The Issue This proceeding concerns applications for certificates of need (CON) for open heart surgery programs at Central Florida Regional Hospital and Winter Park Memorial Hospital. It must be determined whether those applications meet applicable statute and rule criteria and should be approved by the Department of Health and Rehabilitative Services. By stipulation, filed on June 20, 1989, the parties agree that the following criteria have either been met or are not at issue in this proceeding: Section 381.705(1)(c), F.S., regarding quality of care, only as to the applicants' record of providing quality of care in currently existing programs, and not as to the provision of open heart services. Section 381.705(1)(f), F.S., regarding the need for special equipment and services in the district which are not reasonably and economically accessible in adjoining areas. Section 381.705(1)(j), F.S., regarding the special needs and circumstances of health maintenance organizations. Section 381.705(2)(e), F.S., regarding nursing home beds. Rule 10-5.O11(1)(f)3.c., F.A.C., regarding the applicants' ability to provide a specified range of services in the facility if granted their certificates of need.
Findings Of Fact The Parties Applicant, Central Florida Regional Hospital (CFRH) is a 226-bed private, for profit hospital in Sanford, Seminole County Florida. CFRH was a county-owned hospital until 1980, when it was purchased by Central Florida Regional Hospital, Inc., a wholly-owned subsidiary of Hospital Corporation of America (HCA). CFRH currently provides a wide range of diagnostic and treatment services, including cardiology, neurology surgery, special imaging, and nuclear cardiology. Its in-patient cardiac catheterization services were initiated in April, 1988. Applicant, Winter Park Memorial Hospital (WPMH), is a 301-bed acute care, not-for-profit hospital located in Winter Park, Orange County, Florida. It was opened in 1955, and is governed by a board of directors comprised of business and civic leaders in the central Florida area. WPMH also currently offers diagnostic cardiac catheterizations services with medical/surgical, pediatric/obstetric, and a broad range of outpatient services. The Department of Health and Rehabilitative Services (HRS) is the agency responsible for administering sections 381.701 through 381.715. F.S., the "Health Facility and Services Development Act", the statute describing the certificate of need (CON) process. Petitioner, Humana of Florida, Inc., is the corporate owner of Humana Hospital Lucerne (Humana), a 267-bed hospital facility in downtown Orlando, Orange County, Florida. Along with its broad range of existing services, Humana provides open heart surgery and a full range of diagnostic and therapeutic cardiac catheterizations. It maintains two operating rooms (ORs) dedicated for open heart surgery. Petitioner, Adventist Health Systems/Sunbelt, Inc. is the corporate owner and licensee of a number of hospitals, including Florida Hospital. Florida Hospital is a private not-for-profit tertiary care hospital with over 1100 beds on three campuses in central Florida: Orlando, Apopka, and Altamonte Springs. Florida Hospital's open heart surgery program, the largest in HRS District 7, and one of the largest in the southeast United States, is conducted at the Orlando facility in Orange County. It has four ORs dedicated to open heart surgery. Florida Hospital has an active cardiac catheterization program with a full range of diagnostic and therapeutic procedures, such as angioplasty and valvuloplasty. The Applications CFRH proposes to add its open heart surgery program at a total cost of $4,322,702.00, including construction costs, equipment and financing costs. CFRH intends to start with a single furnished OR and with shelled-in space for a second OR. These and a recovery area will be located on the first floor adjacent to the existing surgical department. Twelve existing general medical/surgery beds will be converted to intensive care beds on the second floor, accessible by means of an elevator dedicated to the exclusive use of open heart surgery patients. CFRH's primary service area is described as north Seminole and southwest Volusia counties, an area containing no other open heart surgery programs. It anticipates it will draw its open heart surgery patients primarily from that service area, and projects 200 surgeries by the end of the first year, with 288 surgeries during the second year. WPMH proposes to add two dedicated ORs and related operating suite rooms for open heart surgery, at a cost of $1,470,000.00. One of the ORs will be kept available for emergency open heart surgery cases. The application does not include additional intensive care or critical care unit beds. Because it is slowly phasing in additional progressive care beds, the applicant anticipates that the current bottleneck created by patients waiting to leave critical care to go to progressive care, will be relieved by the time the open heart surgery program generates a demand for critical care and intensive care beds. Like CFRH, WPMH claims a relatively local primary service area, east Orange and south Seminole Counties, and proposes that its open heart surgery program will serve that same area. WPMH projects a case load of 117 open heart surgery patients the first year, 173 the second year, and is confident that it will meet the minimum requirement of 200 adult open heart procedures annually by the end of the third year of service. Neither CFRH nor WPMH are projecting pediatric open heart surgery. Numeric Need and the "350 Standard" HRS Rule 10-5.011(1)(f)8., Florida Administrative Code, provides the formula for determining a threshold numeric need for open heart surgery programs in a service area, defined for purposes of the rule as the entire HRS district. District 7 is comprised of Orange, Seminole, Osceola, and Brevard Counties, on Florida's east central coast. The formula is stated as follows: 8. Need Determination. The need for open heart surgery programs in a service area shall be determined by computing the projected number of open heart surgical procedures in the service area. The following formula shall be used in this determination: Nx - Uc X Px Where: Nx = Number of open heart procedures projected for Year X; Uc = Actual use rate (number of procedures per hundred thousand population) in the service area for the 12 month period beginning 14 months prior to the Letter of Intent deadline for the batching cycle; Px = Projected population in the service area in Year X; and, Year X = The year in which the proposed open heart surgery program would initiate service, but not more than two years into the future. Elizabeth Dudek is a health facilities and services consultant supervisor in HRS' Office of Regulation and Health Facilities. She was the Department's authorized representative at the hearing and was qualified, without objection, as an expert in health planning. The State Agency Action Report (SAAR), reflecting HRS' review of the CON proposals, applies the formula above as explained by Ms. Dudek. The planning horizon for the project under consideration is July, 1990, which, based on data from the Executive Office of the Governor, has a projected population of 1,492,327. The use rate of 202.53 per hundred thousand population for District 7 was derived from volume data provided by the local health council and from population data from the Executive Office of the Governor. The result of the formula is a projected number of 3022 procedures in the planning horizon. While the rule does not specify what is done with this figure, HRS looks to the 350 minimum number of procedures required in subsection 11. of the rule and divides 350 into the projected number of procedures, to derive a theoretical number of programs which could operate in the district. HRS found a need for 8.6 programs, rounded to 9. Since District 7 has four existing programs, this meant that 5 additional programs could be approved. HRS approved three, the two applicant parties in this proceedings and Wuesthoff, in central Brevard County. There is little, if any, dispute with HRS' application of its rule to this point. The parties do vigorously dispute the application of the following portions of Rule 10-5.011(1)(f), F.A.C.: 11.a. There shall be no additional open heart surgery programs established unless: the service volume of each existing and approved open heart surgery program within the service area is operating at and is expected to continue to operate at a minimum of 350 adult open heart surgery cases per year or 130 pediatric heart cases per year, and, the conditions specified in Sub- subparagraph 5.6., above, will be met by the proposed program. b. No additional open heart surgery programs shall be approved which would reduce the volume of existing open heart surgery facilities below 350 open heart procedures annually for adults and 130 pediatric heart procedures annually, 75 of which are open heart. The volume of procedures performed at existing programs during the period, July 1987 to June 1988, was: Florida Hospital-Orlando 1612 Holmes Regional 333 Humana Lucerne 440 Orlando Regional 368 2753 At the time of this batching cycle, there were only "existing" and no "approved" (not yet operating) programs in District 7. Holmes Regional did not meet the 350 minimum, as reflected above. HRS, however, has consistently and over a period of years, interpreted the requirement of 11.a (I) to be that an average of 350 cases be performed by existing and approved programs, not that each program actually perform that minimum, annually. Under this interpretation, which assumes that all programs have equal capacity, there are sufficient procedures being generated in the district to allow for the existing programs to average over 688 procedures. Quality of Care Part of the rationale for the 350 minimum procedures per year is the widely-accepted view that mortality rates are lower when an open heart program experiences volume at a minimum level of 200-350 procedures annually. Dr. Harold Luft is a professor of Health Economics employed at the University of California in San Francisco, who has conducted extensive research into the correlation between volume of open heart surgery cases and quality of care. In his findings published in the Journal of the American Medical Association in 1987, in-house deaths were 5.2%, 3.9%, 4.1% and 3.1% in facilities conducting 20-100, 101-200, 201-350, and more than 350 annual operations, respectively. A strong correlation was also found between volume and "poor outcome", defined as patients who either died in the hospital or who stayed beyond 15 days in the hospital (the 90th percentile post operative length of stay). Poor outcomes occurred in 21.7%, 15.5%, 11.8% and 12% of the patients in facilities performing 20-100, 101-200, 201- 350, and more than 350 annual procedures, respectively. The correlations are even more dramatic for patients who received non-scheduled ("emergency") surgery, ranging from 7.7% deaths in hospitals performing less than 100 operations, to 4.6% deaths in hospitals performing more than 350 operations annually, and from 27.9% poor outcomes in the lowest volume hospitals to 16.3% poor outcomes in the highest volume hospital. Both applicants argue the advantages of having the open heart surgery in-house to avoid the trauma of transfer of an emergency patient from their facility to another existing open heart surgery program. Dr. Luft's study cited above suggests that, despite the trauma of transfer, an unscheduled case might still expect a better outcome in a higher volume facility. While it is sometimes necessary to transfer a patient from one hospital to another for coronary angioplasty or open heart surgery, those patients are most frequently medically stable and have been scheduled for the procedure. Where a patient in need of a diagnostic cardiac catheterization has a history placing him in a high risk category, the patient will generally be referred at the outset to a facility with full service back-up to avoid the chance of an emergency transfer. Emergency cases are rare in open heart surgery, and when they have occurred, they have been accommodated at existing programs, with little, if any, delay. The applicants presented ample hypothetical examples of elderly heart patients anxiously enduring emergency transfers by helicopter or ambulance with dangling IV tubes, balloon pumps or other support devices. No actual data was presented as to how many cases are transferred in this manner or to the mortality rates attributable to such transfers. Florida Hospital enjoys an excellent reputation for the quality of its large open heart surgery program. It regularly draws patients from areas beyond the boundaries of district 7. No evidence was produced to suggest that the other existing programs are of questionable quality. Quality of care in the district will not be enhanced by approval of these applications. Access: Geographic and Economic Rule 10-5.011(1)(f)4.a., F.A.C. requires that open heart surgery be available within a maximum automobile travel time of two hours under average travel conditions for at least 90% of a service area's population. It is uncontroverted that this standard is met by existing providers. The average driving time from Florida Hospital to CFRH is 29 minutes, and from Florida Hospital to WPMH is just over 15 minutes. Although CFRH would be the only program in Seminole County, the population is concentrated at the lower end of the county, closer to Orlando and closer to Florida Hospital than to CFRH at the northeast end of the county. It would undoubtedly be convenient for patients and their physicians to be able to administer and receive all medical services in a neighborhood center, but no one is suggesting that every community hospital should have an open heart surgery program. Open heart surgery and its associated services are expensive. These services are not used by many indigent or Medicaid patients and no data is available regarding the level of need by this group or the impediments to access. WPMH has a reputation of providing low cost medical services and CFRH has a commendable history of commitment to public health, but the numbers of medicaid patients and indigents proposed to be served do not alone-weigh in favor of approval of their applications. Availability of Staff A single seven-physician, open heart surgery group performs virtually all of the open heart surgery in District 7, at Orlando Regional Medical Center (ORMC), Humana and Florida Hospital. The group has also committed to providing services at Winter Haven Hospital, an applicant in District 6; Wuesthoff; and CFRH and WPMH. In addition to surgery, the group provides in-house back up to facilities performing coronary angioplasty in their catheterization labs. When new programs come on line the open heart surgeon must spend substantial time training and working with the new surgery team at the hospital. This would further strain a busy practice. There are already delays at existing facilities in obtaining back-up surgery coverage. The group has stated that it will expand, if the new programs are approved, but it is unreasonable to assume that the expansion will be timed to fully accommodate existing demand and the demand of three new programs. The shortage of critical care unit nurses nationwide and in central Florida, is widely acknowledged, and Dr. Meredith Scott, an eminent cardiac surgeon otherwise enthusiastically supporting the new programs, cautions that the dilution of a pool of highly qualified nurses detracts from his support. When hospitals are unable to recruit sufficient nursing staff they are left with reliance on temporary agency personnel, a less preferable alternative in terms of costs and quality of care. Financial Feasibility Both applicants have the funds required for capital expenditures and start-up costs. CFRH's parent corporation, HCA, has committed that it will fund the project costs and has the resources to do so. The interest expenses allocated by HCA are appropriately included in the applicant's pro forma projection of revenue and expenses. The pro formas of both applicants, reflecting no more than a best guess, are reasonable. To the extent that expenses are understated, the charges will no doubt be adjusted, and they will also rise in the event that use rates do not reach expectations. Open heart surgery is a highly profitable health care service. Competition/Need/Impact on Existing Programs District 7 has four existing providers and a fifth approved provider, Wuesthoff, for a total of 11 dedicated ORs for open heart surgery, ranging from 4 at Florida Hospital to one at Holmes. Competition in the market already actively exists and was not a notable factor in HRS' decision to approve the applications. Wuesthoff's projected average charge for the first year at $30,400.00 is $4-5,000.00 less than that projected by WPMH and CFRH. A single OR has a capacity of 500 cases per year. HRS Rule 1O- 5.O11(1)(f)3.d, F.A.C. requires that each open heart surgery program be able to provide 500 operations per year. Same programs, as Holmes, and as CFRH's proposed program, have only one OR, evidencing acceptance of that capacity principle. Eleven existing and approved ORs translate into a capacity of 5500 cases. The horizon year volume is projected at a mere 3,022 cases. Assuming, for argument's sake, and as proposed by the applicants, that the need methodology of Rule 10- 5.O11(1)(f)8., F.A.C. under-states utilization rates and, therefore, need; or that the number of "cases" should be more properly adjusted by a multiplier to derive the number of "procedures"; ample capacity still exists. In the period of July 1987 through June 1988, existing providers performed 2753 surgeries. The projected 3,022 cases will generate 269 additional surgeries - enough to support Wuesthoff, the approved provider, (assuming no increase by existing providers) - but inadequate to justify the approval of two additional programs in the same cycle. It is obvious from the above that the applicants, in order to achieve their projected utilizations, will draw heavily from existing providers. At 1589 cases in 1988, (more than half the cases performed that year in District 7), Florida Hospital is a leviathan, a mega-center. Approximately half of its patients come from counties outside of District 7. Among the in- district patients, substantial numbers of referrals are from CFRH and WPMH. In a 13-month period ending in April 1989, CFRH referred 82 open heart surgery cases to Florida Hospital and one case to Humana. In 1987 and 1988, WPMH referred 70 and 84 open heart surgery patients, respectively, to Florida Hospital and 4 and 5 patients to Humana Hospital. Whether population growth or increased utilization rates will make up those losses is a matter of conjecture. Utilization rates have remained relatively stable since 1983, gaining 13 cases per thousand in that period, from 196 in 1983, to 209 in 1988. New technology is making it possible to avoid open heart surgery by removing obstructions from the heart vessel, rather than bypassing them. Ultrasound and laser techniques are being tested, and drug treatments and more efficient use of balloon angioplasty are reducing the incident of by-pass operations. Consequently, it is the sicker patients who receive the more invasive open heart surgery. And, typically, the sicker patients are referred to the larger, longer- established programs, driving up their costs when the new programs are able to skim the more profitable cases. Size alone does not cushion the impact on a facility such as Florida Hospital. The cardiology program accounts for one-third of its revenue. It helps support a research center and extensive education programs . Loss of revenue will effect these programs, as they, rather than direct services to patients, will be cut to the detriment of the health care community at large. Impact on Humana and the other smaller facilities is likely to be more direct. Humana's open heart surgery program was set back recently when a group of cardiologists left its staff in a dispute over administration. Volume has dropped and Humana reasonably projects 250 surgeries or less in 1991 and 1992 if WPMH and CFRH are approved. Both Humana and ORMC lost volume and market share when Holmes began to operate, since these facilities rely heavily on in-district patients. Like Florida Hospital, Humana derives one-third of its revenue from its cardiology program. State and Local Health Plans Both applications are consistent with the State Health Plan's objective of maintaining an average of procedures per open heart surgery program in the district, although as demonstrated above, actual maintenance of such an average would decimate the program at Florida Hospital. The plan's primary goal of ensuring the availability and accessibility of open heart services is not advanced by these applications. The most current State Plan is dated 1985-87; it is effective through 1987. Although widely referred to in CON proceedings because of statutory and rule requirements for consistency, the utility of an out-of-date plan for health planning purposes is questionable. The District 7 local health plan, approved by the local health council in June 1988, is internally inconsistent. It provides: District VII existing open heart programs appear to be performing well both from the standpoint of volume efficiency and quality, and clearly, there is sufficient, accessible capacity in these programs to handle additional growth. Consider, too, that new open heart programs are being developed in surrounding districts, and these programs, once operational, will begin to draw back their local patient bases from this district's open heart providers. Lately, as angioplasty, laser and drug technology evolve, there is little doubt that the percentage of patients requiring open heart surgery to correct blockage problems will drop. In view of these aforementioned facts, the approval of any additional open heart programs in District VII is discouraged. (Florida Hospital Exhibit #9, P. AC- 45.) emphasis added. At the same time, the plan provides four recommendations for tertiary services, including open heart surgery: specifically, that priority be given to CON applications from teaching hospitals or regional health care centers (defined as non-teaching hospitals) of at least 300 acute-care beds, that priority be given to applicants which commit to serve patients regardless of ability to pay, that applications be reviewed on a districtwide or regional basis, and that review priority be given to open heart surgery applicants which provide clear documentation of the impact of their proposal on other similar service providers in the district and in adjourning districts serving the same geographical area. (Florida Hospital Exhibit #9, P. 11-67) As discussed above, these recommendations are only marginally met by the applicants, if at all, and CFRH is clearly not a regional health center. "Balancing the Criteria" and Summary of Findings Additional open heart surgery programs are not needed in District 7. The expenditure of approximately $5.8 million in construction and start-up costs, the dilution of scarce staffing resources, the real potential that existing programs will suffer substantial financial losses, the real risk that declining volume at existing programs will lead to poorer quality of care or that the new programs will fail to achieve their hoped for volume, are not outweighed by enhanced convenience to patients, their families and physicians. Access to good quality open heart surgery is not currently a problem and, as advocated by Dr. Ron Luke, the more prudent health planning course would be to wait to see what happens in the district with the additional two open heart surgery operating rooms at Wuesthoff.
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That a final order be issued denying CON number 5695 for Winter Park Memorial Hospital and number 5696 for Central Florida Regional Hospital. DONE AND RECOMMENDED this 12th day of December, 1989, in Tallahassee, Leon County, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 1989. APPENDIX The following constitute rulings on the findings of fact proposed by each party: CENTRAL FLORIDA REGIONAL HOSPITAL This party's proposal includes 68 separately numbered lengthy paragraphs combining argument with multiple findings. The arguments are well articulated and well organized. However, the format makes it impossible to accord a paragraph by paragraph ruling. The description of the parties, the description of HRS' application of its rule and the conclusions regarding financial feasibility of the CFRH application are accepted generally and substantially, or in summary form, have been adopted in this recommended order. Otherwise, the findings are rejected as unnecessary, immaterial or contrary to the weight of evidence. WINTER PARK MEMORIAL HOSPITAL Adopted in paragraph 2. Addressed in the Preliminary Statement. Adopted in paragraph 2. 4-6. Rejected as unnecessary. 7. Adopted in Statement of the Issues. 8-10. Rejected as unnecessary. Adopted in paragraph 9. Rejected as unnecessary. 13-17. Adopted generally in paragraph 9. 18 and 19. Rejected as unnecessary. 20-31. The current staffing at the facility and the level of staffing projected as necessary for the open heart program are not materially at issue. The issue is whether necessary staffing will be available and whether competition for existing staff will impact costs and quality of care. Rejected as contrary to the weight of evidence. See 20-31, above. Rejected as contrary to the evidence. There are delays in getting back-up surgery teams. The description of the group and its commitment is adopted in paragraph 30. That quality of care will not be affected was not established by the weight of evidence. 36-38. Rejected as unnecessary. 39-47. Adopted generally in paragraphs 34 and 35, except as to the finding that there is sufficient growth to assure 200 cases in the third year for all three applicants. This is rejected as contrary to the evidence. 48 and 49. Rejected as unnecessary. 50. Rejected as contrary to the weight of evidence. 51-53. Addressed in paragraph 23, otherwise rejected as immaterial. 54-58. Addressed in paragraph 28, otherwise rejected as immaterial. Adopted in substance in paragraph 29. Adopted in paragraph 14. 61 and 62. Adopted in paragraph 12. 63. Adopted in paragraph 14. 64 and 65. Rejected as unnecessary. 66. Adopted in paragraphs 16 and 17, except that the application meets the requirements of the rules, only as applied by HRS. 67-83. Rejected generally as contrary to the weight of evidence or immaterial. 84. Rejected as argument. 85-89. Rejected as immaterial or argument. 90. The comparison of Florida Hospital's mortality rate to that of Ormand Beach Hospital's is immaterial. There is no analysis of case mix and even Dr. Luft concedes that there may be isolated examples of high mortality rates with high volume or low rates in a low volume hospital. 91-93. Rejected as unnecessary or unsupported by the weight of evidence. Rejected as unnecessary. That the application meets the objectives of the local health plan is rejected as contrary to the evidence. The remaining portion of the paragraph is subordinate Rejected as unnecessary. Adopted in cart in paragraph 44, otherwise rejected as contrary to the evidence. Rejected as cumulative and unnecessary. 99-115. Rejected as unnecessary. That competition already exists is adopted in paragraph 36 otherwise rejected as unnecessary. Rejected as contrary to the evidence. THE DEPARTMENT OF HRS 1-3. Addressed in Preliminary Statement. 4 and 5. Adopted in substance in paragraph 12. 6-8. Adopted in paragraph 14. 9. Adopted in paragraph 45. 10 and 11. Rejected as unnecessary. Rejected as contrary to the weight of evidence. Adopted, as to the "averaging" method, in paragraph 44, otherwise rejected as unnecessary. Rejected as contrary to the weight of evidence, except as to the finding regarding drive time, which is adopted in paragraph 26. The quality of care stipulation is addressed in the statement of issues. The remaining finding regarding 200 procedures within 3 years is rejected as contrary to the weight of evidence. 16 and 17. Adopted, as to financial feasibility, in paragraphs 34 and 35, otherwise rejected as contrary to the weight of evidence. 18. Rejected as contrary to the weight of evidence. 19 and 20. Rejected as immaterial or unnecessary. HUMANA OF FLORIDA, INC. Adopted in substance in paragraph 9. Rejected as unnecessary. The original lack of pro forma is addressed in conclusions of law. Rejected as unnecessary. Adopted in paragraphs 6 & 7. 5 and 6. Adopted in Preliminary Statement. Adopted in paragraphs 14 & 16. Rejected as unnecessary. Adopted in Preliminary Statement. 10-12. Adopted in paragraph 4. Rejected as unnecessary. Rejected as subordinate. Adopted in substance in paragraph 30. 16 and 17. Adopted in paragraph 46. Adopted in paragraph 15. Adopted in paragraph 19. 20 and 21. Rejected as unnecessary. 22. Adopted in paragraph 14 and in conclusions of law. 23-25. Rejected as unnecessary. 26 and 27. Adopted in paragraph 38. Adopted in paragraph 37. Adopted in substance in paragraph 46. 30 and 31. Adopted in substance in paragraphs 26 and 27. 32-35. Rejected as unnecessary. 36. Adopted in substance in paragraph 41. 37 and 38. Rejected as unnecessary. 39 and 40. Adopted in paragraph 46. 41-44. Rejected as cumulative and unnecessary. 45-49. Adopted in substance in paragraphs 44 and 45. 50 -60. Rejected as contrary to the weight of evidence or unnecessary. 61-63. Adopted in substance in paragraph 36. 64-70. Rejected as cumulative or unnecessary. 71. Adopted in paragraph 24. 72 and 73. Adopted in paragraph 25. 74. Adopted in paragraph 19. 75-77. Rejected as unnecessary. 78-82. Adopted in substance in paragraphs 30-32. 83 and 84. Adopted in paragraph 33. 85-90. Rejected as unnecessary, except as adopted in paragraph 22. 91-1OO. Rejected as unnecessary. Adopted in paragraph 29. Rejected as unnecessary. 109-123. Rejected as contrary to the weight of evidence. 124-125. Rejected as unnecessary. 126-134. Adopted in summary in paragraph 43. 135-138. Rejected as cumulative. 139-143. Rejected as contrary, to the weight of evidence or unnecessary. FLORIDA HOSPITAL Adopted in paragraphs 1 & 2. Adopted in paragraph 4. Adopted in paragraph 5. Adopted in paragraph 16. 5-12. Rejected as unnecessary. Adopted in paragraph 12. Adopted in paragraph 14. Addressed in Preliminary Statement. Adopted in paragraph 17. Adopted in paragraph 38. Rejected as unnecessary. Adopted in paragraph 41. 20 and 21. Rejected as unnecessary. 22 and 23. Adopted in paragraph 45. Rejected as unnecessary. Adopted in paragraph 19. Adopted in paragraph 20. Rejected as cumulative and unnecessary. Adopted in paragraph 26. Adopted in paragraph 27. Adopted in paragraph 22. 31 and 33. Rejected as unnecessary. 34-39. Rejected as argument or unsupported by the record. 40. Adopted in summary in paragraph 33. 41 -46. Rejected as unnecessary. Rejected as immaterial. Rejected as contrary to the evidence or immaterial. Addressed in Conclusions of Law. Adopted in paragraph 39. 51-57. Rejected as unnecessary. 58-76. Impact is addressed in summary in paragraphs 42 and 43. 77. Adopted in paragraph 30. Adopted in paragraph 29. Rejected as unnecessary. COPIES FURNISHED: Jeffery A. Boone, Esquire Robert T. Klingbeil, Jr., Esquire P.O. Box 1596 Venice, FL 34284 James C. Hauser, Esquire P.O. Box 1876 Tallahassee, FL 32302 Richard A. Patterson, Esquire Ft. Knox Executive Center 2727 Mahan Drive Tallahassee, FL 32308 John Radey, Esquire Elizabeth McArthur, Esquire Monroe Park Tower Suite 1000 Tallahassee, FL 32314 Kenneth F. Hoffman, Esquire 2700 Blairstone Road Tallahassee, FL 32314 Gregory L. Coler, Secretary Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 John Miller, General Counsel Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 R. S. Power, Agency Clerk Dept. of Health and Rehabilitative Services 1323 Winewood Blvd. Tallahassee, FL 32399-0700 =================================================================
The Issue Whether certificate of need application number 7184 for the establishment of adult open heart surgery services at Baptist Hospital, Pensacola, Florida, filed in March 1993, meets statutory and rule criteria for approval.
