council for the purpose of making an on-site inspection and for additional fact finding. This informal subcommittee was to be accompanied by Mr. Art Forehand by whom their guidance was sought. At the conclusion of its hearing on February 20, 1976, the State Hospital Advisory Council, chaired by Mr. Scott Peek requested from the applicant an extension of time in which to consider the subject application. Mr. Ray Chambliss, who is in charge of the section within the Bureau of Community Medical facilities responsible for reviewing applications for certificates of need, and Mr. Forehand joined in the request for an extension, with Mr. Chambliss requesting that instead of a sixty day extension that the extension be until May 1, 1976. The applicant's representative stated that it would grant the extension to the date requested. The above referenced extension was never committed to writing by the parties thereto. The applicant did not agree to any other extension except that set forth above, nor was any other extension ever discussed between applicant and the Bureau of Community Medical Facilities. On May 11, 1976, the subcommittee chairman notified the chairman of the State Hospital Advisory Council of the subcommittee's recommendation to the Council that the application be denied. On May 21, 1976, the Council chairman wrote Mr. Forehand advising that the Council had likewise recommended denial of the subject application. By letter dated May 24, 1976, and received by applicant on May 26, 1976, Mr. Art Forehand notified applicant of his denial of the subject application. By letter dated June 8, 1975, applicant made formal request for an appeal of the decision of the Bureau of Community Medical Facilities. The Bureau of Community Medical Facilities by written stipulation and statements of counsel has admitted that the Bureau failed to grant or deny the subject application within the time period required by Subsection 381.494(6), Florida Statutes, and Subsection 101-1.03(5), Florida Administrative Code. The letter of denial of the subject application from Mr. Art forehand to the applicant sets forth the reason for denial as an undemonstrated need for the additional facility and beds proposed for Pasco County by applicants.
Findings Of Fact The Respondent, Barbara Barlow, is a licensed practical nurse holding License No. 41347-1 issued by the Florida State Board of Nursing. During the month of November, 1978, Respondent was employed as a licensed practical nurse at West Florida Hospital, Pensacola, Florida. Prior to November, 1978, Respondent underwent a formal orientation program given by the hospital, which program included medication procedures for West Florida Hospital. Subsequent to that formal orientation program, Respondent received additional orientation with respect to medication procedures from Carrie Miller, an experienced licensed practical nurse working at West Florida Hospital on the same shift as the Respondent. Respondent was additionally counseled by Beverly Everitt, Respondent's head nurse, regarding medication procedures. Respondent's explanation for the errors alleged in Paragraphs 1(c) and 1(d) of the Administrative Complaint was vague and uncorroborated by either live testimony or the patients' medical records, which were received into evidence. Further, Respondent's explanation failed to withstand cross-examination. Respondent was terminated from her position at West Florida Hospital for having committed an excessive number of medication errors.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Board enter its final order finding Respondent, Barbara Barlow, guilty of unprofessional conduct based upon each and every allegation contained in the Administrative Complaint and placing the license of Respondent to practice nursing in the State of Florida on probation for a period of one year with the specific term and condition of said probation being that Respondent, during the period of probation, enroll in and successfully complete a course in the administration of and charting of medications by a nurse. RECOMMENDED this 20th day of May, 1980, in Tallahassee, Florida. LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Julius Finegold, Esquire 1107 Blackstone Building 223 West Bay Street Jacksonville, Florida 32202 Joseph L. Hammons, Esquire 412 West Gregory Street Pensacola, Florida 32501 Ms. Barbara Barlow Route 2, Box 129 Milton, Florida 32570 Ms. Geraldine B. Johnson, R.N. Supervisor I, Office of Investigations Region II Florida State Board of Nursing 111 East Coastline Drive Jacksonville, Florida 32292 Ms. Nancy Kelley Wittenberg, Secretary Department of Professional Regulation The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301
The Issue The issue presented is whether Petitioner's application for a certificate of need to establish a hospice with a six (6) bed component to be located in Dade County, Florida, should be approved.
