The Issue Whether the certificate of need (“CON”) applications filed by Cornerstone Hospice & Palliative Care, Inc. (“Cornerstone”); Suncoast Hospice of Hillsborough, LLC (“Suncoast”); and VITAS Healthcare Corporation of Florida (“VITAS”), for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A (Hillsborough County), satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications, on balance, best meets the applicable criteria for approval.
Findings Of Fact Based upon the credibility of the witnesses and evidence presented at the final hearing, and on the entire record of this proceeding, the following Findings of Fact are made: The Parties AHCA AHCA is designated as the single state agency for the issuance, denial, and revocation of CONs, including exemptions and exceptions in accordance with present and future federal and state statutes. AHCA is also the state health planning agency. See §§ 408.034(1) and 408.036, Fla. Stat. In addition, AHCA is the agency designated as responsible for licensure and deficient practice surveys for health facilities, including hospices. See ch. 408, Part II and § 400.6005-.611, Fla. Stat. Pursuant to Florida Administrative Code Rule 59C-1.0355(4)(a), the Agency established a numeric formula for determining when an additional hospice program is needed in a service area. The Agency's need formula determined a need for one new hospice program in SA 6A in the application cycle at issue. That determination is unchallenged. None of the applicants argued that more than one new hospice program should be approved for Hillsborough in this cycle. Suncoast The Hospice of the Florida Suncoast (“Suncoast Pinellas”) was founded in 1977, and was one of the first hospices in Florida, and in the nation. Although it operates only in Pinellas County, Suncoast Pinellas has grown to become one of the largest nonprofit hospices in the country. Suncoast Pinellas is a subsidiary of Empath Health (“Empath”), which also provides a number of non-hospice services. As discussed further below, Empath is currently undergoing a merger with Stratum Health System (“Stratum”), which operates Tidewell Hospice in Sarasota and Manatee Counties. The Chief Executive Officer (“CEO”) of Empath and Suncoast Pinellas is Rafael Sciullo. Mr. Sciullo was recruited to be CEO of Suncoast Pinellas in 2013, where he has served ever since. When Mr. Sciullo arrived at Suncoast Pinellas, the company operated a human immunodeficiency virus (“HIV”) testing and treatment program, a PACE program, a home health program, and a palliative care program. Mr. Sciullo became concerned that patients in the HIV, PACE, and home health programs were not comfortable hearing the word “hospice,” as those patients did not view themselves as hospice patients. Mr. Sciullo reorganized Suncoast Pinellas by creating Empath in order to alleviate this concern with a more inclusive and mission directed organization. Empath is an administrative services provider that provides support to its affiliates, which include Suncoast Pinellas, Empath Partners in Care (“EPIC”),2 Suncoast PACE, Suncoast Hospice Foundation, and programs for palliative care, pharmacy, durable medical equipment (“DME”), and infusion services. Through its affiliates, Empath already provides several services within Hillsborough, including EPIC HIV services and support, and palliative care. The federal definition of hospice care requires a prognosis of a six- month or less life expectancy. However, Florida’s definition permits patients with a 12-month prognosis. Under its supportive care program, Suncoast Pinellas offers hospice services to patients with a prognosis of six to 12 months. As one of the largest not-for-profit hospices in the nation, Suncoast Pinellas offers specialized programs for veterans, the Jewish population, African Americans, the Hispanic population, and disease groups such as heart failure, Alzheimer’s, and COPD. The applicant entity for the CON is Suncoast Hospice of Hillsborough, LLC. If approved, Suncoast will appear beside Suncoast Pinellas in Empath’s organizational chart, operating as a subsidiary under the Empath Health, Inc., family of companies. Empath has entered into a Memorandum of Understanding with Stratum to merge the two organizations. The merger has not yet been accomplished; the companies are currently in the process of conducting due 2 Empath’s EPIC program provides programs and services to persons impacted by HIV and AIDS throughout the Tampa Bay area. diligence. However, the two companies have already agreed that if the merger is consummated, Mr. Sciullo will serve as the CEO of the merged entity, and will be in charge of both original entities after the merger. According to Mr. Sciullo, the merger will not distract or otherwise serve as an impediment to Suncoast’s plans to implement its new hospice program in Hillsborough. Cornerstone Cornerstone is a 501(c)(3) community-based, not-for-profit entity, founded in 1981 by compassionate nurses in Eustis, Florida, to care for patients during their last days of life. Licensed in 1984, Cornerstone (formerly, Hospice of Lake and Sumter, Inc.) has since grown to serve three hospice service areas (3E, 6B, and 7B) which encompass seven central Florida counties, including Polk County, which is contiguous to Hillsborough. Cornerstone has spent more than 35 years serving tens of thousands of patients and their loved ones in the Central Florida region. As a local, not-for-profit hospice, Cornerstone’s governing body is comprised of leaders from the communities it serves, and its board would be expanded to include new members from Hillsborough. This fosters local accountability to the populations Cornerstone serves. Due to its not-for-profit status, Cornerstone is also legally and ethically bound to benefit its communities, and its earnings are reinvested locally rather than inuring to the benefit of private owners. The Cornerstone Hospice Foundation is an independent, 501(c)(3), nonprofit foundation led by community volunteers. The purpose of the Foundation is to raise money for Cornerstone’s community programs, hospice houses, and for people with no method of paying for hospice. Cornerstone Health Services, LLC, is an affiliated entity which provides non-hospice palliative care services to patients. Cornerstone also includes Care Partners, LLC, which is a consulting and group purchasing organization that provides information and materials to other hospices and group purchasing options. Cornerstone leadership has extensive experience in hospice, including development and expansion of new programs in Florida and elsewhere. Cornerstone has achieved significant growth and expansion within its existing service areas in recent years, led largely by the team that would lead Cornerstone’s expansion into Hillsborough. Cornerstone serves all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, disability, military status, marital status, pregnancy, or other protected status. Hospice and palliative care are the only healthcare services Cornerstone provides. This focus assures that Cornerstone is committed to providing high quality care to meet the needs of hospice patients and their families. VITAS VITAS Healthcare Corporation (“VITAS Healthcare”), the corporate parent of VITAS, is the largest provider of end-of-life care in the nation. VITAS Healthcare was initially founded in 1978 in South Florida. At that time, its leaders helped organize bipartisan legislative efforts to establish the state and federal regulatory mechanisms that guide the provision of hospice services today. Upon its inception, VITAS programs in Dade and Broward Counties participated in a federal demonstration project that resulted in the development of model clinical protocols and procedures used by hospice programs across the country. In 2018, VITAS Healthcare served 85,095 patients and maintained an average daily census of 17,743 patients among its 47 hospice programs in 14 states and the District of Columbia. As of 2018, VITAS Healthcare employed 12,176 staff members, including over 4,700 nurses nationwide. VITAS currently serves 46 of Florida’s 67 counties, which covers about 72% of Florida’s population. VITAS serves 16 of AHCA’s 27 hospice service areas under three separate licenses. VITAS successfully operates 34 satellite offices in Florida and provides facility-based care through freestanding inpatient units as well as its contracts with hospitals and nursing homes. In Florida in 2018, VITAS served over 36,000 patients, providing 3.3 million days of care with an average daily census of 9,028 patients. This was no aberration—at the time of the filing of its 6A CON application, VITAS had admitted over 35,000 patients in Florida during 2019. In addition to providing the four required levels of hospice care (see ¶ 35), VITAS also provides a full continuum of palliative and supportive care, and additional unreimbursed services that are beneficial to the hospice population it serves. VITAS has over 40 years of experience as a hospice provider, and has developed comprehensive outreach, education, and staff training programs and resources designed specifically to address the unique needs of a wide range of patient types, communities, and clinical settings. Similarly, VITAS recognizes that the needs of Florida patients vary between service areas, and it has endeavored to provide programs and services tailored to meet the needs of each community. In its Florida programs, VITAS provides complete hospice care, including medications, equipment and supplies, expert nursing care, personal care, housekeeping assistance, emotional counseling, spiritual support, caregiver education and support, grief counseling, dietary, physical, occupational and speech therapy, and volunteer support. VITAS has a long history of providing significant levels of care to all patients without regard to the ability to pay, as well as a demonstrated commitment to underserved populations such as the homeless, veterans, AIDS population, and minorities. VITAS provided almost $7 million in charity care in Florida in 2018, and $7.25 million in 2019 at the time it submitted its CON application. VITAS ensures that anyone who is appropriate for hospice services has the right to access them. VITAS is committed to giving back to the communities it serves through meaningful donations. It accomplishes this goal through VITAS Community Connections, a nonprofit organization, which makes donations and grants to local organizations and families. In 2018, VITAS made over $161,000 in charitable contributions to organizations in Florida. In that same year, VITAS contributed over $700,000 to sponsoring Florida community events. At the time of filing its Hillsborough application, VITAS employed nearly 5,500 persons in Florida, 2,235 of which are nurses. VITAS encourages and assists its nurses in obtaining board certification in hospice and palliative care through training, compensation incentives, and support. Due to VITAS Healthcare’s multi-state operations, VITAS can readily recruit staff to Florida from other markets. VITAS also relies on volunteers in a variety of roles to enhance patient care. In 2018, VITAS used 1,165 active volunteers in Florida, who provided over 145,054 volunteer hours. VITAS is led by an extremely experienced and highly qualified leadership team, many of which have long and successful tenures with the company. Hospice Care Generally Hospice refers both to care provided to terminally ill patients and the entities that provide the care. Hospice care is palliative care. Palliative care relieves or eliminates a patient's pain and suffering and helps patients remain at home. It differs from curative care, which seeks to cure a patient's illness or injury. 42 C.F.R. § 418.24(d); §§ 400.6005 and 400.601(6), Fla. Stat. Hospices provide physical, emotional, psychological, and spiritual comfort and support to patients facing death and to their families. The Medicare and Medicaid programs pay for the vast majority of hospice care. The services those programs require hospices to offer and the services the programs will pay for have become, de facto, the default definition of hospice care, the arbiter of hospice services, and the decider of when a patient is terminally ill. Florida requires a CON to establish a hospice program and regulates hospices through licensure. §§ 400.602 and 408.036(1)(d), Fla. Stat. Florida considers a patient with a life expectancy of one year or less to be terminally ill and eligible for Medicaid payment for hospice care. § 400.601(10), Fla. Stat. To be eligible for Medicare payment for hospice services, a patient must have a life expectancy of six months or less. 42 C.F.R. § 418.20; 42 C.F.R. § 418.22(b)(1). A hospice must provide a continuum of services tailored to the needs and preferences of the patient and the patient’s family delivered by an interdisciplinary team of professionals and volunteers. §§ 400.601(4) and 400.609, Fla. Stat. Hospice programs must provide physical, emotional, psychological, and spiritual support to their patients. A hospice must provide physician care, nursing care, social work services, bereavement counseling, dietary counseling, and spiritual counseling. 42 C.F.R. § 418.64; § 400.609(1)(a), Fla. Stat. In Florida, hospices must also provide, or arrange for, additional services including, but not limited to, “physical therapy, occupational therapy, speech therapy, massage therapy, home health aide services, infusion therapy, provision of medical supplies and durable medical equipment [DME], day care, homemaker and chore services, and funeral services.” § 400.609(1)(b), Fla. Stat. Federal requirements are similar. 42 C.F.R. § 418.70. Hospices are required to provide four levels of care. The levels are routine home care, general inpatient care, crisis care (also called continuous care), and respite care. Since hospice’s goal is to support a patient remaining at home, hospices provide the majority of their services in a patient’s home. Routine home care is the predominant form of hospice care. Routine care is for patients who do not need constant bedside support. A hospice may provide routine care wherever the patient lives. The location could be a residence, a skilled nursing facility (SNF), an assisted living facility (ALF), some other residential facility, or a homeless camp. Continuous care, sometimes called crisis care, may also be provided wherever the patient resides. It is more intense services for a short period of time. Continuous care supports a patient whose pain and symptoms are peaking and need quick management. With continuous care, unlike routine care, a nurse may be at a patient’s bedside 24 hours a day, seven days a week. Continuous care is an option allowing a patient to avoid admission to an inpatient facility. Hospices provide general inpatient care in a hospital, a dedicated nursing unit, or a freestanding hospice inpatient facility. To qualify for inpatient care, a patient must be acutely ill and need immediate assistance and daily monitoring to the extent that they cannot be cared for at home. Hospices must offer around-the-clock skilled nursing coverage for patients receiving general inpatient care. Respite care is caregiver relief. It allows patients to stay in an inpatient setting for up to five days in order to provide caregivers respite. Florida law requires hospices to accept all medically eligible patients. Each hospice must make its services available to all terminally ill persons and their families without regard to age, gender, national origin, sexual orientation, disability, diagnosis, cost of therapy, ability to pay, or life circumstances. A hospice may not impose any value or belief system on its patients or their families, and must respect the values and belief systems of its patients and their families. § 400.6095(1), Fla. Stat. Hospices frequently offer additional, uncompensated services that are not required by Florida licensure laws or federal Medicare requirements. Pre- hospice care and community counseling are two examples. Hospices often establish programs to meet the needs of particular populations, such as the Hispanic, African American, Jewish, veteran, and HIV/AIDS communities. Cornerstone, Suncoast Pinellas, and VITAS provide the hospice services required by state laws and funded by the Medicare benefit. All three providers also offer services beyond those required by, or paid for by, government programs. The Fixed Need Pool and Preliminary Agency Decision Pursuant to its rule-based numeric need methodology, AHCA determined and published a fixed need for one new hospice program in SA 6A, Hillsborough, in the second batching cycle of 2019. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. In this instance, the difference between projected hospice admissions and current admissions in SA 6A was 863, and therefore a numeric need for an additional hospice program exists in Hillsborough.3 In addition to the three litigant applicants, three other entities filed applications seeking approval for the new program. Those three applications have been deemed abandoned and are not at issue herein. On February 21, 2020, the Agency published its preliminary decision to award the hospice CON to Suncoast, and to deny the remaining applications. Thereafter, Cornerstone and VITAS both filed timely petitions for formal administrative hearing contesting the Agency’s preliminary decision. On April 1, 2020, Suncoast filed a “Cross Petition, Notice of Related Cases and Notice of Appearance” in support of the Agency decision on the competitively reviewed applications. None of the applicants petitioning for 3 According to AHCA’s need methodology, absent a showing of “not normal” circumstances, only one new hospice program may be approved for a SA at a time, regardless of the multiples of 350 “need” that may be shown. Fla. Admin. Code R. 59C-1.0355(4)(c). hearing alleged “special circumstances” or “not normal” circumstances in their application. Service Area 6A: Hillsborough County As can be seen by the map below, Hillsborough is located on the west coast of Florida along Tampa Bay. It includes 1,048 square miles of land area and 24 square miles of inland water area. Hillsborough is home to three incorporated cities: Tampa, Temple Terrace, and Plant City, with Tampa being the largest and serving as the county seat. The county is bordered by Pasco County to the north, Polk County to the east, Manatee County to the south, and Pinellas County to the west. (Source: Google Maps) According to AHCA’s Florida Population Estimates 2010-2030, published February 2015, Hillsborough’s total population as of January 2020 was estimated to be 1,439,041. Hillsborough’s total population is expected to grow to 1,557,830 by January 2025, or 8.25% over that five-year period. In 2020, 14% of Hillsborough’s population was aged 65 and older. According to the 2010 U.S. Census, 35.4% of the county population age 65 and older has a disability, and 17.2% of the county population is below the poverty level, compared to 12.2% statewide. The Hillsborough County Department of Health (“HCDOH”) reports that the county has a diverse mix of residents, with 52% White, 16% African American, 26% Hispanic, and 5% other races. Of the Hillsborough households living below the poverty level, 23.73% are Hispanic/Latino and 31.07% are African American. Nearly 10% of Hillsborough residents report not speaking English “very well.” The most recent U.S. Census indicates that the median income for households in Hillsborough is $54,742, considerably below the national average, with 17.2% reported below poverty level. A larger percentage of the county’s residents (3.3%) received cash assistance than did the state’s residents (2.2%), and a larger percentage (15.7%) received food stamp benefits than is the case for the state overall (14.3%), as reported by HCDOH. Hillsborough is currently served by two hospice providers: Lifepath Hospice (“Lifepath”); and Seasons Hospice and Palliative Care of Tampa, LLC (“Seasons”), a for-profit company. Following approval after an administrative hearing, Seasons was newly licensed to begin operations in Hillsborough in December 2016. Florida’s hospice CON rule prevents need for a new program from being shown for a period of two years following the addition of a new program to a service area. The purpose of the two-year forbearance is to allow new programs to gain a foothold in the market, and to potentially avoid a repeated need determination in future batching cycles. Hospice admissions at Lifepath for the period of July 1, 2018, through June 30, 2019, were 6,195, and for Seasons were 601. The addition of Seasons to the service area was not successful in deterring the need for yet another new program in Hillsborough. The Application Proposals and CON Conditions Suncoast Suncoast recently applied for approval for a hospice program in neighboring Pasco County, but, after a DOAH hearing, that application was denied in favor of another applicant. From that experience, Suncoast determined to better identify local needs before applying for approval in Hillsborough. Upon learning that a fixed need pool would be announced for Hillsborough, Mr. Sciullo directed his team of executives and staff over a series of strategy meetings to conduct an independent community needs assessment of Hillsborough. Mr. Sciullo tasked Kathy Rabon to oversee the development of a community needs assessment of Hillsborough to identify potential needs of Hillsborough residents, based on key informant surveys and other assessment tools. Ms. Rabon has significant experience in conducting feasibility studies for capital projects funded by the Suncoast Hospice Foundation, which she leads. Ms. Rabon began by reviewing existing community needs assessments of the county. Those assessments identified the health needs of Hillsborough’s underserved patients, and identified community leaders that informed the assessments. Ms. Rabon then contacted many of those key informants. At hearing, Ms. Rabon described the process she used to develop a community needs assessment for Hillsborough as follows: Q. When tasked with doing an assessment for Hillsborough's hospice, where did you start? What documents did you first review? A. A community needs assessment can take quite a while when you engage focus groups and need to meet with stakeholders. We didn't have the luxury of a lot of time. We also had the luxury of knowledge that other hospitals in Hillsborough County that are not-for-profit have to periodically do a community needs assessment. So rather than start from a blank piece of paper, I turned to those community needs assessments and I began compiling and gathering as many as I could that I felt were relevant to, A, the geographic boundaries of the entire county, which some did not, but B, also were timely. And I found that the Department of Health had done a very comprehensive community needs assessment in 2015-16 that had been updated in March of 2019 that I felt would provide a lot of good information. * * * I was responsible for identifying need and, if possible, identifying perhaps solutions that could be developed as a result of a partnership or a relationship or an engagement or a future plan that we could put together that would help solve a need in Hillsborough County relative to chronic and advanced illness. In addition to the HCDOH needs assessment and update, Ms. Rabon also obtained quantitative information for her assessment from the following sources: Community Health Improvement Plan 2016- 2020, Florida Department of Health in Hillsborough County, Revised January, 2018; Moffitt Cancer Center Community Health Needs Assessment Report 2016; Florida Hospital Tampa Community Needs Assessment Report 2016; Florida Hospital Carrollwood Community Needs Assessment Report 2016; South Florida Baptist Hospital 2016 Community Needs Assessment Report; Tampa General Hospital; Community Health Needs Assessment 2016; and Community Needs Assessment St. Joseph’s Hospitals Service Area 2016. Ms. Rabon also developed a key informant survey tool to elicit qualitative information regarding the healthcare needs of Hillsborough residents. The survey specifically asked about the strengths and weaknesses of the community for treatment of persons with chronic or advanced illness, and other pressing issues relating to end of life care. Those survey questions included, among others: What is your role, and responsibilities within your organization? What do you consider to be the strengths and assets of the Hillsborough community that can help improve chronic and advanced illness? What do you believe are the three most pressing issues facing those with chronic or advanced illness in Hillsborough County? From your experience, what are the greatest barriers to care for those with chronic or advanced illness? What are the strategies that could be implemented to address these barriers? Once meetings with key informants were complete, and 25 key informant surveys were returned, Ms. Rabon summarized her findings in a final Community Needs Assessment Summary. Ms. Rabon’s findings were consistent with assessments conducted by other organizations, including HCDOH, and local hospitals. The results of the Community Health Needs Assessments, Suncoast Key Informant Surveys, and detailed letters of support, identified the following gaps in end-of-life care for residents of Hillsborough: Need for Disease-Specific Programming: High cardiovascular disease mortality rates (higher than the state average and the highest of the six most populous counties in Florida) and low percentage of patients served by existing hospice providers. Other areas where there appears to be a gap in specific end-of-life programming and a large need in terms of Hillsborough resident deaths include: Alzheimer's Disease and Chronic Lower Respiratory Disease, both of which are in the top 5 leading causes of death in the county. Need for Ethnic Community-Specific Programming Nearly 30 percent of the Hillsborough population is Hispanic, with 19 percent of the county's 65+ population falling into the Hispanic ethnic category. The concentration of 65+ Hispanic residents in Hillsborough is higher than the state average. Surveys and assessments indicate a lack of knowledge in the Hispanic/Latinx[4] community in Hillsborough regarding end-of-life care. Many of these residents speak Spanish at home and/or have limited English proficiency. Hillsborough Hispanic population has low utilization of hospice due to factors including lack of regular physician and medical care, lack of information and cultural barriers. Lack of Available Resources for Homeless and Low-lncome Populations With the 5th largest homeless population in the state, Hillsborough has 1,650 homeless residents as of a Point in Time Count conducted in February 2019. Nearly 60 percent of the area’s homeless population is considered ‘sheltered’, yet there are no resources for end-of-life care for these patients where they live, whether it be an emergency shelter, safe haven or transitional housing. Additionally, 17.2 percent of the Hillsborough population lives below the poverty level and has limited access to coordinated care, including end-of- life services. Largest Veteran Population in Florida Requires Special Programming and Large Number of Resources More than 93,000 veterans currently reside in Hillsborough, with more than one-third over the age of 65. 4 Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States. The ?-x? suffix replaces the ?-o/-a? ending of Latino and Latina that are typical of grammatical gender in Spanish. See “Latinx,” Wikipedia (last visited March 19, 2021). While most hospice programs provide special services for veterans, Suncoast Pinellas has obtained Partner Level 4 certification by We Honor Veterans, a program of the National Hospice and Palliative Care Organization (“NHPCO”) in collaboration with the Department of Veterans Affairs (“VA”). Lack of Specialized Pediatric Hospice Program in the Area Pediatric hospice programming in Hillsborough is limited, as there are no specialized pediatric hospice providers in the county. Hillsborough is home to approximately 338,000 residents ages 0-17 in 2020, and is projected to increase to more than 368,000 by 2025. The pediatric utilization rate of hospice services in Hillsborough is low compared to the general population. For the year ended March 31, 2019, there were only five pediatric patients discharged from the hospital setting to home hospice or an inpatient hospice facility, while 106 pediatric patients died in the hospital. Absence of Continuum of Care Navigation Navigation of the healthcare system was highlighted as a key driver that will bring positive improvements to overall continuum of care in Hillsborough. Hillsborough residents are not accessing hospice services at a rate consistent with the rest of the state, and either access hospice programs very late in the disease process, or not at all. Transportation Challenges for Rural Areas of the County Transportation challenges as a deterrent to seeking medical care, particularly in rural areas of Hillsborough. Approximately one-third of the Hillsborough population is considered “transportation disadvantaged” meaning they are unable to transport themselves due to disability, older age, low income or being a high-risk minor/child. Suncoast retained David Levitt and his firm as its healthcare consultant and primary drafter of its CON application. To develop Suncoast’s application, Mr. Levitt utilized numerous reliable data sources and worked with Suncoast Pinellas’s staff. Mr. Levitt credibly confirmed the need for an additional hospice program in Hillsborough based on reliable healthcare planning data. AHCA’s CON application form, adopted by rule, requires applicants to submit letters of support with their CON applications. Suncoast complied with this requirement and included numerous letters of support from the Hillsborough community. One of the key informants identified by Ms. Rabon was Dr. Douglas Holt of the HCDOH. Dr. Holt agreed to meet with Mr. Sciullo and ultimately agreed to provide a letter of support, which was included with the Suncoast application. Mr. Sciullo also personally met with Dr. Larry Fineman, the regional medical director of HCA West Florida, who provided a letter of support. HCA West Florida hospitals are key referral sources of Suncoast Pinellas’s current hospice admissions. In addition to HCA West Florida, Suncoast Pinellas has an existing relationship with other Hillsborough hospitals: St. Joseph’s, Moffitt Cancer Center and Tampa General Hospital. Suncoast received letters of support from St. Joseph’s and Tampa General. The Agency’s witness, James McLemore, testified that letters from such referral sources were highly persuasive to the Agency, as they indicate the likelihood of successful operations. Suncoast’s witness, Dr. Larry Kay, credibly testified that he obtained letters of support from Dr. Howard Tuch, Director of Palliative Medicine at Tampa General Hospital; Dr. Larry Feinman, Chief Medical Officer at HCA West Florida; and Dr. Harmatz, the Chief Medical Officer at Brandon Regional Hospital, an HCA hospital within HCA West Florida. Those letters were included with the Suncoast application. Suncoast Pinellas currently has working relationships with BayCare, HCA, AdventHealth West Florida, Tampa General, and Moffitt hospital systems. Suncoast submitted letters from BayCare and HCA, which were included with its application. Suncoast received letters specifically related to partnering with Suncoast for inpatient services from St. Joseph’s (BayCare) and Brandon Regional (HCA). Suncoast also received a letter of support related to partnering with Suncoast for inpatient services from the Inn at University Village, a long- term care facility in Hillsborough; and support from a pediatric hospitalist who provides care to terminally ill and medically fragile children at St. Joseph’s Children’s Hospital and Johns Hopkins All Children’s Hospital. Suncoast also received letters of support from numerous community organizations, including Balance Tampa Bay and The AIDS Institute. Also included with the Suncoast application were several letters of support from [Remainder of page intentionally blank] the veterans’ community, including one from the Military Order of the World Wars.5 After considering Ms. Rabon’s Community Needs Assessment, and input from key informants, Suncoast developed programs and plans to meet each of the needs identified above. Suncoast conditioned the approval of its CON on the provision of those services. In all, Suncoast offered 19 conditions in its CON application intended to meet the unique needs of Hillsborough. Condition 1: Development of Disease Specific Programing: Suncoast is committed to providing disease-specific programming in Hillsborough: Empath Cardiac CareConnections, Empath Alzheimer’s CareConnections, and Empath Pulmonary CareConnections. Dr. Larry Kay and Dr. Janet Roman credibly testified that Suncoast will fulfill Condition 1 for disease specific programming. To fulfill Condition 1, Suncoast will provide Empath Cardiac CareConnections in Hillsborough. Dr. Roman designed and currently runs the CardiacCare Connections program in Pinellas County. Dr. Roman is a national expert in developing programs across the continuum of care to assist heart failure patients. Although Suncoast Pinellas has always treated patients with heart failure, since Dr. Roman’s arrival, cardiologists have been referring patients to Suncoast Pinellas earlier than before. Dr. Roman has trained Suncoast Pinellas’s nurses in all advanced heart failure therapies, including IV inotropes, and mechanical circulatory 5 As correctly noted by Cornerstone in its Proposed Recommended Order, letters of support included in the three applications, unless adopted by the sponsoring author at hearing or in sworn deposition received in evidence, are uncorroborated hearsay, and the contents therein may not form the basis of a finding of fact. However, the letters are not being received for the truth of the matters set forth therein, but rather the number and types of support letters included in the applications are relevant generally as a gauge of the level of community support for the proposals. The Hospice of the Fla. Suncoast, Inc. v. AHCA and Seasons Hospice and Palliative Care of Pasco Cty., DOAH Case No. 18-4986 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 15, 2019) (“In a broad sense, comparison of each applicant's letters of support illuminates the differences between each applicant's engagement with the community.” FOF No. 127.). supports such as left ventricular assist devices (“LVAD”) and artificial hearts. Dr. Roman’s program has been successful at reducing hospital readmissions. Suncoast’s application provided significantly more detail about the operations of its heart program than either Cornerstone or VITAS. Cornerstone and VITAS’s descriptions of their heart programs do not reach the level of specificity of operation as Suncoast’s and are not backed up with a measure of success such as a reduction in readmissions. In furtherance of Condition 1, Suncoast will also offer Empath Alzheimer’s CareConnections. Suncoast Pinellas has already created the foundation for Empath Alzheimer’s CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. As part of Empath Alzheimer’s CareConnections, Suncoast will deploy a Music in Caregiving program for Hillsborough hospice patients, including those suffering from Alzheimer’s Disease. Suncoast will also offer Empath Pulmonary CareConnections in Hillsborough. Suncoast Pinellas has already created the foundation for Empath Pulmonary CareConnections in Pinellas County, but has not yet been marketing the program under the brand of CareConnections. Suncoast Pinellas already has several respiratory therapists full time caring for COPD and asthma patients. In Hillsborough, Suncoast plans to engage a pulmonologist as a consultant and to hire dedicated respiratory therapists as volume increases in Hillsborough. Condition 2: Development of Ethnic Community-Specific Programming Suncoast conditioned its CON application on the purchase of a mobile van staffed by a full-time bilingual LPN and a full-time bilingual social worker to discuss advanced care planning and education, and increase access to care to diverse populations. The van will operate eight hours a day, five days a week, and drive to areas in Hillsborough that have a need for the services offered by Suncoast and Empath. This outreach is intended to enhance access to care to diverse communities. The van will spend time at the HCDOH and its satellite clinics, and use Metropolitan Ministries as a resource for identifying additional locations that could benefit. The van will also visit key Latinx community locations within Hillsborough and offer Spanish language assistance. The van will be equipped with telehealth technology capabilities to link the LPN and social worker to the care navigation office to further enhance the care navigation function of the mobile van. The purpose of the mobile outreach van is to build relationships with, and trust in, the community, enhance visibility, and bring care navigation to areas of Hillsborough that may not typically access it. Suncoast Pinellas’s EPIC program has significant experience operating a mobile outreach unit. EPIC currently operates a mobile outreach and testing unit that provides HIV testing and sexually transmitted infection testing in the community. Condition 3: Development of Resources for Homeless and