Findings Of Fact On or about March 23, 1993, Baptist Hospital, Inc., ("Baptist"), Pensacola, Florida, filed a certificate of need ("CON") application to establish an adult open heart surgery program for a total project cost of $2.35 million. Baptist's application was subsequently numbered CON 7184, and was approved preliminarily by the Agency for Health Care Administration ("AHCA") on July 7, 1993. Conditions for the issuance of the CON were drafted by Elizabeth Dudek of AHCA. Violations of CON conditions may result in sanctions, including fines of up to $1,000 a day. The conditions, as drafted, are as follows: The provision of a minimum of 3 percent of total annual adult open heart surgeries to Medicaid patients. The provision of a minimum of 3 percent of total annual adult open heart surgeries to charity care patients. A fixed rate structure by DRG for open heart surgery discharge (DRGs 104-108) will be set at a level which is 85 percent of the average of the most recently available charges at Sacred Heart and West Florida Regional, inflated at 7.5 percent annually. Baptist shall ensure a minimum annual adult open heart surgery patient volume of 350 at each Sacred Heart and HCA West Florida. (This assurance shall not be achieved though the transfer of charity care patients). Baptist is a 546-bed hospital, with 388 medical/surgical beds, 62 acute care beds being used as skilled nursing beds, 76 psychiatric and 20 substance abuse beds. Baptist is a Medicaid disproportionate share provider and a designated Level II trauma center, located in Pensacola, Escambia County, in AHCA District I. District I includes Escambia, Santa Rosa, Okaloosa, and Walton Counties. Baptist's primary service area is Escambia and Santa Rosa Counties in Florida, and Baldwin and Escambia Counties in Alabama. Sacred Heart Hospital of Pensacola ("Sacred Heart") the oldest hospital in Pensacola, is licensed for 391 beds, including 42 Level II and III neonatal intensive care beds, and is a Level II trauma center. Sacred Heart has an approved CON to add 40 acute care beds for a women's and children's hospital. In late 1995, construction is expected to be completed. After the women's and children's hospital is finished, Sacred Heart will undertake the construction of 12 additional critical care beds which it projects will be operational in 1996. Sacred Heart is a Medicaid disproportionate share provider. Sacred Heart initiated an open heart surgery program in the early 1970's, and is located approximately 4 to 6 miles from Baptist. Escambia and Santa Rosa Counties are in Sacred Heart's primary service area. The secondary service area includes Okaloosa and Walton Counties, and sections of Alabama. Approximately 65 percent of the total open heart surgery patients in Escambia County, and 51 to 58 percent of the total from Santa Rosa County have open heart surgeries at Sacred Heart. West Florida Regional Medical Center ("West Florida") is a 547-bed existing provider of open heart surgery services, composed of 378 medical/surgical care, 21 skilled nursing, 89 psychiatric, and 58 comprehensive medical rehabilitative beds. West Florida is also a state Level II trauma center, in Pensacola. West Florida is approximately 7 to 9 miles from Sacred Heart, and approximately the same distance from Baptist. Open heart surgery services were initiated in 1975 at West Florida, which is the dominant provider to residents of Okaloosa and Walton Counties. West Florida Regional's service area includes all of District 1. Three open heart surgery programs exist in Mobile, Alabama, approximately one to one and a half hour drive from Pensacola, two more in Dothan, Alabama, and one in Panama City, in AHCA District 2. Over 90 percent of the population in District 1 is located within a two-hour average drive to an existing open heart surgery program. Numeric Need On February 5, 1993, AHCA published a fixed need pool of zero for additional adult open heart surgery programs in District I for the July 1995 planning horizon. Two subsequent publications of need for an additional open heart surgery program in the district have also resulted in zero numeric need. When zero numeric need is computed, using the formula in Rule 59C-1.033(7)(b), an applicant has to demonstrate not normal circumstances for the approval of the application. In addition, a new adult open heart surgery program will not normally be approved if the formula in subsection (c) of that rule yields a result less than 350, indicating that existing programs in the district will be reduced to volumes below 350 annual open heart surgery operations. The calculation to determine whether this condition applies was 346.67. A fixed need pool of zero was published and not challenged. Vol. 19, No. 5, Florida Administrative Weekly, February 5, 1993. Not Normal Circumstances for Need Baptist describes certain conditions as not normal circumstances for the approval of its open heart surgery program. The not normal circumstances described are (1) a lack of financial access for uninsured persons, (2) utilization and capacity problems at one of the two existing providers in the district, (3) the size of Baptist Hospital, and the size and complexity of its cardiology services, and the fixed price and minimum volume conditions proposed for the approval of the CON. Financial Access Baptist asserts that its program will serve uninsured patients, who are a financially underserved group in its service area. Baptist proposes in its pro forma to serve up to 15 uninsured open heart surgery patients in year one and up to 19 in year two. Assuming the percentage of uninsured persons in District 1 is comparable to that for the entire state and assuming the open heart surgery use rate for the uninsured would otherwise be the same, Baptist's expert claimed that 53 uninsured persons were denied open heart surgery services in District 1 in 1993. Baptist's opponents challenged the admissibility of evidence related to uninsured persons as an impermissible amendment not discussed in the application. Assuming arguendo, that the evidence is admissible, Baptist failed to document any unmet need for uninsured persons, which its proposal will alleviate. There was more credible evidence that uninsured persons have a lower use rate for reasons other than the absence of another program in the district, including age, lack of access to primary care physicians, lack of referrals to cardiovascular surgeons, and the failure to secure Medicaid coverage. No advantage is gained with referrals of patients to the same group of cardiologists and cardiovascular surgeons who currently serve both Sacred Heart and Baptist, in the absence of evidence that the doctors can and will accept more Medicaid and indigent patients. The use rate for Medicaid patients in District 1, adjusted for age, shows equal access to open heart surgery services, as compared to other payer groups. District 1 Demographics and Utilization AHCA District 1 includes Escambia, Santa Rosa, Okaloosa and Walton Counties. Approximately 250,000 people reside in Escambia County, with slightly over half of the district population located in the other three counties in the district. Escambia is the western-most county in the district and the state. From 1992 to 1997, adult population growth is projected to be lower in Escambia County (2.6 percent) than it is district-wide (6.5 percent) which, in turn, is lower than the statewide growth rates (9 percent). Open heart surgery services began in District 1 prior to 1988 at both Sacred Heart and West Florida. From 1988 to 1993, the volumes of procedures in District 1 and the state have been as follows: 1988 1989 1990 1991 1992 1993 District 1 805 803 733 901 1,006 848 Statewide 18,961 19,819 22,010 23,748 26,078 25,190 From July 1991 - June 1992, there were 498 and 493 open heart surgery procedures at Sacred Heart and West Florida Regional, respectively, for a total of 991 procedures in AHCA District I. At West Florida Regional, open heart surgeries declined from 533 in 1992 to 418 in 1993. Open heart surgery use rates in District 1 and statewide are declining or becoming comparatively more level. Most residents of the district receive open heart surgery services in the district, with fewer than 3 percent out-migration. Baptist's expert claimed that the 1993 decline was an anomaly rather than a trend, comparing District 1 to AHCA districts which experienced a 1993 decline, but are reporting larger volumes for the first quarter of 1994. The volumes were not annualized to take into account seasonal fluctuations. In fact, Baptist's cardiologists also noted the increase in alternative procedures such as angioplasty, electrophysiology, and drug therapies. In the first quarter of 1994, there were 250 open heart surgery procedures in the district, as compared to 265 in 1992, and 208 in 1993. Annualized for the entire year to adjust for seasonal variations, 980 open heart surgeries are expected in 1994. Expert projections of total open heart surgeries at District 1 facilities for 1995-1998 are in a range as follows: 1995 1996 1997 1998 880 - 1,051 894 - 1,069 908 - 1,085 921 - 1,100 Sacred Heart's occupancy for total acute care beds was 74.8 percent in 1991, 74.5 percent in 1992, and 74.4 percent in 1993. However, Sacred Heart's critical care unit ("CCU") is frequently at capacity during the peak season in the winter months. Delays of 1 to 3 days before patients are admitted for elective open heart surgery operations and elective angioplasties, are not uncommon. Elective procedures are those performed on patients who are stabilized with drug therapies pending the procedure. There is no evidence of delays in transfers for emergency angioplasties or emergency open heart surgeries, other than the time required to follow transfer protocols. Actual Sacred Heart CCU utilization was 83.4 percent in 1991, 84.4 percent in 1992, and 81.2 percent in 1993. Sacred Heart's expert in health planning, Mark Richardson's opinion that over 75 to 77 percent occupancy in a CCU means inadequate capacity to add a new open heart program, but not to serve an existing program is accepted. In addition, Sacred Heart plans to add 12 beds to the critical care unit in early 1996, and has improved case management procedures to alleviate capacity limits in the CCU, and scheduling heart surgeries. Two of the three cath labs at Sacred Heart are used for cardiac caths, electrophysiological studies and angioplasties. Sacred Heart has the capacity to perform 4,200 total cases a year. There are no problems associated with the capacity of the cardiac cath labs at Sacred Heart. The expert testimony is undisputed that West Florida Regional provides excellent quality of care, has excess cath lab, CCU and operating room capacity, and is in an excellent position to increase utilization without additional construction and with minimum additional staff. Cardiologists at Baptist resist transferring patients to West Florida, where they have not sought staff privileges. The statement in Baptists' CON application that the "closed medical staff arrangement at West Florida Regional limits referrals" from Baptist and Sacred Heart is not supported by the evidence. Staff privileges in various categories, including temporary privileges are available to physicians who apply. There was an inference that only doctors affiliated with the hospital's clinics gain privileges at West Florida. From September 1993 to April 1994, over one hundred doctors not affiliated with West Florida's Medical Clinic referred patients to the cath lab at West Florida. West Florida has the capacity to perform from 2500 to 3000 procedures in the two cardiac cath labs and one electrophsiology lab and from 800 to 1000 open heart surgery procedures in its 2 dedicated operating rooms. In 1993, there were 1453 cardiac cath, 387 angioplasties, and 418 open heart surgery procedures at West Florida Regional. A resident of the Baptist area and former patient, and a doctor with privileges at Baptist complained that the drive to West Florida takes up to 30 minutes. There is no credible claim of geographic access problems to West Florida, as defined by Rule 59C-1.033(4)(a), Florida Administrative Code, which provides that "[a]dult open heart surgery shall be available within a maximum automobile travel time of 2 hours under average conditions for at least 90 percent of the district's population." Medical risks of transfers do not outweigh the benefits of concentrated expertise in open heart surgery programs. That determination is one basis for AHCA's rule designating open heart surgery services as tertiary services. Cardiology Consultants is a group of cardiologists, cardiac surgeons, nurses and support staff which provides services to Baptist and Sacred Heart. The chairman of Cardiology Consultants does not travel to West Florida Regional because it is an inefficient use of his time. Because their patients would have to be transferred to cardiologists other than themselves or others in their group, the cardiologists are reluctant to make referrals from Baptist to West Florida Regional for open heart surgery. The cardiologists and one former patient who testified agreed that Sacred Heart's open heart surgery services provided excellent quality of care. By contrast, Baptist's expert, Dr. Luke, claimed that an analysis of severity adjusted mortality rates showed outcomes at Sacred Heart significantly below that statistically expected, and below that experienced at West Florida Regional. That testimony is not reliable due to his lack of an explanation of the methodology involved in the compilation of the report. The analysis was offered to demonstrate that Baptist could capture a larger market share than Sacred Heart. If Dr. Luke's assertions on quality of care are true, the conclusion would suggest that Baptist-based cardiologists refer patients almost exclusively to a lower quality facility to avoid referrals to cardiologists outside their group at West Florida. That conclusion is rejected based on the expert's admission of his lack of clinical expertise to render opinions on quality of care. One of the reasons advanced for the approval of the Baptist CON is that Baptist and Sacred Heart operate, in effect, a unified, high quality single cardiology program with a shared chief cardiologist, shared on-call cath lab staff, and virtually identical, overlapping medical staffs from the Cardiology Consultants group. Cardiology Consultants maintains offices at both Sacred Heart and Baptist. Because the group staffs both hospitals, Baptist argues that its cardiology program should be viewed in terms of serving a 1000 bed hospital, and the statutory criterion on joint or shared programs would apply. In fact, an agreement for a shared or joint CON application was rejected by Sacred Heart. Baptist, in this case, is seeking to establish a program which competes with that at Sacred Heart. Baptist's Size and Programs Baptist cited its size and the breadth of its existing cardiology services as a not normal basis for approval of its open heart surgery program. Baptist is one of only three hospitals in Florida exceeding 500 beds, performing over 1100 cardiac caths without open heart surgery backup. There are also 58 Florida hospitals with cardiac cath services without an open heart surgery program. The Baptist network in District 1 includes two other hospitals of 60 and 55 beds, and affiliations with four of the five hospitals located in Baldwin and Escambia Counties, Alabama. Baptist's actual medical/surgical bed size is 388, as compared to 391 operational and 40 more approved for a total of 431 at Sacred Heart, and 379 at West Florida Regional. All three of the Pensacola hospitals are described by AHCA's witnesses as "large." Since the late 1980's, Baptist has followed a long range plan to develop a first floor heart center. The most recent cath lab construction included shelled-in space to relocate the backup lab from the fourth floor to the first floor. The projected cost of moving the lab, as is, is $50,000 to $60,000. By comparison to the first floor lab, the fourth floor lab equipment is not state-of-the-art. Upgrading the fourth floor lab is expected to cost $400,000. Baptist has a large volume cardiology program, with a broad range of services, and claims to treat sicker cardiac patients. In fiscal year 1993, there were 1106 cardiac caths, 146 electrophysiology studies, 118 pacemaker implants, 69 coronary angioplasties, 20 vascular angioplasties, and 28 defibrillator implants. Baptist's claim that it provided services to more severe cardiac cases, based on a computer analysis of unknown variables with inadequately explained data input is not substantiated. If open heart surgery services are not approved at Baptist, the cardiology program will not be able to expand to include alternative less invasive techniques which require open heart surgery backup. Without open heart surgery, however, other cardiology services at Baptist have been able to develop and currently contribute approximately $12 million annually to net revenue, with a $6.4 million contribution margin. In the cardiac diagnostic categories, 80 percent of Baptist patients come from Escambia County with an additional 5 percent from Santa Rosa County. Baptist anticipates having the capacity in its two cardiac cath labs to handle the anticipated increase of 100 to 150 angioplasties, expected to result from the establishment of an open heart surgery program, in its two laboratories which are currently at 65 percent utilization. Utilization is approximately 80 percent in the first floor cath lab, which is used for almost all cardiac caths and angioplasties. The fourth floor cath lab is used exclusively for pacemaker implants and electrophysiology studies, not for cardiac caths or angioplasties. If approved, Baptist can meet the requirement of AHCA rules related to adequate staffing and the availability and quality of its service. Angioplasties were performed at Baptist, prior to the requirement for back-up open heart surgery services. However, an exception was given to Baptist in a letter from AHCA's predecessor agency in 1987. Baptist is allowed to have invasive cardiologists perform angioplasties in an emergency or if open heart surgery is not a viable option, as happens for some patients who have had prior open heart surgeries. Proposed CON Conditions As a condition for approval of this project, Baptist proposes to set charges, through September 1997, at the lesser of actual charges or 85 percent of the inflated average charges of the two existing providers, but not less than 50 percent of charges. Initially, Baptist proposed to adhere to the condition for the first three years, from July 1994 to September 1997. Having been delayed due to litigation, Baptist's expert financial witness testified that Baptist would adhere to the condition for three years after approval of the application. Baptist did not agree to adhere permanently to the fixed price structure, although no time limit is set in the AHCA draft of the proposed condition. AHCA did not consider the proposed condition a not normal circumstance in this or a prior Baptist application. District 1 already has the lowest average charges statewide for open heart surgery services. Statewide charges are 27 percent higher than the average for Pensacola and 42 percent higher than Sacred Heart's. There will not be an enhancement of financial access as a result of approval of the Baptist CON. In addition, relatively few patients would benefit from the proposed fixed charges. Medicare, Medicaid, and managed care contractual agreements will not be affected by the proposed fixed rate charge structure. Baptist also proposed to adhere to a CON condition to monitor and maintain annual minimum volumes of 350 open heart surgeries at Sacred Heart and West Florida. In its CON application, Baptist projects 85 to 100 of its projected 165 open heart surgeries in year one would otherwise have been performed at Sacred Heart. The loss of net income was projected at $1.37 million or 9.6 percent of total net income. Baptist projected 35 surgeries lost to West Florida Regional, and the financial loss of a half a million dollars, or 6 percent of net income. Baptist's expert, Dr. Luke, noted that at least 925 open heart procedures must be performed in 1997 to allow Sacred Heart and West Florida Regional to maintain the 350 minimum volume of procedures. If there are three open heart surgery providers in Escambia County in 1998, Dr. Luke conceded that one of those programs will not have a minimum volume of 350 open heart surgery procedures a year. Historically, the required volume of open heart surgeries was exceeded only in 1992, and the highest projected volume by Baptist's expert is 1,100 for 1998. See, Findings of Fact 12 and 14. Baptist's expert asserted that the surgeons volume is more directly related to quality than the hospital's volume, but the hospital volume requirement is specifically recognized as a factor in Rule 59C-1.033(7)(c). To the extent that open heart surgery volumes at an existing provider decline, it is unlikely that Baptist can control decisions which are made based on the convenience of cardiologists and cardiovascular surgeons, increasingly by health maintenance organizations and other insurers, and the preferences of patients or their families. While the proposed 350 minimum condition is intended to avoid adverse effects of the approval, there is no reason to create and then have to alleviate that potential problem absent a showing of need or not normal circumstances. The proposed condition is not, in and of itself, a not normal circumstance. Other Criteria Related To Need Local Health Plan The 1992 District 1 Allocation Factors Report is the applicable local health plan to the review of Baptist's CON application. However, the 1990 District 1 Allocation Factors were analyzed by Baptist, and therefore, the Baptist application addressed only those preferences common to the two plans. Preference one favors an applicant demonstrating cost efficiency, lower project costs, and the least increase in patient charges. Beyond the first three years of the program for very few patients, the fixed rate charge structure will not be effective in keeping patient costs lower. Therefore, Baptist does not meet the preference. The lowest cost expansion of open heart surgery services in the district is the use of the excess capacity at West Florida Regional, with capacity for 800 to 1000 open heart surgeries as compared to the highest district-wide projection of 1,100 open heart surgeries in 1998. See, Finding of Facts 14 and 16. The second preference for bed conversions to increase utilization is not applicable to the proposed project. Preference three favors converting existing capacity to expand services over new construction. Baptist proposed to dedicate 2 exising rooms for open heart surgery, and to renovate 9,660 square feet, including a 2-bed expansion of the existing 8-bed cardiac care unit (CCU), to relocate a 6-bed eye unit, to expand by 9-beds an existing 18-bed step-down unit, to establish of a 12-bed progressive care unit, and to relocate a cystoscopy room. Total project costs are projected to equal $2,350,000. The Baptist proposal for renovations is preferable to new construction, but cannot be favored due to the alternative of using exising capacity at West Florida Regional. Preference four for joint ventures or shared services that mutually increase efficiency as opposed to unilateral CON applications is not given to Baptist. Although the same group of cardiologists presently operates the cardiovascular surgeries as a unified program at both Baptist and Sacred Heart, this application is a unilateral application, not a joint program. It is a duplicative program. The fifth preference, for applicants proposing to serve patients regardless of ability to pay, favors the Baptist application. In response to the sixth preference, for applicants agreeing to provide the greatest percentage of Medicaid and indigent services, Baptist proposes 3.03 percent of cases to be Medicaid patients and 3.03 percent indigent patients for the first year of operation, and 2.44 percent Medicaid and 2.93 percent indigent for the second year, or up to 15 indigents in year one, and 19 in year two of initiating a open heart surgery program. In total operations at Baptist in 1991, Medicaid was approximately 20 percent and charity 3 percent. Sacred Heart which, like Baptist, is a disproportionate share provider, averaged approximately 23 percent Medicaid and 5 percent charity. West Florida provided approximately 4 percent Medicaid and 9 percent charity. Baptist is entitled to partial preference to the extent that its provision of Medicaid exceeds that of West Florida. Preference seven, for applicants demonstrating a history of serving the greatest percentage of indigent and Medicaid patients, is met by Baptist. Baptist is a disproportionate share provider of services to Medicaid and charity care. In 1991, Baptist also provided 7.3 percent charity and uncompensated care. The eighth preference, for expansion of existing facilities as opposed to the establishment and construction of a freestanding facility, is not applicable to this case. Preference nine for applications which increase a facility's weighted occupancy rate, preference ten for a facility with an actual occupancy rate equal to or above the weighted occupancy rate and preference eleven to avoid a decrease in a facility's weighted occupancy rate were not addressed by Baptist, having not been included in the earlier local plan. Preference twelve is given to CON applicants who describe the impact on patient case load and the estimated increase in subdistrict case load, but not to applicants who do not supply this information. Baptist met the preference by providing an analysis of the impact on patient case loads at Sacred Heart and West Florida Regional. Preference thirteen is given for CON applications that include a five year projected occupancy rate for the applicant facility that is equal to or greater than the rule standard rate for facilities, as specified in the state rule paragraph 59C-1.038(7)(e), currently 75 percent. Baptist did not provide five year projected occupancy rates. Preference fourteen, related to pediatric units, is not applicable to Baptist's proposal. Preference fifteen, related to eliminating ICU/CCU units of less than 10 beds, is not applicable to this project. Preference sixteen is met by Baptist's plans to establish periodic internal evaluations of staff and equipment performance. Baptist committed to meet preference seventeen by providing initial and ongoing training and educational programs for staff members treating or caring for open heart patients, including training staff at an existing high- volume hospital in Orlando. Preference eighteen is given for the creation and use of data collection systems to monitor and report patient volume, patient origin, charges, safety problems and complications. Baptist agrees to meet preference eighteen by collecting and reporting data for open heart surgery services, as it currently does for all other services. Preference nineteen for written referral agreements between facilities in District 1 is not met by Baptist. Preference twenty for a plan to record instances of service repetition due to poor results, data, or images, is met. An index of performance currently exists for cardiac cases at Baptist. The preference for applicants that demonstrate a history of or willingness to commit to provide health care services to AIDS patients, preference twenty-one, was not addressed by Baptist. Preference twenty-two, given to CON applicants that demonstrate they have provided the greatest percentage of the facility's available annual patient days to AIDS patients has not been addressed. On balance, Baptist failed to demonstrate compliance with the applicable local health plan, in part by failing to address some of the preferences. Baptist does meet preferences for serving patients regardless of their ability to pay, for its proposal to serve Medicaid and indigent patients, for having done so in the past, for quality assurance, data collection and training programs, and for including an impact analysis. State Health Plan The 1989 Florida State Health Plan provides six allocation preferences related to the review of CONs to establish open heart surgery programs. The first state plan preference favors applicants establishing new open heart surgery programs in larger counties in which the percentage of elderly is higher than the statewide average and the total population exceeds 100,000. Although the population of Escambia County exceeds 250,000, the preference is not met because the percentage of the population age 65 or over is 12.24 percent, in contrast to the statewide average of 18.59 percent. State plan preference two, for new open heart surgery programs which will reach a volume of 350 adult procedures annually within three years of initiating the program, is not met. Baptist projects that it will perform 165 open heart surgery procedures in the first year of operation and 205 operations in its second year of operation. Baptist did not include a third year projection. With a CON condition that Sacred Heart and West Florida will retain a minimum of 350 procedures, Baptist's expert, Dr. Luke, conceded that Baptist cannot achieve the 350 volume by its third year of operation. State preference three, for improved geographic accessibility and reduced travel time for residents leaving the district for open heart surgeries is not met by the Baptist application. Out-migration from District 1 is extremely low, approximately 3 percent, and the geographic access standard is met. State plan preference four, for hospitals which meet Medicaid disproportionate share criteria, is met by Baptist. State preference five which, in general, favors larger more efficient facilities is met by Baptist. Baptist has 388 medical/surgical beds, with $12 million in net revenue annually from its cardiology program. A large hospital is described by AHCA witnesses as one exceeding 350 to 400 beds. State health plan preference six, for applicants with protocols for the use of alternative non-surgical therapeutic cardiac procedures, is met by Baptist. On balance, Baptist's CON application does not comply with the state health plan. Although it meets the preferences for treating patients regardless of ability to pay, for a disproportionate share provider, and for a large, efficient hospital, and for the types of services proposed, Baptist is not located in an area with demographic characteristics indicative of need, and does not have the ability to attract enough patients from that population to reach sufficient open heart surgery volumes to assure a quality program. AHCA Review of the Baptist CON Application Dr. James T. Howell, the AHCA Division Director for Health Policy and Cost Containment, made the decision to approve the Baptist open heart surgery CON, because of Baptist's substantial, active, sophisticated cardiology program, its status as a high disproportionate share provider, its size, and because the results of the numeric need calculation and the formula for determining the reduced volume at existing providers were close to that required by rule. See, Finding of Fact 7. In February, 1993, after the numeric need publication and prior to the filing of the application at issue in this case, Dr. Howell, Albert Granger, and Robert Sharpe of AHCA met with the Mayor of Pensacola who is also Senior Vice President of Baptist Health Care and President of Baptist Health Care Foundation, and Baptist's Vice President for Planning who expressed frustration over the denials of its prior open heart surgery CON applications. Baptist submitted CON applications for open heart surgery in 1987, 1989, 1991, 1992, and 1993. Among the issues of concern was the status of Sacred Heart and West Florida Regional as grandfathered providers resulting in their having "a permanent franchise." Baptist representatives expressed concern about their ability ever to secure an open heart surgery program under the current rules. After that meeting, the rule amendment process was initiated to allow consideration of data reported up to 3 months, rather than 6 months prior to the publication of the fixed need pool. At the time the Baptist application for CON 7184 was reviewed, the amendment had not been adopted. No other change in the open heart surgery rule has been made subsequent to the review of the prior Baptist CON application. When the Baptist application for CON 7184 was filed initially, Laura MacLafferty was assigned as AHCA's primary reviewer. The state agency action report ("SAAR") represents her factual analysis of the application, although she did not and, routinely, does not make recommendations to issue or deny CONs. Ms. MacLafferty and her supervisor, Alberta Granger, are not aware of any AHCA non-rule policy to determine if a calculation of minimum volume is "close" enough to the 350 standard of the rule, nor any agency guidelines to determine when a hospital is "large" or "operates a large cardiology program" which should include open heart surgery. Subsequent to reviewing the Baptist application, in December 1993, Ms. MacLafferty reviewed another open heart surgery application from District 1, filed on behalf of Fort Walton Beach Medical Center. In her review of both the Baptist and Fort Walton applications, Ms. MacLafferty found no documentation that patients in District 1 experienced problems with access to open heart surgery services. Ms. MacLafferty submitted the draft SAAR to a supervisor, Alberta Granger. The draft SAAR was retrieved from her desk, prior to Ms. Granger's reviewing it. It was removed by Elizabeth Dudek, who heads AHCA's CON and health care board sections. Ms. Granger did not review the SAAR, which was prepared by Ms. MacLafferty. The final draft was returned to Ms. Granger for her to sign on July 7, 1993. This was the only time since Ms. Granger became supervisor in the CON office, that she has not reviewed and discussed with Ms. Dudek SAARs prepared by her staff. Ms. Granger had been the primary reviewer of Baptist's 1989 CON application. Ms. Granger and her supervisor, Ms. Dudek, are aware that in this case and in one or more of its prior CON open heart surgery applications, Baptist argued that its size, scope of cardiology services, and proposed fixed rate structure were reasons to approve its proposal. Ms. Granger stated, and Ms. Dudek confirmed, that the usual procedure was not followed in the review of this and one other application in this batching cycle. In this batching cycle, Dr. Howell requested that Mr. Sharpe, head of AHCA's planning section, also review those two open heart surgery applications. Ms. Dudek recalls, that prior to 1987, there were two batches of approximately 12 total applications in which agency personnel other than the CON staff was involved in the review of CON applications. In making his decision on the Baptist application, Dr. Howell consulted Ms. Dudek and Mr. Sharpe. Ms. Dudek, who heads the CON and health care board section, was not initially in favor of the approval of the Baptist application. Mr. Sharpe, head of the planning section, prepared a 9 page analysis of the pros and cons of the Baptist proposal. The Sharpe analysis demonstrates that an increase of 9 additional open heart surgeries during the 12 month reporting period, and the use of the more current data under the pending rule revision would have resulted in the need for one additional open heart surgery program in District 1. The memorandum also demonstrated that a lower future volume of open heart surgeries is projected by using the actual use rate, as required by Rule 59C-1.033(7)(6)2, rather than a trended use rate. If these adjustments to the data are made to achieve numeric need, then Baptist's application could be approved without a showing of not normal circumstances. The memorandum also reported the October 1991-September 1992 volumes of cardiac cath admissions at Baptist as 2,677, at Sacred Heart as 2053, and at HCA West Florida as 1,915, with the conclusion that Baptist "had the largest number of cardiac catheterization admissions of the three hospitals." The evidence in this proceeding is that the memorandum was in error. Actual volumes for October 1991-September 1992 were 912 at Baptist, not 2677. Dr. Howell found Baptist's proposal consistent with health care reform trends towards eliminating the need for CON regulation by enhancing market competitive forces, as a part of Florida's managed competition model, as explained in the Sharpe analysis. Similarly, Dr. Luke described the 1980's use of the CON process to control costs by limiting duplication and the rejection of institution specific planning as outdated. Dr. Luke also favors a model of competition for cost controls. At this time, however, these positions have not been adopted in Florida Statutes and rules. The 1994 Florida Health Security Plan, however, recommends the continuation of CON review of all tertiary services, including open heart surgery. That plan was submitted as a part of AHCA's 1994 legislative proposals. Ms. Dudek described traditional "not normal" circumstances as issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns. Facility specific concerns, in this case, include Baptist's attempt to retain cardiologists who wish to perform procedures not approved at Baptist and to improve its position to compete for managed care contracts. Baptist has failed to show not normal circumstances for the departure from the open heart surgery rule, statutes and prior complications of the criteria to the review of CON applications. Baptist has also failed to demonstrate that the facts of this case justify a departure from the guidelines set by rule for the need methodology, use rate and population projections, and the minimum volumes at existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying the application of Baptist Hospital of Pensacola for certificate of need number 7184 to establish an adult open heart surgery program in Agency for Health Care Administration District 1. DONE AND ENTERED this 18th day of November, 1994, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 1994. APPENDIX To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Sacred Heart Hospital of Pensacola's Proposed Findings of Fact. 1-11. Accepted in or subordinate to Finding of Fact 3. 12-14. Accepted in or subordinate to Finding of Fact 15. Accepted in or subordinate to Finding of Fact 4. Accepted in Finding of Fact 16. Accepted in Finding of Fact 2. Accepted in Findings of Fact 2, 3 and 4. Accepted in Finding of Fact 5. Accepted in Finding of Fact 3. Accepted in Findings of Fact 3 and 4. Accepted in Finding of Fact 5. Accepted in Findings of Fact 3 and 4. Accepted in Finding of Fact 24. Accepted in Finding of Fact 18. Issue not reached. 27-28. Accepted in Findings of Fact 11 and 12. Accepted first two sentences in Findings of Fact 15 and 16. Remainder issue not reached. Accepted. Accepted. 32-35. Accepted in Findings of Fact 11 - 16. 36. Accepted in Findings of Fact 6 and 7. 37-38. Subordinate to Finding of Fact 6 and 7. 39. Accepted in Finding of Fact 60. 40-46. Accepted in or subordinate to Finding of Fact 15. 47-49. Accepted in or subordinate to Finding of Fact 16. 50-53. Accepted in or subordinate to Finding of Fact 26. 54-64. Accepted in or subordinate to Findings of Fact 3 and 15. 65-70. Accepted in or subordinate to Findings of Fact 12 and 15. 71. Issue not reached. 72-78. Accepted in or subordinate to Findings of Fact 4, 12, and 16. 79-88. Accepted in or subordinate to Findings of Fact 18-20. 89-95. Accepted in Finding of Fact 15. 96. Accepted in Finding of Fact 20. 97-101. Accepted in or subordinate to Finding of Fact 15. Subordinate to Findings of Fact 4 and 16. Accepted in or subordinate to Findings of Fact 4 and 16. Accepted in Finding of Fact 3. 105-110. Accepted in or subordinate to Findings of Fact 21-30 and 75. Accepted in Finding of Fact 12. Accepted in Findings of Fact 3-5 and 17. 113-121. Accepted in or subordinate to Finding of Fact 29 and 30. 122-126. Accepted in or subordinate to Finding of Fact 27. 127-135. Issue not reached. 136-138. Accepted in or subordinate to Findings of Fact 9 and 10. 139-141. Accepted in general in Findings of Fact 74 - 77. 142-149. Accepted in or subordinate to Findings of Fact 29 and 30. West Florida's Proposed Findings of Fact. Accepted in Findings of Fact 3 and 4. Accepted in Findings of Fact 1 and 6. 3-13. Accepted in or subordinate to Findings of Fact 61-76. 14-15. Accepted in or subordinate to Findings of Fact 1 and 68. 16. Accepted in or subordinate to Findings of Fact 64-68 and 75. 17-21. Accepted in Findings of Fact 6-7. 22-24. Accepted in or subordinate to Finding of Fact 17. 25. Accepted in Findings of Fact 2 and 11. 26-27. Accepted in Findings of Fact 3 and 4. 28. Subordinate to Finding of Fact 3 and 4. 29-30. Accepted in Finding of Fact 17. 31-32. Accepted in Finding of Fact 11. 33. Accepted in Findings of Fact 15 and 16. 34-36. Subordinate to Findings of Fact 11 and 12. 37-45. Accepted in or subordinate to Findings of Fact 4 and 16. 46-55. Accepted in or subordinate to Findings of Fact 11-14. 56-79. Accepted in or subordinate to Finding of Fact 14, 29, 30 and 55. 80-83. Accepted in Findings of Fact 68, 75 and 77. 84. Accepted in Findings of Fact 29 and 30. 85-87. Accepted in Findings of Fact 27 and 28. 88. Accepted in Findings of Fact 17-19. 89-90. Accepted in Findings of Fact 21-24. 91-92. Accepted in Finding of Fact 15. 93-97. Accepted in Finding of Fact 16. 98-100. Accepted in or subordinate to Findings of Fact 61, 63, 71-74 and 77. 101. Accepted in Findings of Fact 27-28. 102-105. Accepted in Findings of Fact 9 and 10. Accepted in or subordinate to Finding of Fact 11. Accepted in Finding of Fact 75. Accepted in Findings of Fact 23-24. Baptist Hospital, Inc.'s and AHCA's Proposed Findings of Fact. Accepted. Accepted in Finding of Fact 1. Accepted in Finding of Fact 6. Accepted in Finding of Fact 12. Accepted in Finding of Fact 7. Accepted in Finding of Fact 72. Accepted in Finding of Fact 8. Accepted in Finding of Fact 2. 9-11. Accepted in Finding of Fact 21. Accepted in Findings of Fact 2, 51 and 60. Accepted in Finding of Fact 24. 14-16. Accepted in Finding of Fact 34. Accepted in Finding of Fact 3. Accepted in Finding of Fact 4. 19-24. Accepted in Findings of Fact 21-23. 25-30. Accepted in or subordinate to Finding of Fact 26. 31-37. Accepted in or subordinate to Findings of Fact 21-26. 38. Rejected in Finding of Fact 23. 39-53(a-g) Accepted in or subordinate to Findings of Fact 18-24. 54. Rejected in Finding of Fact 20. 55-58. Accepted in Finding of Fact 15. Rejected in Finding of Fact 15. Accepted in Finding of Fact 15. Accepted in Finding of Fact 26. Accepted in Finding of Fact 15. 63-66. Rejected conclusions in Finding of Fact 15. Accepted in or subordinate to Finding of Fact 15. Rejected conclusions in Finding of Fact 15. 69-78. Accepted in or subordinate to Finding of Fact 15. 79-81. Rejected in or subordinate to Finding of Fact 17. 82-84. Rejected in or subordinate to conclusion in Finding of Fact 17. 85. Subordinate to Finding of Fact 15. 86-87. Accepted in or subordinate to Findings of Fact 13 and 21. 88-90. Accepted in or subordinate to Finding of Fact 18. 91-94. Rejected in Finding of Fact 15. 95-97. Accepted in or subordinate to Finding of Fact 15. 98-121. Issues not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes. Accepted in or subordinate to Finding of Fact 4. Accepted in Finding of Fact 4. 124-132. Issue not reached or rejected in Findings of Fact 74-77 except that the reference to a shared cardiology program should be understood to mean unified operation of programs under one group of cardiologists serving two hospitals, not "joint, cooperative or shared," as AHCA has previously defined those terms in construing subsection 408.035(1)(e), Florida Statutes. 133-134. Accepted in Findings of Fact 15-18. 135. Accepted in Finding of Fact 75. 136-138. Conclusion not support by testimony cited. 139-145. Accepted in Findings of Fact 2, 36, 37, 38 and 57. 146-152. Accepted in or subordinate to Findings of Fact 1, 29 and 30. 153-165(a-c) Rejected conclusions that highest projections of growth in open heart surgery is reasonable in District 1 in Findings of Fact 11-16. 165(d) Rejected as insignificant number in Finding of Fact 12. 165(e-g) Rejected in Finding of Fact 19. 165(h) Accepted in Findings of Fact 9-10. Rejected in Finding of Fact 29. Accepted as shared is defined in Finding of Fact 20. 168-172. Rejected in Findings of Fact 29-30. 173-177. Rejected conclusions in Findings of Fact 29-30. 178-181. Rejected in Findings of Fact 4, 16, 17 and 18. 182-186. Accepted in 1 as explained in Findings of Fact 27 and 28. Rejected in part in Finding of Fact 52 and accepted in part in Findings of Fact 60. Rejected as most relevant in Findings of Fact 60. 189-199. Accepted in Finding of Fact 25. 200-201. Issue not reached. COPIES FURNISHED: William Wiley, Esquire Darrell White, Esquire Charles A. Stampelos, Esquire McFarlain, Wiley, Cassedy & Jones 600 First Florida Bank Building 215 South Monroe Street Tallahassee, Florida 32301 John Radey, Esquire Jeffrey Frehn, Esquire Aurell, Radey, Hinkle, Thomas & Baranek 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 Michael J. Cherniga, Esquire Greenberg, Traurig, Hoffman Post Office Drawer 1838 Tallahassee, Florida 32302 W. Dexter Douglass, Esquire John A. Rudolph, Jr., Esquire Douglass & Powell Post Office Box 1674 Tallahassee, Florida 32302 Richard Patterson, Esquire Agency for Health Care Administration 325 John Knox Road Tallahassee, Florida 32303 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