Findings Of Fact The Parties Since 1975, Petitioner, Comprehensive Home Health Care, Inc., has been serving the elderly population of Dade County, primarily working with the Hispanic community to provide skilled nursing services and the services of physical therapy, speech pathology, occupational therapy, home health aide and medical social services. Petitioner currently provides its services as a home health care agency licensed by the Department. Respondent, Department of Health and Rehabilitative Services (Department), is a state agency which is responsible for administering Section 381.701 through 381.715, Florida Statutes, the "Health Facility and Services Development Act", under which applications for certificates of need (CON) are filed, reviewed and either granted or denied by the Department. Petitioner currently does not participate in an approved hospice program. Two hospice programs are licensed by the Department to serve Dade County: Catholic Hospice, Inc., and Hospice, Inc. Neither entity chose to intervene in the instant proceeding. The Application On or about March 27, 1989, Petitioner filed an application with the Department for a CON to implement a six (6) bed hospice service in Dade County, Florida, with no capital expenditure. The application was designated as CON Number 5871. No public hearing was requested. After the submittal of an omissions response, the Department deemed the application complete on May 16, 1989. The application was reviewed as the sole applicant in its batching cycle After review of the application, the Department issued its intent to deny the application in its state agency action report (SAAR) on June 29, 1989. In the application, Petitioner proposes to establish a not-for-profit, full service hospice which includes a six (6) bed inpatient component with beds to be located in the Northwest, Central West and Southwest Dade County, Florida, in three of the following hospitals: AMI Kendall Regional Medical Center Coral Gables Hospital North Gables Hospital Palmetto Hospital Pan American Hospital Westchester Hospital In addition to relying on its application as meeting pertinent statutory and rule criteria- Petitioner asserts that the application demonstrates mitigating and extenuating circumstances which would allow the approval of the application even if the numeric need prescribed by rule were not demonstrated by the application. Further, the application states that Hospice, Inc., as the only provider in Dade County, has a monopoly on the market in Dade County. Petitioner also intends to concentrate on providing service to the Hispanic population and those individuals suffering from AIDS. The application was not presented in the format which the Department usually receives applications for certificate of need. The usual format was not made part of the record in this proceeding. However, the application, as supported at hearing, shows Petitioner's desire to provide hospice services to the residents of Western Dade County. The witnesses testifying on behalf of Petitioner were Teresa Corba Rodriguez, Roger Lane and Rose Marie Marty. Ms. Rodriguez is an experienced registered nurse who worked for Hospice, Inc., from November, 1987, through June, 1989. She is currently employed at Victoria Hospital. Mr. Lane is the director of information and referral at Health Crisis Network in Miami, and Ms. Marty is the Vice President of Petitioner. The Department's primary bases for issuance of its intent to deny the application were the lack of need for additional inpatient hospice beds, and the failure to document sufficiently certain statutory and rule criteria, as discussed in the following paragraphs. The Department offered the testimony of Elizabeth Dudek, who is an employee of the Department, and is an expert in health planning. Compliance with Statutory Criteria In its proposed recommended order, the Department acknowledged that only six statutory criteria in Section 381.705(1), Florida Statutes (1987) are at issue, in addition to Rule 10-5.011(1)(j), Florida Administrative Code. State Health Plan Although the State Health Plan was not offered into evidence, the Department through testimony and the SAAR indicates that the Application conforms to the State Health Plan. Local Health Plan The applicable Local Health Plan is represented by the plan entitled, "1988 District XI Certificate of Need Allocation Factors", adopted on March 3, 1988. This plan, as it relates to hospice services, is composed of a Subsystem Description, a statement of Issues and of Recommendations. The SAAR chose to base its determination of Petitioner's compliance with the local health plan on an evaluation of whether the application fulfilled the several preferences within the recommendations portion of this plan. In so doing, the Department determined in its SAAR that the Petitioner was in partial compliance. The first preference reads as follows "Preference should be given to applicants having a workable plan for training and maintaining a corps of volunteers." Petitioner demonstrated its consistency with this preference by utilizing volunteers who are bilingual and who will assist in performing the clerical, visitation, counseling, public relations and community awareness aspects of the program. Petitioner also intends to rely on the volunteer efforts of the servicing hospital, churches, schools, community functions, educational efforts and media to enhance community awareness about the program. The second preference reads as follows, "Preference should be given to those applicants who propose to provide care for the indigent and medically needy." Petitioner demonstrated its consistency with this preference by proposing to provide ten (10) percent of its total patient day for Medicaid recipients, and five (5) percent of its total patient days to the medically indigent, at least, during the first year of operation. The third preference reads as follows, "Preference should be given to those applicants who propose a commitment to serving