The Issue The issues in this case are whether the Agency for Health Care Administration (AHCA) should grant Hospice Integrated’s Certificate of Need (CON) Application No. 8406 to establish a hospice program in AHCA Service Area 7B, CON Application No. 9407 filed by Wuesthoff, both applications, or neither application.
Findings Of Fact Hospice Hospice is a special way of caring for patients who are facing a terminal illness, generally with a prognosis of less than six months. Hospice provides a range of services available to the terminally ill and their families that includes physical, emotional, and spiritual support. Hospice is unique in that it serves both the patient and family as a unit of care, with care available 24 hours a day, seven days a week, for persons who are dying. Hospice provides palliative rather than curative or life- prolonging care. To be eligible for hospice care, a patient must have a prognosis of less than six months to live. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. At that time, there was more information available to establish a prognosis of six months or less for these patients. Since that time, the National Hospice Organization (“NHO”) has established medical guidelines which determine the prognosis for many non-cancer diseases. This tool may now be used by physicians and hospice staff to better predict which non- cancer patients are eligible for hospice care. There is no substitute for hospice. Nothing else does all that hospice does for the terminally ill patient and the patient’s family. Nothing else can be reimbursed by Medicare or Medicaid for all hospice services. However, hospice must be chosen by the patient, the patient’s family and the patient’s physician. Hospice is not chosen for all hospice-eligible patients. Palliative care may be rejected, at least for a time, in favor of aggressive curative treatment. Even when palliative care is accepted, hospice may be rejected in favor of home health agency or nursing home care, both of which do and get reimbursed for some but not all of what hospice does. Sometimes the choice of a home health agency or nursing home care represents the patient’s choice to continue with the same caregivers instead of switching to a new set of caregivers through a hospice program unrelated to the patient’s current caregivers. There also is evidence that sometimes the patient’s nursing home or home health agency caregivers are reluctant, unfortunately sometimes for financial reasons, to facilitate the initiation of hospice services provided by a program unrelated to the patient’s current caregivers. Existing Hospice in Service Area 7B There are two existing hospice providers in Service Area 7B, which covers Orange County and Osceola County: Vitas Healthcare Corporation of Central Florida (Vitas); and Hospice of the Comforter (Comforter). Vitas Vitas began providing services in Service Area 7B when it acquired substantially all of the assets of Hospice of Central Florida (HCF). HCF was founded in 1976 as a not-for-profit organization and became Medicare-certified in 1983. It remained not-for-profit until the acquisition by Vitas. In a prior batching cycle, HCF submitted an application for a CON for an additional hospice program in Service Area 7B under the name Tricare. While HCF also had other reasons for filing, the Tricare application recognized the desirability, if not need, to package hospice care for and make it more palatable and accessible to AIDS patients, the homeless and prisoners with AIDS. HCF later withdrew the Tricare application, but it continued to see the need to better address the needs of AIDS patients in Service Area 7B. In 1994, HCF began looking for a “partner” to help position it for future success. The process led to Vitas. Vitas is the largest provider of hospice in the United States. Nationwide, it serves approximately 4500 patients a day in 28 different locations. Vitas is a for-profit corporation. Under a statute grandfathering for-profit hospices in existence on or before July 1, 1978, Vitas is the only for-profit corporation authorized to provide hospice care in Florida. See Section 400.602(5), Fla. Stat. (1995). HCF evaluated Vitas for compatibility with HCF’s mission to provide quality hospice services to medically appropriate patients regardless of payor status, age, gender, national origin, religious affiliation, diagnosis or sexual orientation. Acquisition by Vitas also would benefit the community in ways desired by HCF. Acquisition by Vitas did not result in changes in policy or procedure that limit or delay access to hospice care. Vitas was able to implement staffing adjustments already contemplated by HCF to promote efficiencies while maintaining quality. Both HCF and Vitas have consistently received 97% satisfaction ratings from patients’ families, and 97% good-to- excellent ratings from physicians. Initially, Vitas’ volunteer relations were worse than the excellent volunteer relations that prevailed at HCF. Many volunteers were disappointed that Vitas was a for-profit organization, protested the proposed Vitas acquisition, and quit after the acquisition. Most of those who quit were not involved in direct patient care, and some have returned after seeing how Vitas operates. Vitas had approximately 1183 hospice admissions in Service Area 7B in 1994, and 1392 in 1995. Total admissions in Service Areas 7B and 7C (Seminole County) for 1995 were 1788. Comforter Hospice of the Comforter began providing hospice care in 1990. Comforter is not-for-profit. Like Vitas, it admits patients regardless of payor status. Comforter admitted approximately 100 patients from Service Area 7B in 1994, and 164 in 1995. Total admissions in Service Areas 7B and 7C for 1995 were 241. For 1996, Comforter was expected to approach 300 total admissions (in 7B and 7C), and total admissions may reach 350 admissions in the next year or two. As Comforter has grown, it has developed the ability to provide a broader spectrum of services and has improved programs. Comforter provides outreach and community education as actively as possible for a smaller hospice. Comforter does not have the financial strength of Vitas. It maintains only about a two-month fiscal reserve. Fixed Need Pool On February 2, 1996, AHCA published a fixed need pool (FNP) for hospice programs in the July 1997 planning horizon. Using the need methodology for hospice programs in Florida found in F.A.C. Rule 59C-1.0355 (“the FNP rule”), the AHCA determined that there was a net need for one additional hospice program in Service Area 7B. As a result of the dismissal of Vitas’ FNP challenge, there is no dispute as to the validity of the FNP determination. Other Need Considerations Despite the AHCA fixed need determination, Vitas continues to maintain that there is no need for an additional hospice program in Service Area 7B and that the addition of a hospice program would adversely impact the existing providers. Essentially, the FNP rule compares the projected need for hospice services in a district using district use rates with the projected need using statewide utilization rates. Using this rule method, it is expected that there will be a service “gap” of 470 hospice admissions for the applicable planning horizon (July, 1997, through June, 1988). That is, 470 more hospice admissions would be expected in Service Area 7B for the planning horizon using statewide utilization rates. The rule fixes the need for an additional hospice program when the service “gap” is 350 or above. It is not clear why 350 was chosen as the “gap” at which the need for a new hospice program would be fixed. The number was negotiated among AHCA and existing providers. However, the evidence was that 350 is more than enough admissions to allow a hospice program to benefit from the efficiencies of economy of scale enough to finance the provision for enhanced hospice services. These benefits begin to accrue at approximately 200 admissions. Due to population growth and the aging of the population in Service Area 7B, this “gap” is increasing; it already had grown to 624 when the FNP was applied to the next succeeding batching cycle. Vitas’ argument ignores the conservative nature of several aspects of the FNP rule. It uses a static death rate, whereas death rates in Service Area 7B actually are increasing. It also uses a static age mix, whereas the population actually is aging in Florida, especially in the 75+ age category. It does not take into account expected increases in the use of hospice as a result of an environment of increasing managed health care. It uses statewide conversion rates (percentage of dying patients who access hospice care), whereas conversion rates are higher in nearby Service Area 7A. Finally, the statewide conversions rates used in the rule are static, whereas conversion rates actually are increasing statewide. Vitas’ argument also glosses over the applicants’ evidence that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B (regardless whether the new entrant improves upon the marketing efforts of the existing providers), and that increased awareness will result in higher conversion rates. It is not clear why utilization in Service Area 7B is below statewide utilization. Vitas argued that it shows the opposite of what the rule says it shows—i.e., that there is no need for another hospice program since the existing providers are servicing all patients who are choosing hospice in 7B. Besides being a thinly-veiled (and, in this proceeding, illegal) challenge to the validity of the FNP rule, Vitas’ argument serves to demonstrate the reality that, due to the nature of hospice, existing providers usually will be able to expand their programs as patients increasingly seek hospice so that, if consideration of the ability of existing providers to fill growing need for hospice could be used to overcome the determination of a FNP under the FNP rule, there may never be “need” for an additional program. Opting against such an anti-competitive rule, the Legislature has required and AHCA has crafted a rule that allows for the controlled addition of new entrants into the competitive arena. Vitas’ argument was based in part on the provision of “hospice-like” services by VNA Respite Care, Inc. (VNA), through its home health agency. Vitas argued that Service Area 7B patients who are eligible for hospice are choosing VNA’s Hope and Recovery Program. VNA’s program does not offer a choice from, or alternative to, hospice. Home health agencies do not provide the same services as hospice programs. Hospice care can be offered as the patient’s needs surface. A home health agency must bill on a cost per visit basis. If they exceed a projected number of visits, they must explain that deviation to Medicare. A home health agency, such as VNA, offers no grief or bereavement services to the family of a patient. In addition to direct care of the patient, hospice benefits are meant to extend to the care of the family. Hospice is specifically reimbursed for offering this important care. Hospice also receives reimbursement to provide medications relevant to terminal illnesses and durable medical equipment needed. Home health agencies do not get paid for, and therefore do not offer, these services. It is possible that VNA’s Hope and Recovery Program may be operating as a hospice program without a license. The marketing materials used by VNA inaccurately compare and contrast the medical benefits available for home health agencies to those available under a hospice program. The marketing material of VNA also inappropriately identify which patients are appropriate for hospice care. VNA’s Hope and Recovery Program may help explain lower hospice utilization in Service Area 7B. Indeed, the provision of hospice-like services by a non-hospice licensed provider can indicate an unmet need in Service Area 7B. The rule does not calculate an inventory of non-hospice care offered by non-hospice care providers. Instead, the rule only examines actual hospice care delivered by hospice programs. The fact that patients who would benefit from hospice services are instead receiving home health agency services may demonstrate that existing hospice providers are inadequately educating the public of the advantages of hospice care. Rather than detract from the fixed need pool, VNA’s provision of “hospice-like” services without a hospice license may be an indication that a new hospice provider is needed in Service Area 7B. Although a home-health agency cannot function as a hospice provider, the two can work in conjunction. They may serve as a referral base for one another. This works most effectively when both programs are operated by the same owner who understands the very different services each offers and who has no disincentive to refer a patient once their prognosis is appropriate for hospice. The Hospice Integrated Application Integrated Health Services, Inc. (IHS), was founded in the mid-1980’s to establish an alternative to expensive hospital care. Since that time it has grown to offer more than 200 long term care facilities throughout the country including home health agencies, rehabilitative agencies, pharmacy companies, durable medical equipment companies, respiratory therapy companies and skilled nursing facilities. To complete its continuum of care, IHS began to add hospice to offer appropriate care to patients who no longer have the ability to recover. IHS is committed to offering hospice care in all markets where it already has an established long-term care network. IHS entered the hospice arena by acquiring Samaritan Care, an established program in Illinois, in late 1994. Within a few months, IHS acquired an additional hospice program in Michigan. Each of these hospice programs had a census in the thirties at the time of the final hearing. In May of 1996, IHS acquired Hospice of the Great Lakes. Located in Chicago, this hospice program has a census range from 150 to 180. In combination, IHS served approximately 350 hospice patients in 1995. In Service Area 7B, IHS has three long-term care facilities: Central Park Village; IHS of Winter Park; and IHS of Central Park at Orlando. Together, they have 443 skilled nursing beds. One of these—Central Park Village—has established an HIV spectrum program, one of the only comprehensive HIV care programs in Florida. When the state determined that there was a need for an additional hospice program in Service Area 7B, IHS decided to seek to add hospice care to the nursing home and home health companies it already had in the area. Since Florida Statutes require all new hospice programs in Florida to be established by not-for-profit corporations (with Vitas being the only exception), IHS formed Hospice Integrated Health Services of District VII-B (Hospice Integrated), a not- for-profit corporation, to apply for a hospice certificate of need. IHS would be the management company for the hospice program and charge a 4% management fee to Hospice Integrated, although the industry standard is 6%-7%. Although a for-profit corporation, IHS plans for the 4% fee to just cover the costs of the providing management services. IHS believes that the benefits to its health care delivery system in Service Area 7B will justify not making a profit on the hospice operation. However, the management agreement will be reevaluated and possibly adjusted if costs exceed the management fee. In return for this management fee, IHS would offer Hospice Integrated its policy and procedure manuals, its programs for bereavement, volunteer programs, marketing tools, community and educational tools and record keeping. IHS would also provide accounting, billing, and human resource services. Perhaps the most crucial part of the management fee is the offer of the services of Regional Administrator, Marsha Norman. She oversees IHS’ programs in Illinois and Missouri. Ms. Norman took the hospice program at Hospice of the Great Lakes from a census of 40 to 140. This growth occurred in competition with 70 other hospices in the same marketplace. While at Hospice of the North Shore, Ms. Norman improved census from 12 to 65 in only eight months. Ms. Norman helped the Lincolnwood hospice program grow from start up to a census of 150. Ms. Norman has indicated her willingness and availability to serve in Florida if Hospice Integrated’s proposal is approved. IHS and Ms. Norman are experienced in establishing interdisciplinary teams, quality assurance programs, and on-going education necessary to provide state of the art hospice care. Ms. Norman also has experience establishing specialized programs such as drumming therapy, music therapy for Alzheimer patients and children’s bereavement groups. Ms. Norman has worked in pediatric care and understands the special needs of these patients. Ms. Norman’s previous experience also includes Alzheimer’s care research conducted in conjunction with the University of Chicago regarding the proper time to place an Alzheimer patient in hospice care. Through its skilled nursing facilities in Service Area 7B, IHS has an existing working relationship with a core group of physicians who are expected to refer patients to the proposed Hospice Integrated hospice. Although its skilled nursing homes account for only six percent of the total beds in Service Area 7B, marketing and community outreach efforts are planned to expand the existing referral sources if the application is approved. IHS’ hospices are members of the NHO. They are not accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO). Hospice Integrated would serve pediatric patients. However, IHS’ experience in this area is limited to a pilot program to offer pediatric hospice care in the Dallas/Ft. Worth area, and there is little reason to believe that Hospice Integrated would place a great deal of emphasis on this aspect of hospice care. The Hospice Integrated application proposes to provide required grief support but does not include any details for the provision of grief support groups, resocialization groups, grief support volunteers, or community grief support or education activities. In its application, Hospice Integrated has committed to five percent of its care for HIV patients, 40% for non-cancer patients, ten percent for Medicaid patients, and five percent indigent admissions. These commitments also are reflected in Hospice Integrated’s utilization projections. At the same time, it is only fair to note that IHS does not provide any charity care at any of its Service Area 7B nursing home facilities. The Hospice Integrated application includes provision for all four levels of hospice care—home care (the most common), continuous care, respite care and general inpatient. The latter would be provided in one of the IHS skilled nursing home facilities when possible. It would be necessary to contract with an inpatient facility for acute care inpatient services. The federal government requires that five percent of hospice care in a program be offered by volunteers. With a projected year one census of 30, Hospice Integrated would only require 3-4 volunteers to meet federal requirements, and its year one pro forma reflects this level of use of volunteers. However, Hospice Integrated hopes to exceed federally mandated minimum numbers of volunteers. The IHS hospice programs employ volunteers from all aspects of the community, including family of deceased former hospice patients. Contrary to possible implications in the wording of materials included in the Hospice Integrated application, IHS does not approach the latter potential volunteers until after their bereavement has ended. The Wuesthoff Application Wuesthoff Health Services, Inc. (Wuesthoff) is a not- for profit corporation whose sole corporate member is Wuesthoff Health Systems, Inc. (Wuesthoff Systems). Wuesthoff Systems also is the sole corporate member of Wuesthoff’s two sister corporations, Wuesthoff Memorial Hospital, Inc. (Wuesthoff Hospital) and Wuesthoff Health Systems Foundation, Inc. (Wuesthoff Foundation). Wuesthoff Hospital operates a 303-bed acute care hospital in Brevard County. Brevard County comprises AHCA Service Area 7A, and it is adjacent and to the east of Service Area 7B. Wuesthoff Hospital provides a full range of health care services including open heart surgical services, a Level II neonatal intensive care unit and two Medicare-certified home health agencies, one located in Brevard and the other in Indian River County, the county immediate to the south of Brevard. Wuesthoff Foundation serves as the fundraising entity for Wuesthoff Systems and its components. Wuesthoff currently operates a 114-bed skilled nursing facility which includes both long-term and short-term sub-acute beds, as well as a home medical equipment service. Wuesthoff also operates a hospice program, Brevard Hospice, which has served Brevard County residents since 1984. Over the years, it has grown to serve over 500 patients during 1995. Essentially, Wuesthoff’s application reflects an intention to duplicate its Brevard Hospice operation in Service Area 7B. It would utilize the expertise of seven Brevard Hospice personnel currently involved in the day-to-day provision of hospice services, including its Executive Director, Cynthia Harris Panning, to help establish its proposed new hospice in 7B. Wuesthoff has been a member of the NHO since the inception of its hospice program. It also had its Brevard Hospice accredited by JCAHO in 1987, in 1990 and in March, 1996. As a not-for-profit hospice, Wuesthoff has a tradition of engaging in non-compensated hospice services that benefit the Brevard community. Wuesthoff’s In-Touch Program provides uncompensated emotional support through telephone and in-person contacts for patients with a life-threatening illness who, for whatever reason, are not ready for hospice. (Of course, Wuesthoff is prepared to receive compensation for these patients when and if they choose hospice.) Wuesthoff’s Supportive Care program provides uncompensated nursing and psychosocial services by hospice personnel for patients with life-threatening illnesses with life expectancies of between six months and two years. (These services are rendered in conjunction with home health care, which may be compensated, and Wuesthoff is prepared to receive compensation for the provision of hospice services for these patients when they become eligible for and choose hospice.) Wuesthoff’s Companion Aid benefits hospice patients who lack a primary caregiver and are indigent, Medicaid-eligible or unable to pay privately for additional help in the home. If approved in Service Area 7B, Wuesthoff would hope to duplicate these kinds of outreach programs. For the Supportive Care program, that would require its new hospice program to enter into agreements with home health agencies operating in Service Area 7B. While more difficult an undertaking than the current all-Wuesthoff Supportive Care program, Wuesthoff probably will be able to persuade at least some Service Area 7B home health agencies to cooperate, since there would be benefits to them, too. Wuesthoff proposes to use 38 volunteers during its first year in operation. As a not-for-profit organization, Wuesthoff has had good success recruiting, training, using and retaining volunteers in Brevard County. Its experience and status as a not-for-profit organization will help it meet its goals in Service Area 7B; however, it probably will be more difficult to establish a volunteer base in Service Area 7B than in its home county of Brevard. Wuesthoff’s proposed affiliation with Florida Hospital will improve its chances of success in this area. Key to the overall success of Wuesthoff’s proposed hospice is its vision of an affiliation with Florida Hospital. With no existing presence in Service Area 7B, Wuesthoff has no existing relationship with community physicians and no existing inpatient facilities. Wuesthoff plans to fill these voids through a proposed affiliation with Florida Hospital. In existence and growing for decades, Florida Hospital now is a fully integrated health care system with multiple inpatient sites, including more than 1,450 hospital beds, in Service Area 7B. It provides a full range of pre-acute care through post-acute care services, including primary through tertiary services. Approximately 1,200 physicians are affiliated with Florida Hospital, which has a significant physician-hospital organization. Wuesthoff is relying on these physicians to refer patients to its proposed hospice. Florida Hospital and Wuesthoff have signed a letter of intent. The letter of intent only agreed to a forum for discussions; there was no definite agreement concerning admissions, and Florida Hospital has not committed to sending any particular number of hospice patients to Wuesthoff. However, there is no reason to think that Wuesthoff could not achieve a viable affiliation with Florida Hospital. Wuesthoff has recent experience successfully cooperating with other health care providers. It has entered into cooperative arrangements with Jess Parrish Hospital in Brevard County, with Sebastian River Medical Center in Indian River County, and with St. Joseph’s Hospital in Hillsborough County. Wuesthoff’s existing hospice provides support to children who are patients of its hospice, whose parents are in hospice or whose relatives are in hospice, as well as to other children in the community who are in need of bereavement support services. Wuesthoff employs a full-time experienced children’s specialist. Wuesthoff also provides crisis response services for Brevard County Schools System when there is a death at a school or if a student dies or if there is a death that affects the school community. Camp Hope is a bereavement camp for children which is operated by Wuesthoff annually for approximately 50 Brevard children who have been affected by death. Wuesthoff operates extensive grief support programs as part of its Brevard Hospice. At a minimum, Wuesthoff provides 13 months of grief support services following the death of a patient, and more as needed. It employs an experienced, full- time grief support coordinator to oversee two grief support specialists (each having Masters degree level training), as well as 40 grief support volunteers, who function in Wuesthoff’s many grief support groups. These include: Safe Place, an open grief support group which meets four times a month and usually is the first group attended by a grieving person; Pathways, a closed six-week grief workshop offered twice a year primarily for grieving persons three to four months following a death; Bridges, a group for widows under age 50, which is like Pathways but also includes sessions on helping grieving children and on resocialization; Just Us Guys and Gals, which concentrates on resocialization and is attended by 40 to 80 people a month; Family Night Out, an informal social opportunity for families with children aged six to twelve; Growing Through Grief, a closed six-week children’s grief group offered to the Brevard County School System. Wuesthoff also publishes a newsletter for families of deceased hospice patients for a minimum of 13 months following the death. Wuesthoff also participates in extensive speaking engagements and provides seminars on grief issues featuring nationally renowned speakers. Wuesthoff intends to use the expertise developed in its Brevard Hospice grief support program to establish a similar program in Service Area 7B. The Brevard Hospice coordinator will assist in implementing the Service Area 7B programs. In its utilization projections, Wuesthoff committed to seven percent of hospice patient days provided to indigent/charity patients and seven percent to Medicaid patients. Wuesthoff also committed to provide hospice services to AIDS patients, pediatric patients, patients in long-term care facilities and patients without a primary caregiver; however, no specific percentage committments were made. In its pro formas, Wuesthoff projects four percent hospice services to HIV/AIDS patients and approximately 40% to non-cancer patients. The narrative portions of its application, together with the testimony of its chief executive officer, confirm Wuesthoff’s willingness to condition its CON on those percentages. In recent years, the provision of Medicaid at Brevard Hospice has declined. However, during the same years, charity care provided by Brevard Hospice has increased. In the hospice arena, Medicaid hospice is essentially fully reimbursed. Likewise, the provision of hospice services to AIDS/HIV patients by Brevard Hospice has declined in recent years—from 4.9% in 1993 to 1.4% in 1995. However, this decline was influenced by the migration of many AIDS patients to another county, where a significant number of infectious disease physicians are located, and by the opening of Kashy Ranch, another not-for-profit organization that provides housing and services especially for HIV clients. Financial Feasibility Both applications are financially feasible in the immediate and long term. Immediate Financial Feasibility Free-standing hospice proposals like those of Hospice Integrated and Wuesthoff, which intend to contract for needed inpatient care, require relatively small amounts of capital, and both applications are financially feasible in the immediate term. Hospice Integrated is backed by a $100,000 donation and a commitment from IHS to donate the additional $300,000 needed to open the new hospice. IHS has hundreds of millions of dollars in lines of credit available meet this commitment. Wuesthoff questioned the short-term financial feasibility of the Hospice Integrated proposal in light of recent acquisitions of troubled organizations by IHS. It recently acquired an organization known as Coram at a cost of $655 million. Coram recently incurred heavy losses and was involved in litigation in which $1.5 billion was sought. IHS also recently acquired a home health care organization known as First American, whose founder is currently in prison for the conduct of affairs at First American. But none of these factors seriously jeopardize the short-term financial feasibility of the Hospice Integrated proposal. Wuesthoff also noted that the IHS commitment letter is conditioned on several “approvals” and that there is no written commitment from IHS to enter into a management contract with Hospice Integrated at a four percent fee. But these omissions do not seriously undermine the short-term financial feasibility of the Hospice Integrated proposal. Hospice Integrated, for its part, and AHCA question the short-term financial feasibility of the Wuesthoff proposal, essentially because the application does not include a commitment letter from with Wuesthoff Systems or Wuesthoff Hospital to fund the project costs. The omission of a commitment letter is comparable to the similar omissions from the Hospice Integrated application. It does not undermine the short-term financial feasibility of the proposal. Notwithstanding the absence of a commitment letter, the evidence is clear that the financial strength of Wuesthoff Systems and Wuesthoff Hospital support Wuesthoff’s hospice proposal. This financial strength includes the $38 to $40 million in cash and marketable securities reflected in the September 30, 1995, financial statements of Wuesthoff Systems, in addition to the resources of Wuesthoff Hospital. Hospice Integrated also questions the ability of Wuesthoff Systems to fund the hospice proposal in addition to other planned capital projects. The Wuesthoff application indicates an intention to fund $1.6 million of the needed capital from operations and states that $1.4 million of needed capital in “assured but not in hand.” But some of the projects listed have not and will not go forward. In addition, it is clear from the evidence that Wuesthoff Systems and Wuesthoff Hospital have enough cash on hand to fund all of the capital projects that will go forward, including the $290,000 needed to start up its hospice proposal. Long-Term Financial Feasibility Wuesthoff’s utilization projections are more aggressive than Hospice Integrated’s. Wuesthoff projects 186 admissions in year one and 380 in year two; Hospice Integrated projects 124 admissions in year one and 250 in year two. But both projections are reasonably achievable. Projected patient days, revenue and expenses also are reasonable for both proposals. Both applicants project an excess of revenues over expenses in year two of operation. Vitas criticized Hospice Integrated’s nursing salary expenses, durable medical equipment, continuous and inpatient care expenses, and other patient care expenses as being too low. But Vitas’ criticism was based on misapprehension of the facts. The testimony of Vitas’ expert that nursing salaries were too low was based on the misapprehension that Hospice Integrated’s nursing staffing reflected in the expenses for year two of operation was intended to care for the patient census projected at year end. Instead, it actually reflected the expenses of average staffing for the average patient census for the second year of operation. Vitas’ expert contended that Hospice Integrated’s projected expenses for durable medical equipment for year two of operation were understated by $27,975. But there is approximately enough overallocated in the line items “medical supplies” and “pharmacy” to cover the needs for durable medical equipment. Vitas’ expert contended that Hospice Integrated’s projected expenses for continuous and inpatient care were understated by $23,298. This criticism made the erroneous assumption that Hospice Integrated derived these expenses by taking 75% of its projected gross revenues from continuous and inpatient care. In fact, Hospice Integrated appropriately used 75% of projected collections (after deducting contractual allowances). In addition, as far as inpatient care is concerned, Hospice Integrated has contracts with the IHS nursing homes in Service Area 7B to provide inpatient care for Hospice Integrated’s patients at a cost below that reflected in Hospice Integrated’s Schedule 8A. Vitas’ expert contended that Hospice Integrated’s projected expenses for “other patient care” were understated by $19,250. This criticism assumed that fully half of Hospice Integrated’s patients would reside in nursing homes that would have to be paid room and board by the hospice out of federal reimbursement “passed through” the hospice program. However, most hospices have far fewer than half of their patients residing in nursing homes (only 17% of Comforter’s are nursing home residents), and Hospice Integrated made no such assumption in preparing its Schedule 8A projections. In addition, Hospice Integrated’s projections assumed that five percent of applicants for Medicaid pass-through reimbursement would be rejected and that two percent of total revenue would be lost to bad debt write-offs. Notwithstanding Vitas’ attempts to criticize individual line items of Hospice Integrated’s Schedule 8A projections, Hospice Integrated’s total average costs per patient day were approximately the same as Wuesthoff’s--$19 per patient day. Vitas did not criticize Wuesthoff’s projections. On the revenue side, Hospice Integrated’s projections were conservative in several respects. Projected patients days (6,800 in year one, and 16,368 in year two) were well within service volumes already achieved in hospices IHS recently has started in other states (which themselves exceeded their projections). Medicaid and Medicare reimbursement rates used in Hospice Integrated’s projections were low. Hospice Integrated projects that 85% of its patients will be Medicare patients and that ten percent will be Medicaid. Using more realistic and reasonable reimbursement for these patients would add up to an additional $74,000 to projected excess of revenue over expenses in year two. Wuesthoff also raised its own additional questions regarding the long-term financial feasibility of the Hospice Integrated proposal. Mostly, Wuesthoff questioned the inexperience of the Hospice Integrated entity, as well as IHS’ short track record. It is true that the hospices started by IHS were in operation for only 12-14 months at the time of the final hearing and that, on a consolidated basis, IHS’ hospices lost money in 1995. But financial problems in one hospice inherited when IHS acquired it skewed the aggregate performance of the hospices in 1995. Two of them did have revenues in excess of expenses for the year. In addition, Hospice of the Great Lakes, which was not acquired until 1996, also is making money. On the whole, IHS’ experience in the hospice arena does not undermine the financial feasibility of the Hospice Integrated application. Wuesthoff also questioned Hospice Integrated’s assumption that the average length of stay (ALOS) of its hospice patients will increase from 55 to 65 days from year one to year two of operation. Wuesthoff contended that this assumption is counter to the recent trend of decreasing ALOS’s, and that assuming a flat ALOS would decrease projected revenues by $262,000. But increasing ALOS from year one to year two is consistent with IHS’ recent experience starting up new hospices. In part, it is reasonably explained by the way in which patient census “ramps up” in the start up phase of a new hospice. As a program starts up, often more than average numbers of patients are admitted near the end of the disease process and die before the ALOS; also, as patient census continues to ramp up, often more than average numbers of patients who still are in the program at the end of year one will have been admitted close to the end of the year and will have been in the program for less than the ALOS. Finally, while pointing to possible revenue shortfalls of $262,000, Wuesthoff overlooked the corresponding expense reductions that would result from lower average daily patient census. It is found that both proposals also are financially feasible in the long term. State and Local Plan Preferences Local Health Plan Preference Number One Preference shall be given to applicants which provide a comprehensive assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas. Such assessment shall include but not be limited to: A projection of the number of Medicare/Medicaid patients to be drawn away from existing hospice providers versus the projected number of new patients in the service area. A projection of area hospice costs increases/decreases to occur due to the addition of another hospice provider. A projection of the ratio of administrative expenses to patient care expenses. Identification of sources, private donations, and fund-raising activities and their affect on current providers. Projection of the number of volunteers to be drawn away from the available pool for existing hospice providers. Both applicants provided an assessment of the impact of their proposed new service on existing hospice providers in the proposed service areas (although both applicants could have provided an assessment that better met the intent of the Local Health Plan Preference One.) There was no testimony that, and it is not clear from the evidence that, one assessment is markedly superior to the other. There also was no evidence as to how the assessments are supposed to be used to compare competing applicants. Both applicants essentially stated that they would not have an adverse impact on the existing providers. The basis for this assessment was that there is enough underserved need in Service Area 7B to support an additional hospice with no adverse impact on the existing providers. Vitas disputed the applicants’ assessment. Vitas presented evidence that it and Comforter have been unable, despite diligent marketing efforts, to achieve statewide average hospice use rates in Service Area 7B, especially for non-cancer and under 65 hospice eligible patients, that the existing hospices can meet the needs of the hospice-eligible patients who are choosing hospice, and that other health care alternatives are available to meet the needs of hospice-eligible patients who are not choosing hospice. Vitas also contended that the applicants will not be able to improve much on the marketing and community outreach efforts of the existing providers. In so doing, Vitas glossed over considerable evidence in the record that the addition of a hospice program, by its mere presence, will increase awareness of the hospice option in 7B regardless whether the new entrant improves upon the marketing efforts of the existing providers, and that increased awareness will result in higher conversion rates. Vitas’ counter-assessment also made several other invalid assumptions. First, it is clear from the application of the FNP rule that, regardless of the conversion rate in Service Area 7B, the size of the pool of potential hospice patients clearly is increasing. Second, it is clear that the FNP rule is inherently conservative, at least in some respects. See Finding 24, supra. The Vitas assessment also made the assumption that the existing providers are entitled to their current market share (87% for Vitas and 13% for Comforter) of anticipated increases in hospice use in Service Area 7B and that the impact of a new provider should be measured against this entitlement. But to the extent that anticipated increased hospice use in Service Area 7B accommodates the new entrant, there will be no impact on the current finances or operations of Vitas and Comforter. Finally, in attempting to quantify the alleged financial impact of an additional hospice program, Vitas failed to reduce variable expenses in proportion to the projected reduction in patient census. Since most hospice expenses are variable, this was an error that greatly increased the perceived financial impact on the existing providers. While approval of either hospice program probably will not cause an existing provider to suffer a significant adverse impact, it seems clear that the impact of Wuesthoff’s proposal would be greater than that of Hospice Integrated. Wuesthoff seeks essentially to duplicate its Brevard Hospice operation in Service Area 7B. Wuesthoff projects higher utilization (186 admissions in year one and 380 admissions in year two, as compared to the 124 and 250 projected by Hospice Integrated). In addition, Wuesthoff’s primary referral source for hospice patients—Florida Hospital—also is the primary referral source of Vitas, which gets 38% of its referrals from Florida Hospital. In contrast, while also marketing in competition with the existing providers, Hospice Integrated will rely primarily on the physicians in Orange and Osceola Counties with whom IHS already has working relationships through its home health agencies and skilled nursing facilities. Hospice Integrated’s conservative utilization projections (124 admissions in year one and 250 in year two) will not nearly approach the service gap identified by the rule (407 admissions). In total, Hospice Integrated only projected obtaining 6% of the total market share in year one and 12% in year two, leaving considerable room for continued growth of the existing providers in the district. The hospice industry has estimated that 10% of patients in long-term care facilities are appropriate for hospice care. IHS regularly uses an estimate of five percent. Common ownership of skilled nursing facilities and hospice programs allows better identification of persons with proper prognosis for hospice. These patients would not be drawn away from existing hospice providers. In addition to the difference in overall utilization projections between the applicants, there also is a difference in focus as to the kinds of patients targeted by the two applicants. The Hospice Integrated proposal focuses more on and made a greater commitment to non-cancer admissions. In addition, IHS has a good record of increasing hospice use by non-cancer patients. In contrast, Wuesthoff’s proposal focuses more on cancer admissions (projecting service to more cancer patients than represented by the underserved need for hospice for those patients, according to the FNP rule) and did not commit to a percentage of non-cancer use in its application. For these reasons, Wuesthoff’s proposal would be expected to have a greater impact and be more detrimental to existing providers than Hospice Integrated. Hospice Integrated also is uniquely positioned to increase hospice use by AIDS/HIV patients in Service Area 7B due to its HIV spectrum program at Central Park Village. It focused more on and made a greater commitment to this service in its application that Wuesthoff did it its application. To the extent that Hospice Integrated does a better job of increasing hospice use by AIDS/HIV patients, it is more likely to draw patients from currently underutilized segments of the pool of hospice-eligible patients in Service Area 7B and have less impact on existing providers than Wuesthoff. Vitas makes a better case that its pediatric hospice program will be impacted by the applicants, especially Wuesthoff. Vitas’ census of pediatric hospice patients ranges between seven and 14. A reduction in Vitas’ already small number of pediatric hospice patients could reduce the effectiveness of its pediatric team and impair its viability. Wuesthoff proposes to duplicate the Brevard Hospice pediatric program, creating a pediatric program with a specialized pediatric team and extensive pediatric programs, similar to Vitas’ program. On the other hand, Hospice Integrated proposes a pediatric program but not a specialized team, and it would not be expected to compete as vigorously as Wuesthoff for pediatric hospice patients. The evidence was not clear as to whether area hospice costs would increase or decrease as a result of the addition of either applicant in Service Area 7B. Vitas, in its case-in- chief, provided an analysis of projected impacts from the addition of either hospice provider. As already indicated, Vitas’ analysis incorporated certain invalid assumptions regarding the fixed/variable nature of hospice costs. However, Vitas’ analysis supported the view that Wuesthoff’s impact would be greater. Wuesthoff’s ratio of administrative expenses to patient care expenses (24% to 76% in year one, dropping to 22% to 78% in year two) is lower than Hospice Integrated’s (26% to 71%). Wuesthoff also appears more likely to compete more directly and more vigorously with the existing providers than Hospice Integrated for private donations, in fund-raising activities, and for volunteers. Local Health Plan Preference Number Two Preference shall be given to an applicant who will serve an area where hospice care is not available or where patients must wait more than 48 hours for admission, following physician approval, for a hospice program. Documentation shall include the number of patients who have been identified by providers of medical care and the reasons resulting in their delay of obtaining hospice care. There was no direct evidence of patients who were referred for hospice services but failed to receive them. Local Health Plan Preference Number Three Preference shall be given to an applicant who will serve in addition to the normal hospice population, an additional population not currently serviced by an existing hospice (i.e., pediatrics, AIDS patients, minorities, nursing home residents, and persons without primary caregivers.) State Health Plan Factor Four Preference shall be given to applicants which propose to serve specific populations with unmet needs, such as children. State Health Plan Preference Number Five Preference shall be given to an applicant who proposes a residential component to serve patients with no at- home support. When Medicare first recognized hospice care in 1983, more than 90% of hospice cases were oncology patients. Although use of hospice by non-cancer patients has increased to 40% statewide, it lags behind in Service Area 7B, at only 27%. Both applicants will serve non-cancer patients. But Hospice Integrated has made a formal commitment to 40% non-cancer patient days and has placed greater emphasis on expanding the provision of hospice services for non-cancer patients. The clinical background of employees of IHS and Hospice Integrated can effectively employ NHO guidelines to identify the needs of AIDS patients and other populations. In its other hospice programs, IHS has succeeded in achieving percentages of non-cancer hospice use of 60% and higher. Wuesthoff projects over 40% non-cancer patient days, and is willing to accept a CON condition of 40% non-cancer patient days, but it did not commit to a percentage in its application. In Service Area 7B, there are 1,200 people living with AIDS and 10,000 who are HIV positive. Both applicants would serve AIDS/HIV patients, but Hospice Integrated has demonstrated a greater commitment to this service. Not only does IHS have its HIV spectrum program at Central Park Village, it also has committed to five percent of its care for HIV patients. Wuesthoff has agreed to serve AIDS/HIV patients, projects that about four percent of its patient days will be provided to AIDS/HIV patients, and would be willing to condition its CON on the provision of four percent of its care to AIDS/HIV patients. But Wuesthoff did not commit to a percentage in its application. Both applicants will serve children, but Wuesthoff has demonstrated greater commitment and ability to provide these services. Ironically, Wuesthoff’s advantage in the area of pediatric hospice carries with it the disadvantage of causing a greater impact on Vitas than Hospice Integrated’s proposal. See Findings 101-102, supra. While neither applicant specifically addressed the provision of services to minorities, both made commitments to provide services for Medicaid patients and the indigent. Hospice Integrated’s commitment to Medicaid patients is higher (ten percent as compared to seven percent for Wuesthoff). But the commitment to Medicaid patients is less significant in the hospice arena because Medicaid essentially fully reimburses hospice care. Meanwhile, Wuesthoff committed seven percent to indigent/charity patients, as compared a five percent commitment to the indigent for Hospice Integrated. But there was some question as to whether Wuesthoff was including bad debt in the seven percent. Both applicants will provide care for patients without primary caregivers. Earlier in its short history of providing hospice, IHS required patients to have a primary caregiver. However, that policy has been changed, and IHS now accepts such patients. Wuesthoff has long provided care for patients without primary caregivers. Local Health Plan Preference Number Four Preference shall be given to an applicant who will commit to contracting for existing inpatient acute care beds rather than build a free-standing facility. State Health Plan Preference Number Six Preference shall be given to applicants proposing additional hospice beds in existing facilities rather than the construction of freestanding facilities. Neither applicant plans to build a free-standing facility for the provision of inpatient care. Both plan to contract for needed inpatient acute care beds, to the extent necessary. IHS’ common ownership of existing skilled nursing facilities in Service Area 7B allows Hospice Integrated access to subacute care at any time. However, not all physicians will be willing to admit all hospice patients to skilled nursing facilities for inpatient care, and Hospice Integrated also will have to contract with acute care facilities to cover those instances. Wuesthoff relies on its proposed affiliation with Florida Hospital for needed inpatient care for its proposed Service Area 7B hospice. State Health Plan Preference Number Two Preference shall be given to an applicant who provides assurances in its application that it will adhere to the standards and become a member of the National Hospice Organization or will seek accreditation by the JCAHO. Both applicants meet this preference. Wuesthoff’s Brevard Hospice has JCAHO as well as membership in the National Hospice Organization (NHO). IHS’s hospices are NHO members, and Hospice Integrated’s application states that it will become a member of the NHO. Wuesthoff’s JCAHO accreditation does not give it an advantage under this preference. Other Points of Comparison In addition to the facts directly pertinent to the State and Local Health Plan Preference, other points of comparison are worthy of consideration. General Hospice Experience Wuesthoff went to great lengths to make the case that its experience in the hospice field is superior to that of Hospice Integrated and IHS. Wuesthoff criticized the experience of its opponent as being short in length and allegedly long on failures. It is true that IHS was new to the field of hospice when it acquired its first hospice in December, 1994, and that it has had to deal with difficulties in venturing into a new field and starting up new programs. Immediately after IHS acquired Samaritan Care of Illinois, Martha Nickel assumed the role of Vice-President of Hospice Services for IHS. After several weeks in charge of the new acquisition, and pending the closing of the purchase of Samaritan Care of Michigan from the same owner set for later in 1995, Nickel uncovered billing improprieties not discovered during IHS’ due diligence investigations. As a result, IHS was required to reimburse the Health Care Financing Administration (HCFA) approximately $3.5 million, and the purchase price for Samaritan Care of Michigan was adjusted. After this rocky start, IHS’ hospice operation settled down. Hospice Integrated’s teams have completed five to seven start up operations and understand what it takes to enter a new market, increase community awareness, and achieve hospice market penetration. Personnel who would implement Hospice Integrated’s approved hospice program have significant experience establishing new hospice programs, having them licensed and receiving accreditation. Without question, IHS’ Marsha Norman has the ability to start up a new hospice program. In contrast, Wuesthoff has operated its hospice in Brevard County since 1984. It is true that Wuesthoff’s Brevard Hospice appears to have been highly successful and, compared to the IHS experience, relatively stable in recent years. But, at the same time, Wuesthoff personnel have not had recent experience starting up a new hospice operation in a new market. Policies and Procedures A related point of comparison is the status of the policies and procedures to be followed by the proposed hospices. Wuesthoff essentially proposes to duplicate its Brevard Hospice in Service Area 7B and simply proposes to use the same policies and procedures. In contrast, IHS still is developing its policies and procedures and is adapting them to new regulatory and market settings as it enters new markets. As a result, the policies and procedures included in the Hospice Integrated application serve as guidelines for the new hospice and more of them are subject to modification than Wuesthoff’s. Regulatory Compliance A related point of comparison is compliance with regulations. Wuesthoff contends that it will be better able to comply with Florida’s hospice regulations since it already operates a hospice in Florida. In some respects, IHS’ staffing projections were slightly out of compliance with NHO staffing guidelines. However, Ms. Norman persuasively gave her assurance that Hospice Integrated would be operated so as to meet all NHO guidelines. One of IHS’ hospice programs was found to have deficiencies in a recent Medicare certification survey, but those deficiencies were “paper documentation” problems that were quickly remedied, and the program timely received Medicare certification. In several respects, the policies and procedures included in Hospice Integrated’s application are out of compliance with Florida regulations and will have to be changed. For example, the provision in Hospice Integrated’s policies and procedures for coordination of patient/family care by a social worker will have to be changed since Florida requires a registered nurse to fill this role. Similarly, allowance in the policies and procedures for hiring a lay person in the job of pastoral care professional (said to be there to accommodate the use of shamans or medicine men for Native American patients) is counter to Florida’s requirement that the pastoral care professional hold a bachelor’s degree in pastoral care, counseling or psychology. Likewise, the job description of social worker in the policies and procedures falls below Florida’s standards by requiring only a bachelor’s degree (whereas Florida requires a master’s degree). Although IHS does not yet operate a hospice in Florida, it has three long-term care facilities and two home health agencies in Service Area 7B, as well as 25 other skilled nursing facilities and several other new home health care acquisitions in Florida. Nationwide, IHS has nursing homes in 41 different states, home health care in 31 different states, and approximately 120 different rehabilitation service sites. Through its experiences facing the difficulties of entering the hospice field through acquisitions, IHS well knows federal regulatory requirements and is quite capable of complying with them. IHS also has had experience with the hospice regulations of several other states. There is no reason to think that Hospice Integrated will not comply with all federal and state requirements. Wuesthoff now knows how to operate a hospice in compliance with federal and state regulatory requirements. But, while Wuesthoff’s intent was to simply duplicate its Brevard Hospice in Service Area 7B, that intention leads to the problem that its board of directors does not have the requisite number of residents of Service Area 7B. Measures will have to be taken to insure appropriate composition of its board of directors. 140. On balance, these items of non-compliance are relatively minor and relatively easily cured. There is no reason to think that either applicant will refuse or be unable to comply with regulatory requirements. Not-for-Profit Experience Wuesthoff clearly has more experience as a not-for- profit entity. This includes extensive experience in fund- raising and in activities which benefit the community. It also gives Wuesthoff an edge in the ability to recruit volunteers. See Findings 56-58, supra. Ironically, Wuesthoff’s advantages over Hospice Integrated in these areas probably would increase its impact on the existing providers. See Finding 105, supra. Presence and Linkages in Service Area 7B Presently, Wuesthoff has no presence in Service Area 7B. As one relatively minor but telling indication of this, Wuesthoff’s lack of familiarity with local salary levels caused it to underestimate its Schedule 8A projected salaries for its administrator, patient coordinator, nursing aides and office manager. IHS has an established presence in Service Area 7B. This gives Hospice Integrated an advantage over Wuesthoff. For example, its projected salary levels were accurate. Besides learning from experience, Wuesthoff proposes to counter Hospice Integrated’s advantage through its proposed affiliation with Florida Hospital. While IHS’ presence and linkages in Service Area 7B is not insignificant, it pales in comparison to Florida Hospital’s. To the extent that Wuesthoff can developed the proposed affiliation, Wuesthoff would be able to overcome its disadvantage in this area. Wuesthoff also enjoys a linkage with the Service Area 7B market through its affiliate membership in the Central Florida Health Care Coalition (CFHCC). The CFHCC includes large and small businesses, as well as Central Florida health care providers. Its goal is to promote the provision of quality health care services. Quality Hospice Services Both applicants deliver quality hospice services through their existing hospices and can be expected to do so in their proposed hospices. As an established and larger hospice than most of IHS’ hospices, Brevard Hospice can provide more enhanced services than most of IHS’. On the other hand, IHS has been impressive in its abilty to expand services to non-cancer patients, and it also is in a better position to provide services to AIDS/HIV patients, whereas Wuesthoff is better able to provide quality pediatric services. Wuesthoff attempted to distinguish itself in quality of services through its JCAHO accreditation. Although Hospice Integrated’s application states that it will get JCAHO accreditation, it actually does not intend to seek JCAHO accreditation until problems with the program are overcome and cured. Not a great deal of significance can be attached to JCAHO hospice accreditation. The JCAHO hospice accreditation program was suspended from 1990 until 1996 due to problems with the program. Standards were vague, and it was not clear that they complied with NHO requirements. Most hospices consider NHO membership to be more significant. None of IHS’s new hospices are even eligible for JCAHO accreditation because they have not been in existence long enough. Bereavement Programs Wuesthoff’s bereavement programs appear to be superior to IHS’. Cf. Findings 44, and 63-64, supra. To some extent, Wuesthoff’s apparent superiority in this area (as in some others) may be a function of the size of Brevard Hospice and the 14-year length of its existence. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement are cursory and sparse. IHS relies on individual programs to develop their own bereavement policies and procedures. The provisions in the policies and procedures included in the Hospice Integrated application relating to bereavement include a statement that a visit with the patient’s family would be conducted “if desired by the family and as indicated by the needs of the family.” In fact, as Hospice Integrated concedes, such a visit should occur unless the family expresses a desire not to have one. Continuum of Care One of IHS’ purposes in forming Hospice Integrated to apply for a hospice CON is to improve the continuum of care it provides in Service Area 7B. The goal of providing a continuum of care is to enable case managers to learn a patient’s needs and refer them to the appropriate care and services as the patient’s needs change. While IHS already has an integrated delivery system in Service Area 7B, it lacks hospice. Adding hospice will promote the IHS continuum of care. Since it lacks any existing presence in Service Area 7B, granting the Wuesthoff application will not improve on an existing delivery system in the service area. I. Continuous and Respite Care Though small components of the total hospice program, continuous or respite hospice care should be offered by every quality provider of hospice and will be available in IHS’ program. Wuesthoff’s application failed to provide for continuous or respite hospice care. However, Wuesthoff clearly is capable of remedying this omission. Result of Comparison Both applicants have made worthy proposals for hospice in Service Area 7B. Each has advantages over the other. Balancing all of the statutory and rule criteria, and considering the State and Local Health Plan preferences, as well as the other pertinent points of comparison, it is found that the Hospice Integrated application is superior in this case. Primary advantages of the Hospice Integrated proposal include: IHS’ presence in Service Area 7B, especially its HIV spectrum program at Central Park Village; its recent experience and success in starting up new hospice programs; its success in expanding hospice to non-cancer patients elsewhere; Hospice Integrated’s greater commitment to extend services to the underserved non- cancer and AIDS/HIV segments of the hospice-eligible population; and IHS’ ability to complete its continuum of care in Service Area 7B through the addition of hospice. These and other advantages are enough to overcome Wuesthoff’s strengths. Ironically, some of Wuesthoff’s strengths, including its strong pediatric program and its ability (in part by virtue of its not- for-profit status) and intention generally to compete more vigorously with the existing providers on all fronts, do not serve it so well in this case, as they lead to greater impacts on the existing providers.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the AHCA enter a final order approving CON application number 8406 so that Hospice Integrated may establish a hospice program in the AHCA Service Service Area 7B but denying CON application number 8407 filed by Wuesthoff. RECOMMENDED this 6th day of May, 1997, at Tallahassee, Florida. J. LAWRENCE JOHNSTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax FILING (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 6th day of May, 1997. COPIES FURNISHED: J. Robert Griffin, Esquire 2559 Shiloh Way Tallahassee, Florida 32308 Thomas F. Panza, Esquire Seann M. Frazier, Esquire Panza, Maurer, Maynard & Neel, P.A. NationsBank Building, Third Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308 David C. Ashburn, Esquire Gunster, Yoakley, Valdes-Fauli & Stewart, P.A. 215 South Monroe Street, Suite 830 Tallahassee, Florida 32301 Richard Patterson Senior Attorney Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308-5403 Jerome W. Hoffman General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308-5403
The Issue Whether Florida Administrative Code Rule 59C-1.0355(4)(d)3. is an invalid exercise of delegated legislative authority?