Findings Of Fact The Agency For Health Care Administration ("AHCA") is the state agency responsible for the administration of certificate of need ("CON") laws in Florida. On February 5, 1993, AHCA published a need for one additional adult open heart surgery program in District 9. AHCA defines open heart surgery as a "tertiary health service" which, due to complexity, cost, and the relationship between volume and quality of care should be concentrated in a limited number of hospitals. Rule 59C-1.002(66), Florida Administrative Code. District 9 is located generally along the southeast coast of Florida and includes Palm Beach, Indian River, Martin, St. Lucie, and Okeechobee Counties. Palm Beach is the county at the southern end of District 9. The parties have referred to the counties other than Palm Beach, as the four northern counties. Martin County is north of Palm Beach, and St. Lucie, Okeechobee, and Indian River are further north. The applicants in this proceeding, seeking to establish an additional District 9 adult open heart surgery program, are Lawnwood Medical Center, Inc., d/b/a Lawnwood Regional Medical Center, Inc. ("Lawnwood"), St. Mary's Hospital, Inc. ("St. Mary's"), and Martin Memorial Medical Center, Inc. ("Martin Memorial"). Lawnwood Regional Medical Center Lawnwood is a 335-bed for-profit hospital located in Ft. Pierce, in St. Lucie County. Lawnwood has CON approval for the construction of an additional 18 skilled nursing beds and 10 level II NICU beds. In addition to the 335 licensed beds, Lawnwood has 16 unlicensed bassinets for a total of 351. Lawnwood's 335 licensed beds include 60 psychiatric beds, located one and a half blocks away from the main Lawnwood building, at a facility called Harbor Shores. Lawnwood has 260 general acute care beds. When Lawnwood filed its application, its parent corporation was HCA, Inc., a subsidiary of the Hospital Corporation of America. HCA was also the parent corporation of the Medical Center of Port St. Lucie, the only other hospital in St. Lucie County, and of Raulerson Hospital in Okeechobee County. After the application was filed and prior to hearing, a subsidiary of Columbia Health Care Corporation merged with HCA. As a result of the merger, the administrator of Lawnwood also serves as the market manager assigned to coordinate the services offered at the three hospitals. Lawnwood is classified by the State as a disproportionate share provider of Medicaid-reimbursed services for financially needy patients. In 1993, 21 percent of its total patient days were attributable to Medicaid and 4 percent to charity. Lawnwood operates an outpatient cardiac catheterization ("cath") laboratory and, in 1992, received CON approval to perform inpatient cardiac caths in a lab which was scheduled to open in October 1994. The outpatient lab opened in 1988 at Lawnwood. In 1989, 561 cardiac cath lab procedures were performed at Lawnwood, 494 in 1990, 362 in 1991, and 468 procedures in 1993. Although 602 procedures were reported to the local health council in 1993, these were performed on 468 patients, which is the number consistent with reporting methods of other cath labs. As a result of the diagnostic caths, 45 patients were referred for open heart surgery, and 98 for angioplasties. Of the 45 patients referred for open heart surgery, 26 were actually scheduled for the procedure. Lawnwood proposes to establish an adult open heart surgery program for a total project cost of $4.99 million. The project includes construction of two dedicated operating rooms, renovations to provide a 4-bed dedicated recovery room, and conversion of 12 acute care beds to construct a 12-bed cardiovascular intensive care unit ("CVICU"). St. Mary's Hospital St. Mary's is a 430-bed not-for-profit hospital, which has been operated 55 years by the Franciscan Sisters, currently through a parent organization called the Allegheny Health System. St. Mary's is the largest hospital in District 9, and the largest provider of womens' and childrens' medical services in the district. St. Mary's is a designated regional perinatal intensive care center with level II and III neonatal intensive care units, and is the designated level II trauma center for the northern area of Palm Beach County. Like Lawnwood, St. Mary's is recognized by the State as a disproportionate share provider of services to Medicaid reimbursed and indigent patients. It is approximately sixth in the state in the provision of services to financially needy patients. St. Mary's cardiac cath lab began operation in February 1988. There were 267 inpatient and 116 outpatient cardiac caths at St. Mary's lab in 1991, 240 and 118 respectively in 1992, and 171 and 115 respectively from January to November 1993. St. Mary's operates a 10-bed coronary care unit. St. Mary's proposes to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. The project will include renovations to two existing operating rooms and to a recovery room area. Martin Memorial Medical Center Martin Memorial is a 336-bed not-for-profit acute care hospital, with an additional 17 nursery/bassinets which are not required to be in the total licensed beds. The ultimate parent corporation for the Martin Memorial facilities and its foundation is Martin Memorial Health Systems, a not-for- profit corporation with a volunteer community board of directors. Martin Memorial's beds are divided between two campuses, with 236 beds in Stuart, and 100 in Port Salerno. The Port Salerno hospital opened in September, 1992 and is approximately 8 miles south of Stuart. Included in the 236 beds at Martin Memorial in Stuart are 5 level II neonatal intensive care beds, 23 intensive care unit beds, 45 ventilator, telemetry or other monitored beds, and 134 medical/surgical beds. Martin Memorial's existing cardiac services include a cardiac cath lab which opened in 1989 and, that year, reported 250 procedures. Caths at Martin reached the highest volume, 905 in 1991, followed by 799 in 1992, and 867 in 1993. Martin Memorial proposes to establish an adult open heart surgery program in Stuart for a total project cost of $3,594,720. Martin's project includes a newly constructed open heart surgery suite adjacent to the cardiac cath lab and, as a back-up, renovation of an existing operating room. As a part of an approved, separate CON application, Martin proposes to renovate and expand to accommodate a 13-bed surgical intensive care unit ("SICU") with four private rooms dedicated as a cardiovascular intensive care unit ("CVICU"). The expenses associated with the four CVICU rooms are included in the total open heart surgery project costs. Existing Open Heart Surgery Providers In Or Adjacent To District 9 All of the existing adult open heart surgery programs in District 9 are in Palm Beach County, at Delray Community Hospital ("Delray"), JFK Medical Center, Inc. ("JFK"), and AMI Palm Beach Gardens Community Hospital, Inc. d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens"). The same services are also available in the adjacent districts to the north in District 7 at Holmes Regional Medical Center in Brevard County, and to the south in District 10 at AMI North Ridge General Hospital in Broward County. In addition, established referral patterns exist from District 9 to Miami Heart Institute in Dade County and Holy Cross Hospital in Broward County. All residents of District 9 have access to open heart surgery within two hours average drive time, which exceeds the geographic access standard of Rule 59C-1.033(4)(a), Florida Administrative Code. Delray is located in southern Palm Beach County and is a level II trauma center for that area. JFK is a 369-bed not-for-profit hospital located in Atlantis, Florida, approximately midway between Boca Raton and West Palm Beach, in north central Palm Beach County. The corporation which owns and operates JFK, also is the parent of a fund-raising foundation, and other subsidiaries, some of which are for-profit corporations. JFK has had an open heart surgery program since 1987. JFK's two operating rooms are equipped and sized identically, and located in close proximity to the two room cardiac cath lab and the intensive care unit. JFK has the capacity to perform up to 1000 cases annually, while actual annual volumes at JFK have ranged from 350 to 370 cases. Palm Beach Gardens is a 204-bed for-profit hospital located in the northern part of Palm Beach County. It operates the oldest open heart surgery program in the district, having started in 1982 or 1983. In fiscal year 1992- 1993, there were 477 open heart surgery patients at Palm Beach Gardens, of which 173 resided in the four northern counties of the District. Palm Beach Gardens has 11 operating suites, 7 capable of being used for open heart surgeries, and 4 dedicated solely to open heart surgeries. The current capacity of Palm Beach Gardens is 900 open heart procedures a year. By adding staff, Palm Beach Gardens could reach a volume of 1100 cases a year. While Palm Beach Gardens has excess capacity in its operating rooms, at the peak of its seasonal demand, delays occur in scheduling non-emergency surgeries due to inadequate capacity in its 24-bed intensive care unit. Occupancy levels in the 24 beds were 112.5 percent in 1993, according to Treasure Coast Health Council data. Although Palm Beach Gardens also suggested that an 8-bed overflow unit supplemented the 24 beds, accounting reports do not reflect billings for their use as intensive care services. Comparison of Applicants and Applications Subsection 408.035(1)(a) -- need in relation to state and local plans The 1989 state health plan, Healthy Floridians, includes six preferences for the review of open heart surgery applications. The first preference favors applicants establishing programs in counties with a population over 100,000 and a higher percentage than statewide average of 18.8 percent elderly persons. All the experts in health planning testified that the term "elderly" in this preference means persons 65 years of age and older, which is consistent with the age group with the greatest demand for open heart surgery. St. Mary, Lawnwood, and Martin meet the preference. The 1993 population of Palm Beach County was 900,000, St. Lucie's was 162, 598, and Martin's was 108,089. The population age 65 and over as a percentage of total population was 24 percent in Palm Beach, 21.2 percent in Lawnwood, and 27.5 percent in Martin County. The second state preference is for applicants who can demonstrate the ability to perform at least 350 annual procedures within 3 years of initiating an open heart program. Lawnwood reasonably projected a total of 314 open heart surgery procedures in year one, 350 in year two, and 386 in year three. Lawnwood's utilization projections are conservatively based on the assumption that, by the third year, 70 percent of its open heart patients will come from St. Lucie and Okeechobee Counties, which are already in its primary service area. Martin Memorial's expert questioned Lawnwood's projected open heart volumes from Martin and Indian River Counties, based on its acute care and cath lab patient origins. In addition, traditional referral patterns show Indian River patients going north to Brevard and Orange Counties, while Martin County patients go south to Palm Beach, Broward, and Dade Counties. Considering the acute care and cath lab competition within the four northern counties, the absence in that area of any competition for an open heart surgery program, the relative success of Lawnwood's outpatient cath lab despite its limitations and competition, and its affiliation with Port St. Lucie and Raulerson hospitals, Lawnwood established the reasonableness of its projected utilization. Lawnwood also reasonably expects to reverse some of the 73.5 percent out-migration for open heart surgery by residents of the northern four counties. See, Findings of Fact 27, infra. Martin Memorial's projections of 249 cases in year one, 317 in year two, and over 350 in year three are also reasonable. Martin Memorial's underlying assumptions, that its open heart surgery market share will at least equal that of its acute care, that it will keep some patients previously referred from its cath lab, and that, it, like Lawnwood, would reverse some district out-migration, are also reasonable. Martin Memorial referred 172 patients from its cath lab for open heart surgery in 1993, in contrast to 45 from St. Mary's, and 41 from Lawnwood. Martin Memorial's projections are based on 1991-1992 use rates which declined in 1993. Despite the one year decline and some expert predictions of a continuing downward trend in use rates, Martin Memorial's projections are bolstered by the fact that its open heart surgery primary service area includes Port St. Lucie, which contains 40 percent of the population of St. Lucie County and is the fastest growing area of District 9. That area, which is closer to Stuart, but is located in the St. Lucie County community in which Lawnwood has an affiliate hospital, supports both the projections of Lawnwood and Martin Memorial, and could be served by an open heart surgery program at either facility. Although Martin Memorial's projected volumes are higher than and inconsistent with other projections made by Martin Memorial, the reasonableness of the projections was established. St. Mary's projected 171 open heart surgeries in year one, 265 in year two, and 363 in year three. The projections are based on the use of a gravity model designed to determine potential volume "attracted" to the program by using the size of the hospital and the proximity of patients as factors. The model used a zip code level analysis to take into consideration the fact that St. Mary's expects a sub-county primary service area, as a result of sharing the county with the three existing District 9 providers. The projected utilization was reduced, by St. Mary's expert, to take into consideration an expected start- up factor. There is, however, substantial expert testimony that the variables and/or the weight attributed to each variable included in this gravity model are inadequate to explain actual or potential volumes. There is substantial evidence that the size of a hospital is not reliable enough to be one of only two variables in a model. For example, JFK although larger than Palm Beach Gardens, only exceeded 350 cases in 1991-1992 by 16, when smaller Palm Beach Gardens with an older open heart surgery program reached 499 cases. The model also fails to consider actual physician referral patterns. St. Mary's projections and its ability to exceed 350 cases also depend on its ability to attract Medicaid patients over and above the patients projected by the gravity model. See, Findings of Fact 35, infra. The volume of diagnostic cardiac caths at St. Mary's is low and has declined over the past three years. In part, the volume is low because there is no open heart surgery back-up available in the event the diagnostic cardiac cath indicates that need. Cath patients suspected of needing more invasive procedures are diverted by referring physicians to hospitals with angioplasty and open heart programs. But that explanation of St. Mary's volumes apparently is incomplete, since, by contrast Boca Raton Community Hospital and Martin Memorial, which also have no open heart surgery back-up, have had more steadily increasing cardiac cath volumes. The fact that St. Mary's cath volumes are low and its open heart surgery projections unreliable is also attributable to the fact that St. Mary's is located 11 miles north of JFK and 5 1/2 miles south of Palm Beach Gardens, therefore, at a competitive disadvantage with these established programs. The third state health plan preference applies to proposals, for improving access for persons currently leaving the district. With almost half of Palm Beach County open heart surgery patients receiving the service outside the county, St. Mary's claims to be in the best location to reverse that trend if geographical access is the problem. St. Mary's also points to the convenience of access to its hospital, which is 2 miles from Interstate 95, the main north-south transportation corridor through the district. Approval of St. Mary's proposal will not, however, reverse out-migration to the extent that it is attributable to factors such as seasonal residency, established physician referral practices from northern areas of District 9 to providers in adjacent districts, and managed care contractual arrangements. Lawnwood is located in the largest, fastest growing, and most centrally located county of the northern four counties. St. Lucie County is adjacent to each of the other three northern counties, with Martin to the south, Okeechobee to the west, and Indian River to the north. The level of "out-migration," defined as those patients leaving the district to receive the service, increases dramatically from south to north in District 9, from 55 percent in Martin, 70 percent in St. Lucie, 80 percent in Okeechobee, to 100 percent in Indian River County. Considering growth in western St. Lucie County, the needs of St. Lucie and Okeechobee County residents, and the alternative to out-migration provided for both Indian River and Martin County residents, the Lawnwood location is superior to that of Martin Memorial in terms of the ability to improve access to the service. See, also Findings of Fact 23-24, supra. The fourth state preference for applicants with a history of providing disproportionate share Medicaid and charity care favors the applications of St. Mary's and Lawnwood, in that order. Martin Memorial argues that it also meets the disproportionate share criteria, which the preference requires, although it has not been designated by the State, which the preference does not require. Relying on the criteria in subsection 409.911(2), Florida Statutes, Martin claims to meet or exceed the disproportionate share requirements for 1990, despite the agency's reliance on 1989 data. Assuming, arguendo, that Martin is entitled to the preference, the comparative ranking of St. Mary's first, Lawnwood second, and Martin third remains the same. In addition, the preference looks at a history of disproportionate service, as does subsection 408.035(1)(n), in part, which Martin failed to establish. For 1991, St. Mary's provided 15.8 percent of total District 9 Medicaid, Lawnwood provided 11.7 percent, and Martin Memorial, 1.7 percent. Martin Memorial established that it treated a larger number of Medicaid patients with circulatory diseases as a proportion of Medicaid patients in Martin County, as compared to St. Lucie County residents treated at Lawnwood. However, the absolute number of circulatory disease Medicaid patients treated at Lawnwood was approximately two and half times the number treated at Martin Memorial. Statistical indicators, including per capita income and low income patients diagnosed with circulatory diseases, demonstrate that residents of St. Lucie and Okeechobee Counties are less affluent, and more medically needy than those in Palm Beach and Martin Counties. The fifth state preference favors the applicant offering a service with the highest quality of care at the least expense. The preference includes an explanation that larger facilities usually have more available resources to meet the preference. As the largest hospital with the lowest cost per case by the second year of the program, $22,659, St. Mary's best meets the preference. Martin's projected cost is $26,909 and Lawnwood's is $27,085. Martin Memorial's expert calculated total expenses per case at $23,221 for Martin Memorial, $22,615 for St. Mary's, and $23,645 for Lawnwood. St. Mary's projected charges of $50,600 in year one and $53,100 in year two. Lawnwood projected charges of $55,199 in year one, and $58,133 in year two. Martin Memorial projected charges of $55,594, in year one, $58,955 in year two. Total project costs were estimated at $2,166,351 for St. Mary's, $3,594,720 for Martin Memorial, and $4,995,039 for Lawnwood. Using either set of cost data or the projected charges, St. Mary's best meets this preference based on size, the lowest total project costs, and the lowest projected charges for open heart surgery services. Martin Memorial and Lawnwood have, as described by one expert, remarkably similar costs, and the same is true of projected average charges per case. The final state preference favors applicants who will include protocols for the use of innovative therapeutic alternatives to surgery for appropriate patients, including streptokinase and tissue plaminogen activator therapies. Lawnwood and Martin Memorial currently use streptokinase. St. Mary's performs emergency angioplasties, and uses streptokinase therapy. All three applicants meet the preference for providing and/or planning to provide alternative therapies to open heart surgery. The first District 9 local health plan allocation factor gives a priority for established cardiac cath programs. Based on expert testimony, a cardiac cath program exceeding 150 annual procedures is established. All the applicants exceed the minimum volume and, therefore, comply with the allocation factor. Martin Memorial has the highest volume in an operational inpatient and outpatient lab and, meets the allocation factor better than Lawnwood and St. Mary's. The other District 9 factor favors applicants with a documented commitment to provide services regardless of patient's ability to pay. Lawnwood projects 2.51 percent Medicaid and 1.5 percent charity care in year two. St. Mary's projects providing 5 percent Medicaid and 3.5 percent charity care in year two. Martin Memorial projects 2 percent Medicaid and 1.9 percent charity care in year two. St. Mary's best meets the factor, followed by Lawnwood, and then Martin Memorial. More Medicaid residents live in the primary service area of Lawnwood than that of Martin Memorial. Martin has filed CON compliance reports demonstrating difficulty in meeting prior CON Medicaid conditions due to the demographics of its service area. Subsections 408.035(1)(b) - availability, quality of care, efficiency, accessibility, extent of utilization of like and existing programs; 408.035(2)(b) - appropriate and efficient use of existing inpatient facilities; and 408.035(2)(d) - serious problems in obtaining care without proposed new program(s). With the exception of seasonal excess demand for Palm Beach Gardens' ICU beds, the evidence demonstrates there is excess capacity in existing District 9 providers. Geographic access to existing providers in or adjacent to the district is also reasonable. The quality of care at existing providers is excellent. St. Mary's asserts that its proposal will best assist in alleviating access barriers to open heart surgery for low income persons with limited geographic mobility. One expert estimated that 38 District 9 Medicaid patients needed, but did not receive, open heart surgeries in 1991, based on the use rates for commercially insured patients. In general, the highest density of population with a demand for invasive heart therapies and open heart surgeries is concentrated in southern and central Palm Beach County. However, expert testimony established that Medicaid patients are underserved for reasons, other than the policies of the existing providers. The evidence does not show that St. Mary's proposal can overcome these financial barriers. St. Mary's is a level II trauma center, and maintains that trauma patients in need of open heart surgery are at risk of death from having to wait for transfers. Transfers of patients from St. Mary's to Palm Beach Gardens or JFK for open heart surgery take from three hours to three days, averaging 8 to 12 hours, in approximately 30 percent of the cases. From May 1991 through January 1994, over 2600 trauma patients were treated at St. Mary's. Expert testimony, after review of medical records, indicates that from one to six patients needed open heart surgery, an insufficient number to constitute a not normal circumstance for the establishment of an open heart program at St. Mary's. Palm Beach Gardens' position that an additional adult open heart surgery program is not needed in District 9 is rejected. Open heart surgery use rates are not increasing nationally or in Florida. However, District 9 population is increasing, as is open heart surgery utilization for District 9 as a whole, and for Palm Beach, St. Lucie and Okeechobee Counites, while remaining static in Martin County and decreasing in Indian River. Palm Beach Gardens and JFK have demonstrated that in Palm Beach County, an additional open heart surgery program is not needed, and would be detrimental to existing programs. See, Findings of Fact 51-52. Subsection 408.035(1)(c) - quality of care The applicants, like the existing providers, are accredited by the Joint Commission on Accreditation of Healthcare Organizations. All of the applicants provide excellent quality care, as indicated by their accreditations and proposals, compromised only by their ability to achieve the projected volumes. See, Findings of Fact 23-26. Subsection 408.035(1)(d) - alternatives or outpatient facilities and 408.035(2)(a) - alternatives to inpatient services There are no alternatives or facilities other than acute care hospitals in which open heart surgeries can be performed. The criterion is inapplicable to this case. Subsections 408.035(1)(e) - economies of joint or shared facilities and 408.035(2(k) - modernization or sharing arrangements as alternatives to new construction. Martin Memorial is a part of a network of hospitals planning a more formalized affiliation to attract managed care contracts. Lawnwood is a part of a large corporate group, which can offer experience in establishing an open heart surgery program. Neither of these arrangements entitles the applicants to special consideration under the statutory criterion, as it has been construed by AHCA. In this case, each applicant is a separate acute care hospital. An alternative arrangement for a shared program was considered by Martin Memorial, but there is no showing that any proposal which improves access for the northern four counties could avoid the necessity for new construction. Subsection 408.035(1)(f) - needs for equipment and services not accessible in adjoining areas There is no evidence that any applicant proposes to provide a service not readily available in adjoining areas. On the contrary, each applicant proposes to offer an alternative within the district for residents who currently use providers in adjoining areas. See, Finding of Fact 27. Subsection 408.035(1)(g) - need for research and educational programs There is no evidence that any of the applicants will meet research or educational needs, or is a teaching hospital. AHCA has strictly construed the statutory criterion to apply to teaching hospitals. Subsection 408.035(1)(h) - availability of resources, including staff, management, and funds for capital and operating expenditures, including personnel required in Rule 59C-1.033(5)(b). The Cleveland Clinic has expressed an interest in providing surgeons for Martin Memorial's program, but no agreement has been formalized. Martin Memorial was criticized for not having a full-time infectious disease specialist, inadequate pulmonary and nephrology specialists, and for being unable to perform transesophageal echocardiology, all of which are necessary to support an open heart surgery program. St. Mary's was criticized for not planning to have nurses assigned exclusively to its open heart surgery team. Lawnwood has been unable to attract full-time coverage in thoracic, orthopedic, and neurosurgery. Despite these specific criticisms, each applicant has successful recruitment mechanisms and affiliations which will be enhanced by the presence of an open heart surgery program. The applicants' staffing and equipment proposals are reasonable. Both St. Mary's and Lawnwood are subsidiaries of larger organizations which include hospitals with open heart surgery programs. Subsection 408.035(1)(i) - immediate and long term financial feasibility St. Mary's has the ability to establish an adult open heart surgery program for a total of $2,166,351, funded by private donors. St. Mary's provided a pro forma of expected revenues and expenses to establish financial feasibility based on two factors which were challenged, the average length of stay ("ALOS") and the mix of payer classifications for patients. St. Mary's projected 10.3 days as the ALOS. JFK's experts suggested that a 13-day ALOS is more reasonable, particularly for a new program. JFK's actual experience was an ALOS of 16.1 days in 1988, 14.5 days in 1992, and 12.6 days by the year ending June 1993. Mature programs generally have lower ALOS than newer ones. Currently, ALOS in the District are 10.9 for Palm Beach Gardens, 12.5 for Delray, and 14.5 for JFK. JFK's assertion that St. Mary's initial ALOS will more likely be 13 days not 10.3 is reasonable. The fact that the ALOS will be longer than that projected in the pro forma means that expenses for the care of each patient will be greater, while revenues will not increase proportionately. Revenues are limited in fixed Diagnostic Related Group ("DRG") reimbursement categories, such as Medicare and managed care, which are the dominant payer groups, in contrast to the more flexible per diem reimbursement of commercial insurers. St. Mary's failed to include revenues and expenses for the construction period, anticipating only capital expenditures and start-up costs for implementing a new service. St. Mary's pro forma was based on a first year payer mix which includes 12.4 percent managed care and 11.6 percent commercial insurance in 1995. At JFK, the open heart surgery payor mix was 33 percent managed care and 9 percent commercial in 1993. St. Mary's underestimated the proportion of patients in the DRG-based managed care category, as compared to the per diem arrangements typical of commercial insurance. Taking into consideration increased expenses of $251,000 in year one and $409,000 in year two, due to adjustments from 10.3 to 13 days in the ALOS, and reduced revenues of $350,000 in year two, St. Mary's proposal is not financially feasible. The conclusion is also compelled by St. Mary's failure to establish the reasonableness of its utilization projections for the program. See, Finding of Fact 25. Martin Memorial has the funds necessary to establish an open heart surgery program for $3,594,720. Its pro forma shows revenues and expenses for the construction period, which are identical with or without the open heart surgery program. Martin Memorial's pro forma is flawed by double counting revenues from patients currently spending some time and revenues at Martin Memorial prior to transfers for open heart surgery. Revenues associated with pre-transfer stays must be deducted from revenues for open heart surgeries of average total lengths of stay. The amounts of over-stated revenues were not calculated by Palm Beach Gardens expert, and other criticisms of Martin Memorial's pro forma are rejected. Lawnwood, like St. Mary's, failed to include any construction period revenues and expenses in its pro forma. Lawnwood, as a separate legal entity, does not have the funds to establish its open heart surgery program, without relying on its parent, Hospital Corporation of America. The commitment of funds, represented by a letter dated April 30, 1993, indicated the source as either internally generated cash or available lines of credit. Lawnwood demonstrated its financial feasibility, in part, by showing that its open heart program's break-even point, at which expenses and revenues would be equal is 182 cases, well below projected utilization. See, Findings of Fact 23. Subsection 408.035(1)(j) - special needs and circumstances of health maintenance organizations The applicants do not propose to provide any different or special services for health maintenance organizations, nor is any applicant in this batch itself a health maintenance organization, as required by AHCA's interpretation to the statutory criterion. NME Hospitals, Inc., d/b/a West Boca Medical Center v. HRS, DOAH Case Nos. 90-7037 and 91-1533 (F.O. 4/8/92). Subsection 408.035(1)(k) - substantial, specialty services to non-residents of the service district Although the applicants propose to provide open heart surgery, which is one of the specialty services listed in the statute, they do not project that they will serve residents of other districts. The applications are not distinguishable on the basis of Subsection 408.035(1)(k), Florida Statutes. Subsection 408.035(1)(l) - impact on costs and effects of competition with existing providers. If St. Mary's proposal is approved and, as St. Mary's projects, two- thirds of its patients come from existing district providers, the program at JFK will be adversely affected. As the result of JFK's loss of approximately 106 cases, its net income could also be reduced up to $2.6 million. By contrast, programs at Lawnwood or Martin Memorial would have a negligible impact on JFK. The existing program at Palm Beach Gardens would suffer an adverse impact from the approval of programs at either St. Mary's or Martin Memorial. The adverse impact of a program at Martin Memorial is greater. Palm Beach Gardens could lose from 128 to 142 cases in the first year and from 179 to 198 cases in the third year in the worst case scenarios, depending on whether the use rate declines or remains constant. In addition, the further development of the VHA Network proposed by some District 9 hospitals, including Martin Memorial, as a means to attract managed care contracts, would enhance referrals to an open heart surgery program at Martin Memorial. Reasonable estimates of the financial loss to Palm Beach Gardens range between $2.8 and $3.1 million, although Palm Beach Gardens, with $9 million in annual income, would still be profitable. While the numeric calculations required in Rule 59C-1.033(7)(c), Florida Administrative Code, indicate that there will be enough total open heart surgeries to allow each of the existing providers to continue to exceed 350 operations, Palm Beach Gardens would be disproportionately, adversely affected by a program at Martin Memorial, as would JFK by a program at a St. Mary's. As the lowest volume provider, JFK is also at greater risk of dropping below the 350 minimum level established as indicative of the quality of care. Subsection 408.035(1)(m) - costs and methods of construction With total project costs of $4.99 million, Lawnwood's proposal to construct two new, dedicated operating rooms is the most expensive. Martin Memorial's cost of $3.59 million includes new construction of one and renovation of another operating room. St. Mary's low project cost of $2.16 reflects the fact that renovations rather than new construction is planned. The advantages of new construction, however, are that the size of the operating rooms will exceed general state requirements, and comply with recommendations developed specifically for open heart surgery. See, Findings of Fact 58, infra. Subsection 408.035(1)(n) - past and proposed service to Medicaid and medically indigent patients Based on history and proposed service, the applicants rank, in order, St. Mary's, Lawnwood, and Martin Memorial in complying with the criterion. See, Findings of Fact 28 and 32, supra. Subsection 408.035(1)(o) - continuum of care in multilevel system, including acute, skilled nursing, and home health care The applicants failed to distinguish their proposals on the basis of this statutory criterion. Other Criticisms of the Applications St. Mary's has a 16-bed intensive care unit, 4 of those beds will require no additional equipment to be used to provide post-operative care for open heart surgery patients. The 4 beds are located adjacent to the intended open heart surgery operating suite. The proposed 4-bed ICU was criticized for being too crowded, and inadequately designed to allow adequate patient observation and monitoring, and for not being dedicated solely to open heart surgery patients. The 16-bed unit has experienced over 90 percent occupancy rates, but some of those patients have required the staffing, but not the equipment available in the intensive care unit. St. Mary's acknowledged potential capacity problems, but has the ability to create additional step-down unit beds to relieve the ICU unit, when necessary. In addition, outpatient surgeries were scheduled to be performed in a separate facility beginning in July 1994. While some clinicians may prefer a separate ICU, there was no evidence of any requirements that open heart surgery patients receive post-operative care in a separate ICU, nor that the lack of a specialized unit means a lack of staff capable of caring for such patients. St. Mary's project involves the renovation of a total of 1731 square feet, 764 net square feet of that in the main operating room on the first floor. The back-up operating room at St. Mary's is 480 square feet, below the American College of Cardiologists' recommendation and 1992 Federal Guidelines of a minimum of 600 and up to 800 square feet. Despite the term "back-up," expert testimony established the need for regular use of both operating rooms, one for regularly scheduled procedures and one for emergencies which occur within the cardiac cath lab or the post-operative intensive care unit. The size of St. Mary's back-up operating room meets state requirements for operating rooms, which do not differentiate on the basis of the type of surgery. St. Mary's also demonstrated that open heart surgeries are performed in comparably sized or smaller operating rooms at JFK. The space allocated to Lawnwood's 4-bed open heart surgery recovery room was criticized as inadequate to accommodate the equipment and personnel required to monitor and, if necessary, to revive post-operative patients. The space allocated complies with state licensure requirements. Reconfiguration of the beds and equipment in the space is permissible, if necessary, in final construction documents which must be approved by AHCA. Lawnwood's proposal was also criticized because the CVICU will be located three stories above the surgical area and recovery rooms. There was no evidence that the location of the CVICU violated licensure requirements or compromised the quality of care. The use of restricted elevator access between the surgical/recovery area and the CVICU is reasonable. AHCA favored the applications of both Lawnwood and Martin over that of St. Mary's due to their locations outside Palm Beach County. Having been told by staff that it was then a "toss up" between the two, AHCA's Division Director selected Martin Memorial. The Division Director, Dr. James Howell, is a former Deputy District Administrator for AHCA District 9 and former County Health Director for Palm Beach County. In explaining his decision, Dr. Howell testified as follows: Q. Ultimately, sir, you recommended to Ms. Dudek that Martin be approved rather than Lawnwood; isn't that correct, sir? A. Yes, sir. In our mutual discussions we had a discussion about two. To be straightforward, the reason that I'd recommended Martin was that Martin is a long-term community hospital with local community responsiveness or local community board of directors, as far as I know, and that AHCA owned - now I believe, it's part of the Columbia system, was in St. Lucie County and was a newer hospital, and that, you know, I felt more comfortable with giving the first CON in the area to a group that had a long heritage and commitment to the area, even though I can tell you I can't say anything negative about AHCA in dealings with them. Q. Or Columbia? A. Or Columbia; right. I can't say anything. That's not meant to be prejudicial with them. They did a good job with us, with maternity/child health. Q. You did approach this batch, did you not, sir, with a bias towards Martin Memorial because you knew the institution had been there a long, long time and was a very stable institution; isn't that correct? A. That is quite correct, yes, sir. See, Transcript, p. 251. The court reporter's references to "AHCA" are corrected and understood, in this context, to refer to HCA or Hospital Corporation of America. The statutory and rule criteria, on balance, demonstrate that open heart surgery programs at Martin Memorial or Lawnwood are more likely to improve access, to meet projected volumes, and to be financially feasible. Of these two, however, Lawnwood is better situated to reverse district out-migration, and has to be preferred, under the state and local health plans and subsection 408.035(1)(n), Florida Statutes, for its history of providing a disproportionate share of its services to Medicaid and charity patients. Finally, the most significant distinction between the applicants is that the quality of care at existing providers, as measured by their volumes of open heart surgeries, will not be adversely affected by the approval of a new program at Lawnwood. Application Content AHCA accepted Martin Memorial's application, although two different letters of intent for mutually exclusive open heart surgery programs were filed simultaneously by Martin Memorial, one for a program shared with Indian River Memorial, and one for a separate program. Martin Memorial's application also, arguably exceeds the scope of its Board approval by including renovation of a portion of the surgical intensive care unit ("SICU"). AHCA accepted Martin Memorial's proposal to allocate the cost of 4 of 13 SICU beds to the open heart surgery project. As a practical matter, Martin Memorial's witnesses concede, the 4 beds cannot be constructed independently. The Board separately authorized the filing of an expedited CON for the SICU construction and renovations. In an Additional Motion For Summary Recommended Order Palm Beach Gardens' submitted correspondence between AHCA and Martin Memorial attempting to establish that the separate SICU CON has expired. AHCA accepted Lawnwood's application without a construction period pro forma, and without identification of the ultimate parent corporation of the subsidiary, Lawnwood Medical Center, Inc.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency For Health Care Administration enter a Final Order issuing Certificate of Need 7245 to Lawnwood Medical Center, Inc., denying Certificate of Need 7244 to St. Mary's Hospital, Inc., and denying Certificate of Need 7243 to Martin Memorial Medical Center, Inc. DONE AND ENTERED this 13th day of March, 1995 in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4908 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner, Lawnwood's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in Findings of Fact 3. Accepted in Findings of Fact 16. Accepted in Findings of Fact 4. Accepted in Findings of Fact 5. 6-12. Accepted in or subordinate to Findings of Fact 27. 13. Accepted in Findings of Fact 13. 14-20. Accepted in or subordinate to Findings of Fact 27. Accepted in or subordinate to Findings of Fact 16 and 19. Accepted in Findings of Fact 24. 23-39. Accepted in or subordinate to Findings of Fact 27. 40-47. Accepted in or subordinate to Findings of Fact 34. 48-61. Accepted in or subordinate to Findings of Fact 28. 62-64. Accepted in relative terms or subordinate to Findings of Fact 27. 65-70. Accepted in or subordinate to Findings of Fact 28. 71-73. Accepted in part or subordinate to Findings of Fact 24 and 28. 74-86. Accepted in part or subordinate to Findings of Fact 2, 23 and 27. 87. Issue not reached. 88-94. Accepted in or subordinate to Findings of Fact 23. 95. Rejected in part and accepted in part in Findings of Fact 24. 96-100. Accepted in Findings of Fact 23. 101-105. Accepted in general in Findings of Fact 24. 106-111. Accepted in Findings of Fact 47. Accepted in general in Findings of Fact 22-29. Accepted in Findings of Fact 22. Accepted in Findings of Fact 23. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Accepted in relevant part in Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. 120-122. Accepted in or subordinate to Findings of Fact 31. 123-131. Accepted in or subordinate to Findings of Fact 5, 43, and 48. 132-133. Accepted in or subordinate to Findings of Fact 43. 134-146. Accepted in or subordinate to Findings of Fact 48. Accepted in or subordinate to Findings of Fact 45, 48 and conclusions of law 66. Accepted in or subordinate to Findings of Fact 48. 