persons with AIDS." Petitioner demonstrated its consistency with this preference by stating both in the application and through the testimony of its witnesses that it intends to serve the ever-increasing number of patients diagnosed with AIDS. Further, it is one of Petitioner's long range objectives to seek funding sources and grants to provide additional services to AIDS patients. The fourth preference reads as follows: "Preference should be given to those applicants who can demonstrate or have entered contractual agreements with other community agencies to ensure a continuum of care far those in need." Petitioner's application is consistent with this preference by its claim that the hospitals set forth in paragraph 6 intend to participate in the program, and should supplement the home health care system which Petitioner currently maintains. However, no competent proof was offered in support of the proposed arrangements. The fifth preference reads as follows: "Preference should be given to those applicants who have developed specialized innovative services to special sub-population in need within the District." Petitioner demonstrated its partial consistency with this preference by showing its intent to service patients with AIDS, the elderly and the Hispanic sub-populations of Dade County. However, Petitioner failed to show that the service it would provide was different from the service provided by the existing hospices in Dade County, other than the intended geographical location of Petitioner's proposal. Siting in Western Dade County on its own was not shown to be a specialized, innovative offering. The sixth preference reads as follows: "Preference should be given to those applicants who will address specific needs of the culturally diverse minority populations in the District." Petitioner demonstrated its consistency with this preference by showing that it intends to serve the elderly, ethnic minorities, victims of AIDS, and the indigent populations of Dade County. Each of the groups Petitioner has singled out are indeed minority population groups within Dade County, and are elements of, and contribute to the cultural diversity of the area. The seventh preference reads as follows: "Preference should be given to those applicants who propose to have health care personnel on call during night and weekend hours." Petitioner demonstrated its consistency with this preference by showing its intent to provide for home care up to24 hours a day, 7 days a week, to control its patients' symptoms and respond to emergencies as needed. The eighth preference reads as follows: "Preference should be given to applicants who build quality assurance methods into the proposed program." Petitioner demonstrated its consistency with this preference by expressing its plan to install a quality assurance program which will include clinical records review by a registered nurse, ongoing clinical record review, and utilization review. On balance, the Petitioner's application is consistent with the Local Health Plan. Availability, Accessibility and Extent of Utilization Currently there are two hospices that serve the District. The two are located in the Eastern portions of the County. Petitioner intends to locate its beds in the Northwest and Southwest portions of Dade County, whereas the existing beds are housed in the Northeast and Southeast parts of the County. Thus, Petitioner's proposed beds are more geographically accessible to the residents of Western Dade County, which the application asserts is the fastest growing area of the County. By providing beds in the Western portion of the District, and in locations different from the existing beds, Petitioner would make the hospice services in the District more geographically accessible. Hospice, Inc., is currently licensed for twenty- five (25) beds, of which only between fourteen (14) to sixteen (16) are operable. The record is silent as to the availability of the thirty (30) beds approved for Catholic Hospice, Inc. The record does not indicate why the approved beds are not in service, or how the beds requested by Petitioner would improve the availability of hospice service in the District. Quality of Care, Efficiency, Appropriateness and Adequacy The Application suggested that patients suffering from acquired immune deficiency syndrome (AIDS) are underserved, and that Petitioner will fulfill that need. Testimony offered by Petitioner sought to establish that some patients suffering from AIDS, and those of Hispanic origin, had been refused service by the existing hospices, and made vague reference to some credit problems which Hospice, Inc., had experienced If proven, the statements might impact on the quality of care, efficiency, appropriateness and adequacy; however, without a more direct showing this testimony is not considered, substantial, or credible. As to other references concerning the quality of care, efficiency, appropriateness and adequacy, the record is again silent. Availability and Best Use of Resources Petitioner currently operates as a home health care agency. The hospice program would be an extension of the existing service offered by Petitioner and targeted to serve the Hispanic, elderly and terminally ill patients within the District, utilizing existing and voluntary personnel. Without demonstrating more about the current operations, and proof of the market demand for the proposed services, a determination of the best use of resources cannot be made. Financial Feasibility The application projects a financially sound forecast in the short-term through 1991 starting with $75,000 available. The Department through testimony and in the SAAR recognized the short- term financial feasibility of the project. However, the record is silent on financial projections past 1991. Accordingly, a determination of the long-term financial feasibility of the proposal has not been shown. Effects on Competition Petitioner asserted that eligible patients were not being served by the existing facilities, as discussed