Findings Of Fact Background This is a challenge to the facial validity of the 48-hour rule. It is not a challenge to the 48-hour rule as applied.2 Nonetheless, the following background provides the context that produced the challenge. See also Findings of Fact 14-16. LifePath, Suncoast, and Palm Coast (or related entities), as well as the Agency, are parties in pending proceedings at the Division of Administrative Hearings (DOAH) involving Palm Coast's (or related entities) challenges to the Agency's preliminary determinations to deny CON applications (hospice) filed by Palm Coast (or related entities). These cases have been abated pending the outcome of this proceeding. In each proceeding, Palm Coast (or related entities) contends that a "special circumstance" exists under the 48-hour rule to justify approval of each CON application. Moreover, in support of its position, Palm Coast (or related entities) relies, in part, on data compiled by LifePath and Suncoast. It is the use of this data, in light of the 48-hour rule and interpretation thereof, that caused LifePath and Suncoast to file the rule challenges, notwithstanding that the Agency has not definitively interpreted the 48-hour rule. Parties The Agency administers the CON program for the establishment of hospice services and is also is responsible for the promulgation of rules pertaining to uniform need methodologies, including hospice services. See generally §§ 408.034(3) and (6) and 408.043(2), Fla. Stat.; Ch. 400, Part IV, Fla. Stat. Suncoast is a not-for-profit corporation operating a community-based hospice program providing hospice and other related services in Pinellas County, Florida, Hospice Service Area 5B. Suncoast has provided a broad range of hospice services to residents of Pinellas County since 1977. Suncoast has implemented an electronic medical records system and has developed a proprietary information management software system known as Suncoast Solutions. LifePath is a not-for-profit corporation operating a community-based hospice program providing hospice services in Hillsborough, Polk, Highlands, and Hardee Counties, Hospice Service Areas 6A and 6B. LifePath has provided a broad range of hospice services for the past 25 years. Palm Coast is a not-for-profit corporation currently operating licensed hospice programs in Daytona Beach, Florida, Hospice Service Area 4B and in Dade/Monroe Counties, Hospice Service Area 11. Palm Coast, as well as other related entities such as Odyssey Healthcare of Pinellas County, Inc., e.g., CON application No. 9984 filed in 2007, for Hospice Service Area 5B, has filed several CON applications to provide hospice services. It is also a party in pending proceedings before DOAH, challenging the Agency's preliminary decisions to deny the respective applications. Palm Coast's sole member is Odyssey Healthcare Holding Company, Inc., which is a wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey). (Palm Coast and Odyssey shall be referred to as Palm Coast unless otherwise stated.) Standing Petitioners provide hospice services in Florida and have not applied for a CON to provide hospice services outside their current service areas. In the absence of a numeric need,3 an applicant for a hospice CON is afforded the opportunity to demonstrate a need for a new hospice program by proving "special circumstances." These include circumstances described in the 48-hour rule. The applicant must document that "there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested)."4 The parties have cited no law that requires an existing hospice provider to maintain records documenting when a person is referred to a hospice program. Public documents are not available that may otherwise provide information regarding when a person is referred to a hospice program.5 Existing providers do not uniformly maintain data that reflects the length of time between when a person is referred to and later admitted to a hospice program. By rule, existing licensed hospice providers in Florida are required to report admissions data every six months to the Agency. The Agency uses the information to calculate numeric need under the rule methodology. Petitioners keep records indicating, for their record keeping purposes, e.g., when a person contacts the hospice program and when the person is admitted. Petitioners use software to assimilate this type of information. Petitioners also maintain patient records that contain this type of information. However, this information is not specifically gathered and maintained for the purpose of determining when a person is actually "referred" to a hospice program and later "admitted" and whether "persons" are admitted within 48 hours from being referred. During discovery in pending CON proceedings following preliminary agency action, Petitioners produced information, related to this record, to Palm Coast or related entities. Palm Coast or related entities have used this information in their CON applications to justify a "special circumstance" under the 48-hour rule. See generally Pet 6, 17, 17A and PC 75-78. See also T 987-995. It is a fair inference that Palm Coast or related entities have and will use this information in CON application cases pending at DOAH. See generally Palm Coast's February 14, 2008, Request for Judicial Notice, items 1-18. It is the use of the information by Palm Coast or related entities, coupled with Palm Coast's or related entities interpretation of the 48-hour rule that caused Petitioners to file the rule challenges in this proceeding. LifePath and Suncoast are regulated by and subject to the provisions of Rule 59C-1.0355. See generally Pet 30 at 2, item 2. The 48-hour rule is a CON application criterion, a planning standard, that is not implicated unless and until an applicant relies on this provision in its hospice CON application and uses data provided by, e.g., existing providers such as Petitioners. Subject to balancing applicable statutory and rule CON criteria, application of the 48-hour rule may provide an applicant with a ground for approval of its CON application by indicating a need for a new hospice program. This may occur either leading up to the Agency's issuance of its SAAR, see Section 408.039(4)(b), Florida Statutes, stating the Agency's preliminary action to approve a CON application, or ultimately with the entry of a final order following a proceeding conducted pursuant to Section 120.57(1), Florida Statutes. This information may also be considered during a public hearing if the Agency affords one. § 408.039(3)(b), Fla. Stat. Existing hospice providers, such as LifePath and Suncoast, may be substantially affected by the Agency's consideration of this information, especially if the Agency preliminarily concludes (in the SAAR) that a CON application should be approved based in part on application of the 48-hour rule. At that point, existing hospice providers have the right to initiate an administrative hearing upon a showing that its established program will be substantially affected by the issuance of the CON. See § 408.039(5)(c), Fla. Stat. Existing providers may also intervene in ongoing proceedings initiated by a denied applicant. Id. Petitioners have proven that they are substantially affected by the application of the 48-hour rule. Rule 59C-1.035(4) Prior to the Agency's adoption of Rule 59C-1.0355 in 1995, the Agency adopted Rule 59C-1.035, which included, in material part, a numeric need formula. In a prior rule challenge proceeding, it was alleged that Rule 59C-1.035(4) and in particular the numeric need formula was invalid. Paragraph (4)(e) provided: (e) Approval Under Special Circumstances. In the absence of need identified in paragraph (4)(a), the applicant must provide evidence that residents of the proposed service area are being denied access to hospice services. Such evidence must demonstrate that existing hospices are not serving the persons the applicant proposes to serve and are not implementing plans to serve those persons. This evidence shall include at least one of the following: Waiting lists for licensed hospice programs whose service areas include the proposed service area. Evidence that a specifically terminally ill population is not being served. Evidence that a county or counties within the service area of a licensed hospice program are not being served. Rule 59C-1.035(4), including paragraphs (4)(e)1.-3., was determined to be invalid. Catholic Hospice of Broward, Inc. v. Agency for Health Care Administration, Case No. 94-4453RX, 1994 Fla. Div. Admin. Hear. LEXIS 5943 (DOAH Oct. 14, 1994), appeal dismissed, No. 1D94-3742 (Fla. 1st DCA Jan. 26, 1995). However, other than quoting from paragraph (4)(e) because it was included as part of the rule, there was no specific finding or conclusion regarding the validity of paragraphs (4)(e)1.-3. The successor rule, Rule 59C-1.0355(4)(d)1.-3., changed the preface language and substantially retained paragraphs (4)(e)2. and 3., now paragraphs (4)(d)1.-2., but omitted paragraph(4)(e)1. (waiting lists) and added paragraph(4)(d)3. (the 48-hour rule). Rule 59C-1.0355(4)(d)1.-3. Elfie Stamm has been employed by the Agency in different capacities. Material here, Ms. Stamm was the health services and facilities consultant supervisor for CON and budget review from July 1985 through June 1997. Since 1981, Ms. Stamm has had responsibility within the Agency for rule development. In and around 1994 and prior to the former hospice rule being invalidated, a work group was created for the purpose of developing a new hospice rule. Input was requested from the work group. Various hospice providers throughout the state participated in the rule development process. It appears that there was an attempt to replace the waiting list standard in the prior rule with the 48-hour standard. (There had been general objections made to the waiting list standard in this and other Agency rules.) The language for the 48-hour rule apparently came from the work group, rather than from Agency staff, although there is no evidence indicating which person or persons suggested the language. The Agency kept minutes of a meeting conducted on June 30, 1994, to discuss the proposed hospice rule, including the 48-hour rule. The minutes were kept to record any criticisms or comments regarding the proposed hospice rule. The minutes of a rule workshop "only addresses issues where people have concerns and varying opinions." The record does not reveal that any adverse comments were made regarding the 48-hour rule. In 1995, the Agency, adopted Rule 59C-1.0355, including Rule 59C-1.0355(4)(d)1.-3. that provides: (d) Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: That a specific terminally ill population is not being served. That a county or counties within the service area of a licensed hospice program are not being served. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons.6 The 48-hour rule, in its present iteration at issue in this proceeding, has been a final rule since 1995.7 The Agency's hospice need methodology is set forth in Rule 59C-1.0355(4), which is entitled "Criteria for Determination of Need for a New Hospice Program." Rule 59C-1.0355(4) is comprised of four paragraphs, (4)(a) through (4)(e). Paragraph (4)(a) sets forth the process for the Agency's calculations of a numeric fixed need pool for a new hospice program. Paragraph (4)(b) provides that the calculation of a numeric need under paragraph (4)(a) will not normally result in approval of a new hospice program unless each hospice program in the service area in question has been licensed and operational for at least two years as of three weeks prior to publication of the fixed need pool. Paragraph (4)(c) similarly states that the calculation of a numeric need under paragraph (4)(a) will "not normally" result in approval of a new hospice program for any service area that has an approved but not yet licensed hospice program. Paragraph (4)(d) of the need methodology sets forth the three "special circumstances" quoted above. Paragraph (4)(e) sets forth preferences that may be applicable to a CON application for a new hospice program. The purpose of the 48-hour rule is to establish a standard by which the Agency may determine whether there is a timeliness of access issue that would justify approval of a new hospice program despite a zero fixed need pool calculation. Under the hospice need methodology, "special circumstances" are distinguishable from "not normal" circumstances, in part, because the three "special circumstances" are comprised of three delineated criteria rather than generally referencing what has been characterized as "free form" need arguments. Also, "not normal" circumstances may be presented when the Agency's numeric fixed need pool calculations produces a positive numeric need. Once an applicant demonstrates at least one "special circumstance" in accordance with Rule 59C-1.0355(4)(d)1.-3., the applicant may then raise additional arguments in support of need, which may be generally classified as "not normal" or as additional circumstances. Although the 48-hour rule has existed since 1995, it has rarely been invoked as a basis for demonstrating need by a CON applicant seeking approval of a new hospice program. In this light, the Agency has rarely been called upon to interpret and apply the 48-hour rule. The Agency recently approved a CON application filed in 2003 by Hernando-Pasco Hospice to establish a new hospice program in Citrus County (CON application No. 9678). The application was based, in part, on the 48-hour rule. In its SAAR, the Agency mentions that the applicant presented two letters of support, stating that some admissions to hospice were occurring more than 48 hours after referral. The number of patients was not quantified. There was no challenge to the Agency's preliminary decision. The Agency's decision does not provide any useful guidance with respect to the Agency's interpretation of the 48-hour rule. The Challenges Petitioners allege that the 48-hour rule is an invalid exercise of delegated legislative authority because the terms "referred" and "persons" are impermissibly vague and vest unbridled discretion with the Agency. For example, Petitioners point out that the term "referred" is not defined by statute or rule and contend it is not a term of art within the hospice industry. As a result, Petitioners assert the starting point for the 48-hour period cannot be determined from the face of the rule. Petitioners also contend that the 48-hour rule is arbitrary and capricious because the language, "excluding cases where a later admission date has been requested" (the parenthetical), is the only exception that may be considered when determining whether there has been compliance with the subsection, when, in fact, there are "other facts and circumstances beyond the control of the hospice provider that may result in delay in admission of a hospice patient." Petitioners also contend that the use of a 48-hour time period for assessing the need for a new hospice provider in a service area notwithstanding the Agency calculation of a zero numeric need is arbitrary and capricious. Finally, Petitioners allege that the 48-hour rule contravenes the specific provisions of Section 408.043(2), Florida Statutes, which is one of the laws it implements. Specifically, Petitioners further allege that "[b]ecause of its vagueness, its lack of adequate standards, its vesting of unbridled discretion with the Agency, and its arbitrary and capricious nature [the 48-hour rule] fails to establish any meaningful measure of the 'need for and availability of hospices in the community,' as required by [S]ection 408.043(2), Florida Statutes, and in violation of Section 120.52(8)(c), Florida Statutes (2007)." Joint Prehearing Stipulation at 2-4. The Agency's and Palm Coast's Positions The Agency and Palm Coast contend that Petitioners do not have standing to challenge the 48-hour rule, but otherwise assert that the 48-hour rule is not invalid. In part, Palm Coast and the Agency contend that there is a common and ordinary meaning of the term "referred," which is "that point in time when a specific patient or family member on behalf of a patient or provider contacts a hospice provider seeking to access hospice services. Once a patient, patient family member on behalf of [a] patient, or provider contact [sic] a hospice provider seeking to access services, the 48 hour 'clock' should begin to run." See Joint Prehearing Stipulation at 6; AHCA/Palm Coast PFO at paragraph 79. With respect to the term "persons," Palm Coast and the Agency suggest that whether there are a sufficient number of "persons" that fit within the special circumstance "is a fact-based inquiry, which should be evaluated based on a totality of the circumstances." The Agency and Palm Coast contend that circumstances other than as stated in the parenthetical may be considered. Rule 59C-1.0355(4)(d)3. and Specific Terms Referred The term "referred" is not defined either by AHCA rule, in Chapter 400, Part IV, Florida Statutes, entitled "Hospices," or in Chapter 408, Part I, Florida Statutes, entitled "Health Facility and Services Planning." The terms "referred" or "referral" are not defined in any Agency final order or written policy. No definition of "referred" appears in at least three dictionaries, Webster's New World College Dictionary (4th ed. 2005) at 1203, Webster's II New College Dictionary (1999) at 931, and Webster's Ninth New Collegiate Dictionary (1985) at 989, although "refer" is defined, id. For example, "refer" means, in part "[t]o direct to a source for help or information." Webster's II New College Dictionary (1999) at 931. The term "referral," as a noun, means: "1 a referring or being referred, as for professional service, etc. 2 a person who is referred or directed to another person, an agency, etc." Webster's New World College Dictionary (4th ed. 2005) at 1204. Referral also means: "The practice of sending a patient to another practitioner or specialty program for consultation or service. Such a practice involves a delegation of responsibility for patient care, which should be followed up to ensure satisfactory care." Taber's Cyclopedic Medical Dictionary at 1843 (19th ed.). Pet 18A. Pursuant to the Patient Self-Referral Act of 1992, "'[r]eferral' means any referral of a patient by a health care provider for health care services, including, without limitation: 1. The forwarding of a patient by a health care provider to another health care provider or to an entity which provides or supplies designated health services or any other health care item or service; or 2. The request or establishment of a plan of care by a health care provider, which includes the provision of designated health services or other health care item or service." § 456.053(3)(o)1.-2., Fla. Stat. Essentially, this Act seeks to avoid potential conflicts of interest with respect to referral of patients for health care services. In the absence of any authoritative definition of "referred," it is appropriate to determine whether the word has a definite meaning to the class of persons within the 48-hour rule. It is also appropriate to consider the Agency's interpretation of the 48-hour rule. As noted, hospice services are required to be available to all terminally ill patients and their families. Under the 48-hour rule, a CON applicant has the opportunity to prove that persons are being denied timely access to hospice services after 48 hours elapses from when they have been referred and they have not been admitted, absent some a reasonable justification. The issue is what elements are necessary for a person to be deemed "referred" and are those elements commonly understood well enough to enable the 48-hour rule to withstand a challenge for vagueness. If a person calls a hospice organization and inquires about the availability of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate for an elderly parent in need of hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill, and further requests hospice services, does this call start the 48-hour period? If the same person calls a hospice organization and states that he or she is the caregiver/surrogate of an elderly parent in need of hospice services, that the elderly parent is terminally ill based on a prognosis by a licensed physician under Chapters 458 or 459, Florida Statutes, and further requests hospice services, does this call start the 48-hour period? Does eligibility for hospice services have a bearing on when a person is referred? If so, what factor(s) constitute eligibility? Petitioners contend the term "referred," as used in the 48-hour rule, can not be defined with any precision; hence the term is vague.8 Petitioners describe "referred" and "referral," for operational purposes, but not with respect to how the term "referred" is used in the 48-hour rule. Agency experts define the term differently, although none suggest the term is vague. Palm Coast offers a definition of "referred" or "referral" as part of its standard of admitting patients within three hours after referral. But, Palm Coast has a more generic and broader definition for the terms when used in the 48-hour rule. It is determined that "referred" can be defined with some precision and is not vague. But, the various positions and thought processes of the parties are described below and help in framing the controversy for resolution. LifePath and Suncoast Over the years, LifePath developed an administrative/operational manual pertaining to policies and procedures. One such policy is the "referral/intake procedure" that is the subject of a two page written policy, PC 55, revised March 2006. LifePath does not have a written definition of the terms inquiry or referral. LifePath does not believe it is reasonable to define referral as the point in time when a patient, a patient family member, or a physician requests hospice services on behalf of a patient. It is too general. In and around March 2006, LifePath considered a referral to occur when a first contact to LifePath was made by a person requesting hospice services. LifePath used the term referred "to anybody requesting services as a referral source." The admissions staff was directed to gather from the referral source, physician, and/or family any information needed to complete the patient record in the Patient Information System, and contact the patient/family on the same day of referral if available to discuss Lifepath hospice services. Sometime after December 2006, and the final hearing that was held in the Marion County hospice case, LifePath began revising its referral and intake procedure. According to LifePath, its process did not change, only its manner of characterizing certain terms, such as referral. At this time, LifePath wanted to track more precisely different occurrences within LifePath's process, including providing a more accurate label for referral as a request for assessment (RFA) rather than a referral. For LifePath, a referral and a RFA are not synonymous. A RFA is the first contact with the hospice program, which enables staff to follow- up with the prospective patient. A referral is a written physician's order for admission. At the same time, it had come to LifePath's attention that hospice providers (Palm Coast) defined referral differently. It became clear to LifePath that "Palm Coast had a very different definition of referral than [LifePath] did at that particular time. [LifePath] wanted to be able to clearly track each event during that time process so that [LifePath] would be able to compare with [Palm Coast's] definition of referral at that time." Stated somewhat differently, LifePath wanted to create a process that would capture several events (e.g., dates and times) consistently and measurable in the intake process rather than comb through paper charts to verify what they were doing. In April 2007, LifePath made several changes and updates to its written policy/procedure manual and software system, including using the term RFA instead of referral. According to the revised April 2007 policy, "Intake means: the initial demographic and patient condition information that is necessary to initiate the process for 'request for assessment.'" PC 56-57. In summary, for LifePath, a RFA for services is different from and precedes a referral. A RFA occurs when a person makes an initial contact with LifePath inquiring about access to hospice services. At this point LifePath has a name and an action to follow up with, and the information is entered into LifePath's system. The intake process begins. A RFA could be made by a physician in the community who orally or in writing requests LifePath to assess a patient for hospice care and/or issues an assess and admit order if appropriate. A call from a physician requesting LifePath to determine whether a person is appropriate for hospice services begins LifePath's RFA process. An RFA could arise when a person calls LifePath and says that their neighbor is really sick and gives LifePath the neighbors name and telephone number. RFA used in the April 2007 policy revision (PC 56) means the same as the term referral as used in the March 2006 policy revision (PC 55), i.e., the same point in time when LifePath received the patient's name and began the intake process and ability to follow up. Again, LifePath's intake process did not change; Lifepath's policies became more specific describing the events that occur during the entire intake process. According to LifePath, LifePath's revised policy of April 2007 is not reflective of LifePath's interpretation of the 48-hour rule. LifePath's revised policy "outlines the process in the organization in which [Lifepath] begin the intake process and how [LifePath follows] up and then certain moments in time within that process that [LifePath tracks] and monitor[s] as an organization." The April 2007 revision was followed by a May 2007 revision. LifePath characterized Palm Coast exhibits 55 through 57 as an "interim pilot process" that has been made permanent without any apparent significant changes. LifePath also perceived Palm Coast as defining referral to mean when a physician issues an admission order. As a result, LifePath began capturing data reflecting that moment in time so that the Agency could compare LifePath's data -- an apples-to-apples approach -- with another provider's data based on a definition that equated referral with a physician's order, but not for the purpose of defining what referred means to LifePath under the 48-hour rule. LifePath now considers a referral to occur when a physician issues an order to admit for the purpose of gathering data that is to be used to compare other providers, not for the purpose of applying the 48-hour rule. An assess and admit order in LifePath's view is not a referral until LifePath assesses the patient, obtains consent of care, determines that the patient is appropriate for hospice services, receives certification, and receives an order to admit the patient at that time. The RFA process is completed when either the patient is admitted to the program or it is determined that the patient cannot be admitted to the program. LifePath will admit a patient in lieu of having an admitting order when LifePath receives a verbal order to admit the patient from a physician. The verbal order for admission is a referral. LifePath admits at least 75 percent of its patients within 48 hours of the RFA. However, LifePath gave several reasons outside of a hospice program's control that would delay admission greater than 48 hours from the RFA. LifePath believes that the Agency's rule is a good rule, but that the language has been taken out of context and used inappropriately. Like LifePath, Suncoast's interest in the 48-hour rule was stimulated when Palm Coast filed two CON applications requesting approval to provide hospice services in Pinellas County and both applications claim a need for an additional hospice program based, in part, on the 48-hour rule. Suncoast was concerned with the manner in which referral was being used by Palm Coast in light of data provided by Suncoast and further believes that the 48-hour rule is being manipulated by Palm Coast. Suncoast uses an elaborate software product that uses terms such as referral. Suncoast does not have a formal policy definition of referral. Suncoast believes that there are differing definitions of referral among hospice programs. Suncoast filed its rule challenge because according to Suncoast the 48-hour rule is nonspecific; because there is no commonly understood definition of referral in the hospice rule or in the Agency that Suncoast and other hospice providers can depend on. Given the lack of a specific definition, Suncoast and others are unable to determine when the 48-hour clock begins. As used in its business and not for the purpose of defining the term in the 48-hour rule, Suncoast defines referral to mean "that first contact with [Suncoast's] program where [Suncoast gets] a name and [Suncoast gets] other information about the client so that [Suncoast] can go see them." This definition is not limited Medicare reimbursed hospice services. Inquiry and referral are the starting points. But, Suncoast states that there is no consistent definition of referral across the hospice industry. Suncoast also views a referral and an admission as "processes," "not really events." Sometimes the process takes a period of weeks to evolve with many variants, e.g., eligibility, consent, etc. Palm Coast In this proceeding, Interrogatories were answered on behalf of Hospice of the Palm Coast - Daytona and by Hospice of the Palm Coast - Waterford at Blue Lagoon with respect to the referral, intake, and admission of patients for hospice services to such facilities. Several terms are defined. "Referral" is an industry term, referring to contact by an individual or entity including but not limited to a patient, family member on behalf of a patient, HCS, POA, guardian, ALF, nursing home, or hospital seeking to access hospice services. "Referred" is an industry term, having a plain and ordinary meaning within the hospice field which generally describes when a patient, patient family member or personal representative, or provider contacts a hospice program seeking to access hospice services. "Intake" [] a general term of art describing the process from referral to admission. Admission is a general term of art describing that point in time when a patient meets all eligibility requirements including clinical requirements for hospice services and is admitted to a hospice program. [Assessment is t]he process by which patients are evaluated regarding clinical appropriateness for hospice services including eligibility requirements as set forth by state regulation, Medicare, Medicaid or other third party payors. [First Contact and initial contact, a]s it relates to referral, intake, and admission of patients, are defined above as referral and referred. For Palm Coast's purposes, a referral occurs when someone, e.g., a physician, discharge planner, family or a friend, contacts the hospice agency seeking hospice services. If the first contact comes from a physician, Palm Coast seeks that physician's approval to admit the patient if the patient is eligible or qualifies for hospice. For Palm Coast, it is typical to obtain a physician's written order for evaluation and admission before the patient is evaluated by the hospice provider. If a physician calls with a referral of a patient, the call goes to the admission coordinator. Calls from patients or family of a hospice patient would be routed into the clinical division. A referral does not include contacting a hospice requesting information where a chemotherapy wig or a hospital bed could be purchased. For Palm Coast, the admissions coordinator determines when an inquiry is an inquiry only or is a referral. The phone call may turn into a referral when the caller is asking for hospice services to be provided or a family member or to a patient who is at their end of life as opposed to a general request for information about hospice services. But, Palm Coast does not have written criteria for use by the admissions coordinator in determining whether a phone call is an inquiry or referral, or when an inquiry becomes a referral. Odyssey also does not have a written definition of referral, although it is a term used in policies and procedures. A referral results when they have a patient's name and a physician's name and someone is calling for hospice services. Ms. Ventre states that order and referral are not interchangeable. A physician's order is not a referral. For the purpose of describing Palm Coast's hospice operations and referring to page four of the "referral process" page within Palm Coast's Admission and Patient/Family Rights Policies, a referral begins when a written physician's order is received by the hospice program. Receipt of a physician's written order and referral are synonymous regarding the three- hour standard. Receipt of a telephone call from a potential patient does not qualify as a referral. It is classified as an inquiry. It is unusual for a patient or a patient's family would make a referral themselves. (Ms. Ventre characterized an inquiry as someone calling for an explanation of hospice services. A phone call could be classified as an inquiry or referral depending on the depth of the call. It may be an inquiry where there is no follow-up.) Palm Coast uses Odysseys service standard providing that all patients are admitted within three hours from a written physician's order to admit -- 24 hours a day, seven days a week. (This three hour standard is one of 14 standards adopted by Palm Coast/Odyssey.) A clinical assessment is performed within this three hour period. For Palm Coast, if it has a written physician's order to admit and if the family is available, Palm Coast believes it can meet the three-hour standard. Palm Coast (and Odyssey) does not track the time between receipt of a physician's order to evaluate and the admission of the patient nor does Odyssey track the time between the receipt of a physician's order to admit and the time the admission of the patient. Palm Coast (and Odyssey) maintains internal mechanisms that are reviewed on a daily basis to evaluate the referral process and if patients are being admitted in a timely fashion. Sometimes the three-hour standard is not met. The most frequent reason is that the patient and/or the family are not available to meet. Another is the time it may take to gather documentation from the referring physician. The Agency Agency experts defined "referred" differently. During the final hearing, Ms. Stamm stated that in order for a person to receive hospice services, the person must be qualified or eligible. Eligibility occurs when a physician certifies that the person has a six months or less (for Medicare) or (pursuant to Florida law) one year or less life expectancy. Ms. Stamm clarified her deposition testimony during the final hearing and stated that a person is referred to a hospice program when a request for hospice services is made to the hospice program by or on behalf of the person, coupled with the physician's written certification. A referral would not occur when, e.g., the person or someone on their behalf simply asks for hospice services without the physician's certification. Ms. Stamm was not aware whether this interpretation reflected the Agency's interpretation. She never thought there was a problem with defining "referred" or that it was an issue, so it was not discussed. Also, Ms. Stamm was not aware of how the Agency has interpreted the 48-hour rule. Mr. Gregg confirmed that there is no written definition of referred, but that it is commonly used in healthcare, i.e., "referral is a mechanism by which a patient is channeled into some specific new or different provider." Having considered his prior deposition testimony, see endnote 9, and in preparation for the final hearing in this proceeding, for Mr. Gregg, the 48 hours starts "[a]t the point of initial contact," "the point when some person representing a potential patient calls a hospice or contacts a hospice and says I believe we have a person who is appropriate for your service." The first contact could be made by a hospital discharge planner or nursing home social worker. Mr. Gregg does not believe that a physician's certification is required to start the 48-hour period or is part of the initial contact.9 Rather, the physician's certification would come at the end of the process, although the "physician is going to be a part of a successful referral." In other words, in order to start the 48-hour period, it would not be necessary for the hospice program to be advised that a patient was terminally ill. The latter determination is required to assess whether "the patient is appropriate and eligible." Generally, Mr. Baehr agrees with Mr. Gregg's view. For Mr. Baehr, there is a transfer of responsibility that occurs when the first contact is made at a point in time when either the patient or a family member or some institution, whether it be an assisted living facility, nursing home, hospital, or a physician, makes a contact with a hospice, and in a sense initiates a process that requires the hospice program to respond and do something so that this process can get underway. Mr. Baehr opines that referral has a common understanding; it is similar to when a patient is provided with a different medical service, whether it be hospice or some other form of healthcare service, from the one they are currently receiving. Mr. Baehr differentiates this scenario from one that occurs when a person merely seeks information about hospice versus someone who is seeking eventual admission to a hospice program. Admitted There is no rule or statute that requires a hospice provider to admit a patient within a certain time period. In Big Bend Hospice, Inc. v. Agency for Health Care Administration, Case No. 01-4415CON, 2002 Fla. Div. Hear. LEXIS 1584 (DOAH Nov. 7, 2002; AHCA April 8, 2003), aff'd, 904 So. 2d 610 (Fla. 1st DCA 2005), a proceeding involving a challenge to a numerical need (under the fixed need pool) for an additional hospice program, it was expressly found: "40. An admission consists of several components: (a) a physician's diagnosis and prognosis of a terminal illness; (b) a patient's expressed request for hospice care; (c) the informed consent of the patient; (d) the provision of information regarding advance directive to the patient; and (e) performance of an initial professional assessment of the patient. At that point, the patient is considered admitted. A patient does not have to sign an election of Medicare benefits form for hospice care prior to being admitted." 2002 Fla. Div. Admin. Hear. LEXIS at *26- 27(emphasis added). See also § 400.6095(2)-(4), Fla. Stat. This finding of fact was adopted by AHCA in its Final Order. A patient cannot be admitted for Medicare reimbursement without a physician's order. In order to be eligible to elect hospice care under Medicare, an individual must be entitled to Part A of Medicare and be certified by their attending physician, if the individual has an attending physician, and the hospice medical director as being terminally ill, i.e., that the individual has a medical prognosis that his or her life expectancy is six months or less if the illness runs its normal course, and consent. 42 C.F.R. §§ 418.3, 418.20(a)- (b), and 418.22(a),(b),(c)(i)-(ii). AHCA has defined the term "admitted" by and through its Final Order in Big Bend Hospice and there is no persuasive evidence in this case to depart from that definition, although the definition of the term was discussed during the hearing. The Agency's definition of "admitted" establishes the outer time limit when the 48-hour period ends for the purpose of the 48-hour rule. Persons The 48-hour rule requires the applicant to indicate the number of persons who are referred but not admitted to hospice within 48 hours of the referral (excluding cases where a later admission is requested). The term "persons" is not defined by AHCA statute or rule. However, the term is generically defined by statute. "The word 'person' includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations." § 1.01(3), Fla. Stat. "The singular includes the plural and vice versa." § 1.01(1), Fla. Stat. The term "persons" used in the 48-hour rule is not vague, ambiguous, or capricious. In context, it refers to individuals who are eligible for hospice services within the meaning of the 48-hour rule as discussed herein and who request hospice services. The Agency has not established by rule or otherwise a specific number of persons that can trigger a special circumstance under the 48-hour rule or the specific duration for counting such persons. The numeric need formula does not encompass every health planning consideration. The need formula is based on general assumptions such as population, projected deaths, projected death rates applying statewide averages, and admissions. The special circumstances set forth in Rule 59C- 1.0355(4)(d) compliment other portions of the rule and the statutory review criteria and allows an applicant to identify factors that may be unique to a particular service area, such as a particular provider not providing timely access to persons needing hospice services or a service area that is rural or urban that affects access. One size may not appropriately fit all. Rather, the term is capable of being applied on a case-by-case basis when (hospice) CON applications are reviewed by the Agency prior to the issuance of the SAAR and thereafter, if necessary, in a de novo proceeding, through and including the issuance of a final order. The Agency's exercise of discretion is not unbridled. Excluding cases where a later admission date has been requested10 The 48-hour rule provides in part: "3. That there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested). The applicant shall indicate the number of such persons." There is some testimony that the parenthetical may be interpreted broadly by the Agency, although Mr. Gregg suggested that the parenthetical was literally limited to when a specific request is made for a later admission date. There are numerous circumstances beyond the control of a hospice that delay an admission other than when a later admission date is requested under the rule. These circumstances do not necessarily indicate an access problem.11 Petitioners provided examples of situations (other than when a later admission date is requested) that may arise when a person would not be admitted with 48 hours after being referred such as when a patient or family is unresponsive to a contact made by the hospice provider; a patient was out of a hospice program's service area when the initial request for hospice services was made and no immediate plans to transfer to the service area; the patient/family/caregiver chose to stay with another benefit, e.g. skilled nursing facility, versus electing their hospice Medicare benefit; a patient residing in a non-contract hospital, e.g., VA Hospital, when the initial request is made and patient admitted to hospice service when the patient is transferred out of that facility into a contract facility, hospice inpatient setting or home; patient meeting the admission criteria at a later date; a delay in obtaining a physician order for assessment; or when a patient is incompetent at the time the initial request to consent for care or other delays in obtaining consent. There are also factors where a referral does not end in an admission. Persons falling in this category would not be counted under the 48-hour rule. The Agency and Palm Coast suggest that the Agency may consider these non-enumerated factors, whereas LifePath and Suncoast suggest the Agency's discretion is limited. Compare Agency/Palm Coast PFO at paragraphs 90-95, and 141 with LifePath/Suncoast PFO at paragraphs 61-67. The persuasive evidence indicates that the Agency should consider these factors. Nevertheless, the plain language of the parenthetical excludes from consideration legitimate circumstances that would reasonably explain a delay in admission other than the affirmative request for a later admission date and, as a result, is unreasonably restrictive. 48 hours Licensed hospice programs are required to provide hospice services to terminally ill patients, 24 hours a day and seven days a week. It is important that terminally ill persons who request hospice services (or if requested on their behalf), receive access to hospice services in a timely fashion. There is evidence that approximately 30 percent of patients that are admitted to hospice die within seven days or less after admission, i.e., an average length of stay of seven days or less. While the opinions of experts conflict, the 48-hour period is a quantifiable standard assuming that there is a precise and reasonable definition of referred and admission. Ultimate Findings of Fact Having considered the entire record in this proceeding, it is determined that the term "referred" is not impermissibly vague or arbitrary or capricious. A person is "referred" to a hospice program when a terminally ill person and/or their legal guardian or other person acting in a representative capacity, e.g., licensed physician or discharge planner, on their behalf, requests hospice services from a licensed hospice program in Florida. This definition presumes that prior to or contemporaneous with the request for hospice services a determination has been made by a physician licensed pursuant to Chapter 458 or Chapter 459, Florida Statutes, that the person is terminally ill, i.e., "that the patient has a medical prognosis that his or her life expectancy is 1 year or less if the illness runs its course." §§ 400.601(10) and 400.6095(2), Fla. Stat. This determination may be made by, e.g., the hospice's medical director, who presumably would be licensed pursuant to one of these statutes. The Agency and Palm Coast implicitly suggest that a referral (pursuant to the 48-hour rule) does not include a determination by a physician that the person is terminally ill. When it comes to "referral" in the generic, non- emergency physician/patient setting, the patient is examined by a physician; the physician determines that the patient needs a further evaluation by a specialist; and the physician refers the patient to the specialist.12 This is usually followed with a written order. The patient, or his or her authorized representative on the patient's behalf, must consent to and request any further examination for the ensuing service to be provided. The point is that the physician makes the referral. In order to apply the plain and commonly understood meaning of the term "referred" in the context of the 48-hour rule, the physician's determination is a critical component of the referral process, coupled with the patient's request and ultimate consent for services. Access to hospice services and the time it takes to deliver the service is of the essence for the prospective hospice patient. Having a written and dated physician certification of terminal illness would likely make recordkeeping easier and more predictable to assist in determining when the 48-hour period starts, in conjunction with the request for services. However, the potential delay in obtaining a written certification from a physician who has determined the patient is terminally ill should not be required to begin the 48-hour period and the referral in light of the purpose of the 48-hour rule. Thus, while a determination of terminal illness is necessary to start the running of the 48 hours under the 48-hour rule, reduction of that determination to writing is not. This definition, coupled with the 48 hour admission requirement and consideration of other factors affecting an admission, provides a sufficient standard for determining whether a person is receiving hospice services in a timely fashion.13 Whether access has been denied to a sufficient number of "persons" under the rule for the purpose of determining whether a special circumstance may justify approval of a hospice CON application in the absence of numeric need can be determined on a case-by-case basis by the Agency in the SAAR or later, if subject to challenge in a Section 150.57(1), Florida Statutes, proceeding in light of the facts presented. See generally Humhosco, Inc. v. Department of Health and Rehabilitative Services, 476 So. 2d 258, 261 (Fla. 1st DCA 1985). The use of the word "persons" in the rule is not vague or arbitrary or capricious. The time period of "48 hours" is not vague or arbitrary or capricious. Given the plight of terminally ill persons needing hospice services, it is not unreasonable for the Agency to have chosen this time period, in conjunction with "referred" and "admitted" as the beginning and stopping points for determining whether access is being afforded on a timely basis. The parenthetical language "(excluding cases where a later admission date has been requested)" is arbitrary and capricious because it precludes consideration of other factors that reasonably demand consideration given the rule's purpose. There is persuasive evidence that persons may not access hospice services (be admitted within 48 hours after being referred) within the 48-hour period based on circumstances that are outside the control of the hospice provider and arguably outside the parenthetical language. To the extent the parenthetical language is construed to limit consideration to one circumstance, the failure to consider other circumstances could unreasonably skew upward or overstate the number of persons that may fit outside the 48-hour period and indicates a lack of timely access when the contrary may be true, having considered the circumstances. The 48-hour rule can remain intact notwithstanding severance of the parenthetical language. The remaining portions of the rule provide an applicant with a viable avenue to demonstrate a lack of timely access based on a special circumstance. Finally, even if the 48-hour rule was not in existence, under applicable statutory and rule criteria, see, e.g., Subsections 408.035(2), Florida Statutes, an applicant may provide evidence that persons are being denied timely access to hospice services in a service area. However, such evidence would not necessarily be classified as a special circumstance unless the evidence fit within Florida Administrative Code Rule 59C-1.0355(4)(d)1. and 2.