Low-Income Populations Suncoast conditioned its application on the development of resources for homeless and low-income populations. Under this condition, Suncoast will provide up to $25,000 annually for five years to Metropolitan Ministries. Metropolitan Ministries is a leading community-based organization in Hillsborough that serves homeless and low-income individuals. Christine Long, Chief Programs Officer for Metropolitan Ministries, provided a letter of support which was included in Suncoast’s CON application. Condition 4: Development of Specialized Veterans Program Suncoast conditioned its CON application on the development of a specialized veterans program, which includes a dedicated Veterans Professional Relations Liaison to collaborate with the local VA hospital, outpatient clinics, and veterans organizations. Suncoast Pinellas provides a wide range of specialized care for veterans, through its Empath Honors program, including Honor Flight and pinning ceremonies. Additionally, Suncoast Pinellas holds a Level 4 Certification from We Honor Veterans, a national program through the National Hospice and Palliative Care Organization (“NHPCO”) whose mission is to honor military veterans in hospice care. The NHPCO recently added a new Level 5 Partnership, for which Suncoast Pinellas has already applied for its Pinellas hospice program. Suncoast will also pursue a Level 5 Certification in Hillsborough, if awarded the CON. Condition 5: Development of Specialized Pediatric Hospice Program in Hillsborough County Suncoast will also develop a specialized pediatric hospice program in Hillsborough. Dr. Stacy Orloff started the Children’s Hospice Program at Suncoast Pinellas in 1990 and has been with Suncoast Pinellas for 30 years. Dr. Orloff helped draft the first waiver that the State of Florida submitted to CMS for approval to operate a PIC/TFK program. Once the PIC/TFK waiver was approved, Ms. Orloff led Florida’s PIC/TFK steering committee for 12 years. PIC/TFK is a Medicaid waiver program that provides palliative care services for children with a risk of a death event by age 21, and also provides counseling support for family members who lived at the child’s home, such as parents, siblings, and grandparents. A PIC/TFK provider must be a licensed hospice provider in the service area. Suncoast Pinellas has operated a PIC/TFK program in Pinellas since 2004, utilizing a pediatric interdisciplinary team to provide its PIC/TFK services. Suncoast Pinellas’s PIC/TFK program averages a census of approximately 40 children. Combining the PIC/TFK patients with pediatric patients, Suncoast Pinellas’s census averages approximately 50 children. Suncoast Pinellas has already received acknowledgment from Children’s Medical Services to permit it to operate a PIC/TFK program in Hillsborough if awarded the hospice CON. Initially, pediatric patients will be serviced by the Suncoast Pinellas pediatric staff. Suncoast Pinellas currently has sufficient staff availability to service Hillsborough at the commencement of the program. Suncoast anticipates that by the second year, the Hillsborough pediatric program will have a sufficient census to have a staff that serves only Hillsborough. VITAS’s regional Medical Director, Dr. Leyva, acknowledged that a pediatric patient will receive better care from a care team with pediatric expertise than with an adults-only team. Of the three applicants, Suncoast has demonstrated the most experience providing care to pediatric patients.6 In addition, Suncoast Pinellas has longstanding relationships with the local children’s hospitals, St. Joseph’s Children’s Hospital, and Johns Hopkins All Children’s Hospital. Concurrent care is a benefit created as part of the Affordable Care Act that allows children admitted to hospice care to continue to receive their curative care. Although all applicants have proposed providing concurrent care, only Suncoast has proposed a PIC/TFK program. Suncoast is the only applicant currently operating a perinatal loss program and miscarriage at home program. Dr. Orloff credibly confirmed that Suncoast will implement the perinatal loss program if approved in Hillsborough. Condition 6: Development of Continuum of Care Navigation Program Suncoast’s Community Needs Assessment identified that Hillsborough lacks effective access to the full continuum of healthcare services. Suncoast 6 AHCA’s witness, James McLemore, credibly testified that this is an area where Suncoast enjoys an advantage over the other applicants because “Suncoast went with an entire pediatric program.” Pinellas operates an entire care navigation department that can address any inquiry or referral regarding hospice and Empath’s other services, in order to direct that patient to the right care at the right time. All services offered by Empath, including hospice, palliative care, home health, EPIC, and PACE are available to individuals who call the Care Navigation Center. Care Navigation staff can also assist existing patients with questions involving, for example, DME. Suncoast Pinellas’s care navigation center is available 24 hours a day, 7 days a week, 365 days a year. If its application is approved, Suncoast will also offer its Care Navigation Department in Hillsborough. Condition 7: Development of a Program to Address Transportation Challenges for Rural Areas Suncoast has conditioned its application on developing a program to address transportation challenges for rural areas in Hillsborough. As part of this condition, Suncoast will provide up to $25,000 annually in bus vouchers for the first five years to current hospice patients and their families, as well as non-hospice patients. Critics of Suncoast’s plans to offer bus vouchers claimed that Hillsborough’s bus system does not reach all areas within the county. However, Suncoast has also conditioned its application on the provision of funds that may be used to purchase transportation, including ridesharing providers such as Uber. Condition 8: Interdisciplinary Palliative Care Consult Partnerships Suncoast will implement interdisciplinary palliative care partnerships with hospitals, ALFs, and nursing homes located in Hillsborough. Suncoast has already identified potential partnerships, including with Dr. Harmatz at Brandon Regional Medical Center, to launch the program. Condition 9: Dedicated Quality-of-Life Funds for Patients and Families Suncoast is committed to providing quality of life funds as described in Condition 9 in Suncoast’s CON application. Suncoast Pinellas has extensive experience with providing each interdisciplinary team with $1,200 of quality of life funds to be used to facilitate a safe environment for its patients, such as paying rent, getting rid of bedbugs, paying utilities such as electricity for air conditioning, and to power specialized medical equipment. On occasion these funds are also used to provide meaningful patient experiences, similar to the Make-a-Wish programs. Conditions 10 – 13: Development of Advisory Committees and Councils Suncoast has committed to establishing care councils and advisory committees to learn firsthand the needs and concerns of the community. A care council is made up of members from a particular community who provide input regarding the needs of the community. Suncoast Pinellas offers similar councils and committees in Pinellas County. These groups are critical to the success of Suncoast Pinellas’s mission. Condition 14: Development of Open Access Model of Care Suncoast has committed to implementing an open access model of care in Hillsborough. This condition recognizes that while some patients may be receiving complex medical treatments that may lead some to question whether the patient is terminal, those treatments are actually required for palliation and the patient’s comfort. Under this condition, Suncoast promises to admit these patients and provide coverage for their treatments. Condition 15: SAGECare Platinum Level Certification Joy Winheim testified at the final hearing regarding the HIV positive community and the LGBTQ community. Over her many years working with the HIV/AIDS community, Ms. Winheim has built lasting relationships with community partners in the Tampa Bay area, including HCDOH and the Pinellas County Health Department. Empath’s EPIC program has a permanent staff member housed within the HCDOH, and the HCDOH has physicians housed in EPIC’s Tampa office to provide medical care to EPIC’s clients. Ms. Winheim has built lasting relationships with community partners in the Tampa Bay LGBTQ community, including Metropolitan Community Church, an LGBTQ friendly church; the Tampa Bay Gay and Lesbian Chamber of Commerce; and Balance Tampa Bay. SAGE is a national organization dedicated to improving the rights of LGBTQ seniors by providing education and training to businesses and non- profits. The platinum level of SAGECare certification is the highest level and indicates that 80% of an organization’s employees and 100% of its leadership have been trained by SAGE. Leadership training is in the form of a four-hour in-person training. Employee training is in the form of a one-hour training conducted either in person or web-based. All of Empath’s entities are SAGECare certified at the platinum level. Although the platinum level certification requires only 80% of its employees to receive training, Empath Health required that 100% of its employees attend the training. SAGECare certification makes a difference to members of the LGBTQ community choosing a healthcare provider. Suncoast is committed to fulfilling this condition. Condition 16: Jewish Hospice Certification Suncoast Pinellas has a specialized Jewish Hospice Program and holds a Jewish Hospice Certification from the National Institute of Jewish Hospices. Suncoast has conditioned its CON application on achieving this same certification in Hillsborough by the end of year one. Condition 17: Joint Commission Accreditation The Joint Commission on Accreditation of Healthcare Organizations (“Joint Commission”) accreditation is the “gold standard” for hospitals, nursing homes, hospices, and other healthcare providers. Suncoast is currently accredited by the Joint Commission, and if approved, is committed to achieving Joint Commission accreditation for its Hillsborough program. Condition 18: Provision of Value-Added Services Beyond Medicare Hospice Benefit Suncoast has committed to provide its integrative medicine program in Hillsborough. Suncoast Pinellas’s existing integrative medicine program is staffed by an APRN who is also certified in acupuncture. Suncoast Pinellas’s integrative medicine program is a holistic approach for helping patients manage their symptoms with such therapies as acupuncture, Reiki,7 and aromatherapy. Suncoast Pinellas recently established a Wound, Ostomy, and Continence Nurse Program in Pinellas County to provide expertise in end-of- life wounds and incontinence issues in long-term care settings, particularly smaller ALFs that may not have the necessary staffing. Suncoast will also offer this program in Hillsborough. [Remainder of page intentionally blank] 7 Reiki (??, /'re?ki/) is a Japanese form of alternative medicine called energy healing. Reiki practitioners use a technique called palm healing or hands-on healing through which a “universal energy” is said to be transferred through the palms of the practitioner to the patient in order to encourage emotional or physical healing. Condition 19 – Limited Fundraising in Hillsborough County Suncoast has committed to limiting fundraising activities in Hillsborough. Ms. Rabon credibly testified that Suncoast can, and will, fulfill this condition.8 Suncoast’s PACE Program In addition to its conditions, Suncoast’s proposal also includes several other non-hospice services that will be made available in Hillsborough. For example, Suncoast Pinellas operates a PACE program. The PACE program provides everything from medical care to transportation for medical needs and adult daycare services, as well as respite services for caregivers. The overall goal of the PACE program is to reduce unnecessary hospital visits and nursing home placement and keep elderly participants at home. Suncoast Pinellas’s PACE program currently operates at capacity, with 325 participants enrolled. Over the last four years, Suncoast Pinellas PACE has referred 175 people to Suncoast Pinellas. And although there are approximately 14,000 eligible PACE participants in Hillsborough, there is not a PACE provider in the county. In recognition of this unmet need, Suncoast Pinellas is currently in the process of expanding PACE services to residents of Hillsborough. Suncoast’s PACE program distinguishes Suncoast from Cornerstone and VITAS, neither of which currently operates a PACE program in any of their service areas. Suncoast’s Volunteer Program Under the Medicare Conditions of Participation, hospice programs must use volunteers “in an amount that, at a minimum, equals 5 percent of 8 Both Suncoast and Vitas condition their applications on eschewing fundraising activities in SA 6A, apparently in an effort to minimize adverse impact on the two existing providers in the service area. However, neither Lifepath nor Seasons participated as a party to this litigation, or presented evidence at hearing as to revenues received through their fundraising activities. Thus, it is impossible to determine whether the conditions proposed by Suncoast and VITAS would have a material impact on either of the existing providers. the total patient care hours of all paid hospice employees and contract staff.” 42 C.F.R. § 418.78(e). Suncoast Pinellas regularly exceeds that 5% requirement and, in fact, reached 12% in the last fiscal year. Suncoast Pinellas currently has over 1,000 volunteers who support the hospice program by assisting with palliative arts, including Reiki and aromatherapy, Lifetime Legacies, pediatric patients, and transportation. Suncoast Pinellas’s volunteers also assist with Suncoast’s Pet Peace of Mind Program, for which Suncoast Pinellas won the inaugural award for program of the year in 2019. Suncoast is the only applicant that operates a teen volunteer program. Suncoast Pinellas’s teen volunteer program was established in 1994 and was the first of its kind in the entire country. In 1998, it was awarded the Presidential Point of Light award. Suncoast Pinellas’s Volunteer Services Director, Melissa More, regularly consults with hospices across the country on the development of teen volunteer programs. Ninety of Suncoast Pinellas’s 1,000 volunteers currently live in Hillsborough, but travel to Pinellas to volunteer at Suncoast Pinellas. Nine of those volunteers submitted letters of support for Suncoast’s CON application to serve Hillsborough. Doctor Direct Program Suncoast Pinellas’s existing Doctor Direct Program enables physicians in the community and their ancillary referral partners to contact a Suncoast Pinellas physician 24/7, who can answer any questions about a patient they think might be eligible for hospice, and questions related to other Suncoast Pinellas programs. Suncoast will provide its Doctor Direct Program in Hillsborough. Plan for Inpatient Services Suncoast received letters of support from hospitals and a nursing home indicating a willingness to enter into a contract for inpatient services with Suncoast. Suncoast intends to offer both inpatient units and “scatter- bed” arrangements with these providers. Suncoast received letters specifically related to potential partnerships with St. Joseph’s (BayCare) and Brandon Regional (HCA) for the provision of inpatient hospice services. Suncoast also received a letter related to a potential partnership with the Inn at University Village, a long-term care facility in Hillsborough, for the provision of inpatient services. Telehealth Suncoast Pinellas offers telehealth services using CMS and HIPAA- approved software so that patients can keep meaningful connections with their family and friends, regardless of ability to travel. In Hillsborough, Suncoast will provide nurses, social workers, and chaplains with traveling technology for use in the patient’s home to connect with family and friends. Utilizing telehealth in this way will help to minimize emergency room visits and hospitalizations. Suncoast will be prepared to implement its telehealth program in Hillsborough on day one of operation if awarded the CON. Outreach Efforts to Diverse Communities Suncoast is committed to, and has a proven track record of, community outreach efforts to diverse communities. As part of its outreach efforts in Hillsborough, Empath’s Vice President of Access and Inclusion, Karen Davis-Pritchett, met with the Executive Director of the Hispanic Service Council, Maria Pinzon, to discuss the organization’s outreach efforts and gain insight into the Hispanic community in Hillsborough. Ms. Davis- Pritchett learned that the Hispanic community in Hillsborough differs from the Hispanic community in Pinellas, in that Hillsborough has a large and spread out migrant population. Ms. Davis-Pritchett and Ms. Pinzon also discussed the transportation issues facing residents of Hillsborough. To address these transportation issues, Suncoast conditioned its CON application on the purchase and use of a mobile outreach van with bilingual staff to conduct outreach to the Hispanic and other diverse communities. Suncoast also conditioned its application on the provision of vouchers that may be used for buses or ride-sharing services. Ultimately, Suncoast obtained a letter of support from Ms. Pinzon, which was submitted with its CON application. Additionally, Suncoast conditioned its application on recruiting four community partnership specialists, who will conduct outreach to the African American community, the Hispanic community, the Veterans community, and the Jewish community, and six professional liaisons who will conduct outreach to clinical partners in Hillsborough. All of these positions will be dedicated to Hillsborough and be filled by individuals who are connected to these communities, and understand the importance of access to hospice care. Suncoast’s proposal includes a bilingual medical director, Dr. Jerez- Marte, for its Hillsborough program. Dr. Jerez-Marte regularly speaks Spanish with patients and staff, which would be a benefit to Hispanic patients in Hillsborough. Mr. Sciullo credibly testified that Suncoast will offer high quality hospice services in SA 6A, and will fulfill the 19 conditions proposed in its application. Cornerstone Based on its review of data and analytics that Cornerstone relies upon and conducts as part of its ongoing operations in Florida, Cornerstone recognized in the second quarter of 2019, long before AHCA published its need projections, that there was need for an additional hospice program to enhance access to hospice services in Hillsborough. Regardless of the service area, Cornerstone offers quality hospice care through consistent policies, protocols, and programs to ensure that patients are getting the highest quality care possible. Cornerstone will bring all aspects of its existing hospice programs and services to Hillsborough, including all of the programs and services described throughout its application. However, Cornerstone recognizes each service area is different in terms of the needs and access issues patients face, whether based on demographics, geography, infrastructure, a lack of information about hospice, or other factors. When looking to enter a market, Cornerstone conducts a detailed community-oriented needs assessment to determine the specific needs of the community with regard to hospice to best understand how to enhance access to quality hospice services. Cornerstone explores each potential new area to identify the cultural, ethnic, and religious makeup of the community, the current providers of end- of-life care in the community, and the unmet needs and gaps in care, which is critical to understanding where issues may lie. This allows Cornerstone to build and develop an appropriate operational plan to meet the needs identified in a particular market. Cornerstone conducted this type of analysis for its recent successful expansion in Marietta, Georgia, and has had success expanding access to hospice in its existing markets through ongoing similar analyses. Cornerstone conducted an analysis of Hillsborough similar to those it conducts in its existing markets and in expansion efforts outside its existing markets. In its assessment of Hillsborough, Cornerstone relied, in part, on the extensive knowledge of its senior leaders and outreach personnel, many of whom live and previously worked in Hillsborough, with regard to the population characteristics and needs of the Hillsborough area. This experience in the target service area affords Cornerstone’s team a detailed knowledge of the hospice-related needs of the county. Mr. D’Auria, who conducted much of the analytics internally for Cornerstone, also oversaw a team of Cornerstone staff who spent several weeks canvassing Hillsborough at a grassroots level. The Cornerstone team spoke to residents, medical professionals, community leaders, SNFs, ALFs, and hospitals, among others, on the local experience of hospice care, to identify any areas of concern regarding unmet needs or perceived improvements necessary relative to the provision of hospice care by the current providers. Cornerstone’s retained health planning experts, Mr. Roy Brady and Mr. Gene Nelson, further undertook an extensive data-driven analysis of Hillsborough’s health-related needs to explore the access issues and service gaps identified in Cornerstone’s analytics, knowledge of and discussions in the local community, as well as the issues raised in community health needs assessments,9 letters of support, and other resources. Together, the team concluded that quality hospice services are available in Hillsborough County through existing providers LifePath and Seasons Hospice. That care is available to patients of all ages and demographic groups with virtually any end-stage disease process. Yet some patients simply are not accessing hospice services at the expected rate in Hillsborough. For example, Cornerstone’s analyses identified specific unmet community need among particular geographic areas, as well as among persons with a diagnosis other than cancer, particularly those under age 65, persons with end-stage respiratory disease, the Hispanic and African American communities, migrant communities, residents of smaller ALFs, and veterans. Based upon its analysis of the healthcare needs of Hillsborough, Cornerstone included multiple conditions intended to address those needs. In 9 Cornerstone considered the health needs assessments released by Tampa General Hospital and the Moffitt Cancer Center, both published in 2019. Cornerstone also considered the health needs assessment prepared by HCDOH issued on April 1, 2016, as updated, including the March 2019 update. all, Cornerstone proposed 10 conditions in its CON application targeted to meet the hospice needs of Hillsborough: Licensure of the Hospice Program: Cornerstone commits to apply for licensure within 5 days of receipt of the CON to ensure that its service delivery begins as soon as practicable to enhance and expand hospice and community education and bereavement services in SA 6A; Hispanic Outreach: Cornerstone commits to provide two full-time salaried positions for bilingual staff as part of its Community Education Team. These Community Education Team members will be responsible for the development, implementation, coordination and evaluation of programs to increase community knowledge and access to hospice services, particularly designed to reach the Hispanic community in Spanish. Bilingual Volunteers: Cornerstone commits to recruit bilingual volunteers. Patients’ demographic information, including other languages spoken, is already routinely collected so that the most compatible volunteer can be assigned to fill each patient’s visiting request. Offices: Cornerstone commits to establish its first program office in the Brandon area (zip code 33511 or 33584) during the first year of operation. Cornerstone commits to establish a satellite office in the Town & Country area (zip code 33615 or 33634) during the second year of operations. Complimentary Therapies: Cornerstone conditions its application on offering alternative therapies to patients that may include massage therapy, music therapy, play therapy, and holistic (non-drug) pain therapy. These complimentary therapies are not generally considered to be part of the hospice's core services, but are enhancements to the patient’s care which often have a marked impact on the quality of life during their last days. Veterans: Cornerstone commits to providing services tailored to the military veterans in the community. Cornerstone will immediately upon licensure expand its existing We Honor Veterans Level 4 program to serve Hillsborough and will provide the same broad range of programs and services to veterans in Hillsborough as it currently provides in its existing service areas. Bereavement Counseling for Parents: Cornerstone will implement a program in its second year of operation which will provide outreach for bereavement and anticipatory grief counseling for parents of infants who have died. The Tampa area has several hospitals which provide high-level newborn and infant services such as Level III NICU and other programs, consequently there is a higher than average infant mortality rate due to this concentration of high-level services. Cornerstone will work with the local hospitals which provide high-level neonatal intensive care to develop and carry out this program. Cooperation with Local Community Organizations: Cornerstone commits to donate at least $25,000.00 for four years to non-profit community organizations focused upon providing greater healthcare access, disease advocacy groups and professional associations located in SA 6A. These donations will be to assist with their core missions, which foster access to care, and in collaboration with Cornerstone to provide educational content on end-of-life care. Separate Foundation Account: Cornerstone will donate $25,000.00 to a segregated account for SA 6A maintained and controlled by the Cornerstone Hospice Foundation. Additionally, all donations made to Cornerstone or the Foundation from SA 6A, or identified as a gift in honor of a patient served in the 6A program, shall be maintained in this segregated account and only used for the benefit of patients and services in Hillsborough. This account will be used to meet the special needs of patients in Hillsborough which are not covered under the Medicare hospice benefit and cannot be met through insurance, private resources, or community organization services or programs. Continuing Education Programming (CEUs): Cornerstone will commit to extending free CEU in- services to the healthcare community in Hillsborough. Topics will cover a wide range of both required and pertinent subjects and will include information on appropriate conditions and diagnoses for hospice admission, particularly for non-cancer patients. A minimum of 10 in-services will be offered in a variety of healthcare settings during each of the first five years. Additional CEU will be provided on an ongoing basis. In addition to formulating CON conditions, Cornerstone used information gleaned from its community exploration to develop an operational plan detailing the number and type of staff to hire, which programs to offer, and how to tailor its outreach and education to best enhance access to hospice services in Hillsborough to meet the unmet need. Given Cornerstone’s existing outreach to area providers in Hillsborough, such as Moffitt, Tampa General Hospital, and the VA, which already discharge patients to Cornerstone in neighboring service areas, Cornerstone fully expects that it will receive referrals to its hospice from providers throughout Hillsborough upon the initiation of operations in the county. Cornerstone will provide hospice services to those and any other patients throughout Hillsborough from day one. However, when seeking to expand access in new or existing markets, Cornerstone focuses not on taking patients from existing providers but on enhancing access to groups and populations that have been overlooked, or whose needs are not otherwise being met by existing hospices. Cornerstone therefore developed a phased operational plan to focus its outreach and education efforts on areas where there are barriers to access, rather than simply scattering their efforts haphazardly or concentrating on areas that already have a heavy hospice presence. Phase One of Cornerstone’s operational plan will begin immediately upon licensure and continue through the first six months of operation. During this time, Cornerstone will focus outreach and education efforts heavily on the underserved southeast portion of Hillsborough, including Plant City, Valrico, Brandon, Riverview, Mango, and Sun City Center. Phase One includes 68 ALFs, six SNFs, and four hospitals. Almost one-third of the population of Hillsborough resides in this area, and an estimated 28 percent of the residents are Hispanic, and 14 percent are African American. There is also a large, underserved migrant population in this area. Cornerstone conditioned its application on opening an office in Brandon during this initial phase in the first year of operation. Phase Two will expand Cornerstone’s targeted outreach efforts into the southwest quadrant of Hillsborough, including the Apollo Beach, Ruskin, Gibsonton, Progress Village, and Palm River areas. While the population of this phase is smaller than Phase One, the two areas combined make up almost a third of the county’s Hispanic population, and a fourth of the county’s African American population. Phase Three will reach into the broader Tampa area, including towns such as Temple Terrace, Pebble Creek, University, Ybor City, and Carrollwood. This is the largest and most populated of the four phases; however, it is also currently the most hospice-penetrated area of the county as the two existing providers, LifePath and Seasons, each have offices in Phase Three. There is also a hospice house and two hospice inpatient units in the area as well. Because this area already has better hospice visibility and access, and to avoid siphoning patients from existing providers, Cornerstone will focus on this area after Phases One and Two. Cornerstone will ramp up its outreach staffing consistent with the increased area, facilities, and population added during Phase Three. Combined, the first three phases of the operational plan will offer enhanced outreach and education to 90% of the Hillsborough population starting at the beginning of year two operations. Phase Four will encompass the remainder of the county to the west of Tampa in the Town ‘n’ Country area. While this area represents only about 10% of the county’s population, Phase Four has no hospice visibility currently in the form of hospice offices, hospice houses, or hospice inpatient units. Cornerstone has conditioned its application on establishing an office in the Town ‘n’ Country area within project year two to enhance hospice visibility and access in this area of the county. Upon implementation of Phase Four, Cornerstone’s targeted outreach and education will be fully integrated throughout the county. Cornerstone’s application included more than 174 letters of support for its proposal. The letters of support are from a broad range of individuals and facilities located within and outside Hillsborough, including families, SNFs, ALFs, hospitals, vendors, and local charitable organizations, among others. Cornerstone presented testimony from three authors of letters of support, Andrea Kowalski, Eric Luetkemeyer, and Colonel (Ret.) Gary Clark. Ms. Kowalski is an employee benefits coordinator for USI Insurance Representatives in Tampa who works with Cornerstone to build benefits programs for its employees. In addition to authoring her own letter of support, Ms. Kowalski also assisted in gathering approximately 40 additional letters of support for Cornerstone from her colleagues in Hillsborough. Ms. Kowalski strongly supports Cornerstone’s approval and indicated the community would benefit not only from enhanced access to Cornerstone’s excellence and expertise in caring for those with advanced illness, but also from the addition of a highly-regarded employer, which will provide additional options for healthcare workers and financial benefits as Cornerstone reinvests in the community. Mr. Leutkemeyer is the COO for Spectrum Medical Partners (“Spectrum”), the largest privately-held hospitalist group in Florida. Spectrum manages roughly 400 providers across the state, the majority of which (85%) are medical doctors or doctors of osteopathic medicine, either in hospital or post-acute settings, and sees roughly 2,000 patients per day. Spectrum’s footprint includes coverage in Hillsborough for entities such as Simply or Humana with which Spectrum contracts statewide. Spectrum is looking to expand its footprint and services in Hillsborough in the near future. As detailed in his letter, Mr. Luetkemeyer supports Cornerstone’s efforts to establish a hospice program in Hillsborough, indicated a desire to work with Cornerstone in the county if awarded, and believes the community would benefit from the additional resources and quality care that Cornerstone would provide. Colonel Clark, who retired from the United States Air Force in 1993, is co-founder and current Chairman of the Polk County Veterans Council, a volunteer organization of individuals interested in assisting veterans. Colonel Clark is also affiliated with, and participates in, a number of veterans organizations in Hillsborough, including as an adviser to the Mission United Suncoast Chapter in Hillsborough, which primarily assists veterans in transitioning from service to the civilian world. He also serves on the management advisory committee of James A. Haley Veterans’ Hospital in Tampa, which provides a broad spectrum of hospital-based care to area veterans. Colonel Clark has significant experience with Cornerstone through its participation in the Polk County Veterans Council, including on the Council’s committee for the Flight to Honor program, which provides veterans a flight to Washington D.C. to visit war memorials. If a veteran is unable to make the flight, a virtual flight and tour, as well as ceremonies or presentations, are provided by Cornerstone to veterans enrolled in hospice. Cornerstone is heavily involved in the Council’s Flight to Honor program— participating on the committee, recruiting volunteers, working with local schools to gather letters for the veterans on the flights, arranging for orientation prior to the flights, and putting on the virtual flights for those Veterans unable to make the flight due to various disabilities. Colonel Clark is also familiar with Cornerstone’s efforts to support veterans at James A. Haley Veterans’ Hospital in Tampa. Colonel Clark described Cornerstone’s support not only for veterans but for the community overall as “magnificent,” and detailed his support for Cornerstone’s application in a letter of support that is included in Cornerstone’s application. Cornerstone is well-positioned to quickly establish a successful hospice program to enhance access in Hillsborough, and its proposal is a carefully considered, long range plan that would bring its established and proven processes, procedures, and programs to the residents of the county. Cornerstone also posits that its existing presence nearby in Lakeland will enhance its ability to topple barriers to care and serve patients in adjacent SA 6A immediately. For example, Cornerstone has existing relationships with veterans groups that serve both Polk and Hillsborough, and will utilize those relationships to enhance access to the large veteran population in Hillsborough, as highlighted through Cornerstone’s condition to provide services tailored to the veteran community. VITAS VITAS, which operates a hospice program in adjacent SA 6B, proposes to expand into SA 6A under its existing license. This will allow VITAS to begin serving patients quickly without creating an entirely new administrative infrastructure for the opening. Although VITAS provides many of the same core programs in each of its service areas, it also recognizes that each community is different. VITAS performed a qualitative and quantitative assessment that examined the specific needs of Hillsborough regarding hospice care and services. Through its consultants and internal team, VITAS identified several communities, patient types, and clinical settings that are underserved in SA 6A. These include: the African American, Hispanic, and migrant communities, particularly those age 65 and older; impoverished, food insecure and homeless communities; patients with non-cancer diagnoses such as pulmonary disease, cardiac disease, Alzheimer’s Disease, and patients with sepsis; cancer patients in need of palliative care; high acuity patients in need of complex services and those needing admissions during evenings and weekends; patients requiring admission after hours and on weekends; and patients who reside in nursing homes and small ALFs. To understand the hospice needs within Hillsborough, VITAS conducted a two-step review—(1) analyzing data from a wide variety of sources including Medicare, AHCA, Florida Department of Elder Affairs, Florida CHARTS, and demographic and socioeconomic data; and (2) meeting with some healthcare and social service providers in