in above paragraph 24. To the extent these underserved patients exist and were to be provided for by the proposed program, the offering might have an impact on the costs of providing health services in the District. However, as discussed in paragraph 24, the evidence presented did not support Petitioner's claim. Compliance with Rule Criteria Rule 10-5.011(1)(j), Florida Administrative Code, sets forth the Department's methodology for calculating the numeric need for hospice services within a particular service area. Dade County is the pertinent service area for the evaluation of the application. The methodology provides a formula by which the total number of hospice patients for the planning horizon, in this case January, 1991, are to be estimated. The formula takes the cancer mortality rate in the district, and factors in a certain percentage to allow for any other types of deaths, and then factors in considerations of both long-term, and short-term hospital stays to yield the projected number of beds which will be needed in the horizon year. For the batching cycle in which Petitioner's application was reviewed, the projected bed need is fifty-nine (59). From that figure, the number of approved beds is subtracted. At the time Petitioner submitted its letter of intent, the inventory of licensed beds in the District indicated that Catholic Hospice, Inc. was approved for thirty (30) beds, and Hospice, Inc., for twenty-five (25) beds. In other words, the inventory of licensed approved beds applicable to this application is fifty-five (55) beds. Thus, the numeric need for the pertinent batching cycle is four (4) beds. As referenced in paragraph 5, Petitioner requested approval for six (6) hospice beds. The application contains no request for approval of less than six (6) beds, nor did Petitioner raise the issue of a partial award. The Department does not normally approve an application when numeric need is not met unless, in the instance of a request for hospice services, mitigating and extenuating circumstances are proven by demonstrating the following: (1) documentation that the population of the service area is being denied access to existing hospices because the existing hospices are unable to provide service to all persons in need of hospice care and service, and, (2) documentation that the proposed hospice would foster cost containment, discourage regional monopolies and promote competition for all providers in the health service area. Hospice Inc., frequently maintains a waiting list for its hospice beds; however, the reason or reasons for the list was not demonstrated. The census of the hospice beds at Catholic Hospice, Inc., was not discussed at the hearing, or in the application. All of Petitioner's witnessed testified that they believed that the existing hospices were unavailable to potential patients in need of hospice service who lived in the Western portion of the District because the existing hospices were located in the Eastern portion of the District. The travel time from the Southern portion of the District to the Northernmost existing facility can require up to two and one-half hours. The witnesses asserted that the patients and their families do not wish to travel for that period of time to receive the services or to visit patients in the existing hospices. However, no patient or family member testified that the travel time or location of the existing hospice were a hindrance to care. The testimony presented concerning the patients and their families is not competent or corroborated by competent evidence. Further, Petitioner's witnesses asserted that doctors who had treated patients eligible for hospice service had told the witnesses that the physicians hesitated to refer the patients to the existing hospices because the doctors might not have staff privileges at the hospitals which house the existing beds. Again, no physicians were available to corroborate the statements of the witnesses or offer competent testimony in support of these assertions. Although Hospice, Inc., is Licensed for twenty- five (25) beds, it has chosen to operate only between fourteen (14) to sixteen (16) of those beds. The reasons Hospice, Inc., has chosen not to operate all of its licensed beds were not offered in the record. The District has the largest number of AIDS diagnosed cases of any county in Florida. The number of cases in the District is doubling, more or less on a yearly basis. The incidence of AIDS cases adds to the number of person in need of hospice care in the District. Rule 10-5.011(1)(j) does not single out AIDS-related deaths in its calculation; however, deaths from other than cancer are factored into the formula. Again, no competent testimony was presented that the existing hospices were unable to serve patients suffering from AIDS. The methodology set out in Rule 10-5.011(1)(j) determines the initial need for hospice within the District. Once a hospice has been approved, it can increase the number of beds that it has without certificate of need approval as long as the hospice keeps a patient mix of twenty (20) percent inpatient to eighty (80) percent outpatient. The factors asserted in findings 33-37 would go to show mitigating and extenuating circumstances, if proven by competent substantial proof. However, from the evidence presented, it cannot be determined that the existing hospices are unable to provide service to those in need of hospice care. The evidence presented to document that the proposal would foster cost containment, discourage regional monopolies, and promote competition is discussed in paragraphs 25-28 above, and is lacking in substance to show the premise raised here.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that the Department of Health and Rehabilitative Services issue a Final Order which denies CON Application Number 5871. DONE AND ENTERED in Tallahassee, Leon County, Florida,, this 13th day of February, 1990. JANE C. HAYMAN 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 February, 1990.