139-141. Accepted in or subordinate to Findings of Fact 29. 142-147. Accepted in or subordinate to Findings of Fact 48. 148-152. Accepted in Findings of Fact 8 and 53. Accepted in Findings of Fact 43. Subordinate to Finding of Fact 53. 155-164. Accepted in or subordinate to Findings of Fact 59. 165-173. Accepted in or subordinate to Findings of Fact 43. 174. Accepted in or subordinate to Findings of Fact 38 and 43. 175-176. Accepted in Findings of Fact 7. Accepted in or subordinate to Findings of Fact 38 and 43. Accepted in or subordinate to Findings of Fact 53. Accepted in or subordinate to Findings of Fact 43. 180-181. Accepted in Findings of Fact 38. 182-187. Accepted in Findings of Fact 61. 188. Rejected in Findings of Fact 61. Petitioner, Palm Beach Gardens' Proposed Findings of Fact. 1-3. Accepted in Findings of Fact 16-19. Accepted in Findings of Fact 5 and 8. Accepted in Findings of Fact 13 and 15. Accepted in Findings of Fact 9 and 12. Accepted in preliminary statement. Accepted in Findings of Fact 3. Accepted in Findings of Fact 3 and 16. 10-15. Accepted in or subordinate to Findings of Fact 61. Rejected in conclusions of law 69. Rejected in Findings of Fact 53. Rejected in Findings of Fact 2 and 27. 19-25. Accepted in or subordinate to Findings of Fact 16 and 33. 26. Accepted in or subordinate to Findings of Fact 34. 27-44. Accepted in or subordinate to Findings of Fact 52. 45-48. Accepted in or subordinate to Findings of Fact 18-19 and 27-28. 49-52. Accepted in or subordinate to Findings of Fact 51 and 52. 53. Accepted in general in Findings of Fact 27. 54-55. Accepted in or subordinate to Findings of Fact 33. 56-60. Accepted in or subordinate to Findings of Fact 34. 61. Rejected "substantially" in Findings of Fact 52. 62-72. Accepted in or subordinate to Findings of Fact 16, 27, and 33. 73-76. Accepted in or subordinate to Findings of Fact 27. 77-84. Accepted in or subordinate to Findings of Fact 52. 85-92. Accepted in or subordinate to Findings of Fact 27,28 and 34. 93-103. Accepted in or subordinate to Findings of Fact 28. 104-105. Accepted in Findings of Fact 31. 106. Accepted in Findings of Fact 32. 107-109. Accepted in or subordinate to Findings of Fact 28 and 32. 110-111. Accepted in Findings of Fact 22. 112-125. Accepted in or subordinate to Findings of Fact 23. 126. Accepted in or subordinate to Findings of Fact 5. 127-141. Accepted in Findings of Fact 23 and 24. 142. Rejected in Findings of Fact 7 and 23. 143-145. Accepted in or subordinate to Findings of Fact 7 and 23. 146-151. Issue not reached. 152-158. Accepted in or subordinate to Findings of Fact 24. 159-160. Accepted in Findings of Fact 27. 161-162. Accepted in Findings of Fact 28. Accepted in part in Findings of Fact 28. Accepted in or subordinate to Findings of Fact 29. 165-167. Accepted in or subordinate to Findings of Fact 29. 168-169. Accepted in Findings of Fact 30. 170. Accepted in Findings of Fact 21-30. 171-172. Rejected in general in Findings of Fact 47. 173. Accepted in Findings of Fact 47. 174-184. Rejected or subordinate to Findings of Fact 47. 185-187. Rejected or subordinate to Findings of Fact 43 and 47. 188-193. Accepted in Findings of Fact 47. 194-199. Subordinate to Finding of Fact 47. 200. Accepted in Findings of Fact 29. 201-208. Accepted in or subordinate to Findings of Fact 52. 209. Rejected. 210-218. Accepted in or subordinate to Findings of Fact 52. 219. Rejected conclusion as to "substantial" in Findings of Fact 52. 220-229. Accepted in or subordinate to Findings of Fact 52. 230. Rejected conclusion as to "substantial" in Findings of Fact 52. Petitioner, St. Mary's, Proposed Findings of Fact. 1-3. Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Facts 3 and 22. Accepted in or subordinate to Findings of Fact 9. Accepted in or subordinate to Findings of Fact 12. Accepted in or subordinate to Findings of Fact 10. Accepted in or subordinate to Findings of Fact 27. Accepted in Findings of Fact 2. 10-12. Accepted in or subordinate to preliminary statement and Finding of Fact 12. 13-14. Accepted in or subordinate to Findings of Fact 58. 15-17. Accepted in or subordinate to Findings of Fact 43. 18-24. Accepted in Findings of Fact 30. 25-26. Rejected in Findings of Fact 44-46. 27-29. Accepted in Findings of Fact 30. Rejected in Findings of Facts 44-46. 31-32. Accepted in or subordinate to Findings of Fact 44. 33-35. Accepted in or subordinate to Findings of Fact 43. 36. Accepted in or subordinate to Findings of Fact 56. 37 Accepted in or subordinate to Findings of Fact 9. Accepted in Findings of Fact 38. Accepted in or subordinate to Findings of Fact 58. Accepted in or subordinate to Findings of Fact 60. 41-44. Accepted in or subordinate to Findings of Fact 56 and 57. 45-54. Accepted in or subordinate to Findings of Fact 35. 55. Rejected in Findings of Fact 35. 56-57. Accepted in or subordinate to Findings of Fact 34. 58. Conclusion rejected, although access is limited by comparison to commercially insured patients, See, Findings of Fact 34. 59-66. Accepted in or subordinate to Findings of Fact 34. 67-73. Accepted in Findings of Facts 9, 28 and 32. Accepted in Findings of Fact 9. Accepted in Findings of Fact 32. Accepted in Findings of Fact 34. Rejected as significant benefit in Findings of Fact 34. Accepted (as both interests can be better accomplished) in Findings of Fact 27. Accepted in or subordinate to Findings of Fact 25. 80-81. Rejected in Findings of Fact 25. Accepted in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected in Findings of Fact 25. Rejected as valid in Findings of Fact 34. 86-88. Accepted in Findings of Facts 27 and 36. 89-91. Accepted in part or subordinate to Findings of Fact 26. Rejected in Findings of Fact 26. Rejected in Findings of Fact 25 and 26. Accepted in Findings of Fact 22. Rejected in Findings of Fact 25-26. Rejected in general in Findings of Fact 27. 97-98. Accepted in or subordinate to Findings of Fact 28. Accepted in Findings of Fact 29. Accepted in Findings of Fact 30. Rejected conclusion in Findings of Fact 35. Accepted in Findings of Fact 31 and 32. 103-104. Accepted in Findings of Fact 27. 105. Accepted in Findings of Fact 37. 106-107. Rejected in Findings of Fact 51. Accepted in or subordinate to Findings of Fact 51. Accepted in Findings of Fact 35. Rejected in Findings of Fact 47. Rejected in Findings of Fact 48. Rejected in Findings of Fact 24. Intervenor, JFK Medical Center, Inc.'s Proposed Findings of Fact. Accepted in Findings of Fact 9. Accepted in Findings of Fact 18. Accepted in or subordinate to Findings of Fact 12. 4-6. Accepted in or subordinate to preliminary statement. 7-9. Accepted in or subordinate to Findings of Fact 2. Accepted in or subordinate to Findings of Fact 16-19. Accepted in Findings of Fact 27. Accepted in relevant part in Findings of Fact 16 and 27. 13-19. Accepted in or subordinate to Findings of Fact 34. Accepted in Findings of Fact 18 Accepted in Findings of Fact 35. Accepted in Findings of Fact 19. 23 Accepted in relevant part in Findings of Fact 33. 24. Accepted in Findings of Fact 36. 25-27. Accepted in or subordinate to Findings of Fact 33. 28-31. Accepted in or subordinate to Findings of Fact 27. 32-34. Accepted in or subordinate to Findings of Fact 27 and 34. 35-44. Accepted in or subordinate to Findings of Fact 35. 45-48. Accepted in or subordinate to Findings of Fact 25. 49-50. Accepted in or subordinate to Findings of Fact 26. 51. Accepted in or subordinate to Findings of Fact 25. 52-57. Accepted in Findings of Fact 44-46. 58. Subordinate to Finding of Fact 44-46. 59-66. Accepted in or subordinate to Findings of Fact 51. 67-75. Accepted in or subordinate to Findings of Fact 59. 76-78. Rejected in Findings of Fact 59. 79-80. Accepted in or subordinate to Findings of Fact 25. 81-82. Rejected in or subordinate to Findings of Fact 57. 83-84. Accepted in or subordinate to Findings of Fact 52. 85. Accepted in Findings of Fact 43. 86-89. Accepted in or subordinate to Findings of Fact 58. Respondent, AHCA's Proposed Findings of Fact. 1. Accepted in general or subordinate to Findings of Fact 5-8. 2. Accepted in or subordinate to Findings of Fact 9-12. 3. Accepted in or subordinate to Findings of Fact 13-15. 4. Accepted in Findings of Fact 16 and 18. 5. Accepted in Findings of Fact 6 and 19. 6. Accepted in preliminary statement and Findings of Fact 2. 7. Accepted in Findings of Fact 31 and 32. 8. Accepted in Findings of Fact 31. 9. Accepted in or subordinate to Findings of Fact 7. Subordinate to Findings of Fact 7. Accepted in Findings of Fact 11 and 26. Accepted in or subordinate to Findings of Fact 14. 13,14. Accepted in or subordinate to Findings of Fact 6, 28 and 32. 15. Accepted in or subordinate to Findings of Fact 10, 28 and 32. 16,17. Accepted in or subordinate to Findings of Fact 28 and 32. Accepted in Findings of Fact 21-30. Accepted in Findings of Fact 22. 20,21. Accepted in part in Findings of Facts 23 and 24. Accepted in Findings of Fact 24. Accepted in or subordinate to Findings of Fact 25, 26 and 27. Accepted in Findings of Fact 27. Accepted in Findings of Fact 28. Subordinate to Findings of Fact 29. Accepted in Findings of Fact 5, 9 and 13. Rejected conclusion in terms of other indicators in Findings of Fact 29. Accepted in or subordinate to Findings of Fact 5, 9, 13 and 29. Accepted in Findings of Fact 29. 30-33. Accepted in or subordinate to Findings of Fact 23-26. Accepted in Findings of Fact 30. Accepted in Findings of Fact 27 and 34-37. 36-37. Accepted in or subordinate to Findings of Fact 27. 38. Accepted in Findings of Fact 35. 39-42. Accepted in or subordinate to Findings of Fact 32 and 34. Accepted in Findings of Fact 18. Accepted in Findings of Fact 51. Accepted conclusion in Findings of Fact 52. 46-48. Accepted in Findings of Fact 23-26 and 38. Accepted in Findings of Fact 14 and 24. Accepted if last line changed from "St. Mary's" to "Lawnwood" in Findings of Fact 27, 36 and 37. 51-52. Accepted in Findings of Fact 40 and 61. Accepted in Findings of Fact 42. Accepted in Findings of Fact 29. Accepted in Findings of Fact 48. Accepted in Findings of Fact 44-46. Accepted in Findings of Fact 47. Accepted in Findings of Fact 29 and 51. Respondent, Martin Memorial's Proposed Findings of Fact. Accepted in Findings of Fact 2. Accepted in preliminary statement. Accepted in or subordinate to Findings of Fact 13. Accepted in or subordinate to Findings of Fact 9. 5-6. Accepted in or subordinate to Findings of Fact 5. Accepted in or subordinate to Findings of Fact 7, 11 and 14. Accepted in or subordinate to preliminary statement and Findings of Fact 19. Accepted in or subordinate to preliminary statement and Findings of Fact 18. Accepted in preliminary statement and Finding of Fact 1. Accepted in Findings of Fact 3 and 16. Accepted in or subordinate to Findings of Fact 23 and 24. Accepted in or subordinate to Findings of Fact 20. 14-15. Accepted in or subordinate to Findings of Fact 14. Accepted in or subordinate to Findings of Fact 15. Subordinate to Finding of Fact 13. Accepted in Findings of Fact 12. Accepted in relevant part or subordinate to Findings of Fact 8 and 49. 20-21. Accepted in Findings of Fact 61. Accepted in Findings of Fact 62. Accepted in preliminary statement and Finding of Fact 2. Accepted in Conclusions of Law 74. Accepted in Findings of Fact 52. Accepted in Findings of Fact 38. 27-28. Rejected conclusion that program is superior in terms of quality of care in Findings of Fact 38. 29-30. Accepted in or subordinate to Findings of Fact 43. Accepted in general or subordinate to Findings of Fact 43. Rejected in or subordinate to Findings of Fact 59. 33-34.. Accepted conclusion in Findings of Fact 43. 35-37. Accepted in or subordinate to Findings of Fact 23-26. 38-40. Conclusion rejected in substantial part in Findings of Fact 23. 41-43. Accepted in substantial part in Findings of Fact 24. 44. Accepted in Findings of Fact 47. 45-48. Accepted in or subordinate to Findings of Fact 48. 49-50. Rejected in Findings of Fact 66 and 67. 51-52. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion in part in Findings of Fact 23 and 24. Accepted in Findings of Fact 27. 55-59. Accepted in or subordinate to Findings of Fact 28 and 34. 60. Conclusion rejected in Findings of Fact 32. 61-62. Accepted in Findings of Fact 27. 63. Rejected in general in Findings of Fact 23 and 27. 64-65. Rejected as to alternatives for "residents most likely" to the extent that is inconsistent with need in relation to state plan, in Findings of Fact 27. Accepted in Findings of Fact 51 and 52. Accepted in or subordinate to Findings of Fact 52. Rejected in Findings of Fact 52. 69-70. Accepted in or subordinate to Findings of Fact 52. Accepted in Findings of Fact 22 and 30. Rejected conclusion in Findings of Fact 23 and 24. Accepted except last sentence in Findings of Fact 27. 74-75. Accepted in Findings of Fact 28. 76-77. Accepted in or subordinate to Findings of Fact 29. Rejected conclusion or subordinate to Findings of Fact 29. Accepted in Findings of Fact 32. 80-82. Accepted in or subordinate to Findings of Fact 31. COPIES FURNISHED: W. David Watkins, Esquire 2700 Blair Stone Road, Suite C Post Office Box 6507 Tallahassee, Florida 32314-6507 (Counsel for St. Mary's Hospital) Michael J. Cherniga, Esquire David C. Ashburn, Esquire Greenberg, Traurig, Hoffman, et al. Suite 2000 111 South Monroe Street Tallahassee, Florida 32302 (Counsel for Palm Beach Gardens Community Hospital) Elizabeth McArthur, Esquire 101 North Monroe Street, Suite 1000 Post Office Drawer 11307 Tallahassee, Florida 32302 (Counsel for Lawnwood Medical Center) Leslie Mendelson, Esquire Senior Attorney Agency for Health Care Administration 325 John Knox Road, Suite 301 Tallahassee, Florida 32303-4131 Byron B. Mathews, Jr., Esquire 201 South Biscayne Boulevard Suite 2200 Miami, Florida 33131 Robert A. Weiss, Esquire John M. Knight, Esquire The Perkins House, Suite 200 118 North Gadsden Street Tallahassee, Florida 32301 R. S. Power, Agency Clerk Agency for Health Care Administration Atrium Building, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, Esquire The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
The Issue Whether Respondent Cleveland Clinic Florida Hospital's Motion to Dismiss the Petition in this case, for lack of standing, should be granted.
Findings Of Fact The facts necessary for disposition of the Motion to Dismiss are not in dispute. The Public Health Trust of Miami-Dade County operates Jackson Memorial Hospital ("JMH") in Dade County (AHCA District 11). In its Petition for Formal Administrative Hearing, certified to have been served on August 19, 1998, the Trust alleged that JMH is the only provider of adult kidney transplantation services within Florida Transplant Service Planning Area 4, which includes AHCA Districts 8, 9, 10 and 11. The Trust described itself in both the Petition and an amended Petition which followed as: [A]n agency and instrumentality of Miami-Dade County, which is organized and operated pursuant to Chapter 154, Part II, Florida Statutes, and Chapter 25A of the Code of Miami-Dade County. It governs and operates Jackson Memorial Hospital and other designated health care facilities. Its address is 1611 N.W. 12th Avenue, Miami, Florida 33136. Amended Petition, paragraph 2, p. 2. The Trust and Jackson Memorial Hospital are both in Dade County, AHCA District 11. With regard to CCFH, the Petition alleged the following. CCFH is located in Fort Lauderdale, Broward County (AHCA District 10). CCFH has CON approval to construct a new facility in Weston, also in Broward County. It submitted an application for an adult kidney transplantation program at the new Broward County facility which was awarded preliminary CON approval as noticed in the Florida Administrative Weekly on July 31, 1998. It is the application for the adult kidney transplantation program at the Weston facility in AHCA District 10 which the petition seeks to have denied contrary to AHCA's preliminary approval. The Petition's allegations with regard to standing are contained in paragraphs seven and eight: As the sole provider of adult transplantation services in Transplant Area 4, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. The adverse affects to the PHT if the preliminary approval of CON No. 9026 is upheld include but are not limited to: A decrease in the number of procedures performed at JMH, which may impair research objectives and medical proficiency; A loss of needed revenue to JMH, the largest provider of indigent hospital care in Florida; An increase in the competition for professional staffing, thereby driving up the costs of performing these hospital services; and An increase in the cost to the health care system for performing transplant services through he unnecessary duplication of services. Petition for Formal Administrative Hearing, p. 3 and 4. CCFH moved to dismiss the Petition on the basis that the Trust had not alleged facts sufficient to meet the standing requirement in CON proceedings found in Section 408.039(5), Florida Statutes. In essence, CCFH asserted that the Trust had failed to allege that its adult kidney transplantation program in District 11 was within the same district as the challenged kidney transplant program of CCFH approved by AHCA for District 10. In response, the Trust informed the Agency that it had on the same date filed an Amended Petition which, differs substantively from the original petition only in paragraphs 4 and 8, concerning the issue of standing. By filing its Amended Petition, the Trust adds an additional basis for standing, and does not in any manner retreat from the basis for standing asserted in its original Petition. Public Health Trust's Response to Cleveland Clinic Florida Hospital's Motion to Dismiss, p. 2, paragraph 2. The new paragraphs four and eight in the Amended Petition, state: PHT's medical staff (including its transplantation physicians) is provided by the university of Miami School of Medicine, doing business as the University of Miami Medical Group (UMMG), under an affiliation agreement between the PHT and the University of Miami. Through the UMMG, JMH conducts various activities in Broward County as part of its adult kidney transplantation program, including but not limited to the following: UMMG sees approximately one third of all its post transplant patients at two satellite clinics in Fort Lauderdale; and UMMG through the University of Miami's Organ Procurement Organization maintains agreements with various Broward donor hospitals and provides in-service training to hospital personnel involved in organ procurement, including kidney procurement. * * * As the sole provider of adult transplantation services in Transplant Area 4, as an existing health care facility with an established adult kidney transplant program operating in both Districts 10 and 11, Petitioner has standing to file this petition because its substantial interests will be directly affected by the Agency action for which this petition seeks review. Amended Petition, pages 2 and 3. The Amended Petition was filed with the Department Clerk for AHCA on September 4, 1998, prior to the case's referral by AHCA to DOAH. Argument on the Motion to Dismiss was heard on September 28, 1998. Ruling was reserved until entry of this order.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that the Agency for Health Care Administration enter a final order dismissing the amended petition in this case of the Public Health Trust of Miami-Dade County, Florida. DONE AND ENTERED this 14th day of October, 1998, in Tallahassee, Leon County, Florida. DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1998. COPIES FURNISHED: Jack P. Hartog, Esquire Assistant County Attorney Jackson Memorial Hospital West Wing 109 1611 Northwest 12th Avenue Miami, Florida 33136 Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs LLP 118 North Gadsden Street, 2nd Floor Tallahassee, Florida 32301 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive, Building 3 Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building 3 Suite 3431 Tallahassee, Florida 32308
Findings Of Fact Petitioner, Bayonet Point Regional Medical Center, (Bayonet Point), has applied for a certificate of need in part for a cardiac catheterization laboratory and for open heart surgery. Bayonet Point is an existing hospital located in Hudson in the northwest corner of Pasco County, part of District V of Respondent, Department of Health and Rehabilitative Services (HRS). District V also includes Pinellas County. Hillsborough County, part of HRS District VI, is adjacent to District V. Hillsborough County is southeast of Pasco County and east of Pinellas County. Bayonet Point has five board certified cardiologists on its staff. It also has the nursing and other support staff needed by those cardiologists. If a cardiac catheterization laboratory and open heart surgery is added at Bayonet Point, Bayonet Point will be able to attract the additional needed specialists and staff. Under the rule methodology for determination of need for cardiac catheterization laboratories set out in Rule 10- 5.11(15)(1) through (o), Florida Administrative Code, there is no need for an additional cardiac catheterization laboratory in District V. However, the rule methodology referred to in the immediately preceding paragraph incorporates 1981 cardiac catheterization use rates. The 1981 use rates are out of date and lower than actual use rates. Using actual 1985 use rates, the rule methodology would demonstrate a need for one additional cardiac catheterization laboratory in District V. In addition, even the actual 1985 cardiac catheterization use rates do not include or account for substantial utilization of Hillsborough County cardiac catheterization laboratories by residents of Pasco County. There is a need for at least one additional cardiac catheterization laboratory in District V by the year 1986. The two existing cardiac catheterization laboratories in District V are both in Pinellas County. Within District V, there is a need for a cardiac catheterization laboratory in Pasco County. New Port Richey is centrally located both in terms of geography and in terms of population within Pasco County. Hudson, being in the northwest corner of Pasco County, is not. Hudson does have better access to the eastern and northeastern portions of Pasco County because of better arterial road access. Hudson also is more accessible to southern portions of Hernando County, part of HRS District III, which also are within Bayonet Point's primary service area. Hernando County also is without a cardiac catheterization laboratory and the southern portion of Hernando County needs one too. There is no need for additional open heart surgery services in District V under the rule methodology for determination of such need set forth in Rule 10-5.11(16), Florida Administrative Code. The rule methodology employs 1981 utilization rates which project an average of approximately 342 open heart surgery procedures per year in the three existing open heart surgery programs in District V in the year 1986. Using 1985 utilization rates, the average utilization drops to approximately 317 procedures per year. None of the three existing open heart surgery programs in District V are projected to do 350 or more open heart surgery procedures in 1986. The rule methodology requires that all existing open heart surgery programs must be projected to do 350 or more procedures per year in 1986 before an additional open heart surgery program can be approved. There is no open heart surgery service available at Bayonet Point at this time, and there is currently no open heart surgery service within 30 minutes travel time from Bayonet Point by emergency vehicle under average travel conditions. Approximately 1200 Pasco County residents per year are being sent out of District V for cardiac catheterization, mostly to Tampa General Hospital. It can be estimated that 300 of those patients also undergo open heart surgery.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that Respondent, Department of Health and Rehabilitative Services, enter a final order granting the portions of the application of Petitioner, Bayonet Point Regional Medical Center, CON Action No. 3083, for a certificate of need for a cardiac catheterization laboratory and open heart surgery. RECOMMENDED this 30th day of May, 1986, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of May, 1986.
Findings Of Fact Lawnwood Regional Medical Center is a 225 bed community hospital in Ft. Pierce, Florida. It currently holds a CON to add an additional 50 beds. Lawnwood is owned and operated by Hospital Corporation of America, (HCA). On October 14, 1985, Lawnwood submitted a CON application for authorization to provide cardiac catheterization and open heart surgery programs at the facility. The project for both services would involve a total of approximately 10,000 sq. ft. of construction consisting of both new construction and renovation of the present facility, with a project cost of approximately $3.6 million. Lawnwood developed the project because it found a need therefor as a result of various visits to the administrator by physicians practicing in the area who indicated a growing demand for the services. The physicians in question indicated they were referring more and more patients to facilities out of the immediate area and the services in question were very much needed in this locality. The main service area for Lawnwood consists of the northern four counties of DHRS District IX, including St. Lucie, Martin, Okeechobee, and Indian River Counties. The majority of the cardiology practitioners in this service area find it necessary, because of the lack of cardiac catheterization and open heart surgery programs, to transfer patients to facilities either in Palm Beach County, which are from one to two hours away, or to facilities outside the District, primarily in Miami or the University of Florida area, which are even further. While many heart patients are not severely impacted by this, one specific class of patient, the streptokinase patient is. This procedure, involving the use of a chemical injected by catheter to dissolve a clot causing blockage must he done within a relatively short period of time after the onset of the blockage to be effective. However, this can he done outside a cardiac cath lab. A representative sampling of doctors testifying for Lawnwood indicated that during the year prior to the hearing, one doctor, Kahddus, sent 140 patients outside the district for catheterization procedures and 90 additional patients for open heart surgery. Other physicians referring outside District IX included Dr. Hayes - 4; Dr. Marjieh - 240; and Dr. Whittle - 12. Doctors indicated that the situation was so severe that some physicians practicing in the Palm Beach area, who have cardiac catheter and open heart surgery services available to them in the immediate locale are nonetheless referring patients outside the District for these procedures. No physician who does this testified, however. St. Mary's Hospital is a 358 bed not for profit hospital located in Palm Beach County. It has been issued a CON for a cardiac catheterization lab expected to come on line in April, 1987. Palm Beach Gardens Medical Center is a 204 bed acute care hospital which currently operates a cardiac catheterization laboratory and an open heart surgery program. It, too, is located in Palm Beach County. A second cardiac catheterization laboratory was scheduled to open at this facility in February, 1987. An additional cardiac catheterization laboratory is operating at Delray Community Hospital and this facility, as well as the currently existing facility at PBGMC are the only two currently operating cardiac catheterization laboratories within DHRS District IX. There are, however, other cardiac catheterization labs approved for District IX. These include the aforementioned second PBGMC lab, the aforementioned St. Mary's lab, one at JFK Hospital and one at Boca Raton Community Hospital. These latter four facilities are not yet operational. As to open heart surgery programs, only PBGMC and Delray Community Hospital have open heart surgery programs on line. JFK has been approved for an open heart surgery program. DHRS has promulgated rules for determining the need for cardiac catheterization and open heart surgery programs. These rules are found in Section 10-5.11(15) and (16), F.A.C. and establish methodologies based on use rates to determine need. The use rate for the applicable time period here, July, 1984 through June, 1985, is to be multiplied by the projected population for the District in the planning horizon, (July, 1987) which figure is then divided by 600 procedures per laboratory to determine the need for catheterization labs or 350 open heart procedures to determine the need for additional open heart surgery programs. The difficulty in applying this methodology to the current situation is in the calculation of the "use rate" used to measure the utilization of a service per unit of population. For the rule here, it is expressed as the number of procedures per 100,000 population. There is more than one way to calculate a use rate and the DHRS rules do not specify the method of calculation. An "actual use rate" is determined by applying the actual number of procedures performed within a particular geographical area in a particular time period. Data to determine an actual use rate for catheterization services or open heart surgery is not currently available in District IX, however. Applying the formula cited above to the existing figures, however, reflects a use rate of 62.3 procedures per 100,000 population in District IX. This is far below the 409.7 procedures per 100,000 population statewide. Lawnwood proposes to apply the statewide use rate rather than the District IX use rate because District IX is currently in a start up phase and does not have sufficient historical information available to provide an accurate use rate for the purpose of the need methodology. The lower the use rate, the lower the need will be shown to be. If the lower District IX rate is applied, in light of the numerous other laboratories coming on line approved already, there would clearly be no need for any additional services in either the catheterization or open heart surgery areas. Some experts offer as a potential substitute for the actual use rate a "facility based use rate" which involves determining the number of procedures performed in all hospitals within a particular geographic area for the applicable time period and dividing that number of procedures by the population of that area. DHRS evaluators employed this "facility based use rate" in their need calculations. At least one expert, however, contends that the "facility based use rate" is appropriate only when certain conditions exist. These include an adequate supply of facilities or providers in the area; historical, long-standing experience rather than start-up programs; and a lack of a high number of referrals outside of the particular area. Since these three conditions are not met here, it would seen that the "facility based use rate" would not be appropriate. In determining the statewide use rate of 409.07, Mr. Nelson, consultant testifying on behalf of Lawnwood, derived that figure by compiling utilization data for all hospitals in the state providing cardiac catheterization during the time period in question divided by the statewide population as of January 1, 1985. The resulting figure was thereafter converted into a rate per unit of population. A statewide figure such as this includes patients of all ages and it would appear that this is as it should be. Catheterization and open heart surgery services would be open to all segments of the state population and it would seem only right therefore that the entire population be considered when arriving at figures designed to assess the need for additional services. On the other hand, experts testifying on behalf of the intervenors utilized statistical manipulation which tended to indicated that the need, reflected as greater under Mr. Nelson's methodology, was in fact not accurate and was flawed. He that as it may, it is difficult to conclude which of the different experts testifying is accurate and the chances are great that none is 100 percent on track. More likely, and it is so found, the appropriate figure would be one more extensive than the population figures and resultant use rate for District IX alone and closer to the statewide rate across a broad spectrum of the population. When the fact that the older population of the District IX counties, the age cohort more likely to utilize catheterization and open heart surgery services, is greater in the District IX counties than perhaps in other counties north of that area, the inescapable conclusion must be reached that a use rate significantly higher than 62.3 would be appropriate. This may not, however, require the use of a statewide rate of 409.7. Utilizing, arguendo, the statewide use rate of approximately 409 procedures per 100,000 population results in a projected number of procedures of 4,576 in District IX if the projected population figure of slightly more than 1.1 million holds true. When that 4,576 figure is divided by the minimum number of procedures required by rule prior to the addition of further cardiac catheterization labs, (600),a need for 7.63 labs in District IX is shown. With six labs existing or approved, a net need of two additional labs would appear to exist since DHRS rounds upward when the number is .5 or higher. A similar analysis applied to open heart surgery, using a statewide use rate of 120.94 per 100,000 population results in a procedure number of 1,353 for the same population. Utilizing the DHRS rule minimum of 350 procedures per lab for open heart surgery procedures, a net yield of 3.87 programs would be needed in District IX in January, 1988. Subtracting the three existing or approved programs now in the district, and rounding up, would show a need of one additional open heart surgery program. These are the figures relied upon by Lawnwood. Accepting them for the moment and going to the issue of financial feasibility, DHRS apparently has agreed that the project costs for this facility are reasonable. Lawnwood has shown itself to be a profitable hospital and HCA is a large, well run corporation not known for the establishment of non- profitable operations. If one accepts that the actual utilization will approximate the projected utilization figures, then the operation would clearly be financially feasible. Both intervenors challenged the Petitioner's pro forma statement of earnings, but their efforts were not particularly successful. If Lawnwood can perform a sufficient number of procedures, then it should be able to break even without difficulty. Turning to the question of the impact that the opening of Lawnwood's facilities would have on the other providers or prospective providers in the area, both PBGMC and St. Mary's contend that there would be a substantial adverse impact on their existing services as well as on the prospective units already approved. Lawnwood proposes to service a portion of the indigent population with its two new operations. Were this to be done, indeed an impact would be felt by St. Mary's which is currently a substantial provider of indigent and Medicaid treatment and St. Mary's will be particularly vulnerable since it is in the start-up phase of its cardiac catheterization lab. Currently, PBGMC draws patients in both services from Martin and St. Lucie counties as well as from Palm Beach County. The percentage of patients drawn from these more northern counties is, while not overwhelming, at least significant, being 14 percent from Martin County and 9 percent from St. Lucie. Taken together, this constitutes 23 percent of the activity in these areas. St. Mary's anticipates a loss of 25 percent of its potential catheterization cases and if this happens, it will lose approximately $719,000.00 of its gross revenue in catheterization cases alone. St. Mary's further predicts that if Lawnwood's facility is opened, it will have difficulty recruiting and maintaining qualified personnel. PBGMC, figuring it's loss to be approximately $492,000.00, estimates that a layoff of nursing and other staff personnel or the redirecting them into other areas of the hospital would be indicated. PBGMC also refers to the cumulative impact not only of Lawnwood's proposal but of the other cardiac programs in the District which have been approved but are not yet on line. If all come into operation, PBGMC estimates it could lose as much as 69 percent of its activity in these areas. These negative predictions are not, however, supported by any firm evidence and are prospective in nature. From a historic perspective, it is doubtful that any lasting significant negative impact would occur to either PBGMC or St. Mary's overall operation by the opening of Lawnwood's facility. Turning to the question of staffing and its relationship to the issue of quality of care, there is little doubt that Lawnwood could obtain appropriate staffing for both its services if approved. Of the physicians already on staff at the facility, many are now certified and the hospital and the medical community plans training programs for those who are not. As to nurses and other support personnel, Lawnwood is satisfied that it can recruit from other HCA facilities and will recruit from the open market. It has a full time recruiter on staff. Quality of care is of paramount concern to the administration of Lawnwood. It has a current three year accreditation from the Joint Commission on Hospital Accreditation. It also has a quality control committee made up of both physicians and other staff members and the laboratory is approved by appropriate accrediting agencies. These same types of quality control programs would be applied to both new requested services as well. The rules in question governing the approval of cardiac catheterization laboratories and open heart surgery programs set down certain criteria for the approval of additional services which, as to the question of cardiac catheters states at subparagraph 15(o)1a that there will be no additional adult cardiac catheterization laboratories established in a service area unless the average number of catheterizations performed per year by existing and approved laboratories performing adult procedures in the service area is greater than 600. Much the same qualification relates to open heart surgery programs except that in that latter case, the minimum number would be 350 open heart procedures annually for adults and 130 for pediatric heart procedures annually. Ms. Farr, consultant for DHRS, feels that Petitioner's application would be inconsistent with the minimum standards set forth in the rule because she does not believe the Petitioner would do enough procedures in either cardiac catheterization or open heart surgery to meet the 600/350 criteria. She also contends that the proposal is not consistent with the District Health Plan, because the District plan requires the rule which addresses need be followed. Since, in her opinion, the application of the rule shows no need, there would be a violation of the District Health Plan if these proposals were approved. In the area of cardiac catheterization laboratories, of the six licensed and approved labs in District IX, only that existing currently at PBGMC is presently performing more than 600 procedures per year. Substantial testimony tending to indicate that a well organized cardiac catheterization lab can handle between 1500 and 2000 procedures per year, the 600 figure would tend to be a minimum and was so recognized by the drafters of the rule. No evidence was introduced by any party to show the numbers of open heart surgery procedures currently being performed in the three existing or approved open heart surgery programs in the District. Again, however, it would appear that DHRS criteria of 350 would be a minimum rather than an optimum or maximum figure. The parties have stipulated that as to the travel time criteria set forth in the rule for both procedures, 90 percent of the population of District IX is within two hour automobile travel time from availability to either or both procedures. It would further appear from an evaluation of the evidence, that while difficulty is experienced in arranging treatment for indigent transfer patients outside the District, little if any difficulty is experienced in arranging transfer treatment for those who can pay for the service. Little difficulty is experienced in securing treatment for these individuals in either Miami, Orlando, or elsewhere, and aside from inconvenience, there was no showing that a real, substantial health risk existed as a result of the transfer process. All things taken together, then, though the numerical evaluation under the rule process, applying a statewide use rate, tends to indicate that there is a "need" for this additional service, the subparagraph "o" criteria of 600/350 procedures requirement prior to authorization of additional service is not met.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Lawnwood's application for a CON to add a cardiac catheterization laboratory and open heart surgery program at its facility in Ft. Pierce, Florida, be denied. RECOMMENDED this 16th day of March, 1987 at Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of March, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1539 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. By Petitioner - Lawnwood 1 & 2. Accepted and incorporated. 3 & 4. Accepted and incorporated. 5. Accepted and incorporated. 6. Accepted and incorporated. 7. Accepted and incorporated. 8. Accepted and incorporated. 9. Accepted and incorporated. 10. Accepted and incorporated. 11. Accepted and incorporated. 12. Accepted and incorporated in substance. 13. Accepted and incorporated in substance. 14. Accepted and incorporated in substance. Rejected as indicating a need for 2 additional cath labs. Rejected as calling for determination of "not normal status for District IX. Accepted in general but rejected insofar as there is an implication that non-indigent patients experience "significant" difficulty securing treatment. Accepted. 19 & 20. Accepted as to the streptokinase patients specifically. Accepted but not considered to be of major significance. Accepted and incorporated. 23 & 24. Accepted and incorporated. 25 & 26. Accepted and incorporated. 27 & 28. Accepted and incorporated. 29. Accepted. 30 & 31. Accepted and incorporated in substance. 32. Rejected as not supported by the best evidence. 33-36. Accepted and incorporated. Rejected as contrary to the evidence. Accepted. 39-42. Accepted. By Intervenor - St. Mary's 1 - 4. Accepted and incorporated. 5 & 6. Accepted and incorporated. 7 - 9. Accepted and incorporated. 10. Rejected as not supported by the best evidence. 11 & 12. Accepted and incorporated. Accepted and incorporated. Accepted and incorporated. Rejected as not supported by the best evidence. Accepted. Accepted. Accepted. 19-21. Merely a summary of testimony. Not a Finding of Fact. 22-24. Summary of testimony. Not a Finding of Fact. Accepted as ultimate Finding of Fact. Rejected. Rejected as a summary of testimony. Not a Finding of Fact. Irrelevant. Accepted. Accepted. Subordinate. 32-36. Rejected as a recitation of testimony and not Finding of Facts. 37-40. Rejected as contrary to the weight of the evidence. 41 & 42. Accepted. 43-46. Accepted. Rejected. Irrelevant. Accepted. Rejected. By Intervenor - PBGMC 1 & 2. Accepted and incorporated. Accepted except for last sentence which is irrelevant. Accepted. Accepted and incorporated. 6 & 7. Accepted and incorporated. Accepted. 9. Accepted and Incorporated. 10 & 11. Accepted and incorporated. 12. Accepted. 13-16. Accepted and incorporated. Accepted. Accepted. Rejected ultimately as contrary to the weight of the evidence. Accepted. Rejected. Accepted. 23 & 24. Accepted. 25 & 26. Rejected as contrary to the weight of the evidence. 27. Accepted. COPIES FURNISHED: Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 Thomas A. Sheehan, III, Esquire 9th Floor, Barnett Centre 625 North Flagler Drive West Palm Beach, Florida 33401 R. Bruce McKibben, Esquire 1323 Winewood Blvd. Building 1, Room 407 Tallahassee, Florida 32301 Eleanor A. Joseph, Esquire Harold F.X. Purnell, Esquire 2700 Blairstone Road, Suite C Tallahassee, Florida 32314 Robert S. Cohen, Esquire 306 North Monroe Street Post Office Box 10095 Tallahassee, Florida 32302
The Issue Whether there is need for a new Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program in Organ Transplant Service Area (OTSA) 3; and, if so, whether Certificate of Need (CON) Application No. 10471 (heart) and/or 10472 (heart and lung), filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital (Nemours or NCH), to establish a Pediatric Heart Transplant and/or Pediatric Heart and Lung Transplant program, satisfy the applicable statutory and rule review criteria for award of a CON.