Hillsborough. Key members of VITAS’s leadership team, including Patty Husted, Mark Hayes, and Dr. Shega, conducted an assessment in Hillsborough to identify the unmet need within the community and underserved populations. VITAS’s needs assessment team physically went into Hillsborough to visit nursing homes, ALFs, hospitals, and physicians to determine the unmet need and how to achieve greater access to hospice services for the residents of Hillsborough. VITAS’s team spent a significant amount of time conducting hospice outreach and education in Hillsborough in furtherance of the needs assessment. Specifically, VITAS’s team met with hospitals including H. Lee Moffitt Cancer Center, Baptist Health, BayCare, St. Joseph’s, and Brandon Regional; nursing homes, such as Hudson Manor, Ybor Health and Rehabilitation Center; and physician and nurse practitioner groups. VITAS’s needs assessment team also participated in physician advisory council meetings as part of its needs assessment for Hillsborough. During these meetings, VITAS gained perspective from these local physicians regarding the challenges faced by patients in need of hospice services in SA 6A, as well as insight as to what VITAS could bring from its existing programs to fill the unmet needs. VITAS also drew on the knowledge of the 18 VITAS employees currently living in Hillsborough. To address the needs it identified in SA 6A, VITAS proposes a broad array of programs and services to be offered in Hillsborough which are specifically targeted to increase the availability and accessibility of hospice services for underserved groups and Hillsborough residents more broadly. To demonstrate its commitment, VITAS conditioned its CON application on providing the following 20 programs and services in SA 6A: VITAS Pulmonary Care Program. VITAS Cardiac Care Program. Clinical research and support for caregivers of patients with Alzheimer’s and dementia. VITAS Sepsis Care Program. Veterans programs, including achieving Level 4 commitment to the We Honor Veterans program within the first two years of operation in SA 6A. Bridging-the-Gap Program and Medical/Spiritual Toolkit, which is an outreach and end-of-life education tool for African American and other minority communities. ALF Outreach and CORE Training Program. Palliative care resources and access to complex and high acuity services, including engaging area residents with serious illness in advance care planning and goals of care conversations, as well as offering palliative chemotherapy, inotrope drips and radiation to optimize pain and symptom management as appropriate. Provider clinical education programs for physicians, nurses, chaplains, HHA’s and social workers. Quality and Patient Satisfaction Program, including hiring a full-time Performance Improvement Specialist within the first six months of operation dedicated to supporting quality and performance improvement programs for the 6A hospice program. VITAS staff training and qualification, ensuring the medical director covering SA 6A will be board-certified in hospice and palliative care medicine. Hospice office locations. Deployment of a mobile van to increase access and outreach to rural counties. VITAS will not solicit donations. Outreach and end-of-life education for 6A residents experiencing homelessness, food insecurity, and limited access to healthcare, including advanced care planning for area homeless shelter residents and a partnership to provide a grant for housing and food assistance with a community organization. $5,000 will be distributed during the first two years to the Hispanic Services Coalition or similar qualified organization for promoting academics, healthy communities and engagement of Latinos. Outreach program for underserved residents of SA 6A. Educational grant, to the University of South Florida Foundation including $250,000 for fellowships, scholarships, education and workforce development as well as $20,000 for diversity initiatives. Inpatient hospice house and shelter for natural disasters and hurricanes. Medicaid Managed Care education Services beyond the hospice benefit, including, among others: 24/7 Telecare Program and access to admission on evenings and weekends, including outreach and end-of-life education for residents experiencing poverty, food insecurity, homelessness and/or food insecurity, including nutrition services, advanced care planning for shelter residents, and housing assistance. Hospice Education and Low Literacy (HELLO) Program. Multilingual education materials in several languages including Spanish, Chinese, Korean, Portuguese, Russian, Vietnamese and Creole. CAHPS Ambassador Program to generate interest, awareness and encourage ownership by team members of their team’s performance on CAHPS survey results. Community outreach and education programs. Partnership with a local college for fellowships, scholarships, education and workforce development and diversity initiatives. VITAS’s application contains approximately 50 letters supporting its proposed program, the vast majority of which are from hospitals, nursing homes, ALFs, physicians, and community organizations in Hillsborough County with direct hospice experience. VITAS obtained these letters of support as part of its community-oriented needs assessment, and they attest to the community’s confidence in VITAS’s ability to meet hospice care needs in Hillsborough. Included are letters of support from Cynthia Chavez, Executive Director at Hudson Manor Assisted Living; Brian Pollett, Administrator at Ybor Health and Rehabilitation Center; and Dr. Jorge Alfonso, Regional Chief Medical Officer at Dedicated Senior Medical Center. All three providers expressed a local need to address high acuity patients, including greater access to continuous home care. Statutory and Rule Review Criteria The review criteria are found in sections 408.035, 408.037, and 408.039, and rules 59C-1.008 and 59C-1.0355. (Prehearing Stipulation). Section 408.035(1) - Need for the health care facilities being proposed There are currently two licensed hospice programs in hospice SA 6A, and a need for one additional hospice program, as calculated using the need methodology found in rule 59C-1.0355(4), and published by AHCA, without challenge. AHCA’s need calculation compares reported hospice admissions during the base year with projected admissions in the horizon year and finds need if the difference between base and horizon year admissions exceeds 350, assuming there are no recently-licensed or CON-approved hospice programs in the service area. In this case, AHCA’s calculation revealed a net need of 863 hospice admissions for the January 2021 planning horizon. Each Applicant has put forth a proposal to meet the calculated need for one additional hospice program in Hillsborough. None of the applicants are advocating the approval of more than one new program. Section 408.035(2) – Availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district. It is undisputed that quality hospice services are available in Hillsborough today through existing providers LifePath and Seasons, including for patients of all ages and with essentially all end-stage disease processes, as well as for patients of all demographic groups. Relevant data demonstrates discharges to hospice in Hillsborough for a wide range of diagnoses and demographic groups, including African American and Hispanic patients, non-cancer and cancer patients, both over and under age 65; patients with end-stage cardiac disease; end-stage pulmonary disease and dementia, including Alzheimer’s disease, among others. However, despite the availability of quality hospice services, some patients simply are not accessing hospice services at the rate expected in SA 6A, as reflected by low penetration rates and low discharge-to-hospice rates, particularly within certain major disease categories and demographic groups, including Hispanic and African American residents. All three applicants agreed that the underutilization is concentrated among certain patient populations, including demographic groups and disease groups. Generally, all three applicants agreed that the Hispanic, African- American, veteran, and homeless populations are currently underserved in Hillsborough. In addition, Suncoast points to the need for a specialized pediatric hospice program in SA 6A; Cornerstone argues that non-cancer patients younger than age 65 are in need of enhanced access, as are residents of smaller ALF’s; and VITAS asserts that patients with respiratory, sepsis, cardiac, and Alzheimer’s diseases are underserved, as are patients requiring continuous care and high acuity services, such as high-flow oxygen. VITAS’s argument is based largely on a claim that the existing providers are not providing “any measurable continuous care,” as well as hearsay reports from area hospitals indicating a lack of high-acuity services available through existing hospice providers. However, VITAS’s health planning expert conceded that, in fact, existing providers are offering continuous care, and she was unable to quantify any purported dearth of continuous care in Hillsborough as compared to other providers or the statewide average. The record establishes that continuous care is part-and- parcel of the hospice benefit, and there was no evidence presented at final hearing to support the claimed lack of availability of that service from existing providers. Based on the foregoing, the evidence tended to show quality hospice care is available in SA 6A, that it is underutilized, and that the underutilization is driven by accessibility challenges among particular patient groups, and supports AHCA’s determination that another hospice program is needed in Hillsborough. Section 408.035(3) - Ability of the applicant to provide quality ofcare and the applicant’s record of providing quality of care Cornerstone is the only applicant accredited by the Joint Commission, which is a national symbol of quality that reflects its commitment to meeting high quality performance standards. Cornerstone’s Joint Commission accreditation, which was just recertified in 2020, and the accompanying high standards of quality care, will carry over to its new SA 6A program. As a new entity, Suncoast is not Joint Commission accredited, but conditions its application on achieving such accreditation by the end of year two. Suncoast Pinellas is Joint Commission accredited, and indeed, is one of only a handful of hospices nationwide, along with Cornerstone, to hold Joint Commission accreditation and/or certification. While VITAS represents that some affiliated VITAS hospice programs are Joint Commission accredited, VITAS, the applicant here, is not accredited by the Joint Commission, and makes no representation that it will seek or attain such accreditation for its new hospice program in SA 6A. There are two universal metrics codified in federal law that are used as a proxy for assessing the quality of care offered by hospice programs— Hospice Item Set (“HIS”) scores and Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) survey scores. See 42 C.F.R. § 418.312; see also § 400.60501, Fla. Stat. (2020). CAHPS surveys are a subjective metric sent to family members and other caregivers months after a patient's death. The survey asks respondents to provide ratings like: “would definitely recommend,” “would probably recommend,” “would probably not recommend,” and “would definitely not recommend.” It also seeks yes or no responses to statements like: the hospice team “always communicated well,” “always provided timely help,” “always treated the patient with respect,” and “provided the right amount of emotional and spiritual support.” It also asks if the patient always got the help they needed for pain and symptoms, and if “they” received the training they needed. The CAHPS survey was created by CMS in conjunction with the Agency for Healthcare Research and Quality to measure and assess the care experience provided by a hospice. The purpose of the Hospice Compare Website is to allow the public to compare quality scores for CAHPS among different hospice providers. CAHPS scores are one measure of quality that is intended to allow for comparison across hospice programs. Significant time at final hearing was dedicated, through multiple witnesses, to discussing the strengths and weaknesses of CAHPS scores as a measure of quality. Ultimately, the greater weight of the evidence supports that CAHPS scores are an indicator of quality, but are not the only consideration, and suffer from limitations that prohibit drawing distinctions from minor differences in scores. The three applicants’ CAHPS scores are summarized in this chart: (Suncoast Ex. 42, BS p. 12203) While it is true that Suncoast Pinellas’s scores on all CAHPS measures are higher than those of Cornerstone, the slight difference between Suncoast Pinellas and Cornerstone is not significant given the subjective nature of the survey instrument. However, both Suncoast Pinellas and Cornerstone do score significantly higher than VITAS on most measures. Cornerstone’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to three points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. As a new entity, Suncoast does not have CAHPS scores. Suncoast Pinellas’s CAHPS scores meet or exceed state averages on six of the eight measures, are within one to two points of the state average on the remaining two measures, and its average CAHPS score exceeds the state average. In contrast, VITAS’s CAHPS scores fall below the state average on all eight metrics, fall five to seven points below the state average on seven of the eight metrics, and its average CAHPS score for all measures combined falls five points below the state average. Cornerstone and Suncoast Pinellas are within one to three points of each other on every CAHPS metric. The difference in scores between Cornerstone and Suncoast Pinellas is not statistically significant or meaningful, particularly given the shortcomings of CAHPS scoring. VITAS’s CAHPS scores are below both Cornerstone and Suncoast Pinellas, falling six and eight points below Cornerstone and Suncoast Pinellas, respectively, on the average of all CAHPS metrics. This difference is meaningful, particularly when viewed in the context of VITAS’s history of substantiated complaints discussed below. HIS scores, which assess documentation of various items, are more a process or compliance measure than a quality measure. Suncoast Pinellas’s HIS scores exceed the state and national average on all metrics, albeit most scores are within two points of the state average. Cornerstone’s HIS scores are on par with state averages on most metrics and meet or exceed the national average on every metric, except Pain Assessment. Cornerstone has worked to substantially improve its Pain Assessment score through better documentation protocols, raising its score from 52.1 to 89.1 in the last few years, and is implementing a new Electronic Records Management system to further improve its scores. VITAS’s HIS scores are on par with state averages on most metrics, and meet or exceed the national average on all metrics except Visits When Death Imminent. VITAS scores 68.4 on Visits When Death Imminent compared to the state and national averages of 83.2 and 82.4, respectively. As measured by the HIS scores, there was no credible, persuasive testimony establishing a meaningful difference among the three applicants. In contrast to CAHPS and HIS scores, the number and substance of complaints substantiated against each applicant by AHCA is a more direct indicator of quality of care. Suncoast has no prior hospice operations history, and therefore no prior substantiated complaints. Suncoast Pinellas has had only three substantiated complaints since 2008, and none since 2013. Cornerstone has only two substantiated complaints since 2008, and only one since Mr. Lee took over as CEO of Cornerstone in late 2012. VITAS has 73 substantiated complaints since 2008, including 10 substantiated complaints in the three years ending November 20, 2019, just prior to submission of the CON application at issue here. Between November 20, 2019, and June 17, 2020, VITAS had five additional substantiated complaints. VITAS’s health planning expert, Ms. Platt, also considered all AHCA survey deficiencies, whether based upon a complaint, life safety survey, or otherwise. Ms. Platt’s analysis demonstrates that VITAS had 80 such surveys with deficiencies since 2012, including 26 between January 2018 and June 2020. VITAS argues that its greater number of substantiated complaints are the consequence of higher patient volumes than Suncoast and Cornerstone. However, even taking into consideration the greater number of patient days provided by VITAS, VITAS had infinitely more surveys with deficiencies in 2019 than Cornerstone, which had zero. And VITAS had five times as many surveys with deficiencies for 2018 and 2019 as Cornerstone. A comparison of VITAS to Suncoast Pinellas yields similar results, with VITAS having significantly more surveys with deficiencies than Suncoast Pinellas, even when taking into consideration the greater number of patient days provided by VITAS. Complaints substantiated against VITAS demonstrate failures in many areas of patient care, including some of the specific aspects of hospice care at which VITAS claims to excel beyond other providers, such as after- hours care, the provision of continuous care, and care to patients wherever they live, including smaller ALFs. For example, a substantiated complaint against VITAS in November 2019 included a finding of “immediate jeopardy”—the most severe level of deficiency possible—for a patient who failed to receive proper care after-hours at end-of-life, resulting in a particularly painful death for the patient, and an excruciating experience for the patient’s daughter who witnessed her mother’s painful death, unaccompanied by hospice personnel. Two additional substantiated complaints from January and February 2020 found deficiencies in VITAS’s care to patients on continuous care, including one where the VITAS nurse had headphones in and was not paying attention when the patient fell. Indeed, VITAS’s own internal review of the substantiated complaint involving the patient who fell confirmed an upward trend in falls among VITAS patients. And, as recently as June 2020, a separate substantiated complaint found that VITAS abandoned a patient on continuous care, requiring the patient to be transferred to the hospital rather than continue to receive care in the “small ALF” where the patient resided. VITAS acknowledged the patients at issue in the substantiated complaints discussed at final hearing did not receive quality hospice care. Those five examples are only a sampling of the complaints substantiated against VITAS, and the others demonstrate similar quality deficiencies. The number of substantiated complaints weighs in favor of Cornerstone and Suncoast, and heavily against VITAS with regard to record of providing quality of care. There is no meaningful difference between Cornerstone and Suncoast in regard to substantiated complaints, and neither is entitled to preference in this regard. On balance, among the three applicants, the quality of care provided by Suncoast and Cornerstone is on equal footing, with both having a distinct advantage over VITAS. Section 408.035(4) - Availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation; and Section 408.035(6): The immediate and long-term financial feasibility of the project The parties stipulated that each of the applicants have available funds for capital and operating expenditures in the short term for purposes of project accomplishment and operation. Suncoast demonstrated that it has the resources to accomplish its proposed project. Suncoast provided detailed descriptions of the personnel that would be required to successfully implement its proposed program. Suncoast has reasonably projected the types of staff necessary to operate Suncoast in year 1 and 2 of operation. At hearing, Suncoast witnesses credibly described the roles of the staff contained in Suncoast’s Schedule 6, including the roles of administrator, care team manager, administrative assistant, regional hospice scheduler, business development liaisons, physicians, program director, nurses, hospice aides, respiratory therapists, staff for the mobile van in Condition 2 of its application, community partnership specialists, social workers, patient social team lead, chaplain, volunteer coordinator, and senior staff nurse. Suncoast’s financial expert, Armand Balsano, testified that part of his role in preparing Suncoast’s CON application was working with Suncoast Pinellas’s Chief Financial Officer, Mitch Morel, to develop Suncoast’s financial projections that were included on Schedules 1 through 8 of the application. Mr. Balsano, in collaboration with Mr. Morel, utilized Suncoast Pinellas’s internal financial modeling system to develop the financial schedules and financial narrative for the application. Mr. Balsano credibly testified that financial Schedules 1 through 8 are accurate and reasonable. Suncoast projects admissions of 460 patients for project year one and 701 patients for project year two. Suncoast’s health planner, David Levitt, developed Suncoast’s projected admissions based on experience of other providers entering a market with two existing providers. Suncoast’s projected number of admissions for years one and two are reasonable projections of admissions for a new hospice program in Hillsborough. Suncoast was criticized as having a lackluster record for admissions in its existing Pinellas hospice. While it is true that Suncoast Pinellas’s admissions declined slightly from 2013 to 2014, the overall trend has been one of increasing admissions. For example, based on Medicare claims data, from 2005 to 2019, Suncoast Pinellas’s admissions grew from 4,679 to 6,534.10 Financial feasibility may be proven by demonstrating the expected revenues and expenses upon service initiation, and determining whether a shortfall or excess revenue results. The projection of revenue is not complicated for hospice services. The vast majority of hospice care, more than 90%, is funded by the Medicare Program which pays uniform rates to all hospice providers. Mr. Balsano testified that Suncoast’s projected revenues in Schedule 7 are based on the revenues that are currently realized for the various payer categories, including Medicare, Medicaid, Commercial, and self-pay. Mr. Balsano credibly testified that the assumptions reflected on Schedule 7 of Suncoast’s CON application are reasonable and appropriate. 10 Suggestions by VITAS and Cornerstone that Suncoast’s internal data indicate a history of low utilization or inaccurate reports to AHCA are without merit. Mr. Sciullo credibly testified that the data reported to AHCA is the most accurate admissions data. Mr. Sciullo further credibly testified that the Utilization Trend Reports contained in Cornerstone’s exhibits 82 through 88, relied on by VITAS and Cornerstone, contain duplicate hospice admissions and admissions from non-hospice programs such as Suncoast’s home health program. Mr. Sciullo also credibly testified that the most accurate admissions numbers reported to AHCA are not generated from the Utilization Trend Reports. Rather, the admissions numbers reported to AHCA are produced by Suncoast’s reimbursement department. Mr. Sciullo’s testimony under cross examination demonstrated a confident and credible understanding of the nuances of the Utilization Trend Reports. Additionally, the suggestion that Suncoast would intentionally under-report admissions to AHCA lacks credibility because hospice providers in Florida are incentivized to report higher numbers of admissions. In Year 2, Suncoast projects net operating revenue of $7,138,000, which breaks down to approximately $172 per day of overall net revenue per patient day. Mr. Balsano’s credibly testified that this is a reasonable forecast of net operating revenue. Projected expenses were also reasonably projected by Suncoast. Mr. Balsano testified that Suncoast’s projected income and expenses in Schedule 8A includes salaries and wages, fringe benefits, medical supplies and ancillary services, and approximately 1.5% of inpatient days. Suncoast also included a separate allowance for administrative and overhead cost. Suncoast also allocated $752,000 in management fees to account for “back office services” and other support services that would be provided to the Hillsborough program through the Empath home office. Mr. Balsano arrived at this number by determining that a reasonable assessment would be the cost per patient day of $18, as reflected on Schedule 8 for year two. Mr. Balsano credibly testified that, for a startup program, it is appropriate to include the costs associated with services provided by the corporate office because one must be cognizant of what services are provided locally, and what services will be provided through the corporate office. Mr. Balsano further testified that it would not be reasonable to assume that 100% of the costs associated with corporate services to a new hospice program would be fixed. As Mr. Balsano explained, the variable costs must be accounted for as well. Mr. Balsano credibly testified that Suncoast’s net profit in year two as reflected in Schedule 8A is $615,416. It is found that Suncoast has reasonably projected the revenues and expenses associated with its proposed hospice, and that Suncoast’s proposal is financially feasible in the long term. Cornerstone projected admissions of 448 patients in year one, and 819 patients in year two, for the highest year two admissions of the three applicants. In comparison, Suncoast projected admissions of 460 patients in year one and 701 in year two, while VITAS projected 491 patients in year one and just 593 in year two. Cornerstone’s projected admissions were developed by health planning experts Roy Brady and Gene Nelson based on the experience of recent new hospice programs in the state of Florida, were discussed and confirmed by Cornerstone personnel prior to being finalized, and are a reasonable projection of admissions for years one and two of operations in Hillsborough. Despite the highest anticipated year two admissions, Cornerstone’s projection still fell below the SA 6A service gap of 863 patients and therefore did not, standing alone, establish any greater adverse impact on area providers than Suncoast or VITAS. Cornerstone emphasized its mission as an organization, and intent for this proposal, to expand penetration by resolving unmet need as opposed to capturing patients already served by existing providers. The adverse impact analysis in Cornerstone’s application therefore represents a worst-case scenario by assuming all of its patients otherwise would be served by existing providers, a premise undercut by the substantial published need. Using this approach, Cornerstone anticipated that LifePath would bear the overwhelming burden of its entry into Hillsborough, with a projected adverse impact on LifePath of 408 patients in year one, and 747 in year two. Cornerstone anticipated adverse impact to Seasons of 39 patients for year one, and 72 patients for year two. Even in this worst-case scenario, existing [Remainder of page intentionally blank] providers’ volumes in Cornerstone project years one and two exceed their historical volumes.11 Cornerstone has available health personnel and management personnel for project accomplishment and operation. Cornerstone’s existing staff, as well as its projected incremental staff for the new program, is reflected in schedule 6A of its application. The projected incremental staff shown in schedule 6A is based on established ratios and methodologies Cornerstone uses in its existing hospice programs. The projected incremental staff is all the incremental staff Cornerstone will need to establish the new program in Hillsborough, and combined with its existing personnel, are sufficient to achieve program implementation as proposed in the application. Both Suncoast and VITAS criticized Cornerstone’s financial projections as flawed because they did not present the fully allocated costs of the project. According to Mr. Balsano, Cornerstone’s projected profit margin is unreasonable and, in fact, is “an extreme outlier.” As he explained, Cornerstone’s financial schedules make no allocation of shared service costs for critical services to be provided by the home office. According to Suncoast and VITAS, this omission is unreasonable when viewed in context with Cornerstone’s Schedule 6, which does not allocate any FTEs to back office support services. Not shown are the expenses Cornerstone will incur for finance, billing, revenue cycle, accounts receivable, payroll, human resources, 11 Relative adverse impact on existing hospice programs of competing applicants has been used as a dispositive factor for favoring one applicant over another. See, Hospice of Naples, Inc. v. Ag. for Health Care Admin., DOAH Case No. 07-1264, ¶ 274 (Fla. DOAH Mar. 3, 2008; Fla. AHCA Jan. 22, 2009) (“One factor outweighs all others, however, in favor of VITAS. VITAS's application will have much less impact on HON and its fundraising efforts and in turn on the high-quality services that HON presently provides in Service Area 8B.”). However, as noted here, neither of the existing providers presented evidence as to the relative impact that any of the applicants would potentially have on its existing operations, or whether such impacts would be material. Accordingly, there is no evidentiary basis for providing an advantage to one or another of the applicants based upon consideration of adverse impact. and contract negotiations, among others. Notably, hospice providers include home office costs as part of their Medicare cost reports filed with CMS.12 Because Cornerstone did not allocate home office costs in its application, its profit margins are substantially higher than all other applicants for the October 2019 Batching Cycle. While most applicants fall within the $100,000 – $500,000 range, Cornerstone projected a staggering $4.9 million profit margin. There is nothing in the CON application form or instructions that require that financial projections be presented on a “fully allocated” basis. Notably, in its review of the financial projections, AHCA determined that each applicant’s proposed program appeared to be financially feasible in the long-term. Cornerstone’s financial feasibility analysis included consideration of payer mix, level of service mix, admissions, average lengths of stay, patient days and incremental staffing needs, among others, and focused on the resulting incremental revenues and expenses generated by addition of the new program in Hillsborough. Cornerstone’s projected admissions are reasonable and appropriate for the proposed new program in Hillsborough. Cornerstone’s proposed incremental staff, combined with its existing staff, is sufficient for project accomplishment and operation. Cornerstone’s projected payer mix is based upon consideration of Cornerstone’s own historic experience, the demographics and recent hospice payer characteristics of Hillsborough, and consideration of Cornerstone’s goal to serve the non-cancer under-65 population, which may reduce Medicare 12 In terms of its budgeting process, Cornerstone has one “bucket” for its administrative overhead/home office expenses and then separate buckets for each of its hospice programs. Home office expenses include human resources, IT, compliance, and facility maintenance. Cornerstone does not allocate its home office expenses to each of its hospice programs within its internal books. However, when an audit is performed, the performances of each hospice program and the home office expenses are all included, and the home office expenses are allocated to each of its hospice programs. levels slightly from what they otherwise may be, and is reasonable and appropriate for its proposed hospice program in Hillsborough. Cornerstone’s projected level of service mix and average length of stay are based upon Cornerstone’s historical experience, and are reasonable and appropriate for the proposed hospice program in Hillsborough. Likewise, Cornerstone’s projected revenues as set forth in schedule 7A are based upon the projected volumes, service level mix, payer mix projections, and Medicare service level specific rates, and are a reasonable projection of revenues for the proposed project in Hillsborough. Cornerstone has established the long-term financial feasibility of its proposed SA 6A program. VITAS’s financial projections were prepared through the work of an internal team led by Lou Tamburro, Vice President of Development for VITAS. VITAS reasonably based these projections on the successful opening and ramp up of new hospice programs in Service Areas 1, 3E, 4A, 6B, 7A, 8B, and 9B, and other Florida communities. VITAS has a clear understanding of what startup costs will be, and it was appropriate for VITAS to rely on its past history of success in developing these projections. VITAS projects admissions of 492 patients for project year one and 593 patients for project year two. Mr. Tamburro developed the projected admissions using an internal model based upon VITAS’s prior experience. While Mr. Tamburro is an expert in health finance, not health planning, Ms. Platt reviewed VITAS’s projections and credibly concluded they are reasonable. VITAS proposes to dedicate more resources to SA 6A than the other two applicants in the second year of operations; 74% of that expense is focused on direct patient care, with only 23% associated with administrative and overhead, and 2% property costs. In contrast, Suncoast and Cornerstone only dedicate 54% and 56%, respectively, of their expenses on direct patient care and 41% and 42%, respectively, on administrative and overhead. However, VITAS’s higher direct patient care costs are at least partially explained by the larger number of clinical and ancillary FTE’s associated with the higher levels of continuous care projected by VITAS than either Suncoast or Cornerstone. As would be expected, VITAS also projects to admit a larger number of high acuity patients than Suncoast or Cornerstone. Given VITAS’s vast experience in the start-up and operation of hospice programs, including 16 within Florida, there is no reason to doubt that the VITAS Hillsborough program would be financially feasible in the long term. The following table summarizes the three applications’ financial metrics: Cornerstone Suncoast Vitas Total Project Costs $286,080 $703,005 $1,134,149 Operating Costs Yr.2 $6 million $5.7 million $8.6 million Net Profit Yr.2 $4,972,346[13] $615,416 $154,913 Proj. Admits Yr. 2 819 701 593 Routine Home Care 95.4% 97.5% 94% General Inpatient 3.5% 1.5% 2.5% Continuous Care 0.3% 0.5% 3.5% Respite 0.8% 0.5% 0% Section 408.035(5) The extent to which the proposed services will enhance access to health care for residents of the service district; and Section 408.035(7) The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. Rule 59C-1.0355 and the criteria for determination of need for a new hospice program found within that rule, is predicated upon the notion that, 13 As noted, Cornerstone’s relatively large profit margin is a function of its incremental cost, versus fully allocated cost, financial projections. when need exists, approval of an additional program will foster competition beneficial to potential and prospective hospice patients in the service area. As between the three applicants, Suncoast did the most thorough and extensive analysis of the current needs of the Hillsborough population. This effort was driven by the fact that Suncoast had recently applied for a new hospice program in neighboring Pasco County, and was denied in favor of a competing applicant. In that case, Administrative Law Judge Newton specifically faulted Suncoast for failing to carefully evaluate the hospice needs of Pasco County residents: Suncoast, in effect, proposes a branch operation for Pasco County. Suncoast did not conduct the focused, individualized inquiry into the needs of Pasco County that Seasons did. Nor did it begin developing targeted ways to serve the needs or begin establishing relationships to further that service. The Hospice of the Fla. Suncoast v. Ag. For Health Care Admin., Case No. 18- 4986, ¶ 126 (Fla. DOAH Sept. 5, 2019; Fla. AHCA Oct. 16, 2019). As explained by Mr. Sciullo at hearing, Suncoast took the above criticism to heart, and determined to conduct an exhaustive evaluation of the hospice needs in SA 6A, and to formulate a strategy for addressing those needs. Specifically, Suncoast’s intent was to identify issues and gaps in services facing residents of Hillsborough, and to enable a dialogue with existing community partners and providers in order to create shared solutions. As part of this comprehensive effort, Suncoast met with more than 50 key individuals and organizations, representing a broad range of general and special populations within the county. This effort resulted in the development of collaborative strategies and action plans to fill the gaps and meet the unmet need for additional hospice services in Hillsborough, as reflected in the Suncoast application conditions. In contrast to Suncoast, Cornerstone did not conduct its own needs assessment, but rather relied on the community needs assessments prepared by the HCDOH and two area hospitals. Moreover, rather than reaching out to the Department of Health and to the area hospitals that prepared those assessments to conduct further research