The Issue Whether the Division of Administrative Hearings (DOAH) has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if the Florida Commission on Human Relations (FCHR) does not make a "cause" or "no cause" determination, as provided in Section 760.11(3), Florida Statutes, but rather issues a Notice of Dismissal, pursuant to Section 760.11(8), Florida Statutes. Whether DOAH has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if the Petition for Relief was not timely filed pursuant to Section 760.11(6), Florida Statutes. Whether DOAH has jurisdiction to conduct a formal hearing under the provisions of Sections 120.569 and 120.57(1), Florida Statutes, if Petitioner fails to name Respondent in the Petition for Relief filed with the FCHR, as required by Section 760.11(1), Florida Statutes.
Recommendation Based on the foregoing facts and conclusions of law, it is RECOMMENDED that a final order be entered dismissing with prejudice the Petition of Manuel Pedraza in DOAH Case No. 02-0237, and FCHR Case No. 99-0849, for failure to timely file his Petition for Relief and for failure to properly name Respondent in the Petition. DONE AND ENTERED this 21st day of June, 2002, in Tallahassee, Leon County, Florida. ___________________________________ DANIEL M. KILBRIDE 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 21st day of June, 2002. COPIES FURNISHED: Susan K. W. Erlenbach, Esquire Erlenbach Law Offices, P.A. 2532 Garden Street Titusville, Florida 32796 W. Russell Hamilton, III, Esquire Morgan, Lewis & Bockius, LLP 5300 First Union Financial Center 200 South Biscayne Boulevard Miami, Florida 33131-2339 Denise Crawford, Agency Clerk Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301 Cecil Howard, General Counsel Florida Commission on Human Relations 2009 Apalachee Parkway, Suite 100 Tallahassee, Florida 32301
Findings Of Fact By letter dated December 16, 1977, the Division of State Planning forwarded Petitioner's request for a hearing on an application for a Binding Letter of Interpretation submitted by North Florida Regional Hospital, Respondent. Respondent sought a determination that a proposed addition to North Florida Regional Hospital was not a Development of Regional Impact (DRI) pursuant to Section 380.06(4)(a), Florida Statutes. Thereafter Respondent filed a request with the State of Florida, Department of Health and Rehabilitative Services (HRS) for a determination that a certificate of need was not required for the proposed addition to the hospital. Petitioner thereupon requested a hearing pursuant to Section 120.57(1), Florida Statutes for a factual determination whether or not the preliminary plans for the proposed addition had been filed by Respondent prior to July 1, 1973, so as to exempt Respondent from the requirement of obtaining a certificate of need. This was forwarded to the Division of Administrative Hearings (DOAH) for the designation of a hearing officer to conduct the hearing, assigned Docket Number 78-054, and referred to the undersigned for hearing. Petitioner moved that these two cases be consolidated for hearing on the grounds that the parties and issues of fact for the two cases are the same. A prehearing conference was held on January 6, 1978, at which all pending motions were considered, and the issues to be contested at the forthcoming hearings were resolved. After full discussion by the parties, oral stipulations were entered into. These stipulations were written down by the Hearing Officer, read back to and accepted by the parties, and thereafter incorporated in the Order entered January 9, 1978. Prior to the motion hearing on July 28, 1978, no party questioned the accuracy or validity of these stipulations. On January 9, 1978, the results of the January 6, 1978 prehearing conference were memorialized in an Order stating that all parties agreed that only two basic issues were involved in this case. One was a factual determination relating to the status of Respondent's application to HRS (Docket 78-054) respecting a certificate of need and the other a legal issue regarding the interpretation of Rule 22F-2.04, Florida Administrative Code. The parties agreed that the factual issues regarding the certificate of need was a threshold question which needed to be resolved before