Findings Of Fact Based upon the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following Findings of Fact are made: The Parties The Applicant, Nemours Nemours Children’s Hospital is a licensed Class II specialty children’s hospital located in Orange County, Health Planning District 7, Subdistrict 7-2, OTSA 3, which is owned and operated by The Nemours Foundation. Nemours is licensed for 100 beds, including 73 acute care, nine comprehensive medical rehabilitation, two Level II neonatal intensive care unit (NICU), and 16 Level III NICU beds, and is a licensed provider of pediatric inpatient cardiac catheterization and pediatric open-heart surgery. As the primary beneficiary of the Alfred I. duPont Testamentary Trust established in the will of Alfred duPont, the Foundation was incorporated in Florida in 1936. The Foundation set out to provide children and families medical care and services, its mission being “[t]o provide leadership, institutions, and services to restore and improve the health of children through care and programs not readily available, with one high standard of quality and distinction regardless of the recipient’s financial status.” Foundation assets reached $5.5 billion, by the end of 2015. The Foundation has funded $1.5 billion of care to Florida’s pediatric population through subspecialty pediatric services, research, education, and advocacy. Nemours has established a pediatric care presence throughout the State of Florida. Nemours operates over 40 outpatient clinics throughout Florida that offer primary care, specialty care, urgent care, and cardiac care services to pediatric patients in central Florida, Jacksonville, and the panhandle region. Nemours also provides hospital care to pediatric inpatients at Nemours Children’s Hospital in Orlando, as well as through affiliations with Wolfson’s Children’s Hospital in Jacksonville, West Florida Hospital in Pensacola, and numerous hospital partners in central Florida. The resources Nemours offers in the greater Orlando area are especially significant with 17 Primary Care Clinics, five Urgent Care Clinics, 10 Specialty Care Clinics, nine Nemours Hospital partners, and, of course, NCH itself. These clinics are located throughout OTSA 3 where Nemours determined access to pediatric care was lacking, including Orlando, Melbourne, Daytona Beach, Titusville, Kissimmee, Lake Mary, and Sanford, as well as neighboring Lakeland. The clinics are fully staffed with hundreds of Nemours-employed physicians who live in the clinic communities. Through these satellite locations, as well as the Nemours CareConnect telemedicine platform, Nemours is able to bring access to its world-class subspecialists located at NCH to children throughout the State of Florida who otherwise would not have access to such care. Nemours was established to provide state of the art medical care to children through its integrated model. Nemours’ development has been and continues to be driven by its mission and objective to be a top-tier, world-class pediatric healthcare system. NCH is the first completely new “green field” children’s hospital in the United States in over 40 years, allowing Nemours to integrate cutting-edge technology and a patient-centered approach throughout. Nemours has created a unique integrated model of care that addresses the needs of the child across the whole continuum, connecting policy and prevention, to the highest levels of specialized care for the most complex pediatric patients. From its inception, Nemours envisioned the development of a comprehensive cardiothoracic transplant program as proposed by the CON applications at issue in this proceeding. NCH is located in the Lake Nona area, just east of downtown Orlando in a development known as Medical City. Medical City is comprised of a new VA Hospital, the University of Central Florida (UCF) College of Medicine and School of Biomedical Sciences, the University of Florida (UF) Research and Academic Center, the Sanford Burnham Medical Research Institute, and a CON-approved hospital, which is a joint venture between UCF and AHCA, which will serve as UCF’s teaching hospital. Medical City is intended to bring together life scientists and research that uses extraordinarily advanced technology. Co- location in an integrated environment allows providers and innovators of healthcare, “the brightest minds,” so to speak, to interact and to share ideas to advance healthcare and wellness efforts. Agency for Health Care Administration AHCA is the state health-planning agency that is charged with administration of the CON program as set forth in sections 408.031-408.0455, Florida Statutes. Context of the Nemours Applications Pursuant to Florida Administrative Code Rule 59C-1.044, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including: heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestine transplantations. “Transplantation” is “the surgical grafting or implanting in its entirety or in part one or more tissues or organs taken from another person.” Fla. Admin. Code R. 59A-3.065. Heart transplantation, lung transplantation, and heart/lung transplantation are all defined by rule 59C-1.002(41) as “tertiary health services,” meaning “a health service which, due to its high level of intensity, complexity, specialized or limited applicability, and cost, should be limited to, and concentrated in, a limited number of hospitals to ensure the quality, availability, and cost effectiveness of such service.” AHCA rules define a “pediatric patient” as “a patient under the age of 15 years.” Fla. Admin. Code R. 59C-1.044(2)(c). AHCA rules divide Florida into four OTSAs, corresponding generally with the northern, western central, eastern central, and southern regions of the state. Fla. Admin. Code R. 59C-1.044(2)(f). The programs at issue in this proceeding will be located in OTSA 3, which is comprised of Brevard, Indian River, Lake, Martin, Okeechobee, Orange, Osceola, Seminole, and Volusia Counties. Currently, there are no providers of PHT in OTSA 3, and there are no approved PHLT programs statewide. The incidence of PHT in Florida, as compared to other types of solid organ transplants, is relatively small. The chart below sets forth the number of pediatric (ages 0-14) heart transplant discharges by year for the four existing Florida PHT programs during Calendar Years (CY) 2013 through 2016, and the 12-month period ending June 2017: HOSPITAL HEART TRANSPLANT CY 2013 CY 2014 CY 2015 CY 2016 12 MONTHS ENDING JUNE 2017 All Children’s Hospital 7 14 9 8 7 UF Health Shands Hospital 6 8 15 15 9 Memorial Regional Hospital 5 5 5 7 4 Jackson Health System 2 2 1 4 1 Total 20 29 30 34 21 The above historic data demonstrates that the incidence of PHT statewide is relatively rare, and does fluctuate from program to program and from year to year. As can be seen, the most recent available 12-month data reflects that only 21 PHTs were performed during that time, for an average program volume of only 5.25 cases. Florida has more existing and approved PHT programs than every other state in the country except California, which has more than double the pediatric population of Florida. And like Florida, two of the California programs are extremely low- volume programs. Additionally, evidence regarding the number of PHLT patients demonstrated just how rare this procedure is. From 2013 to 2016, there was an annual average of only four PHLTs nationally, with only one actual transplant on a Floridian. Nemours’ health planner stated that although Nemours projected in its application that it would perform one heart/lung procedure each year, it is a “very low-volume service,” and Nemours in actuality expects that there will be years with zero volume of PHLT. The CON Applications Nemours filed its applications for heart transplantation, heart/lung transplantation, and lung transplantation in the second Other Beds and Programs Batching Cycle of 2016. Nemours is proposing the development of a comprehensive cardiothoracic transplant program, which will be the only such program in Florida. This will be achieved by combining three types of transplant services (heart, lung, and heart/lung) in one comprehensive cardiothoracic transplant program. Each application was conditioned on the development of all three transplantation programs. Nemours is located in OTSA 3, where there is currently no PHT provider, PLT provider, or PHLT provider. There are, however, three providers of pediatric open-heart surgery and pediatric cardiac catheterization, and a large, growing pediatric population. Unlike any other facility in Florida, the Nemours Cardiac Center (Cardiac Center) is uniquely organized to treat all forms of congenital heart disease. The Cardiac Center employs a “programmatic approach” to offer the most beneficial environment and the finest care available for pediatric patients. The Cardiac Center, physically located at NCH, throughout Florida, is organized as a single Department of Cardiovascular Services to house Cardiac Surgery, Cardiac Anesthesia, Cardiac Intensive Care Unit (ICU), and Cardiology. Cardiac Center physicians throughout Florida are organized as a single entity with the goal of providing the highest quality, patient-centered care to all patients without the usual barriers created by the departmental “silos.” The entire Cardiac Center clinical team, including nurses and physicians, is dedicated solely to the special challenges of congenital heart abnormalities and makes the care of children with heart disease the life’s work of team members. The fully integrated organizational structure permits the team to take shared responsibility for all aspects of the delivery of quality care to these pediatric patients from admission to discharge. The Cardiac Center holds weekly patient consensus conferences, where all providers, including physicians, nurses, and the patients’ caregivers, participate in case reviews of all inpatients and those patients scheduled for surgery or catheterization. The Cardiac Center is “state of the art” with a designated cardiovascular operating room, a designated cardiovascular lab that includes an electrophysiology lab, and a dedicated comprehensive care unit. In addition, The Foundation has furthered the commitment to the Cardiac Center by funding an additional $35 million expansion to the sixth floor of NCH, adding an additional 31 inpatient beds, an additional operating room, and a comprehensive cardiovascular intensive care unit. Dr. Peter D. Wearden joined Nemours in 2015 as the chief of cardiac surgery, chair of the Department of Cardiovascular Services, and director of the Cardiac Center at Nemours. Dr. Wearden will serve as director of the Comprehensive Cardiothoracic Transplant Program at Nemours and will be instrumental in the development and implementation of the program. Dr. Wearden was recruited from the Children's Hospital of Pittsburgh (CHP), where he served as the surgical director of Heart, Lung, and Heart/Lung Transplantation. He was also the director of the Mechanical Cardiopulmonary Support and Artificial Heart Program. CHP rose to a US News and World Report top 10 program during Dr. Wearden’s tenure. CHP is at the forefront of organ transplantation and is where the first pediatric heart/lung transplantation was performed. Dr. Wearden is a trained cardiothoracic surgeon who completed fellowships in both cardiothoracic surgery (University of Pittsburgh) and Pediatric and Congenital Heart Surgery (Hospital for Sick Children, Toronto, Canada). He is certified by the American Board of Thoracic Surgery and holds additional qualifications in Congenital Heart Surgery from that organization. In his tenure as a board-certified pediatric transplant specialist, he has participated in over 200 pediatric cardiothoracic transplantations, of which he was the lead surgeon in over 70. In addition, he has procured over $20 million in National Institutes of Health research funding since 2004 specific to the development of artificial hearts and lungs for children and their implementation as a live-saving bridge to transplantation. Dr. Wearden was a member of the clinical team that presented to the Food and Drug Administration (FDA) panel for approval of the Berlin Heart, the only FDA-approved pediatric heart ventricular assist device (VAD)1/ currently available, and he proctored the first pediatric artificial heart implantation in Japan in 2012. A VAD is referred to as “bridge to transplant” in pediatric patients because the device enables a patient on a waiting list for a donated heart to survive but is a device on which a child could not live out his or her life. Both utilization of VADs and heart transplantation procedures are in the “portfolio of surgical interventions” that can save the life of a child with heart failure. Dr. Wearden is an international leader in the research and development of VADs. Victor Morell, an eminent cardiac surgeon and chief of Pediatric Cardiac Surgery at CHP, testified that Dr. Wearden’s presence in Orlando alone and the work that he will be able to do with VADs and a PHT program will likely save lives. Many of the physicians that comprise the Nemours Cardiac Center transplant team not only have significant transplant experience, but also have experience performing transplants together. These physicians came with Dr. Wearden from CHP, were trained by Dr. Wearden, or otherwise worked with Dr. Wearden at some point in their careers. The physicians recruited to the Nemours transplantation team were trained at or hail from among the most prestigious programs in the country. For example, Dr. Kimberly Baker, a cardiac intensivist, was trained by Dr. Wearden in the CHP ICU. Dr. Constantinos Chrysostomou, Nemours’ director of cardiac intensive care, worked with Dr. Wearden at CHP, and has experience starting the pediatric ICU in Los Angeles at Cedar Sinai Hospital. Dr. Steven Lichtenstein, chief of cardiac anesthesia, held the same position at CHP for 12 years before he was recruited to Nemours. Dr. Karen Bender, a cardiac anesthesiologist, was recruited by Dr. Wearden from the Children’s Hospital of Philadelphia – one of the leading programs in the country. Dr. Michael Bingler, a cardiac interventionalist, was at Mercy Children’s Hospital in Kansas City for eight years. Dr. Adam Lowry of the Nemours cardiac intensive care center previously trained at both Texas Children’s Hospital (the number one program in the country) and Stanford. The 11 physicians that comprise the Cardiac Center’s Cardiothoracic Physician Team have collectively participated in 1,146 cardiothoracic transplantations. These physicians came to Nemours to care for the most acute, critically ill patients, including those requiring PHT. In addition to the physician team, the expertise and skill of the non-physician staff in the catheterization lab, the operating room, and the cardiac ICU are crucial to a successful program. Dr. Dawn Tucker is the administrative director of NCH’s Cardiac Center and heads the nursing staff for NCH’s Cardiac Center, which includes 23 registered nurses with transplant experience. Dr. Tucker holds a doctorate of Nursing Practice and was formerly the director of the Heart Center at Mercy Children’s Hospital in Kansas City, where she oversaw the initiation of a PHT program. The average years of experience for total nursing care in cardiac units across the nation is two years. The average years of experience in the Nemours Cardiac Center is eight years. Medical literature shows the greater the years of nursing staff experience, the lower the mortality and morbidity rates. The nursing staff at Nemours, moreover, has extensive experience in dealing not only with pediatric cardiac patients, but with pediatric heart transplants as well. The Cardiac Center’s cardiothoracic nursing staff has over 220 years of collective cardiothoracic transplant experience. Nemours operates a “simulation center” that allows the Cardiac Center to simulate any type of cardiac procedure on a model patient before performing that procedure on an actual patient. The model patient’s “heart” is produced using a three- dimensional printer that creates a replica of the heart based on MRI’s or other medical digital imaging equipment. These replica hearts are printed on-site, using the only FDA-approved software for such use, and are ready for use in the simulation center within a day after medical imaging. Nemours Cardiac Center currently performs what the Society of Thoracic Surgeons has coined “STAT 5” cardiac procedures. STAT 5 cardiac procedures are the most complex; STAT 1 procedures are the least complex. A PHT is a STAT 4 procedure. Since Dr. Wearden’s arrival at the Nemours Cardiac Center, there have been no patient mortalities. The uncontroverted evidence established that Nemours has assembled a high-quality, experienced, and unquestionably capable team of physicians and advanced practitioners for its cardiothoracic transplantation programs and is capable of performing the services proposed in its applications at a high level. UF Health Shands While not a party to this proceeding,2/ UF Health Shands’ (Shands) presence at the final hearing was pervasive. AHCA called numerous witnesses affiliated with Shands in its case-in-chief. The scope of the testimony presented by Shands- affiliated witnesses was circumscribed by Order dated December 13, 2017 (ruling on NCH’s motion in limine) that: At hearing, the Agency may present evidence that the needs of patients within OTSA 3 are being adequately served by providers located outside of OTSA 3, but may not present evidence regarding adverse impact on providers located outside of OTSA 3. Baycare of Se. Pasco, Inc. v. Ag. for Health Care Admin., Case No. 07-3482CON (Fla. DOAH Oct. 28, 2008; Fla. AHCA Jan. 7, 2009). UF Health Shands Hospital is located in Gainesville, Florida. UF Health Shands Children’s Hospital is an embedded hospital within a larger hospital complex. Shands Children’s Hospital has 200 beds and is held out to the public as a children’s hospital. The children’s hospital has 72 Level II and III NICU beds. Unlike Nemours, Shands offers obstetrical services such that babies are delivered at Shands. It also has a dedicated pediatric intensive care unit (PICU) as well as a dedicated pediatric cardiac intensive care unit. The Shands Children’s Hospital has its own separate emergency room and occupies four floors of the building in which it is located. It is separated from the adult services. Shands Children’s Hospital is nationally recognized by U.S. News & World Report as one of the nation’s best children’s hospitals. The children’s hospital has its own leadership, including Dr. Shelley Collins, an associate professor of pediatrics and the associate chief medical officer. As a comprehensive teaching and research institution, Shands Children’s Hospital has virtually every pediatric subspecialty that exists and is also a pediatric trauma center. The children’s hospital typically has 45 to 50 physician residents and 25 to 30 fellows along with medical students. Over $139 million has been awarded to Shands for research activities. As a teaching hospital, Shands is accustomed to caring for the needs of patients and families that come from other parts of the state or beyond. Jean Osbrach, a social work manager at Shands, testified for AHCA. Ms. Osbrach oversees the transplant social workers that provide services to the families with patients at Shands Children’s Hospital. Ms. Osbrach described how the transplant social workers interact with the families facing transplant from the outset of their connection with Shands. They help the families adjust to the child’s illness and deal with the crisis; they provide concrete services; and these social workers help the families by serving as navigators through the system. These social workers are part of the multidisciplinary team of care, and they stay involved with these families for years. Shands is adept at helping families with the issues associated with getting care away from their home cities. Shands has apartments specifically available in close proximity to the children’s hospital and relationships with organizations that can help families that need some financial support for items such as lodging, transportation, and gas. Ms. Osbrach’s ability to empathize with these families is further enhanced because her own daughter was seriously ill when she was younger. Ms. Osbrach testified that, while she was living in Gainesville, she searched out the best options for her child and decided that it was actually in Orlando. Despite the travel distance, she did not hesitate to make those trips in order to get the care her child needed at that time. The Shands Children’s Hospital is affiliated with the Children’s Hospital Association, the Children’s Miracle Network, the March of Dimes, and the Ronald McDonald House Charities. Shands operates ShandsCair, a comprehensive emergency transport system. ShandsCair operates nine ground ambulances of different sizes, five helicopters, and one fixed-wing jet aircraft. ShandsCair does over 7,000 transports a year, including a range of NICU and other pediatric transports. ShandsCair is one of the few services in the country that owns an EC-155 helicopter, which is the largest helicopter used as an air ambulance. This makes it easier to transport patients that require a lot of equipment, including those on extracorporeal membrane oxygenation (ECMO). Patients on ECMO can be safely transported by ground and by air by ShandsCair. Shandscair serves as a first responder and also provides facility-to- facility transport. It has been a leader in innovation. The congenital heart program at Shands includes two pediatric heart surgeons, as well as pediatric cardiologists Dr. Jay Fricker and Dr. Bill Pietra, both of whom testified for AHCA. Dr. Fricker did much of his early work and training at the Children’s Hospital of Pittsburgh, and came to the University of Florida in 1995. He is a professor and chief of the Division of Cardiology in the Department of Pediatrics at Shands. He is also the Gerold L. Schiebler Eminent Scholar Chair in Pediatric Cardiology at UF. He has been involved in the care of pediatric heart transplant patients his entire career. Dr. Bill Pietra received his medical training in Cincinnati and did his early work at several children’s hospitals in Colorado. He came to the University of Florida and Shands in July 2014 and is now the medical director, UF Health Congenital Heart Center. Shands performed its first pediatric heart transplant in 1986. Shands treats the full range of patients with heart disease and performs heart transplants on patients, from infants through adults, with complex congenital heart disease. Shands provides transplants to pediatric patients with both congenital heart defects and acquired heart disease (cardiomyopathy). Shands will accept the most difficult cases, including those that other institutions will not take. Data presented by AHCA dating back to the beginning of 2014 demonstrate that Shands has successfully transplanted numerous patients that were less than six months old at the time of transplantation. This data also demonstrates that Shands serves all of central and north Florida, as well as patients that choose to come to Shands from other states. PHT patients now survive much longer than in the past, and in many cases, well into adulthood. Because Shands cares for both adult and pediatric patients, it has the ability to continue to care for PHT patients as they transition from childhood to adulthood. Managed care companies are now a significant driver of where patients go for transplantation services. Many managed- care companies identify “centers of excellence” as their preferred providers for services such as PHT. Shands is recognized by the three major managed-care companies that identify transplant programs as a center of excellence for PHT services. AHCA’s Preliminary Decision Following AHCA’s review of Nemours’s applications, as well as consideration of comments made at the public hearing held on January 10, 2017, and written statements in support of and in opposition to the proposals, AHCA determined to preliminarily deny the PHT and PHLT applications, and to approve the PLT application. AHCA’s decision was memorialized in three separate SAARs, all dated February 17, 2017. Marisol Fitch, supervisor of AHCA’s CON and commercial-managed care unit, testified for AHCA. Ms. Fitch testified that AHCA does not publish a numeric need for transplant programs, as it does for other categories of services and facilities. Rather, the onus is on the applicant to demonstrate need for the program based on whatever methodology they choose to present to AHCA. In addition to the applicant’s need methodology, AHCA also looks at availability and accessibility of service in the area to determine whether there is an access problem. Finally, an applicant may attempt to demonstrate that “not normal” circumstances exist in its proposed service area sufficient to justify approval. Statutory Review Criteria Section 408.035(1) establishes the statutory review criteria applicable to CON Applications 10471 and 10472. The parties have stipulated that each CON application satisfies the criteria found in section 408.035(1), (d), (f), and (h), Florida Statutes. The only criteria at issue essentially relate to need and access. However, the Agency maintains that section 408.035(1)(c) is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. AHCA believes that there is no need for the PHT or PHLT programs that Nemours seeks to develop because the needs of the children in the Nemours service area are being met by other providers in the state, principally Shands and Johns Hopkins All Children’s Hospital. Section 408.035(1)(a) and (b): The need for the health care facilities and health services being proposed; and the availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the district of the applicant. Florida Administrative Code Rule 59C-1.044(6)(b).3/ The criteria for the evaluation of CON applications, including applications for organ transplantation programs, are set forth at section 408.035 and rule 59C-1.044. However, neither the applicable statutes nor rules have a numeric need methodology that predicts future need for PHT or PHLT programs. Thus, it is up to the applicant to demonstrate need in accordance with rule 59C-1.044. There are four OTSAs in Florida, numbered OTSA 1 through OTSA 4. NCH is located in OSTA 3, which includes the following counties: Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, Martin, Lake, and Volusia. (See § 408.032(5), Fla. Stat; Fla. Admin. Code R. 59C- 01.044(2)(f)3.) OTSA 3 also generally corresponds with the pediatric cardiac catheterization and open-heart surgery service areas defined by AHCA rule. (See Fla. Admin. Code R. 59C- 1.032(2)(g) and 59C-1.033(2)(h)). Currently, there is no provider of PHT in OTSA 3, but there are three providers of pediatric cardiac catheterization and pediatric open-heart surgery: Orlando Health Arnold Palmer Hospital for Children; Florida Hospital for Children; and Nemours. There are no licensed providers of PHLT anywhere in the State of Florida. There are four existing providers and one approved provider of PHT services in Florida: UF Shands in OTSA 1; Johns Hopkins All Children’s Hospital in OTSA 2; Jackson Memorial Hospital in OSTA 4; and Memorial Regional Hospital, d/b/a Joe DiMaggio’s Hospital in OTSA 4; and a third approved program in OTSA 4, Nicklaus Children’s Hospital, which received final approval from AHCA in August 2017. As noted above, there is no fixed-need pool published for PHT, PHLT, or PLT programs. Alternatively, AHCA follows rule 59C-1.008(2)(e)2., which requires consideration of population demographics and dynamics; availability, utilization and quality of like services in the district, subdistrict, or both; medical treatment trends; and market conditions. To quantify the need for a new PHT program in District 7, OTSA 3, Nemours created and presented a methodology that started with the statewide use rate in its projected first year. Then for the second year, Nemours aggressively increased the use rate to the highest rate in any of the other transplant service areas in the state. Then, in an even more aggressive (and unreasonable) assumption, Nemours projected that it would essentially capture all of the cases in OTSA 3 by the second year of the program. In its application, the assumptions resulted in a projection that Nemours would do four transplants in the first year of operation and eight in the second. These projections fall short of the rule requirement that the applicant project a minimum of 12 transplants per year by the second year of operation. Fla. Admin. Code R. 59C-1.044(6)(b)2. At hearing, Nemours updated (increased) those first and second year projections to 7 and 13 cases, respectively. However, these updated projections included one child, aged 15 to 17, in year one, and two in year two. There are several reasons these projections lack credibility. First, as noted, Nemours assumed a near- 100 percent market share based on the highest use rate in the state by just year two. Second, when Nemours prepared its update, it used the most recent calendar year data. However, this was not the most current data. Calendar Year 2016 reflected 34 cases statewide, but that number had dropped to 21 for the most recent 12-month period available at the time of the hearing. Use of this most recent 12-month data would have significantly decreased the Nemours PHT volume projections. In addition, the projection of 13 cases by year two would place Nemours at a higher PHT case volume than three of the four established programs in the state, and would be at a level that is nearly equivalent to the much more established Shands program. This is not credible, especially considering that Nemours also admitted at hearing that only two OTSA 3 residents received pediatric heart transplants in 2016. The existence of unmet need cannot be based solely on the absence of an existing service in the proposed service area. Fla. Admin. Code R. 59C-1.008(2)(e)3. While Nemours’ own health planner agreed that the absence of a PHT program in OTSA 3 is not itself a basis for finding need, Nemours nevertheless argues that this rule is inapplicable in this proceeding because the title to this subsection of the rule is “Comparative Review” and a portion of this subsection addresses competing applications in the same cycle. As detailed further in the Conclusions of Law section herein, this interpretation is unconvincing and rejected. AHCA interprets this rule provision to apply to those batched applications submitted without the submission of a competing application in the same batching cycle, as with Nemours in this proceeding. Nemours initiated its cardiac catheterization and cardiac surgery program in June/July 2016. In its PHT application, Nemours projected that it would meet or exceed the rule minimum required volumes of 200 cardiac catheterizations and 125 open-heart surgery cases by the end of 2017. Actual volumes achieved by Nemours in CY 2017 were 97 open-heart cases and 196 cardiac catheterizations. The incidence of PHLT is extremely low. During the four calendar years, 2013 through 2016, there were only 16 PHLT transplants performed nationwide. Only one Florida resident received a PHLT during that four-year period, and that was performed in Massachusetts. Also during that four-year period, only three Florida residents were registered for PHLT. There is no evidence in this record as to why two of the three registered Florida residents did not obtain a PHLT. Based on the national use rate for PHLTs from CY 2013 through CY 2016, Nemours projects that it will perform an average of one PHLT per year. Nemours acknowledges that due to the extremely low incidence of PHLTs, there may be some years that no PHLTs are performed at Nemours. Geographic Access There is no evidence of record that families living in central Florida are currently being forced to travel unreasonable distances to obtain PHT services. Indeed, there are five existing or approved programs within the state, with at least two located very reasonably proximate to OTSA 3. According to the analysis of travel distances for PHT patients living in OTSA 3 contained in the Nemours application (Exhibit 15), only some residents located in Brevard and Indian River Counties are not within 120 miles of an existing PHT program. There was agreement that patients that need a PHT are approaching the end-stage of cardiac function, and in the absence of a PHT will very likely die. Accordingly, it is reasonable to infer that the parents of a child living in central Florida and needing a PHT will travel to St. Petersburg or Gainesville for transplant services rather than let their child die because the travel distance is too far. To the contrary, the evidence in this record from witnesses on both sides, as well as common sense, is that families will go as far as necessary to save their child. The notion that there is some pent-up demand for PHT services among central Florida residents (especially when there is no evidence of a single OTSA 3 patient being turned down or unable to access a PHT) is without support in this record. The parents of four pediatric patients testified at the final hearing. Two testified for Nemours. The other two testified for AHCA and were parents of children that received PHTs at Shands. One of the Nemours witnesses was the parent of a child that has not received a transplant. The other received transplant services at Johns Hopkins All Children’s Hospital in St. Petersburg. The parents of the two Shands patients were representative of the two broad categories of PHT patients. One was a patient with a congenital heart defect that lives in Cocoa Beach (Brevard County). The patient likely had the heart defect since birth, but it was not diagnosed until she was six years old. That patient was asymptomatic at the time of diagnosis but deteriorated over a period of years. While she was first seen at Shands, the family had the time and researched other prominent institutions, including Texas Children’s Hospital, Boston Children’s Hospital, Children’s Hospital of Pittsburgh, and the Mayo Clinic in Rochester, Minnesota. They did this because, like all of the parents that testified, they “would have gone to the ends of the earth” to save their child. This family researched the volumes and experience of the programs they considered and looked for what they felt was the best program for their child, and ultimately chose Shands. It was clear that they felt Shands was the right choice. Their daughter received her heart transplant at Shands, is doing well, and is now considering what college to attend. Additionally, this family did not find the two hours and 35 minute travel time from their home in Brevard County to Shands to be an impediment, and actually consider Shands as being relatively close to their home. This testimony supports the obvious truism that obtaining the best possible outcome for a sick child is the paramount goal of any parent. The other parent witness called by AHCA has a daughter that, on Christmas Eve in 2008, went from perfectly healthy to near death and being placed on life support within a 24-hour period. As opposed to a congenital heart defect, this patient had cardiomyopathy. This family lives in Windermere, a suburb of Orlando. She acquired a virus that attacked her heart. She was initially treated at Arnold Palmer Children’s Hospital where she had to be placed on ECMO. From there, she was safely airlifted to Shands while still on ECMO where, upon arrival, the receiving team of physicians informed the family that she was one of the most critically ill children they had ever seen. After an 11-hour open-heart surgery, a Berlin Heart was successfully implanted and kept her alive for four months until an appropriate donor heart became available. This patient also had an excellent outcome and is now a student at the University of Florida. The following exchange summarizes how the child’s mother felt about the inconvenience of having to travel from the Orlando area to Gainesville: Q If a family in Orlando told you, or in your city of residence told you that their child was critically ill and they were worried about having to travel and potentially spend time in Gainesville to get care, what would you tell them? A Well, I would tell them to just take it a day at a time and – when your child is critically ill, convenience never really comes into your mind. What comes into your mind is how do I help my child live. And so you will go