or seek their support of its CON application, Cornerstone simply “verified that their documentation was thorough enough.” Cornerstone’s limited outreach effort in Hillsborough is further demonstrated by the letters of support submitted with its CON application. While Suncoast obtained letters of support from the HCDOH and numerous hospitals and community organizations in Hillsborough, Cornerstone failed to obtain a single letter of support from any hospital in Hillsborough. Despite submitting approximately 150 letters of support (many of which were form letters, and letters from Cornerstone employees), Cornerstone failed to obtain any letters from the Hispanic community, the African American community, the HIV community, the migrant community, or organizations that assist the homeless, unlike Suncoast. As Mr. McLemore testified, “a large part” of the review criteria is “hav[ing] the commitment from the organizations in the service area. I think that’s where – a little bit where Cornerstone was a little off base. They did have a bunch of letters of support, but again, they were not specific to the service area.” Mr. McLemore further testified that, rather than a large pile of letters, he was looking for letters “that are definitely from hospitals, nursing homes and civic organizations, healthcare organizations in the area.” Cornerstone’s failure to conduct meaningful and thorough outreach efforts in Hillsborough is also demonstrated by its generic list of CON application conditions. As multiple Cornerstone witnesses acknowledged, the services Cornerstone is proposing to offer in Hillsborough are identical to the services Cornerstone already offers in its existing service areas. Specifically, Cornerstone conditions its application on Hispanic outreach, bilingual volunteers, multiple office locations within a service area, complementary therapies, veterans-specific programming, bereavement counseling for parents, cooperation with local community organizations, a separate foundation account for the specific service area, and continuing education programming, all of which are services that Cornerstone already offers in its existing service areas. Thus, unlike Suncoast, which used the existing community health needs assessments as a starting point for its own comprehensive needs assessment, and proposed conditions that are reflective of the unique needs of Hillsborough, the conditions proposed by Cornerstone are almost identical to the services Cornerstone currently provides elsewhere. Cornerstone’s plan to serve Hillsborough in phases does not immediately address the unmet need for hospice services countywide. Cornerstone will not send its marketing team to facilities and other referral sources in those phased areas until Cornerstone has completed each phase of its plan. Although Cornerstone’s witnesses testified that Cornerstone will not turn away referrals from parts of the county before Cornerstone begins operations in those areas, they also confirmed that Cornerstone will not actively seek referrals from other phased areas until it is ready to move into those areas. Unlike Suncoast, and to a lesser extent VITAS, there is no evidence that Cornerstone conducted a thorough needs assessment of SA 6A before developing its phased implementation plan. Cornerstone simply looked at a map of where existing providers have offices and decided to start elsewhere. Likewise, Cornerstone did not conduct any independent assessment of the needs of the four different geographic areas of its plan to determine whether Cornerstone will be capable of serving all of the county’s residents immediately upon CON approval. Further, Cornerstone did not conduct any review or analysis of comparable start-ups in Florida when preparing its SA 6A CON application. VITAS undertook an analysis of information from a variety of sources, including meetings with various individuals within Hillsborough regarding the perceived gaps in care. Based on this review, VITAS identified a number of patient groups with purported unmet needs: African American and Hispanic populations; migrant workers; patients residing in the eastern and southern parts of the county who are not accessing hospice at the same rate as other parts of the subdistrict; patients with respiratory, sepsis, cardiac, and Alzheimer’s diagnoses; patients requiring continuous care and high acuity services such as Hi-Flow oxygen; patients requiring admission in the evening or on weekends; and patients residing in small, less than 10-bed, ALFs. VITAS proposed a number of solutions to address the purported needs identified in Hillsborough, and largely included those proposed solutions as conditions of its application. However, VITAS failed to identify a specific operational plan for Hillsborough. The purported gaps in care and solutions identified in VITAS’s application for Hillsborough largely mirror those identified in its application for Service Area 2A that was submitted during the same cycle, despite significant differences between the makeups of those two service areas. VITAS’s application included 47 letters of support. Many of the letters are from persons and organizations outside Hillsborough, and even include a letter from one of VITAS’s employees, Kellie Newman, and two letters in support of its 2A application. At hearing, VITAS offered testimony from letter of support authors Mary Donovan and Margaret Duggar. Ms. Donovan lives in Miami and is VP for Caregiver Services, Inc., a nurse staffing agency that contracts with VITAS in other areas of the state and hopes to do so in Hillsborough. Ms. Duggar is the President of MLD & Associates, Inc., located in Tallahassee, which is a management firm that serves as executive staff for a number of entities. Neither of these letters is probative of VITAS’s ability to meet the hospice needs of Hillsborough residents. Ultimately, the applicants all agreed that the unmet need in SA 6A is not purely numeric: it is concentrated among certain patient populations, including Hispanic and migrant communities; non-cancer patients under age 65, including those with dementia, Alzheimer’s, respiratory, and cardiac disease; and lower income groups. Each applicant tailored their proposal to address the perceived, underlying access barriers accordingly. Two primary theories concerning the source of access barriers in Hillsborough developed at final hearing: (a) that access barriers, and hence, unmet need in the service area stem from a lack of access to relevant hospice services through existing providers once a patient has entered hospice care; and (b) that access barriers, and hence, unmet need in Hillsborough, stem from a lack of outreach and education necessary to bring awareness of hospice services to Hillsborough residents so that they access hospice services in the first place. All three applicants proposed to tailor their hospice services and programming to the particular residents of Hillsborough. But Suncoast’s proposal and conditions focused more heavily on outreach and education to bring geographically and culturally-driven awareness of the hospice benefit to patients appropriate for hospice. As noted, Suncoast also did a more comprehensive needs analysis, which allowed Suncoast to focus its CON conditions on those segments of the Hillsborough population most in need of improved access to hospice services. Among the applicants, Suncoast alone proposes to implement a dedicated pediatric hospice program, which is not currently offered in Hillsborough. Dr. Stacy Orloff, accepted as an expert in pediatric hospice care, confirmed in her testimony the following: Suncoast's pediatric hospice program includes a dedicated integrated care team comprised of a fulltime pediatric nurse with more than 25 years’ hospice experience, a pediatric medical director, a full-time licensed social worker, a team assistant, a volunteer coordinator and a pediatric team leader. Additionally, there are part-time staff members including LPNs and CNAs with dedicated pediatric hospice experience. This is an important distinction, as many hospice programs claim to provide pediatric hospice services, but oftentimes they utilize the same care teams that provide care for adult patients. Suncoast's longstanding expertise and network of community partners for its pediatric program will ensure that the proposed pediatric hospice program fits the specific needs of the pediatric patient and family. Suncoast will use a combination of existing staff and PRN assistance until the pediatric caseload is large enough to warrant addition of new team members in Hillsborough County. Suncoast's existing pediatric hospice team has a strong relationship with St. Joseph's Children's Hospital, which it will utilize to expand its network of pediatric providers to increase hospice awareness and utilization in Hillsborough. Suncoast conditions its application on purchasing a $350,000 mobile van, the “Empath Mobile Access to Care,” to conduct mobile outreach activities in Hillsborough for ethnic-specific programming and outreach to homeless. VITAS also conditioned its application on a “Mobile Hospice Education Unit” van, and included photos of similar vans that it operates in other service areas. The Suncoast van will be staffed by a full-time bilingual LPN and a full-time social worker prepared to discuss advanced care planning and education, and will be equipped with telehealth technology capable of linking with the Empath Care Navigation Office. In contrast, VITAS did not explain how its van will be staffed, or whether any of the staff will be clinicians. Indeed, from the photos included in the application, the van appears to be more of a mobile advertisement for VITAS, than it does a tool for hospice education and outreach. VITAS attempted to differentiate its proposal by pointing to disease- specific programming for patients with pulmonary and cardiac conditions, Alzheimer’s, and sepsis. But, Cornerstone and Suncoast are also capable of caring for patients with those conditions. And, specific to sepsis programming—a feature of VITAS’s presentation at final hearing— septicemia is not usually the primary reason a patient enrolls in hospice. Instead, sepsis is a complication of another terminal condition for which a patient is admitted to hospice, and therefore does not represent a need unto itself. VITAS further attempted to differentiate its program by pointing to its comparatively longer average length of stay, arguing that longer average lengths of stay are indicative of greater access and quality. However, this notion was countered by credible testimony that longer lengths of stay, along with a higher percentage of live discharges and higher 30-day readmission rate, may, alternatively, represent targeting of patients unlikely to experience the types of access barriers at which CON is aimed, and may be indicative of lower quality and higher costs. And VITAS’s healthcare planning expert did not conduct an analysis, and offered no opinion, as to the specific cause of VITAS’s comparatively longer length of stay. Taken together, the evidence was inconclusive as to whether longer lengths of stay reflect access enhancements generally, or as applied to VITAS’s proposal. Section 408.035(9) - The applicants’ past and proposed provision of health care services to Medicaid patients and the medically indigent. Rule 59C-1.0355(2)(f) provides that hospice services must be available “to all terminally ill persons and their families without regard to age, gender, . . . cost of therapy, ability to pay, or life circumstances.” Consistent with rule, hospice providers must provide care to Medicaid patients. Medicaid pays essentially the same for hospice care as does Medicare. As such, there is no financial disincentive to accept Medicaid hospice patients. VITAS and Cornerstone both have a history of providing Medicare, Medicaid, and medically-indigent care; Suncoast’s affiliated entity, Suncoast Pinellas, has a similar history, and all three applicants propose to provide care to Medicare, Medicaid, and the medically indigent. While the three applicants project that they will experience different payor mixes for Medicaid and indigent patients, there is no evidence in this record that any of the applicants have discriminated against such patients in the past, or would do so in their Hillsborough program. Cornerstone argues that it is entitled to preference over Suncoast because Cornerstone’s projected percentage of Medicaid and medically indigent admissions (6%) is almost double that of Suncoast (3.3%). However, Cornerstone’s projection is exactly that: a projection of the payor mix it may experience in its new program. Significantly, Cornerstone did not commit to a 6% Medicaid/indigent payor mix within its CON conditions, and therefore that level of Medicaid/indigent admissions is unenforceable. Rather than the applicants’ projected payor mixes, what is significant are plans to reach out to the Medicaid and charity care population to improve their knowledge about, and use of, hospice services. Suncoast’s application presents a specific plan for doing exactly that. All of the applicants have proposed programs for outreach to financially disadvantaged communities within Hillsborough, and none of the applicants are entitled to preference under this criterion. Rule 59C-1.0355(4)(e) – Preferences for a New Hospice Program.Preference shall be given to an applicant who has a commitment to serve populations with unmet needs. Each applicant expressed a commitment to provide hospice services to populations with unmet needs. And to a greater or lesser extent, each applicant conducted an analysis of the specific populations with unmet needs in Hillsborough. No evidence was presented to establish that care for hospice patients with the varying identified conditions or within the various demographic groups is not available in Hillsborough. Rather, the evidence demonstrates that patients are not accessing hospice services, despite their availability to residents of Hillsborough. Among the three applicants, Suncoast best demonstrated a plan for enhancing access to quality hospice care for these populations, as well as a track record of past experience with enhancing access to quality hospice services for these populations. Preference shall be given to an applicant who proposes to provide the inpatient care component of the Hospice program through contractual arrangements. Each of the applicants propose to provide the inpatient care component of the hospice program through contractual arrangements, and presented testimony regarding their ability to do so. Likewise, all three applicants presented letters from entities in Hillsborough regarding their purported willingness to contract for the inpatient care component of the hospice program. However, no applicant presented non-hearsay evidence from any entity within Hillsborough regarding a willingness to contract for the inpatient care component of the hospice program. The applicants are on equal footing in terms of the ability to contract for inpatient care. Notwithstanding its intention to provide the inpatient component of the hospice program through contractual arrangements, VITAS conditioned its application on applying for a CON to construct an inpatient hospice house within the first two years of operation. However, VITAS presented no evidence to establish the need for an additional inpatient hospice house in SA 6A, and no evidence was presented to demonstrate that an inpatient hospice house is a more cost-effective alternative to contracted beds. The proposals by Cornerstone and Suncoast to contract for the inpatient component of the hospice program represent a better use of existing resources than that of VITAS, which will incur the expense of a freestanding hospice house for its proposed program. On balance, this preference weighs equally in favor of Cornerstone and Suncoast, and against VITAS. Preference shall be given to an applicant who has a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each applicant presented evidence of a commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS. However, the programs proposed by Suncoast to address the needs of these populations are more precisely targeted than those of the other applicants, and Suncoast is therefore entitled to preference. Proposals for a Hospice service area comprised of three or more counties. SA 6A is comprised of a single county, Hillsborough. This preference is therefore not applicable in this case. Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare. All three applicants propose to provide services in Hillsborough that are not specifically required or paid for by private insurance, Medicaid, or Medicare. The added services beyond those covered by private insurance, Medicaid, or Medicare as proposed by the applicants differ slightly, but on balance, weigh equally in favor of approval of each applicant. Rule 59C-1.0355(5) – Consistency with Plans. Each of the applicants conducted an analysis of the needs of Hillsborough residents and included evidence within their applications and through testimony at final hearing regarding the consistency of their respective plans with the needs of the community. However, Suncoast’s evaluation of the needs specific to Hillsborough was more thorough, and its application is best targeted at meeting the identified needs. Rule 59C-1.0355(6) – Required Program Description. Each applicant provided a detailed program description in its CON application. The elements of the program descriptions are discussed above in the context of the various statutory and rule criteria. Ultimate Findings Regarding Comparative Review Suncoast conducted the most comprehensive evaluation of the end of life care needs of Hillsborough residents, and developed targeted programs and services to address those needs. Those programs and services are identified as CON conditions, and are enforceable by AHCA. The depth and breadth of Suncoast’s commitments to the residents of Hillsborough exceed those of Cornerstone and VITAS. Unlike the other applicants, Suncoast offers needed programs which are not currently available in Hillsborough, including a dedicated pediatric hospice program, and enhanced transportation options for persons living in rural areas of the county. Suncoast and Cornerstone are comparable in terms of history of providing quality care. VITAS is inferior in this regard, as evidenced by the numerous confirmed deficiencies in recent years. Undoubtedly, VITAS has redoubled its efforts to improve quality in response to the numerous confirmed deficiencies and complaints, but based upon the record in this case, Suncoast and Cornerstone have a better history of providing quality care. Suncoast would be able to commence operations in SA 6A more quickly than Cornerstone or VITAS. It has connections with other healthcare providers in Hillsborough and could easily transition to that adjacent geographic area. All three proposals would enhance access to hospice services in the county, but Suncoast’s program would be the most effective at enhancing access. A careful weighing and balancing of the statutory review criteria and rule preferences favors approval of the Suncoast application, and denial of the Cornerstone and VITAS applications. Upon consideration of all the facts in this case, Suncoast’s application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Suncoast Hospice of Hillsborough, LLC’s, CON No. 10605 and denying Cornerstone Hospice and Palliative Care, Inc.’s, CON No. 10602 and VITAS Healthcare Corporation of Florida’s, CON No. 10606. DONE AND ENTERED this 26th day of March, 2021, in Tallahassee, Leon County, Florida. COPIES FURNISHED: D. Ty Jackson, Esquire GrayRobinson, P.A. 301 South Bronough Street, Suite 600 Post Office Box 11189 Tallahassee, Florida 32302 Seann M. Frazier, Esquire Parker, Hudson, Rainer & Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Kristen Bond Dobson, Esquire Suite 750 215 South Monroe Street Tallahassee, Florida 32301 Marc Ito, Esquire Parker Hudson Rainer & Dobbs, LLP 215 South Monroe Street, Suite 750 Tallahassee, Florida 32301 S W. DAVID WATKINS Administrative Law Judge 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 2021. Julia Elizabeth Smith, Esquire Agency for Health Care Administration Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308 Stephen A. Ecenia, Esquire Rutledge, Ecenia & Purnell, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Gabriel F.V. Warren, Esquire Rutledge Ecenia, P.A. 119 South Monroe Street, Suite 202 Post Office Box 551 Tallahassee, Florida 32301 Elina Gonikberg Valentine, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Amanda Marci Hessein, Esquire Rutledge Ecenia, P.A. Suite 202 119 South Monroe Street Tallahassee, Florida 32301 Allison Goodson, Esquire GrayRobinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 Maurice Thomas Boetger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 James D. Varnado, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC Suite 3600 303 Peachtree Street Northeast Atlanta, Georgia 30308 D. Carlton Enfinger, Esquire Agency for Health Care Administration Mail Stop 7 2727 Mahan Drive Tallahassee, Florida 32308 Simone Marstiller, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308
The Issue The issue in this proceeding is whether the application of Catholic Hospice, Inc., to establish a hospice program in District 10 meets the statutory and rule criteria for approval.
Findings Of Fact 1. Catholic Hospice, Inc. (Catholic Hospice) is the preliminarily approved applicant for Certificate of Need (CON) Number 9333, to expand hospice services, currently provided in Dade County, into adjacent Broward County, Florida. 2. The Agency for Health Care Administration (AHCA) is the department authorized to administer the Florida CON program for health care facilities and services. 3. Catholic Hospice applied for CON Number 9333 to initiate services in Eroward County, which is designated AHCA, District 10, for the July 2001, planning horizon. As the parties stipulated prior to the final hearing, AHCA published zero as the numeric need for an additional hospice program in Broward County. At the time the CON application was submitted, Catholic Hospice asserted that its proposal would meet an unmet need for hospice care for the Hispanic and Haitian populations, in particular, and the growing multi-ethnic population in Broward County, in general. Catholic Hospice also initially indicated that its program would increase access to hospice care by eliminating financial, language, religious, and cultural barriers. At the hearing, Catholic Hospice presented evidence to support its intention to improve access for the Hispanic population by overcoming language and cultural barriers, and its assertion that the existing hospice programs are not consistently and aggressively reaching Hispanics. 4. Catholic Hospice is a partnership established in 1988 by the Archdiocese of Miami, St. Francis Medical and Health Care Services, and Mercy Hospital. The governing body is a 15-member Board of Directors with five directors from each of the three member organizations. The Board is ethnically diverse and includes three directors who are native Spanish language speakers. Catholic Hospice serves people of various religions, having, within the last year and a half, established the L'Chaim Jewish Hospice Program. 5. Catholic Hospice has steadily increased the proportion of care it gives to Hispanics in Dade County. In 1989, approximately 30% of Catholic Hospice patients were Hispanic. By 1999, Catholic Hospice served 740 Hispanic patients out of a total of 1157. By 2000, the number and proportion of Hispanic patients increased to 841 out of a total of 1228. Currently, over 60% of Catholic Hospice's patients are Hispanics, while 55% of the total populaticn of Dade County is Hispanic. Existing Hospice Programs and Services 6. The existing hospice providers in Broward County are vitas Healthcare Corporation (Vitas), Hospice Care of Broward County, Inc. (Hospice Care of Broward), Hospice by the Sea, Inc. (HBTS), and Hospice of the Gold Coast. All of the existing hospices have elected to qualify for and to obtain accreditation from the Joint Commission for Accreditation of Health Care Organizations. 7. Vitas is the successor to the organization known as Hospice of Miami, established in 1978. Vitas is a for-profit organization, having been established prior to the enactment of the Florida law which currently requires hospices to be not-for- profit corporations. ‘Currently, Vitas operates twenty separately licensed programs in seven states with an average daily census of 5,400 patients. In 1999, Vitas admitted 5,921 patients in Broward County and 4,382 in Dade County. It is the largest provider of hospice care in the United States, and in Broward and Dade Counties. In Broward County, Vitas cared for 180 Hispanic patients in 1998, 238 in 1999, and 206 through November 15, 2000. Approximately 3.3 to 4% of its total number of Broward County patients are Hispanic. 8. Hospice Care of Broward operates in both Dade and Broward Counties, with offices in both Fort Lauderdale and Miami. The main business office is the one in Fort Lauderdale with close to 180 employees as compared to a staff of 50 in the Miami office. The Miami and Fort Lauderdale operations share the same board of directors, executive director, development director, finance director, and clinical director of operations. 9. Hospice Care of Broward cares for patients in their homes, in hospitals or nursing homes, and in its own 5-bed residence in Fort Lauderdale. Approximately half of their Dade County patients and 2% of their Broward County patients are Hispanic. In 1999, Hospice Care of Broward admitted a total of 999 patients in Broward County and 172 in Dade County. 10. HBTS, established in 1979, is a not-for-profit corporation, which serves both AHCA District 9, for Palm Beach County and AHCA District 10, for Broward County. It operates a 30-bed inpatient center in Palm Beach and, by contract, provides care at various hospitals, including Hollywood Medical Center, Holy Cross Hospital, Cleveland Clinic Hospital and North Ridge Hospital. 11. In Broward County, HBTS served five Hispanic patients out of a total of 287, in 1998; 7 out of 415 in 1999; and 15 out of 641 in 2000, or almost 2.4%. 12. Hospice of the Gold Coast is a relatively small operation, serving approximately 200 patients a year, primarily at the North Broward Hospital District facilities. Its office located in the northeastern area of the County, which has a relatively small Hispanic population. As a result, Hispanic utilization of Hospice of the Gold Coast was estimated at 2% by one expert. 13. In general, hospice care is provided to terminally ill patients who are certified by a medical doctor as having a prognosis of death within six months. The care is, therefore, palliative, that is, to provide comfort to the dying patient, not curative. The patient and family members are treated as a unit by an interdisciplinary team which includes doctors, nurses, home health aides, chaplains, social workers, and counselors. Hospice services are gaining in acceptance and utilization in the United States. It is considered cost effective and is, therefore, subject to reimbursement by Medicare, Medicaid and private insurances. Many hospice services to relatives and the community, however, including camps for bereaved children, are funded by charitable donations to the programs. 14. In its CON application, Catholic Hospice describe two cases in which hospice patients in Broward expressed a preference for its care. One doctor who testified by deposition for Catholic Hospice said he supports the application because there is no real advocate for Hispanics in Broward County. He complained of discriminatory practices in county hospital emergency rooms. He also expressed frustration that the existing hospices are not supporting his clinic, but admitted that he is not familiar with referrals to hospices. When his hospital patients need hospice, the social service departments handle referrals. He refers his other potential hospice patients to their churches. See Catholic Hospice Exhibit 20. Demographic Data 15. Approximately 80% of all hospice patients are over 65 years old. Hospice patients, obviously, are those whose deaths 10 are not unexpected, that is, not the victims of homicides, suicides or fatal motor vehicle accidents. Hospice services were traditionally provided largely to terminally-ill cancer patients, who still make-up the majority of patients statewide. 16. Catholic Hospice's expert noted that, particularly after some Dade County communities were destroyed by Hurricane Andrew, the trend of Hispanic migration into Broward County has been increasing. The projected increase in the Broward Hispanic population, from 2000 to 2005, is 45,900 for people under age 65 and 7,000 for people 65 and over. 17. The total Hispanic population of Broward County, is approximately 205,000 people out of a total of 1.5 million, or an estimated 12.6 to 13.4%. It is projected to increase to 15.6% by 2005. By comparison, Hispanics are approximately 55% of the population in Dade County. In Broward, Hispanics are more heavily concentrated in south central and southwestern areas of the County. One of Catholic Hospice’s offices is located in the northern Dade County area of Miami Lakes, conveniently near the southern areas of Broward County. Broward County residents are included in the staff and volunteers working in that office. The other office is in Kendall. Consistent with the concentration of the population, the largest number of Hispanics discharged from a Broward County hospital come from Memorial Hospital West. il 18. Catholic Hospice took the position that hospice care for Hispanics in Broward County should be provided within two or three percentage points of that which the group represents in the total population. The fact that the Broward providers serve from two to 4% Hispanic patients is, according to Catholic Hospice, indicative of underservice to the group. 19. Catholic Hospice's health planning expert conceded, however, that a better analysis than Hispanic population as a percentage of the total, would take into consideration more specific demographic data, including age, death rates by ethnicity, and causes of death. 20. Hispanics over 65 were 8.7% of the total Hispanic population in Broward County, 3.4% were over 75 years old. By comparison, over 20% of the total Broward County population is over 65, and over 10% over 75. Catholic Hospice offered its Dade County service, where 60% of its patients are Hispanics, as an example of its ability to achieve better results serving Hispanics in Broward County. In Dade County, however, the pool of potential patients is larger, with smaller differences between ethnic groups. Hispanics over 65 are 14.4% of the total population, almost identical to the 14.6% the non-Hispanic and total Dade populations over age 65. 21. Differences in age cohorts in the population are, as expected, reflected in differences in death rates. In 1998, 12 there were 641 Hispanic deaths in Broward County. of these, 383 were in the 65 and over age group, and 258 were under 65 years old. For 1999, there were 718 Hispanic deaths, of which 455 were 65 and over, and 261 were under 65. In the larger and older Hispanic population of Dade County, there were 9,220 Hispanic deaths, in 1999. 22. Hispanics in Broward County have a lower number of deaths per thousand, which is consistent with the relative youth of the group, as compared to the total population. In 1998, Hispanics accounted for 3.64 deaths per thousand, while there were 10.71 deaths per thousand in the total population of Broward County. In 1999, the Hispanic rate was 3.83 per thousand, as compared to 10.89 per thousand for the total population. When death rates are adjusted to exclude as causes accidents, suicides, and homicides, the Broward Hispanic death rates for 1998 and 1999 were 3.8 and 4%, respectively. 23. The analysis of the Hispanic population by age, death rates, and causes of death indicates that the current level hospice services, ranging between 2% for lower volume providers to 4% for Vitas, is the appropriate, expected level. 24. The level of hospice care which Catholic Hospice deemed appropriate is virtually impossible to reach considering the reality of the causes of death. Using Catholic Hospice's expert health planner's expectation that nine percent of all 13 Hispanics who died in Broward County should have hospice care, then 680 of 718 deaths in 1999, would have had to have been admitted to hospice. Numeric Need 25. Due to the demographic make-up and the level of care provided by the existing four hospice programs in District 10, AHCA published a zero numeric need for additional programs. AHCA publishes a need for a new hospice program when its formula demonstrates that the number of additional patients who would elect hospice care equals or exceeds 350 patients over and above the current volume of hospice admissions. 26. The formula, in Rule 59C-1.0355(4) (a), Florida Administrative Code, for projecting additional hospice deaths, uses actual three-year resident deaths in four groups of people, those with and without cancer, who are both over and under age 65. 27. When the formula was applied to the Broward County data, the result was 5,947 projected hospice patients for the July 2001, planning horizon. When compared to the actual volume, in 1999, of 7,550 patients served by the four existing hospice programs, the number of projected additional patients is a negative 1,603. The negative number is based on the statewide hospice experience and indicates that the hospices in Broward 14 County, in 1999, served 1,603 more people than they were expected to serve two years later. Penetration Rate, Accessibility and Availability 28. Although not used in the formula, the negative need calculation is, in part, a function of what the health planners described as the hospice use rate or hospice penetration rate. All of the expert health planners who testified agreed that the hospice penetration rate is the single most significant factor in determining the extent of the existing hospice utilization. The total number of hospice deaths divided by the total number of deaths during the same time period in the same planning area gives that planning area's penetration rate. 29. In Florida, the statewide hospice penetration rate for is 33.5%. In Broward County, District 10, the rate is 46.6%, the highest in the State. By contrast, the national average is approximately 29%. For adjacent District 11, which includes Dade County, the penetration rate is 30.7%. 30. For Hispanics in Broward County, the hospice penetration rate was 37.3% in 1999. In Dade County, the Hispanic hospice penetration rate was 28.2% in 1999, indicating greater opportunities for growth in Dade. In general, the data indicates that Hispanics in Broward are utilizing hospice care more than Hispanics in Dade County, and more than the total population of Florida. 15 31. The adequacy of access to hospice care in terms of geographical coverage has been considered. In Broward, with a total of 1,211 square miles and four hospices, each one averages 303 square miles. The smallest geographical area for hospices in Florida was 280 square miles for the one hospice operating in Pinellas County. The statewide average, however, is 1,083 square miles for each hospice in Florida. There are no apparent geographical limitations on access to hospice care in Broward County. 32. As the parties stipulated, accessibility in terms of timeliness is not at issue. There is no indication that hospice referrals do not get a response within 48 hours, a special circumstance, specified in Rule 59C-1.0355(4) (d)3., Florida Administrative Code. Spanish Language Material and Spanish-Speaking Staff 33. Catholic Hospice conceded that the existing Broward County hospices provide appropriate printed material, forms, and promotional information in Spanish. But, Catholic Hospice argued that it has the ability to reach out to and serve Hispanic patients better than any of the other existing providers based on its experience and staff. Catholic Hospice noted that the percentages of Hispanics to total Dade County patients it serves is higher, ranging between 61 to 67% than Vitas' to 35 to 40%, even though in absolute numbers Vitas 16 served twice as many Hispanics, in Dade County in 1999, as did Catholic Hospice. 34. Spanish-speaking staff is inadequate to serve Spanish- speaking patients, according to Catholic Hospice, unless every member of the hospice interdisciplinary team speaks Spanish. In response to discovery requesting numbers of fluent Spanish speakers on staff in Broward County, HBTS reported three full- time equivalent (FTE) employees. Each FTE represents a 40-hour work week. 35. Hospice Care of Broward reported that it employs, in Broward, three nurses, one home health aide, two chaplains, but no social workers or bereavement counselors who speak Spanish. Although that was considered inadequate by Catholic Hospice's expert, Hospice Care of Broward noted its ability to use Spanish-speaking staff from its Dade office. Catholic Hospice also indicated its intention to use its staff from Dade, if needed, as well as some of its current staff members and volunteers in Dade who actually reside in Broward County. 