the instant case was decided and, therefore, that case should proceed first. At this prehearing conference the parties stipulated that: If no certificate of need is required pursuant to Section 381.494, F.S. for the 150 bed addition proposed for North Florida General Hospital, and that, if in Rule 22F-2.04 Florida Administrative Code the words "whose application for a certificate of need under Section 381.494, Florida Statutes," refers only to the application under consideration and not to other applications by Respondent for a certificate of need, then the application is not a Development of Regional Impact and the Division of State Planning should issue the binding letter of interpretation re- quested by Respondent. The Hearing Officer submit a Recommended Order to Division of State Planning construing Rule 22F-2.04, Florida Administrative Code and make recommendations regarding the issuance of a binding letter of interpretation. The parties will submit briefs by January 13, 1978 on the interpretation of Rule 22F-2.04, Florida Administrative Rule to Hearing Officer for his consideration in preparing his Recommended Order. By Order entered January 19, 1978 Petitioner's Motion for Consolidation of Dockets 77-2223 and 78-054 was denied and the entering of a Recommended Order in Docket 77-2223 was stayed pending completion of the hearing in Docket 78-054. The hearing in Docket No. 78-054 was held on March 31, 1978 and the Recommended Order was filed April 13, 1978. On July 11, 1978 HRS entered its Final Order in Docket Number 78-054 sustaining the ultimate findings of the Hearing Officer that Respondent had filed preliminary plans for the proposed addition prior to July 1, 1973 and did not now require a certificate of need for the proposed addition to the hospital.
Recommendation RECOMMENDED that Respondent, North Florida Regional Hospital, be issued a Binding Letter of Interpretation that its proposed three-floor addition to the hospital is not a Development of Regional Impact. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 15th day of September, 1978. K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: William C. Andrews, Esq. and Philip A. Delaney 1133 N.W. 23rd Avenue Gainesville, FL 32601 Robert M. Rhodes, Esq. Post Office Box 1876 Tallahassee, FL 32302 Peter Skoro, Esq. Assistant County Attorney Post Office Drawer "CC" Gainesville, FL 32602 Jon Moyle, Esq. and Daniel H. Jones, Esq. Post Office Box 3888 West Palm Beach, FL 33402 C. Lawrence Keesey, Esq. Staff Attorney Division of State Planning 335 Carlton Building Mailing address: 530 Carlton Bldg. Tallahassee, FL 32304 =================================================================
Conclusions Having reviewed the administrative complaint dated July 20, 2009, attached hereto and incorporated herein (Ex. 1), and all other matters of record, the Agency for Health Care Administration ("Agency") has entered into a Settlement Agreement (Ex. 2) with the other party to these proceedings, and being otherwise well-advised in the premises, finds and concludes as follows: ORDERED: The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. Respondent shall pay an administrative fine in the amount of $750. The administrative fine is due and payable within thirty (30) days of the date of rendition of this Order. Checks should be made payable to the "Agency for Health Care Administration." The check, along with a reference to these case numbers, should be sent directly to: Filed November 9, 2009 12:07 PM Division of Administrative Hearings. Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS# 14 Tallahassee, Florida 32308 Unpaid amounts pursuant to this Order will be subject to statutory interest and may be collected by all methods legally available. Respondent's petition for formal administrative proceedings is hereby dismissed. Each party shall bear its own costs and attorney's fees. The above-styled case is hereb DONE and ORDERED this /4day 2ref( inTallahassee, Leon County, Florida. A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW OF PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED. Copies furnished to: D. Bland Eng, CEO Palms West Hospital 13001 Southern Boulevard Loxahatchee, Florida 33470 (U. S. Mail) Nelson E. Rodney Assistant General