The Issue Whether the Certificate of Need (CON) applications filed by Regency Hospice of Northwest Florida, Inc. (Regency), Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and United Hospice of West Florida, Inc. (United) for a new hospice program in Agency for Health Care Administration (AHCA or the Agency) Service Area (Service Area) 1, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval and, if so, which of the three applications best meets the applicable criteria for approval.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1) Florida Statutes.1 Regency Regency Hospice of Northwest Florida, Inc. (Regency) is a for-profit, wholly-owned subsidiary of Regency Healthcare Group, LLC (RHG). Regency is a start-up corporation formed for the purpose of owning and operating a new hospice program in Service Area 1. (Findings relating to the creation of Regency and Regency Hospice of Northwest Florida, LLC (Regency LLC) are set forth in section III.) RHG was formed in 2005 for the purpose of acquiring and then owning and operating hospice operations in the southeastern United States. The company's sole business is providing hospice services. In February 2006, RHG acquired the hospice operations of Regency Hospice with locations in Georgia and South Carolina. In June 2006, RHG acquired New Beacon Hospice with multiple locations in Alabama. In addition to these acquisitions, RHG opened a new Medicare licensed hospice program in Augusta, Georgia, and also opened two additional satellite offices in Gainesville, Georgia, and Gadsden, Alabama. RHG operates under the "Regency" brand name in Georgia and South Carolina (seven hospice offices) through its wholly- owned subsidiary Regency Hospice of Georgia, LLC, and operates under the "New Beacon" brand name in Alabama (eights hospice offices) through its wholly-owned subsidiary New Beacon Healthcare Group, LLC. Presently, RHG owns and operates ten Medicare certified hospice programs at 15 office locations: eight in Alabama, four in Georgia, and three in South Carolina. The offices are located in urban and rural settings. If approved in Florida, RHG would operate the hospice through the wholly-owned subsidiary Regency Hospice of Northwest Florida, Inc. There is no separate corporate management of Regency at the subsidiary level. The supervision, management, and control of all of the RHG hospice operations, whether operating under the Regency or New Beacon brand name, are centralized in the senior management team of RHG located in Birmingham, Alabama. The mission, core values, service standards, operating practices, protocols and policies are uniform throughout the company regardless whether a hospice program is operated under the New Beacon or Regency brand name. RHG senior management team has demonstrated a history of developing successful hospice operations. The origin of Regency's New Beacon hospice operations in Alabama dates back approximately 25 years when the hospice was first established in Birmingham, Alabama. The Birmingham hospice was initially owned by the Baptist Health System as a department of Montclair Hospital. Over time, the Baptist Hospice expanded its operations through acquisitions and opening of new programs in locations outside of Birmingham. Eventually, Baptist-owned hospice operations merged with the hospice operations of the Catholic health system in 1997. The joint Baptist/Catholic venture was operated under the name of Unity Health Services changing its name to New Beacon in 2001. In 2006, the Baptist and Catholic health systems decided to sell their hospice operations in Alabama. Both Odyssey and Regency submitted bids to purchase the New Beacon operations. Although Odyssey was the highest bidder, the hospice program was sold to Regency, apparently because RHG shared New Beacon's philosophy regarding providing hospice care. The Baptist and Catholic health systems continue to have a minority ownership in Regency and share a seat on the seven-member board of directors. RHG's hospice operations have grown in terms of patient admissions and average daily census since the acquisition of Regency and New Beacon. RHG plans to focus efforts in the southeast and expand into southern Alabama and the Florida panhandle. RHG's present plans are to open from three to ten new hospice locations in 2008 including the three Florida panhandle locations at issue in this case if approved. New Beacon is a recognized provider of choice in Alabama for some health care providers and its operations have been successful. RHG's operations in Georgia and South Carolina have also been successful. Under RHG's management and prior to its acquisition, New Beacon has afforded high quality of care to the patients its served. There are numerous examples of highly complex, difficult, and costly patients that New Beacon has accepted both before and after the acquisition. There have been no apparent changes in New Beacon's direction or philosophy since acquisition by RHG. Some witnesses who testified on behalf of Regency, expressed a preference for New Beacon over Odyssey based on ease of referrals and complexity of care of patients New Beacon accepts. Odyssey Odyssey Healthcare of Northwest Florida, Inc. (Odyssey) is a for-profit, wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey Healthcare). Odyssey is a start-up corporation formed for the purpose of filing a CON application at issue in this proceeding and owning and operating a new hospice program in Service Area 1. Odyssey Healthcare is a publicly-traded company founded in 1996 and focuses on caring for patients at end-of-life care. Odyssey Healthcare's sole line of business is hospice services. Since 1996, Odyssey Healthcare has started up and acquired more than 80 hospice programs in 30 states. Odyssey Healthcare presently operates approximately 76 Medicare certified hospice programs, including the operation of two hospice programs in Florida. Odyssey Healthcare has approximately 5,000 employees through affiliated programs and serves approximately 8,000 patients per day across its 76 hospice programs and serves has approximately 34,000 admissions in a 12-month period. Last year, Odyssey Healthcare started five or six new hospice programs. Odyssey is the only one of the three co-batched applicants with start-up and operational hospice experience in Florida - in AHCA Service Areas 4 and 11. Since 2003, Odyssey Healthcare has started up approximately 40 new hospice programs, but over the past several years, Odyssey Healthcare has closed or sold seven programs as underperforming or, in some cases, in light of unfavorable market conditions. Odyssey Healthcare has not sold or closed other hospice programs, such as those located in New Orleans and Baton Rouge, Louisiana, following the hurricane, or in Boston, Massachusetts, notwithstanding the loss of money in those markets or other market conditions. Odyssey Healthcare's patient population consists of approximately 68 percent non-cancer and 32 percent cancer patients. Odyssey Healthcare was the subject of an investigation by the United States Department of Justice (DOJ) that ultimately resulted in a settlement and the payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of wrongdoing. As part of the settlement with the United States Department of Health and Human Services, Office of Inspector General, Odyssey Healthcare entered into a corporate integrity agreement (CIA) for five years. Ody 4 at 32. According to Odyssey Healthcare, the federal investigation allowed Odyssey Healthcare to self- audit to ensure compliance with the Medicare conditions for participation followed by an outside verification agency. The federal investigation was not related to quality of care issues. Medicare CAP problems result from longer patient stays that are not balanced by shorter patient stays, thus leading to increased overall revenue per patient. Medicare CAP limitations have been a problem for the hospice industry at large because they place a ceiling on the overall Medicare revenue per patient that a hospice may receive. Odyssey Healthcare's Medicare CAP liability increased from approximately 2 million dollars in 2004 to approximately 12 million dollars in 2005 to approximately 16 million dollars in 2006, but lower in 2007. Odyssey Healthcare has plans in place to reduce its Medicare CAP exposure that may have negative short-term affects. Odyssey Healthcare's net income declined significantly from 2004 to 2006. The decline is due in part to Medicare CAP limitations. Regency has had one cap repayment ($670,000, T 201) and United has had none. United United Hospice of West Florida, Inc. (United) is a wholly-owned subsidiary of United Hospice, Inc. (UH), which, in turn, is a wholly-owned subsidiary of United Health Services, Inc. (UHS) commonly known as UHS-Pruitt. UH is an existing provider of hospice services in Georgia, South Carolina, and North Carolina. UHS has also established a not-for-profit foundation, which offers the public and professional community information and assistance regarding end of life care and planning. UHS-Pruitt was founded in 1969 as a nursing home company and has expanded to become a comprehensive long-term care provider in Georgia, South Carolina, North Carolina, and Florida. UHS-Pruitt provides several services including nursing homes, hospices, assisted living facilities, pharmacy services, medical supplies, durable medical equipment, outpatient rehabilitation, adult day care, and home health services. UHS-Pruitt currently has a 120-bed skilled nursing facility (Santa Rosa Heritage, operated by United Hospice, Inc.), pharmacy services, rehabilitation office (including therapy programs), durable medical equipment, located in Milton, Santa Rosa County, Florida. UHS-Pruitt has approximately 8,000 employees in all of its programs. The main focus of United Hospice, Inc. and UHS-Pruitt has been the nursing home business, with additional product lines developed as an adjunct to the delivery of nursing home services as noted herein. United Hospice Foundation was established to educate individuals about hospice services and end-of-life decision making. The foundation provides training and educational programs to both the professional and the lay community regarding these subjects. The foundation is operated independently from the for-profit portions of UHS-Pruitt. UHS-Pruitt by and through United Hospice, Inc. for the most began providing hospice services in 1993 and offers hospice programs in approximately 13 to 20 locations in Georgia, North Carolina, and South Carolina, with the vast majority of the programs in Georgia. The hospice programs were start-up programs, not acquisitions. There is evidence that approximately 40 to 42 percent of United Hospice, Inc.'s hospice patients reside in company owned nursing homes. United Hospice, Inc. opened one or more new hospice program each year during the past several years and is internally discussing three new hospices "[t]hrough pure development, as opposed to acquisition." Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their family. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. §§ 400.601(3) and (8), Fla. Stat. Under the Medicare program administered by the federal government, a terminally ill patient is a person who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, 7 days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. § 400.609(1)(a), Fla. Stat. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support of services to the family for a minimum of one year after the patient's death. §§ 400.609(1)- (5), Fla. Stat. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, including chaplains. There are four levels of service of hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care is the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room type or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85 to 90 percent of hospice care is Medicare related. There are certain services required by specific patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are other more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Each applicant proposes to provide hospice patients with the all of the core services and many of the other services mentioned above. However, there are several distinctions among the applicants which are discussed later. Regency's LOI and CON Application Prior to the final hearing, Odyssey and United filed separate motions requesting entry of an order dismissing Regency's petition and CON application. Odyssey and United argue that Regency Hospice of Northwest Florida, LLC's initial LOI and shell CON application were defective because only a corporation, not a limited liability company, authorized to do business in Florida on the date these documents were filed, can be a viable applicant to provide hospice services in Florida. As a result, the Agency should have rejected the LOI and shell CON application because Regency LLC was not an existing corporation on the date the LOI and shell CON application were filed contrary to Florida law. The following findings of fact relate to this issue. On November 2, 2006, Regency Hospice of Northwest Florida, LLC was formed as a Delaware limited liability company for the purpose of pursuing approval of a CON to provide for a new hospice program in Florida. (Regency LLC was 100 percent owned by RHG and did not differ in structure from Regency, except for the difference in entity status.) On November 3, 2006, the Florida Secretary of State certified that Regency LLC was properly registered to conduct business in Florida on November 3, 2006. In October 2006, Odyssey and United filed separate LOIs. By Agency rule, these filings created a grace period for filing additional LOIs. During the grace period, on November 7, 2006, Regency LLC filed a LOI to establish a new hospice program in Service Area 1. On November 9, 2006, the Agency issued a letter to Regency LLC, accepting the LOI. On November 22, 2006, Regency LLC filed its initial shell application with the Agency. The initial CON application consisted of two pages. Reg 7; T 118. Thereafter, Odyssey advised the Agency that Regency LLC's CON application should be withdrawn from further consideration because the applicant entity, Regency LLC, was not a corporation under Florida law, but was instead a limited liability company. On November 28, 2006, the Agency notified Regency LLC that it was withdrawing Regency LLC's CON application for consideration on the basis that Regency LLC was a limited liability company, rather than a corporation. On November 29, 2006, a certificate of incorporation was filed on behalf of Regency Hospice of Northwest Florida, Inc., with the State of Delaware. A certificate of conversion was filed converting the limited liability company to a corporation, i.e., Regency Hospice of Northwest Florida, LLC to Regency Hospice of Northwest Florida, Inc. On December 5, 2006, a certificate of conversion and articles of incorporation were filed on behalf of Regency Hospice of Northwest Florida, Inc. with the Florida Secretary of State. The Florida Secretary of State issued a document stating in part: "The Certificate of Conversion and Articles of Incorporation were filed December 5, 2006, with an organizational date deemed effective November 2, 2006, for REGENCY HOSPICE OF NORTHWEST FLORIDA, INC., the resulting Florida corporation." On October 24, 2007, the Florida Secretary of State certified that Regency Hospice of Northwest Florida, Inc. "is a corporation organized under the laws of the State of Florida, filed on December 5, 2006, effective November 2, 2006." (emphasis added). On December 11, 2006, Regency Hospice of Northwest Florida, Inc., filed a formal petition (by letter) requesting a hearing in connection with the Agency's prior notice indicating withdrawal of the CON application. On or about December 21, 2006, a settlement agreement was reached among representatives of the Agency and Regency Hospice of Northwest Florida, LLC and "now known as" Regency Hospice of Northwest Florida, Inc. The Agency agreed to accept a timely filed and complete CON application by Regency Hospice of Northwest Florida, Inc. The Agency was persuaded that Regency was a proper applicant in light of its conversion from Regency LLC to Regency. On or before December 27, 2006, Regency, Odyssey, and United timely filed their completed CON applications, also known as the omissions responses. In particular, the president and CEO of Regency executed the "certification by the applicant," Schedule D-1, which stated in part: "I certify that the applicant for this project will license and operate the health services, programs, or beds described in this application." Reg 7 at Schedule D-1, p. 9. On January 9, 2007, the Agency adopted and approved the settlement agreement by entry of a Final Order. On January 12, 2007, the Agency published its decision in the Florida Administrative Weekly to accept the Regency Hospice of Northwest Florida, Inc., CON application. On January 16, 2007, the Agency advised Odyssey of the final Agency's decision to accept Regency's CON application. On February 5, 2007, Odyssey filed a petition to challenge the Agency's decision to accept Regency's CON application. On April 19, 2007, the Agency partially granted the Agency's own motion to dismiss "to the extent that the Petition is dismissed as moot and due to the fact that the Petitioner did not have standing to file the Petition at the time it was filed." In essence, the Agency decided that because Odyssey had already filed a petition to challenge the Agency's preliminary decision to deny its CON application and the Agency approval of Regency's application, that the filing of that petition rendered the original petition to challenge the agency's decision to allow Regency of Northwest Florida, Inc. to submit a CON application moot.2 There is no evidence that Odyssey sought appellate review of the Agency's April 19, 2007, Final Order. On November 8, 2007, Odyssey filed a Motion for Summary Recommended Order seeking dismissal of Regency's CON application. A similar motion was filed by United on November 9, 2007. Regency, joined by the Agency, filed a response. On November 26, 2007, a hearing was held regarding the motions and all counsel were heard. After hearing argument of counsel, the motions were denied without prejudice. As a matter of fact, Regency Hospice of Northwest Florida, Inc. did not exist at the time the LOI and shell CON application were filed with the Agency. The LOI and the shell CON application were filed on behalf of Regency Hospice of Northwest Florida, LLC that was not a corporation authorized to do business in the State of Florida and not eligible at that time to file a LOI or CON application to provide a new hospice program. Whether Regency Hospice of Northwest Florida, Inc., formed after the LOI and shell CON application were filed, is a viable applicant turns on whether the "conversion" statutes apply, or if not, whether the 'forgiveness clause,' Section 408.039(5)(d), Florida Statutes, applies. For the reasons stated in the Conclusions of Law, the issues regarding Regency's corporate status, while novel, are resolved in Regency's favor. Fixed need pool Pursuant to its numeric need methodology, the Agency published a fixed need pool or a numeric need for one new hospice program in Service Area 1 for the second batching cycle of 2006. In forecasting need under the rule methodology, the Agency uses the historical average three-year death rate. It applies it against the forecasted population two years out or for a two-year planning horizon, in this case January 2008. The projected first year of operation for a new provider in this case is 2008. Then, the Agency uses the statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The penetration rate is also considered a use rate in other health care arenas, but in hospice it is generally referred to as a penetration rate. The statewide average penetration rate is subdivided into four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65. The projected hospice admissions in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceeds 350, the need for a new hospice is shown, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for less than two years. According to the Agency's fixed need pool methodology, the net un-met need for hospice's admissions in Service Area 1 is 450 additional hospice admissions in 2008. Among the four categories, there is a higher need projected among non-cancer patients. The percentage of non- cancer patients can vary from community to community and a hospice patient's admissions will likely reflect that local decedent population. (Historically, for RHG hospice operations, approximately 62 percent of the admissions were non-cancer diagnoses and 38 percent were cancer diagnoses, whereas Odyssey Healthcare's overall hospice experience is approximately 68 percent non-cancer and 32 percent cancer and UHS's experience is approximately 64 percent non-cancer and 36 percent cancer.) Demographics of Service Area 1 AHCA Service Area 1 consists of four counties: Escambia, Santa Rosa, Okaloosa, and Walton Counties, located in the northwest portion of the Florida panhandle. Geographically, the service area is large. It spans from the Florida-Alabama border on the west in Escambia County to the eastern border of Walton County over 100 miles away. The July 2006 population estimates for Service Area 1 indicate that the total population was approximately 700,000 with the four counties having the following population: Escambia (303,578); Santa Rosa County (140,988); Okaloosa County (193,298); and Walton County (56,900). In the most recent calendar year, there were 5,800 deaths in the service area and 6,400 deaths per year projected in the two-year planning horizon. The largest population center is Escambia County (and the city of Pensacola) followed by Okaloosa, Santa Rosa, and Walton Counties. Walton County is the fastest growing county, which experienced 40 percent growth in the last six years followed by Santa Rosa with approximately 20 percent growth. Overall, the service area grew approximately 11 to 12 percent. When Escambia County is excluded, the service area grew approximately 19-20 percent for the three eastern counties. Between 2006 and 2011, Santa Rosa County is projected to grow by approximately 16 percent and Walton County by approximately 20 percent. Service Area 1 has two major east-west arteries, with the I-10 corridor cross the central and more northern portion of the service area, and U.S. Highway 98 running along the coastal beach communities. There are 13 hospitals, 27 nursing homes, and two existing hospice providers in Service Area 1. The two existing hospice providers are Covenant Hospice and Hospice of the Emerald Coast. Covenant Hospice currently has its headquarters in Pensacola, Escambia County, and satellite offices in Milton, Santa Rosa County and Crestview and Niceville in Okaloosa County. It appears that Emerald Coast has its headquarters in Pensacola and a satellite office in Crestview. The existing hospice providers do not have offices in Walton County and neither has an office in Fort Walton Beach along the coast in Okaloosa County. Currently, Covenant Hospice provides approximately 86 percent of the hospice care in Service Area 1 followed by Emerald Coast providing approximately 14 percent of the hospice services. Emerald Coast does not serve hospice patients without primary caregivers. Based upon the 2,000 U.S. Census, the population of the State of Florida is 65.4 percent White; 14.6 percent African-American; 16.8 percent Hispanic; and 3.2 percent in the other category. With respect to Escambia, Santa Rosa, Okaloosa, and Walton Counties, the percentages of African-Americans, Hispanics, and others are as follows: Escambia (21.4 percent African-American, 2.7 percent Hispanic, and 5.0 percent other; Santa Rosa (4.2 percent African-American, 2.5 percent Hispanic, and 4.2 percent other; Okaloosa (9.1 percent African-American, 4.3 percent Hispanic, and 5.6 percent other); and Walton County (7.0 percent African-American, 2.2 percent Hispanic, and 3.5 percent other). The Hispanic population in Service Area 1 is low relative to the State of Florida, although it is projected to grow. On a percentage basis by county, the African-American population is lower than the statewide percentage, except Escambia County, which also has the largest population of the four counties in Service Area 1. The proposals Regency's proposal Regency proposes to establish its new hospice program with the immediate opening of three offices at commencement of operations in Pensacola, Escambia County; along the coast in Fort Walton Beach, Okaloosa County; and along the I-10 corridor in De Funiak Springs, Walton County. In its CON application, Regency projected the number of admissions in years one and two, 2008 and 2009, 242 and 496, respectively. With the projected average length of stay (ALOS) 60 days in year one and 80 days in year two, the overall projected patient days were 14,543 in year one and 39,686 in year two. The ALOS projections were demonstrated to be consistent with other Florida hospice start-up operations. The resulting total average daily census (ADC) from the proposed three office locations is 40 in year one growing to 108 in year two, with continuing growth thereafter. The Regency projections appear to be reasonable and achievable. Regency projects that it can open all three offices for $195,745. Odyssey suggests that Regency has impermissibly amended its CON application by describing proposed programs and services in great detail during the final hearing that were minimally, at best, discussed in Regency's CON application, including the omissions responses. See Odyssey's PRO at 44-52. In its CON application, Regency notes that it is a subsidiary Regency Healthcare Group, LLC, which offers hospice services in three states, Alabama, Georgia, and South Carolina. Regency described the corporate structure, including the entities operating in these states. Regency is also affiliated with two non-profit foundations, which accept donations and provide support to their hospice programs. Regency places heavy reliance on the experience of the existing hospice programs in Alabama, Georgia, and South Carolina. In its CON application, Regency lists several types of programs currently offered. For example, the Regency Hospice/New Beacon programs have a full-time pharmacist (Pharm. D.) on staff to assist their teams. Regency lists the services that its staff will directly provide and provide through contractual arrangements. Reg 7 at 33-34. (Regency [and United] mention providing dietary services through contractual arrangements, but the service is required to be provide by staff. AHCA 1 at 17.) Regency mentions that it will sponsor community education programs. Id. at 16. Regency also lists several non-reimburseable services provided by its affiliated hospice programs such as bereavement (for at last 12 months (13 months according to hearing testimony) following death of the patient) and chaplain services, the recruitment, training, and supervision of volunteers, hospice care for the medically indigent, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities for needy patients. See Reg 7 at 2, 25, and 26. On page 12 of its CON application, Regency notes that for the year ending October 31, 2006, Regency affiliated hospice programs rendered 18.4 percent of total days of care to African- Americans and that "Regency will focus on this population as an outreach group since it is a significant part of the population of Service Area 1. This is particularly the case in Escambia County, which has the largest population, and African-Americans may be an underserved group." Regency mentions a potentially unmet need in Walton County and commits to opening an office in De Funiak Springs to serve the rural areas of the county. Id. at 23-25. Regency commits to providing care to persons without caregivers. Id. In several places in its CON application, Regency references continuous care generically, id. at 5-6, and based on the experience of Regency's affiliated hospice programs in other markets and expectations for the start-up of a new program, Regency projects patient days for continuous home care, routine home care, inpatient respite care, and general inpatient care. Id. at 32. On Schedule 7A, Regency has a line dedicated for continuous care as part of its revenue projections and also Schedule 8A provides for an expense for continuous care for years one and two. Id. at 27-28, 30, and 32. (Regency proposes 1.46 percent of continuous case; Odyssey, 1.33 percent; and United, a negligible amount.) During the final hearing, Regency expounded on these services. For example, there was testimony that as part of the "flower ministry," Regency expects to offer a Christmas tree program. It appears that the flower ministry and Christmas tree programs are local programs within the Birmingham, Alabama, area, spearheaded by a volunteer. It does not appear that Regency presently provides this service on a corporate-wide basis, although there is some intent to do so - it would depend on the leadership of their volunteers. See T 125-126, 142, 368, 537; Reg 83. In its CON application, Regency notes at page 32 that "[t]rained volunteers will provide important services by helping families and loved ones care for patients, by raising funds to support hospice services, and by performing administrative report functions." One witness, Ms. Acton, testified that her testimony was limited to the volunteer program in Jefferson County. Regency included letters of support in the deposition testimony of Richard Mason, Reg 79, indicating that Regency would be able to establish inpatient programs at the three Sea Crest nursing homes in Service Area 1 in Pensacola, Destin, and Crestview. (There is no affiliation between Sea Crest and RHG or its subsidiaries, except for two minority investors in Sea Crest who are also investors in RHG.) Overall, Regency's CON application mentions, although not in elaborate detail, the programmatic aspects of its proposal that were discussed in much more detail during the final hearing. United's proposal United proposes to establish a new hospice program in Service Area 1 with the headquarters in Milton, Santa Rosa County, Florida. It intends to open its first satellite office in Walton County when market forces indicate that it would be more efficient to have another office. United plans to have a dedicated hospice team located in Walton County to ensure access to services to the Walton County residences. United also proposes to have inpatient arrangements at its sister-facility in Milton as well as at nursing homes in Okaloosa and Walton Counties. United included letters of support from all three nursing homes indicating that it would be able to establish the proposed inpatient sites. In its CON application and during the final hearing, United provided a detailed discussion of hospice services it will offer. United is projecting project costs of $336,467. United Hospice of West Florida, Inc.'s parent is UHS- Pruitt, whose principle business appears to be the nursing home business. UHS-Pruitt also has a number of operating subsidiaries that appear to supply or enhance those nursing homes with physical therapy or pharmacy services. In its CON application, United focuses on minority outreach to the Hispanic population in the service area. As noted herein, the population of Hispanics in the service area is quite low compared to the statewide average. In its CON application, United projected that it would achieve 264 admissions in year one and 454 admissions in year two. United applied a median length of stay of 27 days to arrive at its projection of 7,185 patient days in year one and 12,061 patient days in year two. United's admissions and average daily census ramp up through the end of year one and then remain flat showing no growth throughout the second year of operation. United's projections appear to be reasonable and achievable. Odyssey's proposal Odyssey proposes to initiate hospice services by opening an office in Pensacola, Escambia County. In the final quarter of year two, Odyssey proposes to open a second office in Okaloosa County, and an office in Walton County in year three. Within six months following the opening of the Walton County office, Odyssey plans to open a fourth office in Santa Rosa County. Odyssey projected 270 admissions in year one and 411 admissions in year two. Odyssey projected in its CON application that it would have an ALOS of 25 in year one and 50 in year two, resulting in total patient days of 6,750 in year one and 20,550 in year two. Odyssey's projections for routine care for year two are similar to the percentages proposed by United and Regency. Odyssey proposes less cancer, but more respite and non-cancer care than United and Regency. United proposes more inpatient care than Regency and Odyssey. Odyssey's projections appear to be reasonable and achievable. Odyssey anticipates that it will cost $464,720 to start its Escambia office. Odyssey Healthcare, through its not-for-profit affiliate, Hospice of the Palm Coast, currently operates two start-up hospice programs in Florida, Volusia County, with a satellite office in Flagler County, Florida, and one in Dade County, Florida, with a satellite office in Monroe County. Both programs are licensed and Medicare/Medicaid certified. Odyssey will benefit from the clinical experience, expertise, management resources, and financial strength of Odyssey Healthcare in implementing its program within Service Area 1. Odyssey start-up team has a group of experts located in Odyssey's Dallas support center. The team consists of designated experts from several departments including billing, human resources, clinical compliance, and IT. The team meets weekly and is responsible to support the start-up hospice programs. For Odyssey Healthcare, hospice care is delivered via an interdisciplinary team of caregivers who specialize in end- death-of-life care, including nurse care managers, physician, nurses, spiritual advises, bereavement coordinators, social workers, home health aides, and members of the patient's family. The manager of the team is an RN who addresses the needs of the patient and family and develops a specific plan of care with the physician. The RN case managers coordinate care with other team members while the patient's physician works with the Odyssey medical director and other team members to assure that all symptoms are controlled, pain managed, and the patient and family informed. Other members of the interdisciplinary team include a chaplain, home healthcare aide, social worker, trained volunteers, bereavement coordinator, on-call nursing team, and other specialists. The interdisciplinary team delivers these services in a context of Odyssey Healthcare's 14 service standards by focusing on admissions within three hours of a physician admission order. Odyssey Healthcare offers certain educational tools which will be implemented by Odyssey to furnish healthcare providers with information about non-cancer and cancer diagnoses of all types. Odyssey commits to spending $25,000 in its first year of operation for community outreach and marketing. Odyssey identified the African-American community as an underserved population in Service Area 1. Odyssey Healthcare operates in numerous locales where there are culturally diverse areas such as Miami/Dade County and El Paso, Texas, with high percentages of Hispanic population. Other Odyssey Healthcare hospice programs have also reached out to African-American communities in Memphis, Tennessee, and Charleston, North Carolina. Odyssey's interdisciplinary teams are often made up of Hispanic or African-American medical directors, home health aides, social workers, priest, ministers, and nurses. Odyssey Healthcare has recreated a developmental model called community education representatives (CERs) to educate the community as to the benefits of hospice services and the services that are provided by Odyssey. These CERs are used to establish and develop referral sources in part. Odyssey Healthcare programs offer extensive bereavement programs (for 13 months after the death of the patient) as part of the core Medicare services it provides. Odyssey Healthcare operates hospice programs in Birmingham, Montgomery, and Mobile, Alabama. The Mobile program is in Baldwin County, which is contiguous to the Pensacola, Escambia County, an area Odyssey proposes to serve. Odyssey Healthcare's Mobile, Alabama, hospice program has an inpatient agreement with Providence Hospital in Mobile, Alabama, which has a related facility, Sacred Heart Hospital, in Pensacola, Florida, which has the same parent organization. Odyssey will benefit from Odyssey Healthcare's resources and experience with respect to start-ups as well as centralized services such as accounting, centralized billing, and training. All other benefits include the size of Odyssey Healthcare, comprehensive scope of hospice services, service standards, staff education including palliative care center vocation, commitment to education, and investment and technology. Odyssey Healthcare has internally developed an in- house pharmaceutical system called Hospice Pharmaceutical Services (HPS). HPS is a separate company and not a wholly- owned subsidiary of Odyssey Healthcare. HPS provides services 24 hours a day, 7 days a week, including pre-admission consultations on referrals. HPS hotline is housed in the Dallas Odyssey Healthcare corporate office and is staffed by a Pharm. D., a pharmacist, and seven hospice certified RNs and at least two on-call nurses who cover the pharmacy system 24/7. The HPS staff is available to the attending physician and to the local hospice nursing staff when needed. Odyssey included several letters of support in its CON Application. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1.-5. The first preference is for an applicant who has a commitment to service populations with unmet needs. Each of the applicants identified population groups they believe to have unmet needs. Hospice patients can be viewed as consisting of four basic categories: cancer patients under age 65; cancer patients age 65 and older; non-cancer patients under age 65; and non- cancer patients age 65 and older. (This is the breakdown of hospice patients used by the Agency in its need methodology.) It appears that the largest underserved group of these four is the under age 65 non-cancer patients, followed by the non-cancer patients age 65 and older and cancer patients age 65 and older. The only over-served group was the cancer patients under the age 65. All applicants stated a commitment to serve non-cancer patients. However, only Odyssey and United identified this group as an underserved group and provided evidence concerning how they would meet the needs of this group. Historically, RHG hospice programs have provided approximately 62 percent of its patient care to non-cancer patients; whereas UHS has provided approximately 64 percent, followed by Odyssey Healthcare at approximately 68 percent. One witness suggested that a range of 35 to 50 percent was reasonable, although there are factors that affect the range such as age of the program. Regency and Odyssey identified African-Americans as a traditionally underserved group. However, while it is possible to extract the percent of the population by race group in the service area, neither applicant presented any concrete data to show that existing providers in the service area are failing to meet the demands of the African-American population or that this population group is underserved by the existing providers. The percentage of African-Americans in Escambia County according to 2000 Census information was 21.4 percent; 4.2 percent in Santa Rosa County; 9.1 percent in Okaloosa County; and 7.0 percent in Walton County. Regency stated that it "will focus on this population as an outreach group since it is a significant part of the population of Service Area 1." Reg 7 at Odyssey stated that African-Americans in the service area would benefit from Odyssey's experience. See Ody 1 at (bates stamp) 46, 59 and 74. United does not discriminate against individuals based upon ethnicity or for any other reason and it historically provides care to minorities. Both of the existing providers have offices in Escambia County and Regency and Odyssey both propose offices in this county. Odyssey presented data claiming that RHG hospice programs did a below average job in outreach and service to the African-American communities in areas served by RHG. The analysis was flawed in part because it compares the statewide experiences of RHG and Odyssey Healthcare based upon the operations in different local communities (e.g. rural versus urban) that can have different demographic compositions. Overall, the evidence indicates that RHG and Odyssey Healthcare have demonstrated a record of doing a credible job of outreach and service to the African-American community. All applicants agreed that providing continuous care services is an important level of service for hospice patients. In Service Area 1, continuous care accounts for only 0.6 percent of patient days; whereas the national and Florida averages are four and two percent, respectively. As noted herein, Regency and Odyssey propose a specific percent of continuous care, 1.46 and 1.33 percent, respectively, and United projects a negligible amount, see United 1 at Schedule 7A, although United proposes to provide the service. United identified patients without caregivers as an underserved population because Hospice of the Emerald Coast does not accept these patients. All three applicants will serve this population. United identified Hispanics as a population with unmet needs. Service Area 1 has the lowest percent of total population that is Hispanic of all of AHCA's service areas, although there is projected growth. In calendar year 2006, there were 59 Hispanic deaths out of 5,821 deaths in Service Area 1 or approximately one percent. In Santa Rosa County, where United plans to initially open its sole office, there were approximately seven Hispanic deaths in 2006. It was estimated that a little more than 20 Hispanics would use hospice services in the service area per year. Regency and Odyssey deserve preference under this subsection and United to a lesser degree. The second preference shall be given to an applicant who proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost-effective alternative. Each of the applicants proposes to serve inpatients through contractual arrangements. No applicant is proposing a freestanding inpatient unit. Through its related skilled nursing facility in Santa Rosa County, United has an existing relationship with a health care facility that will be used to provide inpatient care. United did not include all of the room and board expenses for Medicaid nursing home patients in its financial projections. United provided unauthenticated letters of support to demonstrate that it will be able to offer inpatient services in Santa Rosa, Okaloosa, and Walton Counties. United expects to offer only one office (primary headquarters) in Santa Rosa County that would serve the four- county service area. United expects to establish working teams in the other counties. Regency does not have any directly affiliated inpatient providers. However, Regency has commitments to enter inpatient contracts with, among other facilities, three nursing homes operated by Sea Crest Management through mutual investors. These nursing homes are located in Destin and Crestview in Okaloosa County, and Pensacola in Escambia County. Regency also has a commitment from Healthmark Hospital in De Funiak Springs, Walton County. Although Odyssey did not include any letters of support from any potential inpatient service locations in its original CON application, it stated that it will contract with acute care providers and skilled nursing home facilities in the service area. (Odyssey's CON applications have general letters of support of its application.) At hearing, Odyssey provided letters of support from area nursing homes, including a memorandum of understanding from the administrator of Southern Oaks Nursing Home in Pensacola, a 210-bed facility, indicating a willingness to provide inpatient services for Odyssey patients. Each applicant can be expected to contract for inpatient services and satisfy this preference. The third preference shall be given to an applicant who has a commitment to service patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each of the applicants presented evidence demonstrating a history and commitment to serve such patients and have in place programs and policies to ensure that such services are provided. The fourth preference provides: "In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties." The two Service Area 1 existing hospice providers have their headquarter offices in Escambia County and there are currently satellite offices in Santa Rosa and Okaloosa Counties. There are no offices in Walton County, which is the smallest county of the four by population, 56,900 or approximately eight percent in 2006, but with the highest projected growth, 16,299, by percent, approximately 40 percent. Regency plans to open an office in Escambia and Walton Counties and an additional office in Fort Walton Beach along the Okaloosa County coastal area where neither existing providers have a current office location. Regency proposes the widest geographic coverage of offices of the three applicants, although the Escambia County office would add little. Its Walton County office would make it the only service provider with an office in that county. Odyssey plans to initially open an office in Escambia County and open an additional office in Okaloosa County starting toward the end of the second year of operation. Odyssey plans to open an office in Walton County in its third year of operation and a fourth office in Santa Rosa County six months thereafter. United proposes to open an office initially in Milton, Santa Rosa County. United proposes to have a dedicated hospice team in Walton County. No persuasive evidence was presented that residents of Walton County (or any other county in the service area) do not have access to hospice services or are actually underserved. The fifth and final preference provides: "Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare." All of the applicants meet this preference. Odyssey identifies several proposed services such as bereavement, pet, message, aroma, and music therapy, dialysis, palliative radiation, and palliative chemotherapy. United identifies similar services, although United provides bereavement coordination through either a social worker or chaplains. United does not allocate a specific position exclusively for bereavement. Regency identifies similar services such as bereavement following death, chaplain services, recruitment and training of volunteers, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities. (The bereavement services offered, as well as policies and procedures used by RHG's hospice programs, are similar.) Bereavement and volunteer services are not specifically reimbursed by Medicare, but they are conditions of participation. The State of Florida requires all hospice providers to serve indigent patients and the applicants agree to provide hospice services to all regardless of their ability to pay. § 400.6095(1), Fla. Stat. The applicants have established charitable foundations to provide assistance to the medically needy for services that Medicare does not reimburse. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. Each applicant provided letters of support ranging from three for Regency; approximately 20 for Odyssey; and 161 for United. Statutory Review Criteria Section 408.035(2), Florida Statutes - availability, quality of care, accessibility, and extent of Utilization The Agency published a fixed need for one additional hospice in the service area. See § 408.035(1), Fla. Stat. There is no persuasive evidence to rebut the presumption of need and all parties concur there is a need for one new hospice. The service area is served by two hospice providers: Hospice of the Emerald Coast with a market share of 14 percent and Covenant Hospice with a market share of 86 percent. The extent of utilization of the two providers results in the projection for unmet need of 450 hospice admissions in 2008 growing to an unmet need of 507 admissions in 2009. Regency, United, and Odyssey projected the following admissions for their respective second year or operation (2009): 496, 454, and 411. Each applicant can reasonably meet the projected need in conjunction with the existing providers. Neither of the current providers has offices located in Walton County or in the Fort Walton Beach coastal communities. Regency plans to locate offices in these areas, which may improve accessibility. Odyssey proposes to serve Walton County from its Pensacola office until it opens a Walton County office. United proposes to meet the needs in Walton County by establishing a dedicated hospice team there and by establishing an inpatient treatment center at an existing nursing home. Aside from the numeric need projections, there is no persuasive evidence that any geographic portion of the service area or any discreet population category, such as African- Americans, Hispanic, or by age and cancer versus non-cancer groups, needing hospice services are truly underserved, although there is evidence that there are some gaps in services for the existing hospice providers when compared to statewide numbers of hospice use. Section 408.035(3), Florida Statutes - ability to provide quality of care and record of providing quality of care Each applicant has a history of providing quality hospice services. Each applicant has reported overall good responses on patient and family satisfaction surveys. Each applicant proposes to provide a broad array of hospice services to all persons regardless of their ability to pay. It is expected that each applicant will continue to provide quality of hospice services as they have in their existing programs. Each applicant will staff its hospice programs according to national guidelines. Regency proposes to staff its program with nurses on a ratio of one nurse for every ten patients as opposed to the ratio of one nurse for every 12 patients (the National Hospice and Palliative Care Organization [NHPCO] standard) proposed by Odyssey and United. Regency proposes more home visits per week (five-to- six hours per week) and more direct care hours as a percent of total staff hours than Odyssey and United. (The national average is four visits per week.) Regency and Odyssey have developed service standards. All of the applicants propose to offer similar hospice services that are discussed herein. There is evidence that Regency, in its Birmingham program, accepts medically complex patients when other providers may not. There is no evidence that any Regency or United hospice program has been cited for conditional level deficiencies, whereas Odyssey has been cited in approximately three programs, although the specifics and severity of each deficiency is unclear. It appears the deficiencies have been cleared. T 1244-1252. Odyssey also operates under a CIA, unrelated to any quality of care concerns. RHG has a Doctor of Pharmacy (Pharm. D.) on staff who is experienced in hospice and palliative care pharmacy issues. Dr. Blodgett makes regular visits to the offices in Alabama and at least quarterly visits to each of RHG hospice programs in Georgia and South Carolina; participates in IDT meetings, quarterly in South Carolina and Georgia and on a regular basis in Alabama; and is available for consultations on a regular basis. Dr. Blodgett averages between four to five home visits while working for New Beacon in Alabama. She has not made house calls yet in Georgia and South Carolina, although she consults with nurses in those areas and provides training for the hospice staff. Having a Pharm. D. on staff is advantageous for a hospice program. Dr. Blodgett recounted several representative events when she was able to directly assist a patient in dire straits. Dr. Blodgett currently oversees all of Regency's local hospice operations in Alabama, Georgia, and South Carolina with a combined average daily census of 900 to 1,000 patients, roughly 600 at New Beacon and 350 at Regency Hospice. RHG contracts for pharmacy services when Dr. Blodgett is unavailable. Odyssey provides pharmacy services through a consulting contract arrangement with a specialized pharmacy that is co-located with odyssey at its Dallas, Texas, headquarters. The consulting pharmacy has a Pharm. D. and a pharmacist on staff to provide consulting services to Odyssey's programs. The Pharm D. does not provide home visits. UHS-Pruitt has a subsidiary company, United Pharmacy Services, headed by a Pharm. D., which provides pharmacy services to the company's long term nursing home facilities, including its affiliated nursing home in Santa Rosa County. Fifty percent of United Pharmacy Services business is unrelated to UHS. The Pharm. D. is not responsible for oversight of the hospice operations. There are two licensed pharmacists who are not Pharm. D.'s within United Pharmacy Services who provide training for hospice staff and provide consulting services as needed 24/7. As a normal practice, they do not provide medications for hospice patients who at home. They consult on every hospice admission. Odyssey Healthcare has operational experience in Florida with two hospice programs, beginning in 2004. No confirmed complaints have been reported by the Agency. (Regency and United do not operate hospice programs in Florida.) Odyssey also has contiguous hospice program across Perdido Bay in Alabama. Odyssey Healthcare operates 76 Medicare certified hospice programs (or seeking certification) in 30 states. Odyssey will adopt Odyssey Healthcare's quality and improvement plans and its operational policies and procedures. United has an existing relationships with related party providers, particularly its Milton nursing home in Service Area 1. The United family of health companies located there includes a skilled nursing home, pharmacy, durable medical equipment provider, and a therapy provider. These shared resources may increase efficiency for United's hospice program. It also provides United with local contacts with physicians, hospitals, and nursing homes. Of course, in time, it is reasonable that Regency and Odyssey would develop similar relationships, although having existing relationships is a plus for United. An issue was raised regarding the applicant's commitment to provide continuous care. For the second year of operation, Regency proposes 1.46 percent; Odyssey, 1.33 percent; and United, a negligible amount, although United expects to provide continuous care days as needed by its patients. Given its existing nursing home as a component of its corporate family, United naturally provides more services to patients in its nursing homes and nursing homes owned by others. Section 408.035(4), Florida Statutes - availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation Each of the applicants is a start-up company, relying on its parent organizations for financial and management strength. Each applicant has demonstrated sufficient resources to fund the start-up of a new hospice program. Controversies arose regarding when Regency and Odyssey would actually start-up operations following issuance of a CON and the amount each applicant allocated for start-up costs. Odyssey provided a start-up timeline in its application. The timeline assumes approximately six months from CON approval until Medicare certification. The timeline provides for approximately 60 days between licensure and Medicare certification. The timing of licensure and Medicare certification is imprecise at best. A provider is not entitled to reimbursement from Medicare until after certification. Operational expenses for treatment of patients between state licensure and Medicare certification would generally fall under start-up costs. Approximately three months prior to state licensure, Odyssey intends to hires a general manager who begins interviewing and hiring key staff. Other staff including the admission coordinator, RN, home health aide, dietician, social worker, and chaplain are hired in the third month. Odyssey projected its total project cost of $464,720 and total start-up costs of $350,000, with $240,000 allocated for salaries/benefits/taxes, over the six-month period from licensure approval until Medicare certification. (Odyssey exhibit 39 projects start-up expenses of $343,191.) Regency projected on Schedule 1 that its total project costs would be $195,745, with pre-opening staffing and recruitment costs of $36,500. Total start-up costs are projected at $60,000 for three offices. Mr. Morris joined RHG in February 2006. He is currently CEO for RHG and has experience with hospice programs. Subsequent to RHG's acquisitions, RHG started three hospice programs, one of which is a Medicare certified program in Augusta, Georgia, and two satellite offices. T 47, 50, 59-60, 62, 95-96. United projected on Schedule 1 that its total project costs would be $336,467, with total start-up costs at $57,257. According to Dr. Luke, if Odyssey's start-up model and time line is applied to Regency, i.e., month one is actual Medicare certification rather than licensure, Regency would need $543,408 in pre-opening expenses for the three offices it plans to open instead of $60,000 listed by Regency on Schedule 1. Odyssey also criticized United's projected start-up costs as too low based on Odyssey's six month start-up time line. United proposed it would hire most of its staff 30 days prior to licensure. United's vice president in charge of development who has started 15 to 20 hospice operations stated that it is a reasonable approach to hire, orient, and train staff one month prior to licensure. According to Dr. Luke, if Odyssey's start-up model and time line is applied to United, United would need $201,482 rather than $57,257 projected by United on Schedule 1. If month one is the month when United achieves licensure, then the start- up expenses would be $115,846 according to Dr. Luke. The persuasive evidence shows that Regency and United do not use the Odyssey start-up model and time line. Regency's pre-opening costs on Schedule 1 include only the pre-opening salaries prior to initial state licensure of the hospice rather than Odyssey's approach. The salary and wage expenses for Regency after initial licensure are included on its Schedule 8A projection of expenses, whereas it appears Odyssey started its Schedule 8A expenses on the date of Medicare certification. Dr. Luke agreed that this difference in approach would reduce his estimate of pre-opening expenses from $543,408 to $297,792. In other words, if Regency's month one, year one is licensure not certification, according to Dr. Luke, Regency's start-up expenses would be $297,792. Unlike Odyssey, Regency proposes to hire its local executive director one month prior to licensure. All of the additional patient care staff necessary to care for the low initial patient census in the first month of operation would also be hired and undergo training 30 days prior to licensure. Additional staff would be hired and start on day one of licensure and undergo training during the first month of operation while the patient census is in the ramp up stage. While Odyssey and Regency propose differing start-up models and time lines with differing hiring schedules and Regency's time line appears to be quite concentrated, both applicants have sophisticated parent company's who have experience with hospice operations, albeit that Odyssey has more experience than Regency or United with start-up hospice programs, especially in Florida where Regency and United have no experience and Odyssey has experience with two start-up hospice programs. (Regency has not done any start-up hospice programs in a state where either Regency or New Beacon had no presence, although it was noted by a witness that the markets were similar except for the CON process in Florida.) Like, Odyssey, United has start-up experience and given its time-line, its projected start-up costs are reasonable. The start-up costs and expenses projected by the applicants are reasonable, although it would appear the Regency's projected start-up costs may be overly optimistic. In any event, the parent organizations have sufficient funds to cover projected start-up costs and expenses. All of the applicants demonstrated they can recruit staff to adequately provide hospice services. Section 408.035(5), Florida Statutes - extent to which proposed services will enhance access to health care for residents of the service district There is a projected need for one additional hospice program in the service area. Approval of any of the applicants would enhance access to some degree and it is difficult to predict which applicant would enhance access the best. Regency proposes to open three offices immediately in Escambia, Okaloosa, and Walton Counties. Regency would have the only office offering hospice services located in Walton County. Covenant has an office in Niceville in Okaloosa County and not far from Fort Walton Beach, also a site proposed for a Regency office. The existing providers have their headquarters in Escambia County, also the location of Odyssey's headquarters and initial office. Thereafter, Odyssey plans to open offices in Okaloosa, Walton, and Santa Rosa Counties in this order. United plans to open its initial office in Santa Rosa County where its related nursing home is located. United plans to have dedicated hospice team in Walton County and perhaps a second office located there in the future. Of the three applicants, United would enhance access the least. The proposed office locations for Regency and to a lesser extent Odyssey would probably favor Regency rather than Odyssey, although it is one of degree. Some of the factors that favor Regency and Odyssey over United are: Regency and Odyssey expect to provide a specific percent of continuous care, 1.46 and 1.33, respectively; both project to serve more patients (by patient census) than United; both will focus efforts more on a service area wide basis than related nursing home patients in the case of United; and both will devote more FTEs for community hospice/education representatives and information materials than United. Section 408.035(6), Florida Statutes - immediate and long-term financial feasibility Short-term financial feasibility is considered to be the ability of an applicant to finance the start-up of operations. Each of the parent entities of the applicants has sufficient funds to finance the start-up of operations and, as a result, each applicant demonstrated immediate or short-term financial feasibility. Each of the financial projections relating to long- term financial feasibility submitted by the applicants has problems. There is no rule or statute that expressly defines long-term financial feasibility, notwithstanding the requirement that an applicant provide the Agency with detailed financial projections, including a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. § 408.037(1)(b)3., Fla. Stat. The applicants provided financial projections for two years of operation. Thus, as identified by the applicants, long-term financial feasibility relates to whether an applicant has the ability to break even or show a profit by the end of the second year of operations. See generally T 1412, 1533. Regency's errors including typographical errors, admittedly small (the inclusion of Medicare revenue that would not be received for the first 45 days to two months of operation while the hospice program would not yet have Medicare certification), would not affect the projected long-term financial feasibility of its project. The errors affect the year one projections only and resulted in a projected write-off of approximately $31,000 or an increase to the projected loss of approximately $31,000. Regency shows a profit in year two. Also, regardless of whether Regency's projection of pre-opening expenses is reasonable or not, which it appears to be, Regency has adequate cash on hand to open its three proposed offices and the pre-opening expense if greater than projected is not likely to affect long-term financial feasibility. United's financial schedules contained an error by omitting the room and board expenses for Medicaid nursing home residents who receive hospice care. This failure to include the full cost of inpatient care would result in a shortfall in the pro forma of between $50,000 to $150,000 and potentially $373,000 in year two of operation. United also explained that it used a conservative number of patient days on its financial schedules. It is likely that if United had used a mean average length of stay rather than a median length of stay, the projected revenues would likely have increased although offset by increasing expenses. In other words, it would have increased the average daily census and thereby increased the revenues. Mr. Shull testified that he expected that the United proposal would be financially feasible in the long-term based on the experience in its other hospice programs. Odyssey's financial projections were the subject of focus by the applicants. See, e.g., Odyssey's PRO at paragraphs 53-55; Regency's PRO at paragraphs 203-210; and United's PRO at 43-45. On Schedule 6, an applicant sets forth its projected staffing for the project. When reporting full time equivalents (FTEs) for staffing, the Agency does not proscribe the specific format to be used. On its original Schedule 6 contained in the application, Odyssey set forth the number of year-end FTEs as opposed to using a weighted average of FTEs for the year. Regency suggested that, as a result of Odyssey's portrayal of staffing information, there was no link between Odyssey's Schedule 6A FTEs and salaries and the expense for staff's salaries and wages on Schedule 8A. Regency also contended that Odyssey did not account for staffing expenses associated with the provision of respite care and continuous care. Further, although Odyssey proposes to spend $25,000 in community outreach and marketing programs in its first two years of operation, that expense was not included in its pro forma projections. Odyssey prepared numerous exhibits, including revisions, that deal with these areas and various witnesses explained and offered rebuttal in response. Regarding the continuous care/respite issue, if appropriate revisions are made to Odyssey's pro forma, on paper, there is likely to be a projected net loss in year two of approximately $100,000. Odyssey proposes changing the 13.5 percent management fee that was included in the application to a seven percent management fee. Odyssey Healthcare's two not-for-profit Florida hospice entities are charged a seven percent management fee, similar to the fee it charges to other not-for-profit subsidiaries. Odyssey's proposed seven percent management fee is in line with the management fees proposed by Regency (7.2 percent) and United (6.3 percent). It appears reasonable to charge not-for-profit entities a lower fee because these entities would not be charged with the home office costs associated with various regulatory filings associated with being a publicly traded company. On the other hand, other than perhaps being a mistake, Odyssey's rationale for charging a different management fee for the applicant, a for-profit entity, T 1039, than other related for- profit entities is a departure from the norm. Changing the management fee and accounting for all of the adjustments to its financial schedules would result in Odyssey showing a year two profit of approximately $80,000. Section 408.035(7), Florida Statutes - extent to which proposal will foster competition that promotes quality and cost- effectiveness Approval of any of the applicants is likely to foster competition, thereby improving quality and cost-effectiveness in the service area, although there is no evidence that the current providers do not provide quality of care or are not cost- effective. Hospice services are not price competitive because Medicare pays a flat per diem rate to all providers in a given area and the vast majority of hospice patients are Medicare patients. Each provider has the ability to increase community awareness of available hospice services thus increasing the opportunity for increasing market penetration of all providers. United has existing linkages in the community that it serves through its related nursing home and other related companies. United's prospects of achieving cost-efficiencies and economies of scale are increased because of these relationships. Regency and Odyssey can also achieve similar efficiencies through their existing relationships with related entities. Having an office in a particular county such as Walton County, would most likely establish and promote a presence in the area that would be beneficial given its rural setting. However, it was not persuasively proven that opening more versus fewer offices in the short-term is more beneficial to the potential hospice patient pool from the standpoint of actually promoting cost-effectiveness and quality of care, although it does increase the physical presence of a hospice provider and give potential patients more choices. Section 408.035(8), Florida Statutes - costs and methods of construction, etc. None of the applicants are proposing construction as part of their hospice programs, thus, this criterion is not applicable. (Section 408.035(10), Florida Statutes, is also not applicable.) Section 408.035(9), Florida Statutes - the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent All of the applicants propose to serve all eligible patients without regard to ability to pay and have a history of providing patient care to the medically indigent. All of the applicants have allocated patient days to serving, e.g., Medicaid patients. Regency offered to provide 2.5 percent of patient days to the medically indigent as a condition on the CON. Odyssey and United did not offer a similar condition. However, the Agency states in the SAAR that "[b]ecause hospice programs are required to provide services to anyone seeking them, CON conditions are not necessary to ensure such care is given." AHCA 1 at 6. Ultimate findings of fact The Agency determined that there is a numeric need for one additional hospice program in the service area. On balance, each of the applicants satisfies the applicable statutory and rule criteria, although the projected long-term financial feasibility by year two on paper of United's proposal was not proven. This proceeding involves a close question. The Agency preliminarily approved Regency's application. The only evidence of the Agency's rationale for its position is stated in the SAAR, which does not include consideration of the facts presented in this de novo hearing. Each of the applicant's related entities has experience starting-up, owning, and operating hospice programs with Odyssey related entities operating two programs in Florida unlike Regency and United. Each applicant's related hospice entities provide a broad array of hospice services to all persons regardless of their ability to pay, race, severity of illness, or setting where hospice services need to be provided. Each applicant demonstrated a history of service, by related entities, to Medicaid and medically indigent patients. The residents of the service area would benefit regardless of which applicant is approved. The applicants are committed to community outreach and can be expected to heavily market their services. All of the applicants demonstrated that they will actively recruit needed personnel. United's presence in the service area may give United an edge with regard to recruitment, but if so, the edge is slight. Consistent with NHPCO standards, Odyssey and United propose a ratio of one nurse for every twelve patients. Regency proposes a better ratio: one nurse for every ten patients. Regency's Pharm. D., although spread thin given the number of hospice programs served by Regency's related entities in three states, is a positive feature. Despite correcting errors in its financial projections, Regency demonstrated financial feasibility in year two of operations and should receive a comparative advantage. Odyssey and United had problems with proving long-term financial feasibility. Odyssey, after revisions to its financial schedules and reducing the proposed management fee, demonstrated financial feasibility by year two. United can expect to have a loss in year 2, but like Odyssey, its parent organization has a strong financial position and is committed to the project such that it is likely to be financially feasible beyond year two. Regency expects to initially open three offices and, in particular, one in rural Walton County. Odyssey plans to open an office in each county within the service area, although staggered. United plans to open one office initially and takes a wait and see approach regarding opening other offices. The approach of United and to a much lesser extent Odyssey, require less overhead expense but is not necessarily appropriate given the need for an additional hospice services over a four-county area, although the need projection does not indicate which portion or portions of the service area need the additional program the most or where underserved persons may be located, although there are gaps in service. Regency should receive a slight advantage for proposing to offer slightly more continuous care than Odyssey and a greater advantage over United, which expects to provide the service, but did not allocate a specific percentage of care. United receives an edge given its established relationships in the service area by and through its related service providers. The United family includes a nursing home, pharmacy, durable medical equipment provider, and a therapy provider. It gives United the opportunity to share resources among programs to increase efficiency. Odyssey receives a plus given current operations in Florida and contiguous operations across Perdido Bay in Alabama. Odyssey Healthcare's prior problems with the federal government, Medicare cap issues, and unfavorable surveys detract from the overall positive features of Odyssey's proposal. Regency has had one Medicare cap issue. United does not share these problems. Overall, and in a tight comparative review hearing, the persuasive evidence favors Regency followed by Odyssey with United closely behind Odyssey.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving of Regency's CON No. 9971 and denying United's CON No. 9955 and Odyssey's CON No. 9954. DONE AND ENTERED this 30th day of April, 2008, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2008.
The Issue Whether there is “an error in the Fixed Need Pool numbers” for hospice as calculated by the Agency for Health Care Administration (“AHCA”) pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), and as published by AHCA on February 5, 2021, pursuant to rule 59C-1.008(2)(a).
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA is designated as the single state agency for the issuance, denial and revocation of certificates of need (“CONs”), including exemptions and exceptions in accordance with present and future federal and state statutes. Suncoast is a licensed hospice program serving HSA 5B, which is comprised entirely of Pinellas County. As an existing hospice provider in HSA 5B, Suncoast is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C-1.008(2)(a)2. Seasons is also a licensed hospice program serving HSA 5B. As an existing hospice provider in HSA 5B, Seasons is substantially affected by the publication of the FNP at issue in this proceeding and has standing to challenge “an error in the Fixed Need Pool numbers” as set forth in rule 59C- 1.008(2)(a)2. Cornerstone is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. Cornerstone is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. HPH is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. HPH is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. VITAS is an applicant for a CON for a new hospice program in HSA 5B predicated, at least in part, on the publication of the FNP under challenge in this proceeding. VITAS is substantially and adversely affected by the potential change of the FNP from a determination of need for a new hospice program to no need for a new hospice program in HSA 5B, and therefore has standing to intervene in this proceeding. AHCA’s Calculation and Publication of the Fixed Need Pool As part of its responsibilities under the CON laws, AHCA is required to establish, by rule, uniform need methodologies for CON-regulated health facilities and services. Those need methodologies must take into account “the demographic characteristics of the population, the health status of the population, service use patterns, standards and trends, geographic accessibility, and market economics.” § 408.034(3), Fla. Stat. Rule 59C-1.0355 codifies the uniform need methodology that applies to hospice programs. The rule defines twenty-seven (27) service areas, and AHCA uses the need methodology in rule 59C-1.0355(4)(a) to calculate numeric need for hospice programs for each of the 27 HSAs. The results of those calculations determine whether there is an FNP of one, or zero, in each of the 27 HSAs. Typically, AHCA publishes need projections for hospice programs twice per year in “batching cycles.” See Fla. Admin. Code R. 59C-1.008(1)(g), (2)(a).1,2 Rule 59C-1.008(2)(a) allows parties to identify purported “errors” in the FNP numbers published by AHCA: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need 1 As explained below, AHCA cancelled the CON Hospital Facilities and Hospice 2nd Batching Cycle for 2020. 2 Although AHCA typically publishes need projections for hospice programs twice per year, Florida law requires only one FNP publication per year. See § 408.039(1), Fla. Stat. (“The agency by rule shall provide for applications to be submitted on a timetable or cycle basis; provide for review on a timely basis; and provide for all completed applications pertaining to similar types of services or facilities affecting the same service district to be considered in relation to each other no less often than annually.”). (emphasis added). Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Fla. Admin. Code R. 59C-1.008(2)(a)2. and 3. It is undisputed that AHCA’s rules do not define “error” as that term is used in rule 59C-1.008(2)(a)2. Although there is no definition of the word “error,” AHCA limits its interpretation of the word to only “mathematical” errors or late-filed hospice admissions by Florida licensed hospice programs pursuant to rule 59C-1.0355(8). Petitioners’ Fixed Need Pool Challenge On February 5, 2021, AHCA published an FNP for one new hospice program in HSA 5B. Suncoast timely advised AHCA in writing of two purported errors it had identified in the FNP. Specifically, Suncoast asserted that: (1) AHCA’s calculations incorrectly predict future need based upon a spike in admissions caused by the COVID-19 pandemic that will not exist when the planning horizon arrives3; and (2) AHCA has not accounted for actual hospice admissions by VA hospitals that provide hospice care in Pinellas County. 3 Even before AHCA’s publication on February 5, 2021, Suncoast requested that AHCA suspend the Hospital Facilities and Hospice 1st Batching Cycle for 2021, citing the COVID-19 pandemic. Seasons Pinellas also timely advised AHCA in writing of the same two purported errors in the FNP. On February 17, 2021, AHCA issued separate but identical responses to Suncoast and Seasons Pinellas, stating that “the published need is correct and a revision to the fixed need pool is not warranted.” The Hospice Need Methodology Under AHCA’s hospice need methodology, numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in an HSA is calculated as follows: Numeric Need for a New Hospice Program. Numeric need for an additional Hospice program is demonstrated if the projected number of unserved patients who would elect a Hospice program is 350 or greater. The net need for a new Hospice program in a service area is calculated as follows: (HPH) -- (HP) = 350 where: (HPH) is the projected number of patients electing a Hospice program in the service area during the 12-month period beginning at the planning horizon. (HPH) is the sum of (U65C x P1) + (65C x P2) + (U65NC x P3) + (65NC x P4) where: U65C is the projected number of service area resident cancer deaths under age 65, and P1 is the projected proportion of U65C electing a Hospice program. 65C is the projected number of service area resident cancer deaths age 65 and over, and P2 is the projected proportion of 65C electing a Hospice program. U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer, and P3 is the projected proportion of U65NC electing a Hospice program. 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer, and P4 is the projected proportion of 65NC electing a Hospice program. The projections of U65C, 65C, U65NC, and 65NC for a service area are calculated as follows: U65C = (u65c/CT) x PT 65C = (65c/CT) x PT U65NC = (u65nc/CT) x PT 65NC = (65nc/CT) x PT where: u65c, 65c, u65nc, and 65nc are the service area's current number of resident cancer deaths under age 65, cancer deaths age 65 and over, deaths under age 65 from all causes except cancer, and deaths age 65 and over from all causes except cancer. CT is the service area's current total of resident deaths, excluding deaths with age unknown, and is the sum of u65c, 65c, u65nc, and 65nc. PT is the service area's projected total of resident deaths for the 12-month period beginning at the planning horizon. “Current” deaths means the number of deaths during the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool. “Projected” deaths means the number derived by first calculating a 3-year average resident death rate, which is the sum of the service area resident deaths for the three most recent calendar years available from the Department of Health, Office of Vital Statistics at least 3 months prior to publication of the Fixed Need Pool, divided by the sum of the July 1 estimates of the service area population for the same 3 years. The resulting average death rate is then multiplied by the projected total population for the service area at the mid-point of the 12-month period which begins with the applicable planning horizon. Population estimates for each year will be the most recent population estimates from the Office of the Governor at least 3 months prior to publication of the Fixed Need Pool. The projected values of P1, P2, P3, and P4 are equal to current statewide proportions calculated as follows: P1 = (Hu65c/Tu65c) P2 = (H65c/T65c) P3 = (Hu65nc/Tu65nc) P4 = (H65nc/T65nc) where: Hu65c, H65c, Hu65nc, and H65nc are the current 12-month statewide total admissions of Hospice cancer patients under age 65, Hospice cancer patients age 65 and over, Hospice patients under age 65 admitted with all other diagnoses, and Hospice patients age 65 and over admitted with all other diagnoses. The current totals are derived from reports submitted under subsection (8) of this rule. Tu65c, T65c, Tu65nc, and T65nc are the current 12-month statewide total resident deaths for the four categories used above. (HP) is the number of patients admitted to Hospice programs serving an area during the most recent 12-month period ending on June 30 or December 31. The number is derived from reports submitted under subsection (8) of this rule. 350 is the targeted minimum 12-month total of patients admitted to a Hospice program. (Fla. Admin. Code R. 59C-1.0355(4)(a)). While daunting in its length and complexity, the methodology can succinctly be summarized as follows: AHCA makes a projection of future hospice need in an HSA which is abbreviated as “(HPH)”; AHCA then subtracts from that projection the actual number of hospice admissions in the HSA, which is abbreviated “(HP).” If the result of that subtraction is 350 or greater, AHCA publishes an FNP for an additional program for that HSA. (HPH) is calculated by determining the projected number of deaths in four categories—(1) cancer, 65 and older; (2) cancer, under 65; (3) non-cancer, 65 and older; and (4) non-cancer, under 65. The methodology then projects the percentage of people within those four categories that would elect hospice care, which is calculated by employing the statewide penetration rate for those four categories to a service area’s community. These penetration rates or, P-values, are calculated by using the entire state’s admissions in each of the four categories divided by the entire state’s deaths in each of those four categories. In calculating the number of deaths for (HPH), the rule calls for AHCA to use data from the most recent calendar year for which data are available from the Department of Health, Office of Vital Statistics, at least three months prior to publication of the FNP. (HP) is calculated by using semi-annual utilization reports that are required to be completed by each licensed hospice program in the state on or before July 20 of each year and January 20 of the following year. “The July report shall indicate the number of new patients admitted during the 6-month period composed of the first and second quarters of the current year” and the “January report shall indicate the number of new patients admitted during the 6-month period composed of the third and fourth quarters of the prior year.” Using this need methodology, the net need for HSA 5B for the July 2022 hospice planning horizon was 414, resulting in a need of one (1) new hospice program in the service area. Because the rule requires death data from the most recent calendar year that was available at least three months prior to the publication of the FNP, AHCA used the final death reports from 2019 in calculating need for the July 2022 hospice planning horizon. However, because the rule requires admissions data from the most recent 12-month period ending on June 30 or December 31, AHCA used admissions from 2020 in calculating need for the July 2022 hospice planning horizon. As pointed out by Petitioners, just 65 more hospice admissions in HSA 5B in 2020 would have resulted in a net need of zero (0) new hospice programs in that HSA for the July 2022 planning horizon. Legal Presumption Created by FNP Determination A positive FNP determination will establish a rebuttable presumption of need. Balsam v. Dep’t of HRS, 486 So. 2d 1341, 1349 (Fla. 1st DCA 1986); VITAS Healthcare Corp. of Cent. Fla., Inc. v. Ag. for Health Care Admin., Case No. 04-3858CON (Fla. DOAH June 14, 2005; Fla. AHCA July 7, 2005). The converse is also true that “[a] lack of numeric need under the rule formula establishes a rebuttable presumption of no need.” Beverly Enter.- Fla., Inc. v. Ag. for Health Care Admin., Case Nos. 92-6656, 92-6659-6662, 92-6669 (Fla. DOAH July 24, 1994; Fla. AHCA Oct. 17, 1994). In a hospice CON case, the absence of numeric need prohibits the approval of a new hospice program unless special circumstances found in the hospice need rule are present, or applicable criteria outweigh the lack of need. See Fla. Admin. Code R. 59C-1.0355(3)(b), (4)(d); Compassionate Care Hospice of the Gulf Coast, Inc. v. State, Ag. for Health Care Admin., 247 So. 3d 99, 101-02 (Fla. 1st DCA 2018). In most cases, the establishment of a positive FNP nearly always results in the approval of a new hospice program, and the determination of zero need results in a denial of all applications. Thus, AHCA’s calculation of hospice need as reflected in its FNP determination will substantially affect each of the parties in this case. Suncoast and Seasons Pinellas have identified two purported errors in AHCA’s need determination: (1) the challenged FNP is based on data that was skewed by the COVID-19 pandemic; and (2) the FNP numbers fail to account for hospice admissions to Bay Pines. Petitioners contend that, in light of these factors, AHCA’s calculation of a net need for one new hospice program in HSA 5B for the July 2022 planning horizon is not accurate. While both of these arguments are cognizable within an FNP challenge, neither is persuasive in this instance, as explained below. Does the Impact of the Pandemic Warrant Use of Updated Deaths Data? In March 2020, a worldwide pandemic erupted due to the outbreak of the novel coronavirus (“COVID-19”). (Office of the Governor, Executive Order No. 20-52 (“E.O. 20-52”)). COVID-19 is “a severe acute respiratory illness that can spread among humans through respiratory transmission and presents with symptoms similar to those of influenza.” E.O. 20-52. On March 9, 2020, Florida Governor Ron DeSantis declared a state of emergency due to the outbreak of COVID-19. E.O. 20-52. The Governor noted that, as of March 9, 2020, “eight counties in Florida have positive cases for COVID-19, and COVID-19 poses a risk to the entire state of Florida.” Id. Upon the Governor’s direction, on March 1, 2020, the State Surgeon General “declared a Public Health Emergency exists in the State of Florida as a result of COVID-19.” E.O. 20-52. The World Health Organization also “declared COVID-19 a Public Health Emergency of International Concern.” Id. On March 15, 2020, the Florida Division of Emergency Management issued an Emergency Order “prohibiting all individuals from visiting facilities within the State of Florida,” including nursing homes, long-term care hospitals, and assisted living facilities. (Div. of Emerg. Mgmt., In Re: Suspension of Statutes, Rules, and Orders, Pursuant to Executive Order Number 20-52, Made Necessary By the COVID-19 Public Health Emergency, DEM Order. No. 20-006 (Mar. 15, 2020)). The CON Hospital Facilities and Hospice 2nd Batching Cycle was scheduled to begin on the third Friday in July 2020. (Fla. Admin. Code R. 59C-1.008(1)(g) (2019).4 However, due to the outbreak of the COVID-19 pandemic, and under the authority of the Governor’s Executive Order, AHCA issued an Emergency Order cancelling the Hospital Facilities and Hospice 2nd Batching Cycle. (AHCA, In Re: Temporary Suspension of Certificate of Need Batching Cycle, AHCA 20-004 (July 17, 2020)). In that Emergency Order, AHCA noted that “all counties in Florida have confirmed cases of COVID-19 that are growing in number daily and straining virtually every health care resource available within the State.” Id. AHCA also considered cancelling the Hospital Facilities and Hospice 1st Batching Cycle – 2021 (the batching cycle at issue here). Although the 4 In December 2020, the Agency issued a new Final Rule changing the dates of the hospice batching cycles. (See Fla. Admin. Code R. 59C-1.008(1)(g) (2020). Under the new Rule, the Hospital Facilities and Hospice 2nd Batching Cycle will begin on the first Friday in August. State of Florida was still under a state of emergency when AHCA announced need for an additional hospice program in HSA 5B, AHCA decided to move forward with the batch because, according to AHCA’s representative, James McLemore, it was “trying to get to a normal.” In deciding not to change or adjust the FNP at issue, AHCA did not compare hospice penetration rates from this batch with any other batch. In other words, AHCA did not compare previous hospice penetration rates to see if the need predictions made in this batching cycle were unusual in any way. Suncoast’s health planning expert, Armand Balsano, testified that if AHCA had examined the hospice penetration rates for this batching cycle with previous batching cycles, it would have noticed a significant anomaly in the FNP numbers used to calculate hospice need for the July 2022 planning horizon for HSA 5B. According to Mr. Balsano, typically, overall hospice penetration rates are very consistent year over year, hovering around .67 or .68 (meaning that 67% - 68% of recorded deaths received hospice care before passing). However, for the February 2021 batching cycle, AHCA calculated that the overall penetration rate had dramatically increased to .727, which Mr. Balsano considered to have a “profound” effect on the FNP calculation. According to Petitioners, because AHCA’s need projections relied on 2020 hospice admissions, which included COVID-19-related hospice admissions, and 2019 deaths, which necessarily excluded COVID-19-related deaths, the data showed a larger spike in hospice admissions than deaths, which caused the overall penetration rate to increase dramatically from prior years. To illustrate the effect caused by using hospice admissions during a year in which Florida (and the rest of the world) was battling a highly contagious virus (2020) and deaths from a year in which the world was not (2019), Mr. Balsano recast the overall penetration rates using 2020 hospice admissions and 2020 deaths. According to Mr. Balsano, when using 2020 hospice admissions and 2020 hospice deaths, the penetration rate actually decreases from AHCA’s overall penetration rate of .727 to .629. When 2020 deaths were substituted for 2019 deaths, and AHCA’s calculated penetration rate of .727 was substituted with the recast penetration rate of .629, the rule need methodology would result in a negative numeric need, and thus, no need for an additional hospice program, according to Mr. Balsano. Mr. Balsano acknowledged that AHCA’s use of deaths from one year and hospice admissions from another year to predict need is not inherently unreliable in projecting future need. Petitioners also conceded that AHCA complied with its rules when it used 2019 death data to calculate the FNP numbers at issue. The parties stipulated that when performing its FNP calculation at issue, AHCA used the number of “current deaths” as defined in, and required by, rule 59C-1.0355(4)(a). The parties further stipulated that when performing the FNP calculation, AHCA used the number of patients admitted to hospice programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C-1.0355(4)(a). Petitioners’ alternative FNP calculation is not permitted by rule 59C- 1.0355(4). Rather, it is uncontroverted that when performing its FNP calculations, AHCA used the number of “current deaths” as defined in and required by rule 59C-1.0355(4)(a). Likewise, AHCA used the number of patients admitted to Hospice Programs serving HSA 5B during the most recent 12-month period ending December 31, 2020, as derived from the reports submitted under rule 59C-1.0355(8), as required by rule 59C- 1.0355(4)(a). Moreover, Petitioners’ alternative need calculation is based on provisional death data for calendar year 2020 from the Office of Vital Statistics as of April 3, 2021. This data could not have been available three months prior to the February 5, 2021, publication of the FNP numbers, since calendar year 2020 did not conclude three months prior to February 5, 2021. Despite advocating for the use of 2020 death data, Suncoast’s expert witness did not know whether any 2020 death data, even provisional data, were available from the Office of Vital Statistics by February 5, 2021. Additionally, Mr. Balsano conceded that he did not know if the provisional data he used for his alternative FNP calculation were different from any death data available from the Office of Vital Statistics as of the date of the final hearing. Had AHCA used the provisional death data used by Suncoast’s expert witness in creating Suncoast Exhibits 11 through 20, then AHCA would have violated rule 59C-1.0355(4), and its calculation of the FNP numbers would have been erroneous. While the impacts of the COVID-19 pandemic have been profound and devastating, particularly in the number of individuals who have succumbed to the disease, the effects of the pandemic will, fortunately, be transitory. As of the time of the final hearing, a number of vaccines had become available to protect individuals from COVID-19. AHCA’s witness acknowledged that vaccines developed by Pfizer and Moderna (as well as Johnson and Johnson) have been reported to be very effective in reducing the number of deaths among individuals who have been vaccinated. AHCA further acknowledged that, in part, due to the availability of these vaccines, Florida has seen a significant decline in COVID-19 deaths. Inclusion of VA Hospital Hospice Admissions in the FNP Calculation? Petitioners further argue that AHCA’s failure to consider hospice admissions to VA hospitals has led to an incorrect projection of need under the rule formula. In making FNP calculations for hospice, AHCA only considers admissions to hospice programs licensed by AHCA. Thus, VA admissions are not considered because AHCA does not license VA facilities or programs. However, all deaths are factored into the FNP calculation, including deaths in a VA facility. Petitioners argue that this is an additional error, and created a flawed and unreliable calculation of need in HSA 5B, where there is a significant population of veterans. There are multiple VA hospitals in Florida that operate inpatient hospice units, including Bay Pines. The main facility of the Bay Pines VA system is the C.W. Bill Young Department of Veterans Affairs Medical Center (“CWBY VA Medical Center”) located in Bay Pines, Pinellas County, Florida. The CWBY VA Medical Center is part of the Department of Veterans Affairs, a federal agency. The CWBY VA Medical Center holds no type of health care facility or health services license issued by the State of Florida. The CWBY VA Medical Center is not a “Hospice Program” as that term is defined in rule 59C-1.0355(2)(f). The CWBY VA Medical Center does not report utilization information to AHCA pursuant to rule 59C-1.0355(8). Nor is it required to do so. At hearing, AHCA’s representative confirmed that AHCA lacks jurisdiction over the CWBY VA Medical Center to require it to submit any report to AHCA. It was not clear from the testimony at final hearing what hospice services the CWBY VA Medical Center provides. At most, the facility only provides inpatient end of life services. For example, Suncoast’s Exhibit 6 purported to depict Suncoast discharges to CWBY VA Medical Center during 2020. But Suncoast’s Care Navigator was asked whether she knew “what services specifically any of these patients received while they were at the VA” and she admitted, “I do not.” For “outpatient” or “community” hospice services, the CWBY VA Medical Center refers veterans to a local hospice for admission for hospice services. Although Suncoast tracks patient referrals from the CWBY VA Medical Center, Suncoast did not present any evidence demonstrating that those patients received hospice care at the VA. Suncoast’s expert witness conceded that AHCA followed the requirements of rule 59C-1.0355, by not including VA patient data, and that including such data would be contrary to the rule. Suncoast’s expert witness stated that Suncoast’s argument that AHCA should include any patients receiving hospice services at the VA in the FNP calculation was simply a “conceptual issue,” and that he could not obtain useable data from other VA centers in Florida to create an exhibit that could be introduced into evidence. This “conceptual issue,” which forms a significant part of Suncoast’s allegation that there is an error in the FNP numbers, is essentially the claim that hospice admissions at VA facilities were not counted, while deaths of patients in VA facilities under the VA’s inpatient hospice care were being counted as Florida resident deaths. Suncoast’s expert conceded that he did not know whether these patients had been reported to AHCA as hospice admissions as a result of care they may have received at a state-licensed hospice program, or whether the patients admitted to VA facilities actually died, much less whether they were counted as Florida resident deaths. Indeed, Suncoast’s evidence made clear that it admits patients referred from the CWBY VA Medical Center, and that those patients are included in utilization reports submitted to AHCA under rule 59C-1.0355(8). Suncoast also presented evidence that its hospice patients are frequently discharged for acute care services at the CWBY VA Medical Center, and that Suncoast reports such patients as separate admissions if the patient returns to Suncoast. Suncoast’s witness acknowledged that this results in a single patient being counted as multiple admissions in its utilization reports. Suncoast’s witnesses acknowledged that this discharge and re- admission pattern only occurred with VA patients and would not be the case for patients who were placed on inpatient hospice care in a Suncoast hospice house, or in a hospital or skilled nursing facility. Suncoast’s expert acknowledged that accounting for any VA admissions would change the penetration rate statewide, and as a result, any VA admissions identified in HSA 5B could not simply be subtracted from the total number of projected hospice admissions to recalculate the FNP for HSA 5B. Ultimately, Mr. Balsano could not opine on what the correct need number would have been, and had no idea what the calculated result would have been if the purported VA admissions were counted. Absent reliable data in this regard, there is no basis to deviate from the data source utilized by AHCA in its FNP calculation, even if such deviation was permissible by rule. The existence of potential alternatives to the FNP calculation in rule 59C-1.0355, and in particular the use of different death and admissions data than that used by AHCA, as advocated by Petitioners, is not warranted for the reasons discussed above. Petitioners have failed to carry their burden to establish that the FNP calculations that AHCA made using the rule- required data was in error.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered determining that there is no error in the Fixed Need Pool numbers for Hospice Service Area 5B and that there is a calculated net need for one additional hospice program in Hospice Service Area 5B as published by AHCA on February 5, 2021. DONE AND ENTERED this 16th day of June, 2021, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2021. COPIES FURNISHED: Stephen C. Emmanuel, Esquire Ausley & McMullen 123 South Calhoun Street Tallahassee, Florida 32301 D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Eugene Dylan Rivers, Esquire Ausley & McMullen, P.A. 123 South Calhoun Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 David C. Ashburn, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Karl David Acuff, Esquire Law Offices of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308-5407 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308 Michael J. Cherniga, Esquire Greenberg Traurig, P.A. 101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32301 Marc Ito, Esquire Law Office of Marc Ito, PLLC 411 Wilson Ave. Tallahassee, Florida 32303 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Christoper E. Gottfried, Esquire Greenberg Traurig 101 East College Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308
The Issue Which of two applications for a Certificate of Need (CON) to operate a hospice in Service Area 8B, Collier County, Florida, should be granted: CON 9967 filed by Hope Hospice and Community Services, Inc., or CON 9969 filed by VITAS Healthcare Corporation of Florida?