36. Vitas employed three chaplains, six registered nurses, three doctors, three home health aides, a secretary, a case worker, six pool staff and various others, for a total of 42 Spanish speakers in Broward County. Vitas was considered inadequately staffed by Catholic Hospice's expert for not having a Spanish-speaking social worker, although its chaplains and not 17 just social workers provide bereavement counseling. At the time, Vitas' census of Hispanic patients included seven in three different nursing homes, and 29 patients at home. 37. Catholic Hospice listed the names of 69 Spanish- speaking employees, who staff Catholic Hospices current operations in Dade County. Catholic Hospice's expert testified that, with 69 Spanish-speaking staff members, it adequately met the needs of 840 Hispanic patients. It must be concluded, logically, that Vitas, with 42 Spanish-speaking staff members, also had an adequate number to serve 238 Broward County Hispanic admissions in 1999. Including all of Catholic Hospice's administrators and excluding all but apparently fluent Spanish- speaking staff, the ratio of staff to Hispanic admissions is 9.9 to one for Catholic and 5.7 to one for Vitas. 38. All of the hospices rely on volunteers to help provide care to patients and their relatives. They also rely on relatives to serve as translators, if necessary. In addition, some hospice employees who are not fluent in the language do speak and understand some Spanish. Staffing 39. The staffing and related expenses, included in Catholic Hospice's financial projections, were criticized as inadequate. An expert for Vitas testified that $80,000 rather than $50,000 is appropriate for an hospice administrator; that 18 $18.99 an hour, Catholic Hospice's second year projection, is more appropriate for the first year than the first year projection of $17.78 an hour, or $37,000 a year, which was proposed for the first year for a registered nurse; that, although starting salaries are $16,000, or $7.69 an hour for nurses' aides, Catholic Hospice should expect to pay a minimum of $8.50 an hour in Broward County; that $35,000 a year is unreasonable for a patient care manager, a position typically filled by a registered nurse; and that $37,000 rather than $32,000 is more reasonable for a licensed clinical social worker. 40. The Vitas' expert also testified that 7.6 not 6 FTEs for registered nurses are needed, and more than one FTE for a social worker for the entire County for the first year. The proposal to hire one bereavement counselor, and one volunteer coordinator in the second year, but none in the first was also criticized as an underestimate of staffing needs, considering an average daily census of 30 patients in the first year, and 50 patients in the second. 41. Catholic Hospice used its experience and ratios established by national associations to project staffing needs. The projections are reasonable in providing, for example, one nurse for every ten patients and one home health aide for every eight patients. The nursing shortage, which all parties concede 19 exists in South Florida will likely increase the time and expense for Catholic Hospice to recruit its staff. Some health care facilities also find it necessary to provide signing bonuses, which Catholic Hospice has not proposed to do. At the time of the hearing, Catholic Hospice needed more staff and was participating in a jobs fair in Dade County. 42. In terms of its own operations, Catholic Hospice could also use and benefit from economies of scale, by using some of its existing staff and volunteers in Broward County. Its per unit costs would decrease primarily from sharing administrative staff, in much the sawe way as Hospice Care of Broward operates in both counties. For this reason, the criticism of Catholic Hospice that its propesed staffing and salaries are adequate is rejected, even though its work papers showed more staff than its CON application. Financial Feasibility 43. Catholic Hospice expects to serve 220 patients in the first year and 400 in the second. The average length of stay for each hospice patient in Broward County was around 40 days For Catholic Hospice, in Dade County, it was 48.9 days in 1999. When patient days are calculated from admissions with an average of 48.9 days, the results are 10,219 for the first year, and 19,574 for the second year. Catholic Hospice's application uses 10,905 patient days for the first year, and 25,520 for the 20 second year. It appears that utilization is overestimated by 700 admission in the first year and 6000 in the second year. To reach the second year projection of 400 admissions, the average length of stay would have to be 63.8 days. 44. One expert quantified the effect on projected revenues as a result of Catholic Hospice's overstatement of utilization by patient days. The conclusion was that projected revenues would decrease by $136,000 in the first year, and $1,063.881, in the second year. When Medicare rate increases approved by Congress are considered, the projected revenue decreases are approximately $65,000 in the first year, and that adds back $123,000, to the expected decrease of $1,063,881, increasing it to about a $900,000 reduction in revenues for the second year. 45. The analysis of revenues as compared to patient days was flawed having not reflected a proportionate reduction in variable expenses. Vita's expert's assumed that expenses should not be reduced because: Catholic Hospice had underestimated staffing and salaries. The finding that staffing and salaries are adequate means that, although Catholic Hospice overestimated revenues, the exact amount cannot be determined. The evidence that revenues and utilization are overestimated means that Catholic Hospice failed to prove that its proposal is financially feasible. The assumption is made that revenues are sufficient to‘cover projected start-up costs of $69,493. 21 46. Catholic Hospice's expert criticized the use of average length of stay to determine patient days. That approach is more reasonable than that used by Catholic Hospice which relied on its start-up experience in Dade County in 1989, to guess what Broward patient days might be in 2002 and 2003. When Catholic Hospice started, its average lengths of stay were 21.17 days in 1989, and 32.1 days in 1990. 47. Additional factors which cast doubt on the likelihood of Catholic Hospice achieving its projected utilization and revenues are the pattern of referral sources in Broward County and the level of charity care. Physicians referred approximately 43% of all hospice patients in Broward County, while approximately 24% came from hospitals in 1999. It will take Catholic Hospice longer to establish referral relationships with a number of different physicians. Lower revenues are also reasonably expected with higher percentages of charity care. Historically, in Dade County, charity care has accounted for -23% of Catholic Hospice's services, but it projected 3.5% for Broward County. 48. The CON application submitted to AHCA was incomplete, having omitted key information necessary for AHCA to determine financial feasibility, including the following: (1) failure to distinguish between Broward and Dade operations in sufficient detail for an evaluation of Broward separately, 22 although payer mix assumptions for each were different ; (2) inadequate breakdown of admission by payer type; (3) no provision for dietetic and nutritional counseling; (4) no specific allocation of FTEs for a medical director; (S) no details of a staff recruitment and retention plan; and (6) a material discrepancy of $3 million, given the projected year two net profit of $39,100, between revenues on one schedule as compared to the notes to the same schedule. Impact on Existing Providers 49. The existing providers presented evidence related to the potential impact on their admissions, revenues, and staffing, if Catholic Hospice begins operating in the Broward County market. They need to maintain or increase their censuses to have some leverage for contract negotiations, and to provide charity care and unreimbursed services, such as bereavement services. Catholic Hospice maintained that it would not adversely affect existing providers, citing the experience in Dade County when Hospice Care of Broward began operations in 1998. The situations are distinguishable. From 1997 to 1999, for example, hospice admissions increased 16.7% in Broward and 35.3% in Dade County. Dade County started with a lower-than- average hospice penetration rate in 1998. Most importantly, 23 AHCA published a numeric need for an additional hospice which led to the approval of the Hospice Care of Broward CON. 50. Although Vitas' market share in Dade County increased during the time that Hospice Care of Broward began operations there, the smaller hospices, Hospice Care of South Florida and Catholic Hospice lost market shares. Similarly, recent increases in the market share of HBTS in Broward County have adversely affected Hospice Care of Broward, but not Hospice of the Gold Coast, which has the affiliation with a hospital district, or Vitas. Based on these experiences, it is reasonable to expect that the smaller providers will experience a disproportionately greater adverse impact from the entry of Catholic Hospice into the Broward County market. 51. Assuming that: Catholic Hospice achieves it projection of 220 patients in its first year of operations in Broward County and 400 in the second year, then it will adversely affect all of the existing providers, at least to the extent of limiting their potential growth. 52. Using the total number of projected hospice patients for 2002 and 2003, and allocating all incremental admissions to Catholic Hospice first, the result is that 61 cases for 2002, and 120 for 2003, are available for Catholic Hospice. That leaves an additional 159 admissions for the first year and 280 24 for the second year, waich must come from patients who would have otherwise used the existing hospices. 53. When proportional losses of cases to Catholic Hospice are assumed with static market shares, the expected impact in terms of lost admissions are 5 and 8 from Hospice of the Gold Coast, 11 and 20 from HBTS, 21 and 37 from Hospice Care of Broward, and 121 and 215 from Vitas, in years one and two, respectively. 54. If the assumption is made that the market shares will change, following established trends, then projected losses will increase most (to 16 in 2002 and 29 in 2003) for the hospice which has been expanding most rapidly, HBTS. More consistent providers, in terms of volume, would have lower projected losses, for example, 15 and 26 admissions in years one and two, respectively, for Hospice Care of Broward County. 55. Of the three scenarios presented, the most reasonable assumptions are that proportional losses of the type which occurred in Dade County would also occur in Broward, and that market share trends would continue. If that happens, then the smaller providers would lose more potential patients, up to 91 and 165 from HBTS, 87 and 158 from Hospice Care of Broward, and 27 and 49 from Hospice of the Gold Coast, in years one and two, respectively. For Hospice Care of Broward, the loss of 158 is 25 significant when compared to total volume of approximately 1000 patients. 56. The market share analyses could be criticized for relying on projected population growth, but not factoring in an increase in the penetration rate. In fact, the penetration rate in Broward, as high as it is, has been increasing, but in relatively small increments, from 45.8% in 1993 to 46.6% in 1999. The .8% increase is considered approximately flat, particularly having followed a 7% decline in the Broward hospice penetration rate from 45.8% in 1993 to 38.6% in 1994. The fluctuations in the penetration rate and the decline in deaths from cancer and AIDs support the reasonableness of the assumption of a static penetration rate in the market share analysis. 57. Only HBTS presented evidence on the financial impact of the projected losses, ranging from a low of $61,554 for 20 lost admissions to a high of $507,464 for the more reasonable assumption of 165 lost admissions. The magnitude of the detrimental impact, put in context, is significant given HBTS' losses from operations of $1.8 million in 1999, and $1 million in 2000, which had to be offset by charitable contributions and income from investments. 58. In addition to lower operating revenues from patient care reimbursements, HBTS also projected losses from charitable 26 contributions. In 1993, HBTS received $629 in charitable donation for each hospice patient admitted, from bequests, memorials, tributes, holiday remembrances from families and friends. Contributions from these sources are directly related to the care given to individual patients and, therefore, to the total number of patients. At HBTS, over 64% of its total charitable contributions are in the combined categories of tributes and bequests. The adverse financial impact on HBTS including reduced charitable contributions, is $74,149 for 20 cases and up to $611,301 for 165 cases. 59. WVitas received referrals from Holy Cross Hospital, a Catholic facility in Broward County which would be expected to enter an agreement with Catholic Hospice. Vitas also runs a bereavement group for Spanish speakers at Holy Cross Hospital. Holy Cross Hospital is listed, in the CON application, as the likely source of a contract for services with Catholic Hospice. In a three-month period, Vitas received 30 referrals resulting in 25 hospice admissions from Holy Cross Hospital. In Dade County, Vitas receives virtually no referrals from Mercy Hospital, which is also a Catholic institution and one of the Catholic Hospice partners. Therefore, despite the projected disproportionate impact in the market, to Vitas' advantage, if all other things were comparable to the Dade County experience, because of the institutional relationships between Catholic 27 Hospice and Holy Cross Hospital, Vitas' is reasonably expected to be adversely affected. It is impossible to determine if projected losses are significant in terms of the total Vitas operation, since it provides over three-fourths of all hospice care in Broward and returned approximately $10 million in revenues in 1999, to its corporate operations. There is also no evidence that more competition with Vitas will enhance services or reduce costs. 60. Expert witnesses acknowledged a severe nursing shortage in South Florida, approaching crisis proportions. The existing providers are always recruiting and never fully staffed. The kind of care required of hospice nurses, the pressure of dealing with dying patients, the need for them to be on call rather than working only on scheduled shifts, the preference for oncology nurses, and the need for bilingual nurses further limits the available pool. The shortage has increased since 1998, when Hospice Care of Broward expanded into Dade County. Hospices are also not free to attract nurses by raising rates to pay increasingly higher salaries, but must resort to other incentives which increase recruiting costs. Hospice patient care is usually reimbursed on a per diem basis, regardless of actual costs, at rates set by the Medicaid and Medicare programs. The existing hospices reasonably expect an adverse impact on their staffing, recruiting time and costs, 28 particularly for nurses and home health aides, if Catholic Hospice enters the market in Broward County and succeeds in staffing its project as proposed. Agency Action and Rules 61. The Chief of the Bureau of Health Facility Regulation for AHCA, who is also an expert in health planning, testified that the review process in this case was the same as for most CONs. Within AHCA, however, the initial recommendation was to deny the application because of insufficient data to support the allegation of a lack of access for the Hispanic population. 62. The decision to approve CON Number 9333 was made because AHCA Secretary, "Ruben King-Shaw indicated that he felt that it was a policy priority at the highest level of the current administration, both within the Agency and I would say at the level of the Governor, to promote culturally sensitive access to end of life care. And that he referenced a presentation that I believe that he had heard Secretary Brookes (phonetic) of the Department of Health make a day or two prior to our meeting where he said that Dr. Brookes was one of the best speakers that he had ever seen on the issue of culturally sensitive health care and barriers to -- cultural barriers to health care." Transcript, p. 955-956. 63. In addition to the statutory review criteria for CONs, AHCA relied on Rule 59C-1.030, Florida Administrative Code, which lists general criteria for evaluation of CON applications, 29 and Rule programs. there is included 64. follows: 59C-1.0355, which applies specifically to hospice The need to serve a particular ethnic minority, if evidence that their access to a service is limited, is in the criteria. The most relevant provisions of Rule 59C-1.030 are as (2) Health Care Access Criteria. (a) The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly, are likely to have access to those services. (b) The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. (c) The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and State health plan as deserving of priority. (d) In determining the extent to which a proposed service will be accessible, the following will be considered: 30 1. The extent to which medically underserved individuals currently use the applicant's services, as a proportion of the medically underserved population in the applicant's proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; 65. In the absence of numeric need, the special circumstances subsection in Rule 59C-1.0355(4) (d)1., Florida Administrative Code, on which Catholic Hospice relied is as follows: Evidence submitted by the applicant must document one of the following: 1. That a specific terminally ill population is not being served. 66. One expert testified that the provision should be narrowly construed to require a proposal to care for a specific terminal diagnosis, such as AIDS, but AHCA reasonably rejected that interpretation as applied to this case. Care fora particular ethnic group is specifically recognized as a valid consideration in Rule 59C-1.030. 67. AHCA's expert also noted, that under its rules, there is no reason to approve the application of Catholic Hospice if it fails to show that there is an underserved population, in this case, Hispanics in Broward County. The CON was prepared based on a belief that Hispanics are underserved, but without any data on Hispanic utilization. That data is not routinely 31 collected by AHCA and only became available in this case as a result of discovery. AHCA also determined that Catholic Hospice needed to show evidence that the existing providers are not meeting the area's needs. Catholic Hospice failed to show any need for its services in Broward County. In fact, there is affirmative evidence that the Hispanic hospice penetration rate should be what it is, which is approximately the same as the Hispanic death rate, adjusted to exclude unexpected causes of death. Therefore, the application of Catholic Hospice should be denied.
Conclusions For Petitioner Hospice by the Sea, Inc.: Robert A. Weiss, Esquire Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP 118 North Gadsden Street The Perkins House, Suite 200 Tallahassee, Florida 32301 For Petitioner Vitas Healthcare Corporation: Geoffrey D. Smith, Esquire Steven E. Oole, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Post Office Box 11068 Tallahassee, Florida 32302-3068 For Petitioner Hospice Care of Broward County, Inc.: Stephen A. Ecenia, Esquire R. David Prescott, Esquire Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 32302-0551 For Respondent Catholic Hospice, Inc.: Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303 For Respondent Agency for Health Care Administration: Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
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 denying the application of Catholic Hospice for Certificate of Need Number 9333 to establish a hospice program in District lo. DONE AND ENTERED this [3% day of July, 2001, in Tallahassee, Leon County, Florida. Ahicamae rn Yt. 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 /.3r* day of July, 2001. COPIES FURNISHED: Sam Power, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 38 Julie Gallagher, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403 Robert A. Weiss, Esquite Karen A. Putnal, Esquire Parker, Hudson, Rainer & Dobbs, LLP 118 North Gadsden Street The Perkins House, Suite 200 Tallahassee, Florida 32301 Geoffrey D. Smith, Esquire Steven E. Oole, 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 Thomas W. Konrad, Esquire Rutledge, Ecenia, Purnell and Hoffman, P.A. 215 South Monroe Street, Suite 420 Post Office Box 551 Tallahassee, Florida 22302-0551 Theodore E. Mack, Esquire Powell & Mack 803 North Calhoun Street Tallahassee, Florida 32303 Richard A. Patterson, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building Three, Suite 3431 Tallahassee, Florida 32308-5403
The Issue Whether the Certificate of Need (“CON”) applications filed by Seasons Hospice and Palliative Care, Inc. (“Seasons”); Gulfside Hospice and Pasco Palliative Care, Inc. (“Gulfside”); and West Florida Health, Inc. (“West Florida”); for a new hospice program in Agency for Health Care Administration (“AHCA” or the “Agency”) Service Area 6A/Hillsborough County, satisfy the applicable statutory and rule review criteria sufficiently to warrant approval, and, if so, which of the three applications best meets the applicable criteria, on balance, for approval.
Findings Of Fact Procedural History The Fixed Need Pool On October 3, 2014, the Agency published a need for one additional hospice program in Hospice Service Area 6A, Hillsborough County, for the January 2016 planning horizon. Under the Agency's need methodology, numeric need for an additional hospice program exists when the difference between projected hospice admissions and the current admissions in a service area is equal to or greater than 350. The need methodology promotes competition and access because numeric need exists under the methodology when the hospice use rate in a service area falls below the statewide average use rate. In a service area in which there is a sole hospice provider, as in the present case, the existing provider has an incentive to continually improve access to hospice services in the service area in order to avoid numeric need for an additional program under the formula. For the January 2016 planning horizon, the Agency determined that the difference between projected hospice admissions and current admissions in Hospice Service Area 6A was 759, and therefore a numeric need for an additional hospice program exists in Hillsborough County. AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034(1), Florida Statutes. The Proposals and Preliminary Decision Nine applicants submitted CON applications seeking to establish a new hospice program in AHCA Service Area 6A, Hillsborough County, in response to the fixed need pool. LifePath, the only existing provider of hospice care in the service area, opposed the hospice application which was sponsored by a hospital system, i.e., West Florida’s. After reviewing the applications, the Agency preliminarily approved West Florida's CON Application No. 10302 and preliminarily denied the remainder of the applications, including Seasons’ CON Application No. 10298 and Gulfside's CON Application No. 10294. At the final hearing, Marisol Fitch, supervisor of AHCA's CON unit, testified that the Agency approved West Florida's CON application because it determined that West Florida's application best promotes increased access to hospice services for residents of Hillsborough County. The Agency concluded that Tampa General and Florida Hospital, West Florida's parent organizations, already have large infrastructures in place in Hillsborough County. Accordingly, the Agency determined that West Florida's proposed hospice program, if approved, would benefit from built-in access points that would enable West Florida to improve hospice accessibility. The Applicants, AHCA and Lifepath West Florida West Florida is a joint venture with 50-50 ownership and control by Tampa General and Florida Hospital, two acute care hospitals in Hillsborough County. The entity was created for the purpose of seeking the CON at issue in this proceeding for a new hospice in Service Area 6A. West Florida recently became the owner/operator of three home health agencies which had been operated for several years by the Florida Hospital System. Tampa General has not operated hospices in the past, while Florida Hospital has, and the CON application submitted by West Florida relied heavily upon the Florida Hospital-affiliated hospice’s programs and history. West Florida is the only applicant in this proceeding that is hospital affiliated. Seasons Seasons, the applicant, is a single purpose entity created for the purpose of seeking a CON to operate a new hospice in Service Area 6A. It is affiliated with Seasons Hospice and Palliative Care, a for-profit company (hereinafter referred to as “Seasons HPC”). Seasons HPC is the largest family-owned hospice organization in the country. The first Seasons HPC-affiliated hospice opened in Chicago, Illinois, in 1997. In 2003, Seasons HPC opened its second hospice in Milwaukee, Wisconsin, and in 2004, it acquired a third hospice in Baltimore, Maryland. Since 2004, Seasons HPC has continued to grow nationally by opening, or in some cases acquiring, hospices in new markets. Today, Seasons HPC is the fourth largest hospice company in the United States with 25 separate hospices operating in 18 different states. Each Seasons HPC-affiliated hospice is a separate entity, with its own license, executive director, and staff. However, each Seasons HPC hospice is connected via overlapping ownership and via contracts with Seasons Healthcare Management, its management company. Among the services that Seasons Healthcare Management provides to each Seasons HPC hospice are: education and training, quality management, financial planning support, management of payrolls, tax preparation, cost report preparation and coordination, IT services, corporate compliance policies and programs, marketing and development expertise, in- house legal services, and a wide variety of policies and consultations including, but not limited to, clinical support and physician oversight. Todd Stern is the CEO of Seasons Healthcare Management and is also the CEO of the 25 separate hospices that Seasons HPC operates throughout the country. Mr. Stern joined Seasons HPC in 2001, and was appointed CEO in 2008. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization and is licensed by AHCA. Gulfside has been providing hospice services in Pasco County (which is contiguous to Hillsborough County) for more the 25 years. Gulfside provides service to all patients in need regardless of race, creed, color, gender, sexual orientation, national origin, age, qualified individual with a disability, military status, marital status, pregnancy, or other protected status. LifePath LifePath is the sole existing, licensed hospice provider in Hospice Service Area 6A, Hillsborough County. LifePath is a subsidiary of Chapters Health System. LifePath has provided hospice services in Hillsborough County since 1983. It was the first hospice program in the state to be accredited by The Joint Commission and has continuously maintained that accreditation. LifePath is also accredited by the National Institute for Jewish Hospices. In addition to providing routine, continuous, and respite care to residents of Hillsborough County, LifePath also provides inpatient hospice care in two, 24-bed hospice houses located in Temple Terrace and Sun City, Florida. Additionally, LifePath has scatter-bed contracts with all of the acute care hospitals in Hillsborough County to provide inpatient care. LifePath is an important part of the healthcare continuum in Hillsborough County and works collaboratively with other healthcare providers in the community, including hospitals, nursing homes, and assisted-living facilities. AHCA AHCA is the state agency responsible for administering the Florida CON program. Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their families. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. Under the Medicare program administered by the federal government, a terminally ill patient is one who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, seven days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may also be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support services to the family for a minimum of one year after the patient's death. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, chaplains, and other disciplines. There are four levels of service in hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care comprises the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room-like or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85-to-90 percent of hospice care is paid for by Medicare. There are certain services required or desired by some patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy, among others. There are other, more complicated and expensive non-covered services, such as palliative chemotherapy and radiation, that may be indicated for severe pain control and symptom control. Hospices which provide these additional services are said to have “open access” and foot the bill for such services. The Parties’ Proposals Each of the applicants- -as well as LifePath and the Agency– -agree that any one of the applicants could provide quality hospice services if approved. The following paragraphs set out some of each applicant’s attributes. Before each of the applicants’ proposals is discussed more fully below, it is clear that all of the applicants would likely be successful if approved. As stated by the parties themselves: “All three applicants . . . have the ability to operate a high quality hospice.” West Florida counsel, Tr., p. 12. “These are all excellent providers” and “There are no bad choices here.” AHCA counsel, Tr., pp. 1802 and 2009. “All [applicants] would be qualified; they all do good.” Lifepath counsel, Tr., p. 1980. “All applicants will undoubtedly provide the same level of quality care.” West Florida PRO, ¶ 59. The ultimate concern of AHCA regarding a new hospice provider in Hillsborough County is not the quality of care that the applicants can provide. All applicants will undoubtedly provide the same level of quality care. The real concern is costs, access, and availability. The Agency believes that West Florida will be best suited to promote cost effectiveness, as well as increase access and availability. A. West Florida West Florida is a collaborative effort by two existing, licensed hospitals in the service area. West Florida justifiably touts its connection to educational institutions. West Florida conditioned its approval on the funding of an additional palliative care fellowship at the University Of South Florida College of Medicine at an annual cost of roughly $80,000 and an additional CPE resident in Tampa General’s CPE program at an annual cost of $30,000. Having West Florida as part of the Tampa General “family” will expose not only the new palliative care fellow, but also medical students, medical interns and residents, other fellows, nurses, and a wide variety of allied health professionals, to hospice services and the benefits of hospice care. The new CPE resident could help to expand knowledge about end-of-life care and ultimately improve access to hospice services. West Florida will benefit the Tampa General pastoral care and CPE program by extending pastoral palliative care and end-of-life care training and experiences for all CPE students. Florida Hospital is a part of the Adventist Health System, which operates all types of healthcare facilities throughout the nation, including hospitals, rehab facilities, home health agencies, hospices, long term acute care hospitals, nursing homes, and more. In Florida, Adventist operates a range of facilities, including statutory teaching hospitals, quaternary-level service providers, critical-access hospitals, and safety net hospitals. In Hillsborough County, Florida Hospital operates Florida Hospital Tampa and Florida Hospital Carrollwood, both acute care facilities, in addition to a variety of outpatient facilities, physician practices, and the like. West Florida has proposed and is committed to opening a four-bed hospice inpatient unit at Florida Hospital Carrollwood, located in the northwestern portion of the county. Currently, there are two other inpatient hospice house units in Hillsborough County, one on the eastern side and one in the far south, both operated by LifePath. The unit would theoretically benefit hospice patients by increasing the number of inpatient beds and improving geographic distribution, thereby providing more access to hospice care. An inpatient unit may operate better than contracted “scatter beds” because hospice staff trained in end-of-life care and symptom management would be the medical personnel providing care to the patient rather than other hospital staff. Florida Hospital is an experienced provider of hospice services in the State of Florida, operating Florida Hospital Hospice Care in Volusia and Flagler Counties, as well as Hospice of the Comforter in Orange and Osceola Counties. Ms. Rema Cole is the administrator for Florida Hospital Hospice in Flagler and Volusia Counties. She has been responsible for opening two new hospice programs in the State of Florida. West Florida will provide a wide variety of unfunded “open access” services to its patients, such as: radiation and chemotherapy, caring for patients on ventilators, and training staff to provide these services. Combined, Florida Hospital and Tampa General touch tens of thousands of lives in Hillsborough County, totaling approximately 52,000 patients each year. Tampa General or Florida Hospital could tell its patients and their families about the goals and benefits of hospice care. It is likely West Florida would tend to promote its own hospice more prominently than it would promote its competitor’s (LifePath) services. West Florida suggests the possibility of a fully integrated electronic medical record. It would entail a long process, but steps have already been taken to begin the integration. The ability of the medical records of both Tampa General Hospital and Florida Hospital to “talk” to each other and all related ancillary providers, including its clinically integrated network, home health agency, and West Florida could improve the ability to reduce costs, as well as emergency room visits and unplanned admissions of hospice patients to hospitals. Having a streamlined system that communicates between the hospice, hospitals, and their ancillary providers could reduce workload, unnecessary paperwork, and increase the efficiency at which the hospice staff is able to operate. There is no such system in operation yet, but West Florida has plans to implement it once it is available. Florida Hospital Hospice Care provides a wide range of non-compensated programs, including a pet partner program called “HosPooch” that provides pet therapy to patients in inpatient units, nursing homes, ALFs, and even to non-hospice patients at their cancer centers. They also have a recording project called Project Storytellers that has a group of volunteers going into patients’ homes or wherever they may be to talk to the patient about their life, record things that were important to them, and give that recording to the families as a keepsake. Florida Hospital Hospice Care is involved with their local Veterans Administration nursing home and clinic, where volunteers perform pinnings of veterans. There is also music therapy, a group of quilters, and vigil volunteers, who sit at the bedside of patients to keep watch if the caregiver needs to take a break or run errands. West Florida can immediately tap into the existing connections that both Florida Hospital and Tampa General have in the community. These include relationships and connections with physicians, churches, civic groups, and other organizations, both healthcare and non-healthcare related. These existing relationships would serve not only as opportunities to market West Florida, but could also serve as educational opportunities to inform more individuals, groups, and organizations about the benefits of hospice care and the availability of the West Florida. West Florida agreed to condition approval of its CON application on the following eleven concepts: Annual funding for an additional palliative care fellowship at the University of South Florida; Annual funding for an additional CPE resident; Annual sponsorship of up to $5,000 for children’s bereavement camps; Up to $10,000 annually for a special wish fund; Operating a 4-bed inpatient unit at Florida Hospital Carrollwood; Programs which are not paid by Medicare; Offices on the campus of Tampa General and Florida Hospital; Using a licensed clinical social worker with at least a Master’s degree to lead the psychological department; 8) Establish an education program on hospice care accessible to medical staff; Programs for the Hispanic population; and Creation of a community resource information website. A. Seasons Seasons described its proposal for services through various key players within its parent organization. Dr. Balakrishana Natarjan is the chief medical officer for Seasons Healthcare