anywhere. And it’s just an hour and a half, it just doesn’t matter. When you are talking about saving your child, it means nothing. It literally means nothing. It is clear from the testimony of these two parents that nothing about having a gravely ill child is “convenient.” It creates great stress, but it was also clear that having an experienced provider was more important than just geographic proximity. The mothers of the two Shands patients persuasively spoke of their concerns about further diluting the volumes of the existing programs that could result from approval of a sixth pediatric heart transplant program in Florida, particularly when there are two other programs that are not that far from the Orlando area.4/ While transplantation is not an elective service, it is not done on an emergent basis. As noted, the number of families affected is, quite fortunately, very small. While having a child with these issues is never “convenient,” the travel issues that might exist do not outweigh the weight of the evidence that fails to demonstrate a need for approval of either application. The Orlando area, being centrally located in Florida, is reasonably accessible to all of the existing providers. Most appear to go to Shands, which is simply not a substantial distance away. The credible evidence is that families facing these issues are able to deal with the travel inconvenience. In addition, Nemours presented evidence regarding the various locations at which they provide services, ranging from Pensacola to Port St. Lucie. Clearly, Nemours sees itself as providing some cardiac services to patients in these locations, but it would also suggest that patients seen at these locations may be referred to NCH for transplant services, which would mean that some patients would be bypassing closer facilities. As observed by AHCA, for Nemours to posit that it is appropriate for patients to travel from Pensacola or Jacksonville to Orlando while asserting that it is not acceptable for patients in Orlando to go to Gainesville or St. Petersburg is an illogical inconsistency. Financial Access Nemours asserts that approval of its proposed programs will enhance financial access to care. Nemours currently serves patients without regard to ability to pay and will extend these same policies to transplant recipients. Approximately half of Nemours’ projected PHTs are to be provided to Medicaid recipients, the other half to commercially insured patients.5/ However, there was no competent evidence of record that access to PHT or PHLT services was being denied by any of the existing transplant providers because of a patient’s inability to pay. Transplant Rates at Shands In its need methodology, Nemours utilized the use rate from OTSA 1 where Shands is located because it is the highest use rate in the state. Despite this, Nemours then asserted that Shands is not performing as many PHTs as it could or should. The Nemours CON applications are not predicated on any argument that their proposed programs are needed because of poor quality care at any of the existing pediatric transplant programs in Florida. Indeed, Dr. Wearden stated his belief that Shands provides good quality care in its transplant programs, and he respects the Shands lead surgeon, Dr. Mark Bleiweis. As evidence of his respect for the Shands PHT program, Dr. Wearden has referred several transplant patients to Dr. Bleiweis at Shands. Despite that position, Nemours argued that the Shands program is unduly conservative and cautious in its organ selection and may have some “capacity” issues due to a few cited instances of apparent surgeon unavailability. These assertions, made by Nemours witnesses with no first-hand knowledge of the operations of the Shands program, are not persuasive. With regard to whether the Shands program is unduly “cautious,” “conservative,” or “picky,” Nemours relied on a document produced by Shands in discovery. Nemours also relied on data reported by Shands to the Scientific Registry of Transplant Recipients (SRTR). The data included a list of all of the organs offered to Shands since the beginning of 2015, the sequencing of the offer of that organ to Shands, whether the organ was transplanted at Shands or elsewhere, the primary and secondary reasons the organ was refused (if refused) and other information. The SRTR exhibit demonstrates that a high number of the organs that are offered are not acceptable for transplant on patients waitlisted at Shands. It also shows that organs that are accepted may have to be examined by many different centers before being deemed potentially acceptable. This demonstrates the extensive level of complexity, nuance, and clinical judgment involved in the decision to accept an organ for transplant in a pediatric patient. Indeed, Dr. Wearden agreed that the decision by a program to accept or turn down an organ involves both clinical expertise and judgment, and that there are many reasons an organ might be turned down, which helps explain why the transplanted percentage of total organs offered nationally is on average, so small. Dr. Wearden chose a few examples of organs that were not taken by Shands to express an opinion that Shands may be unduly conservative in its organ selection. However, this assertion was credibly refuted by Dr. Pietra, a transplant cardiologist and the medical director of the UF Health Congenital Heart Center. Dr. Pietra discussed the complexity of these cases and how simply looking at the SRTR data does not provide enough information to reach Dr. Wearden’s conclusion. An organ that might be acceptable for one patient would not be acceptable for another for a host of reasons. Many more organs are rejected by transplant centers than are accepted. Dr. Pietra credibly opined that being conservative and cautious are important traits for a transplant surgeon, particularly for one that wants the accepted organ to work well for the patient long-term. That does not mean that Shands is rejecting organs when it should have taken them, nor does the SRTR data support the proposition that the Nemours program should be approved because its program may have accepted an organ for a particular patient that Shands might have rejected. Nemours also argues that Shands performs PHTs at a rate lower than the region and the country, and that this should mitigate for the approval of another program. This assertion is predicated on waitlist information reported in the SRTR data. Patients that are placed on the waitlist have different status designations, depending on the severity of their condition. That status may change, up or down, over time. Due to the shortage of organs, until a patient reaches status 1A, he or she is unlikely to be offered an organ. The evidence reflected that Shands puts patients on the PHT organ waitlist at a time earlier than the moment they require the transplant surgery under what is called the “pediatric prerogative.” This helps those patients maintain their status on the list but does not result in organs being provided to less severely ill patients to the detriment of those in greater need. Further, the record evidence supports the finding that Shands waitlists patients because the clinical determination has been made that the child will ultimately require a transplant. This was corroborated by the parent of a Shands PHT patient who testified that when her daughter was placed on the waitlist, Dr. Fricker concluded at that time that her daughter would ultimately need a PHT, even though she was placed on a lower status initially, and it was a few years before the transplant occurred. Transplant surgeon Dr. Victor Morell, of the Children’s Hospital of Pittsburgh, testified that he waitlists his PHT patients not only when they need the procedure performed immediately, but rather when, in his clinical judgment, he determines the patient will ultimately need a PHT. This testimony supports the finding that there is nothing clinically unusual or inappropriate about how the Shands program waitlists patients. Shands realizes that its philosophy, which is contemplated within and permitted under the United Network for Organ Sharing (UNOS) rules, makes its statistics, both in terms of percent of patients transplanted and waitlist mortality, look worse. While Shands’ waitlist mortality may be higher than expected as reflected in the SRTR data, it is still significantly lower than in the UNOS region or the United States. Shands advocates for its patients by their waitlist practices because it believes it helps secure the best outcomes for its patients. It does not indicate need for a new PHT program. Nemours also suggests that there may be a “capacity” problem at Shands because the organ rejection information provided by Shands shows that, during the 3-year period of CY 2015 through CY 2017, there were seven entries showing as either a primary or secondary reason for organ rejection that the surgeon was unavailable. However, this included both adult and pediatric hearts, and further investigation revealed that in only four instances were there potential PHT recipients at Shands. Of those four hearts that were rejected, two were not accepted by any PHT provider, and the two that were accepted were placed with adult transplant patients, not PHT patients. Shands has two PHT transplant surgeons. In very few instances at Shands, an organ was offered but not accepted because the surgeon was not available for one of several reasons. In one instance, there was another transplant scheduled. A surgeon could be ill, could be gone, or may have just completed another long surgery and be too fatigued to safely perform another. Like Shands, Nemours also has two experienced PHT surgeons. Although Dr. Wearden believes that Nemours would endeavor to not reject an organ for this reason, this ambition ignores reality. He cannot guarantee that the same could not or would not happen at Nemours for the same reasons it occasionally occurs at Shands. As explained by Dr. Pietra, when there are only small to medium volume programs, there is not likely to be a sufficient number of surgeons such that this scenario can be avoided entirely. Not Normal Circumstances In both its heart and heart/lung applications, Nemours articulated the following “not normal circumstances” in seeking approval: Florida does not have any approved pediatric heart/lung transplant programs. Florida's only two approved pediatric lung transplant programs have not performed any lung transplant programs in the last two reporting years according to AHCA reporting data. Significantly, there are no pediatric heart transplant or lung transplant programs in AHCA's Organ Transplant Service Area OTSA 3 in which NCH is located-an area of the State with one the fastest growing and youngest populations. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program. Florida has no other pediatric comprehensive, multi-organ thoracic transplant program that is part of a pediatric specific integrated delivery system such as Nemours offers. NCH offers a unique, dedicated model of cardiothoracic care developed at its Alfred I. duPont Hospital for Children (AIDHC) in Wilmington, Delaware and implemented upon the opening of the program at NCH. The key and differentiating element of this Model of Care is a unified team of cardiac clinical and administrative professionals who serve children with cardiac problems in dedicated facilities (the "Cardiac Team"). The Cardiac Team only cares for children with cardiac diagnoses. As such, the Cardiac Team of anesthesiologists, surgeons, cardiologists, nurses, and other support personnel do not "float" to other hospital floors or departments as in a typical hospital setting. This dedicated model of cardiac care allows the Cardiac Team to develop highly specialized knowledge and relationships to provide the best treatment protocols for patients with cardiac conditions. NCH has developed state-of-the art facilities and innovative clinical pathways for the care of the most complex pediatric thoracic patients. NCH has and will bring new opportunities for research in pediatric cardiology, cardiac surgery, and pulmonary medicine, particularly clinical translational and basic research into the linkages between childhood obesity and cardiac conditions. Nemours operates a regional network of clinics in Florida, with primary locations in Pensacola, Jacksonville, and Orlando, that will operate in partnership with NCH for the appropriate regional referral of patients in Florida for pediatric thoracic care. NCH can reduce the out-migration of pediatric, thoracic transplant patients from OTSA 3 to other parts of the State as well as the out-migration of these patients to other out-of-state transplant programs. Similarly, NCH will reduce the outmigration of organs donated in Florida to other states ensuring that Florida recipient patients are first priority for organs donated in Florida. NCH has in place the infrastructure, facilities, and resources to seamlessly add thoracic transplant services to its existing comprehensive cardiac surgery program. Additional needed staff are already being recruited to this program. As a result, the project has minimal incremental cost that will need to be incurred. Total project costs are, therefore, estimated to be $715,425.00. In addition, according to Nemours, an additional “not normal” circumstance has emerged since the filing of the applications: the approval of Nemours’ PLT application in the absence of a PHT program at the facility, which it contends is “a very unusual situation.” Noteworthy about these purported reasons for approval are that: (1) none of them are specifically directed at a unique circumstance relating to a need for another PHT program; and (2) most of them are either a recitation of the fact that there is no existing program in the service area or are about Nemours’ capability to provide these services. They are not directed at whether there is a need for its proposed programs. In fact, the main thrust of Nemours’ case was directed at proof regarding its capabilities. But the flaw in this theme is best demonstrated in the testimony of Dawn Tucker, the last witness called by Nemours. Ms. Tucker is the cardiac program administrative director for Nemours. When asked why she supported the proposed program, she talked about the experience of the team, a desire to care for sick patients, an organization (Nemours) that financially supports the program, and the network of centers that Nemours has in Florida. These factors address why Nemours “wants” these CONs. None of them addresses the threshold issue of whether there is a “need” for these programs in OTSA 3. More specifically, the first, third, and fourth bullet points are all based on the absence of a program in OTSA 3. By rule, that is not a basis for establishing need. Fla. Admin. Code R. 59C-1.009(2)(e)3. AHCA appropriately rejected the absence of a program in OTSA 3 as the sole basis upon which need for the proposed projects could be established. The second bullet point relates to the pediatric lung transplant application that is not at issue in this matter. The fifth and sixth bullet points relate to the Nemours integrated model of care. But again, this does not address whether there is a need for the proposed programs. The fact that Nemours has an employed-physician model is not unique or “not normal.” AHCA considered the information regarding the model of care and correctly noted that the model of care does not itself enhance access or improve outcomes. It should be noted that Shands’ doctors are employed by the University of Florida. In addition, the reliance on this model does not guarantee a robust program. This bullet point references the much older and more established Alfred I. duPont Hospital for Children in Wilmington, Delaware, that is touted as the model for Nemours. Nemours presented evidence relating to its more established hospital in Delaware that also provides PHT services. However, the PHT program at duPont is a low-volume program, performing only one PHT in 2016. None of the managed- care companies that recognize Shands as a center of excellence also recognizes the duPont Hospital as such. One of the companies--Lifetrac--acknowledges duPont as a “supplemental” program, whereas Shands is one of its “select” programs. This demonstrates that simply having the financial resources of the duPont Foundation or the model of care used by that organization does not guarantee high volumes or success. The “not normal circumstance” bullet points regarding Nemours’ facilities, research, and other infrastructure similarly do not demonstrate need. Otherwise, a hospital could obtain a CON for a new program by spending the money in advance and then demanding approval based upon those expenditures. AHCA recognized that Nemours had recruited some very qualified clinicians, but correctly noted that that does not create or evidence need for the proposed programs. The remaining bullet point asserts that approval of the PHT and PHLT programs could reduce outmigration of both patients and organs. By definition, because neither of these transplant programs exists in OTSA 3, all patients leave OTSA 3 for these services. Again, that alone does not establish need, nor is it automatically a “not normal” circumstance. As discussed herein, Nemours has not demonstrated a sufficient need or an access problem that justifies approval of either application. With regard to the outmigration of organs from Florida, Nemours has argued that Florida is a net exporter of organs and that this is a “not normal” circumstance justifying approval of its application. However, organs harvested in one state are commonly used in another. There is nothing unusual or negative about that fact. Indeed, Dr. Wearden agreed that in his experience, this is a common occurrence. There is a national allocation system through UNOS and this sharing, as explained by Dr. Pietra, facilitates the best match for organs and patients. UNOS divides the country into regions for the purpose of allocation of donor organs, with Florida being one of six states in Region 3. The evidence of record did not establish that approval of the Nemours applications would result in the reduction of organs leaving Florida, or even that such would be a desirable result. Nemours also argued at hearing that approving their applications would increase the number of donor organs that are procured and transplanted in Florida. Nemours suggested that its programs would increase public awareness and implied that it would accept organs for future patients that surgeons at other programs turn down. However, these arguments are purely conjectural and are rejected. No record evidence exists which demonstrates that a Nemours program would increase the supply of organs in Florida. Indeed, Nemours presented no such relevant data or statistical evidence in its applications to demonstrate that this will occur. Finally, Nemours argues that its PHT and PHLT applications should be approved because it does not make sense for AHCA to have approved the PLT program but denied the other two applications. Nemours goes on to note that while there are hospitals in the country that do PHTs but not PLTs, there are no hospitals that do lungs but not hearts. Regardless of whether that is true, Florida law separates these three services into separate CON applications, which are reviewed independently. The wisdom of the rule is not at issue in this proceeding. Regardless of any overlap in the skill sets required to perform these procedures, approval of the pediatric lung transplant application does not determine need for pediatric heart or pediatric heart/lung programs. Nemours failed to establish that “not normal” circumstances currently exist that would warrant approval of either the PHT or PHLT programs. Nor did Nemours credibly demonstrate any other indicators of need for its proposed programs. Section 408.035(1)(c): The ability of the applicant to provide quality of care and the applicant’s record of providing quality of care. The parties stipulated that Nemours is a quality provider. However, AHCA maintains that this criterion is in dispute to the extent that center transplant volume as a result of Nemours’ approval would lead to or correlate with negative patient outcomes. Nemours failed to demonstrate that it would achieve the volumes it projected unless it takes significant volumes from other Florida providers.6/ Approval of Nemours will not create transplant patients that do not exist or are not currently able to reasonably access services. While Nemours has assembled a team of professionals with varying levels of transplant experience, it has not been demonstrated that it will achieve volume sufficient to reasonably assure quality care.7/ Section 408.035(1)(e): The extent to which the proposed services will enhance access to health care for residents of the service district. Approval of the Nemours PHT and PHLT programs would unquestionably improve geographic access to those services for the very few residents of OTSA 3 that need them. However, given the extreme rarity of pediatric heart and heart/lung transplants, approval of the Nemours programs would not result in enhanced access for a significant number of patients. Moreover, there was no credible non-hearsay evidence presented at hearing that any resident of OTSA 3 that needed PHT or PHLT services was unable to access those services at one of the existing PHT programs in Florida or, for PHLT, at a facility elsewhere. Based upon persuasive evidence at hearing, there is also clearly a positive relationship between volume and outcomes. As with any complex endeavor, practice makes perfect. In this instance, maintaining a minimum PHT case volume provides experience to the clinicians involved and helps maintain proficiency. According to the credible testimony of Dr. Pietra, programs should perform no fewer than 10 PHTs per year. “If you can stay above 10, then your program is going to be exercised at a minimum amount to keep everybody sort of at a peak performance.” The clear intent of the minimum volume requirement of 12 heart transplants per year contained in rule 59C- 1.044(6)(b)2. is to ensure a sufficient case volume to maintain the proficiency of the transplant surgeons and other clinicians involved in the surgical and post-surgical care of PHT patients. In addition, pediatric transplant programs are measured statistically based on outcomes, such as mortality and morbidity. Because of this, the loss of even one patient in a small program can be devastating to that hospital’s mortality statistics. As such, small programs may become less willing to take more complicated patients. In a perverse sort of way, adding more programs that dilute volumes may decrease, rather than increase, access because of the fear a small program might have for taking more complex patients. Adequate case volume is also important for teaching facilities, such as Shands, to benefit residents of all the OTSAs by being able to train the next generation of transplant physicians. The mothers of the two Shands patients that testified made note of the complexity of their daughters’ conditions and how their cases were used for training purposes. There was no persuasive evidence of record that approval of the Nemours applications would meaningfully and significantly enhance geographic access to transplant services in OTSA 3. The modest improvement in geographic access for the few patients that are to be served by the two programs is not significant enough to justify approval in the absence of demonstrated need. There is no evidence that approval of the Nemours applications will enhance financial access nor that patients are not currently able to access PHT or PHLT services because of payor status. Section 408.035(1)(g): The extent to which the proposal will foster competition that promotes quality and cost- effectiveness. It is clear that establishing and maintaining a transplant program is expensive. Given the limited pool of patients, the added expense of yet a sixth Florida program is not a cost-effective use of resources. This criterion also relates to the Nemours position that AHCA should approve the PHT and PHLT applications simply because the PLT application was approved, and it would not be cost-effective for Nemours unless the PHT and PHLT applications were also approved. However, each of these applications must rise or fall on its own merit. As of the hearing, Nemours had not yet implemented its PLT program. Given the absence of need for either the PHT or PHLT programs, the cost-effective solution might be for Nemours to reconsider implementation of the PLT program. 408.035(1)(i): The applicant’s past and proposed provision of health care services to Medicaid patients and the medically indigent. AHCA agreed at hearing that Nemours satisfies section 408.035(1)(i). Nonetheless, Nemours provides a very high level of Medicaid services, and projects a high-level volume related to Medicaid patients and charity care patients. As noted, approximately half of the PHTs projected by Nemours will be performed on Medicaid patients. Conformance with this criterion would mitigate toward approval had there been persuasive evidence that Medicaid and medically indigent patients are currently being denied access to PHT and PHLT services. However, no such evidence was presented.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered denying CON Application Nos. 10471 and 10472 filed by The Nemours Foundation, d/b/a Nemours Children’s Hospital. DONE AND ENTERED this 31st day of July, 2018, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 31st day of July, 2018.
The Issue Whether the adult open heart surgery rule in effect at the time the applications were filed until January 24, 2002, or the rule as amended on that date applies to this case. Whether either or both, Lifemark Hospital of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") and Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") demonstrated the existence of not normal circumstances for the issuance of certificates of need ("CONs") to establish adult open heart surgery programs in Dade County.
Findings Of Fact The Agency for Health Care Administration ("AHCA") administers the certificate of need ("CON") program for health care facilities and services in Florida. Section 408.034, Florida Statutes. Aventura Hospital Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center ("Aventura Hospital") is the applicant for CON No. 9395 to establish an adult open heart surgery program in Dade County, in AHCA District 11. Aventura Hospital is a 407-bed community hospital located in the recently incorporated City of Aventura in northeast Dade County. It is approximately one mile west of the Atlantic Ocean on U.S. Highway 1, three-tenths of a mile south of the Broward/Dade County line. It is halfway between Fort Lauderdale and downtown Miami. Aventura Hospital is owned by the Hospital Corporation of America ("HCA"), which operates hospitals in 30 states and 3 countries, including 40 hospitals in Florida. The 407 beds at Aventura Hospital include 327 acute care beds, 32 adult psychiatric beds, 24 adult substance abuse beds, and 24 obstetrics beds. Services, in addition to those provided in the specialty beds, include general medical/surgical services, oncology, a breast diagnostic center, children's after-hours walk in clinic, comprehensive cancer center, dialysis, intensive care, orthopedics, inpatient and outpatient surgery, and physical, speech and occupational therapies. It is a Baker Act facility. The Aventura Hospital staff has from 700 to 750 medical doctors, and 1,200 to 1,300 employees. The emergency room ("ER") has approximately 34,000 annual visits. According to one ER physician on the staff, the average age of patients presenting at the Aventura Hospital ER is 84 years old. That results in a higher than average hospital admission rate from the ER, 35 to 40 percent, as compared to 15 percent nationally. The staff includes 52 clinical cardiologists, 27 invasive cardiologists and five cardiovascular thoracic surgeons. They currently perform, at Aventura Hospital, inpatient and outpatient cardiac catheterizations ("caths"), pacemaker implants, echocardiograms, cardiac stress and cardiac nuclear testing, diagnostic and transesophageal echocardiograms, diagnostic and interventional vascular surgeries. For the 12 months ending June 30, 2001, 422 open heart patients left the Aventura Hospital's primary service area for their surgeries, and 1,132 received cardiac cath procedures. At Aventura Hospital, from April 1999 through March 2000, 178 diagnostic cardiac caths were performed. In terms of total cardiology services, Aventura Hospital is the largest non-open heart provider in the District, ranking second to Mount Sinai Medical Center ("Mount Sinai"). In calendar year 2001, there were 3,489 cardiovascular disease discharges from Aventura Hospital. The boundaries of the primary service area, from which Aventura Hospital draws most of its patients, are Hollywood Boulevard to the north, U.S. Highway 441 to the west, the Bal Harbour/Miami Shores communities near 125 Street to the south and the Atlantic Ocean to the east. Parkway Regional Medical Center ("Parkway Regional") in Dade County, and Memorial Regional Medical Center ("Memorial Regional") in Hollywood, in Broward County, are the closest hospitals to Aventura Hospital. The primary service area has a population of approximately 250,000 residents and includes growing retirement communities such as Sunny Isles Beach, Hallandale Beach, Southeast Hollywood, North Miami Beach, part of Miami Shores, and Bal Harbour. Parkway Regional and Aventura reported a combined total of 1,721 ischemic heart diseases (IHD) discharges in calendar year 2000. IHD is the diagnostic category for patients experiencing a narrowing of the arteries who are most likely ultimately to require open heart surgery. An international patient services department at Aventura Hospital assists patients, particularly from Canada, and Central and South America. Aventura Hospital is a member of the Miami Medical Alliance, also known as Salud Miami, which has promoted Miami as a destination for health care. Miami Heart Institute (Miami Heart), Mount Sinai, Baptist Hospital (Baptist), South Miami Hospital (South Miami), Miami Children's Hospital and Jackson Memorial Hospital (Jackson Memorial) are among the members of the Alliance. At the time the CON application was filed, Aventura Hospital was scheduled for expansion with the addition of a three-story tower and other capital projects costing an estimated $50 million. Subsequently, in December 2001, Aventura Hospital received approval from HCA for the expenditure of an additional $80 million to build the tower up to nine stories immediately, with the structure capable of ultimately being increased to 12 stories. It is expected to be able to withstand a direct hit from a Class V hurricane. In the past, Aventura Hospital has been entirely evacuated twice due to hurricane warnings. When construction is complete, the ER will be approximately three times larger, relocated to the first floor of the new tower, and projected to receive 50,000 visits annually. Ten new operating rooms on the second floor will include two that are properly-sized for cardiovascular surgeries. Because of higher ceilings in the new tower, the second floor of the new building will connect to the third floor of the existing building, on which the cardiac cath lab and related diagnostic equipment is located. If the open heart program is approved, a ten-bed cardiovascular intensive care unit ("CVICU") will be added to the second floor of the new building, and a second cardiac cath lab will be constructed. A dedicated elevator will connect the surgery suites to a 42-bed intensive care unit ("ICU") on the third floor. The remaining floors will consist of single patient rooms equipped or capable of being equipped for telemetry monitoring. The projected building cost for the portion of the construction related to the open heart surgery program is $3 million. Mount Sinai which purchased Miami Heart from HCA, has agreed to close one of its two open heart surgery programs within one year following the issuance of an adult open heart surgery CON to Aventura Hospital. Otherwise, Mount Sinai is committed to operate both programs for five years from June 30, 2000. Jeffrey Gregg, the head of the CON program at AHCA testified that he believes that it is "unprecedented" for an applicant to submit a letter from an existing provider committing to close a program. (Tr. 3061). Aventura Hospital has also offered to commit to providing 2.5 percent of the patient days generated by the adult open heart surgery program to Medicaid and charity patients. Palmetto General Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital ("Palmetto General") is an applicant for CON No. 9394 to establish an adult open heart surgery program, also in Dade County, AHCA District 11. Palmetto General is a 360-bed acute care hospital located in the City of Hialeah in northwest Dade County at the intersection of 122nd Street, Northwest, and the Palmetto Expressway. Palmetto General is an affiliate of the Tenet Health Care Corporation ("Tenet"), which operates 16 hospitals in Florida, five in Dade County. They are, in addition to Palmetto General, Hialeah Hospital, North Shore Medical Center, Parkway Regional in northern communities, and Coral Gables Hospital in the south. Tenet owns Florida Medical Center, which has an adult open heart surgery program in Broward County. Tenet also operates the open heart program at the Cleveland Clinic in Broward County. The 360 beds at Palmetto General are divided into 253 acute care beds (excluding obstetrics and pediatrics), 48 adult psychiatric beds, and 10 neonatal intensive care beds. Services available on the Palmetto General campus include outpatient imaging and surgery, psychiatry, oncology, rehabilitative therapies, and intensive care. Palmetto General has a staff of 600 physicians, 350 of whom are on the active staff, and 1,500 employees. Palmetto General has approximately 40 cardiologists on staff, 19 of whom are invasive cardiologists. The services available include ultrasound, exercise testing, arrhythmia studies, including halter monitoring and electrophysiology, surgical insertions of pacemakers and defibrillators, and diagnostic cardiac caths. For the 12 months ending June 30, 2001, 1,658 cardiac caths and 668 open heart procedures were performed on patients from the Palmetto General primary service area. At Palmetto General, there were 528 diagnostic cardiac caths performed from April 1999 through March 2000, making it the largest cardiac cath provider in Dade County, which does not also have an open heart program. In calendar year 2001, there were 3,089 cardiovascular disease discharges from Palmetto General. The primary service area for Palmetto General includes the communities of Hialeah, Hialeah Springs, Miami Lakes, and portions of Opa Locka. Approximately 450,000, or 22 percent of the 2.2 million people living in District 11, live in the Hialeah area, over 50,000 are over 65 years old. The 65 and older population in the Palmetto General primary service area is projected to increase by 10 percent by 2005. Seventy to 80 percent of the residents of Palmetto General's primary service area are Hispanic, many first-generation. Most of the staff and employees of Palmetto General are Hispanic or speak Spanish. In addition to Palmetto General, the primary service area includes two other hospitals, Hialeah Hospital and Palm Springs General Hospital ("Palm Springs General"). Of the three, only Palmetto General has a cardiac cath lab. About 400 suspected heart attack patients are treated in the ER at Palmetto General each year. The ER has approximately 60,000 annual visits. It is the third busiest ER in the county. Although the use rate for open heart surgery has been flat or declining throughout the district, it has increased in the Palmetto General service area. While District 11 had an absolute increase of 51 open heart cases from 1999 to 2000, there was a 91-case increase in the Palmetto General service area. Together Palmetto General, Hialeah Hospital, and Palm Springs reported 2,206 IHD discharges, 982 of those from Palmetto General. Subsequent to filing the open heart CON application, Palmetto General developed a $23 million master facility plan of capital expenditures to upgrade the facility in response to operational deficiencies and capacity constraints. Tenet approved the expenditure of $6 million in the first year. When