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated both "as the state health planning agency for purposes of federal law . . . [and as] the single state agency to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat. HON Hospice of Naples, Inc. (HON), a not-for-profit corporation qualified as a "501(c)(3)" charitable organization under the Internal Revenue Service Code, is a community-based full service hospice. Founded in 1983 by a group of volunteers who wanted to improve care for those suffering terminal illnesses in Collier County, HON is governed today by community representatives that comprise a 19-member board of directors. HON is the only hospice currently licensed to provide hospice services in Service Area 8B, Collier County. It is licensed to provide hospice program services and to operate a freestanding general inpatient program facility in the county. Since 1988, HON has been continuously Medicare and Medicaid certified. It has been accredited by the Joint Commission for Accreditation of Health Care Organizations since 2001. HON accepts all Collier County patients, regardless of religious beliefs, sexual orientation, and circumstances, including how the patient may be challenged physically or mentally. HON provides its services wherever the Collier County patient resides: in their own homes (approximately 50%); in skilled nursing facilities and assisted living facilities (45%); in jails, shelters and the Georgeson Hospice House (5%); and in a small fraction of cases in hospitals. Patients are also accepted regardless of ability to pay. In 2006, HON provided $344,000 in charity care to those who did not have the resources to pay for hospice care. HON's principal office is located on the same campus with the Frances Georgeson Hospice House (the "Georgeson House"), HON's 16-bed freestanding hospice general inpatient facility. The main office and Georgeson House are centrally located and geographically accessible in relation to the most populated portions of the county. HON has four branch offices placed where the greatest number of hospice patients reside in the county. The offices are in Marco Island, Immokalee, North Naples (near the Collier-Lee County line), and South Naples. HON consistently relies on donations from the community to cover shortfalls from operations. From 2002-2006, HON lost between $1.5 million and $4.5 million annually on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies on contributions to allow it to continue to provide a wide array of enhanced core, non-core and community services beyond what reimbursement covers. Collier County has been well served by HON, an available, accessible, high quality, not-for-profit community-based hospice. VITAS VITAS is a for-profit Florida corporation licensed to provide hospice services in Florida. It is a wholly-owned subsidiary of VITAS Healthcare Corporation ("VITAS Healthcare") which operates more than 40 hospice programs in the nation and is the largest hospice provider in the country. VITAS has a sister corporation, VITAS of Central Florida, Inc. The two operate hospice programs in Hospice Service Areas 4B, 7A, 7B, 7C, 9C, 10, and 11 that include Orange, Osceola, Seminole, Brevard, Volusia, Flagler, Miami-Dade, Monroe, Broward, and Palm Beach Counties. VITAS and its predecessor entities have provided comprehensive hospice services throughout South Florida in excess of 28 years. It has a storied history that commenced in the mid-seventies with the organization of a group of hospice volunteers by Hugh Westbrook, an ordained United Methodist minister, and Esther Colliflower. These initial efforts led to the incorporation of Hospice Care, Inc., in Miami as one of the nation's first hospice programs. Reverend Westbrook and Ms. Colliflower continued their pioneering endeavors in hospice as leaders in the successful effort to create a federal payment system for hospice. In the early 1990's Hospice Care, Inc., was converted into a for-profit entity. The term VITAS, derived from the Latin word for "lives," was incorporated into the name of the corporation to symbolize the mission of VITAS Healthcare: the preservation of the quality of life for those who have a limited time to live. VITAS Healthcare is a wholly owned subsidiary of Chem-Ed, a for-profit corporation. Chem-Ed has had an interest in VITAS Healthcare at least since 1991 when it was an owner of 25% of VITAS Healthcare stock and one of its executives, Tim O'Toole took a seat on the VITAS Healthcare board of directors. In 2004, the majority ownership of VITAS Healthcare was sold to Chem-Ed and Tim O'Toole became VITAS Healthcare's Chief Executive Officer. Most of the senior management stayed intact after the acquisition by Chem-Ed. Among the reasons for retaining senior management was to continue VITAS Healthcare's values in the wake of the acquisition. The main value is "putting patients and their families first." Hope Hope Hospice and Community Services, Inc. (Hope), is a not-for-profit community-based hospice organization incorporated as a 501(c)(3) charitable corporation under the Internal Revenue Code. Hope is governed by a board of directors, all of whom are residents of Hope's service area. As business and community leaders in Southwest Florida, Hope's Board members know the Hope service area well. Their in depth knowledge of the community enhances their sensitivities to the needs of the communities served by Hope. Founded in 1979 by a group of clergy, nurses, and other volunteers in Lee County, Hope became a Medicare certified hospice in 1984. Since 1991, Samira Beckwith has served as Hope's President and CEO. Ms. Beckwith has been actively involved in hospice since 1976, and has received numerous state and national awards for her work in hospice and end-of-life issues. Originally licensed to serve Service Area 8C (Lee, Hendry, and Glades Counties), Hope has been licensed since 2006 to serve Service Area 6B (Polk, Hardee, and Highlands Counties) as well. Hospice Care Hospice care may be provided in any location where a patient has lived or is temporarily residing such as a private home, family member's home, assisted living facility (ALF), nursing home, hospital or other institution. There are four levels of hospice care: routine home care, general inpatient care (GIP), continuous care and respite care. The majority of hospice patients receive routine home care. This level of care may be provided in the patient's home, a family member's home, a nursing home or an ALF. Routine care comprises the bulk of hospice patient days. Continuous care is also provided in the patient's home. Unlike routine home care, continuous care is nursing assistance at a time of crisis for the patient. Typically, it is for control of acute care pain or symptom management on a short-term basis. Continuous care is usually intermittent. The use of the term "continuous" as a descriptive adjective to describe this type of hospice care, therefore, makes "continuous care" a misnomer. Continuous care requires a minimum of 8 hours of one-on-one care in a 24-hour period with at least 50% of the care provided by a nurse. The other half of the care may be provided by personal care assistants or nurses' aids. General inpatient care or GIP refers to the care a hospice patient receives in an inpatient setting such as a hospital, a Medicare-certified nursing home or in a freestanding hospice unit. This type of care involves increased nursing and physician care for patients with symptoms temporarily out of control and in need of round- the-clock nursing to manage complications. The least used level of hospice care, respite care is provided to patients in an institutional setting such as a nursing home, ALF or freestanding hospice unit in order to allow care givers at home, such as family members, a short break or "respite" from the demands of caring for a terminally ill patient. Penetration Rates An objective measure of accessibility of a hospice program is the penetration rate ("P-rate") in the hospice's service area. P-rate is the ratio of hospice admissions to total deaths in a service area. It is a basis for planning for hospice programs in the state of Florida. Hope touts its P-rate in Service Area 8C as a basis for its superiority over VITAS. Its P-rate in Service Area 8C has always exceeded the state-wide average. For the June 2006 reporting period, its P-rate was 62% when the statewide average was 56%. Hope has continually increased its P-rate at a rate higher than the rate of increase of the statewide average. The Fixed Need Pool and the SAAR On October 6, 2006, AHCA published a fixed need pool for one new hospice program in Service Area 8A for the second batching cycle of 2006. On October 27, 2006, HON filed a challenge to the fixed need pool. The challenge was denied by final order. HON appealed. The appeal was dismissed. In the meantime, five hospice organizations submitted letters of intent and CON applications for a new hospice in Service Area 8A: VITAS, Hope, HCR Manor Care Services of Florida (HCR), Evercare Hospice of Collier County (Evercare), and Odyssey Healthcare of Collier County, Inc. AHCA issued its State Agency Action Report (SAAR) on February 23, 2007. The SAAR approved VITAS' application and denied the others. Notice of AHCA's decision was published in the March 9, 2007, edition of the Florida Administrative Weekly. Between March 12, 2007 and March 29, 2007, HON and three of the denied applicants (Hope, Odyssey, and HCR) filed petitions challenging the approval of VITAS' application. The petitions of Hope, Odyssey, and HCR also challenged the denials of their respective applications. Evercare did not challenge any of the Agency's decision. On March 23, 2007, VITAS filed a petition supporting the decisions of the Agency and requesting comparative review of its application with the applications of the other applicants that had challenged AHCA's decision. In their applications, VITAS and Hope aspire to meet the need published for a single new hospice in Service Area 8A. They also contend in their applications that "special circumstances" demonstrate need for an additional hospice program in Collier County. The need formula in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"), produces a fixed need pool for "1" or "0." The Agency's position is that the formula can never generate a fixed need pool in excess of 1. See Fla. Admin. Code R. 59C-1.0355(4)(a): Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows . . . . (Emphasis supplied). The existence of a fixed need pool of "1," alone, does not prove there are gaps in service if there is an existing hospice provider in the service area. HON's expert, Mr. Davidson elaborated on this point at hearing: The purpose of the rule is not to identify service areas where existing providers are not getting the job done now . . . it's a temptation to interpret a fixed-need pool that way but it's an incorrect temptation. [T]he rule . . . identifies service areas where the growth in hospice admissions is projected to be sufficiently large to enable a new program to be approved without digging into the level of service of the existing provider. Tr. 3708-3709. In this case, the fixed need pool of 1 was attributable more to projection of service area deaths than the use of penetration values used in the formula for calculating fixed need. When a fixed need pool of "1" has been published, and an applicant responds to the numeric need and also alleges that special circumstances exist to justify approval of a new hospice, the Agency views the special circumstance allegation, even if proved, to be a potential preference for the applicant in the context of comparative review. The existence of a special circumstance is not a basis for the approval of more than one applicant in a batching cycle. The Hospice Programs Rule is interpreted by AHCA to permit the approval of only one hospice program in any one batching cycle. This interpretation stands so that only the superior application may be approved even in cases where: a.) there are two hospice organizations qualified to meet numeric need and b.) coincidentally there are special circumstances that would otherwise justify the inferior application's approval. Adverse Impact to HON if Two Programs Approved If the applications of both VITAS and Hope were to be simultaneously approved, HON would experience a significant reduction in average daily census (ADC). By 2009, it is reasonably projected that its census would be reduced to 180 patients, a decrease from 2007 of about 61 patients in the second year of operation for the two new programs. Net income (including donations) for HON in the second year of operation for two new programs, if ADC were decreased by 61 patients, would likely be reduced by approximately $1.2 million. Historically, HON has a net operating loss before contributions ranging from $1.5 million to $4.5 million. The likely reduction in net income would be significant. Reduction in HON's programs would be necessary to make up for the lost revenue. A number of community programs would have to be eliminated. Core and non-core services would have to be reduced. It is possible that there would an indirect adverse impact to HON as well: a breach of trust perceived by the community and donors when community services which have come to be expected are reduced or withdrawn. Service Area 8B: Collier County Service Area 8B, located in Southwest Florida along the coast of the Gulf of Mexico, consists of one county. Collier County is relatively large in area. Its population of around 360,000 is most dense along the coast in the county's westerly parts. Service Area 8A borders Service Area 8C to the north and Service Area 10 and 11. The more populated communities in Collier County are more congruent with communities in adjacent Service Area 8C, where Hope operates. Service Areas 10 and 11, where VITAS operates, on the other hand, are separated from the densely populated areas of Collier County by wide expanses of relatively unpopulated borderlands. Service Areas 8A and 8C have some similar demographics. For example, both are less densely populated than the state as a whole. Both service areas are growing at a rate that is faster than the rate of growth of the state as a whole. The percentage of the two service areas in the 65+ age cohort is the same and is higher than the statewide average for that age cohort. The two have a similarity in the percentage of Hispanic population. The median household net worth in both service areas is higher than the statewide average, considerably so in the case of Collier County. The two service areas have similar mortality rates and a similar array of causes of death for their residents. Proximity of Hope to Collier County Health Care Facilities Collier County has four hospitals, two within each local health care system. NCH Health System (NCH) operates Naples Community Hospital and, less than 10 miles from the Lee County line, North Naples Hospital. Health Management Associates (HMA) operates Physicians' Regional Hospital at Pine Ridge Road and at Collier Boulevard. The two NCH hospitals have 681 beds, while the HMA hospitals have approximately 180 beds. Collier County has many skilled nursing facilities. Collier County hospitals serve some residents of Service Area 8C. The import of the proximity of Hope's current operations in Lee County and Service Area 8C to Service Area 8A was summed up at hearing by Hope's expert planner, Jay Cushman: Because of Hope's proximity to the proposed service area, it has relationships that already exist between important providers of health services in service area 8B including hospitals. From time to time, residents of Hope's service area are hospitalized in Collier County, and Hope's staff visits them if they are going to be referred back to Lee County or other counties in service area 8C as hospice patients. Hope Hospice also operates a long-term care diversion program ["LTCD Program"] which includes services to residents of Collier County. So Hope Hospice is already engaged in providing social and health services to service area 8B in a way that puts them in a natural position to identify patients who are in need of hospice care and to see that their admission to hospice care is accessible and a matter of continuity of care between their participation in the [LTCD Program] and potential admission to hospice. Tr. 2899-2900. Furthermore, of Collier County residents requiring hospitalization, six percent are admitted to hospitals in Lee County. In contrast, the relationship between Collier County residents and admissions to Miami- Dade or Broward County hospitals is insignificant. Having a presence in an adjacent service area does not guarantee success for Hope. When Hope sought to expand to Service Area 6B (Polk, Highland, and Hardee Counties), it made arguments of "contiguous" communities and "established referral networks." Yet, Hope only achieved approximately one-third of its projected first year admissions in Service Area 6B. If Hope is approved as a result of this proceeding and Hope continues its management of the LTCD program in Collier, moreover, it is likely to have an adverse impact on HON with regard to certain referrals. If VITAS is approved, the potential for a hospice operated LTCD program to facilitate referral advantages will not exist. VITAS will not start an LTCD program if its application is approved. The differing impact that co-batched applicants might have on an existing provider is considered by AHCA to be relevant to comparative review. COMPARATIVE REVIEW Relative Impact on HON; Donations Unlike VITAS, which has an affiliated foundation that accepts memorials, bequests and unsolicited donations, Hope and HON actively solicit and depend on donations to cover operating losses annually. HON's only source of revenues are Medicare, Medicaid, and Insurance (combined 82%); Contributions and fundraising (16%); and thrift shop revenue (2%). From 2002-2006 inclusive, HON lost between $1.5 million and $4.5 million on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies heavily on contributions to make up annual shortfalls in revenue and to allow it to continue providing a wide array of core, non-core and community services beyond what reimbursement covers. HON's operational expenses annually exceed revenue, because of HON expenses incurred to ensure quality and accessible care. For example, HON employs highly trained clinicians and deploys them on specialty teams. In addition to its regular home care teams, HON has a Float Team, to ensure there are no service gaps. It also has a Central Facilities Team, comprised of RNs and Aides, experienced with the unique needs of nursing home based hospice patients who exclusively serve HON's patients in nursing homes and assisted living facilities. It also has an On-Call/After Hours Team, a special Weekend Home Care Team, an Admissions and Intake Team, and complementary therapies. Besides the RNs assigned to direct patient care, HON also employs RNs for all key managerial positions. At HON the CEO, Director of Compliance, Clinical Services Directory, Quality Manager, Clinical Education Director, General Inpatient Care (GIP) Clinical Manager and all team managers are all experienced RNs. This depth in personnel allows more clinicians to spend more time with patients and families and to deliver high quality specialized care. It is expensive. It involves hiring and retaining the most experienced, specialized and certified clinicians available. HON has one of the lowest nurse to patient ratios in Collier County: 1 nurse to every 11 patients in home care and 1 nurse to every 4 patients in GIP. These lower ratios mean more care at the bedside and more support for the patient and family. HON uses certified home health aides and nurses assistants rather than homemakers to perform homemaker services for patients. HON has placed certified RNs in all of its key management and care giver positions, with high concentrations of certified RNs on the specialty teams. The certification of hospice and palliative care nurses and home health aides signifies the highest level of competency and specialization in the end of life clinical care. Charitable contributions received by HON, to offset operational losses are broadly categorized as "solicited" and "unsolicited." Solicited funds are monies that HON raises through newsletters, direct solicitation, special events, and individual and corporate underwriting. Unsolicited money comes from memorial gifts and bequests, primarily from patients and patient families. Although Naples may be the one of the wealthiest communities in Florida in terms of disposable wealth, it does not mean there is an inexhaustible pool of money for charitable contributions. The window of opportunity to sponsor a well attended charitable fundraising event in Collier County is January through April. A Naples Charity Register is published annually, to confirm for the donors and event sponsors how the limited space on the calendar of charitable events has been allocated. Each year, there are over 300 not-for-profit organizations in Collier County competing for a weekend, between January and April, to schedule their fundraiser. Solicited funds received from special events are the result of relationship HON nurtures with other organizations in the community. Special event funding is not limited to HON; the market for fundraising in Collier County is highly competitive. Each new fundraising season requires that HON renew relationships, which can be preempted at any time by another charity. HON's historical relationships simply do not guarantee that a community organization will in the future choose to give charitable dollars to HON. HON's ability to maintain these relationships with donors is enhanced by the fact that it is currently the only not-for-profit hospice in Collier County. Like HON, Hope is also heavily dependent on donations and charitable contributions to cover Hope's annual operating losses, which historically range from $1 million to $5.1 million annually. As in the case of HON, Hope is a 501(c)(3) charitable organization, authorized to solicit donations from the general public and to provide receipts for those donations, so that donors can take tax deductions for their donations. The amount of contributions Hope solicits is impressive. In 2006, when all contributions and net assets released from restrictions/satisfaction of donor requirements were considered, Hope raised $4.3 million in charitable contributions. Hope is more successful than the average hospice at raising charitable donations for its hospice program. It has a track record of being committed to raising substantial amounts of money in its own service area through special events. Hope solicits its larger donations from the same sort of activities (tennis and golf charity events) as does HON. Hope's enthusiasm for special event soliciting is exemplified by Hope's decision to include a notice of the "Hope Gala" in the 2006-2007 Naples Charity Register, to directly solicit funds from the Naples area in which Hope is not licensed as a hospice, to fund a Hospice House that Hope had already built in its own service area. It is reasonable to expect that if awarded a CON, Hope would solicit contributions by sponsoring special events in Collier that would directly compete with HON for a seasonally limited pool of solicited special event and corporate donations. It is also reasonable to expect that corporate and individual donors with a history of giving to HON would instead split hospice donations between Hope and HON. In CY/FY 2006, 71% of the charitable contributions received by HON were from solicited sources. Solicited sources can be divided into three broad categories. Special events accounted for 18% of charitable contributions, solicited corporate underwriting 19%, and direct mail and newsletters 34%. Unsolicited bequests and memorials accounted for the remaining 29% of charitable contributions. Solicited contributions from special events and corporate donations exceeded $750,000. If Hope is awarded a CON, HON's fundraising expert project Hope will reduce solicited donations from special events and corporations, which HON would have otherwise received, by at least one half the first year and potentially more than one half in successive years. While the projection may overstate the immediate reduction in HON's share of solicited donations, it is reasonable to project that HON's share of all solicited donations will be reduced roughly by half at some point not long after Hope received a CON were it to do so. It is logical also to conclude that Hope would compete for and reduce HON's receipts from direct mail and newsletter solicitations. VITAS is a for-profit corporation. It is not likely to compete with Hospice of Naples for charitable contributions from the community. Nor does VITAS' charitable Foundation receive contributions on the scale of Hope. VITAS raises approximately $1 to 1.5 million per year nationwide from its hospice programs, most of which is the result of memorial gifts, rather than community fundraising. It is virtually certain that VITAS' entry into the community will have minimal impact on HON's fundraising efforts. VITAS has committed to working collaboratively with HON to limit the impact VITAS would have on HON's donations. VITAS has agreed, as a condition subsequent to approval of its CON, to provide HON's charitable donation solicitation materials and brochures to VITAS patients and families. VITAS' charitable foundation primarily helps fund and support end of life research, such as the Duke Institute for End-of-Life Care, which benefits all hospices. It is reasonable to expect that if VITAS was awarded a CON, HON would continue to receive much needed solicited donations from direct mail, newsletters, corporations, and special events, in an amount approximating HON's historical solicitations. In sum, an approved VITAS program will have significantly less adverse impact on donations to HON than will an approved Hope program. VITAS' offer to accept as a condition on its CON a requirement that VITAS make HON donation solicitation literature available to VITAS' patients is significant. It confirms a collaborative approach to informing the community. It also gives potential donors a choice: donate to a hospice that uses its donated dollars locally or to one that funds end of life care research and improvement. Different Models of Care VITAS offers a model of care different than that provided by HON or that would be provided in Collier County by Hope. The difference flows from the nature of VITAS' organization as a business. It is a wholly-owned subsidiary of a large, for-profit corporation with national resources, VITAS Healthcare Corporation. VITAS Healthcare Corporation, in turn, is a wholly-owned subsidiary of Chem-Ed, a for-profit corporation that is publicly traded and that engages in business unrelated to hospice with nation-wide scope. Chem-Ed, operates under a business model that seeks to maximize shareholder value and returns. Publicly traded companies often make strategic decisions based upon the stock's performance rather than the business' viability or services provided. Chem-Ed provides its executives at VITAS with performance-based compensation incentives that reward them with bonuses premised upon performance. Chem-Ed monitors the financial performance of its hospice programs with respect to the Medicare spending limit (the "Medicare Cap"). The Medicare Cap is a limit on the total annual payments Medicare makes to a hospice based on the number of first time hospice beneficiaries served by the hospice. The Medicare Cap is intended to ensure that Medicare does not spend more for hospice patients, on average, than for conventional medical care patients at the end-of-life. From Chem-Ed's perspective, hospice programs that operate just below or just above the Medicare Cap optimize profitability. A Medicare provider that exceeds its Medicare Cap must pay back to the government the money it was paid by the government above the cap. In the event that VITAS Healthcare determines that one of its subsidiary programs is going to exceed its cap, there is incentive, especially under a business model of delivering hospice care, to take corrective action. Corrective action could be directed at patient mix and patient admissions. This potential was described at hearing by Hope's expert health planner as: [M]anaging patient mix and admissions from the highest levels of the company for a local program in order to protect the bottom line. And this is without regard . . . to whether or not the needs of the community are being met; whether or not changing the patient mix would enhance or deny access to groups of patients; whether the admission discharge rate and length of stay are appropriate or not. It's all regard to whether the [hospice] program is exposing the [parent] company to a financial risk. Tr. 3034. The business organization context within which VITAS Healthcare operates will provide VITAS with the benefits of economies of scale in a number of its activities. In stark contrast, HON and Hope are two local, not-for-profit, community-based hospice providers. Hope employs a model of care called the Open Access Model because it emphasizes the elimination of barriers to access to hospice care. These barriers may include costliness and the difficulty posed for a patient having to choose between parenteral nutrition and hospice care as described in Hope Ex. 27. The exhibit is an article described by Mr. Cushman as: [S]uggest[ing] that the financial exposure that a hospice assumes when it adopts an open access model of care may be too great to bear for hospice programs that are less than an average daily census of 200. [The article] also discusses some of the issues facing patient and physician who want to refer patients to hospice, as they transition between curative and palliative care, and how open access programs, by providing an easier transition . . . assume a greater cost . . . provide more access to hospice services and lengthen the hospice stay. Tr. 3005-3006. Other barriers include a primary language of the patient other than English, cultural traditions, remote location of the patient's home, lack of access to basic social and health services, lack of information about hospice care, and the reluctance of the attending physician to deal with end-of-life issues. An example of Hope's use of the Open Access Model is its willingness to pay for necessary palliative chemotherapy and radiation therapy when there are no other resources available to a hospice patient to cover such care. Hope's related social and health services such as the Long Term Care Diversion Program enhance access to hospice services in Hope's service area. Employment of the model is reflected in Hope's higher than average hospice penetration rates for Service Area 8C. There are other differences between the approaches to hospice care taken by VITAS and Hope. For example, Hope favors Freestanding Hospice Houses for inpatient care whereas VITAS favors Hospital Dedicated Inpatient Units. Freestanding Hospice Houses vs. Hospital Dedicated Inpatient Units Both freestanding hospice houses and hospital dedicated inpatient units have advantages and disadvantages. See VITAS Ex. 57, Ch. 2, p. 35. VITAS sees Hospital Dedicated Inpatient Units as superior particularly from the viewpoint of doctors and ancillary services. VITAS frequently contracts for dedicated hospital inpatient units. It has never built a freestanding hospice house and does not intend to build one in Collier County. VITAS proposes, instead, to begin providing care in scatter beds in hospitals and then would seek to establish dedicated units when the census justified it. Two Collier County hospitals have indicated intention to enter contracts with VITAS if its application is approved. Naples Community Hospital has done the same. Hope prefers freestanding hospice houses because with a homelike environment they provide a secure and comfortable place for those who prefer not to die at home or who may not have a caregiver at home. Furthermore, consistent with the nature of Hope as a community-based hospice, freestanding hospice houses provide community identity and visibility. Hope operates three freestanding hospice houses to provide GIP and residential hospice services. They are HealthPark (16 GIP beds), Cape Coral (24 GIP beds and 12 residential beds) and Joanne's House/Bonita Springs (16 GIP and 8 residential beds). They are staffed by on-site nurses social workers, aides, therapists, and physicians. Medications and other supplies are available on site. Hospice houses are Hope's primary mechanism for providing inpatient care but it also provides GIP services in a dedicated unit at Shell Point, a SNF/CCRC located in Lee County. Hope developed the polices and procedures in place in the unit and is responsible for managing patient care. The unit is jointly staffed by Hope and Shell Point employees with Shell Point providing the routine nursing care. Even though the unit is dedicated for use by Hope, Hope pays a per diem only for the beds actually occupied by its hospice patients. No costs were incurred by Hope to renovate the space for use as a hospice unit. Hope also provides GIP through a "scatter bed" arrangement with other nursing homes and hospitals within Service Areas 8C and 6B. Hope staff provide daily visits to Hope patients in the hospital setting and regular visits in the nursing homes. Hope staff attend team meetings in nursing homes and ALFs for purposes of reviewing care plans and participating in joint care planning with facility staff. Hope staff also regularly meet with the facility administrators and nurses to obtain feedback on the quality of services provided by Hope. For Collier County, Hope's CON application proposed a mixture of scatter beds in hospitals and nursing homes and to use Joanne's house in Bonita Springs. Just as VITAS intends to resort to its primary mechanism for the delivery of inpatient services once its census in Collier County justifies it, Hope intends to build a freestanding hospice house in Collier County when its census reaches 100 patients. It projects that it will reach such a census in Year 4 of operation. HON operates a freestanding hospice house in Collier County. While it has some scatter beds, most of HON's inpatient care is provided in its hospice house. Hope, in its current operations, builds and utilizes hospice houses as its main mechanism for providing inpatient service. VITAS does not. VITAS provides inpatient service in dedicated units in hospitals. The criteria for a patient to receive GIP are substantially the same as the criteria for continuous care: emergency care or control of acute pain or symptom management. The big difference between the two is where GIP is provided. Inpatient care, for the most part, is provided by VITAS in the hospital. The patient's home is generally the site of where the hospice patient receives continuous care. Aside from the different models of care and approaches to GIP care, there are other differences between Hope and Vitas. VITAS CON Conditions In its application, VITAS offered to condition its CON in the following ways: Conditions of the Application Core Services Provide palliative radiation, chemotherapy and transfusions as appropriate for treating symptoms: It is VITAS Healthcare Corporation's position that these services are a core service as appropriately provided palliative care is a requirement of Medicare conditions of participation. This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. Provision of hospice services 24 hours a day, seven days a week as indicated by the patient's medical condition: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. VHCF will admit all eligible patients without regard to their ability to pay: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. Non-Core Services Commit to having every patient being assessed by a physician upon admission to the hospice: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. A physician will serve as a member on every care team and provide patient visits as required: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. On the first day of hospice care responsive patients will be asked to rate their pain on the 1-10 World Health Organization pain scale (severe pain to worst pain imaginable). A pain history will be created for each patient. These measures will be recorded in Vx via a telephone call using the telephone keypad for data entry. These outcome measures will include greater than 60 percent of patients who report severe pain on a 7-10 scale will report a reduction to 5 or less within 48 hours. Implement a Pet Therapy program to begin immediately: This will be measured via a signed declaratory statement by VHCF. Operational/Programmatic Conditions Establish satellite hospice offices in Immokalee and Marco Island during the first year of operation: This will be measured via submission of the office address and location to AHCA and publication of such addresses in the provider's collateral material. Implement a TeleCare Program to begin immediately: This will be measured via publication of the relevant collateral materials for the provider and patient community. Establish a Local Ethics Committee to begin upon certification: This will be measured via publication of the names and relevant information of the Ethics Committee members and the related scheduled of meetings. Implementation of CarePlanIT, a handheld bedside clinical information system, by the end second year of operation: This is measured by identification of the CarePlanIT budget on Schedule 2 of this application and will be measured at the time of implementation via a signed declaratory statement by VHCF. See VITAS Ex. 1, Tab 5, Summary of Conditions attached to Schedule C of CON 9969. In its PRO, the Agency lists five other conditions1 provided by VITAS: Offer VHCF educational programs to Hospice of Naples staff, physicians and patients. Provide Hospice of Naples Foundation information to VHCF patients and their families seeking to donate funds to hospice services. Upon certification of VHCF Collier, its parent entity - VITAS Healthcare Corporation - will make a $20,000 charitable contribution to Hospice of Naples. 65% Non-Cancer patients. Establish a Clinical Pastoral Education program to begin immediately. Core services are required to be offered by hospice programs. The three conditions in VITAS' application related to "Core Services," therefore, cover services that are not typically subject to conditions since they must be provided whether the application is conditioned upon them or not. The advantage to making them subject to a condition, however, is that the CON holder can be fined for not meeting the condition. The Agency approved the VITAS application and denied the others because in its estimation the VITAS application was clearly superior. See VITAS Ex. 274, Deposition of Jeffrey Gregg, at 16. The decision was described as an "easy call," id., at 17 because no other applicant proposed conditions that were close to the significance of the conditions proposed by VITAS. In its PRO, the Agency continues to maintain that the VITAS' conditions are far superior to those offered by Hope: Hope's conditions, by contrast [to those offered by VITAS], were less impressive: Hope Hospice will open an office in Naples and an office in Immokalee during the first year of operation. Hope Hospice will conduct education and outreach programs in Collier County aimed at enhancing access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will implement an emergency preparedness plan capable of maintaining the hospice admissions function during hurricane emergencies. To show conformance with the condition related to office locations, Hope Hospice will forward to the Agency copies of the business licenses and/or certificates of occupancy that who that Hope Hospice has occupied office space in Naples and in Immokalee in Service Area 8B during the first year of operation. Hope Hospice will also forward to the Agency copies of educational and outreach programs and attendance sheets that document efforts to enhance access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will also forward to the Agency copies of its emergency preparedness plan for Service Area 8B. Recommended Order Proposed by the Agency for Health Care Administration, at 8, paragraph 26. Experienced Staff/Industry Leaders Many VITAS employees have 15-20 years of hospice experience, including employees in positions of leadership. VITAS' management team consists of recognized leaders in the hospice industry. Its founders were founding members of the National Hospice and Palliative Care Organization (NHPCO). VITAS has maintained an active leadership within the organization. VITAS' employees serve on a number of significant NHPCO committees. They have actively participated in shaping NHPCO's guidelines on a multitude of topics and are frequent lecturers at NHPCO conferences. The size of VITAS allows it to attract and recruit high caliber physicians, RNs, social workers and chaplains. Ability to grow within the company allows VITAS to retain its best employees. Extensive Education and Training Resources VITAS' economies of scale have allowed it to amass extensive hospice internal and external education materials. VITAS has developed unique training materials for staff. It has also developed specific physician and easy to understand community educational materials for patients and families. Many educational materials are translated into other languages including Spanish. All of VITAS materials are easily accessible on VITAS Intranet Service. VITAS, because of size, is able to dedicate significantly more resources to staff education and training than most hospices. VITAS has a significant distance learning program, as well as ongoing dedicated corporate personnel that visit local programs for training. It also maintains teaching affiliates with universities and community colleges for residency and fellowship training of RNs, physicians, and other healthcare professions. Among its training and education efforts is the coordination of specialized training. For example, Dr. Kinzbrunner has dedicated substantial time to writing the Jewish Hospice Manual and traveling to various programs to help educate them to become certified by the National Institute for Jewish Hospices. Similarly, Colonel Jaracz's full-time responsibility is to formulate VITAS' Choices for Veterans initiatives and visit local programs to ensure they are carrying out these initiatives. VITAS places a great deal of emphasis on educational materials for the patient and family. Hope has a different philosophy, at least at the time of admission. On some occasions Hope might provide brochures related to specific therapies if the patient will be receiving them at home. Usually, however, Hope limits the educational materials it provides at admission to a single brochure about Hope Hospice in general. As Toni Granchi, Professional Relations Coordinator for Hope Hospice, explained in her deposition: "I don't want to inundate them with a bunch of brochures . . . . I don't want to give them everything on the first visit. It's very overwhelming." Hope Ex. 152, at 9-10. In contrast to Hope's approach at the difficult moment of admission to hospice, VITAS sees "reinvesting in the materials that will improve [VITAS'] care and educate the family [as] critical." Tr. 116. Whichever approach is superior, the extent of VITAS' educational materials that would be available in Service Area 8 if VITAS is approved will add a new dimension to hospice education in Collier County. Dedicated New Start Team VITAS has had a dedicated start up team since 2002. This group is headed by Executive Vice President Deirdre Law, an RN with more than 20 years of hospice experience. The team includes several RNs with extensive hospice experience. They train clinical managers, ride with new hire nurses and provide patient care until the new nurses demonstrate competency. An example of the work of the VITAS start up team was offered at hearing by Kathy Laporte, VITAS' Senior General Manager for the Brevard and Volusia County programs. When VITAS' program started in Brevard County, a patient care administrator helped Ms. Laporte learn VITAS' policies, procedures and support tools. Support was offered to the business manager and in managing continuous care. The start-up team stayed with the Brevard Program until the program could be sustained without them, for "about a year." Tr. 1224. The success of the VITAS start- up team is demonstrated by VITAS' growth in five years to become the largest provider in the Brevard market despite competition from three exiting providers, two affiliated with hospitals. In addition to the full-time dedicated start-up team, VITAS uses specialized personnel who are active in new start programs. Among them are Sarah McKinnon who provides start-up services in general staff education, Dr. Kinzbrunner in Jewish hospice training and certification and medical directorship, Colonel Jaracz in Veteran training and outreach, Robin Fiorelli in bereavement and volunteer services and Mike Hansen in IT services. VITAS start up teams and specialized start-up services have had significant new start experience in opening hospices in a number of competitive environments. It has opened 20 programs in the last five years, three in Florida. VITAS has never had a start-up program fail. As a community-based hospice much smaller relative to VITAS, Hope has not had start-up experience comparable to that of VITAS. Its one new start is in Service Area 6B. In its CON application, Hope had projected 321 admissions in Year 1. In its first year of operation, Hope achieved 92 admissions. Service Area 6B is Hope's only experience in a competitive market because it is the only provider of hospice services in Service Area 6C. Advanced Information Technology Because of the strength of its financial resources, VITAS has been able to invest $10 million into its customer computer system called Vx or "VITAS Exchange." The system allows it to perform patient analysis and research studies that improve hospice care. After testing in the Fall of 2007, VITAS will begin to roll out VxNext to make Vx more user friendly allow the gathering of more detailed patient information. A technology refresher to Vx, VxNext requires an investment of $13 million. The latest VITAS Information Technology (IT) project is CarePlanIT, a customized care planning system and electronic medical record. Currently 14 hospice programs, about one in three VITAS programs, are operational on CarePlanIT. The rollout of CarePlanIT has been going on for about three years. Increase in the percentage of VITAS hospice programs over those years has been slowed by the addition of so many new VITAS programs in the past five years. VITAS reasonably conditioned its CON on having CarePlanIT operational in Collier County by Year 2. Hope uses an "off-the-shelf" system, Misys, for its medical records. Unlike CarePlanIT customized for VITAS, Misys was not customized for Hope; nor is it specifically designed for hospice. Put simply, Hope's system is not "leading edge" information technology like CarePlanIT. Customized, leading edge, information technology is too expensive for Hope, as one would expect for a community-based hospice. Telecare VITAS' Telecare system is a centralized call center that answers the telephone calls for VITAS' programs after hours. There are several advantages to Telecare. Clinicians are available to answer questions immediately. The system uses defined criteria to determine if an after hours visit should be made. It divides responsibility between the decision-maker as to whether an after hours visit is needed and the RN who actually makes the visit. This division is advantageous because after hours care occurs at a time that is regarded by many as inconvenient. When the decision is made to undertake a visit, the local on-call RN is dispatched immediately. Many of VITAS' clinicians at the call center are fluent in Spanish and other languages minimizing the barrier that language can be at a moment of stress. Disaster Capability VITAS' IT systems have built-in redundancy. The main site is in a bunker in Miami above the 100 year floodplain in a facility that had been an AT&T switching center. The walls are three feet thick concrete. In addition, VITAS is running concurrent dual systems in Chicago and has 100% redundancy for all systems in a bunker in Phoenix, Arizona. The Miami site has generator capacity to run for two weeks without power but could be switched to Phoenix with little to no down time in the event of a disaster. VITAS' size gives it the advantage of the ability to bring in clinical personnel from other parts of the country should there be a disaster that displaces some staff. Outreach Programs There are no existing hospice outreach programs for the Jewish population in Collier County, but the special needs of Collier County Jewish hospice patients are being served by HON. Dr. Kinzbrunner championed the Jewish hospice initiative for VITAS. At hearing, he offered reasons why some Jewish people might be less likely to utilize hospice service than non-Jewish people. Through its educational and training programs, VITAS teaches staff to be sensitive to Jewish cultural and religious issues including understanding specific Jewish customs and traditions. VITAS also makes an effort to reach the Hispanic populations in the areas it serves. It has a significant number of Spanish speaking staff. Its experience in South Florida and Texas