Counsel Agency for Health Care Administration 8350 NW 52nd Terrace, Suite 103 Miami, Florida 33166 (Interoffice Mail) Richard M. Ellis, Esq. Attorney for Respondent Rutledge, Ecenia & Purnell 119 South Monroe Street Suite 202 Tallahassee, Florida 32301 (U.S. Mail) Finance & Accounting Agency for Health Care Administration Revenue Management Unit 2727 Mahan Drive, MS #14 Tallahassee, Florida 32308 (Interoffice Mail) Jan Mills Agency for Health Care Administration 2727 Mahan Drive, Bldg #3, MS #3 Tallahassee, Florida 32308 (Interoffice Mail) Hospital Unit Agency for Health Care Administration 2727 Mahan Drive MS #31 Tallahassee, Florida 32308 (Interoffice Mail) Hon. Errol H. Powell Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (U.S. Mail) CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of this Final Order was 2rlJZ: served on the above-named per s :nd entities by U.S. Mail, or the method designated, on this the y of ,d& , ? Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Building #3 Tallahassee, Florida 32308-5403 (850) 922-5873 l. STATE OF FLORIDA
Conclusions THIS CAUSE comes before the Agency For Health Care Administration (the "Agency") concerning Certificate of Need ("CON") Application No. 10131 filed by The Shores Behavioral Hospital, LLC (hereinafter “The Shores”) to establish a 60-bed adult psychiatric hospital and CON Application No. 10132 The entity is a limited liability company according to the Division of Corporations. Filed March 14, 2012 2:40 PM Division of Administrative Hearings to establish a 12-bed substance abuse program in addition to the 60 adult psychiatric beds pursuant to CON application No. 10131. The Agency preliminarily approved CON Application No. 10131 and preliminarily denied CON Application No. 10132. South Broward Hospital District d/b/a Memorial Regional Hospital (hereinafter “Memorial”) thereafter filed a Petition for Formal Administrative Hearing challenging the Agency’s preliminary approval of CON 10131, which the Agency Clerk forwarded to the Division of Administrative Hearings (“DOAH”). The Shores thereafter filed a Petition for Formal Administrative Hearing to challenge the Agency’s preliminary denial of CON 10132, which the Agency Clerk forwarded to the Division of Administrative Hearings (‘DOAH”). Upon receipt at DOAH, Memorial, CON 10131, was assigned DOAH Case No. 12-0424CON and The Shores, CON 10132, was assigned DOAH Case No. 12-0427CON. On February 16, 2012, the Administrative Law Judge issued an Order of Consolidation consolidating both cases. On February 24, 2012, the Administrative Law Judge issued an Order Closing File and Relinquishing Jurisdiction based on _ the _ parties’ representation they had reached a settlement. . The parties have entered into the attached Settlement Agreement (Exhibit 1). It is therefore ORDERED: 1. The attached Settlement Agreement is approved and adopted as part of this Final Order, and the parties are directed to comply with the terms of the Settlement Agreement. 2. The Agency will approve and issue CON 10131 and CON 10132 with the conditions: a. Approval of CON Application 10131 to establish a Class III specialty hospital with 60 adult psychiatric beds is concurrent with approval of the co-batched CON Application 10132 to establish a 12-bed adult substance abuse program in addition to the 60 adult psychiatric beds in one single hospital facility. b. Concurrent to the licensure and certification of 60 adult inpatient psychiatric beds, 12 adult substance abuse beds and 30 adolescent residential treatment (DCF) beds at The Shores, all 72 hospital beds and 30 adolescent residential beds at Atlantic Shores Hospital will be delicensed. c. The Shores will become a designated Baker Act receiving facility upon licensure and certification. d. The location of the hospital approved pursuant to CONs 10131 and 10132 will not be south of Los Olas Boulevard and The Shores agrees that it will not seek any modification of the CONs to locate the hospital farther south than Davie Boulevard (County Road 736). 3. Each party shall be responsible its own costs and fees. 4. The above-styled cases are hereby closed. DONE and ORDERED this 2. day of Meaich~ , 2012, in Tallahassee, Florida. ELIZABETH DEK, Secretary AGENCY FOR HEALTH CARE ADMINISTRATION