entirely implemented, the plan will result in doubling the size of the ER, expanding maternity labor and delivery areas, building a new 18-bed intensive care unit with space to add ten more beds later, and refurnishing existing operating rooms and adding three more. Palmetto General also, in 2002, experienced significant discord among the medical staff which apparently has been resolved with a change in the hospital's senior management. Palmetto General maintains that its master facility plan is independent of its plans for an open heart surgery program, although the master plan supports and facilitates that proposal. Mount Sinai and Aventura Hospital contend that Palmetto General has impermissibly amended the architectural plans for the open heart surgery program. The plans, as submitted in the CON, showed the addition of two open heart operating rooms on the ground floor, with an area of shelled-in space, and mechanical/electrical space, and part of the roof, above that on the first floor, and an elevator and corridor on the second floor within the same area designated as being within the scope of work. A separate area of work, on the schematic drawing of the second floor, showed a four-bed CVICU. On the master facility plan, the two open heart surgery operating rooms are in the same location but reconfigured. The space above is still shown as shelled-in and it may have columns. On the second floor, the four-bed CVICU for open heart patients is no longer a separate unit but is included in an existing ten- bed CVICU. The CVICU is adjacent to the existing cardiac cath lab and to an area shown for cath lab expansion, previously a part of the roof on the CON drawing. As a result of the use of the existing space for the CVICU, the total area devoted to the open heart program is reduced in size. Although the two open heart operating rooms are reconfigured and the four-bed open heart CVICU will not be an entirely separate unit, the concept for the open heart surgery program is essentially unchanged. Construction detailed drawings of the master plan were expected to be completed in January 2003. If the open heart surgery program CON is approved, Palmetto General will commit to providing 7.5 percent of open heart and angioplasty services to Medicaid and charity care patients. Existing District 11 Providers Baptist, Cedars Medical Center ("Cedars"), Jackson Memorial, Mount Sinai, Miami Heart, Mercy Hospital ("Mercy"), South Miami, and Kendall Medical Center ("Kendall") are the eight hospitals in Dade County which have open heart surgery programs. Mount Sinai and Miami Heart are, as previously noted, both owned by Mount Sinai. They are located within two miles of each other on Miami Beach, near the Julia Tuttle Causeway. Jackson Memorial which, like Mount Sinai, is a University of Miami Medical School teaching hospital is located in downtown Miami, across the street from Cedars and near Mercy. Kendall is further south and west. South Miami and Baptist are in South Central Dade County. In the summer and fall of 2000, when AHCA published the fixed need pool, and Aventura Hospital and Palmetto General filed their applications, four of the eight open heart programs in Dade County were operating at volumes below 350 cases a year. In 1999, those programs and volumes were Cedars, with 340 surgeries, Jackson Memorial with 332, South Miami at 211, and Kendall with 187. In 2001, Cedars increased to 361 open heart cases and Jackson Memorial reported 513. The programs at Kendall and South Miami have continued to operate below 350 cases a year. The volume at Kendall was 184 in 2000, and 295 in 2001. South Miami reported 175 and 148 in calendar years 2000 and 2001, respectively. Like Aventura Hospital, Cedars, and Kendall are owned by HCA. South Miami and Baptist Hospital, which are 3.5 miles apart, are both affiliated with the Baptist health care system. Because volumes were below 350 at existing programs, AHCA published a numeric need for zero additional programs in District 11 for the January 2003 planning horizon. The rule on numeric need, as revised on January 24, 2002, reduced the minimum volume for existing providers to 300 open heart surgeries for the 12-month period specified in the rule, although it implicitly increased the expected size of each existing program to 500 cases by increasing the divisor in the numeric need formula. Under either rule, the applicants must demonstrate the existence of not normal circumstances for the approval of any additional open heart surgery programs in the district. Under the old rule, with 350 as the divisor in the formula, the numeric calculation, before being reduced to zero because of low volume programs, resulted in a need for 2.1 additional programs. That number is a negative one under the new rule. Aventura Hospital projected that its open heart surgery volumes would be 240, 312, and 347 during the first three years of operations, anticipating these to be the years ending in September of 2004, 2005, and 2006, respectively. Palmetto General projected volumes of 148, 210, and 250 open heart surgeries and 225, 230, and 310 angioplasties, in the first three years. From 1996 to 2001, the total annual volume of open heart surgeries in District 11 declined by 346, from 3,821 in 1996, to 3,421 in 2000, then increased slightly to 3,475 in 2001. Therefore, if Aventura Hospital and Palmetto General achieve projected volumes, it will result largely from redirecting cases from existing providers including one that would close if Aventura's CON is approved. The declining open heart volumes also reflects a technological improvements and a shift to less invasive angioplasty procedures. The number of angioplasties performed in District 11 increased from 6,384 in 2000, to 7,682 in 2001. Mount Sinai and Miami Heart Mount Sinai is one of six statutory teaching hospitals in Florida, with 19 accredited training programs, including residencies and fellowships. The cardiovascular and thoracic surgery residency program is shared with Jackson Memorial. In addition to the University of Miami, Mount Sinai is affiliated with the medical schools at Nova Southeastern University, Barry University, and the University of South Florida. Mount Sinai has the largest open heart volume in District 11, with over 40 percent of the total volume. It also has the broadest geographical draw for patients, with only 60 percent of the cases originating from the District. In the year from April 1999 to March 2000, Mount Sinai reported performing 1,034 adult open heart surgeries and 4,318 adult inpatient cardiac caths. In calendar years 2000 and 2001, the volume of open heart surgeries at Mount Sinai remained virtually constant at 980 and 976, respectively. Angioplasties increased during that same period of time from 1,037 to 1,067. At Miami Heart, from April 1999 through March 2000, 483 open heart surgeries and 4,179 cardiac caths were performed. The combined total of therapeutic cardiac caths or angioplasties performed at Mount Sinai and Miami Heart is approximately 2,500 a year. There is evidence that Mount Sinai has begun to phase-out open heart cases at Miami Heart where the volume dropped to 390 surgeries in 2000, and to 296 in 2001. In a travel time study commissioned by Mount Sinai, the drive time from Palmetto General ER to Mount Sinai ER was 28 minutes to travel the 15.5 miles. From various zip codes within the Palmetto General service area to the Mount Sinai ER, travel times ranged from 14 minutes to 36 minutes. Driving times from Aventura to Mount Sinai ranged from 18 to 37 minutes. Due to its close proximity, to Mount Sinai, it reasonably should take approximately the same driving time to reach Miami Heart. In an Aventura Hospital survey of transfers of high- risk cardiac patients, the average times were estimated to range from 59 minutes from Aventura Hospital to Mount Sinai and 1 hour and 26 minutes from Aventura Hospital to Miami Heart Institute. Those times must include more than actual drive time, otherwise the differences between Mount Sinai and Miami Heart would not be so significant. One would also anticipate that, while under common ownership, transfers from Aventura Hospital to Miami Heart would have been less cumbersome. The accompanying narrative in the CON suggests that time frames may have been counted from the time the decision to transfer is made to the time the patient arrives at the receiving facility. The testimony regarding the data compilation process was vague and inadequate and, therefore, the conclusions are unreliable. The Mount Sinai study showed travel times of 27 minutes to Miami Heart and 28 minutes to Mount Sinai from Palmetto General. That difference of one minute is confirmed in data underlying Aventura Hospital time travel study. Based on projected volumes, prior transfers, referral patterns and market shares, an open heart program at Palmetto General will reduce the volumes at Mount Sinai and Miami Heart by 92 to 107 open heart surgeries a year, for a financial loss of $1.6 million. An open heart program at Aventura is expected to reduce the combined volume at Mount Sinai and Miami Heart by 196 cases. A combined reduction of approximately 300 cases and the closure of one of the programs would leave the remaining Mount Sinai program at approximately 900 open heart cases, with a loss of $4.7 million. Mount Sinai was projected to experience a net loss from operations of $32 million in 2002. There was testimony that overall financial management and the potential for profitable operations have improved. Despite the fact that an Aventura program will have almost double the adverse impact of one at Palmetto General, Mount Sinai, in the asset purchase agreement resulting in its acquisition of Miami Heart from HCA, agreed not to contest the application filed by Aventura Hospital. Jackson Memorial Jackson Memorial is the hospital designated to provide indigent care in Dade County, through a public health trust funded by a portion of sales taxes. In the 12 months ending March 2000, 334 open heart surgeries and 3,644 cardiac caths were performed at Jackson Memorial. In 2000 and 2001, the open heart volume increased to 438 and 513 surgeries, respectively. The Mount Sinai travel time study, showed that the distance from Palmetto General to Jackson Memorial was 10.7 miles and that the average drive took 22 minutes. Jackson Memorial will lose an estimated 46 cases to Palmetto General, in the third year of an open heart program in 2004, and 12 cases to an Aventura Hospital program, or a combined total of approximately 60 cases a year. Mercy Mercy had a volume of 412 open heart surgeries and 2,704 cardiac caths, from April 1999 through March 2000. In calendar year 2000 and 2001, the open heart volumes at Mercy were 492 and 478, respectively. The average driving time from Palmetto General to Mercy ranged from 24 minutes to 38 minutes, averaging 27 minutes in Mount Sinai's expert's study. If Palmetto General is approved, a reduction of 44 open heart cases is expected at Mercy. An Aventura Hospital program is expected to result in a five-case reduction at Mercy. Cedars The volume at Cedars was 316 open heart cases from April 1999 through March 2000. In calendar years 2000 and 2001, the volume increased to 334 and 361 open heart surgeries, and to 1,323 and 1,468 angioplasties, respectively. The average driving time to Cedars, from Palmetto General, was 23 minutes, in the Mount Sinai travel time study, with a range of drive times from 17 minutes (starting at 4:19 a.m.) to 30 minutes (starting at 7:06 a.m.). If Palmetto General is approved to become an open heart provider, Cedars' volume is expected to be reduced by 20 surgeries. If Aventura Hospital becomes an open heart provider, Cedars' volume will be reduced by an estimated 14 cases. Kendall Kendall had a volume of 180 open heart cases for the year ending March 2000. Kendall has consistently been a low volume open heart provider, increasing from 136 surgeries in 1989, to 295 in 2001. Kendall is located in southwestern Dade County, well beyond the primary service areas of Palmetto General and Aventura Hospital. The common feature shared with Palmetto General is that Kendall is also considered an Hispanic or Spanish-speaking hospital, although every hospital in Dade County is staffed to serve Spanish-speaking patients. Mount Sinai's study found the average drive time from Palmetto General to Kendall to be 23 minutes, covering 14.6 miles. Estimates of case reductions at Kendall are six if Palmetto General is approved and one if Aventura Hospital is approved. South Miami and Baptist South Miami reported a volume of 199 open heart cases for the year ending March 2000. The volume of open heart surgeries has been low, over the years, from 132 in 1989, to 148 in 2001, never exceeding 215 cases in any one year. South Miami has become a referral center for complex, multi-vessel angioplasties. Angioplasties increased, at South Miami, from 723 in 2000, to 837 in 2001. Like Kendall, South Miami and Baptist have no overlap with the primary service areas of Aventura Hospital and Palmetto General. If Palmetto General offers open heart services, then South Miami would lose approximately nine cases in the third year of operations. If Aventura Hospital's CON is approved, then South Miami would lose an estimated two cases that year. The volumes at Baptist, from April 1999 through March 2000, were 472 open heart surgeries and 4,730 cardiac caths. The Baptist volume of open heart cases declined to 428 in 2000, and 408 in 2001. Baptist's volume is expected to decline by 14 cases lost to Palmetto General, and two to Aventura Hospital. Existing District 10 Providers Mount Sinai, in its proposed recommended order, suggested that Memorial Regional, the Cleveland Clinic, and Florida Medical Center all in Broward County, are available open heart providers for northern Dade County residents. Tenet operates the open heart program at the Cleveland Clinic, which is 17 miles north of Palmetto General. The average travel time to the Cleveland Clinic, in the Mount Sinai study, was 26 minutes, but that is unreliable because it includes one run where the driver obviously had to speed, at 4:42 a.m., to average over 60 miles per hour. The staff at Cleveland Clinic is not predominantly Spanish-speaking. The medical staff is also closed so that only Cleveland Clinic doctors practice at that hospital. Patients have interruptions in their continuity of care when referred to an entirely different medical staff. In addition, the Cleveland Clinic is a referral hospital drawing patients from outside the area. It does not function as a community hospital. The Cleveland Clinic is not, therefore, an alternative provider for Dade County residents. At Memorial Regional, six miles north of Aventura Hospital, there were 766 open heart surgeries performed in one 12-month period in 1999 and 2000 and 641 in calendar year 2000. Twenty-six percent of the Aventura Hospital primary service area open heart surgeries were performed at Memorial Regional in 2001, as compared to 5 percent from the Palmetto General Area. Over 30 percent of the angioplasties performed on Aventura Hospital service area residents were performed at Memorial Regional in 2001, and less than 4 percent for Palmetto General service area residents. If Aventura Hospital is approved, the loss in volume from Memorial Regional would be approximately 103 cases a year. Aventura Hospital noted that Memorial Regional has experienced capacity problems. In Columbia Hospital Corporation of South Broward vs. AHCA, the administrative law judge found that the proposal to establish a new hospital in Miramar was intended to " . . . allow Memorial Regional and Memorial West the opportunity to decompress and operate at reasonable and efficient occupancies into the foreseeable future without the operational problems caused by the current over-utilization." There is evidence that the relief resulting from the construction of the Miramar Hospital, will not alter the difficulties that Aventura Hospital-based doctors experience in gaining access to the cardiac cath lab at Memorial Regional. Florida Medical Center has approximately 450 open heart surgery cases a year. It is a Tenet facility in Western Broward County. The financial data from Florida Medical Center was used in Palmetto General's projections of income and expenses, but there was no evidence that Florida Medical Center's open heart program is a viable alternative to programs at either Aventura Hospital or Palmetto General. Review Criteria Subsection 408.035(1) - need in relation to applicable district health plan; 59C-1.030(2)(a)-(e) - need that the population has, particularly low income, ethnic minorities, elderly, etc.; relocation of a service; needs of medically underserved, Medicare, Medicaid and indigent persons; and Subsection 408.035(11) - past and proposed Medicaid and indigent care. The District 11 health plan includes preferences for applicants seeking to provide tertiary services who have provided the highest Medicaid and charity care, and who have demonstrated the highest ongoing commitment to Medicaid and indigent patients. Aventura Hospital provided approximately 1 percent charity, 6 to 7 percent Medicaid and 17 percent Medicare in 2001. It qualified as a disproportionate share Medicare hospital. Aventura Hospital's proposed CON commitment is to provide a minimum of 2.5 percent of open heart surgery and angioplasty patient days to Medicaid and charity patients. Palmetto General is and, for at least the last ten years, has been a disproportionate share Medicaid and Medicare provider. Over 20 percent of the total care at Palmetto General has been given to Medicaid patients in recent fiscal years. The care to indigent patients was approximately $8 million in one year. In this regard, Palmetto serves as a "safety net" hospital for poor people, like Jackson Memorial and Mount Sinai. Palmetto General will meet the needs of ethnic minorities, and more Medicaid, low income and indigent patients. Aventura Hospital is serving an older population and, in effect, would be relocating an open heart program from Miami Heart. In a service like open heart surgery, Medicare is the dominant payor. Subsection 408.035(2) - availability, quality of care, accessibility, extent of utilization of existing facilities in the district; Rule 59C-1.033(4)(a) - two-hour travel time; and Subsection 408.035(7) - enhanced access for residents of the district. The applicants contend that the existing programs in the district are geographically maldistributed to the detriment of the residents of northeast and northwest Dade County. They also contend that those access issues outweigh the fact that district residents can reach open heart providers within the two- hour travel time standard in the open heart rule. In its proposed recommended order, Mount Sinai noted that if Dade County is divided in half using " . . . State Road 836 (also known as the Palmetto Expressway), which runs east-west in the center of the County, near Miami International Airport . . . ," there are four existing open heart providers in the north and four in the south. This statement must be inaccurate because Palmetto General's location was described as being on the Palmetto Expressway with no existing open heart providers in the same service area. The existing programs in District 11 are inappropriately dispersed geographically to serve the population, as it is distributed throughout Dade County. The Hialeah area, with 22 percent of the population, is larger than 14 counties in Florida which have at least one open heart surgery program. The population in the Aventura Hospital primary service area, 250,000 residents, is roughly half that of Hialeah, but is equal to or larger than five counties in Florida which have open heart surgery programs. If the applicants' patients are not transferred to other hospitals, then the volume of open heart procedures at those hospitals will decline. The medical literature and experts in the field demonstrate a relationship between volume and quality. In Florida, the old rule and new rule set the minimums for existing providers at 350 and 300, respectively. If Aventura Hospital's open heart CON is approved, almost 200 surgeries will be lost from Miami Heart and Mount Sinai, approximately half of that from the program that will be closed, and just over 100 from Memorial Regional. The effect on the low volume providers will be negligible, one lost case to Kendall and two from South Miami. Based on its projections, Aventura Hospital expects to reach 347 open heart surgeries in its third year of operation. Even assuming that most of the cases would be redirected from other providers, the projection is aggressively based on the assumption that Aventura Hospital will have a market share of 87 percent of its primary service area. If Palmetto General's open heart CON is approved, the greatest impact will also be on Mount Sinai and Miami Heart, a loss of approximately 100 surgeries a year, and on Jackson Memorial, a loss of 46 surgeries a year. Palmetto General projected that it would reach a volume of 250 open heart surgeries by the end of the third year of operations. South Miami would lose nine and Kendall would lose six open heart cases. Neither an Aventura nor a Palmetto area program will keep the existing low volume providers below 300 or 350 open heart surgeries. With or without them, South Miami and Kendall are expected to continue to operate below the objective set by the open heart rule. The absence of a material adverse impact on low volume providers is the result of the absence of any overlap in the service areas of the applicants and South Miami and Kendall. In District 11, only Cedars is likely to end up having open heart surgery volumes in a range between 300 and 350 cases as a result of the approval of both programs. Difficulties and delays in patient transfers for open heart or angioplasty services were raised as possible not normal circumstances in Dade County. Aventura Hospital witnesses presented anecdotal evidence of patients who could have benefited from the availability of angioplasty and open heart case without transfers. The evidence was inadequate to demonstrate that access to existing facilities is not available within a reasonable time. Palmetto General provided a review of medical charts to show patients whose outcomes would have been improved if it had an open heart program. Physicians who testified about those patients differed in their conclusions concerning the urgency of transfers, the need for primary angioplasty or thrombolytics, and the causes of delays. No medical records indicated patient outcomes after they were transferred. Aventura Hospital and Palmetto General also contend that the residents of their primary service area are at a disadvantage by not having timely access to primary angioplasty for patients who are having heart attacks. Treatment in their ERs is limited to administering thrombolytic or clot-busting drugs in an effort to save heart muscle. Increasingly, research has shown the benefits of primary angioplasty over thrombolytics as the most effective treatment to restore blood flow to heart muscle. The benefits include lower mortality rates and few complications, and are enhanced if the "door-to-balloon" time is less than 90 minutes. In Dade County, transfer times typically range from two to five hours, including the time to contact a receiving facility, to find a receiving physician, to receive insurance authorization, to summon an ambulance, and to prepare the patient medically for transfer, as well as the actual travel time. Research also shows that the quality of an open heart surgery program continues to be linked to its volume. In Florida, AHCA has not revised its rules either to provide for angioplasty services without open heart surgery back-up, or to reduce the tertiary designation of open heart surgery programs. Therefore, the need for more timely access to angioplasty is rejected as a not normal access issue. Palmetto General, due to operational difficulties is unlikely to meet the 90-minute reperfusion goal. In fact, most hospitals with open heart programs do not. Palmetto General does not plan to construct a second cardiac cath lab for use at the time it establishes an open heart program. Mount Sinai witnesses questioned the ability of a hospital with one cath lab to provide emergency primary angioplasty services. An additional cath lab is not required in the open heart rule and, while difficulties in scheduling are likely to occur, successful open heart programs have been operated with one cath lab initially, including Tenet-operated Delray Medical Center. Palmetto General can, when needed, construct a second cardiac cath lab in approximately six months without CON review. AHCA has not revised the open heart surgery rule to respond to the development of primary angioplasty as a preferred treatment. By its adoption of a new rule maintaining the link between angioplasty and open heart surgery, and maintaining the tertiary nature of open heart surgery, AHCA has placed the State of Florida on the side of the debate which is more concerned about the link between volumes and quality in open heart programs. Palmetto General also attempted to demonstrate the existence of access constraints at Jackson Memorial. The evidence showed discrepancies in lengths of stay, with indigent patients generally hospitalized longer. But those discrepancies were subject to other interpretations, including the possibility that indigent patients are more sick because lengths of stay were longer before and after indigent patients are transferred to and from Jackson Memorial. The maldistribution of open heart programs in Dade County as compared to the areas of significant population growth is a not normal circumstance affecting the availability, access, extent of utilization, and quality of care of existing facilities in the district. The commitment to the closure of an existing program is also a not normal circumstance in favor of the Aventura Hospital proposal. Subsection 408.035(3) - applicant's quality of care; Rule 59C- 1.030(2)(f) - accessibility of facility as a whole; Subsection 408.035(10) - costs and methods of construction. The parties stipulated that both Aventura Hospital and Palmetto General have a record of providing quality care with regard to the scope and intensity of services provided historically, and that both are accredited by the Joint Commission on Accreditation of Health Care Organizations. The parties also stipulated that both applicants can establish quality perfusion services and recruit qualified perfusionists at the costs identified in their applications. Palmetto General failed to identify any surgeons who would staff their proposed open heart program. Two cardiac surgeons in a group which submitted a letter of interest included in the Palmetto General CON application were killed in a car accident a month before the final hearing. While the absence of named surgeons affects the certainty of referrals, there is no requirement, in AHCA rules, that surgeons be named in CON applications. One board-certified and a second at least board-eligible surgeon must be on the hospital staff if it starts an open heart program. Tenet has the resources and the senior management at Palmetto General has the experience to recruit qualified medical and nursing staff. The plan for a four-bed CVICU at Palmetto General was criticized as allocating too few beds for open heart surgery patients. Using the normile statistical methodology, one expert witness testified that a six-bed CVICU is required to accommodate the expected patient census in the third year of an open heart program. Using an average daily census of 1.43 patients and a target occupancy rate of 70 percent in the four-bed CVICU, however, only two beds are needed in the first year. Subsequently, as needed, acute care beds may be converted to ICU beds without CON review. Subsection 408.035(4) - needs that are not reasonably and economically accessible in adjoining areas. Mount Sinai contends that the residents of the Aventura and Hialeah areas reasonably and economically receive open heart services in Broward County. The statistical data and evidence of capacity constraints, even after the Miramar hospital is constructed, and the closure of one of the programs that residents of the Aventura Hospital primary service area have relied on and its relocation to their area, is more appropriate than increasing their reliance on Memorial Regional. The evidence does not demonstrate that the residents of the Palmetto General service area have reasonable access to Cleveland Clinic, Memorial Regional or any other Broward County hospital with an open heart surgery program. Subsection 408.035(5) - needs of research and educational facilities. Aventura Hospital is not a statutory teaching hospital. It does have podiatry, nursing, and occupational and physical therapy students training at the hospital. Residents and interns from the primary care program at Nova Southeastern University, from the Barry University School of Podiatry, and area nursing and technical schools receive some of their training at Palmetto General. Although one rating service places Palmetto General in the category of a teaching hospital, it is not a statutory teaching hospital. A program at Aventura Hospital will have a greater adverse effect on Mount Sinai, while one at Palmetto General will have a greater adverse effect on Jackson Memorial. Both Mount Sinai and Jackson Memorial are statutory teaching hospitals. Subsection 408.035(6) - management personnel and funds for project accomplishment; Subsection 408.035(8) - immediate and long term financial feasibility. Both Aventura Hospital and Palmetto General have adequate funds and experienced management to establish open heart surgery programs. In the pre-hearing stipulation, the parties agreed that the applicants have sufficient available funds for capital and operating expenses to initiate open heart surgery programs and to operate the programs, in the short term, until financially self- sufficient. Aventura Hospital reasonably projected net profits of approximately $543,000 from an open heart program in the first year of operation, and $1 million in the second year. Aventura Hospital reasonably relied on the experiences of other HCA open heart providers in the area, particularly Miami Heart and JFK Medical Center in Palm Beach County. Mount Sinai questioned the reasonableness of Palmetto General's projection that it will generate higher profits than Aventura Hospital with lower case volumes. It also questioned Palmetto General's ability to attain the volumes projected. Palmetto General projected a net profit of just over $700,000 in the first year, $1.18 million in the second year, and $1.5 million in the third year, with 148 open heart cases in the first year, 210 in the second year, and 250 in the third year. By comparison, Aventura Hospital's first three-year projections for open hearts were 240, 312, and 347. Aventura's projected volume was potentially overstated in view of the experience at HCA facility Columbia Westside in Broward County which has achieved approximately half the open hearts projected. But the differences in projections reasonably reflect Aventura's draw from a smaller but older population and Palmetto General's draw from a larger, poorer but younger population. Palmetto General's projected volumes are reasonable considerating the number of actual open heart surgeries, 668, originating from its primary service area in the 12-months ending in June 2001. Palmetto General reasonably and conservatively based its reimbursement rates on those received at Florida Medical Center in Broward County, which actually has a lower reimbursement rate than Dade County. Mount Sinai also demonstrated that charges at three South Florida Tenet facilities, Delray Medical Center, North Ridge Medical Center, and Florida Medical Center were significantly higher than those at Mount Sinai. But those facilities operate successfully in competitive markets in Districts 9 and 10, which supports the testimony that, for open heart surgery, charges are not very relevant. Most compensation is derived from fixed-rate reimbursement from Medicare. Subsection 408.035(9) - extent to which proposal fosters competition that promotes quality and cost effectiveness. In the District, HCA, the parent of Aventura Hospital, after the sale of Miami Heart, continues to operate Cedars, which has exceeded 350 cases for the first time in 2001, and Kendall, which at 295 cases in 2001, has been a chronically low volume open heart provider. That would raise doubts about the projected volumes at Aventura Hospital, but for the demographics of its location and the closure and, in effect, proposed relocation of the Miami Heart program to a more geographically appropriate area of the District. The relocation, therefore, makes the proposal a "wash" resulting in no net increase in programs or competition in the District. By contrast, the approval of a program operated by Tenet which has five Dade County hospitals, none with an open heart program, does introduce a new provider into the market in a location with special needs due to the larger critical mass of people, their ethnicity, relative poverty and fewer, more distant alternate open heart providers. Subsection 408.035(12) - nursing home beds. The criterion related to nursing home beds, by stipulation of the parties, is inapplicable to this case. Summary of Findings On balance, Palmetto General is preferable as the hospital with the larger critical mass of population, the status as a disproportionate share provider of Medicaid and Medicare, the improved geographical access for a large ethnic group with relatively high IHD and heavy demands for services, including cardiac care services in its ER and in the ERs of other hospitals within its primary service area. In addition, the detriment to existing providers, predominantly Mount Sinai and Jackson Memorial will not reduce the volumes below 350 open heart cases. On balance, the Aventura Hospital proposal, while less compelling, because it is not a Medicaid disproportionate share hospital, is not a new entrant to the market, and has a population which is half that in the Palmetto General primary service is also entirely approvable. The hospital has facilities superior to those at Palmetto General. It is better prepared to implement an open heart program, with plans to open a second cardiac cath lab immediately and with the cardiothoracic surgeons identified for the program. Within its service area population, Aventura Hospital has a large population of elderly people, who present to its hospital with symptoms of heart attacks. The troubling adverse impact on Memorial Regional is offset by the evidence of crowding and scheduling difficulties specifically in the Memorial Regional cardiac cath lab. The troubling adverse impact on the combined Miami Heart and Mount Sinai programs is offset by the Asset Purchase Agreement which contemplated the relocation of at least a portion of the Miami Heart cases to Aventura Hospital. Even with the additional loss of 100 open heart cases to Palmetto General, Mount Sinai will remain the largest Dade County provider, retaining from 900 to 1,000 annual open heart cases. The approval of both applications will improve access to open heart surgery and angioplasty care in District 11.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered issuing CON Application No. 9394 to Lifemark Hospitals of Florida, Inc., d/b/a Palmetto General Hospital, and CON Application No. 9395 to Miami Beach Healthcare Group, Ltd., d/b/a Aventura Hospital and Medical Center. DONE AND ENTERED this 14th day of April, 2003, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 2003. COPIES FURNISHED: Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Michael O. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Building Three, Suite 3431 Tallahassee, Florida 32308-5403 C. Gary Williams, Esquire Michael J. Glazer, Esquire Ausley & McMullen 227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302 Geoffrey D. Smith, Esquire Sandra L. Schoonover, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 Stephen A. Ecenia, Esquire R. David Prescott, Esquire Rutledge, Ecenia, Purnell & Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551
The Issue Whether Certificate of Need application (Number 9078) for an adult kidney transplantation program, filed by St. Luke's Hospital Association, meets the statutory and rule criteria for approval.