consists of work with highly concentrated Hispanic populations. Furthermore, VITAS offers all of its standard hospice forms and much of its educational materials in Spanish. The African American population in Collier County is not as high as other parts of the state; it constitutes 20,000, just less than 7% of the population. VITAS' efforts to educate and reach into minority communities is significant. Its staff is recognized in the industry as providing substantial resources to increase minority access to hospice. Collier County has a significant population of Veterans. The Department of Veteran Affairs has determined that in recent years the number of Veterans' deaths in the county has been approximately 1550 annually. Veterans have special needs at the end of life. These include unique psychosocial needs related to military service, retrieval and obtaining military awards and medals and coordination of military benefits to which patients and families may be entitled. VITAS has a well-developed, detailed program targeted to meet the special needs of veterans. Hope makes an effort to recognize and serve the special needs of Veterans as well. Its psychosocial staff must participate in a special training program designed to educate the staff on the needs of Veterans. Its "Wounded Warrior" program sensitizes Hope staff to the special needs of combat veterans as opposed to those who did not experience combat, the psychosocial needs of veterans of different wars, the special needs of women veterans and special needs of veterans suffering from post-traumatic stress disorder. Hope staff and volunteers, many of them veterans themselves, are trained to build a rapport with Veterans and to help them deal with guilt, anger and anxiety when associated with the Veteran patient's service. Hope regularly reaches out to the Veteran population through local veterans organizations such as the Veterans of Foreign Wars. The special needs of its patients who are Veterans are provided for in a number of other ways as well by Hope. HOPE Required Services Hope provides all of the required Medicare core services directly through its employees, including physicians. It also provides all of the required Medicare non-core services. Unlike some hospices, Hope provides home health aide services and homemaker services directly through its employees in order to better assist its patients and their families. Complementary Therapies Hope offers complementary therapies that enhance the quality of care and the quality of life for hospice patients. Hope offers music therapy through its six licensed music therapists. Other complementary therapies offered by Hope are art therapy, pet therapy and aromatherapy. Hope also offers massage therapy as part of its holistic approach to the care of its patients. Massage therapy can reduce the amount of pain medication that a patient requires and can help alleviate other symptoms as well. Non-required Services In addition to the required core and non-core services, Hope provides non-required services to its patients. They include residential care, a caregiver program for patients who do not have a caregiver at home or whose caregiver at home is not able to provide necessary home care services, and grief services beyond the scope of hospice bereavement services. Other non-required services offered by Hope include the "Dream a Dream" Program. Through this program, Hope patients with a final wish are assisted in making it a reality. Examples include fishing in a private fishing pond, providing plane tickets for far away loved ones to visit the hospice patient, and holding a wedding in the hospice house chapel to enable the Hope patient to attend. Hope has also provided funds for home improvements to make a patient's home more comfortable, providing memorial services conducted by a Hope chaplain at a Hope chapel free of charge to the family of a Hope patient. Hope exceeds the Medicare COP requirement that volunteers provide 5% of patient care. It has done so through special volunteer programs that include "vigil volunteers" sitting at the bedside of the patient, "video volunteers" who make video and audio remembrances for the family and "personal treasure volunteers" who make keepsake items for the family from an article of the patients clothing. Hope offers classes in Continuing Education (CEUs) to all nurses and social workers in the community. It has conducted workshops on coping with grief and loss during the holidays and presentations by Rabbi Kushner on loss and issues related to death and dying. Since 1990 Hope has offered an annual bereavement camp for children aged 6 to 16. The weekend camp is attended by about 70 children from across southwest Florida. Hope sponsors numerous programs designed to educate the physician community about hospice and special programs to help the community deal with specific tragedies or life events. These have included programs for families of service men and women deployed to the Middle East, a 9/11 support group and programs for persons dealing with stress and loss caused by hurricanes. Community Services and Programs Hope provides other community services not required for Medicare certification that are also not provided by HON or VITAS. Hope Life Care is a long term care diversion Medicaid-waiver program Hope provides together with AHCA and the Florida Department of Elder Affairs. PACC is a program for all-inclusive care for children who have a life-limiting illness but may not be eligible yet for hospice. Located in central Lee County, the HOPE Adult Day Health Center is available for elders who cannot be at home by themselves during the day and require a setting with limited supervision. Funded through the Area Agency on Aging, HOPE Connections is a continuing care for the elderly program designed to help frail elderly continue to live in their homes and avoid being admitted to a nursing home or hospital. These community-based non-hospice programs are consistent with Hope's mission of assisting all in need, especially the frail and the elderly who may not qualify for hospice services, across different levels of care that best meet their needs. They also enhance continuity of care for the those who ultimately qualify for hospice care and receive it from Hope. Hope's Clinical Services Hope has received numerous awards in recognition of the excellent quality of care it provides. There are other outward signs of the excellence of its quality of care. For example, it completed its most recent Medicare/Medicaid certification survey with no deficiencies. Hope is accredited by the Community Health Accreditation Program (CHAP) although not by JCAHO. CMS relies upon CHAP certification for participation in Medicare and Medicaid programs. Hope chose to seek accreditation through CHAP rather than JCAHO because of its view that CHAP's accreditation process is more stringent and comprehensive. Hope exceeds the voluntary standards established by NHPCO. It is also a participant in the NHPCO Quality Initiative, which requires a self-assessment as well as other activities related to quality assurance. Hope places emphasis on an individualized approach to every patient and family members over making printed materials available. Hope staff spends time with patients and family in order to establish an individualized plan of care. Hope's Admission Process Hope's Care Resources Department has a staff of 16 who handle the intake of patient referrals to hospice. The Department handles initial inquiries and coordinates the collection of medical records and the physician's order that certifies the patient's condition as terminal. This admission process ensures that the patient meets Medicare eligibility guidelines. All calls pertaining to patient referrals are taken by Hope immediately. Staff typically responds to a referral within 24 hours of request for services. After normal working hours and on weekends and holidays, the After Hours Triage Staff of local registered nurses responds to a referral as well as answering questions of families and dispatching staff, including on-call physicians, as needed. The referred patient is assigned to an inter- disciplinary care team (the "IDT Team") that will provide care for the admission visits, development of the patient's plan of care, and care thereafter. Having the IDT Team conduct admission visits provides the advantage of continuity of care. It fosters early development of a relationship between the IDT and the patient and family and promotes arrangements for the unique and special needs that a patient and family may have. Hope's Medical Team Hope's Medical Director, Mary Stegman, M.D., is board-certified in Hospice and Palliative Medicine, Pain Management and Internal Medicine. She is board-eligible in Hematology-Oncology. Hope employs five physicians other than Dr. Stegman including Dr.Guercio who is board- certified in internal medicine. Dr. Guercio is also board- eligible in pulmonary medicine and serves as the medical director of Joanne's House and the physician on one of Hope's IDT teams. Hope employs ten part-time physicians, including a surgical and pediatric specialist. Dr. Lipschutz is board certified in Hospice and Palliative Care Medicine. A liaison as needed to facilitate patient care discussions between Hope staff and community physicians, Dr. Lipschutz has been involved with Hope since 1992. Hope provides several different types of therapies not provided by other hospices. It has developed evidence-based algorithms for the care of its patients. They include specific clinical pathways or protocols for dealing with specific diseases or symptoms. Veteran Care All of Hope's psychosocial staff must participate in a special training program designed to educate them on the special needs of veterans. The "Wounded Warrior" program sensitizes Hope staff to the special needs of combat vs. non-combat veterans, the psychosocial needs of veterans of the different wars, women veterans, and veterans suffering the effects of post- traumatic stress disorder ("PTSD"). Hope staff and volunteers (many of whom are themselves Veterans) are trained to build a rapport with these veterans and to help them address the feelings of guilt, anger, and anxiety they may have. In addition, Hope nurses are trained to recognize the physical symptoms of patients with PTSD (such as terminal restlessness) and in effective methods to treat such symptoms. All of Hope's veteran patients are presented with a personalized certificate of appreciation and "Thank You letter" from Hope's CEO in a formal ceremony honoring their service to our country. Hope regularly reaches out to local veterans organizations such as the VFW and Knights of Columbus, and provides speakers to educate their members about hospice. Hope is successful in providing for the special needs of its veteran patients. Hope's Pastoral Counseling/Chaplaincy Program Hope employs 15 chaplains who provide spiritual support and counseling to patients and their families. As members of the IDT, Hope chaplains participate in the team meetings, provide resources to patients and families, and serve as an advocate for the patient. Team chaplains regularly consult with other members of the IDT as spiritual issues arise with individual patients or family members. When requested, Hope chaplains also perform memorial or funeral services for Hope patients. Hope chaplains serve as liaisons with community clergy and community leaders, and attend ministerial association meetings. Finally, Hope chaplains provide in-service training for other Hope staff, as well as for community clergy interested in learning about hospice care. All of Hope's chaplains have Masters of Divinity or masters degrees in religious training. All are ordained and certified by their faith group, and all must complete Hope's orientation, clinical training, and mentoring programs. In addition, many of Hope's chaplains have undergone CPE training. Following admission, every patient and the patient's family are visited by the IDT chaplain unless they decline such a visit. The chaplain assesses the spiritual care needs of the patient and family. Hope chaplains do not approach spiritual care in a "cookie cutter" fashion, since even persons of the same faith may have different spiritual needs. Rather, Hope addresses each patient's needs on an individual basis, and strives to meet those specific needs. For example, depending on the patient, Hope chaplains may provide active or passive counseling, life reviews, facilitate the resolution of problems among family members, join in prayer or read scripture. Spiritual care is available to Hope patients on a 24-hour/7-day per week. If a patient requests clergy of a particular faith, the IDT chaplain serves as a liaison to community clergy to ensure that the appropriate clergy visits the patient. Hope's interdenominational chaplains have successfully met the spiritual care needs of patients of a variety of faiths including Buddhism. All of Hope's chaplains are educated and trained in different faiths, including the Jewish faith. When a Hope patient wishes to be attended by a rabbi, those arrangements are made by Hope. Hope has a good relationship with all of the rabbis in its service area and provides excellent care to its Jewish patients. Many local rabbis serve on Hope committees, and some have provided training to Hope staff. Local rabbis also have participated in educational programs which Hope has presented or sponsored which touch upon grieving and mourning in a Jewish context, including lectures by authorities like Rabbi Grolman and Rabbi Kushner. Although Hope at one time sponsored a CPE Program, Hope now sponsors and participates in programs leading to certification by the Association of Death Educators and Counselors ("ADEC"). Persons completing the ADEC program are certified in thanatology (the study of death, dying, grief, and bereavement). Unlike CPE, ADEC certification is not restricted to chaplains, but rather is open to other IDT members, social workers, private therapists, school counselors and other professionals. For these reasons the ADEC curriculum is preferred by Hope over CPE. Hope's Bereavement Services Hope provides a comprehensive array of bereavement and grief counseling services. Each of Hope's IDT's includes a master's level social worker or bereavement counselor trained to assist the patient and family in addressing issues of grief and providing bereavement support. Volunteers who have received special training in helping persons cope with grief and loss are also involved in providing bereavement support. All patients receive a psychosocial assessment at the time of admission, which includes a bereavement assessment. That information is then provided to the IDT, and a determination made as to whether an "anticipatory grief referral" requiring immediate attention is necessary. If so, a counselor will visit with the patient and family within 24 hours to begin assisting the patient and family. Once the patient dies, another assessment is done of the patient's family and loved ones to determine whether early bereavement counseling is required, or whether the normal bereavement process will be followed. Ordinarily, three weeks following death, Hope counselors will contact all persons who have been identified by the IDT as significant in the patient's life to determine whether they would like to receive bereavement counseling, on either an individual or group basis. Letters are sent to family and significant others at 3 weeks, 3 months, 6 months, 12 months, and 15 months following the patient's death. Each of the letters includes an invitation to attend one of the many support group meetings offered by Hope, or to arrange for individual counseling if desired. About 800 persons attend one or more of the Hope-sponsored group sessions each month. Although Medicare guidelines require that bereavement support be provided for up to 13 months following the patient's death, Hope provides bereavement counseling for a minimum of 15 months and for as long as an individual chooses. Hope offers bereavement counseling and grief support to the community at large. This includes the Rainbow Trails Program, a camp for children ages 6 to 16 who have suffered a loss. Hope also offers a Healing Hearts Program which is specifically geared to persons whose loss is the result of a suicide, and another program for persons who have lost a same-sex partner, among others. Hope also offers special crisis response counseling for persons dealing with deaths in school or the workplace. If approved, Hope will provide excellent quality chaplaincy and bereavement programs for its patients in Collier County. Hope's Success in Staff Recruitment and Retention Hope has in its management several people who have obtained certification as Senior Professionals in Human Resources ("SPHR"). SPHR certification assures that these individuals have demonstrated expertise in the core principals of human resource practices such as staff training, development, performance management and assessing current as well as future workforce needs. Hope provides a benefits package which actually attracts new staff to seek employment with Hope. Hope provides quality education to its staff and has supervisory staff certified to assist new staff in achieving accreditation and certification, including certified hospice and palliative care nurses (CHPN). Hope provides cross-training, assistance, and management to avoid burn- out. Hope has considerable experience in recruitment in Southwest Florida. Hope recruits staff through advertising, job fairs and on-site recruiting at local schools. Hope has partnerships with Hi-Tech, Lorenzo Walker, Edison College and Florida Gulf Coast University (FGCU) for developing new nurses and social workers. Hope serves as a clinical site for student interns, who participate in rotations at Hope. These are primarily nursing students, but health care administration, social work and music therapy students also participate. Both Edison and FGCU have campuses in Lee and Collier Counties. HON and Hope currently compete for staff. Healthcare providers in Lee and Collier advertise and compete in both counties to recruit new staff. Hope has some staff living in Collier County. Numbers of staff members have worked for one of the two at one time and the other hospice at another time. The competition would intensify and the overlap increase if Hope's application is approved. Hope also has many employees living in the Bonita Springs area, close to Collier County. One is Dr. Guercio, the IDT physician for Team 100, which would help serve Collier County. He lives in Bonita Springs. Before joining Hope he practiced medicine in Collier County for over 20 years. Hope has not had any difficulties maintaining staff. Hope's salaries are in-line with other local healthcare providers, and Hope could successfully recruit the staff needed for its Collier County program. Hope's Proposed Program for SA 8B Hope will use contract facilities in Collier County for most of the GIP and respite services required by its patients in Service Area 8B. Hope plans to open at least one dedicated GIP unit in a nursing home within Collier County soon after approval of its application. Hope will also be able to enter into contracts for GIP with all four local hospitals. Hope's three hospice houses, moreover, will be available to meet some of the needs of the residents of Service Area 8B for GIP, respite and residential services. Hope has commitments in writing from two hospitals and two SNFs. These contracts will provide for coordinated care whenever a hospice patient is also a nursing home resident or a hospital patient. Hope has inpatient, nursing facility, and ambulatory care service contracts in areas accessible to patients in both Service Areas 8B and 8C. Hope's proposed Service Area 8B hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social services, and all other services required by state and federal law. Hope will provide services that are not reimbursed by Medicare or other insurance, such as bereavement and chaplain services, massage, music, art, and pet therapies. If approved, Hope will provide the required core and non-core services in its Collier County program as well as the non-required services it now offers in 8C and 6B. Hope currently operates in conformance with Medicare COPs and will do so should its Collier County program be approved. If approved, Hope will establish team offices in Bonita Springs, South Naples, and Immokalee. These locations will provide visibility for Hope's program and increase access to hospice services throughout Collier county. Joanne's House is located in Bonita Springs, less than two miles from the Lee/Collier County line. This new facility will be available and convenient to most northern Collier County patients requiring GIP, residential, and respite care. The IDT assigned to Hope's Immokalee office will serve the entire eastern region of Collier County. This office will be approximately 25 miles from Hope's Lehigh office and therefore convenient if staff are needed to travel between those offices. In addition to servicing the IDT, the Immokalee location will also be available for volunteer training, bereavement support meetings and providing information about hospice. Like Service Area 8C, Service Area 8B is also culturally diverse. As with its Service Area 8C program, Hope will also be successful in addressing the special needs of the culturally diverse communities of Service Area 8B. Hope's startup experience in Collier County will differ from the startup of its Service Area 6B program, where Hope served the more rural areas first. As noted, Lee and Collier counties are contiguous and continuous and Hope already has a substantial presence in Collier County, including its long term care diversion program, staff and volunteers who live there, and the numerous existing relationships with physicians, hospitals, nursing homes, and ALFs. Hope will be even more successful in expanding its hospice program into Collier County. Since they are frequently in Collier County on a regular basis, Hope's key leadership staff are familiar with Collier County and will be available to assist with Hope's Collier startup. If approved, Hope will be successful in implementing its proposed hospice program. Hope has the manpower, expertise and know-how to successfully implement a quality program in Collier County. Community Support for Hope Hope's application is supported by at least 133 local letters of support submitted to AHCA. A number of the letter writers testified by deposition in support of the application. They include hospital CEOs; the CEOs of SNFs, ALFs and other elder services; heads of regional businesses; and other involved in Collier County community organizations. The Lee and Collier County communities are related. The business and residential corridor is continuous between the two counties and there is no visible demarcation between them. Many businesses that operate in Lee also operate in Collier. Over the years, Hope has developed relationships with community leaders whose business serve both counties. Hope has volunteers who live in Collier County and has identified others who would volunteer for Hope if its application is approved. There are several physician group practices with offices and hospital practices in both Lee and Collier County. Hope has relationships with physicians located in Bonita Springs and northern Collier County whose practices include residents of both Lee and Collier counties. These physicians include oncologists, cardiologists, pulmonologists, gerontologists, and family practitioners, many of whom refer patients to Hope. Hope staff are familiar with Collier County health care providers and it enjoys a good reputation in Collier County. Through the Hope Life Care Program, Hope has contracts with two SNFs and seven ALFs in Collier County. A number of Collier County SNFs have transferred patients to Joanne's House. Naples Community Hospital and two HMA hospitals in Collier County have indicated intention to enter contracts for GIP with Hope if its application is approved. Underserved Groups? In its CON Application, Hope identified four groups in Service Area 8B it claims to be underserved. One of the groups is "patients under the age of 65." Hope's proof that the group is underserved consists of a comparison between historical deaths for the group to projected admissions for the group. Although the Hospice Program Rule uses this approach in its formula for calculating the Fixed Need Pool, the approach does not support the conclusion that existing providers have not historically been accessible to a particular demographic cohort or that the group suffers due to a gap in service. As Mr. Davidson opined at hearing, the approach: could suggest that there is [a gap in service]. But the data [relied on by Hope]. . . do not provide any kind of a reliable basis for . . . substantial levels of underservice . . . with rare exceptions. And this case is not one of those exceptions. (Tr. 3698). In order to establish the existence of a service gap using a penetration rate as the measure, it is necessary to compare historical deaths to historical admissions. Hope did not do so. Its comparison of historical deaths to projected admissions renders unpersuasive its claim that patients under the age of 65 are underserved in Collier County. Hope claims there are other underserved groups: (1) cancer patients in need of palliative chemotherapy and/or palliative radiation (PC/PR); (2) residents of the Immokalee area, and (3) patients needing access to hospice services during periods before and after hurricanes. Patients in Need of PC/PR The claim that there is an underserved group of patients in need of PC/PR in Collier County is problematic. The Agency does not have a standard for evaluating the appropriateness of PC/PR; nor is there a standard universally accepted in the hospice industry. In the absence of a standard, the propriety of using PC/PR in any one case, therefore, is up to the clinician. Whether it goes forward, too, is additionally dependent on patient choice. Patient choice requires adequate information and understanding on the part of the patient and family, in other words, "fully informed choice." Hope relies on its level of spending on PC/PR compared to levels of spending elsewhere to support its claim that there is a gap in PC/PR service in Collier County. Hope has spending on PC/PR that is high compared to other hospice programs. Hope attributes the high levels to its Open Access Model of Care, a model that reveals, in its view, need for PC/PR that might not be discovered in service areas without a provider that follows the Open Access Model. Comparing PC/PR delivered in different service areas on the basis of dollars spent or volume of patients receiving PC/PR, however, is not sufficient to show that PC/PR is required more often in service areas in which less is spent on PC/PR. The record in this proceeding does not show that Hope patients were inappropriately provided PC/PR. Nonetheless, it does not support the level of PC/PR service provided to Hope patients either. Hope did not provide case-by-case clinical evidence that its PC/PR service were required. Furthermore, and most significantly, Hope did not submit clinical evidence that patients in need of PC/PR in Collier County did not receive it. Both applicants indicate they will provide PC/PR to patients in need of such service. Only VITAS, however, agreed to a condition of its CON to have patient records audited to determine that receipt of the service was supported by fully informed choice. Immokalee The Immokalee area is a low income migrant community. Predominantly Hispanic, Immokalee also has a Haitian Creole community. Much of the population lacks education. Hope proposes to establish an office in the Immokalee area. It would serve the entire eastern Collier County area and will be a center where people can come for volunteer training, for bereavement support meetings, and for getting information about hospice care. Hope plans to locate an IDT in Immokalee. The IDT will serve the county's eastern region. From a service perspective, HON views Immokalee as part of North Collier County. North Collier County includes north Naples, portions of Bonita Springs located in Collier County, Immokalee, Golden Gate, and adjacent rural areas. North Collier County is served by HON's Central and North Teams. The Central team is a specialty team that sees only patients residing in nursing homes or ALFs. The North Team sees patients receiving home care and who are residing in their homes, halfway houses or anywhere else their home may be. HON has two offices to serve North Collier County; the North Branch Office located about 1/2 miles from the Collier/Lee County line, and an office located in Immokalee. HON's presence in Immokalee, however, has not been constant since it was first initiated. The office had been opened and then closed before being opened again. HON opened the North Branch Office in 2003. It accommodates the North Interdisciplinary Team. The office has two suites, appropriate signage, and ample space to accommodate the IDT and various groups who meet there for bereavement and other events. The geographic location of the North Branch Office is appropriate to allow the team members to reach Immokalee. But it would be a service improvement for an IDT to be located in Immokalee as proposed by Hope. HON's office in Immokalee is located in the Career and Service Center, also known as the "One Stop." The One Stop consists of approximately nine different social service organizations located in one building. The One Stop is considered a key location in Immokalee. Immokalee residents can access the services of the Department of Children and Families, as well as food stamps, Medicaid, employment and vocational-rehabilitation services. By having its office located in the One Stop, people are easily able to access information on end-of-life care services. As a tenant of the One Stop, HON's hospice office has use of the One Stop conferences rooms, which have capacity for over 200 people. HON uses the conferences rooms to hold different functions, such as volunteer training or seminars on coping with the holidays. HON's ADC for the north Collier area is 50-60 patients, and of those, the Immokalee area has an ADC of approximately 6-7 patients. The North Team is staffed and organized to deliver direct hands-on hospice care to Immokalee and adjacent rural areas, especially to the Hispanic population. The North Team includes 5 RNs, two social workers, a chaplain, four home health aides, a volunteer coordinator, a physician, a bereavement counselor, an RN clinical manager, and a clinical assistant. Staffing ratios are 10 patients per RN, which is a more intense level of staffing and patient care than the prevailing NHPCO guidelines of 12 patients per RN. The Team includes an additional RN who is a pediatric nurse specialist and who speaks Creole and Spanish. Seven of the IDT members of the North Team are bilingual. Fluency in Spanish, French, and Creole allows North Team clinicians serving this area to directly communicate with patients, a better alternative than resort to non-clinician employees or telephonic language services. When not deployed in the field visiting patients, the Team uses the north branch office and the Immokalee branch office. Three of the nurses and two of the certified home health aides on the North Team are certified in Hospice and Palliative Care. The sparse populations in large portions of the North Team's service area has not justified in HON's view the addition of a third branch office in North Collier County. All HON patients and families receive a Caregivers Guide, either in a Spanish or English version. In addition to general patient care information, which is reviewed and re-reviewed with the patients and families by IDT members, the Guide includes a number where hospice clinicians can be reached 24 hours a day, 7 days a week. HON's Immokalee office is staffed with a full time community resource coordinator, whose primary function is to support the communities in Immokalee. HON's resource coordinator is the contact person for education, referrals and access to HON's services in Immokalee. She speaks English and Spanish. Another role of the resource coordinator is to provide bereavement support to the community. The resource coordinator facilities a monthly bereavement community support group for grief and loss in Immokalee. She also recruits volunteers from Immokalee. Immokalee residents primarily get their information by word of mouth. HON has been successfully involved in Immokalee social service events, not only to support the community, but also to provide education and information to the different social service organizations and the participants of the programs. HON's presence in Immokalee has made it easier for people to develop a rapport and dialogue regarding the end-of-life care issue. HON's community resource coordinator in Immokalee is an active member of the Immokalee Interagency Council, the Weed and Seed initiative, and the HIV and AIDS Network Coalition for Collier County. The Immokalee Interagency Council consists of over 90 different agencies, which provide services in the Immokalee Community. The Council meets monthly. Their general purpose is to inform the community and the other organizations of their individual services. The Immokalee Weed and Seed initiative is a federal government, juvenile justice initiative that was provided to the Immokalee community to better establish relations between community residents and law enforcement. It is in its fifth and final year. The HIV and AIDS Network Coalition for Collier County is a committee comprised of individuals that come together from different medical and social service organizations to better understand and meet the needs of the Immokalee community. The involvement by HON's community resource coordinator in these important organizations promotes awareness of hospice services. When an emergency such as a hurricane is declared in Immokalee, HON's community resource coordinator reports to the hurricane shelter in Immokalee. Seventy-two hours before a hurricane, she is provided with a list of HON patients. Her role is to maintain contact with HON home care staff, and if they are unable to make contact with a hospice patient during that time, she will physically check on the patient and report back to the main office. All services provided by HON are available to the residents of Immokalee. HON provides information on hospice services to the library, for distribution to the public, on a regular basis. The Immokalee Friendship House is a temporary emergency homeless shelter in Immokalee that serves as a referral source for the community. Annually it assists approximately 1,000 homeless families and individuals. Friendship House has 8 to 15 residents per year who are HON hospice patients. HON has never declined to see a hospice patient at Friendship House or declined to deliver care there. Immokalee Friendship House is completely satisfied with Hospice of Naples. Their clients are well taken care of by HON. From Friendship House's perspective, HON is one of the stronger agencies in Immokalee. HON's community resource coordinator comes to the Immokalee Friendship House for individual and group bereavement counseling. She has also provides bereavement training to the Friendship House staff. Despite HON's efforts toward serving residents of the Immokalee area, they have less access to hospice than do residents of the more urban portions of Collier County. Hope would be able to serve Immokalee through its new local office, through the use of contracted inpatient beds in Lehigh and their planned new hospice house. These locations would provide a real option to hospice patients from Immokalee as evidenced, for example, by travel patterns from the Immokalee area. They trend toward Lehigh and Fort Myers rather than to Naples. Collier Health Services is a not-for-profit primary care provider with multiple locations throughout Collier County. It operates a primary care clinic in Immokalee, provides about half of all services provided AIDS/HIV patients in the county and is part of a program to bring Florida State University medical students to Immokalee for training in rural family medicine. Collier Health Services has indicated a willingness to coordinate care with Hope in the Immokalee community and believes it would be a good relationship based upon past experience with Hope. Hope criticizes HON's commitment to Immokalee because of the lack of a continuous presence there as shown by the opening, closing and the re-opening of its office. But a continuous presence by Hope is not guaranteed either. It conditioned its application on opening "an office in the first year of operation." Hope Ex. 1, Schedule C. To show conformance with the condition, as a special feature of the condition, Hope promised to forward to the Agency copies of the business license and/or certificate of occupancy that show occupation of office space in Immokalee during the first year of operation. Neither the condition nor the special feature of the condition guarantees that Hope's office in Immokalee will be present after the first year of operation. Nonetheless, Hope's presence if continuous, would aid and enhance effective service of the Immokalee community's hospice needs. Hope conditioned its application on having an office in Immokalee but so did VITAS. Unlike VITAS, Hope has a history of serving rural areas in Florida. However much Hope's presence would enhance service to the Immokalee area, the evidence is unpersuasive that the Immokalee area is underserved. HON efforts to serve the Immokalee area are effective. Patients in Need of Service When Disaster Strikes Hope's claim that there have been underserved patients in Collier County in times of disaster is based on events associated with Hurricane Wilma. The eye of Hurricane Wilma made landfall just south of Naples in Collier County on October 24, 2005. The impact of the storm was greater in Collier County than it was in Lee County. More services were interrupted and more people were without power and transportation in Collier County than in Lee County. In Collier County, "all of the government services and most community agencies, physicians' offices, . . . were shut down and . . . went into lockdown mode." Tr. 3462. During the hurricane and in its wake, HON continuously operated the Georgeson House. It accommodated the needs of 23 patients who were relocated to the House right before the arrival of the storm. The Georgeson House is rated to withstand a Category 4 hurricane and can accommodate up to 32 patients with all the equipment, supplies and staff to support those patients in an emergency. In the event of evacuation, HON has an agreement with Physicians Regional Hospital, about 1/8th of a mile from Georgeson House to relocate the patients to hospital beds. For a five-day period, two days before the arrival of the hurricane, the day of the storm and the two days after, HON received no referrals. Consequently, it admitted no patients from October 22 through October 26, 2005. Had it received referrals during the five days, HON was accessible and had the ability to admit patients. On the day the hurricane made landfall and for the two days afterward, in addition to the service provided at the Georgeson House, HON contacted its patients by telephone. As soon as the authorities allowed road travel, HON was able to visit its patients. It visited the majority within 48 hours of the storm event. Hope admitted approximately 20 patients during the same five-day period. In Lee County, there was only a short time that Hope was not able to admit or visit patients. It ended shortly after Hurricane Wilma made landfall when the emergency operations center announced that road travel was safe. Hope has a detailed Disaster Management Plan. See Hope Ex. 1, CON 9967 Vol. 2, Supplementary Appendices, Tab 22. In the event of a Disaster Watch, the plan dictates, "Admissions to Hope Hospice and Hospice Houses will be discontinued." Id., I. Disaster Watch, 1. e. iii. There is no persuasive evidence that had Lee County suffered the same impact that Collier County did from Hurricane Wilma that it would have been able to respond any better than HON did in October of 2005. There is, in short, no evidence that there has been unmet need for hospice services by disaster victims in Collier County. Utilization Projections and Financial Feasibility Each Applicant's projected utilization appears reasonable and achievable. Each applicant demonstrated short-term and long- term financial feasibility. Medicaid Patients and the Medically Indigent Both Hope and VITAS have documented a history of service to Medicaid and medically indigent patients. Hope will serve Medicaid patients and the medically indigent if its application is approved. So will VITAS.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration approve CON 9969, an application for a new hospice program in Service Area 8B filed by VITAS Healthcare Corporation of Florida, and deny CON 9967, an application for a similar program filed by Hope Hospice and Community Services, Inc. DONE AND ENTERED this 3rd day of March, 2008, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 2008
The Issue Whether the Certificate of Need (CON) applications filed by Odyssey Healthcare of Collier County, Inc., d/b/a Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and HPH South, Inc. (HPH), for a new hospice program in the Agency for Health Care Administration (AHCA or the Agency) Service Area 5B, satisfy, on balance, the applicable statutory and rule review criteria to warrant approval; and whether such applications establish a need for a new hospice based on special circumstances, and, if so, which of the two applications best meets the applicable criteria for approval. Holding: Neither applicant proved the existence of special circumstances warranting approval of an additional hospice program in Service Area 5B. Although neither application is recommended for approval in this Recommended Order, both applicants, on balance, satisfy the applicable statutory and rule criteria. Of the two, HPH best satisfies the criteria.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Subsection 408.034(1), Florida Statutes. HPH HPH is a newly created not-for-profit corporation formed to initiate hospice services in Pinellas County. HPH is a wholly-owned subsidiary of Hernando-Pasco Hospice, Inc., d/b/a HPH Hospice and is one of the oldest, not-for-profit community hospices in Florida. HPH Hospice was incorporated in 1982 to serve terminally ill persons within Hernando and Pasco Counties. HPH was approved to expand its services north to Citrus County in 2004. HPH is a high-quality provider of hospice services in the service areas where it currently operates. It provides pain control and symptom management, spiritual care, bereavement, volunteer, social work, and other programs. HPH employs a physician-driven model of hospice care, with significant involvement of hospice and palliative care physicians who are physically present treating patients in their homes. The number of physician home visits provided to hospice patients by HPH physicians is larger than many hospices in Florida and throughout the United States. In 2009, HPH provided over 35,000 visits by physicians, advanced registered nurse practitioners, and licensed physician assistants to its hospice patients. The majority of these visits occurred in the patients' homes. HPH operates multiple facilities that allow for provision of services to patients in various settings and hospice levels of care. Among its facilities, HPH operates four buildings it calls Care Centers, at which patients can receive general in-patient care. Additionally, HPH operates four units which it calls Hospice Houses. Those units provide for residential care in a home-like environment for patients who do not have caregivers at home or who otherwise are in need of a home. HPH receives no reimbursement for room and board for the care provided at its Hospice Houses and expends over $1.4 million annually in charity care to operate these Hospice Houses for the benefit of its patients. HPH has an established record of providing all levels of hospice care and does not use its Care Centers as a substitute for providing continuous care in the patient's home when such care is needed. Annually, HPH provides approximately percent of its patient days for continuous care patients. HPH has well-developed staff education and training programs, including specialized protocols for care and treatment of patients by terminal disease type such as Alzheimer's, COPD, cancer, failure to thrive, and pulmonary diseases. Odyssey Odyssey is the entity applying for a new hospice program in Service Area 5B. The sole shareholder of Odyssey is Odyssey HealthCare Operating B, LP, which is a wholly-owned subsidiary of Odyssey HealthCare, Inc. (OHC), Odyssey's parent and management affiliate. Odyssey was formed for the purpose of filing for CON applications in Florida and, thereafter, for owning and operating hospice programs in Florida. OHC is a publicly-traded company founded in 1996 and focuses on caring for patients at the end of life's journey. OHC's sole line of business is hospice services. OHC's patient population consists of approximately 70 percent non-cancer and 30 percent cancer patients. OHC is one of the largest providers of hospice care in the United States. OHC has approximately 92 Medicare-certified programs in 29 states, including established programs in Miami-Dade (Service Area 11) and Volusia (Service Area 4B) Counties and a start-up program in Marion County (Service Area 3B), which was licensed in January 2010. Over four years ago, OHC was the subject of an investigation by the United States Department of Justice that ultimately resulted in a settlement and payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of any wrongdoing by OHC. As part of the settlement, OHC entered into a corporate integrity agreement (CIA) with a term of five years. Odyssey is now in the final year of the CIA. The settlement and CIA allow OHC to self-audit to ensure compliance with the Medicare conditions of participation, which is the first and only time the OIG has allowed a provider to self audit. Suncoast Suncoast is a large and well-developed comprehensive hospice program serving Pinellas County, Service Area 5B. Suncoast is the sole provider of hospice services in Service Area 5B. According to data reported to the Department of Elder Affairs, Suncoast had 7,375 admissions and provided 795,102 patient days of care in 2009, more than any other Florida hospice. In that same year, Suncoast provided 115,247 patient days of care in assisted living facilities, the third highest total in Florida. Suncoast considers itself a model for hospice across the United States and the world. Suncoast has a large depth and breadth of programs, including community programs offered by its affiliate organizations, such as the AIDS Service Association of Pinellas County, the Suncoast Institute, and Project Grace. Suncoast is active in the national organization for hospices and interacts with programs that use it as a model and resource. Unlike the applicants, Suncoast does not use the Medicare conditions or definitions to limit or define the scope of services it provides. Under the Florida definition, hospice is provided to patients with a life expectancy of 12 months or less. HPH, by way of contrast, uses the Centers for Medicare and Medicaid Services definition for hospice, i.e., a prognosis of six months or less. Overview of Hospice Services In Florida, hospice programs are required to provide a continuum of palliative and supportive care for terminally ill patients and their families. Under Florida law, a terminally ill patient has a prognosis that his/her life expectancy is one year or less if the illness runs its normal course. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice benefits if their life expectancy is six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, including nursing, social work, pastoral care or counseling, dietary counseling, and bereavement counseling. Physician services may be provided by the hospice directly or through contract. Hospices are required to provide four levels of hospice care: routine, continuous, in-patient, and respite. Hospice services are furnished to a patient and family either directly by a hospice or by others under contractual arrangements with a hospice. Services may be provided in a patient's temporary or permanent residence. If the patient needs short-term institutionalization, the services are furnished in cooperation with those contracted institutions or in a hospice in-patient facility. Routine home care comprises the vast majority of hospice patient days. Florida law states that hospice care and services provided in a private home shall be the primary form of care. Hospice care and services, to the extent practicable and compatible with the needs and preferences of the patient, may be provided by the hospice care team to a patient living in an assisted living facility (ALF), adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. A resident or patient living in an ALF, nursing home, or other facility, who has been admitted to a hospice program, is considered a hospice patient, and the hospice program is responsible for coordinating and ensuring the delivery of hospice care and services to such person pursuant to the statutory and rule requirements. The in-patient level of care provides an intensive level of care within a hospital setting, a skilled nursing unit or in a freestanding hospice in-patient facility. The in- patient component of care is a short-term adjunct to hospice home care and home residential care and should only be used for pain control, symptom management, or respite care in a limited manner. In Florida, the total number of in-patient days for all hospice patients in any 12-month period may not exceed 20 percent of the total number of hospice days for all the hospice patients of the licensed hospice. Continuous care, similar to in-patient care, is basically emergency room or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care, like in-patient care, was designed to be provided for short amounts of time, usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. Respite care is generally designed for caregiver relief. It allows patients to stay in hospice facilities for brief periods to provide breaks for the caregivers. Respite care is typically a very minor percentage of overall patient days and is generally designed for caregiver relief. Medicare reimburses the different levels of care at different rates. The highest level of reimbursement is for continuous care. Approximately 85 to 90 percent of hospice care is covered by Medicare. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a terminally ill patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. There is no "bright line test" as to what constitutes palliative care and what constitutes curative care. The determination is made on a case-by-case basis depending upon the facts and circumstances of each such case. However, palliative care generally refers to services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary group consisting of physicians, nurses, social workers, and various counselors, including chaplains. There are certain services required by individual hospice patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are also more complicated and expensive non-covered services, such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Suncoast provides, and both Odyssey and HPH propose, to provide hospice patients with all of the core services and many of the other services mentioned above. Fixed Need Pool The Agency has a numeric need formula within its rule for determining the need for an additional hospice program in a service area. See Fla. Admin. Code R. 59C-1.0355(4)(a). When applying the formula in the present case, AHCA ultimately determined that the fixed need was zero for the second batching cycle of 2009. In the absence of numeric need, an applicant must document the existence of one of three delineated special circumstances set forth in Florida Administrative Code Rule 59C-1.0355(4)(d), i.e., (1) That a specific terminally ill population is not being served; (2) That a county or counties within the service area of a licensed hospice program are not being served; or (3) That there are persons referred to hospice programs who are not being admitted within 48 hours. Absent numeric need or one of the delineated special circumstances, there cannot be approval of a new hospice program. In forecasting need under the hospice rule's methodology, AHCA uses an average three-year historical death rate. It applies this average against the forecasted population for a two-year planning horizon. AHCA also uses a statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The statewide average penetration rate is subdivided into four categories: cancer over age 65, cancer under age 65, non-cancer over age 65, and non-cancer under age 65. The projected hospice admissions (based on death rate and projected population growth) in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceed 350, a new hospice is warranted, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for two years. In the instant case, AHCA's final projections showed the net un-met need for hospice's admissions in Service Area 5B was 318, i.e., below the threshold amount of 350 necessary to establish need for an additional hospice program. The fixed need pool for the purpose of this administrative hearing is zero. HPH is primarily basing its determination of need for a new hospice on its contention that there are three specific terminally ill population groups in Pinellas County that are not being served. Odyssey is primarily basing its determination of need for a new hospice on its contention that there are persons being referred to the existing hospice program in Pinellas County who are not being admitted within 48 hours. The Proposals HPH's Proposal HPH proposes to establish its new hospice program in Pinellas County, Service Area 5B. HPH is currently licensed to provide hospice care in three contiguous sub-districts north of Service Area 5B, i.e., in Hernando, Pasco, and Citrus counties. HPH's corporate headquarters is located in Pasco County, ten to 15 minutes from the Pinellas County border. HPH currently operates a home health agency in Pinellas County. HPH's CON application identifies special circumstances justifying approval of its proposal, including four sub-populations of terminally ill persons who are currently underserved in Service Area 5B: (1) patients living in ALFs; (2) patients requiring continuous care; (3) medically complex patients; and (4) patients not being admitted within 48-hours. Another circumstance identified by HPH to support approval of its application is the fact that Pinellas County is one of the most populous and most elderly service areas in the State, and yet, it only has a single hospice provider. HPH argues that the fact Suncoast is a sole hospice provider for the service area exacerbates and contributes to the problems of gaps in available hospice services to the specific terminally ill sub-populations identified in its CON application. HPH proposes a de-centralized model of hospice service delivery similar to its model in the three contiguous counties where HPH presently provides hospice services. HPH proposes contracting with existing nursing homes and hospitals for in-patient beds ("scatter beds") throughout Service Area 5B. HPH then projects that it could offer in-patient services in the local neighborhoods of patients and families where they live, as opposed to transferring patients to a single in-patient facility for the provider's convenience. As census increases, HPH commits to establish, by month seven of operation, a dedicated in-patient unit to provide in-patient level of care and Hospice House residential care to patients in a home-like environment. Like its hospice operations in Hernando, Pasco and Citrus Counties, HPH proposes to implement its "physician- driven" model of hospice care in Service Area 5B, allowing for greater involvement of physicians in the care and treatment of hospice patients, including physician home visits. Odyssey's Proposal Odyssey proposes to address lack of competition2 in Service Area 5B and the special circumstance of patients not being admitted within 48 hours of referral. Under AHCA's hospice rule, an applicant may demonstrate the need for a new hospice provider if there are persons referred to a hospice program who are not being admitted within 48 hours. However, the applicant must indicate the number of such persons. Odyssey relies upon referral of admission statistical information previously provided by Suncoast to a sister Odyssey entity in a 2005 hospice CON matter. Suncoast at that time provided three years of data that demonstrated between 1,700 (31 percent of admissions) and 2,300 (38 percent of admissions) of patients admitted to Suncoast were admitted 72 hours or more after referral. The definition of referral by Suncoast, however, differs from the definition of referral relied upon by Odyssey. (See Paragraph 56, herein.) Odyssey also provided letters of support from the community to further evidence the existence of the 48-hour special circumstance. However, the letters of support originally appeared in an application filed by Odyssey in 2007 and were not given any weight in the instant proceeding based on their staleness. Odyssey also contends that the existence of a sole provider in Service Area 5B has created a monopolistic situation in the service area. It further contends that the lack of competition has led to the existence of a 48-hour special circumstance in Service Area 5B. Approval of Odyssey's application will, it says, eliminate the monopoly currently existing in Service Area 5B and will address the lack of competition currently occurring in Service Area 5B. Subsection 408.045(2), Florida Statutes, speaks of a "regional monopoly," but there is no credible evidence in the record to suggest that Suncoast's position as a sole provider in Pinellas County constitutes a "regional monopoly." Facts Concerning Special Circumstances Arguments Service Area Demographics Hospice Service Area 5B, Pinellas County, is a single-county hospice service area with a population of approximately one million residents. Pinellas County is currently ranked as the fourth largest county in the State in total numbers of elderly persons over 65 years of age, as well as elderly persons over 75 years of age, behind only Miami-Dade, Broward and Palm Beach Counties. Pinellas County also experienced the fourth highest number of total deaths in the State in 2008--11,268. Pinellas County's mortality rate in recent years has slowed. However, even considering a slower growth rate in the number of deaths, Pinellas County likely will remain the fourth largest county in the State in both elderly population and number of deaths through 2015. Although it is the fourth largest service area in terms of likely hospice patients, Suncoast is the sole hospice provider in Service Area 5B. By contrast, the other three largest service areas all have multiple hospice programs to serve their large elderly populations with eight providers in Service Area 11 (Miami-Dade), five providers in Service Area 10 (Broward), and three providers in Service Area 9C (Palm Beach). In assessing the extent of utilization of hospice services in Service Area 5B, HPH through its health planner, Patricia Greenberg, noted that Suncoast appears to have over-stated its utilization rate in its semi-annual reports to AHCA. Ms. Greenberg testified that Suncoast's AHCA data includes patients who are not truly hospice patients and are, instead, patients who are participating in non-hospice programs operated by Suncoast, including palliative care programs known as "Suncoast Supportive Care" and "Hospital Support." The number of such patients was not quantified by Ms. Greenberg.3 Suncoast counters that it does not let the conditions of participation define the scope and breadth of hospice services it offers. Suncoast tries not to be defined by the Medicare conditions of participation and has programs that are not covered by the benefit, including but not limited to its residential care at Woodside and its caregiver services. Specific Terminally Ill Populations HPH identified as under-served in Service Area 5B medically complex patients with complex medical needs, including multiple IVs, wound vacs, ventilator, complex medications, or acutely uncontrolled symptoms in multiple domains. These are the same kinds of patients who would require continuous care within their homes. Hospice patients have become more highly acute in recent years. More patients are being discharged from hospitals with highly complex medical conditions, often directly from hospital intensive care units. Patients discharged directly from hospitals tend to have higher acuity levels. Ms. Greenberg reviewed Suncoast's data on hospital discharges and found Suncoast statistically lags behind HPH in caring for medically complex patients discharged from hospitals. Looking at a three-year average, HPH had 3.7 percent of its hospice discharges directly admitted from hospitals, compared to percent for Suncoast. This is more than a 50-percent deviation between hospital discharges to hospice for HPH versus Suncoast. However, a comparison of Suncoast to HPH does not establish that there is a specific underserved population in Service Area 5B which is not receiving services. One case manager testified to sometimes not being able to timely find hospice placements for medically complex patients. Such patients would then have to be transferred from the hospital to a nursing home or rehabilitation facility. However, she did not testify that this specific terminally ill population was not being served, only that they were being served somewhere other than in an in-patient hospice bed. Medically complex patients, including those needing continuous care, were another specific terminally ill population identified by HPH. At page 54 of her deposition, Deborah Casler, a case manager at Helen Ellis Hospital, addressed those populations, saying, "[w]hat I am going to say is if anybody needed continuous care through Suncoast, it would happen, but it wasn't always a quick and easy process." HPH compared its percentage of continuous care patient days with Suncoast, showing that HPH had more. That does not equate to an absence of service for any specific terminally ill population. HPH attempts to create a presumption that services are not being provided by conditioning its application on a certain percentage (3 percent) of days for continuous care patients. That is merely a projection of intent; it is not evidence that a certain population is not currently being served. Assisted Living Facility Residents HPH provided anecdotal evidence that some ALFs in Pinellas County were not pleased with the services being provided by Suncoast. One ALF administrator was dissatisfied that Suncoast took a long time to admit her resident (but the resident was ultimately admitted). Another was disappointed with Suncoast because it took a long time to get medications for her resident. Another felt like Suncoast's quality of care was inferior. HPH provides a greater percentage of hospice services to ALF residents in Pasco (12.7 percent), Hernando (26.5 percent), and Citrus (23.5) counties than Suncoast provides to ALF residents in Pinellas County. There are approximately 215 ALFs in Pinellas County of varying sizes, i.e., from three beds to almost 500 beds. Suncoast did not provide services to all of them. There was no showing, however, that any resident of an ALF who needed or requested hospice services was denied such care. None of the evidence presented by HPH establishes the existence of a group of ALF residents who were not being served in the service area; nor does the evidence prove that any specific ALF residents are, in fact, terminally ill. The 48-Hour Admission Provision Neither Suncoast, nor Odyssey presented any hard data on timeliness of admissions. In fact, none of the parties could agree as to what action constitutes an admission. Suncoast says an admission must include a physician order and a consent by the patient and family. Odyssey identifies a referral as a telephone call from a family member, even if the call is simply an inquiry as to what services might be available. Odyssey says that the majority of its patients are admitted within three hours of referral and at least 80 percent are admitted within 24 hours. During that three-hour time frame, Odyssey will contact the family, contact the physician in order to evaluate and admit, if appropriate, screen the patient to ensure he or she meets the eligibility guidelines, go out and meet with the family, and provide support while necessary information is being gathered. HPH candidly admits that the issue of admissions within 48 hours does not, in and of itself, justify the approval of a new hospice program in Service Area 5B. However, HPH argues, it is an element of hospice services that HPH would do better than the other parties. There is no credible evidence in the record that an identified number of persons in Pinellas County had not been admitted to hospice within 48 hours of referral. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1 through 5: Commitment to serve populations with unmet need.-- There is no numeric need in this matter. Neither applicant proved the existence of a population with unmet need. Commitment to provide in-patient care through contract with existing health care facilities.-- Both HPH and Odyssey intend to use scatter beds and to contract with existing health care providers. Commitment to serve homeless and AIDS patients, as well as patients without caregivers.--Both applicants have shown a history of serving such groups and commit to do so in Pinellas County. Not Applicable. Commitment to provide services not covered by insurance, Medicare or Medicaid--Both applicants have a good history of providing indigent care and commit to do so in Pinellas County. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. The state health plan addresses the concept of letters of support. Again, as neither applicant proved special circumstances warranting approval of a new hospice program, this comparison is unnecessary. However, there was considerable testimony and argument at final hearing concerning letters of support and the issue deserves some discussion. Each applicant provided letters of support. In fact, HPH's application contained over 250 letters of support from a wide range of writers, including physicians, nurses, ALF and nursing home administrators, and others. AHCA even complimented HPH's letters of support in both quantity and quality. Such letters are, of course, hearsay and cannot be relied upon to make findings as to the statements made herein. However, the fact that HPH generated so many letters of support is a fact that lends additional credence to their application. Odyssey's letters of support, by comparison, were much fewer in number. The letters were also dated, having come from a CON application filed some three years prior to the application currently at issue. The content of those letters would also be hearsay. And in the present action, the age of the letters would reduce their significance as support for the Odyssey CON application at issue. Statutory Review Criteria The Agency reviews each CON application in context with the criteria set forth in Subsection 408.035(1)(a) through (j), Florida Statutes: Subsection 408.035(1)(a), Florida Statutes--The need for the health care facilities and health services being provided There was no need projected by AHCA under its need methodology. Neither party established the existence of special circumstances warranting approval of a new hospice program in Service Area 5B. Subsection 408.035(1)(b), Florida Statutes-- availability, quality of care, accessibility, and extent of utilization Suncoast is the sole provider of hospice services in Service Area 5B. This service area is one of the largest in the State. There are other service areas which have a single hospice provider, but Service Area 5B is the largest service area to be served by a single hospice provider. Service Area 5B experienced the fourth largest number of deaths in the State in 2008, an important factor in the provision of hospice care. Suncoast has 15 interdisciplinary care teams, each of which, lead by a patient-family care coordinator, includes RNs, home health aides, counselors, volunteers, and a chaplain. Suncoast has a north community service center in Palm Harbor that houses four patient care teams. On the back of that property is Brookside, Suncoast's newly built 30-bed in-patient facility. In central Pinellas County, Suncoast has its main service center with six patient care teams along with administrative and support offices. Suncoast has a pharmacy, as well as durable medical equipment and infusion departments, located in Largo. In central Pinellas County is Suncoast's ten-acre, 72-bed Woodside facility. Thirty-six of the beds are in-patient and 36 are residential. On the back of the property are 18 efficiency apartments called "Villas" with separate living, sleeping and kitchen areas. When patients become too ill to remain at home, their spouse may move into a villa until the patient dies. In the southern portion of the county is Suncoast's south community service area which houses five patient care teams, as well as "ASAP." ASAP is Suncoast's AIDS Service Association of Pinellas County which serves and provides support to patients with HIV and AIDS. Suncoast also has in-patient contracts with every hospital in Pinellas County and a number of contracts with nursing homes for in-patient care. Patients may receive continuous care in the home whether that is a residence, an ALF, or a nursing home or may receive care in the Suncoast in-patient unit. There is disagreement over whether Suncoast accurately reports its admissions and whether all reported admissions are actually hospice patients. Further, HPH points out that its penetration rate in counties where it operates is much higher than Suncoast's penetration rate in Pinellas County. However, the most credible evidence is that Suncoast is effectively serving the needs of hospice-eligible residents of Service Area 5B. Subsection 408.035(1)(c), Florida Statutes--ability to provide quality of care and record of providing quality of care Both applicants satisfy this criterion. Both applicants can provide a broad range of quality hospice services to all its patients. HPH touts its physician model, including physician home visits, as evidence of its commitment to quality care. Physician visits have been proven to help patients get pain under control more quickly, an important factor considering ten percent of hospice patients die within 48 hours of admission. Odyssey is a large company and has extensive operational policies and procedures concerning provision of quality care to its patients. Odyssey has a program called Care Beyond which it believes will enhance quality care in Service Area 5B. Odyssey has had some regulatory violations while HPH has not. However, Odyssey has resolved those violations favorably. Subsection 408.035(1)(d), Florida Statutes-- availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(e), Florida Statutes--extent to which proposed services will enhance access to health care for residents of the service district Both applicants satisfy this criterion. HPH is the existing provider of hospice services in the adjacent service area to Service Area 5B. HPH can use its existing contacts in Service Area 5B to extend its service to residents of that area. HPH has already established relationships with Airamed Corporation and its 11 nursing homes and ALF in Service Area 5B. HPH also commits to being more directly involved with smaller ALFs in Pinellas County. Odyssey is a large hospice with significant resources which can be utilized to enhance access for residents of Service Area 5B. It commits to bring quality personnel to Service Area 5B as part of its successful start-up procedures. Subsection 408.035(1)(f), Florida Statutes--immediate and long-term financial feasibility The parties stipulate that both applicants meet this criterion. Subsection 408.035(1)(g), Florida Statutes--extent to which proposal will foster competition that promotes quality and cost-effectiveness Both applicants are established providers of hospice services. The absence of any other hospice provider in Pinellas County means there is no effective competition. If either of the applicants was granted a CON for a new hospice in Service Area 5B, it would likely foster competition and promote quality and cost-effectiveness. Subsection 408.035(1)(h), Florida Statutes--costs and methods of construction, etc. This criterion is not applicable to the instant case. Subsection 408.035(1)(i), Florida Statutes--the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent Both applicants meet this criterion. HPH offers extensive services that go beyond the Medicare requirements of participation. It also operates "Hospice Houses" which provide room and board to homeless hospice patients. Odyssey's record of indigent care is evidenced by the fact that approximately 55 percent of its non-Medicare net revenue is from Medicaid, and 9.5 percent of its non-Medicare services are provided to indigent patients. Subsection 408.035(1)(j)--designation as a Gold Seal Program This criterion is not applicable to the instant case. Ultimate Findings of Fact The Agency determined that there is no need for an additional hospice in the service area based upon the fixed need pool formula. Neither applicant was able to establish the existence of special circumstances warranting approval of a new hospice in the service area. There is no specific terminally ill population which is not receiving hospice services that has been identified by the applicants. There is no persuasive evidence that there is an identifiable number of individuals who were referred to hospice, but were not admitted within 48 hours.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Agency for Health Care Administration denying the CON applications of HPH South, Inc. (No. 10066), and Odyssey Healthcare of Collier County d/b/a Odyssey Healthcare of Central Florida (No. 10068). DONE AND ENTERED this 30th day of November, 2010, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of November, 2010.
The Issue The issue is whether the Agency for Health Care Administration properly determined that the application of Covenant Hospice, Inc. meets the statutory and rule criteria for a hospice program in Service Area (SA) 2B.
Findings Of Fact Hospice Care Hospice care is a medically coordinated group of services that is designed for people who have a terminal diagnosis with a life expectancy less than six months. Hospice care provides palliative care as opposed to curative care. The patients' and their families' needs are multi-dimensional and include physical, psychological, emotional, spiritual, and financial needs. Hospice care includes physician directed medical care, nursing services, social work services, bereavement counseling, and other ancillary services such as community education. Hospice care is reimbursed by Medicare, Medicaid, Champus/Tri-Care (for military populations), and some commercial insurance programs. For example, under the Medicare reimbursement system, hospices are reimbursed based on an identifiable flat per diem rate for a bundled package of services. Medicare does not reimburse hospices for bereavement services. The Medicare benefit is based on level of care. Routine home care is the basic level of care. Routine home care is provided as long as a hospice can care for a patient in a home-like environment. The second level of care is continuous care, which provides between eight and 24 hours of nursing care per day. The third level of care is inpatient care, which a hospice can provide in a hospital, a skilled nursing unit of a nursing home, or a freestanding hospice inpatient facility operated by a hospice. The fourth and final level of care is respite care. The primary reimbursement agent for hospice care is Medicare, but it is becoming more common for private insurers and health maintenance organizations to provide the benefit. Hospices also provide care to charity patients who have no source of payment and no or insufficient assets or income. Hospice SA 2B Hospice SA 2B comprises eight counties: Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla. SA 2B covers 5500 square miles. It has an average of 67 persons per square mile. While Leon County has 345 persons per square mile, Taylor, Franklin, Liberty, Madison and Jefferson Counties all have less than 30 persons per square mile. Liberty County is the least populated county in the state of Florida. Liberty County has a low-income population but is better off economically than some of the other counties in the SA. Madison County has a population of approximately 17,000, with mostly low-to-middle income families. The majority of residents in Madison County have a high school education or less. Like most rural communities, Madison County is resistant to change or "outside intervention." Only two SAs in Florida have fewer projected deaths than SA 2B. Those are SA 2A and SA 7C. The providers in SA 2A and SA 7C serve multiple SAs. The Parties AHCA AHCA is the state agency that is responsible for administering the CON program and laws in Florida. In conjunction with these duties, AHCA reviews applications for new hospice programs pursuant to Sections 400.601, 400.602, 400.609, 400.6095, 408.034, 408.035, 408.036, and 408.043, Florida Statutes, and Rules 59A-2 and 59C-1.0355, Florida Administrative Code. Covenant Covenant, formerly known as Hospice of Northwest Florida, is a not-for-profit community organization that was founded by a committee in 1982. The committee included community leaders and several hospitals in the Pensacola, Florida, area. Covenant began treating its first patients in 1984 and is currently licensed to provide hospice services in SA 1 and SA 2A. The following counties are located in SA 1: Escambia, Santa Rosa, Okaloosa, and Walton. The following counties are located in SA 2A: Holmes, Washington, Jackson, Calhoun, Bay and Gulf. Covenant obtained its first CON for SA 1 and three counties in SA 2A. Covenant later expanded to cover all of SA 2A. In 1994, Hospice of the Emerald Coast (formerly known as Bay Medical Hospice and hereinafter referred to as Emerald Coast) was the dominant provider in SA 2A, but Covenant became the dominant provider within six years after expanding its coverage. Emerald Coast also has expanded its coverage and is licensed now to provide hospice services in SA 1 and SA 2A. Emerald Coast is now gaining market share in SA 1. Covenant is licensed to provide hospice services in 26 southern Alabama counties. However, Covenant currently provides services in only nine or ten Alabama counties. Covenant currently shares its Alabama SAs with five or six other providers and is considering further expansion in Alabama. On average, Covenant serves 429 Florida hospice patients per day. It admits patients and provides service 24 hours a day, seven days a week, without regard to their ability to pay. Covenant's main office and its eight-bed inpatient/residential facility, the Joyce Goldberg Hospice Inpatient Residence, are located in Pensacola, Florida. The room and board residential component of the inpatient facility is not reimbursed by any government agency and most often provides services on a charitable basis. Covenant built the inpatient facility to provide services to the homeless. However, Covenant does not consider patients who present with subjective signs of imminent death to be appropriate for admission to the facility. Covenant performs a financial assessment of patients at the time of their admission to the inpatient facility. If the patient or his or her representative elect not to provide Covenant with financial data, patients and their families understand that the full rate per day for room and board will be charged on a monthly basis at the beginning of each month, even when there is little or no chance that Covenant will ever collect the amount owed. Patients that have the ability to pay for some or all of their treatment at the facility do so on a sliding scale basis. However, the bottom line is that Covenant admits patients to the inpatient/residential facility without regard to their ability to pay. Covenant historically has provided inpatient care to children in one of the area's children's hospitals, Sacred Heart Hospital. Providing inpatient hospice care to children in a special hospital is appropriate from a quality of care perspective. Covenant operates the following Florida branch offices: Okaloosa County at Niceville, Florida; Jackson County at Marianna, Florida, and Bay County at Panama City, Florida. Covenant operates Florida community support centers in Okaloosa County at Crestview, Florida, and in Walton County at Destin, Florida. Volunteers staff Covenant's community support centers. Among other activities, the centers conduct blood drives and provide space and volunteer training for organizations such as the American Cancer Society and various Alzheimers groups. Covenant provides the centers on a charitable basis. Covenant's growth and expansion has focused on serving persons in underserved areas and populations. Its mission is to provide direct care to dying patients, their families and friends, and to provide education to the community. Covenant is the 30th largest hospice in the United States. It serves the largest geographic area in Florida. Covenant's audited finances demonstrate the corporation's growth. In the past five years, Covenant has nearly tripled its number of patient days. Covenant has purchased management software and systems, with a useful life of five years, to facilitate support for a corporation twice its size. It has secured contracts for services with every hospital, nursing home, and assisted living facility in SA 1 and SA 2A. Covenant's vision is to create and foster a corporate culture of excellence. In order to achieve its goals, Covenant has recruited personnel from the for-profit industrial sector. As incentives for achievement of performance goals, Covenant pays bonuses to its top management. It also has a separate staff bonus pool. Covenant made a profit in 2001 despite paying such bonuses out of its operational funds. Covenant has achieved its growth and expansion, in part, by implementing a continuous quality improvement process in which it constantly looks for ways to improve its operations and services. Expansion into SA 2B will improve Covenant's operations by allowing it to spread its fixed overhead costs. Consistent with its objectives, Covenant chose to pursue accreditation from the Joint Commission on Accreditation of Health Care Organizations (JCAHO) four years ago. Covenant became accredited without outside consultation, using its own staff and resources. Since then, JCAHO has re-accredited Covenant, pursuant to a 98 percent survey report with no Type I recommendations. Covenant provides hospice care in a way that ensures sensitivity to cultural diversity and the hospice patient's cultural values. For example, Covenant has informational brochures and material in various foreign languages, including Vietnamese and Spanish. Covenant's policies and procedures comply with all applicable requirements of the U.S. Department of Health and Human Services related to discrimination in the workplace. They are sufficient to ensure confidentiality for any employee with HIV and to ensure protection of all other employees. Covenant provides substantial "unfunded" and "underfunded" programs to the community. Underfunded programs include palliative chemotherapy and palliative radiation therapy. In addition to unfunded community support centers, Covenant provides unfunded bereavement programs in schools and grief-in-the-workplace seminars. Through its physicians and medical teams, Covenant provides unfunded physician care for non-Medicare patients. In fact, Covenant provided approximately $1.5 to $1.7 million in unreimbursed care in the calendar year 2001, and anticipates that it will provide more such care in 2002. Covenant, like all not-for-profit organizations, must raise funds to pay for non-reimbursed expenditures that support charitable services. Covenant has developed a strategic plan to identify ways to measure its success in meeting the needs of underserved populations. As a part of its ongoing strategic planning process, Covenant determined that there was an unmet need for hospice services in SA 2B, the area currently exclusively served by BBH. After receiving requests from physicians for hospice services in SA 2B, Covenant approached BBH to offer assistance and support. Covenant also consulted with its health planner regarding the need for additional hospice services in SA 2B. After AHCA determined that there was a numeric need for an additional hospice in SA 2B, Covenant's chief executive officer (CEO) toured SA 2B to assess the potential for expansion and to look for potential properties. Eventually, Covenant became convinced that there were compelling reasons to apply for a CON in SA 2B because of an unmet need for hospice services. Covenant has strong reserves of ready cash and equivalents, including $2.9 million in cash and over $1 million in investments, to underwrite the SA 2B expansion. Covenant has approximately six times more working capital than BBH. The $84,000 stated in Covenant's application as required expenditures to develop the new program in SA 2B is insignificant compared to the corporation's ability to provide "unlimited funds" for the project. The fact that Covenant has sizable cash and investment reserves despite having to subsidize it SA 2A offices demonstrates its financial power. BBH Community volunteers began organizing BBH in 1981. After its incorporation in 1983 as a not-for-profit community organization, BBH commenced operation under a license that authorized it to provide hospice services only in SA 2B. On average, BBH serves 162 patients per day. BBH's main office is located in Tallahassee, Florida, but it operates the following branch offices and/or community support centers: Franklin County at Carrabelle, Florida; Gadsden County at Quincy, Florida; Jefferson County at Monticello, Florida; Madison County at Madison, Florida; and Taylor County at Perry, Florida. BBH plans to create additional branch offices/community centers in the following locations: Franklin County at Apalachicola, Florida; Gadsden County at Chattahoochee and Havana, Florida; and Wakulla County at Crawfordville, Florida. BBH also operates a 12-bed inpatient facility. The facility, known as The Hospice House is located in Tallahassee, Florida. It usually operates at 80 percent of its capacity. The Hospice House was built using funds raised in a capital funds campaign and $250,000 in community grants. The facility is designed so that family and friends can spend as much time as they can with their loved ones. The facility provides 24-hour care for various reasons, including pain management, respite care, routine residential care as an alternative to continuous care in a patient's home, transition care after leaving a hospital, and care for patients facing imminent death who for personal reasons do not want to die at home. Occasionally, The Hospice House helps local hospitals manage oncology floor bed shortages. BBH has a policy that requires paying patients to pay in advance on a weekly basis because many times patients do not stay at the facility for longer than a week. The rate charged depends on the patient's ability to pay. Frequently, patients stay at the facility for free due to their low-income status. BBH does not bill patients for services that it does not intend to collect. BBH has a 24-member Board of Directors. The Board is comprised of a broad mix of people with backgrounds in law, business, medicine, education, nursing, and insurance. BBH has one or more community advisory councils (CACs) for each county in SA 2B. The CACs hold public meetings in their respective counties each month. The purpose of the CACs is to support BBH's effort to reach out to civic and church groups and to advise BBH on how to gain acceptance in the SAs diverse communities. Like BBH's Board of Directors, the CACs are comprised of a broad group of people who are racially and ethnically diverse. The CACs include local clergy who assists BBH's outreach to the faith-based community. BBH has a minority advisory council (MAC) that supports BBH's outreach efforts in the African-American community. The MAC hosts lunches and dinners at churches and sponsors gospel sings that include education about hospice care. For example, a gospel sing that was conducted at Florida A&M University was preceded by an hour-long seminar on hospice care on National Public Radio. BBH has had an ethics committee since 1994. The purpose of the committee is to educate BBH's staff and the community about ethical issues. The committee routinely reviews BBH's policies and when necessary, reviews particular patient dilemmas. The ethics committee includes a rabbi, a protestant chaplain, a religion professor, a Muslim pharmacist, a social worker, a nurse, and other interested individuals. BBH is a member of the National Hospice and Palliative Care Organization (NHPCO). BBH is accredited by the Community Health Care Accreditation Program, one of the first accreditation programs. AHCA has approved BBH after every licensure survey with no deficiencies. BBH's mission is to provide care and education to terminally ill patients and their families. BBH's mission includes providing emotional support to anyone dealing with grief from loss of a loved one. BBH serves all individuals who meet the clinical criteria for admission to hospice, regardless of their ability to pay. It provides care to indigent patients without concern for financial reimbursement. BBH responds to patient referrals within 24 to 36 hours. BBH does not discriminate against any group on any basis. BBH delivers hospice services with a minimum of administrative costs. Out of the funds raised by BBH through charitable gifts, 86 cents of every dollar goes directly to patient care. BBH does not spend substantial funds on marketing or advertising. BBH has five interdisciplinary teams (IDTs). Each team has a medical director and staff who live in their IDT area. BBH has nurses who live in every county in the SA except Liberty County. The IDTs have separate back-up on-call nurses to provide coverage 24 hours a day, seven days a week. The on-call nurses can provide care to patients within 30 minutes of a call. BBH has a full-time medical director, four part-time IDT associate medical directors, and a part-time associate medical director for its inpatient facility. The associate medical directors meet with the IDTs weekly to review patient care. They also provide advice and education to other providers and physicians in the community. The IDT medical directors provide emergency consultation should an acute situation arise with a patient. In addition to its core services, BBH provides other services to the community and patients that are not reimbursed from any source. These services include grief counseling to adults and children, crisis intervention in schools after a student's death, and the music therapy program. BBH's music therapy program, which is non-reimbursed, is one of only two such programs in Florida that the National Association of Music Therapists has certified as a music therapy site and as a music therapist training site. BBH has the equivalent of five full-time staff members that provide music therapy through out SA 2B as requested by patients or recommended by an IDT. Over 30 percent of BBH's patients receive music therapy. BBH provided over 1,500 hours of music therapy in the six months prior to the hearing. Part of BBH's outreach efforts includes conducting physician education seminars. About 200 out of 320 local physicians in SA 2B periodically refer patients to BBH. BBH provides palliative chemotherapy and radiation treatment on a case-by-case basis. There is no persuasive evidence that BBH has ever denied a physician's recommendation for such services. At times, BBH has reimbursed a local hospital for palliative radiation services for BBH patients. BBH solicits feedback from patients, their families, and their physicians through surveys that are sent out three weeks after patients begin receiving care and again after patients pass away. BBH's committee for quality improvement reviews the results of the surveys on a monthly basis as part of BBH's continuing quality improvement program. Recent results show a high degree of patient and family satisfaction because they are equal to or higher than national palliative care statistics. Physician survey responses show 90 percent or better satisfaction. BBH follows up on any survey response that is less than "very good" from patients or "average" from physicians. Covenant's Application Covenant's Board of Directors duly authorized the filing of Covenant's letter of intent and application. The Executive Committee of Covenant's Board of Directors authorized the filing of the letter of intent on August 27, 2001. Covenant timely filed the letter of intent with AHCA on August 29, 2001. The Board of Directors authorized the filing of the application on August 30, 2001. Covenant filed the application with AHCA on September 4, 2001. After receiving an omissions letter from AHCA, Covenant timely filed its omissions response and complete application along with the appropriate application fee. AHCA has preliminarily approved Covenant's application to establish a new hospice program in SA 2B. AHCA's preliminary approval is subject to the following conditions: (a) Within the first two years of operation, Covenant must open a branch office in Perry, Taylor County, Florida; and (b) Covenant must establish a special non-cancer outreach program to educate the medical community on the effectiveness of hospice care for patients with non-cancer diagnoses. Fixed Need Pool Rule 59C-1.008, Florida Administrative Code, relates to CON application procedures in general. Rule 59C-1.0355, Florida Administrative Code, relates to specifically to hospice programs. Both rules contain provisions that relate to published fixed need pool projections. In this case, Covenant filed its application in response to a published fixed need for an additional hospice program in SA 2B. BBH has challenged that published need in DOAH Case No. 01-4415 CON. A Recommended Order in that case is being issued concurrently with the instant case. Conformance with District Health Plan Preferences Covenant's application is in conformance with the applicable district health plan as required by Section 408.035(1), Florida Statutes, and Rule 59C-1.030(2)(c), Florida Administrative Code. The applicable local health plan preferences are set forth in the District 2 CON Allocation Report, approved October 2000. With respect to the first local health plan preference, Covenant currently provides and commits to providing district-wide services. Covenant will provide the services 24 hours per day, seven days a week, regardless of a patient's ability to pay. As to the second local health plan preference, Covenant currently contracts with and commits to contracting with existing hospitals and nursing homes for the provision of inpatient care. The proposed program does not require the construction of a new facility or the addition of beds. Conformance with Agency Rule Criteria The application conforms to the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which requires hospice programs to comply with the standards for program licensure described in Chapter 400, Part VI, Florida Statutes, and Chapter 58A-2, Florida Administrative Code. Covenant has demonstrated that it meets these statutory and rule requirements. Some of the requirements, including but not limited to "quality of care," are discussed in detail below. The application is in conformance with the five-rule preferences set out in Rule 59C-1.0355(4)(e), Florida Administrative Code. As to rule preference one, Covenant evidences a commitment to serve populations with unmet needs. One such population includes non-cancer patients as discussed below. With respect to the rule preference two, Covenant proposes to provide the inpatient care component of its proposed program through contractual arrangements with existing health care facilities. Covenant does not propose the development of an inpatient facility. The application conforms to rule preference three. Covenant has demonstrated a commitment to serve the homeless, patients with AIDS and patients who do not have primary caregivers at home. Covenant is entitled to credit for rule preference four. Covenant proposes a project in SA 2B, which has eight counties. It intends to establish its main office in Tallahassee, Leon County, Florida, with a branch office in Perry, Taylor County, Florida. Covenant anticipates opening community support centers in Madison County and in Gadsden County during the third year of operation. Covenant has presented persuasive evidence that Madison and Taylor Counties are underserved as discussed below. The application meets the expectations of rule preference five. Covenant is committed to providing services not specifically covered by private insurance, Medicaid, or Medicare. These services include, but are not limited to, chaplain services, support for seriously ill patients not yet appropriate for hospice services, non-health care items such as hot water heaters and telephones that provide quality of life and allow patients to stay at home, bereavement services, and volunteer services. The application is in conformance with Rule 59C-1.0355(5), Florida Administrative Code. Covenant's proposal is consistent with the needs of the community and other criteria contained in local health council plans and the State Health Plan. Rule 59C-1.0355(5), Florida Administrative Code, specifically requires an applicant to provide letters of support from health care organizations, social services organizations, and other entities within the proposed SA that endorse the applicant's development of a hospice program. In order to comply with this provision, Covenant sent approximately 206 letters to individual and entities in SA 2B requesting support of its application. Even though health care providers in SA 2B have limited knowledge about or experience with Covenant, it received the following letters of support: (a) eight letters of support from physicians who practice in SA 2B; (b) three letters of support from hospitals located in SA 2B; (c) 18 letters of support from nursing homes and assisted living facilities located in SA 2B; and (d) six letters of support from other health care professionals and/or residents who live and work in or adjacent to SA 2B. These letters of support are sufficient to show compliance with Rule 59C-1.0355(5), Florida Administrative Code, despite the fact that AHCA received 160 letters of opposition to the proposed project from various individuals and entities in SA 2B. The application is in conformance with Rule 59C-1.0355(6), Florida Administrative Code, because it provides a detailed description of the proposed program. First, proposed staffing for the project will be 9.54 full-time equivalents (FTEs) in the first year of operation and 18.79 FTEs in the second year of operation. The volunteer staff will number about one per patient and will increase from about 15 in the first year to about 35 in the second year. The record contains competent evidence showing how Covenant will recruit and train its staff and volunteers. Second, Covenant expects to obtain patient referrals from hospitals and doctor's offices. Based on Covenant's prior experience in starting new hospice programs, the expected sources of patient referrals are reasonable and appropriate. Third, the application sets forth the projected number of admissions for the first two years, by payer type, by type of terminal illness, and by age groups. Covenant expects Medicare patients to comprise about 80 percent of the admissions. The majority of Covenant's patients will have diagnoses other than cancer, such as heart disease, emphysema, liver disease, and Lou Gehrig's disease. During the first year, Covenant expects to have 27 patients, under 65, and 82 patients, 65 and older. In the second year, Covenant expects to have 56 patients, under 65, and 184 patients, 65 and older. These projected utilizations are reasonable and achievable. Fourth, Covenant has identified the services to be provided by staff and volunteers and those to be provided through contractual arrangements. Covenant plans to provide direct care in the following areas: physician services, nursing services, home health aide services, dietary counseling, social work services, chaplain services, counseling services, and bereavement services. Physical, speech, and occupational therapy services will be provided through contractual arrangements. Fifth, Covenant will provide inpatient services through contractual arrangements with nursing homes and hospitals. Covenant has gained expertise in providing hospice care in nursing homes in its existing SAs. Sixth, the application sets forth provisions for serving persons without primary caregivers at home. Covenant's plan allows patients to be responsible for their own care as long as they are able to do so. When that is no longer possible, Covenant provides the patients with a list of alternatives. Seventh, Covenant will provide bereavement services to its patients before death and to patients' families and friends after death for at least one year. Covenant also provides grief counseling in schools and in the community. Covenant offers grief support to its staff and volunteers. Covenant uses seminars, workshops, and special programs to train and educate its staff, volunteers, and individuals in the community about particular bereavement topics. Next, Covenant will provide extensive community education activities concerning hospice programs. Some of these are discussed in detail below. As indicated above, Covenant has agreed to provide a special non-cancer outreach program to educate the medical community in SA 2B about the effectiveness of hospice care for non-cancer diagnoses. Finally, Covenant's application includes policies for the receipt, acknowledgement, management and utilization of fundraising activities. Covenant expects fundraising to account for 2-3 percent of net revenue for the proposed program. The application does not include specific proposed methods for fundraising activities in SA 2B. However, during the hearing Covenant provided sufficient evidence about its past experiences to support the conclusion that it will be successful in this regard. 