Management. Dr. Natarjan plays an active role in recruiting the medical directors for each Seasons hospice, and the medical director of each hospice reports directly to him. Dr. Natarjan has developed a detailed list of the medical director’s qualifications and responsibilities, and a list of what he deems to be “non-negotiable company values” to which each medical director must agree. It is difficult to imagine how some of those values can be monitored (e.g., “The Medical Director must love holding the patient’s hand”; “The Medical Director must go to bed each night knowing they made a difference in the lives of specific dying patients,” etc.), but the idea of non-negotiables is recognized as positive. Seasons has also recently hired Daniel Maison, M.D., as the associate chief medical officer for the company. Dr. Russell Hilliard is Seasons’ vice-president for Patient Experience and Staff Development. He has a Ph.D. in music education, with an emphasis in music therapy and social work from Florida State University. His work is well-recognized in the hospice community. He was instrumental is starting the music therapy programs at Big Bend Hospice in Tallahassee, Florida, and at Hospice of Palm Beach County (Florida). His concept of music therapy is innovative, inclusive, and well- proven to achieve positive results. Dr. Hilliard will assist Seasons in doing a community-oriented needs assessment to ascertain what needs exist in Hillsborough County, examine how to meet those needs, and establish programs to be implemented upon approval as a hospice provider in the area. Seasons’ music therapies would then be implemented as necessary to meet the identified needs. Seasons has also assembled a team of national experts who are available to assist in various areas. One such expert is Mary Lynn McPherson, Pharm.D. Dr. McPherson has developed an online course entitled “Medication Management at the End of Life for Clinical, Supportive, Hospice and Palliative Care Practitioners,” that is offered through Seasons. Dr. McPherson is purportedly available 24 hours a day, seven days a week, to field numerous calls from Seasons physicians and other staff regarding complex medication management issues. Joyce Simard, a national expert in caring for people with dementia, developed for Seasons HPC hospices a specialized program for patients in the advanced stages of dementia. The program uses person-centered approaches to improve the quality of life for people suffering from dementia through meaningful sensory activities that stimulate the senses and promote comfort and serenity. Seasons Hospice Foundation (Foundation) is an independent 501(c)(3), non-profit foundation founded in 2011. The Foundation was established because Seasons was receiving unsolicited donations from grateful families and friends of patients, and it wanted these funds to go to a charitable purpose. Today the mission of the Foundation is to serve the needs of patients outside the hospice benefit. For example, the Foundation will assist patients who are unable to cover basic non-hospice needs, such as restoring electricity to a patient’s home or airfare so family members can travel to see a patient. Seasons does not rely on charitable contributions or other philanthropy to support its operations, nor does it rely on any other types of non-hospice revenue sources such as thrift shops. Unlike some new hospices which try to conserve resources and hire part-time staff when opening, Seasons invests 100 percent in new programs up front. All of the initial core staff is full-time, even when the hospice may be starting out with just a handful of patients. This allows the hospice team to develop trust among the group and to become familiar with Seasons’ policies, procedures and culture. Each Seasons HPC program and staff is reflective of the ethnic and cultural make-up of the area it serves. However, the mission statement, core values, service standards, operating practices, protocols, and policies are uniform in each Seasons HPC hospice. Seasons provides a large depth and breadth of programs in its hospices. Included among those services are music therapy, pet therapy (using certified pet therapy animals, as well as a specialized robotic seal for certain patients), Namaste (a specialized program for patients in the advanced states of dementia), Kangaroo Kids summer camp, Volunteer Vigil program, Leaving a Legacy, and Careflash. Seasons also participates in the We Honor Veterans program. Seasons would provide “open access” services in Hillsborough County. Seasons would provide these services for patients choosing to continue them so long as their prognosis remains six months or less, and the treatment is approved by the clinical leadership team for appropriateness. Such interventions may include IV antibiotics, blood transfusions, palliative cardiac drips, ventilator support, radiation therapy, heart therapy, dialysis and other palliative therapies. As discussed earlier, Seasons offers a very robust and highly professional music therapy program. But Seasons also provides music companions when simple entertainment is what is called for and Seasons makes sure the entire interdisciplinary staff is trained in this subject. Seasons actively works with hospitals in the markets it serves to educate physicians and allied health professionals in hospice and end-of-life care. Seasons hospices have affiliation agreements with several medical schools around the country to offer internships, fellowships, and other educational opportunities to pre-med students, medical students, and residents. Seasons hires experienced nurses who have previously worked in emergency rooms and intensive care units, and consequently is able to provide a much more clinically complex service than some other hospices. As a result, Seasons is able to serve patients that other organizations typically may not have served. Seasons utilizes a hospice-specific electronic medical record and is the largest hospice client of Cerner, a medical records provider. When a patient is admitted to a Seasons hospice, Seasons gathers the medical history of the patient, including hospital records if the patient has recently been in the hospital, and all relevant non-hospital medical records, including rehab notes, labs and other diagnostic testing results. This integrated electronic medical record is accessible to all Seasons hospice team members. Seasons has a centralized call center that takes calls from patients and their families 24 hours a day, seven days a week. At the call center, there are clinicians who are licensed in every state where Seasons operates who can respond to questions and provide consultation. The call center staff has full access to the patient’s electronic medical record in real time. Seasons also requires that all of its staff, including management at all levels, make calls to check on patients during the term of their treatment (i.e., not only when a patient calls or after the patient has died). In September 2010, Seasons acquired a controlling interest in a hospice in Miami-Dade County that was formerly known as Douglas Gardens Hospice. The hospice was acquired from the Miami Jewish Health System, which retains a 20-percent ownership in the hospice. At the time Seasons took over Douglas Gardens Hospice, the census was approximately 63 patients and the hospice was largely dependent upon referrals from the relatively small Miami Jewish Health System. Seasons retooled the makeup of the staff to better reflect the county’s Hispanic population and aggressively developed outreach efforts across the entire county. By the time of the final hearing, Douglas Gardens had grown to be the second largest hospice in Miami-Dade County with a census of 520 patients. When Seasons acquired its interest in the Miami-Dade County hospice, it diligently pursued referrals from assisted living facilities and nursing homes. In September 2010, Seasons had 13 admissions from ALFs; in September 2015, that number had risen to 154 admissions. Seasons’ hospice in Miami-Dade County has contracts with over 60 percent of the nursing homes in the county. In September 2015, the hospice admitted 110 patients from skilled nursing facilities. It has also pursued marketing to more than 30 acute care hospitals in the county. Today, approximately 40 to 45 percent of Seasons’ referrals in Miami-Dade County come from acute care hospitals. The majority of Seasons’ Miami-Dade County’s staff, including its executive director, is bilingual, and the hospice serves a large number of Hispanic patients. It also employs five to six chaplains, including non-denominational chaplains, a rabbi, and a Catholic priest who is able to deliver the sacrament of last rites. Seasons HPC requires all of its chaplains to be either board-certified or become board-certified within a year of being hired. Seasons HPC has developed a more formalized consulting arrangement with another national expert, Rabbi Elchonon Freedman from West Bloomfield, Michigan. Rabbi Freedman has been involved in the hospice field since the early 1990s and has four CPE units (equivalent to a master’s degree) and is board- certified. He heads the Jewish Hospice & Chaplaincy Network in Michigan which is heavily involved in hospice education across all denominations. Seasons participates in the “We Honor Veterans” program, and its Miami program has achieved Level 3 status. Seasons opened a new hospice in Broward County in late 2014, and it became Medicare certified in August 2015. The Broward hospice has achieved an average daily census of more than 50 patients as of the date of the final hearing. Seasons HPC has been successful in opening and growing new hospices in other large metropolitan markets throughout the country, most of which have no CON requirements and therefore present significantly higher hospice competition. Examples of large metropolitan markets where Seasons has successfully opened and grown the census of new hospices include: Phoenix, northern California, San Bernandino, and Houston. Seasons also agreed to condition its CON application approval on certain agreed services, including: Providing at least two continuing education units per year to registered nurses and licensed social workers at no charge; Offering internship experiences for various disciplines involved in hospice care; Donation of $25,000 per year to fund a wish fulfillment program for its patients and families; Provision of services outside the therapies paid for by Medicare; and Voluntary reporting of the Family Evaluation of Hospice Care survey to AHCA. Gulfside Gulfside is a 501(c)3 community-based, not-for-profit organization licensed by the AHCA as a hospice. Gulfside has been providing hospice services in Pasco County for more the 25 years. Gulfside provides care to all individuals eligible for care who meet the criteria of terminal illness and reside within the service area. Gulfside is accredited by the Joint Commission with Gold Seal status. Gulfside has grown in scope of services and in terms of census and coverage. In July 2004, it had 50 patients and roughly 30 staff members. It had a limited reach within Pasco County, primarily serving the community of New Port Richey. Hernando-Pasco Hospice, now known as HPH, was the dominant hospice provider in Pasco County. Gulfside grew, in part, through extensive community education to physicians and other healthcare and service providers, to its current average census of 360, which makes it the dominant hospice provider in Pasco County. The leadership at Gulfside has extensive experience in hospice, senior living, and Alzheimer’s care and management, including the management of senior living and SNF facilities, and developing new facilities and programs. Gulfside has a depth of experience in oncology care, social work, nursing, hospice and palliative medicine, health care administration, technical development, as well as program and project development. For example, Gulfside’s CEO and COO were both part of the team at LifePath’s Service Area 6B program (Polk, Highland and Hardee Counties) as the program was developing, growing from a census of 200 to 350 in one year. Each hospice patient at Gulfside meets with its interdisciplinary team (“IDT”) at least bi-weekly to discuss patients and to review their plan of care and any adjustments to the care plan. These meetings also include an educational component for IDT members. IDT meetings also take place when a patient requests a change in their care plan or should a change in the patient’s status trigger a new IDT review. Additionally, the physician member of the IDT will confer on a regular basis with the hospice medical director to obtain guidance and advice. The spiritual and pastoral care staff are also part of the IDT. Gulfside has extensive orientation and training for newly hired staff, requires that new staff must demonstrate core competencies before rendering services, and requires all staff to regularly demonstrate their competencies at Gulfside’s recurring “skills days.” Gulfside encourages all disciplines of its staff to maintain competencies, receive additional training, and earn continuing education units in their respective fields. Field staff use web-connected laptops and smartphones to assist with documentation and make live updates to the Electronic Medical Record (Allscripts) which Gulfside phased in over two years ago. Gulfside also has software programs which help to identify potential hospice referrals, allowing them to focus their outreach and education efforts to reach new patients. Gulfside has inpatient and other hospice service agreements with every hospital and nursing home in Pasco County. Gulfside has a very involved structure for internal improvement and regulatory compliance. There are a series of audits conducted by supervisors and others throughout its organization to ensure proper care, documentation and compliance. This type of review for performance improvement has been in place at Gulfside since 2005. Gulfside uses the services of DEYTA, a national organization, to assist it with the processing and data aggregation of its CHAPs results as part of its benchmarking for excellence. Gulfside’s commitment to quality and compliance was recognized in their last CMS and State Survey results, both of which were deficiency-free. Gulfside’s volunteer services are well-developed, allowing trained and supervised volunteers to work in administration, patient care, patient support, and even as part of the spiritual care team. Gulfside was awarded the Florida Hospices and Palliative Care Association’s Excellence Award in 2015 for its specialized Spiritual Care Volunteer Program. That program uses volunteers with spiritual or counseling training, including Stephen Ministers (lay-ministers) and retired clergy, to primarily serve patients with memory impairments, allowing the hospice chaplains to focus their efforts on patients with a more involved spiritual plan of care that might involve complicated unresolved relationships and life review. Community outreach and education and marketing efforts by hospices are important for a hospice to be part of the community. Gulfside has an extensive history of outreach programs that include educational programs for physicians and facility staff, programs to honor local veterans, and to provide education and support to caregivers, patients, and to others caring for family and loved ones with life limiting illnesses. Local fundraisers and events help keep Gulfside in touch with the community at large, in addition to raising funds which help support its mission. Gulfside’s Thrift Shop operations are part and parcel of this community presence. The thrift shop operations are a significant source of Gulfside’s operating revenues. If approved, Gulfside would focus its attention to end-stage heart disease patients, as its research showed that fewer patients with this diagnosis were currently being served in Hillsborough County. Gulfside has developed special program to serve these patients and their unique needs. The end-stage heart disease incidence rate in Hillsborough County for the Hispanic population was 25 percent, much higher than the incidence rate for the population at large of seven percent. Gulfside sees this fact as evidence of need for more focused services. Another unique trend Gulfside identified in Hillsborough County is a comparatively higher infant mortality rate when compared to the state average. In response to that identified trend, Gulfside proposed a program to meet the need for anticipatory grief and bereavement counseling for the parents and siblings of these infants and children. Gulfside currently has well-established relationships with providers in Hillsborough County, physicians, hospitals, SNFs, and conducts outreach and education as part of its mission to educate about hospice, as well as to serve the increasing number of patients its serves who are Hillsborough County residents. Gulfside agreed to a number of conditions for approval of its CON application: Condition 1 is for enhanced services to Veterans. Gulfside is a Level 4 We Honor Veterans provider. Condition 2 is for special bereavement programs and is consistent with Gulfside’s programs and includes the traumatic loss program. Condition 3 is for special programs not covered by Medicare, and these programs all compliment the patient and family hospice experience and are incorporated into how Gulfside provides care. These programs include: (a) Pet Peace of Mind program for ensuring patients and families are not burdened with additional stress worrying about the care of their pets. (b) Treasured Memories, an interactive craft-based activity to express feelings and to create a tangible reminder of the patient. (c) Heartstrings, a program using Reverie Harps to provide a soothing focus for patients and families, and include the patient playing the Harp. The Reverie Harp is a unique instrument which is auto-tuned and harmonizing; anyone can play it and make beautiful soothing music. Condition 4 provides for an Ethics Committee to assist with dilemmas and concerns for professionals and others when there is a question regarding cultural, religious, or clinical questions about the appropriateness or compatibility of a course of care or other decisions related to a patient. Condition 5 is for Gulfside’s Crisis Stabilization program which has become a significant program as troubled family dynamics and other at-risk situations seem to arise with more frequency. Condition 6 is for the Patient and Family Resource Navigator, a program already being used in Pasco County which assists patients and families to identify community and governmental benefits and resources which may be available to them and assisting them with applying or accessing the benefits or resources. Condition 7 is to provide programs for patients whose primary language is not English. This will include providing for translations and to recruit bilingual staff and volunteers. Condition 8 reflects that Gulfside is an “open access” hospice, providing complex therapies such as infusion therapies, dobutamine, special wound care, palliative chemotherapy and palliative radiation to its patients. Condition 9 was for Gulfside to offer non- cancer patient outreach and education. This includes the previously discussed end-stage heart disease and Alzheimer’s patients. Condition 10, Gift of Presence for the actively dying, will require the provision of specially trained volunteers to be present with patients and families during the last stages to assist and comfort them. Condition 11 is related to physician and clinician education, and networking programs to educate community practitioners and aligned professionals about hospice and palliative care and to provide peer-to-peer networks. Condition 12, provides for professional and physician internships and residencies, as well as the use of professional volunteers to educate about hospice and palliative care services. Condition 13 is for the development and implementation of the Patient and Family secure web-portal. Condition 14 provides that Gulfside will establish a separate foundation for Hillsborough County to help cover patient needs and expensive treatments. Gulfside will provide seed-money of $25,000 and donations will remain in Hillsborough County as part of this Condition. Condition 15 is for the rapid licensure of the new Gulfside program in Hillsborough County. Gulfside will file its licensure application to add Hillsborough County to its existing license within 5 days of receipt of the CON. Gulfside’s corporate office in Land O’Lakes and its freestanding hospice inpatient facility in Zephyrhills would be used to support the Hillsborough County program. Both are located just north of the county line. Gulfside will not need to add administrative capabilities or staff at its corporate office to initially support staff and the incremental additional patients served in Hillsborough County. The existing supports for the new program would allow it to enjoy improved economies of scale and efficiencies. Gulfside projects it will take approximately 45 days to receive a license from AHCA. During that time, existing staff will be canvassed to see which of them would like to work in the new Hillsborough County program. Gulfside would only need to assemble one additional IDT initially to begin serving the new service area. Gulfside would provide services in Hillsborough County through existing experienced staff now working in Pasco County. Travel requirements for the Hillsborough County staff would not differ much from what is commonly seen in Pasco County, because Pasco has many remote areas that Gulfside serves. Gulfside already has 25 current staff who reside in Hillsborough County. Because Gulfside is not creating a new Medicare provider or newly licensed entity in Florida, it could begin offering services as a fully-licensed and Medicare Certified provider as soon as it has a license from AHCA. All of Gulfside’s current ancillary services and supply contractors already serve Hillsborough (as well as Pasco) County and all of these contracts necessary for delivering hospice care can readily be expanded to include Hillsborough County. Gulfside will serve all of Hillsborough County through its extensive network of relationships throughout the county. Pasco and Hillsborough Counties are part of the same recognized healthcare market with patients flowing between the two counties. Gulfside expects its initial referrals will originate in the northern part of the county due to its strong referral relationships with providers in that area, and Gulfside’s assessments showed greater unmet need in that same area. It will later expand to cover the entire county. Gulfside’s operations in Hillsborough County would be more profitable on average than its current operations in Pasco County despite the allocation of administration and corporate overhead costs to the Hillsborough County program, and despite the assessment of a seven percent fee for corporate services and management from the Pasco home office. The cause of this difference is that the new program in Hillsborough County will benefit from economies of scale. Adding service volume does not require the duplication of costs and services for administrative and other support in place in Pasco County. Gulfside had a loss in fiscal year 2015 due to several significant non-recurring expenses. Gulfside’s projected budget for the 2016 fiscal year included a profit of $337,000, and Gulfside for the first four months of the new fiscal year was ahead of budget. The 2016 fiscal year budget did not include those items which Gulfside had identified as non-recurring, and yet they out-performed that conservative budget, corroborating that these were non-recurring expenses, and that Gulfside will be more profitable than projected in the 2016 fiscal year budget. Gulfside had a one-year loss for the 2015 fiscal year, but in that year, it also acquired a significant asset with the purchase of its corporate center office. Gulfside also maintained a good cash position and had significant additional credit available should it have needed to draw on those resources. LifePath’s Position vis-à-vis Competition Due to LifePath’s growth and its penetration rate within Service Area 6A, there has not been a need established by AHCA for another hospice in Hillsborough County until recently. The events leading to the newly established need are partially of LifePath’s own making, to wit: In May 2013, the Centers for Medicare and Medicaid Services (“CMS”) announced a decision to eliminate two categories of diagnosis often used for hospice care–“debility, undefined” and “failure to thrive.” The initial pronouncement from CMS indicated the change would take effect in approximately October 2013. LifePath decided to immediately stop accepting patients with those diagnoses so as to be in compliance with the new federal regulations when they took effect. LifePath also informed all its referring partners, physicians, hospitals, discharge planners, etc., that it would not be taking those types of patients any longer. Then CMS decided to delay implementation of the new policies for a year. By then, LifePath had already taken actions resulting in the loss of some 700 potential admissions. When AHCA did its hospice need calculations shortly thereafter, lo and behold, there was a “shortage” of some 700 cases in the use rate portion of the need calculation formula. As a result, AHCA determined there was a need for one additional hospice provider in Service Area 6A. LifePath had been hoisted on its own petard. LifePath does not challenge the Agency’s fixed need calculation or that another hospice should be approved for Hillsborough County Service Area 6A. Rather, LifePath is desirous that only the hospice with least potential for negative impact on LifePath should be approved. Based on the preponderance of evidence, West Florida would have the most negative impact on LifePath. Gulfside, due to its lower census development, would have the least impact. However, as Seasons would be more likely to completely meet the need projected by AHCA and would impact LifePath less than would West Florida, its proposal is the most acceptable. IV. Statutory and Rule Review Criteria The parties stipulate that: (1) All three applicants’ letters of intent and CON applications were timely and properly filed with required fees; (2) AHCA duly noticed its preliminary intent to approve West Florida’s CON application and to deny Seasons and Gulfside; (3) Seasons, Gulfside and LifePath timely filed Petitions for Formal Administrative Hearings challenging AHCA’s preliminary decision; and (4) Each application contains the minimum application content prescribed by sections 408.037 and 408.039, Florida Statutes. Also, Schedules A, D-1, and 10 in each CON application are acceptable and reasonable. Section 408.035(1) Criteria Stipulations (1)(a) “The need for the health care facilities and health services being proposed.”– -There is a need for one additional hospice program in Service Area 6A. (1)(b) “The availability, quality of care, accessibility, and extent of utilization of existing health care facilities and health services in the service district of the applicant.”- –A consideration of this criterion supports the need for one new hospice program in the service area. (1)(d) “The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation.”– -Each applicant has adequately projected the availability of personnel. Each party’s Schedule 6 and staffing projections are reasonable. Each party’s audited financial statements present an adequate financial condition. (1)(f) “The immediate and long-term financial feasibility of the proposal.”– -Schedules 1, 2, and 3 in each application are reasonable and indicate that each applicant’s proposal is financially feasible in the short term and long term. (1)(h) –“The costs and methods of the proposed construction, including the costs and methods of energy provision and availability of alternative, less costly, or more efficient methods of construction.” - This criterion is not applicable. Florida Administrative Code Rule 59C-1.030 Stipulations: (2)(d) – “In determining the extent to which a proposed service will be accessible, the following will be considered: . . . The performance of the applicant in meeting any applicable Federal regulations.”- –This criterion would support approval of any of the three applicants. Florida Administrative Code Rule 59C-1.0355 Stipulations (6)“An applicant for a new hospice program shall provide a detailed program description in its certificate of need application . . . .”– -Each application contained adequate evidence regarding the applicants’ proposals. Factors Mitigating Against Approval of West Florida West Florida's proposal to establish a hospital-based hospice program in Service Area 6A materially differs from Seasons’ and Gulfside's proposals seeking to establish community- based hospice programs in the service area. There are key differences between a freestanding or community-based hospice, on the one hand, and a hospital-based hospice, on the other. Most significantly, in contrast to a community-based hospice, a hospital-based hospice has ready access to a patient population (i.e., acute care patients at its sponsoring hospital) from which it may receive referrals. Further, a hospital-based hospice primarily serves patients discharged from its sponsoring hospital and not the community at large, thereby creating a silo of care in which patients are funneled from the sponsoring hospital to the affiliated hospice. Nationally, for the period 2010 through 2014, hospital-based hospice programs obtained approximately 71 percent of their admissions from hospitals within their own health system and only six percent of admissions from out-of- system hospitals. Further, it is possible for a hospital-based hospice program to quickly obtain a large volume of admissions by virtue of its relationship with its sponsoring hospital. The census development for a community-based hospice program is more gradual. Hospital-based hospices do not tend to serve the broader community; once they have captured all of the admissions coming out of their own hospital or health system, they cease to continue to achieve significant market share growth. Moreover, hospital-based hospices tend to have shorter average lengths of stay and provide higher levels of inpatient care than community-based hospices because they tend to treat patients with a higher acuity and have easy access to inpatient beds where they can provide inpatient hospice care. Medicare reimbursement for general inpatient care is significantly higher than for some other types of hospice care. To the extent that a hospice provider provides more inpatient care, they will experience higher revenues. This would result in a concomitant reduction in revenues for a competing hospice in the same service area. Approximately 36 percent of patients discharged from an acute care hospital in Hillsborough County and admitted to a hospice program are discharged from one of West Florida's sponsoring hospitals. In 2014, approximately 46 percent of LifePath's admissions were referred from acute care hospitals. Accordingly, even if West Florida made no effort to obtain referrals to its program from sources other than its affiliate organizations, approximately 16.6 percent of LifePath's admissions could be at risk if West Florida's proposed project is approved. Mr. Michael Schultz, the CEO of Florida Hospital's West Florida Region, testified that the goal of Tampa General and Florida Hospital is to manage a patient's entire episode of care and that if West Florida's application were approved, both hospital organizations would "absolutely" prefer to have West Florida provide hospice care to patients discharged from its hospitals. LifePath's projection that it would lose 20 percent of its admissions if West Florida's application was approved is reasonable. Mr. Burkhart discussed West Florida’s desire to develop a “covered lives” strategy or network, where the hospital system can control how the dollars are spent and how the care is delivered. West Florida applied for a hospice CON for two reasons: 1) AHCA had published need; and 2) because “we wish to have more control over a piece of the hospice continuum so that when we’re doing things like narrow networks, we have that in our portfolio under our control.” Tr., p. 99. In a covered lives network, a hospice patient would pay less if they went to a West Florida affiliated hospice, and more if they went to Lifepath or another out-of-network hospice. West Florida plans to open satellite hospice offices in Tampa General and in the two Florida Hospitals located in Hillsborough County. There was no mention of the desire or possibility of opening satellite hospice offices in any of the non-West Florida affiliated hospitals located in Hillsborough County. From a practical perspective, it seems unlikely that competing hospital systems would welcome such involvement by a competitor. Seasons Seasons is the only applicant without a current connection to the healthcare community in Hillsborough County. It has, however, some experience in other Florida markets. Fewer of Seasons’ programmatic proposals are directly tied to a Condition of CON approval, but the programs are nonetheless generally universal in Seasons HPC operations. Gulfside Service Area 6A has a sizeable Hispanic population, but Gulfside has very limited experience in treating Hispanics. In fact, only 3.3 percent of its recent admissions are Hispanic. Gulfside’s COO did not know how many, if any, of Gulfside’s existing staff was bilingual. Today, Gulfside relies on interpreters who are accessed through a language line to communicate with Hispanic patients and family members. Since Gulfside plans to utilize existing staff to serve Hillsborough County, it will need to continue to rely upon interpreters to communicate with Hispanics in that county. To the extent the Hispanic population in Hillsborough County is underserved, or there is a need to ensure that these patients have a choice of hospice providers that are committed to meeting their needs, Seasons demonstrated far more experience and ability than Gulfside. Seasons projected 516 admissions in year two while Gulfside projected 276 admissions. Seasons has reasonably projected to achieve 240 more admissions in year 2 than Gulfside and thus will do a better job in meeting the unmet need. West Florida also projects more admissions than Gulfside. Ultimate Findings of Fact Each of the applicants, as advertised, could provide quality hospice services to the residents of AHCA Service Area 6A/Hillsborough County. The proposal by West Florida would be more likely to serve its own hospital patients than the community at large. This would have the effect of less penetration by West Florida in the service area as a whole. It would also likely result in West Florida retaining more of the most critically ill hospice patients (i.e., those with shorter lengths of stay), thereby benefitting from the new reimbursement rules to the exclusion of the competing hospice. Gulfside would be able to commence operations in Hillsborough County more quickly than Seasons or West Florida. It has connections with other healthcare providers in Hillsborough County and could easily transition to that geographic area. However, it proposes less growth and coverage than either Seasons or West Florida, thus will less likely meet the need which currently exists. Seasons has the financial and operational wherewithal to be successful in Hillsborough County. It has more experience (and success) in starting a new hospice than the other applicants. Its programs are well-established and conducted by experts in their fields. Seasons would meet the need for a new hospice provider in Service Area 6A better than the other applicants. Upon consideration of all the facts in this case, Seasons’ application, on balance, is the most appropriate for approval.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving Seasons Hospice and Palliative Care of Tampa, LLC’s, CON No. 10298 and denying West Florida Health, Inc.’s, CON No. 10302 and Gulfside Hospice & Palliative Care of Tampa, LLC’s, CON No. 10294. DONE AND ENTERED this 21st day of March, 2016, in Tallahassee, Leon County, Florida. S R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 2016. COPIES FURNISHED: Stephen K. Boone, Esquire Boone, Boone, Boone and Koda, P.A. 1001 Avenida Del Circo Post Office Box 1596 Venice, Florida 34284 (eServed) Lorraine Marie Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Seann M. Frazier, Esquire Parker, Hudson, Rainer and Dobbs, LLP Suite 750 215 South Monroe Street Tallahassee, Florida 32301 (eServed) Jonathan L. Rue, Esquire Parker, Hudson, Rainer and Dobbs, LLC 303 Peachtree Street Northeast, Suite 3600 Atlanta, Georgia 30308 (eServed) Karl David Acuff, Esquire Law Office of Karl David Acuff, P.A. Suite 2 1615 Village Square Boulevard Tallahassee, Florida 32309-2770 (eServed) Stephen C. Emmanuel, Esquire Michael J. Glazer, Esquire Ausley & McMullen 123 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32301 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Stuart Williams, General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Elizabeth Dudek, Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed)
The Issue The issue is whether Suncoast's application for a Certificate of Need (CON) to establish a new hospice program in Service Area 6C should be approved.