Findings Of Fact The Agency for Health Care Administration (AHCA) is the state agency authorized to administer the Certificate of Need (CON) program for health care facilities and services in Florida. Pursuant to Rule 59C-1.044, Florida Administrative Code, AHCA requires applicants to obtain separate CONs for the establishment of each adult or pediatric organ transplantation program, including heart, kidney, liver, bone marrow, lung, lung and heart, pancreas and islet cells, and intestines transplantations. For purposes of determining the need for organ transplantation services, the State of Florida is divided, by rule, into four service planning areas, corresponding generally with the northern, western central, eastern central and southern regions of the state. St. Luke's and Existing Providers St. Luke's Hospital Association operates St. Luke's Hospital (St. Luke's), a 289-bed, non-for-profit hospital with 17 beds for skilled nursing care and 272 acute care beds. St. Luke's is located on Belfort Road in Jacksonville, Duval County, Florida, AHCA, District 4, organ transplantation service planning area one. Available services at St. Luke's include obstetrics, open heart surgery, neurosurgery, adult bone marrow, and adult liver transplantation. The transplant services have been added during the last six or seven years. The severity of the illnesses and diseases treated at St. Luke's is represented by its relatively high Medicare case weight of 1.7 in 1997, after the addition of relatively low intensity obstetrics services. In 1998, St. Luke's applied for CONs to establish adult pancreas and islet cell, and adult kidney transplant programs. St. Luke's received the CON to establish the pancreas and islet cell transplant program. The application for a CON to establish an adult kidney transplant program is at issue in this proceeding. The parties stipulated that the letter of intent and application, for CON Number 9078, to establish the adult kidney transplant program, were timely filed. Methodist Medical Center, Inc., d/b/a Methodist Medical Center (Methodist) is a 244-bed acute care hospital, serving primarily adults, with special units for diabetes, hospice, and occupational medicine programs. The services do not include either obstetrics or pediatrics. In 1989, Methodist received a CON allowing its establishment of kidney transplant services. Methodist is located approximately one and a half miles north of downtown Jacksonville. Methodist's representatives contend that an additional kidney transplant program in Jacksonville, at St. Luke's, is not needed and will be detrimental to Methodist. St. Luke's, it was argued, will draw from a limited supply of organs and increase Methodist's financial losses. Those losses at Methodist were expected to range between $5 million and $8 million in 1999. Methodist's accountant described the hospital's financial health as poor to critical. The kidney transplant program provides a positive financial contribution at Methodist, largely due to Medicare reimbursements. At the time of the final hearing, Methodist was managed by Shands-Jacksonville, an affiliate of Shands Teaching Hospital and Clinics (Shands) at the University of Florida in Gainesville, and of University Medical Center in Jacksonville (University Hospital). Shands is also located in organ transplant service area one, but Gainesville is in AHCA District 3, not in 4 like Jacksonville. University Hospital is located across the street from Methodist and serves essentially the same inner-city, lower socio-economic population. St. Luke's was first established in the late 1800's. Previously located directly across the street from Methodist, St. Luke's was relocated near the intersection of J. Turner Butler Boulevard at Interstate 95, south of downtown Jacksonville in 1984. In 1987, St. Luke's became affiliated with the Mayo Clinic in Jacksonville (Mayo-Jacksonville). The two facilities share an administrator. St. Luke's receives approximately three- fourths of its admissions from Mayo-Jacksonville physicians. The Mayo-Jacksonville clinic is located approximately 12 miles from St. Luke's at J. Turner Butler Boulevard and Highway A-1-A. The multi-specialty and multi-subspecialty clinic, is staffed by 230 full-time salaried physicians. The governing board of Mayo-Jacksonville reports to the executive committee of its sole corporate member, the Mayo Foundation for Medical Education and Research (Foundation) in Rochester, Minnesota. The Foundation is the parent organization for the original Mayo Clinic in Rochester (Mayo-Rochester) and its affiliated hospitals, St. Mary's Hospital (with 1100 beds) and Methodist Hospital (with 700 to 800 beds), both in Rochester, Minnesota. In addition to the one in Jacksonville, the Foundation has also established a clinic in Scottsdale, Arizona (Mayo-Scottsdale). The Mayo-Scottsdale clinic is affiliated with a local inpatient hospital. Other related organizations include the Mayo Medical School and the Mayo Graduate School of Medicine. Issues Related to Need St. Luke's contends that its transplant surgeons would increase the total number of kidney transplants in Florida, by using less than ideal donor organs and by expanding waiting lists to enhance the possibility of donor/recipient matches. St. Luke's expects to overcome some of the usual limitations on available cadaveric organs because living donors can also be used to provide kidneys. Finally, St. Luke's maintains that a need exists for dual transplant programs, particularity the combination of kidney and pancreas programs. St. Luke's proposes to provide adult kidney transplants as an alternative to life-long dialysis or death for patients suffering from end-stage renal disease. Nationally, the number of dialysis patients increased from 123,822 in 1987 to 287,000 in 1996. The number of patients waiting for kidney transplants increased from 13,000 in 1987 to 41,000 in 1999. The mortality for patients on waiting lists also increased from over 1700 in 1996 to over 2000 in 1997. Due to the large and growing demand for organs, the federal government contracts with the United Network for Organ Sharing (UNOS) to coordinate the allocation of cadaveric organs. UNOS has designated five organ procurement organizations (OPOs) in Florida, one at the University of Florida in Gainesville (the UF OPO), and the others at centers in Orlando, Tampa, Fort Myers, and Miami. When cadaveric organs become available and are retrieved by surgeons from the nearest OPO, UNOS governs the priority in offering the organs. Organs are offered first to the United States military transplant centers, second to potential recipients who are six antigen or "perfect matches," then as paybacks to OPOs who have provided "perfect matches," and finally to various categories of other high-grade matches. After the organ is offered but not taken in the mandatory UNOS sharing hierarchy, the organ becomes available to local programs within the procuring OPO. St. Luke's will participate in the UNOS program for kidneys as it currently does for other organs, and expects to follow the medical protocols established at Mayo-Rochester, where kidney transplants have been performed for 30 years. St. Luke's has included $100,000 in start-up costs for Mayo-Rochester staff to train the St. Luke's staff. In establishing its successful liver transplant program, St. Luke's allocated $75,000 for comparable start-up costs. Rule 59C-1.044(8)(d), Florida Administrative Code, provides for the determination of the need for new programs, in part, based on the number of transplants performed at existing providers, which must exceed 30. An applicant must also provide a reasonable projection of volume, in excess of 15 a year by the second year of the proposed new program. Currently, two adult kidney transplant programs are approved or operational in each of the four service planning areas of Florida: at Shands in Gainesville and Methodist in Jacksonville in the north, which is service planning area one and coincides with the UF OPO; at Southwest Florida Regional in Fort Myers and Tampa General in western central Florida, which is service planning area two; at Florida Hospital in Orlando and Bert Fish Memorial in Volusia County in eastern central Florida, in service planning area three; and at the Cleveland Clinic Florida in Broward County and Jackson Memorial in Miami in the south, in service planning area four. At the time of this hearing, Bert Fish Memorial and the Cleveland Clinic were approved but not operational. The six operational Florida programs increased in volume from 442 transplants in 1994 to 641 in 1997, or an average increase of 13.2% a year. However, recent growth has been less dramatic. Using one year longer to establish a trend, from 1994 to 1998 data, the average annual increase was 9% a year. Kidney transplant volumes ranged, in 1997, from a low of 45 at Southwest Florida to highs of 150 at Jackson Memorial and 162 at Tampa General. From 1994 to 1997, the volume of kidney transplants within service planning area one increased from 35 to 52 at Methodist, and from 106 to 127 at Shands. As the parties stipulated, that volume exceeds the required minimum of 30 transplants at each provider in the service planning area. As also required by rule and stipulated by the parties, there are no new approved but not yet operational providers within service planning area one. Methodist notes that St. Luke's would be the first Florida program approved in a city which already has an existing kidney transplant service. The United States Renal Disease System (USRDS) is a national organization which collects and reports statistics on patients with end-stage renal disease (ESRD). USRDS is divided into regional networks, including Network Seven which is the ESRD Network of Florida, Inc. The Board of Directors of Network Seven adopted the following motion: The Network Seven Board of Directors reviewed the report of the Network's task force regarding the need for additional renal transplant resources for Service Area 1. After a lengthy discussion, the Board unanimously agreed that the Standardized Transplantation Ratio for Florida's Service Area 1 would not justify the establishment of a new stand-alone renal transplant program in this area. However, it agreed that the availability of a multi-organ transplant service (ie: pancreas and kidney) would be beneficial to those ESRD patients in residing [sic] Service Area 1. Two dual organ kidney and pancreas transplant programs are currently located in Florida, at Shands in Gainesville and at Jackson Memorial in Miami. Methodist notes that both are associated with medical schools at teaching hospitals, and are geographically well-suited to serve north and south Florida. Methodist's transplant surgeon who is the medical director of its program, and served on the Network 7 task force, agreed that a kidney/pancreas program is desirable. Apparently, most pancreas transplants are also done with kidneys but not vice versa. Relatively, few kidney/pancreas transplants are performed, although the number has doubled nationally since 1991. In 1997, there were 3 kidney/pancreas transplants at Shands, 3 at Mayo- Rochester and 33 at Jackson Memorial. The low volume of the dual transplant procedures reflected both medical skepticism and the absence of insurance reimbursement for the procedure when it was considered experimental. Having performed six dual transplants for no charge in 1998, Shands has been able to convince a majority of its third-party payors in Florida to pay for the procedure. The federal government, through the Medicare program, also changed its policy and now reimburses for kidney/pancreas transplants. As a result, the number of dual transplants is reasonably expected to increase. No CON is issued, under the Florida system, to authorize the dual kidney/pancreas program only. As Methodist noted, St. Luke's did not offer to condition its CON by limiting itself to a dual transplant program. The standardized transplantation ratio (STR), on which the Network Seven Board relied, is the ratio of first kidney transplants to the expected number based on the estimated national rate adjusted for age. For the four Florida organ transplant service planning areas, the STRs reported by Network Seven are as follows: Region 1 (North) 1.00 Region 2 (West Central) 1.35 Region 3 (East Central) 1.19 Region 4 (South) .66 A STR of 1.0 indicates generally, that a region is performing transplants as expected based on the national average. Therefore, the suggestion that the performance is mediocre is rejected. Methodist supports its argument that no need exists for an additional kidney transplant program at St. Luke's, based on Network Seven's finding that the STR for the region is roughly what should be expected. St. Luke's, however, asserted that the STR could be raised to the level of region two with the approval of a new program. In fact, the approval of a program at the Cleveland Clinic in Broward County, in region four, was supported by Methodist's expert health planner, among others, in part, by the desire to raise the STR. That situation can be distinguished based on geography and the failure in region four to meet expectations, while a better performance than the national average is not to be expected necessarily from the approval of another program in the same city in region one. While the STR is helpful in an analysis of need, Rule 59C-1.044(8)(d), Florida Administrative Code, requires consideration of the projected transplant volume based on the number of end-stage renal disease patients. Basically, these are patients whose kidneys have ceased to function. From June to December 1998, Network Seven estimated that the number of patients with kidney failure in service planning area one increased from approximately 2800 to 3000. Using expected population growth only, not the historical growth rate, St. Luke's conservatively estimated in its CON that number of patients would reach approximately 2900 by the end of the year 2000. Because some patients are not medically appropriate transplant candidates or will, for other reasons, never receive the service, St. Luke's used a ratio of patients to project transplant cases. Using only 20% of patients between ages 14 and 65, St. Luke's reasonably projects a need for over 300 kidney transplant surgeries in service planning area one in the year 2000. Using population increase and the lower historical growth rate of 9.5%, St. Luke's established a need for up to 450 kidney transplants in 2000 in service planning area one. Either number is sufficient to document St. Luke's ability to perform at least 15 kidney transplants by the end of the second year of operation, as required by rule. Methodist's expert further reduced by 40% the number of potential transplant patients to get what the projected to be the actual number of surgeries. This number is intended to take into consideration the limited number of cadaveric organs. The result is, however, unrealistically lower numbers, in the range of the actual number of surgeries currently performed in area one and is, therefore, rejected. In fact, despite the limitations on cadaveric organs, the number of kidney transplants has continued to increase. St. Luke's experience with liver transplants is also evidence of its ability to exceed the minimum number of 15 kidney transplants in the second year of operation. Specifically, St. Luke's expects to perform 15 kidney transplants in the first year, and 30 in the second year. More than double the projected number of Florida residents received liver transplants, 25 or 26 as compared to 12 or 13 cases in the first seven months of that program at St. Luke's. Compared to projections of 15 liver transplants in year one, 30 in year two, St. Luke's transplant surgeons actually performed 113 after 18 months. Significantly, the volume at Shands has also increased based on the annualized volume for the first quarter of 1999. St. Luke's also demonstrated that it is successfully transplanting livers which were rejected by other Florida programs. Currently, the same team of transplant surgeons harvests all abdominal organs, livers, kidneys, and pancreases, but can use only the livers at St. Luke's. The surgeons who perform the liver transplants at St. Luke's will also perform kidney transplants. As a result of the team's aggressive use of organs and recent changes in federal government requirements for notice of potential donors and reimbursement policies, St. Luke's is reasonably expected to assist in expanding the available supply of cadaveric organs and in increasing the number of transplant surgeries. Subsection 408.035(1)(a) - need in relation to district plan The District 4 health plan, developed by the Health Planning Council of Northeast Florida, Inc., includes preferences applicable to the evaluation of St. Luke's application. Preference one applies to applicants who will meet identified needs with acceptable quality in an economical manner. St. Luke's expert conceded that its proposal will be more costly and require longer average lengths of stay when compared to that at Methodist but not as compared to other Florida programs. St. Luke's projected an average length of stay of 7.6 days at $50,123 per case, but the Florida average is 10.5 days at $81,048. No construction is required for implementation of the project which has a total cost of $238,450. Therefore, St. Luke's proposal generally meets the requirements of preference one. Preference two, for applicants who will alleviate a geographic access problem, is not met by St. Luke's. One argument advanced by St. Luke's and rejected is that the existing providers are not using organs at the appropriate rate. Considering 1997 data, Shands and Methodist appear not to accept and use kidneys at the expected rate, as calculated and assigned by UNOS. The reported expected acceptance rate for Methodist is 30.7% in contrast to an actual rate of 11.5%. Shand's assigned expected rate is reported to be 53.8% but its actual rate of acceptance is shown as 37.4%. Corrected UNOS data shows the opposite result, that acceptance rates are higher than expected. UNOS data is inconsistent and inconclusive. In general, the data is so unreliable as to have no significant probative value. St. Luke's meets preference three by caring for HIV positive patients. St. Luke's also demonstrated its access to adequate staff for a kidney transplant program, meeting the requirement of preference four. Methodist questioned St. Luke's failure to list a certified transplant nephrologist on its staff, but physician services are provided by salaried employees of Mayo-Jacksonville. Preference five favors applicants who demonstrate that a new service will not have a significant negative impact on similar facilities. Even though there may be sufficient numbers of kidney disease patients who qualify for and have access to transplants in service area one, the geographic overlap of the programs is an issue of concern related to impact. Methodist primarily serves transplant service area one patients. St. Luke's draws 50% of its patients from Duval and the five surrounding counties, 35% from other areas of Florida, and 15% from elsewhere, primarily Georgia and the southeastern United States, but that also includes 3% of international origin. It is reasonable to expect St. Luke's to maintain approximately the same patient origin mix in a kidney program. This mix will require St. Luke's to perform only 8 kidney transplants on patients from service area one in order to reach the minimum volume requirement of 15 in the second year, which is actually projected for the first year. Currently, 16 Mayo-Jacksonville patients who are on the waiting list for kidney transplants at Methodist would likely receive transplants at St. Luke's if it had a program. Taking into consideration growth and applying a traditional impact analysis, Methodist will lose two to four cases, and Shands will lose nine cases in the first year of a competing program at St. Luke's. With that level of impact, both programs remain substantially above the minimum required by AHCA rule. One expert equated the loss of ten cases from Methodist, to a financial loss of $100,000, after reimbursement deductions and reduced expenses. The overall magnitude of Methodist's financial losses is so great that the loss of the contribution from the kidney transplant program is insufficient to affect the hospital's profitability. Similarly, the loss of nine cases from Shands leaves volume significantly above the minimum required. Methodist and St. Luke's differ in their reliance on cadaveric and living donors, which also should help alleviate any impact of competition for cadaveric organs on the existing program at Methodist. While Methodist uses 50% living donors, St. Luke's projects a more traditional mix of 30% living. It is reasonable to expect that the growth in transplants, and the differences in patient and organ origins will allow Methodist to avoid any detrimental effect from the establishment of a program at St. Luke's. Methodist suggested that the approved program in Volusia County, and to a lesser extent, that in Broward County will also be unable to achieve minimum volumes if a program is established at St. Luke's. Methodist's support for the Volusia County program, however, lends credence to St. Luke's assertion that the geographic overlap is minimal. St. Luke's demonstrated that the number of projected transplants, taking into consideration the approved programs, is considerably lower than the expected numerical increase in surgeries. Projections of 30 at St. Luke's, six at the Cleveland Clinic, and 25 at Bert Fish during the year 2000 are achievable from the projected growth in kidney transplants. The data also indicates that the Florida waiting lists for transplant candidates could and should be expanded. Separate transplant provider lists are coordinated into the organ sharing list maintained by UNOS. Nationally, 150 people for every one million are on waiting lists for kidney transplants. That number, even adjusted to exclude older patients, is double the ratio for the Florida waiting list. Some expansion is reasonably expected as a result of the establishment of a new Florida program. The numbers needed and projected at each program, the differences in projected patient origins, the ability to expand the waiting list and the absence of an adverse impact from the establishment of the liver transplant program at St. Luke's provide some assurance that a kidney transplant program will not be detrimental to the existing providers. Preference six, for applicants who will maximize services to rural county residents, is met by St. Luke's service to surrounding rural areas. In addition to the general health plan preferences for CON applicants, the District 4 health plan includes specific preferences for transplant services. The parties stipulated that preferences one and five for applicants in major population areas (over 250,000) and for pediatric services are not at issue. Specific preference two applies to applicants with relationships with a broad spectrum of other health care providers, including agreements for patient transfers and organ procurement. In response, St. Luke's refers to its active participation in the UF OPO. As Methodist notes, however, a continuation of the existing relationship, with Mayo physicians performing kidney transplants at Methodist, is the most cost- effective and non-duplicative alternative. St. Luke's transplant surgeons will continue to provide coverage for the surgeons at Methodist. Transplant-specific preference three favors applicants who have a significant role in regional and national research efforts, including by government contracts or research grants. Methodist insists that a distinction be made between the well- known work of the Mayo Foundation and that of St. Luke's. The Mayo Foundation divides its services into three major segments - medical care, medical research, and medical education. Research is supported by over $100 million from government agencies and $80 million from the Foundation. Over a thousand residents and fellows are enrolled in Mayo educational programs. Over 75 transplant-specific research projects within the Mayo system are coordinated by a single institutional review board. Admittedly, a non-university facility, St. Luke's does participate in Mayo educational and research activities. Over 60 Mayo-Rochester physicians, residents, and fellows were rotating through Mayo-Jacksonville and practicing at St. Luke's at the time the CON application was filed. St. Luke's separate budget for basic science research also exceeded $10 million for over 200 active research protocols. The medical research building at Mayo-Jacksonville exceeds 80,000 square feet in size. For these reasons, St. Luke's demonstrated that its participation in educational and research activities satisfies the preference. Transplant preference four favors applicants with a specific commitment to provide charity care. In its application, St. Luke's commits to providing 6% of total kidney transplants to Medicaid or charity patients. One expert witness noted that St. Luke's commitment exceeds the statewide volume of 4% Medicaid/charity kidney transplant patients, which was the condition for approval of the Bert Fish CON. Most patients with end-stage renal disease are covered by Medicare. In calendar years 1996-1998, Shands provided over 30% Medicaid and from 4 to 8% charity care. Methodist provided from 9 to 11% Medicaid and approximately 2% charity care. By contrast, St. Luke's provided from .7% to 1.2% Medicaid and just over 2% charity case. St. Luke's meets the preferences by specifying a reasonable commitment for the kidney transplant program, although it has historically provided comparatively insignificant Medicaid and charity care. Since organ transplant service area one includes Districts 1, 2, and 3, as well as 4, St. Luke's and AHCA also considered the local health plans for those districts. Both noted that District 3 has a preference for organ transplant applicants which are teaching hospitals, as defined by Florida Statutes. St. Luke's does not meet that preference. It is not a statutory teaching hospital. On balance, St. Luke's does meet the intent of local health plans preferences and, therefore, the requirements of Subsection 408.035(1)(a), Florida Statutes. Subsection 408.035(1)(b) - increase/improve availability, access, quality of care, efficiency, utilization, and adequacy of like and existing facilities in the district In its application, St. Luke's illustrated the concern for renal patients as follows: End-stage renal disease is a large and growing problem in Florida and north Florida. with 14,168 ESRD patients in Florida and 2,822 ESRD patients in service planning area one during 1998, with 787 Florida residents added to the kidney waiting list during 1997, and with Florida resident deaths due to diabetes growing to 3,828 deaths by 1997, the magnitude of the ESRD problem is evident. St. Luke's Exhibit 1 at p. 96. St. Luke's plans to serve an increasing pool of patients within the District and the service planning area. With its aggressive use of organs, St. Luke's can also increase available cadaveric organs, thus increasing numerically, the accessibility, availability and utilization of kidney transplant services in the district. The efficiency of all providers is also reasonably expected to be enhanced due to the introduction of competition into the market. Currently, the relationship between Methodist and Shands is not competitive. Subsection 408.035(1)(c) - quality of care Modeled after that of the Mayo Clinic Rochester, St. Luke's kidney transplant program will be emulating a program with the nation's best survival rates despite its use of organs which have been rejected by others. St. Luke's is licensed by the AHCA, certified to participate in the Medicare and Medicaid programs, accredited by the Joint Commission on the Accreditation of Health Care Organizations (JCAHO), and certified by UNOS to perform transplants. The parties stipulated that St. Luke's has a history of providing a high quality of care. The evidence also supported a finding that St. Luke's will also provide the same high quality of care in kidney transplantation services, using the same physical spaces, by essentially the same staff. St. Luke's staff will require only specialized kidney transplant training and equipment. Subsection 408.035(1)(d) - available and adequate alternatives An alternative to a new kidney transplant provider is the expansion of the volume of cases performed at existing providers. There are no physical constraints to the alternative, only the need for additional staff and supplies. Methodist and Shands can absorb the projected increase in kidney transplant surgeries in the service planning area. Given that lack of constraint, the minimum volume established for existing providers by rule, gives the guidance to determine whether it is appropriate to expand volumes at existing providers or to introduce a new provider. Because there is no competition in the service area in which the existing providers are well above the minimum volume, and the projected volumes for the new programs are exceeded by the projected additional transplants, the establishment of an additional program is appropriate. Subsection 408.035(1)(e) - economies and improvements from joint operative or shared resources The advantages of developing a kidney transplant program at St. Luke's include: the ability to utilize the existing infrastructure which supports the liver and bone marrow transplant programs; and the ability to adopt Mayo Rochester's treatment protocols, standards, and training resources, and to participate in its research projects. The only clearly identified disadvantage is the risk of undermining the cooperation of Mayo-Jacksonville transplant surgeons with Methodist and the loss of some transplant surgeries from Methodist and Shands. On balance, the introduction of a kidney program in Florida, emulating the Mayo-Rochester program, offers a valuable sharing of Mayo resources. Subsection 408.035(1)(f) - need for equipment or services not accessible in adjoining areas St. Luke's proposal will not result in the introduction of any special equipment or services which are not reasonably or economically accessible in adjoining areas. Subsection 408.035(1)(g) - need for research and educational facilities; (1)(h) - needs of training programs and schools for health professionals Mayo-Jacksonville has active research, medical residency, and fellowship training programs in Jacksonville. Most of the inpatient care associated with the research and educational programs is provided at St. Luke's. A new program at St. Luke's offers new educational opportunities for Mayo- Jacksonville physicians. Subsection 408.035(1)(h) - availability of personnel for project accomplishment (see also Rule 59C-1.044) While the statutory criteria generally, considers whether CON proposals include plans to employ the necessary personnel, the organ transplant rule gives much greater detail. As required by rule, St. Luke's has the staff needed to care for the transplant patients. It offers 24-hour on-site dialysis, and is staffed by renal care and dialysis nurses, nutritionists, respiratory therapists, social workers, psychologists, dialysis laboratory workers and administrators. Physicians include board and UNOS certified transplant surgeons, anesthesiologists, pathologists, psychiatrists, nephrologists, endocrinologists, and immunologists and infectious disease specialists. In addition to the health care professionals needed for operation of a kidney transplant program, St. Luke's has significant experience with the data collection process necessary to evaluate adequately a transplant program. Among the requirements of the Rule are a 24-hour shared call system for organ procurement, and clinical review committees, which already exist. St. Luke's operates a 17-bed intensive care transplant unit capable of prolonged reverse isolation, if required. Equipment is available and in operation for cooling, flushing, and transporting organs, as are an on-site tissue typing laboratory and an in-house blood bank, as the parties stipulated. Subsection 408.035(1)(h) - availability of funds for project accomplishment and Subsection 408.035(1)(i) - immediate and long-term financial feasibility The total project cost is $238,450, which covers filing fees, staff training, and equipment. No renovation or construction costs are anticipated because St. Luke's has adequate capacity to implement the kidney program in existing spaces. Methodist's expert testified that the financial feasibility of the project cannot be determined due to errors on Schedule 2 of the CON application and the lack of reliable utilization projections. As previously determined, the utilization projections are supported by the projected number of area one patients with kidney failure who ultimately have transplant surgeries. Schedule 2 of the CON application lists the capital project commitments of the applicant. St. Luke's listed projects which total $35.9 million taken from a "1998 Capital Budget Request Summary." The total, in excess of $35 million, represents the budget request summary of just over 34 million, minus approximately $4 million that had already been spent, plus a little over $5 million for the two pending CONs and expansion of an intensive care unit (ICU). The ICU expansion cost of $500,000, was understated by $766,000. At the hearing, however, St. Luke's expert testified that he mistakenly listed St. Luke's "wish list," when he used $34 million, which exceeded "approved" projects by $17 to $18 million. That total would have been approximately $16,974,000. The available cash and investments for St. Luke's, approximately $80 million, is sufficient to cover the project costs and other capital projects at either $35 million or $16 million, or $21 million if, as asserted at hearing, the $16 million is understated by $5 million. The proposal is financially feasible in the short-term, even considering the decline in available cash and investments to $65 million at the time of the final hearing. In terms of long-term financial feasibility, the experts considered profits or losses from operations. St. Luke's experienced losses from operations of $4.5 million, $4 million, and $12.9 million in the years 1996, 1997, and 1998, respectively. When investment income is considered, however, St. Luke's had a positive income figure of $5.2 million in 1997 and losses reduced to $.7 million in 1998. St. Luke's explained the losses as temporary due to the initiation of costly new services, the enhancement of information systems, and an increase in charity care. The charges for kidney transplants at St. Luke's are expected to equal $57,200 a case, or $1.7 million in gross revenue for 30 cases at the end of the second year of operations. The expected charges are reasonable when compared to charges, in 1996, of $50,000 at Mayo-Rochester, $42,000 at Shands, $38,000 at Methodist, and a Florida average of $81,000. Kidney transplants continue to receive cost-based reimbursements from Medicare. From the $1.7 million in gross revenue, St. Luke's expert projected an incremental profit of approximately $100,000. In addition, the audited financial statements of the Foundation were submitted with St. Luke's CON, with a statement of the Foundation's willingness to fund the project. With over $1 billion in cash and investments and, for 1997, net income over $31 million, the Foundation is able to assure the short and long- term financial feasibility of the kidney transplant program at St. Luke's. Subsection 408.035(1)(j) - needs of a health maintenance organization (HMO) Although the Mayo organization includes a licensed Florida HMO, the proposal is not intended to serve its needs any more than those of any other potential patients. Mayo- Jacksonville and St. Luke's have contracts to provide services to a number of other HMOs. Subsection 408.035(1)(k) - substantial services to non-resident of the district or adjacent districts Currently, St. Luke's attracts 51% of its patients from Duval County, another 21% from the other counties in District 4, 16% from the rest of Florida, and the remaining 12% from outside of Florida. The patient origin for Mayo-Jacksonville is even more geographically dispersed than that of St. Luke's, with 22% of from outside of Florida. By comparison, nearly 99% of Methodist's patients come from North Florida. St. Luke's patient origin data indicates the reasonableness of its expectation that 15% of kidney transplant patients will come from outside Florida. St. Luke's, therefore, meets the criterion for substantial service to non-residents. Subsection 408.035(1)(l) - impact on costs, effects of competition on improvements or innovations in financing and delivering services with quality assurance and cost-effectiveness St. Luke's expects expanded transplant services to reduce its overall fixed cost per transplant. The introduction of a Mayo-affiliated medical program is reasonably expected to introduce beneficial competition to the market which currently has no competition. The fact that competition will come from a nationally-known, very successful program is expected to have a positive impact on existing programs. Subsection 408.035(1)(m) - costs and methods of construction Methodist contends that St. Luke's omission of architectural drawings or floor plans in the CON makes it impossible to consider the statutory criteria related to construction. While St. Luke's failed to include any architectural drawings, it did include descriptions of the existing spaces and in-house services which will support the program. Schedule 1 and 9 of the application show that no costs are associated with construction, expansion, remodeling or demolition. Architectural drawings were not submitted and not required by AHCA for CONs filed by the Cleveland Clinic (kidney transplant), Tampa General (lung transplant), and University Medical Center (heart transplant). In each instance, the facility proposed using existing spaces for the new programs. Based on AHCA's past practices in comparable circumstances, St. Luke's application is not flawed due to the absence of architectural plans. Subsection 408.035(1)(n) - history of and proposed services to Medicaid and medically indigent patients St. Luke's has historically provided limited Medicaid and charity care. See Findings of Fact 39 and 40. St. Luke's proposal to perform 3% Medicaid and 3% charity kidney transplants in the second year of operation is the equivalent of one Medicaid and one charity case. That commitment, however, exceeds the Florida average and the commitment AHCA required of Bert Fish program. The commitment made by St. Luke's is adequate for kidney transplant services. Subsection 408.035(1)(o) - past and proposed continuum of care in multi-level system St. Luke's affiliation with Mayo physicians' practices and the Mayo-Jacksonville clinic allow it to incorporate kidney transplant services into a multi-level system which includes home health and outpatient care. Subsection 408.035(2)(a) - capital expenditures proposals (a) less costly alternatives; (b) utilization of similar services; (c) alternatives to new construction; and (d) serious access problems Subsection 408.032(2), Florida Statutes, defines capital expenditures as follows: "Capital expenditure" means an expenditure including an expenditure for a construction project undertaken by a health care facility as its own contractor, which, under generally accepted accounting principles, is not properly chargeable as an expense of operation and maintenance, which is made to change the bed capacity of the facility, or substantially change the services or service area of the health care facility, health service provider, or hospice, and which includes the cost of the studies, surveys, designs, plans, working drawings, specifications, initial financing costs, and other activities essential to acquisition, improvement, expansion, or replacement of the plant and equipment. In this project, St. Luke's proposes to incur the cost for kidney transplant equipment to establish the new service. The least costly alternative is enhanced Mayo participation in the program at Methodist. Methodist is, however, sufficiently utilized, well in excess of the rule minimum. No new construction is required at St. Luke's to implement the kidney transplant service. Patients will not, however, experience serious problems with access to kidney transplant services if St. Luke's is not approved. There are no physical constraints on the expansion of services at Shands or Methodist. In the absence of physical constraints at existing providers, but in consideration of their volumes which are well in excess of that required, the introduction of competition of the Mayo quality at such low cost is, on balance, desirable for the health care system.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a final order be entered issuing CON 9078 to establish a new adult kidney transplant program at St. Luke's Hospital in Jacksonville. DONE AND ENTERED this 17th day of February, 2000, in Tallahassee, Leon County, Florida. ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of February, 2000. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Julie Gallagher, General Counsel Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Richard A. Patterson, Esquire Agency for Health Care Administration Fort Knox Building 3 2727 Mahan Drive, Suite 3431 Tallahassee, Florida 32308 F. Philip Blank, Esquire R. Terry Rigsby, Esquire Geoffrey D. Smith, Esquire Blank, Rigsby & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida 32301 Michael J. Cherniga, Esquire Seann M. Frazier, Esquire Greenberg Traurig, P.A. Post Office Drawer 1838 Tallahassee, Florida 32302
Findings Of Fact St. Mary's Hospital, Inc. ("St. Mary's"), is a certificate of need ("CON") applicant for an adult open heart surgery program in Department of Health and Rehabilitative Services ("HRS"), District IX. The Agency for Health Care Administration ("AHCA") is the state agency responsible for the administration of CON laws. Intervenor, Martin Memorial Hospital Association, Inc., d/b/a Martin Memorial Medical Center ("Martin Memorial") has standing to intervene as a CON applicant for an open heart surgery program in HRS District IX. Intervenors, JFK Medical Center, Inc., ("JFK") and Palm Beach Gardens Community Hospital, Inc., d/b/a Palm Beach Gardens Medical Center ("Palm Beach Gardens") have standing to intervene as existing providers of open heart surgery services in HRS District IX. AHCA published a net need projection for zero additional adult open heart surgery programs in HRS District IX, with the following notice: Any person who identifies any error in the fixed need pool numbers must advise the agency of the error within ten (10) days of publication of the number. If the agency concurs in the error, the fixed need pool number will be adjusted prior to or during the grace period for this cycle. Failure to notify the agency of the error during this ten day time period will result in no adjustment to the fixed need pool number for this cycle and a waiver of the person's right to raise the error at subsequent proceedings. See, Volume 18, Number 32, Florida Admiministrative Weekly, at page 4501 (August 7, 1992). By letter dated August 14, 1992, St. Mary's notified AHCA that it believed an error had been made in the fixed need pool projection for adult open heart surgery programs in HRS District IX. This letter was hand delivered to AHCA on August 14, 1992, within the ten days required by the fixed need pool publication. All of the parties to this proceeding agree with St. Mary's that the numeric need formula in Rule 10-5.033(7), Florida Administrative Code (subsequently, renumbered as Rule 59C-1.033(7), showed a need for one additional adult open heart surgery program in District IX, except that AHCA determined that the provisions of subsection 7(a)2. were not met. St. Mary's letter also asserted that there was evidence that all existing adult open heart surgery providers performed in excess of 350 adult open heart surgery operations during the applicable base period calendar year 1991. The minimum of 350 operations in each existing program is an additional prerequisite to the publication of need for a new open heart surgery program in subsection 7(a)2. of Rule 59C-1.033, which the parties refer to as a "default" provision. The default provision is invoked in this case because JFK reported fewer than 350 operations. The subsection provides that a new adult open heart surgery program will not normally be approved if: One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of 6 months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 350 adult open heart surgery operations during the 12 months ending 6 months prior to the beginning date of the quarter of the publication of the fixed need pool. (Emphasis added). In its letter of August 14, 1992, St. Mary's stated that: According to the information provided by JFK to the local health council JFK performed 347 adult open heart surgery operations during the applicable base period (calendar year 1991). Notwithstanding the data reported by JFK to the local health council, data obtained from the Health Care Cost Containment Board for the same 12 month period reflects a total of 356 adult open heart surgery discharges from JFK. All parties agree that for calendar year 1991, JFK Medical Center, Inc. ("JFK"), reported a total of 356 discharges within DRG's 104 through 108 to Florida's Health Care Cost Containment Board and, for the same period of time, JFK reported 347 adult open heart surgery operations to the Treasure Coast Health Council, Inc. Based on the data provided by JFK to the HCCB, St. Mary's requests that AHCA enter a final order finding that there is a need for one additional open heart surgery program in District IX in the September, 1992 review cycle. The determinative factual issue, in this proceeding, is whether the term "discharge" is equivalent to the term "operation" and, if it is, should the HCCB data be accepted as more reliable than the Health Council data. The term "open heart surgery operation" is defined by Rule 59C- 1.033(2)(g), Florida Administrative Code, to mean: Surgery assisted by a heart-lung by-pass machine that is used to treat conditions such as congenital heart defects, heart and coronary artery diseases, including replacement of heart valves, cardiac vascularization, and cardiac trauma. One open heart surgery operation equals one patient admission to the operating room. Open heart surgery operations are classified under the following diagnostic related groups (DRGs): DRGs 104, 105, 106, 107, 108, and 110. (Emphasis added). The definition of "open heart surgery operation" was also considered in Humhosco, Inc. v. Department of Health and Rehabilitative Services, 14 FALR 245 (DOAH 1991). The hearing officer found that: [D]iagnostic related groups, or "DRGs," are a health service classification system used by the Medicare System. The existing rule does not include the reference to DRG classifications. Some confusion had been expressed by applicants as to whether certain organ transplant operations which utilized a bypass machine during the operation should be reported as open heart operations or as organ transplantation operations. The amendment was intended to clarify that only when the operation utilizes the bypass machine and falls within one of the enumerated categories should it be considered an open heart surgery operation. The inclusion of the listed DRGs was meant to clarify the existing definition by limiting the DRG categories within which open heart surgery services may be classified. There is no dispute that the primary factor in defining an open heart surgery procedure is the use of a heart-lung machine. Florida Hospital argued that the proposed definition is ambiguous and vague because not all procedures which fit into the listed DRG categories necessarily involve open heart surgery. Florida Hospital's fear that the new language would seem to indicate that each procedure falling into the listed DRGs qualifies as an open heart surgery operation is unfounded. While the provision could have been written in a simpler and clearer manner, the definition adequately conveys the intent that the use of a heart-lung bypass machine is an essential element to classify an operation as open-heart surgery. Humhosco, supra, at 255. (Emphasis added).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order determining that the fixed need pool publication, dated August 7, 1992, for Department of Health and Rehabilitative Services District IX for the July 1994 planning horizon is accurate. DONE and ENTERED this 22nd day of December, 1992, at Tallahassee, Florida. ELEANOR M. HUNTER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 1992. APPENDIX Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5 and 6. Subordinate to Findings of Fact 13. Accepted in Findings of Fact 11, conclusion rejected in Findings of Fact 13-15. Accepted in Findings of Fact 15, conclusion rejected in Conclusions of Law 18-19. Rejected in Conclusions of Law 17-19. Rejected in Findings of Fact 13-15. Accepted in Conclusions of Law 1. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 7 and 9. Accepted, in part, and rejected, in part in Findings of Fact 10 and 11. Rejected in Findings of Fact 11 and 13-15. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or Reason for Rejection. Accepted in Findings of Fact 5. Accepted in Findings of Fact 5. Accepted in Findings of Fact 6. Preliminary Statement Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Preliminary Statement. Accepted in Findings of Fact 7 and 9. Accepted in Findings of Fact 10 and 11. Accepted in relevant part in Findings of Fact 4. Subordinate to Findings of Fact 9 and 11. Subordinate to Findings of Fact 7. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Findings of Fact 12. Subordinate to Finding of Fact 11. Accepted in Conclusions of Law 17. Accepted in Findings of Fact 13-15. Accepted in Findings of Fact 13-15. COPIES FURNISHED: W. David Watkins, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. 2700 Blair Stone Road Tallahassee, Florida 32301 Lesley Mendelson, Esquire Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Byron B. Mathews, Jr., Esquire 201 S. Biscayne Boulevard Suite 2200 Miami, Florida 33131 Gerald M. Cohen, P.A. Steel Hector & Davis 4000 Southeast Financial Center Miami, Florida 33131-2398 Robert A. Weiss, Esquire John M. Knight, Esquire Parker, Hudson, Rainer & Dobbs The Perkins House 118 N. Gadsden Street Tallahassee, Florida 32301 Sam Power, Agency Clerk Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303 Harold D. Lewis, General Counsel Agency for Health Care Administration The Atrium, Suite 301 325 John Knox Road Tallahassee, Florida 32303