80. Rules 59C-1.0355(6)(h) and 59C-1.0355(6)(i), Florida Administrative Code, do not apply here. Covenant does not intend to establish a freestanding inpatient facility in SA 2B. Covenant's proposals, expectations, and projections are reasonable and appropriate as they relate to the factors set forth in Rule 59C-1.0355(6), Florida Administrative Code. Based upon Covenant's experience, the proposed program as described in the application is conservative and achievable. Conformance with Applicable Statutory Criteria As stated above, the proposed project complies with the standards for licensure described in Chapter 400, Part VI, Florida Statutes. Specifically, the application conforms to the requirements of Section 400.606(1), Florida Statutes, because it provides a plan for the delivery of home, residential, and home-like inpatient hospice services to terminally ill persons and their families. Covenant's plan contains, but is not limited to, the following: (a) the estimated average number of terminally ill persons to be served monthly; (b) the geographic area in which hospices services will be available; (c) a listing of services which will be provided, either directly by the applicant or through contractual arrangements with existing providers; (d) provision for the implementation of hospice home care within three months after licensure; (e) the provision of inpatient care in nursing homes and other health care facilities; (f) the number and disciplines of professional staff to be employed; (g) the name and qualifications of potential contractors; (h) a plan for attracting and training volunteers; (i) the projected annual operating cost of the hospice; and a statement of financial resources and personnel available to the applicant to deliver hospice care. Some of these plans are discussed in detail herein. Rule 59C-1.0355(3)(b), Florida Administrative Code, requires an applicant to be in conformance with Sections 408.035 and 408.043(2), Florida Statutes. Covenant meets the standards sets forth in these statutes as indicated below. Section 408.035(1), Florida Statutes, requires consideration of the need for the proposed project in relation to the applicable district health plan. As discussed above, Covenant meets this criterion. Sections 408.035(2) and 408.035(7), Florida Statutes, relate to the need for the proposed project as evidenced by the availability, quality of care, efficiency, accessibility, and extent of utilization of existing health care facilities and health services in the applicant's SA. Covenant meets these statutory criteria for the following reasons: (a) SA 2B is characterized by lack of hospice competition; (b) The proposed project will ensure access to hospice care in the SA's rural communities; (c) Covenant's special non-cancer outreach program will increase utilization for patients with non-cancer diagnoses; (d) With projected admissions of 109 patients in year one, 240 patients in year two, and 305 patients in year three, the proposed project will achieve a 25 percent market share in the third year; and (e) Covenant is Medicare and Medicaid certified and has a history of providing quality of care. Sections 408.035(2) and 408.035(12), Florida Statutes, relate to the applicant's history of providing quality of care and its demonstrated ability to provide such care. Covenant meets these criteria because it has a quality assurance program that provides a comprehensive, centrally coordinated system by which Covenant can conduct an ongoing evaluation of patient care and family services. Covenant's Performance Improvement Plan (PIP) is discussed in detail below. Section 408.035(4), Florida Statutes, relates to whether the applicant will provide services that are not reasonably and economically accessible in adjacent SAs. It is preferable for hospice services to be delivered in patients' homes or in home-like environments. It is undisputed that residents of rural populations often are reluctant to accept hospice services from a local provider. It follows that rural populations would be even more reluctant to seek hospice services in an adjoining SA. Some SA 2B patients from Liberty and Franklin Counties receive hospice services in SA 2A. Additionally, some residents of Madison and Taylor Counties receive hospice services in SA 3A. However, there is no persuasive evidence that a significant number of the underserved patients in the rural populations of SA 2B ever received services in an adjoining county for any one year. To the contrary, the greatest weight of the evidence indicates that for a substantial number of patients in SA 2B, hospice services are not reasonably or economically accessible in adjoining SAs. Section 408.035(5), Florida Statutes, relates to the needs of research and educational facilities in the SA. This criterion does not apply because Covenant's proposed project is not located in a teaching hospital and does not involve research or formal education and training programs for physicians and other health care professionals. Section 408.035(6), Florida Statutes, relates to the applicant's resources, including health personnel, management personnel, and funds for capital and operating expenditures, that are available for project accomplishment and operation. Section 408.035(8), Florida Statutes, relates to the applicant's immediate and long-term financial feasibility. Covenant meets these criteria because it has demonstrated the short-term and long-term financial feasibility of the proposed project. Section 408.035(9), Florida Statutes, relates to whether the proposed project will foster competition to promote quality and cost-effectiveness. Covenant's proposed project will meet this criterion because it will provide the patients of SA 2B a choice of providers. Benefits accrue from competition among hospice providers because hospice utilization is strongly related to awareness and education. Competition creates an environment in which hospices must do more to educate the community, promoting quality of care. Covenant's proposed project also will increase the hospice penetration rate in SA 2B, thereby resulting cost effectiveness and overall savings to the health care system. This is true even though a large majority of patient care is provided by fixed price government payer sources that are not influenced by competition. Section 408.035(10), Florida Statutes, relates to proposed costs and methods of construction associated with the proposed project. This criterion does not apply because the proposed project does not involve any construction. Section 408.035(11), Florida Statutes, relates to the applicant's history of and commitment to providing health services to Medicaid patients and the medically indigent. In 2000, Covenant provided about 7.8 percent of its patient days to Medicaid patients. That same year, Covenant provided approximately $480,000 in non-billable services. In SA 2B, Covenant proposes to provide 10 percent of its patient days to Medicaid patients and 4 percent to charity. The record is clear that Covenant meets this statutory criterion. Section 408.043(2), Florida Statutes, relates to the need for and availability of hospice services in the community. The application is in conformance with the requirements of this statute because there is a need for additional hospice services in SA 2B, especially for non-cancer patients and in rural populations. Additionally, a new hospice program will promote competition. Need for an Additional Hospice Published Fixed Need Pool and Special Circumstances The hospice penetration rate is defined as the ratio of hospice admissions in a SA divided by the number of resident deaths for that SA. Hospice penetration has grown in Florida and the United States in recent years, due primarily to increased awareness among the lay and health care communities. In Florida, overall hospice penetration is currently about 40 percent. Like the rest of the state, Covenant has increased its utilization in the past few years. The licensing of Emerald Coast in SA 1 created a competitive environment with Covenant and resulted in increased admissions and penetration in SA 1. The same result was achieved in SA 2A when Covenant was licensed to serve all of SA 2A in competition with Emerald Coast. In contrast, BBH has been the sole provider in SA 2B, which has experienced a penetration rate gap that has persisted over a seven-year period. For the batching cycle at issue here, SA 2B has one of the lowest penetration rates (29 percent) in the state, ranking 26th out of 27 SAs. In the instant case, AHCA calculated a net numeric need under Rule 59C-1.0355, Florida Administrative Code, of 351, which exceeds the need threshold of 350, and indicates the need for one additional hospice program in SA 2B. The rule's methodology takes into account the demographic differences between SA 2B and the rest of the state. With a projected need of 1,209 patients for the planning horizon at issue here and only 858 BBH admissions for the relevant historical period, BBH would have needed 41 percent more admissions to close the penetration rate gap regardless of the fact that there is only a difference of one between 350 and 351. It is clear that the net numeric need here correlates to the local reality. Special Circumstances Rule 59C-1.0355(4)(d), Florida Administrative Code, identifies the following special circumstances that may merit approval of a new program even if there is no published need. These special circumstances are as follows: (a) that a specific terminally ill population is not being served; (b) that a county or counties within the SA of a licensed hospice program are not being served; and (c) that there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested.) AHCA did not review Covenant's application to determine whether a CON should be awarded based on special circumstances. Instead, AHCA gave preliminary approval to the proposed project based on the publication of need. However, AHCA's State Agency Action Report (SAAR) indicates that the agency considered and did not agree with Covenant that Madison and Taylor Counties were "underserved." AHCA also determined that there was a need for educational outreach to non-cancer patients in SA 2B and conditioned the award of the CON on Covenant's provision of that service. During the hearing, Covenant presented persuasive evidence that underserved non-cancer patients and underserved rural populations in SA 2B constitute special circumstances within the meaning of Rule 59C-1.0355(4)(d), Florida Administrative Code. The special circumstances would have warranted approval of Covenant's application in the absence of numeric need. Non-Cancer Patients Care to non-cancer patients has increased dramatically during the past 20 years. Generally, non-cancer patients comprise more than half of all hospice patients. The SA 2B penetration rate of non-cancer patients, under age 65 and age 65 and over, lags behind the overall state penetration rate. This is especially significant because the non-cancer deaths rates are higher in the panhandle of Florida than for the State as a whole. For the batching cycle applicable to this proceeding, the penetration rate gap in SA 2B was most remarkable for elderly non-cancer patients, who make up 69 percent of the net need of 351 patients. The current overall state penetration rate for non-cancer patients, age 65 and older, is 32 percent. In SA 1 and SA 2A, the current overall state penetration rate for non-cancer patients, age 65 and older, is 27.7 percent and 26.6 percent respectively. In SA 2B, the current penetration rate for non-cancer patients, age 65 and older, is 20.1 percent, indicating a gap of 11.9 percent with respect to the state penetration rate. The lack of availability of hospice services in SA 2B nursing homes is another indication of the underserved need of elderly non-cancer patients. Underserved Rural Populations SA 2B is underserved as a whole relative to the rest of the state. All counties in SA 2B, except Jefferson County, had a penetration rate lower than the state average. Comparing the overall penetration rate for SA 2B to the penetration rate for each county in the SA shows that Madison and Taylor counties are significantly underserved. Based upon the most recent data available from the United States, Health Care Finance Administration, there is a 30 percent penetration rate for SA 2B, but for Madison and Taylor counties, it was about 16 percent. For non-cancer diagnoses, the penetration rate was only 8 percent for Madison and Taylor counties, well behind the SA 2B's averages for non-cancer diagnosis. Covenant Hospice Programs Quality of Care Covenant's application is in conformance with the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which provides that the proposed program shall comply with the quality of care standards described in Chapter 400, Part VI, Florida Statutes, and Rule 58A-2, Florida Administrative Code. The best evidence of Covenant's ability to provide quality of care is the finding of no state or federal deficiencies on the three most recent State of Florida compliance surveys. On a yearly basis, Covenant develops a Performance Improvement Plan (PIP) based on its ongoing continuous quality improvement program. The PIP ensures Covenant's ongoing compliance with all state and federal regulations as well as the standards established by JCAHO and NHPCO. Covenant also reviews and updates its corporate and clinical policies and procedures to ensure on-going quality improvement. These policies and procedures are consistent with all state and federal regulations and professional guidelines. The policies and procedures are reasonable and appropriate for all operations, including medical and nursing care. Medical Direction and Medical Quality of Care Covenant's medical director is qualified to take an examination for certification in hospice palliative care. He has completed the American Medical Association's curriculum in Education for Physicians in End-of-Life Care. He is board-certified in geriatrics. In addition to the medical director, Covenant employs physicians as adjunct medical directors and branch office physicians. These doctors provide direct patient care when they make home and nursing home visits. They serve as consultants to IDTs or patients' attending physicians. Covenant's physicians also serve on its quality improvement committee and review records to ensure quality of care. Covenant provides access to physician care for all hospice patients. Physician coverage is available for all patients, 24 hours per day, seven days a week, as appropriate. Covenant physicians follow its clinical procedures manual, which is in conformance with all state and federal regulations and professional guidelines. Covenant provides high quality pharmaceutical services. The policies and procedures related to these services are appropriate to ensure compliance with all state and federal regulations. Partners in Care Program Covenant developed its PIC program in part to ensure appropriate education of its own staff and the community in general. However, the main purpose of the program is to educate and train the staff of nursing homes and other health facility settings. The PIC program promotes continuity and quality of care for patients in such facilities, which house about 47 percent of Covenant's patients. The PIC program is based on a procedures manual known as "The Grey Book." The procedures manual is a toolbox that facility staff can reference at any time. The manual has been instrumental in making the PIC program so successful in addressing the needs of critical patients in extreme pain and discomfort associated with certain terminal illness. Education and Outreach Covenant has a comprehensive education program. It develops an education calendar on a yearly basis and presents extensive educational programs to all applicable audiences. Covenant's education program includes a clinical education program that is designed to ensure high professional competency for nurses, social workers, home health aides, nursing aides, and other health care providers. For example, Covenant's program for nurses requires them to demonstrate "knowledge based competencies" within the first 30 days of employment and on an on-going basis. The competencies are important in achieving high quality of nursing care. Covenant has produced its own comprehensive educational modules on an array of topics. They are "in-depth" courses, not "Hospice 101" or survey courses. They deal with such issues as advanced pain management, advanced symptom management, physiology of dying, ethical issues in the end-of- life care, just to name a few. Many of the advanced training modules are approved by various professional organizations for continuing education credit, including continuing medical education credits. The use of the modules will facilitate hospice utilization and penetration wherever they are used. Another facet of Covenant's education and outreach program is its Patient and Family Handbook that Covenant gives to patients and their families. The handbook provides extensive resources and guidelines to patients and their caregivers. The handbook is clinically appropriate to ensure high quality of care. Covenant's education program also includes extensive and intensive community education. This part of the program increases hospice utilization or penetration by ensuring that the community knows about the availability of hospice services and understands the benefits of those services. Covenant has specific education materials directed to non-cancer diagnoses to ensure access to hospice patients with non-cancer diseases. The materials assist clinicians in determining when a terminally ill non-cancer patient is appropriate for hospice care. They provide the community with knowledge about the availability of hospice care for non-cancer patients. The use of the materials results in greater non- cancer admissions to hospice. In fact, Covenant provides educational programs for physicians to assist them in caring for all types and ages of hospice patients. Referring physicians routinely receive newsletters, written and edited by Covenant's medical staff. At times, Covenant provides one-on-one education of physicians, in-service training, and other modes of education as appropriate. Covenant maintains medical advisory groups in each area office. These groups meet on a regular basis for education and to provide participants input and feedback to Covenant. Covenant has developed educational materials in Spanish and Vietnamese in order to facilitate access to those minority populations. Covenant uses its community support centers to distribute the materials. In contrast, BBH provides far fewer educational opportunities to the community than Covenant. In some months, BBH only provided four or five programs. In other months, none of BBH's programs were provided by trained clinicians. Most of BBH's programs were introductory, not advanced or continuing education level presentations directed to health care professionals. BBH's education programs are insufficient to create adequate public and professional awareness of hospice services in an eight-county area. It appears that BBH has increased the number of programs it presents on a monthly basis after Covenant submitted its application. Rural populations often have religious or conservative belief systems that cause them to be reluctant to accept hospice services. Such barriers to access for hospice services can be overcome by sufficient and appropriate education and outreach to the community and to physicians or other health care providers. Competition of an additional hospice in SA 2B will stimulate additional education and outreach, resulting in higher levels of hospice utilization and penetration rate. Volunteer Program State and federal regulations require a hospice to involve community volunteers in the delivery of hospice services. Hospices use volunteers for a variety of functions including, reading to patients, transportation, housekeeping, and office administrative support. Covenant has developed a comprehensive and high quality volunteer program based upon excellent recruitment and training of volunteers. In an attempt to encourage more patients to remain at home for hospice care, the Escambia County Council on Aging reimburses Covenant for care-giver training and in-home respite care, charged on an hourly basis. Currently, Covenant has over 850 active, trained volunteers. Between 2/3 and 3/4 of Covenant's volunteers come from patient families and friends. Covenant's volunteer training program and manual comply with all state and federal regulations and professional guidelines. Faith in Action Programs Covenant has a special volunteer program referred to as the Faith in Action Program. Covenant developed the program in conjunction with initial Robert Wood Johnson Foundation grant funding. Currently, Covenant provides the service on an unfunded basis. The program sponsors activities to involve faith communities in the care of terminally ill members. Thus, the program enhances access to hospice care by members of the faith communities. Covenant also has established a Faith in Action AIDS Program. The program focuses on the needs of AIDS patients and their families. The educational component of the Faith in Action AIDS program teaches faith communities about the needs of HIV and terminally ill AIDS patients, including children. The Faith in Action AIDS program provides a high level of community service to the AIDS community. It links persons living with HIV to faith communities. It directly addresses many practical needs of individuals with HIV and AIDS. The program was initially grant-funded but is now supported by Covenant as a charitable service. The Faith in Action AIDS program utilizes approximately 75 trained volunteers. Currently the program is based in Pensacola and Escambia Counties and primarily serves those areas. However, Covenant is expanding the program through its SAs. Covenant also has developed a clinical AIDS program as a dedicated hospice program. Covenant provides excellent care and comprehensive services to hospice patients with AIDS and their loved ones through this special program. Chaplain Services Covenant's chaplains function as core members of the IDTs. They provide spiritual care to patients and their families, 24 hours per day, seven days per week. The chaplains are employees of Covenant who receive comprehensive hospice training. This ensures high quality services and proper professional development. For the most part, Covenant's chaplains are ordained ministers with five years of experience and a masters of divinity degree. Covenant's 14 full-time or part-time chaplains are distributed across Covenant's SAs. The program meets state and federal regulations and professional guidelines. Social Work and Bereavement Services Covenant's social work begins at admission with comprehensive assessments of the patients' and their families' needs. Bereavement services focus on the family and loved ones during the terminal illness and after the death of the patient. Both of these services provide extensive education to patients, their families, and the community. Covenant's social work and bereavement programs provide educational seminars and workshops in the community on an unfunded basis. Social workers and bereavement specialists are required to complete competency-based instruction in hospice social work. Covenant's corporate and clinical policies and procedures related to social work and bereavement ensure high quality of care. They meet or exceed all state and federal regulations and professional guidelines. Covenant's social workers are core members of the IDTs. The social worker networks with other members of the team to plan and implement services. They help the patient set and achieve goals. Children's Services Covenant provides children's services through a program that is dedicated to terminally ill children and their families or to children of terminally ill parents or grandparents. The children's program includes unfunded bereavement services even if the bereavement in not associated with a hospice patient. Covenant has been selected to participate in one of eight demonstration projects for children's hospice services known as Program for All Inclusive Care for Children (PAC). The PAC project is a Medicaid waiver program. It will allow hospices to interact with dying children and their families earlier than would be otherwise allowed for enrollment in hospice based upon Medicaid program requirements. Participation in the project is unfunded. Covenant's children's program is comprehensive and provides high quality of care. It meets or exceeds all state and federal regulations and professional guidelines. Competition and Impact of the Proposed Project on the Existing Provider Covenant's application is in conformance with the requirements of Section 408.035(9), Florida Statutes. The proposed project will foster competition and promote quality and cost-effectiveness. The effect of the competition will have a positive impact in the SA and increase hospice penetration, particularly for elderly patients with non-cancer diagnoses and rural populations, due in part to Covenant's comprehensive community education programs. There is no merit to the argument that SA 2B's penetration rates and population size are not sufficient to support two hospices. BBH's own strategic plan shows that its admissions and census will increase even if Covenant is approved. In fact, since AHCA preliminarily approved Covenant's application, BBH has taken numerous steps to increase its referrals and its community outreach and education. These actions show how the mere threat of competition has improved BBH's services. BBH has set a goal of increasing its referrals by 50 percent. Approval of the application will have an adverse impact on BBH only if it does not appropriately respond to the presence of a new provider in the area. Based upon data presented by BBH, its net assets have increased each year. At historical admissions and census levels below that projected by BBH, it actually made money and had an increase in net assets at the end of each year. There is no persuasive evidence that BBH will lose patients days or that its admissions will decrease if Covenant's application is approved. The most credible data indicates that BBH will have at least 970 admissions in year zero, 1,085 admissions in year one, 1,202 admissions in year two, and 1,219 admissions in year three. Covenant will have 0 admissions in year zero, 109 admissions in year one, 240 admission in year two, and 305 admissions in year three. By year three, BBH will still be the dominant provider in SA 2B with 75 percent of the market share. When AHCA approved Emerald Coast for an additional hospice program in SA 1, Covenant undertook certain actions to strengthen its position in the community and to become an even better and more effective provider of hospice services. As a result of these and other actions, the addition of a competitor in SA 1 did not have an adverse impact on Covenant. To the contrary, Covenant grew, increasing its admissions, referrals, fundraising, and volunteer participation. Competition from Emerald Coast brought heightened community awareness about the benefits of hospice services to SA 1. Because Covenant increased community education concurrent with the development of the new hospice program, there was no resulting confusion over the identities of the two programs. Nor did the approval of Hospice of the Emerald Coast erode the economic base of Covenant because Covenant took steps to strengthen its referral base. Emerald Coast did not have an office in Pensacola, or within sixty miles of Pensacola, until approximately May 2002. The admissions and census of Emerald Coast have grown since establishing that office. The change in the competitive environment in SA 1 resulted in increased admissions and penetration in that SA. Covenant increased its admissions and penetration in SA 2A after Covenant AHCA authorized Covenant to serve all of that SA. The same can be expected in SA 2B if AHCA approves Covenant's application to provide hospice services in SA 2B. With Covenant’s approval for an additional hospice service in SA 2B, BBH can and will be expected to do the same kinds of things that Covenant did in SA 1 to preserve market share. All of the things that Covenant can do to increase penetration or obtain market share, BBH can do to preserve market share. These activities include providing education and outreach, developing a referral base, and developing contacts with physicians, hospitals, nursing homes, and other health care facilities. In performing these activities, BBH has a competitive advantage in SA 2B based upon its experience, history, and reputation in the SA. For example, BBH already has contracts with all hospitals and nursing homes in SA 2B. BBH was financially viable at a service volume of 34,404 patient days in 1997, and at a volume of 35,721 patient days in 1999. Big Bend has been financially viable at substantially lower volumes than it will have in the future, even if Covenant is approved and operational in SA 2B. Approval of Covenant will not have an adverse impact on the ability of BBH to recruit and retain sufficient numbers of volunteers in SA 2B. BBH currently does not have difficulty recruiting and retaining sufficient numbers of volunteers, which evidences a substantial pool of volunteers in the SA. In addition, Covenant will draw its volunteers primarily from persons served by it, families and friends of Covenant patients. Covenant is willing to work with BBH cooperatively to ensure training and recruitment of sufficient numbers of volunteers. Approval of Covenant in SA 2B will not have an adverse impact on the ability of BBH to effectively raise funds. In SA 1 and SA 2A, Covenant has tailored its fundraising activities so that they do not conflict with Emerald Coast's efforts to raise funds. Covenant and Emerald Coast continue to grow their fundraising in both SAs. The fundraising pool in any SA is elastic and can be expanded. Hospice in particular opens up a new pool of potential donors. The additional education and community outreach provided by Covenant will increase hospice penetration, thereby increasing the pool of hospice donors. Both hospices can increase the fundraising base by utilizing grant revenue. Covenant is stronger today than it would have been without competition. As friendly competitors, Covenant and BBH will be able to engage in collaborative activities that benefit both hospices, including education and fundraising. Dale Knee, Covenant's CEO, did not always believe that competition would foster such benefits. In 1996, Emerald Coast, located in Panama City, Florida, applied for and was preliminarily approved for a CON in SA 1, which includes the Pensacola home office of Covenant. Mr. Knee testified extensively that the approval and development of another hospice in SA 1 would adversely impact Covenant and would not increase hospice penetration in SA 1. He now holds the opposite view based upon Covenant’s actual experience in a competitive environment. Approval of Covenant in SA 2B will increase access to hospice services. It will have a positive impact on the quality of care in the SA as utilization increases. This is consistent with the prior experience of Covenant. Further, the approval of Covenant will result in substantial cost savings to the health care system generally. Hospice care is more cost effective and less costly than conventional medical care, such as the pursuit of curative or maintenance treatments provided by hospitals, nursing homes, home health agencies, and other settings. The approval of Covenant will result in an overall savings of approximately $1.6 million by Covenant's third year of operation. This is true even through the large majority of patient care is provided from fixed price government payer sources. The approval of Covenant in SA 2B will make "continuous care" available to hospice patients. Continuous care is a required level of care under the Medicare conditions of participation. Continuous care is nursing care in excess of eight hours per day, sufficient to maintain the patient with critical needs at home. BBH currently does not provide continuous care to its patients. Instead, BBH uses home health aides with nurses in attendance for shorter periods of time that is billed to Medicare as routine home care. When a patient needs continuous care to remain at home, BBH places the patient in a hospital or its in-patient facility. Upon approval and initiation of operations, Covenant will make continuous care available to the hospice patients, improving quality of care and continuity of care in SA 2B. Financial Feasibility and Financial Schedules and Projections Schedule 1, Estimated Project Costs. Schedule 1 depicts the estimated project costs for the proposed project. The total estimated project cost is $82,648. The costs are based substantially on the start up experience of Covenant in its Dothan, Alabama, office. The $20,000 in cost proposed for recruitment and training of staff is reasonable and appropriate. The amount includes advertising for staff positions, start-up salaries, rent, utilities, and such expenses for a month of start-up operations. The projections for recruitment and training are consistent with prior start-up experience of Covenant. Covenant provided sufficient costs to hire an office manager for the Tallahassee office 30 days prior to opening. This is a reasonable planning assumption and would be sufficient to provide training and orientation. But this may not be necessary, because Covenant may transfer a manager from an existing office. Prior to initiation of operation, Covenant would need to hire an office manager, a registered nurse, a home health aide, a social worker, an administrative assistant, and a community educator. A medical director would not be necessary initially for the Tallahassee office prior to start-up. Start-up on the Dothan, Alabama, office entailed a different process than starting up a new office in Florida. In Alabama, the office had to become separately licensed by the State of Alabama. The next step in the process was for the office to apply for Medicare certification, which required Covenant to be admitting and treating Medicare eligible patients. This accounts for the fact that Dothan had a longer pre-opening period that is projected for the Tallahassee office. The initial Dothan staff spent a full week at Covenant in orientation. During the next five weeks the Dothan office manager worked in Covenant's Panama City, Florida, awaiting certification for Dothan. The Dothan start-up provides insight to Covenant’s success in initiating hospice start-up such as that proposed for SA 2B. Covenant began in Dothan by educating the medical community and others, particularly in the rural communities, where Covenant encountered a lack of understanding of hospice and some reluctance to acceptance of hospice services. Covenant's program in Dothan has shown a steady increase in census. This is true even though three other hospices serve the same service area. The census of the other three hospices has continued to increase as well, due to increased public awareness of hospice care generally. The $5,000 in Covenant's proposed costs for moveable equipment is reasonable, appropriate, and adequate. Covenant generally relies on donated equipment to meet such needs. Covenant already has on-hand equipment for use in SA 2B. This is consistent with prior start-up experience of Covenant, including the start-up of the Dothan office. Covenant intended the proposed costs for movable equipment in the application to cover incidental items only. The phone system for the Tallahassee office is already in inventory, and no expenditure would be necessary for a phone system. At the time of the application, Covenant had an extensive inventory of donated furniture and other items that could be used in the Tallahassee office. Covenant made a planning assumption that at the time of implementation, sufficient donated items would be on hand to furnish and equip the Tallahassee office. The expectation and assumption that furniture and other furnishing sufficient for the Tallahassee office would be available was reasonable based on the specific prior experience of Covenant. The line item of $5,000 for moveable equipment was placed in the budget as a contingency for incidental items, as needed. Donated equipment is not included in Schedule 1, Line 23, because it is not required to be included. Overall, the amounts projected on Schedule 1 of the application are reasonable and appropriate. They are conservative estimates and sufficient to cover all anticipated and expected costs. Schedule 2, Listing of Capital Projects. Schedule 2 sets out a complete listing of all projected and proposed capital projects planned by Covenant. The schedule completely and accurately depicts all such projects and expenditures that were planned, approved, or under way when Covenant submitted its application. Covenant's audited financial statements and balance sheets indicate that it has sufficient resources to fund the proposed project without adversely affecting Covenant's ability to fund other projects and expenditures. Schedule 3, Source of Funds. Covenant has available cash and other funding sources sufficient to fund the proposed project. There are no other demands on the applicant’s available cash. The information depicted in Schedule 3 is reasonable and appropriate. Schedule 4, Utilization of Existing Beds. Schedule 4 is not applicable to the application of Covenant. Schedule 5, Projected Utilization. The utilization projections set out in Covenant's Schedule 5 are reasonable and appropriate. The projections of patient days projections are obtainable and achievable. Schedule 6, Staffing. The staffing and FTE’s proposed by Covenant on Schedule 6A of the application for the first year and the second year of operations are reasonable and appropriate. The staffing projections are sufficient to ensure quality of care. The projections are consistent with the prior start- up experience of Covenant. They are based on a reliable computer model used by Covenant to staff its operations and administration. The staffing model generally supports staffing ratios for all disciplines, which meet or exceed guidelines established by the NHPCO. The salaries projected also were developed based on the actual experience and mid-range salaries of Covenant. The salaries are sufficient to recruit and retain sufficient numbers of qualified staff at the salary levels indicated in Schedule 6A. Covenant has been able to recruit and retain sufficient numbers of qualified staff, including registered nurses and licensed nurses, in its existing SAs at the salary levels indicated. The proposed nurse salaries are approximately equivalent to salaries paid in SA 1, SA 2A, and SA 2B, including the salaries paid in hospitals. Covenant's ability to recruit and retain nurses at the proposed salary levels is corroborated by the fact that some of the registered nurse salaries are higher in the Pensacola, Florida, metropolitan service area (MSA) than in the Tallahassee, Florida, MSA. Even with higher average salaries in Pensacola than in Tallahassee, Covenant has been able to recruit and retain sufficient numbers of registered nurses at the proposed salary levels. The ability of an organization to recruit and retain sufficient numbers of qualified staff is a function of several factors, including work environment, reputation of the employing organization, satisfaction and morale level of the staff, opportunity for staff development and growth, flexibility and respect of the organization for its staff and, of course, salary and benefits. Many such factors attract nurses and other staff specifically to Covenant. If approved in SA 2B, Covenant will not have a significant adverse impact on the ability of BBH to recruit and retain sufficient numbers of qualified staff. This is true because Covenant does not require that nurses have hospice experience. However, Covenant will recruit from the same pool of nurses and thus compete in its recruiting with hospitals, home health agencies, doctors' offices, and any other organization that employs nurses, including BBH. Any adverse impact on BBH's ability to recruit and retain nurses will be minimal. Further Covenant will recruit its staff across the entire eight-county area that comprises hospice SA 2B. Covenant will fill approximately 3.5 FTEs by the end of the first year. Those numbers are not sufficient to have an adverse impact on BBH's ability to recruit and retain sufficient numbers of staff, including nurses. Nor will Covenant have an adverse impact on the staffing costs in SA 2B by driving up staffing costs. It is undisputed that there is a shortage of nurses nationwide. Covenant will be able to recruit and retain sufficient numbers of skilled staff, including nurses, in SA 2B, notwithstanding that shortage, in part due to the positive work environment that it will provide. Schedules 7A and 8A, Projected Revenues and Expenses. Schedule 7A of the application depicts projected revenue for the proposed project. The starting point for the revenue projections is the utilization and patient day projections for the first two years of operation, set out in Schedule 5 of the application. The revenue projections are based upon an established rate for levels of care and payer source. They are based on obtainable volumes and payer source projections. Covenant used a reliable computer model in making the revenue projections. Covenant also projected revenues in a manner consistent with its experience. The overall revenue projections in Schedule 7A, the assumptions underlying their calculations, and the methodology used in making the projections are reasonable, appropriate, and conservative. Schedule 8A sets forth the projected income and expenses for the proposed project. Covenant used the same computer model discussed above and its experience to project income and expenses. The bottom line is that the project is expected to have a net operating surplus of $23,695 in the second year of operation. The income and expense projections, their underlying assumptions such as inflation factors, and the methodology used in making the calculations are reasonable, appropriate, and consistent with Covenant's experience. They are conservative in that they underestimate income and overestimate expenses. Of particular note is that the proposed non-operating revenues for year one and year two include grant revenues, donations, and fundraising. Additionally, property expenses include the cost of rent. Regarding health insurance costs, Covenant has experienced substantial increases in health care insurance premiums. However, health insurance premiums are a component of benefits, and Covenant’s overall benefit rates are conservative, sufficient, and reasonable. Finally, the projected general and administrative costs and ancillary costs, including contractual costs, are reasonable, appropriate, and conservative. Immediate or short-term financial feasibility is the ability of the applicant to secure the funds necessary to capitalize and operate the proposed project. Schedules 1, 2, and 3 and the audited financial statements of Covenant demonstrate that it has sufficient funds and cash-on-hand to fund the project. The capital projects listed on Schedule 2 do not adversely affect the ability of Covenant to fund the project, nor does the project adversely affect the ability of Covenant to carry out all projects listed on Schedule 2 of the application. Therefore, the project is financially feasible in the short term. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Based upon a review of the reasonableness of the volume and patient day projections, the staffing and income and expense projections, it was established by competent substantial evidence that the proposed project is financially feasible in the long term. It is important to note that the reasonableness of the income and expense projections depicted on Schedule 8A of the application, which result in a second year net operating surplus, are driven by the admissions and patient day projections. Persuasive evidence indicates that Covenant's admissions and patient day projections are reasonable and achievable. Financial feasibility analysis is different for hospices than for other organizations because hospices are not- for-profit entities. They rely to a great extent on grants, donations, and other non-operating revenue to sustain operations. Covenant has an excellent record in regard to fund- raising. It has strong reserves of ready cash and over $1 million in investments. This project would be financially feasible even if it did not show a net profit in the first two years of operation. Covenant has the ability to support the project, and the commitment to do so, such that the program would continue to operate as a viable operating entity.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That AHCA should grant Covenant a CON to establish an additional hospice program in SA 2B. DONE AND ENTERED this 7th day of November, 2002, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD 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 7th day of November, 2002. COPIES FURNISHED: Michael D. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308-5403 J. Robert Griffin, Esquire J. Robert Griffin, P.A. 2559 Shiloh Way Tallahassee, Florida 32308 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