Findings Of Fact Numeric Need for One Hospice in Service Area 6C The Agency determined that there is need for one new hospice program in Service Area 6C in the "Other Beds and Programs" Second Batching Cycle 2006. On October 6, 2006, an FNP of one in Service Area 6C (Manatee County) for the January 2008 Hospice Planning Horizon was published by AHCA in Volume 32, No. 40 of the Florida Administrative Weekly. The published FNP was not challenged. Not an Aberration In the six consecutive batching cycles commencing with the October 2006 cycle and ending with the April 2009 cycle, AHCA's numeric need methodology yielded a number of un-served patients who would elect hospice services that was 350 or greater (see paragraph 34, below) in three batching cycles: October 2006, April 2007, and October 2008. Rather than an FNP of one, however, an FNP of zero was published for the April 2007 and October 2008 batching cycles. The FNPs of the two cycles were "zeroed out" because Suncoast's application had been approved earlier and the approval was still pending. See para. 41, below. The Parties Suncoast Suncoast is the approved applicant for a new hospice program in Service Area 6C. Founded in 1977 and started by a group of volunteers, Suncoast is a not-for-profit, full-service community hospice. It has been a provider of hospice services in Service Area 5B (Pinellas County), a service area adjacent to 6C, since 1978. Except for a Pinellas County hospice that exclusively serves and limits its admissions to veterans, Suncoast is the sole provider of hospice services in Pinellas County. From inception, Suncoast's mission has been to provide assistance to anyone affected by death, dying, grief, or bereavement within the community it serves. Suncoast has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 5B. It is Medicare and Medicaid Certified. Agency for Health Care Administration The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated "as the state health planning agency for purposes of federal law . . . ." § 408.034(1), Fla. Stat. It is also "the single state agency [in Florida authorized] to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." Id. TideWell TideWell, the Petitioner in this administrative proceeding, challenges the Agency's preliminary approval of Suncoast's application. TideWell is a not-for-profit, full-service community hospice, founded in 1980. Licensed to provide hospice services in contiguous Service Areas 6C (Manatee County), 8D (Sarasota County) and 8C (Charlotte and DeSoto Counties), TideWell is Medicare and Medicaid Certified. TideWell began serving Manatee County in 1988. Currently the sole provider of hospice services in the county, TideWell has a history of providing high-quality hospice care and a wide variety of unfunded programs in Service Area 6C. Tidewell: Quality of Care, Commitments, and Programs TideWell is accredited by the Community Home Care Accreditation Program ("CHAP"), with special CHAP Commendations for the quality and the use of technology in its program. CHAP is a national accrediting organization whose standards exceed State and Federal licensure standards. CHAP has been authorized by Medicare and Medicaid to "deem" hospice programs to be in compliance with Medicare and Medicaid survey standards. CHAP Accreditation is confirmation that all of TideWell's services delivered in Manatee County are of the highest quality, and that TideWell has the infrastructure in place to ensure high-quality services in the future, as independently measured against national standards for best practices. It is expensive for TideWell to maintain the high levels of quality for which it has been recognized by CHAP. For example, TideWell financially supports Master's level education for its licensed clinical social workers. For its nurses and nurse's aides, it conducts review courses for their certification and pays for their exams if they pass them. Those achieving certification are rewarded with 3 percent pay increases. TideWell has made significant capital commitments in Manatee County. Three branch offices have been strategically located to serve the northeast, northwest, and southern parts of the County. Two of the branch offices are owned by TideWell, and the third is leased for 5 years. TideWell has also built two strategically located freestanding hospice inpatient facilities in Manatee County. TideWell has located its Manatee County hospice services and community outreach efforts to be geographically available and programmatically accessible. TideWell examines Manatee zip code data annually in order to plan the locations for its offices, clinical services, community bereavement services, pre-hospice services, and outreach, so as to best anticipate and serve population growth. Beyond hospice services, TideWell offers a continuum of pre-hospice programs to address the needs of persons who may not be hospice eligible or who do not desire to elect hospice. None of these pre-hospice programs are required as part of a licensed hospice program. Among the pre-hospice programs is Footprints, a program for children started in 2001. Partners in Care ("PIC") is a Medicaid Waiver program that provides highly specialized pediatric palliative care services to patients determined by Children's Medical Services to be eligible. Transitions is a companionship program, started in 2003, for persons with a terminal diagnosis who have not elected hospice, but who need companionship services and psychosocial support with their illness. TideWell Connect is similar to Transitions but also provides palliative care addressed to physical symptoms relief and management. Palliative Care Partners is a program started in 2005 to provide hospice palliative care expertise on a consultative basis to non-hospice patients in acute care hospitals and their homes. None of TideWell's programs along the pre-hospice continuum were implemented as a result of competitive pressure. Rather, each program was developed over time, as TideWell incrementally achieved increased economies of scale in Manatee County sufficient to support these programs. TideWell's Collaboration with All Children's Hospital Pediatrics is a tertiary service. All Children's Hospital serves a five-county area, including Pinellas and Manatee, providing local health care providers with tertiary pediatric acute care resources. TideWell collaborates with All Children's to provide palliative consultations and care to terminally and chronically ill children, participates in the PIC program and provides a sophisticated array of outreach pediatric services to pre-hospice pediatric patients. The level and nature of the services requires the retention of difficult-to- find, highly-qualified pediatric clinicians. TideWell's economies of scale allow it to provide this service, even though the number of children who require it in TideWell's service area is small. At the time of the hearing, TideWell had resources available to handle a caseload of 50 pediatric patients, with an actual census of two patients. TideWell has an active volunteer program in Manatee County, currently composed of 220 volunteers. It offers frequent and conveniently located training classes for new volunteers and has developed a nationally-recognized teen volunteer program. Because TideWell is CHAP accredited, its volunteer program must meet high national standards and be subject to independent verification of best practices. TideWell offers a stratified community bereavement program that addresses the unique issues for survivors associated with various types of death, such as loss of a parent or infant death, and cause of death--e.g., suicide and or death due to trauma. TideWell has a thanatologist and staff of highly trained and experienced grief specialists stationed in Manatee County. They provide grief support to the community, including school counseling, family retreats, support groups, and teen bereavement programs. TideWell has demonstrated that it has the ability to grow geographically and programmatically to meet the clinical needs of patients and referral sources for hospice services in Manatee County. TideWell offers substantially all non-hospice programs proposed by Suncoast. TideWell program enhancements may differ in name, but are substantively similar or virtually identical to services promised by Suncoast. Florida Model Hospices Suncoast and TideWell are "Florida model" hospices. Florida model hospices are usually not-for-profit charitable entities. They strive to achieve revenue (including donations) in excess of expenses so that they have the financial capability of providing services that are typically unfunded or under-funded. One method employed by Florida model hospices to achieve the revenue necessary to fund otherwise under-funded services is through economies of scale. Economies of scale were defined by Mr. Balsano at hearing as: achieving "additional volume [without] . . . having . . . costs go up . . . proportional with volume." Tr. 387. Achievement of economies of scale is especially important in the environment of revenue reduction that prevailed at the time of hearing. That environment is reasonably expected to continue for the immediate future. Due to relative size, Suncoast enjoys greater economies of scale than does TideWell. Suncoast, for example, has an average daily census double the size of TideWell's. It has roughly 1600 employees compared to TideWell's 900 employees. And its volunteer program with 2,800 volunteers has more than twice as many volunteers as TideWell's 1,100. Medicare: Primary Payer The primary payer for hospice services is Medicare. Authorized in 1982, the Medicare benefit covers reasonable and necessary palliative treatments to the hospice patient on a per diem basis for each day the patient is in hospice. The Medicare benefit is comprehensive, providing virtually all a patient and family need during the period of hospice care. Florida law recognizes hospice patients with a prognosis of one year or less. To qualify for Medicare, however, the patient must be certified as having a prognosis of six months or less if the illness runs its ordinary course. Stipulated Facts In the Pre-hearing Stipulation filed July 29, 2009, the parties stipulated to the following facts: AHCA's rule formula resulted in a numeric need for one new hospice program in Manatee County in the batch cycle for which Suncoast's Application No. 9964 was submitted. Suncoast's letter of intent, initial application and omissions response for Application No. 9964 were timely filed by Suncoast with the appropriate filing fee; and the application was deemed complete by AHCA. Suncoast has a record of providing high quality care. Suncoast has demonstrated immediate financial feasibility. Suncoast has a record of providing services to Medicaid and indigent patients. The estimated startup project costs on Schedule 1 of the application are reasonable for the project as proposed. Pre-hearing Stipulation at 2. Conditions in the Application Approval of Suncoast's application is predicated on 14 conditions. The 14 conditions appear in an attachment to Schedule C of the application. See Suncoast Ex. 1, Vol. 1, at SC 0221- 0222. The Hospice Programs Rule Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs" Rule) governs hospice programs. The Hospice Programs Rule regulates several aspects of hospice programs including the establishment of new hospice programs. See Fla. Admin. Code R. 59C-1.0355(1). The criteria for the determination of need for a new hospice program are set out in Section (4) of the Hospice Programs Rule. The section is divided into five subsections: (a) "Numeric Need for a New Hospice Program"; (b) "Licensed Hospice Programs"; (c) "Approved Hospice Programs"; (d) "Approval Under Special Circumstances"; and (e) "Preferences for a New Hospice Program." Fla. Admin. Code R. 59C-1.0355(4). Among the special circumstances that support approval of a CON application for a hospice program is a finding that there exists an un-served population in the service area. Suncoast's application does not seek approval under any of the special circumstances listed in the Hospice Programs Rule. Rather, it seeks to show that it qualifies to establish a new hospice program in response to published numeric need. Subsection (a) declares "[n]umeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater." Fla. Admin. Code R. 59C-1.0355(4)(a). The subsection then sets out a formula for calculating an FNP or "net need." See id. The formula incorporates four different categories of patients: those under 65 years of age whose deaths are "cancer deaths"; those 65 years of age and over whose deaths are "cancer deaths"; those under 65 years of age and whose deaths are "from all causes except cancer"; and, those 65 years of age and over whose deaths are "from all causes except cancer." The calculation under the formula was described by Mr. Sullivan at hearing: First it looks at statewide averages and it then calculates the penetration rate for the local service area. It looks at the actual number of admissions that occurred in that service area in the most recent period for which data is available and then divides that by the number of deaths from the most recent period that's available. So there's basically two different penetration rates. There is a state average and then there is a local actual rate. The State then projects forward the number of deaths that it expects 18 months in the future in that particular geographic region . . . they calculate a three-year historical death rate. They look back at the three most recent years, calculate an average death rate in each of those categories, and then applies that to projected population going 18 month out into the future. * * * And then the state applies the statewide average death rates to the projected number of deaths to see . . . the expected number of hospice patients 18 months down the road -- and subtracts from that number the actual number of patients who were served in the service area. Tr. 407-409. If the number yielded by the calculation is 350 or greater, then an FNP of one is published subject to protective measures for newly-licensed hospices or approved but unlicensed hospices. See Fla. Admin. Code R. 59C-1.0355(4)(b) and (c). In instances in which these protective measures are invoked, the FNP of one is reduced to zero. The Hospice Program Rule does not allow the establishment of more than one new hospice in a service area at a time. That limitation, plus the protective measures for approved hospices and newly-licensed hospices discussed above, led Mr. Gregg to describe the methodology of the Hospice Program Rule for establishing a new hospice program as "inherently very conservative and very measured." Tr. 542. Death Rates and Penetration Rates Death rates declined in Manatee County from 2000 to 2005, but in the latter half of the decade, the number of deaths have been "pretty flat," tr. 410, with a small increase in 2007. As Mr. Sullivan put it at hearing, "[o]ne thing we know is the death rate ultimately is 100 percent for everybody. So there is a finite limit to how far death rates can fall." Id. The death rate in both Florida and Manatee County over the last decade sets up the potential for AHCA's numeric need methodology to yield a result that over-projects need. On the other hand, the penetration rate by hospices (percentage of deaths associated with hospice admissions) had increased at the time of final hearing every year for the previous 12 years. AHCA's numeric need methodology assumes a constant penetration rate. From the standpoint of penetration rates, the numeric need methodology tends to under-project need. Whatever its imperfections, AHCA's methodology is a reasonable method to establish a point of entry for a new provider of hospices services in a hospice service area. A Rebuttable Presumption From the perspective of health planning, a hospice FNP of "1" creates a presumption of need for one new hospice program. But the presumption is not conclusive; it is rebuttable. If a service area has an existing provider of hospice services, as does Service Area 6C with TideWell, then in terms of "incremental demand," an FNP of one creates a rebuttable presumption that the service area can support two providers in total, one of which is new. "Incremental demand" that is at issue is "future deaths." Tr. 467 The existence of an FNP of one new hospice program, however, does not relieve an applicant that aspires to fill the need from demonstrating that its application complies with and meets the statutory and rule criteria applicable to CON projects. Among the statutory criteria is one which relates directly to an FNP. It is found in paragraph (a) of Subsection (1) of Section 408.035, Florida Statutes: "The need for the health care . . . services being proposed." In response to the FNP of one, TideWell seeks to show in this proceeding that there is no need for a new hospice program in Service Area 6C and thereby rebut the presumption that there is a need for one set up by the FNP. Suncoast seeks to show that TideWell has not rebutted the presumption created by the FNP and that it is qualified to fill the need for one new hospice program under relevant statutory and rule criteria. TideWell takes issue with Suncoast's view of the application of some of those criteria, for example, by attempting to show through utilization data and projections that the impact of an approval will fall too heavily on TideWell. Updated Projected Hospice Admissions Suncoast updated projections in its CON application filed in 2006. The updated projections are reasonable. As of June 2009, it projected that there would be a total of 2,154 hospice admissions in Manatee County in 2011, which is hoped by Suncoast to be its second year of operation. Of these, Suncoast projected it would capture 452 if its application is approved. The remaining cases to be served by TideWell in 2011, therefore, is projected to be 1,702. TideWell achieved 2,006 Manatee admissions in calendar year ("CY") 2008. Using CY 2008 admissions as a benchmark, it is reasonable to project that Suncoast's entry into the market will reduce TideWell's admissions in CY 2011 by at least 304. Re-stated, instead of 2,006 admissions in the year 2011, TideWell can be reasonably expected to achieve only 1,702 admissions in CY 2011. The impact to TideWell caused by Suncoast's entry into the market, therefore, is reasonably expected to be at least 304 fewer admissions in CY 2011. Diversity Trends in Manatee County. Manatee County's population is reasonably projected to increase 1.73 percent each year from 2009 to 2015. Over the same time period, the population of persons under 65 is reasonably projected to increase 1.5 percent each year; the population of persons age 65 years and older, 2.5 percent each year. In Manatee County, the non-white population is growing more rapidly than the white population. Historically, the Hispanic population utilizes hospice services at a rate lower than the non-Hispanic population. In Manatee County, the Hispanic population is growing faster than the non-Hispanic population. From 2000 to 2005, the Hispanic population grew at a rate of 56.48 percent and non- Hispanic population grew at a rate of 11.07 percent. While Hispanic deaths are a relatively small portion of the overall deaths in Manatee County, the number of Hispanic deaths is increasing. From 2000-2005, deaths among the African-American population in Manatee County increased 7 percent while deaths in the white population decreased one percent. There are no data to determine the extent to which TideWell serves Hispanics or African-Americans. TideWell Penetration Rates in Manatee County For the six-year period from 2003 to 2008, penetration rates in both Manatee County and Florida have been on an upward trend. TideWell's penetration rate in Manatee County has increased every year over the period except for 2006 when it fell by two percent. Using round numbers, TideWell's penetration rates for the period were: 40 percent in 2003; 50 percent in 2004; 53 percent in 2005; 51 percent in 2006; 57 percent in 2007; and 59 percent in 2008. The drop-off in 2006 was compensated for by a steep increase of 6 percent between 2006 and 2007. Again using round numbers, the statewide penetration rate has increased every year of the six-year period from 48 percent in 2003 to 51 percent in 2004 to 52 percent in 2005 to 55 percent in 2006 to 59 percent in 2007 to 61 percent in 2008. The statewide penetration rate over the six-year period has been greater than TideWell's every year with the exception of 2005 when TideWell's penetration rate exceeded the statewide rate by one percent. With the exception of 2005, TideWell's rate over the six-year period has been between eight percent and one percent lower than the statewide penetration rate. For the last two years of the period, 2007 and 2008, TideWell's penetration rate has been roughly two percent lower than the statewide penetration rate. Suncoast's Penetration Rate in Pinellas County In contrast to the relationship of TideWell's penetration rate to the statewide penetration rate, data provided by Suncoast showed its penetration rate in Pinellas County to have exceeded the statewide penetration rate in the years closest to the submission of its application. In 2000 and 2001, Suncoast's penetration rate was nearly even with the statewide rate but it exceeded Florida's penetration rate by three percent or more for 2002, 2003 and 2004. In 2005, Suncoast's penetration rate exceeded the statewide rate by more than five percent. Statutory Criteria; Section 408.035 Review criteria for CON determinations are contained in paragraphs (a) through (j) of Subsection 408.035(1), Florida Statutes. (Not all of the criteria require findings. For example, paragraph (j) relates solely to nursing facilities.) The need for the health care facilities and services being proposed. As explained, above, the FNP of one establishes a rebuttable presumption of need. The presumption was not rebutted by TideWell. Availability, quality of care, accessibility and extent of utilization of existing health care services in the service district. Over the years, TideWell's admissions in Manatee County have grown significantly: from 792 admissions in 1996 to 2,006 in 2008. After a flattening of growth in 2004 and 2005, attributable to the impact of Hurricane Charlie, the more recent growth has been particularly significant. In 2006 Manatee County hospice admissions numbered 1,683; in 2007 there were 1,906; and, in 2008, there were 2,006. Suncoast's entry into the Manatee County market place will increase availability. If Suncoast enters the Manatee County market and achieves penetration rates in excess of the statewide average penetration rate as it has done in Pinellas County, it is likely that utilization rates will be higher than if TideWell remained the only provider of hospice services in Manatee County. The projected utilization of the proposed hospice program was estimated in Suncoast's application using historical and projected population data for Manatee County and three-year average death rates, applied to the appropriate age category, assuming some modest growth in number of future deaths. TideWell's penetration rate was assumed to increase by one percent per year, consistent with the trend in Manatee County and statewide. The number of hospice admissions in Manatee County was projected forward to 2008 and 2009; and the last step in Suncoast's projection methodology was to estimate what market share Suncoast would achieve. It was assumed that by the end of the second year of operation, Suncoast would achieve a market share of 21 percent. This was applied to the projected number of admissions. The projected utilization was updated before the hearing using more recent data and then compared to the track record of hospices in Service Areas with two hospices. Some Manatee County data had to be estimated because TideWell reports data to the state for its entire operation, serving three service areas. The result is 452 Suncoast admissions projected for 2011, the second year of operation. If Suncoast's projections are achieved, the projected reductions in TideWell's admissions in Manatee County leaves admissions at a figure (1,702) in excess of TideWell's 2006 admissions. TideWell provides high quality of care in Service Area 6C. The ability of the applicant to provide quality of care and the applicant's record of providing quality of care. Suncoast has 18 interdisciplinary teams. Nurses, physicians, social workers, chaplains, home health aides, and volunteers comprise the teams. Team members often represent other disciplines: physical, occupational and speech therapy; dietary counselors; massage therapy; and those engaged in music therapy and other palliative arts. Hospice services address physical and medical needs, such as controlling pain, as well as psychological, spiritual and social needs of patients with life-limiting illnesses. They also provide care for families of the patients. Suncoast provides interdisciplinary team care where the patient lives, whether at a residence, nursing home, or assisted living facility or to the homeless. Suncoast has provided quality of care in the arena of hospice services and has the ability to continue to do so in Manatee County if its application is approved. Suncoast has on staff eight full-time physicians, five nurse practitioners, and one physician's assistant. In addition, contract and volunteer physicians work with the teams by serving patients as well as physician groups and by performing consults. Suncoast has 20 full-time clinically-trained chaplains and six part-time chaplains along with volunteer support and assistance from community clergy to provide direct patient care and follow-up with families in bereavement. Suncoast's interfaith community advisory councils assist in keeping up with service needs identified through faith communities. Florida Administrative Code Rule 59C-1.0355(4)(e)2. provides a preference for applicants that propose to provide inpatient care through contractual arrangements. Suncoast currently provides inpatient care through contractual arrangements, so it has experience doing so. Its application proposes the following: While a free-standing inpatient facility would not be feasible until the program matures in Manatee County, discussions with hospitals and nursing homes have made it clear that contracts for scatter-bed patients provision would be available. Discussion with Lakewood Ranch Medical Center revealed that they would be very interested in contracting for a hospice inpatient unit, staffed with personnel. Suncoast Ex. 1., Vol. 1, SC 0130. Contacted by Suncoast, Manatee County Hospital provided a tour of its facility to Suncoast personnel. Additionally, Westminster Retirement Community of Florida has two nursing homes in Manatee County and is willing to contract with Suncoast for beds in those facilities. Contracts have not been entered. Suncoast was among the first programs in Florida to develop a Hospice Veteran Partnership and has provided assistance to set up programs in various areas of the state and nationally. Suncoast has an affiliation with a Jewish-owned and operated nursing home to connect to the Jewish members of the community it serves. Suncoast's application has conditions to provide or enhance services to populations traditionally underserved by hospice. For example, Suncoast "agrees to condition [its] application on achieving … [p]rovision of an AIDS program that will collaborate with existing AIDS Service Organizations in Manatee County in meeting the needs of hospice patients with HIV." Suncoast Ex. 1, Vol. 1 at SC 0221. There are several conditions which relate to serving the Hispanic population of Manatee County, a traditionally underserved group. Suncoast promises to develop a community advisory committee to be composed of residents "reflective of the community whose purpose is to provide input and feedback about the needs of the Manatee County community and whose recommendations will be used in the future program development." Id. at SC 0222. If Suncoast does not implement the conditions, it will be subject to fines and other actions against its license. Suncoast has committed to serve populations whose needs are traditionally unserved. But there was no evidence that any of these groups are, in fact, un- served or underserved in Manatee County. Suncoast, unlike most hospices, has a caregiver program that allows patients with either a frail caregiver or no caregiver to remain at home to die. Suncoast also trains respite and substitute caregivers. Suncoast has a well-developed and in-depth pediatric hospice program. Suncoast has dedicated staff for this program, meaning they only work with children from the first encounter for admission throughout the care given to the pediatric patient. Suncoast's children's hospice team has an excellent working relationship with All Children's Hospital, a tertiary hospital for children that serves several counties, including both Pinellas and Manatee. Suncoast has partnered with the University of California on a five-year National Institutes of Health grant to study bereaved fathers and develop clinical practices specific to that group. Recently, Suncoast was selected to join a regional network to assist hospitals and hospices in starting pediatric hospice or palliative care programs. Under a grant through Children's Hospital and Clinics in Minneapolis, Minnesota, seven sites were selected to participate, Suncoast being the only hospice. After hearing many families lament the difficult choice of selecting hospice for a child, Suncoast responded to the needs of these families by developing children's palliative care services. Suncoast was also among the first hospices in Florida to provide services under the PIC Medicaid waiver program. The program provides palliative care while the child continues curative treatment. Suncoast provides community counseling services as part of its children's palliative care programs. Any family in Pinellas County, from a family dealing with an ill child undergoing curative care to a family bereaved by a tragedy as the result of an auto accident or shooting, can contact Suncoast and receive counseling support. Suncoast also established the Suncoast Children's Care Coalition--a group of community representatives of services to children that works as the eyes and the ears of the community to identify and advise on services to meet community need. Working with the State Victims' Association, Suncoast is actively involved in the adult and children's trauma network. Suncoast received an award for this work in May 2009. Suncoast's perinatal loss program is the only hospice program of its type in the country. Suncoast works very closely with volunteer doulas or birth coaches who receive at least eight hours of interdisciplinary care training to assist families that know their child is likely to be stillborn or not survive beyond labor and delivery. Doulas and children's programs counselors are matched with families to provide information and support. Suncoast provides adult palliative care services to reduce symptoms. Suncoast Supportive Care provides assistance through an interdisciplinary team for those whose life expectance is one year or less or who choose not to go into hospice or who otherwise would not qualify for hospice. Suncoast has relationships with several hospitals in Pinellas County for palliative care consults, and Suncoast's medical director is available for palliative care consults in any hospital. Suncoast also has a licensed home health agency to provide palliative care. Suncoast has palliative arts volunteers who provide services to patients, community program clients, and trainings and presentations to the community. Also known as complementary therapies, aromatherapy, massage therapy, music therapy, expressive arts, and energy works (or Reiki) are used in collaboration with western medicine to relieve symptoms. Suncoast has a partnership with American Stage, a local theatre in Pinellas County. The two collaborated on a play called "Vesta" in which the title character is a woman facing the end of life. After performances of the play, staff speak with the audience about the play and issues raised. Suncoast provides caregiver support through "caregiver coffee breaks." The programs are facilitated by a counselor and are offered at locations throughout the community and at varying times. The services are not reimbursed. Suncoast provides a number of specialized bereavement groups to the community. For example, Kindred Hearts is Suncoast's suicide survivor group, which puts out a monthly newsletter. Persons attend from around Tampa Bay, including Manatee and Hillsborough Counties, because they have not found anything else that meets their needs. In addition, Suncoast personnel are available to respond to grief crises in the community and beyond. Suncoast teams were in Mississippi and Louisiana after hurricane Katrina and assisted after 9/11 to help people cope with loss and grief. These services are not reimbursed. Suncoast has a children's bereavement program that extends to every school in Pinellas County and serves more than 2,000 children a year with loss and grief counseling. Suncoast provides four different bereavement camps. Camp Erin is a weekend bereavement camp for children ages 8-to- 15 years of age in Ellenton in Manatee County. For the past 14 years, Camp Hope has been a smaller camp for families. It provides bereavement for adults and children, both together and apart. "Cube," a bereavement retreat for teens, just completed its third year. Finally, there is a family fun day held each year with arts, crafts, entertainment, and activities that offer fun as well as support and networking for families with a child that has an illness or condition that is life-limiting. Suncoast's staff undergo intense learning for the first 9-to-12 months of employment. Employees are assigned to a mentor or preceptor who oversees their training. Initially, all disciplines receive at least six or eight hours in pain and symptom management, with an additional 12 hours for nurses, pharmacists and physicians. Follow-up education is provided at the two-year mark. Anywhere from 50-to-80 continuing education courses are provided each month. Additionally, all clinic staff are provided laptops on which various references are provided weekly. Diversity is an integral part of Suncoast. Most recently, diversity efforts have been combined into the Committee to Improve Cultural Awareness. The committee offers education internally and externally to increase understanding and respect for cultural differences. The committee meets monthly. It holds educational events, health fairs, and cultural events for staff and the community. Suncoast also has a Latino Advisory Council of members of the Latino community that helps identify needs of the Hispanic community. Suncoast has staff positions dedicated to outreach in the Latino and African-American communities. Suncoast recruits for diversity so that its employees reflect the community. Much of what Suncoast is able to provide is through the assistance of community volunteers. Suncoast has between 2,800 and 3,000 volunteers, including 400 teen volunteers in the Teen Volunteer program. Volunteers do everything from providing direct patient care to administrative support, fundraising, and outreach. Medicare requires that five percent of total patient hours of care be provided by volunteers. Suncoast exceeds that requirement by several percent. Volunteers receive an initial four-hour training to orient them to hospice and volunteerism. For volunteers desiring to perform patient care, an additional 16-to-18 hours of training is provided followed by mentored visits with the teams. Suncoast is able to recruit, train, and retrain volunteers in Manatee County. Suncoast HIV/AIDS services division, "ASAP," provides case management and a variety of service for adults and children who have HIV/AIDS or have a loved one with HIV/AIDS. Services range from providing condoms and safe sex education, to retreats, outings, counseling, and a personal needs pantry from which clients may obtain grocery and personal care items not covered by food stamps. Many of these services are not reimbursed. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. Suncoast has approximately 1,600 employees. Suncoast and its six affiliated organizations have an annual budget of approximately $150 million. Suncoast is not the subject of any outstanding fines, liens or overpayments. Suncoast is financially efficient. Its operating expenses, including patient service expense, for fiscal year 2008 were $116.8 million. Its administrative and general expenses were just over $19 million, or 15 percent of total costs, a reflection of administrative efficiency. Schedule 1 of Suncoast's application shows "estimated project costs." Schedule 2 shows all of Suncoast's capital projects whether approved, under development, or planned, and the total capital commitment for both health care and other projects. Schedule 3 shows Suncoast's source of funds, and Schedule 4 depicts utilization of existing hospice by patient days. Each of the four schedules was accurate at the time the application was prepared. Schedule 6 of Suncoast's application presents a reasonable estimate of the staffing that would be required for Suncoast's proposed project. The staffing estimate includes six FTEs "to take care of the conditions for this particular certificate of need application," tr. 300-01, as well. The salaries shown on Schedule 6 are reasonable estimates of salaries for the staffing required to support the proposed project. The extent to which the proposed services will enhance access to health care for residents of the service district. Over the years it has operated in Pinellas County, Suncoast has proven that it is responsive to community needs for hospice services. Hospice programs began in the United States in 1974. Suncoast's program commenced in 1977 when a group composed of chaplains, educators, nurses, social workers, and local residents from "all walks of life," tr. 37, saw the need for hospice in Pinellas County. It was decided then that the program would be not-for-profit and that the mission would be to serve any person in the community affected by death, dying, grief, or bereavement, regardless of ability to pay. In keeping with its mission, Suncoast has multiple community advisory committees through which it identifies and meets community hospice needs. In 1981, for example, at a time when most home health agencies were turning down AIDS patients and hospitals were releasing them, Suncoast was one of the first programs to care for AIDS patients in their homes. A recent example of Suncoast's attempt to increase access to hospice services is its "Touch a Life" program. Aware of spreading financial stress in the community typified by community members' decisions to stop paying health insurance premiums, their difficulty in affording medication, and their forgoing needed visits to physicians, every member of the Suncoast organization was asked to touch a life in some way each week. Within three months of the commencement of the program, 10,000 community members had been contacted with the outreach effort. Suncoast's community service centers, dispersed throughout the community, are not only a resource for staff, but gathering places for the community with libraries, computers available for research, and volunteer staff. Suncoast is affiliated with Suncoast Institute, a national center for hospice education, research, and end-of-life care. The institute's mission is to improve the way individuals and communities care for each other in the last years of life. The institute provides training on a contractual basis, conference presentations, "train the trainer," tr. 247, sessions, and seminars via the Internet or webinars where individuals receive training to implement programs in their own communities. In 2008, Suncoast, together with Morton Plant East Hospital, became one of only three accredited clinical pastoral education programs in the nation with training in end-of-life care. Training occurs across the whole continuum of care, whether in a hospital, nursing home, or inpatient hospice care. At inception, Suncoast Institute had as a goal "trying to bridge the gap between academic research and practice." Tr. 253. It began networking with academicians at the University of South Florida (USF.) Today, along with other hospices including TideWell, the institute is part of a center at USF that studies end-of-life care. The center at USF oversees a research agenda that links community provider needs with academic disciplines to provide meaningful research useful in the promotion of hospice and palliative care. Suncoast has also participated through Suncoast Institute in collaboaration with university researchers at the University of Buffalo, Duke, Yale, Brown, Dartmouth, and various state university systems. The institute oversees student affiliations hosting 2,500-to-3,000 students a year that range from two-day observations to two-year internships, residencies, and fellowships. The affiliations span a broad spectrum of clinical disciplines such as pharmacy, nursing, social work and medicine and include non-clinical student affiliations in non- profit business management, finance, marketing, and community outreach. The institute has a local speakers' bureau and provides continuing education for professionals in the local community. It provides up to a million student hours a year of training in the community and with staff. Suncoast's community committees, outreach programs, its institute, and work in academic settings are likely to continue with as much vigor as in the past should its application be approved. Services Suncoast intends to provide will duplicate services offered by TideWell. Nonetheless, it is reasonable to expect that with two different, competing and perhaps at times collaborating hospices, access to hospice services in Manatee County will be enhanced should Suncoast's application be approved. The immediate and long-term financial feasibility of the proposal. Suncoast is a financially strong organization. Its most recent audited financial statement for the fiscal year ending September 30, 2008 shows $15,142,000 in cash and cash equivalents of $7,567,000. The approximate sum of the two, $22.6 million, is a healthy financial reserve. Unrestricted net assets shown in its Consolidated Statements of Financial Position for 2007 (revised) and 2008, see Suncoast Ex. 38, moreover, were $35,309,089 as of September 30, 2008. Suncoast has the cash on hand to finance the proposed project. The parties have stipulated to the short-term financial feasibility of Suncoast's proposal. As for determining long-term financial feasibility, Mr.Balsano, Suncoast's expert in health care finance, used a model developed on a fixed and variable expense basis. It incorporated accounts at the existing Suncoast Hospice in Pinellas County and "looked towards consistency in some of the revenue and expense relationships." Tr. 331. It made adjustments, however, for operations in Manatee County for patient care costs and some other operating costs, taking into account administrative resources that would be shared with its Pinellas County operations. Assumptions made by Mr. Balsano were reasonable. As source documents, the model used the Suncoast 2007 budget. It identified unique capital costs of depreciation associated with opening a hospice in Manatee County; supply expenses and revenue on a per-patient-day or per-admission relationship were assumed to be similar to those of Suncoast's Pinellas County operations. The model was used to develop Schedule 7A of the application, which calls for projected revenues from operating years 1 and 2, and Schedule 8A, which calls for projected income and expenses for the same operating years. Schedule 8A of the application projects a net operating loss at the end of the second operating year of $269,689. Included in the loss are expenses of approximately $250,000 for uncompensated care that Suncoast has committed to provide. Suncoast will provide $358,933 in non-operating revenues which will not only cover the "uncompensated care" loss but will produce a net profit in the second year of operation attributable to the Manatee County operations of $89,244. The contribution of non-operating revenues enables Suncoast to provide service beyond the Medicare benefit. Suncoast's proposal is financially feasible in the long term. The extent to which the proposal will foster competition that promotes quality and cost-effectiveness. If its application is approved, Suncoast will compete with TideWell in Manatee County. Competition from Suncoast, a mission driven, not-for-profit, organization, should promote quality in Manatee County. In contrast to a for-profit organization that would seek to maximize profits by taking as many patients as possible whether at TideWell's expense or not, Suncoast is more likely to attempt to complement the programs offered by TideWell. There is potential for Suncoast to "add value to [the] service area," tr. 443, as Mr. Sullivan phrased it at hearing. It is reasonable to expect that added value will promote quality of care. Suncoast and TideWell have collaborated in the past. Whether the two will continue to collaborate should Suncoast's application be approved is an open question. Given the nature of their operations, however, there is a strong possibility of collaboration. If it continues, there will be an opportunity to achieve efficiencies. (i) The applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent. Suncoast has a long history of providing hospice services to Medicaid patients and the medically indigent. Consistent with its mission, Suncoast has made a conscious decision to provide needed services to hospice patients, whether fully reimbursed or not. These include instances where patients have some level of insurance but not all services are covered or cases where specific covered services are under-reimbursed. It also includes instances of when the patient has no ability to pay. In its fiscal year ending September 30, 2006, Suncoast provided uncompensated care totaling $11.5 million. In its fiscal year ending September 30, 2008, Suncoast provided uncompensated care totaling roughly $11.7 million. During 2006, a total of five percent of Suncoast's patient days were reimbursed by Medicaid and five percent were un-reimbursed charity care. At the time of hearing, Suncoast continued to provide charity care and Medicaid-reimbursed services at or above those levels. In fiscal year 2008, Suncoast's loss from continuing operations was $1,370,000. It received funding from the Suncoast Foundation in that year that was more than enough to cover the loss. Including all program expenses, both reimbursed and un-reimbursed, and all revenues from reimbursement or support from the community for non-reimbursed programs, Suncoast has operated at a profit. Suncoast's past profitability is indicative of the likelihood that it will continue to be able to provide Medicaid services and charity care at levels it has provided in the past. Because many of its programs are not funded through reimbursement by Medicare or private insurance, Suncoast has a fund-raising foundation. The Suncoast Foundation works to support the mission and programs of Suncoast and its affiliates. Its net assets at hearing were $31,690,000. The foundation will coordinate funding in Manatee County by using a community-based, relationship-based approach. The foundation has been successful in the past. In 2007, for example, the foundation raised approximately $9.3 million in contributions to fund its programs that did not generate adequate revenue. The foundation has diverse revenue sources. It receives revenue from contributions, bequests, investment income, rental income, thrift stores, and other fundraisers. In the fiscal year ending September 30, 2008, the foundation received total revenues of approximately $1.7 million from thrift stores alone that netted approximately $750,000. It is reasonable to expect, in light of Suncoast's history and recent performance, that approval of its application will assist in enhancing access to Manatee County's Medicaid patients and medically-indigent patients. Impact to TideWell TideWell is a financially healthy organization. Based on projections found reasonable in this order, approval of Suncoast's application will leave TideWell with a substantial number of Manatee County admissions. TideWell's Manatee County admissions after Suncoast's approval will likely exceed the number of admissions of more than 90 percent of all hospices nationally. Evidence presented reflected two ways of analyzing the impact of the application's approval on TideWell. The first, stressed by TideWell, is impact on its operations in Manatee County. The second, preferred by Suncoast, is impact on the entire entity of TideWell, that is, considering its operations in Charlotte and DeSoto Counties, Service Area 8A, and on its operations in Sarasota County, Service Area 8D, as well as its operations in Manatee County. Impact in Manatee County Alone A Growing Market. The Manatee County market for hospice services has grown because of increasing penetration rates. The "Baby Boom" generation will begin turning 65 in 2011. Despite recent flatness in the death rate, the number of deaths in Manatee County is likely to stabilize or increase forward of the data produced at hearing. The trend in hospice admissions is an upward one both in the state as a whole and in Manatee County. Between 2003 and 2008, the number of hospice admissions in Manatee County increased by 48 percent, "far in excess of any population growth." Tr. 986. The combination of factors that determines hospice admissions indicate that the demand for hospice services in Manatee County is likely to increase. TideWell Quality of Care Post-Suncoast Approval. TideWell maintains that if its admissions were reduced to an annual number of 1,702, as projected by Suncoast, its quality of care in Manatee County will be diminished. There is no evidence that for the years 2004, 2005, and 2006, when it had fewer admissions than 1,702, TideWell provided care that was less-than-excellent quality of care. As Mr. Davidson put it at hearing, however, "[TideWell] was providing the best quality of care it could consistent with its volumes." Tr. 795. Mr. Davidson's testimony with regard to quality of care based on reduced volume should Suncoast's application be approved was consistent with Ms. Maisto's testimony about programs that would be eliminated and jobs lost at TideWell should the application be approved. The cuts in programs and jobs are shown on TideWell Exhibit 19 and the exhibit is supported by testimony from Ms. Maisto. See Tr. 662-672. But Ms. Maisto's testimony and the exhibit are dependent on TideWell's financial impact analysis. Tidewell's Financial Impact Analysis. TideWell predicts a financial loss to TideWell of approximately $1.3 million in the second year of Suncoast's operation in Manatee County. There is no doubt that there will be a financial impact to TideWell as the result of a reduction in volume in Manatee County admissions, but TideWell overstates the projected impact. Furthermore, the impact to TideWell from the loss of Manatee County cases overlooks TideWell's status as a provider of hospice services in several service areas other than Service Area 6C. Impact on the Entity TideWell TideWell serves four contiguous counties: Manatee, Sarasota, Charlotte, and DeSoto. Most of TideWell's hospice activity is outside of Manatee County. In 2008, for example, 29 percent of TideWell's admissions were in Manatee County and 25 percent of its revenues were from Manatee County. TideWell's management views the organization in the aggregate. The view is supported by other indicia. TideWell has one license, one accreditation, one Medicare provider number and its programs are on an organization-wide basis. Likewise, when AHCA conducts surveys of TideWell, it does not limit its inquiry to Manatee County operations; it surveys all of TideWell. Prior to 2009, TideWell did not track financial performance by the counties it served. It accounted for the organization as a whole over the four counties served. Manatee County is not the leading region for TideWell. Sarasota County is regarded by TideWell as its "core business," Suncoast Exhibit 91, at 41, or as the most successful of the four counties it serves. TideWell's assessment is supported by the revenue generated from each county. Sarasota's gross revenue from operation is double the gross revenue from operations of the other three counties combined. TideWell's admissions have grown over the recent past in the three counties it serves that are Manatee County's neighbors. From 2003 to 2008, TideWell's admissions in Sarasota, Charlotte, and DeSoto Counties increased from 3,313 to 4,828. For Suncoast's second year of operation (considering TideWell's loss of admissions in Manatee County), Mr. Balsano projected that total admissions volume for TideWell as an entity in 2011 would be up 3.6 percent over 2008 and revenue would be increased 4.9 percent in the amount of $4,221,800. The projections are based on the assumption that TideWell's growth in admissions from Sarasota, Charlotte and DeSoto Counties would be only half of historical growth. The projections are reasonable. Reasonably projected growth in TideWell's admissions for all four counties and the concomitant reasonably projected increase in revenues mitigates the impact to TideWell's admissions and revenues if Suncoast's proposed hospice in Manatee County is approved. Impact on Charitable Donations TideWell's charity care and unfunded services in Manatee County are not fully covered by donations but the two types of services depend on donations for funding. They are the types of care and services which would be cut should funding levels require cuts within the organization. In fiscal year 2007, TideWell received $823,000 in charitable contributions from Manatee County. The bulk of TideWell's charitable contributions, however, come from outside Manatee County. For the same time period, fiscal year 2007, TideWell received more in charitable donations from outside the four counties than it received from Manatee County: approximately $1 million. From Sarasota County, alone, in fiscal year 2007 TideWell received $5 million, more than five times the amount of Manatee County donations. To make up for lost revenue from the impact of lost admissions in Manatee County, TideWell will need to attempt to increase donations. It is reasonable to expect that memorials and bequests associated with patients lost to Suncoast will be made to Suncoast. An increase in donations, therefore, will not be easily achieved. But it is not reasonable to expect that every charitable dollar raised by Suncoast in Manatee County will be a charitable dollar lost by TideWell. TideWell and Suncoast already compete for charity dollars in Manatee County. (As of January 2008, Suncoast Foundation had 200 active donors from Manatee County.) Without doubt, that competition will sharpen if Suncoast's application is approved. Nonetheless, the impact to TideWell's receipt of charitable contributions is not likely to be so material as to require denial of Suncoast's application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration enter a final order that approves CON 9964, the application of Hospice of the Florida Suncoast, Inc., to establish a new hospice program in Service Area 6C, Manatee County. DONE AND ENTERED this 26th day of February, 2010, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 2010. COPIES FURNISHED: Robert D. Newell, Jr., Esquire Newell, Terry & Douglas, P.A. 817 North Gadsden Street Tallahassee, Florida 32303 Lorraine M. Novak, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop No. 3 Tallahassee, Florida 32308 Paul H. Amundsen, Esquire Julia E. Smith, Esquire 502 East Park Avenue Tallahassee, Florida 32301 Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3 Tallahassee, Florida 32308 Thomas W. Arnold, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive Tallahassee, Florida 32308-5403 Justin Senior, General Counsel Agency for Health Care Administration Fort Knox Building, Mail Stop 3 2727 Mahan Drive Tallahassee, Florida 32308
The Issue Whether the Agency for Health Care Administration (AHCA) should approve the application of Compassionate Care Hospice of the Gulf Coast, Inc. (Petitioner, the Applicant, or CCH), for Certificate of Need (CON) No. 10337 to provide hospice services in Sarasota County, Florida.
Findings Of Fact THE PARTIES AHCA is the state agency authorized to evaluate and render final determinations on CON applications pursuant to section 408.034, Florida Statutes. CCH is a development stage, Florida for-profit, privately-owned corporation, formed for the purpose of initiating hospice services in the Gulf Coast region of Florida, including Sarasota, Manatee, and Pasco Counties. Compassionate Care Group, LTD (CCH-LTD), the Applicant’s parent, is a national, for-profit hospice provider, headquartered in Parsippany, New Jersey, operating 39 hospice programs in 22 states, with 57 offices. CCH-LTD (or its affiliate(s)) currently provides hospice services in Service Area 6B consisting of Polk, Highlands, and Hardee Counties; Service Area 3E, consisting of Lake and Sumter Counties; and Service Area 11, consisting of Miami-Dade and Monroe Counties. The hospice services offered in Service Area 6B is CCH-LTD's only mature program in Florida. The other two are still in the start-up phase. Tidewell is a Florida, not-for-profit corporation, currently licensed to provide hospice services and is currently the sole hospice provider in three geographically contiguous Hospice Service Areas, including Service Areas 8D, Sarasota County; 8A, Charlotte and DeSoto Counties; and 6C, Manatee County. Tidewell currently serves on an annual basis approximately 8,000 patients and their families, employs 500 to 600 fulltime, and 100 to 150 part-time, employees and has approximately 1,000 active volunteers. Tidewell has a total average daily census of approximately 1,130 patients. Tidewell’s average daily census in Service Area 8D, Sarasota County, is approximately 500 patients. STIPULATED FACTS AND LAW CCH submitted its Application for CON 10337 to establish a new hospice program in Service Area 8D, Sarasota County, in the October 2014 AHCA Hospice Program Batching Cycle. CCH's Application was deemed complete, reviewed, and preliminarily denied by AHCA. CCH timely petitioned for a hearing, pursuant to section 120.57. Tidewell timely petitioned to intervene. Intervention was granted subject to proof of legal standing at hearing. All of the review criteria in section 408.035 and Florida Administrative Code Rules 59C-1.008, 59C-1.030 and 59C-1.0355 were at issue in this proceeding, except the following subsections of section 408.035(1): (h) is not applicable to this proceeding; (j) is not applicable to this proceeding; and (d) for which the parties stipulated that CCH has access to sufficient resources, including health personnel, management personnel, and funds for capital and operating expenditures for project start-up as described in its Application, except for manpower specifically associated with CCH's proposed Cardiac Connections, Pulmonary Connections, and Promises programs. Florida law requires a hospice program to provide a continuum of palliative and supportive care for terminally-ill patients and their families. "Palliative care" means services or interventions which are not curative, but are provided for the reduction or abatement of pain and suffering. A terminally-ill patient is defined under sections 400.601(3), (7), and (10), Florida Statutes, as having a medical prognosis of 12 months or less life expectancy. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to dying patients and their families. Hospice care is provided pursuant to an individualized plan of care developed by an interdisciplinary team consisting of physicians, nurses, home health aides, social workers, bereavement counselors, spiritual care counselors, chaplains, and others. There are four levels of service in hospice care: routine home care; continuous care; general inpatient care; and respite care. Routine home care (provided where patients reside) accounts for the vast majority of admissions and patient days. Continuous care, sometimes called "crisis care," is provided in a home care setting or in any setting where patients reside. Continuous care is provided for short durations when symptoms become so severe that around-the-clock care is necessary for pain and symptom management. General inpatient level of care is provided in either a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient unit. Respite care is generally designed for caregiver relief. It allows patients to stay in facilities for brief periods to provide breaks for caregivers. The Medicare hospice benefit requires terminally-ill patients to have a life expectancy prognosis of six months or less to be eligible to elect the Medicare benefit. Like Florida law (chapter 400, Florida Statutes), the Federal Medicare benefit excludes patients seeking curative treatments from hospice eligibility. Medicare is the largest payor source for hospice services. Other sources include Medicaid, private insurance, managed care plans including Medicaid Managed Care, other government payors and charity. Hospices are required to accept all patients regardless of ability to pay. STATUTORY REVIEW CRITERIA The need for the healthcare facilities and health services being proposed. § 408.035(1)(a), Fla. Stat. On October 3, 2014, AHCA published a numerical fixed need of zero for new hospice programs in Hospice Service Area 8D, comprised of Sarasota County, for the October 2014 “Other Beds and Programs” batching cycle with a planning horizon of January 2016. The published need of zero was not timely challenged by any party and is, therefore, the numerical need applicable to this case. A published need of zero creates a rebuttable presumption that a new hospice is not needed. Florida Administrative Code Rule 59C-1.0355(3)(b) provides: (b) Conformance with Statutory Review Criteria. A Certificate of Need for the establishment of a new Hospice program or construction of a freestanding inpatient Hospice facility shall not be approved unless the applicant meets the applicable review criteria in Sections 408.035 and 408.043(2), F.S., and the standards and need determination criteria set forth in this rule. Applications to establish a new Hospice program shall not be approved in the absence of a numeric need indicated by the formula in paragraph (4)(a) of this rule, unless other criteria in this rule and in Sections 408.035 and 408.043(2), F.S., outweigh the lack of a numeric need. Conceding the absence of a published numerical need in the batch cycle, CCH filed the Application seeking to establish a new hospice program in Service Area 8D, Sarasota County, based on the existence of “not normal and special circumstances.” CCH asserts that there are a number of not normal and special circumstances in Sarasota County that outweigh the lack of a numerical fixed need in the overall weighing and balancing of the statutory and rule review criteria. The not normal and special circumstances alleged by CCH include: Tidewell is a regional monopoly provider, operating the sole hospice in three contiguous hospice service areas. Per section 408.043(2), Florida Statutes, and Rule 59C-1.0355(3)(c), F.A.C., the lack of published numeric need is outweighed by the need to promote competition and discourage regional monopolies. There are over 46,979 Medicaid recipients living in Sarasota. Pursuant to section 409.967(2)(c), Florida Statutes, under the new Medicaid managed care model, AHCA established Medicaid Managed Care Requirements to ensure there is an “adequate network” of health care providers in place to provide Medicaid patients with choices when seeking health care services. An “adequate network” of hospices requires a minimum of two hospice providers per county. The Applicant asserts Medicaid recipients in Service Area 8D are being underserved because they do not have an adequate network of providers to choose from in Sarasota. Patients, families, physicians, long term care facilities, home health agencies, and other typical hospice referral sources for hospice lack any choice of provider in Service Area 8D. This is especially important for those who have had negative experiences with Tidewell. There are numerous large scale referral sources in Sarasota that are unhappy about, reluctant to, or in some instances even refusing to refer patients to Tidewell because of their negative experiences. The patients not being referred to hospice because Tidewell is the only option are underserved. Almost 10 percent of Sarasota County residents who received hospice services in 2012, 528 out of 5,707 patients, left Sarasota County to do so. While there is no statistical way to determine why these residents opted to leave Service Area 8D for their hospice care, the number is significant given the large scale referral sources, including home health agencies and long term care providers, dissatisfied with Tidewell or who prefer choice. Hospice patients with end-stage heart, pulmonary, and renal diseases, are underserved in Service Area 8D. Tidewell’s decreasing trends on admitting these patients is inconsistent with national, Florida, and Sarasota County data demonstrating increasing needs for hospice care for these patients. The cost and difficulty of caring for these patients often causes hospices to avoid admitting them. The Applicant has developed disease specific programs targeting these patients. In addition to the alleged not normal and special circumstances summarized above, CCH asserts that the AHCA's numeric need calculation of zero should be given little weight in determining whether to approve the Application because there are anomalies in Tidewell’s reported admissions that distort the apparent penetration rate used in the calculation. At the final hearing, CCH pointed out that, while AHCA allows double counting for purposes of the fixed need calculation, from a health planning perspective, the apparent penetration rate can be distorted by routinely double counting admissions. CCH provided an example where Tidewell reported admitting more than 100 percent of the potential cancer deaths over 65. Based on this analysis, CCH argues that because of a distorted penetration rate, the presumption of no need for a new hospice should be given little weight. CCH's attempt to demonstrate an error in the fixed need pool calculation, however, is untimely. Subsections 2 and 3 of rule 59C-1.008(2)(a) state: Any person who identifies an error in the Fixed Need Pool numbers must advise the Agency of the error within 10 days of the date the Fixed Need Pool was published in the Florida Administrative Register. If the Agency concurs in the error, the Fixed Need Pool number will be adjusted and re- published in the first available edition of the Florida Administrative Register. Failure to notify the Agency of the error during this time period will result in no adjustment to the Fixed Need Pool number for that batching cycle. Except as provided in subparagraph 2. above, the batching cycle specific Fixed Need Pools shall not be changed or adjusted in the future regardless of any future changes in need methodologies, population estimates, bed inventories, or other factors which would lead to different projections of need, if retroactively applied. Therefore, CCH's purported evidence of an error in the calculation of the fixed need pool has not been considered, and the rebuttable presumption that a new hospice is not needed has not been diminished by CCH's criticism of the fixed need calculation. CCH's alleged not normal and special circumstances are addressed below in the same order as summarized in paragraphs through e., above. Regional Monopoly Section 408.043(2), Florida Statutes, provides in pertinent part: HOSPICES.— When an application is made for a certificate of need to establish or to expand a hospice, the need for such hospice shall be determined on the basis of the need for and availability of hospice services in the community. The formula on which the certificate of need is based shall discourage regional monopolies and promote competition . . . . Tidewell is the sole hospice provider in three adjoining hospice service areas (Service Areas 8D, 8B, and 6C), encompassing Manatee, Sarasota, Charlotte, and Desoto Counties. This situation is unique in the state. There is no other part of the state consisting of multiple contiguous hospice service areas with only a single hospice provider. In fact, there is no other part of the state where there are even two adjoining service areas with a single hospice provider. The four counties that comprise the three hospice service areas where Tidewell operates as the sole provider are recognized as a “region” by the U.S. Bureau of the Census and the Office of Management and Budget. These four counties constitute a recognized combined statistical area used for federal planning and budgeting decisions. Multiple witnesses confirmed Tidewell operates as a single integrated regional provider. All of Tidewell’s licensed hospices have the same officers and directors; adhere to the same policies, procedures, and protocols; and share multiple support services, such as information technology and human resources. Practically speaking, Tidewell functions as a single hospice in the four counties which comprise Service Areas 8D, 8B, and 6C. While neither the applicable statute nor rule defines “monopoly,” its commonly understood meaning is that there is an exclusive or sole provider of services or goods in an area. Tidewell is the only hospice provider in the four counties that make up Service Areas 8D, 8B, and 6C. It is found, under the circumstances, that Tidewell has a regional monopoly in those contiguous service areas. The fact that Tidewell is a regional monopoly, standing alone, however, is not a sufficient basis to justify approval of a new hospice program in Service Area 8D. 2. Enhancing Access for Medicaid Managed Care Eligible Patients AHCA recently transitioned its Medicaid program to a managed care delivery model. In so doing, the state was required to develop “adequate network” standards for healthcare services offered to Medicaid patients, including hospice services. Section 409.967(2)(c), Florida Statutes, requires AHCA to develop standards governing the number, type, and regional dispersal of healthcare providers to ensure access. There are two separate components of the Statewide Medicaid Managed Care Program: (1) Managed Medical Assistance (MMA), and (2) Medicaid Long Term Care (LTC). AHCA developed model contracts for managed care plans seeking to become approved Medicaid plan providers under the MMA or LTC programs. The model contracts included “adequate network” standards for the various healthcare providers, including hospices. Under the MMA and LTC model contracts, there must be a minimum of two hospice providers per county. The “adequate network” standards contained in the model contracts were developed through a deliberative process between AHCA and the federal government’s Center for Medicare and Medicaid Services (CMS) as part of the Medicaid Waiver Program issued by CMS. AHCA and CMS used the existing CMS standards from other programs as a starting point, and then made informed decisions on particular adjustments to the standards as necessary. Ultimately, some of the standards adopted for Florida were more stringent than the CMS standards and some were less stringent, depending on Florida use rates. The hospice standard adopted for Florida is two hospices per county. One of the reasons that the standard of two hospices per county was adopted is to provide for patient choice in hospice care. Fifty-six of Florida’s 67 counties have two or more licensed hospices. Nevertheless, Abbie Riddle, AHCA’s Medicaid Plan Management Operations Bureau Chief, testified that there is nothing unusual or not normal about a county not meeting the hospice “adequate network” standards because she had issued waivers in numerous counties throughout the state where there were fewer than two licensed hospices, including Sarasota County. Tidewell argues that because Service Area 8D MMA and LTC contracts are operating under a waiver, there is no reason to be concerned about the lack of an “adequate network.” There is no evidence, however, that the decision to issue waivers for fewer than two hospices within a county was based upon an adequacy analysis or determination. Rather, Ms. Riddle, on behalf of AHCA, granted waivers to all counties that did not have at least two hospices with a physical address within the county. Further, AHCA’s waiver authority under the model contract does not suggest that the issuance of a waiver is a determination of network adequacy. Rather, Section VI, B., 3. of the model contract provides: If the Managed Care Plan is able to demonstrate to the Agency’s satisfaction that a region as a whole is unable to meet network requirements, the Agency may waive the requirement at its discretion in writing. As soon as additional service providers become available, however, the Managed Care Plan shall augment its network to include such providers in order to meet the network adequacy requirements. Such a written waiver shall require attestation by the Managed Care Plan that it agrees to modify its network to include such providers as they become available. The addition of another hospice program in Service Area 8D, Sarasota County, would be consistent with the applicable “adequate network” standards for hospice services. This finding, however, is not the equivalent of finding that there is an underserved population in Sarasota County. 3. Lack of Choice and Out-Migration CCH relies on 13 letters of support from the community and 13 deposed witnesses who all urge that choice and competition are sufficient reasons to support approval of CCH’s Application. The letters and witnesses, however, express personal opinions that are not based upon any demonstrated expertise in health planning. Those opinions, therefore, have not been given significant weight. CCH also presented evidence that some residents of Sarasota County receive hospice services from hospices located in surrounding counties. That evidence, however, was insufficient to demonstrate a cause for the outmigration. The observations of outmigration, alone, do not support a conclusion that the outmigration would be prevented by the addition of another hospice provider. 4. Specific Terminally-Ill Populations Not Being Served The Special Circumstances provision in the hospice rule recognizes that a CON may be granted in the absence of need when there are specific terminally-ill populations that are not being served. This can include a specific disease category. The health planners testifying at the final hearing agreed that a given population does not have to be completely unserved to rise to a level of special circumstance. Rather, it is adequate to demonstrate that a given population is underserved compared to the statewide use rate of hospice services for that population. CCH asserts that hospice patients with end-stage heart, pulmonary, and renal diseases are underserved in Service Area 8D. CCH described its programs especially designed to meet the needs of patients with those diseases. CCH failed, however, to demonstrate that patients in Service Area 8D in those disease categories are underserved. In describing its Cardiac Connections Program, Pulmonary Connections Program, and Advanced Care Connection Programs, CCH relied on evidence from those who created and operate the programs. Documenting an ability to provide care under specialty programs with alternative or additional clinical protocols, however, is not the equivalent of documenting substandard care by an existing provider, an underserved group, or “special circumstances” sufficient to find a need for the Applicant who is offering those alternative protocols. Only 40 percent of CCH-LTD affiliate program offices have implemented the Cardiac Connections Program. Even where implemented, not all of CCH-LTD’s end-stage heart failure patients are enrolled in Cardiac Connections. CCH acknowledged that CCH-LTD hospices are still able to deliver acceptable and appropriate care to end-stage heart disease hospice patients without the Cardiac Connections Program. CCH described the Cardiac Connections Program as an enhanced service and agreed that the failure of CCH-LTD affiliate facilities to provide its end-stage heart failure patients with Cardiac Connection Program services does not constitute “substandard service” to those patients. In fact, CCH agrees that adequate palliative hospice care can be provided to end-stage heart patients without the Cardiac Connections Program. As an example of the significance of the Cardiac Connections Program, CCH cites the fact that its Cardiac Connections Program admits inotrope and left ventricle assist device (LVAD) patients. CCH suggests that, because inotropes must be started in an intensive care setting and are expensive, many hospices will not provide inotropes in a home setting for their patients. Tidewell, however, also admits LVAD patients and patients being infused with inotropes. Those patients are included in Tidewell’s complex case management protocol when the patient is going to be infused at home and Tidewell pays for all infused medications related to the patient’s primary diagnosis. The evidence further demonstrated that Tidewell understands the needs of end-stage heart failure patients and provides high quality care hospice services for those patients consistent with best practices and generally accepted guidelines. As argued with regard to end-stage heart failure patients and its Cardiac Connections Program, CCH contends that end-stage pulmonary disease patients in Sarasota County are an underserved group because those patients do not have access to CCH’s Pulmonary Connections Program. CCH-LTD's national Pulmonary Connections Program coordinator, however, acknowledged that hospice patients with a primary diagnosis of end-stage pulmonary disease, who are not enrolled in its Pulmonary Connections Program, should not be presumed to be receiving substandard care. Tidewell demonstrated that Tidewell provides high quality palliative care to its end-stage pulmonary disease patients, consistent with best practices, including the necessary patient and family training for the symptoms associated with shortness of breath. Although CCH also argued that its Renal Advanced Care Connections program would enhance access for renal failure patients in Sarasota County, the evidence in that regard was not sufficiently developed at hearing to support any findings of fact with regard to an unmet need that would be served by that program. In addition to describing its specialty programs, CCH relies on admissions data and general demographic or disease prevalence information to support its contention that there is an unmet hospice need in Service Area 8D for end-stage cardiac, pulmonary, and renal patients. For instance, CCH provided evidence showing that heart disease is the number one leading cause of hospitalization nationally and in Florida, and that it has a high mortality rate. It was also shown that, nationally, there were over 5.7 million heart disease hospitalizations in 2008, and that figure is projected to grow to over 10 million by 2037. Using admissions data, CCH made various data comparisons to demonstrate the need for CCH’s Cardiac Connections Program in Sarasota County. CCH compared the rate of re-hospitalization (within 30 days) for patients in the Cardiac Connections Program, with general readmission rates (i.e. not specifically from hospice programs) for end-stage heart failure patients nationally, and all end-stage heart failure readmissions to Sarasota County and surrounding hospitals. CCH also compared the rates of re-hospitalization of cancer patients with heart failure patients. CCH did not, however, offer evidence to allow a comparison of Tidewell’s re-hospitalization rates for Service Area 8D end-stage heart failure hospice patients with rates for Cardiac Connections Program patients. Nor did CCH provide data to allow a comparison of the hospital readmission rates for Cardiac Connections Program patients with the re-hospitalization rates for CCH-LTD affiliate end-stage heart failure patients where end-stage heart failure patients are not enrolled in the Cardiac Connections Program. CCH also submitted admissions data showing that Florida has the second highest number of pulmonary disease cases in the U.S. behind California, which has double the population. The evidence showed that Florida ranks number one for pulmonary disease with a prevalence rate of six percent, followed by California at four percent. Sarasota County is even higher with a 7.37 percent prevalence rate, closely followed by Manatee County at 6.5 percent. Relying primarily on comparative admissions data, CCH argues that the population requiring hospice care for heart, pulmonary and renal failure has been going up, while the percentage of patients served by Tidewell for those populations has declined. The admissions data for Tidewell submitted by CCH in support of its argument of allegedly underserved populations, however, does not properly utilize death rates necessary to determine “penetration rates.” Rather than relying on general demographic and disease prevalence information or merely comparing differences in the number of admissions in trying to determine whether underservice exists, it is more accurate to compare penetration rates. Penetration rates for an area within a given time period are calculated by dividing the number of hospice admissions by the resident deaths for the area during the time period. Using penetration rates calculated and published by AHCA, Tidewell’s overall annual penetration rates for Service Area 8D range from four to nine percent higher than the Florida average penetration rates during the period from 2004 to 2014. While CCH has criticized the calculations for Tidewell’s penetration rates as inflated due to AHCA's double counting of readmissions, the numbers hold up in other contexts, indicating that Tidewell is available and accessible for those persons eligible for hospice to a greater degree than the average Florida hospice. When annual Service Area 8D hospice admissions for end-stage heart failure patients as a percentage of annual Service Area 8D end-stage heart failure deaths from 2011 to 2014 (from Department of Elder Affairs’ admissions data that does not include readmissions and death statistics from the Florida Bureau of Vital Statistics, respectively) are compared to the average penetration rate for all Florida hospices, it shows that, although the state average fluctuates annually, Tidewell’s rate increased incrementally year over year, and approximated, or exceeded, the state average rate three out of four years. Comparing Service Area 8D to all of Florida, using hospice end-stage pulmonary disease and end-stage renal disease admissions as a percentage of end-stage pulmonary and renal disease deaths, respectively, for the years 2011 to 2014, shows that annual variations in the average rates exist in both Service Area 8D and Florida, but there is no pattern of historical or remarkable underservice to hospice eligible patients of Service Area 8D for either disease. To the extent the state average penetration exceeds Tidewell’s in any one year, it does not support the notion that the difference represents a “gap” in service. Gaps, for purposes of the special circumstance applications, must be a material or sustained trend, not a blip. Availability, quality of care, accessibility, and extent of utilization of existing healthcare facilities, and health services in the service district of the applicants. § 408.035(1)(b), Fla. Stat. Sarasota County, with a population of over 400,000 residents, has a healthcare delivery system with 6 acute care hospitals, 31 skilled nursing facilities, 61 assisted living facilities, 53 home health agencies, 9 adult family care homes, 54 homemaker and companion services, 20 surgical centers, 1,100 doctors, and over 5,000 registered nurses. As the sole provider of hospice services in Sarasota County, Tidewell is governed by a 15-member volunteer Board of Trustees who all live in and are representative of Tidewell’s Service Areas. The Board provides independent accountability to the communities served by Tidewell, including Sarasota County, Service Area 8D. In addition to its principle administrative office in Sarasota, Tidewell has located two of its eight satellite offices within the geographic boundaries of Service Area 8D, Sarasota County. In addition, Tidewell owns and operates seven hospice houses with a total of 65 licensed general inpatient beds, which can also be used for residential patients and respite care. Two of Tidewell’s hospice houses are located in Service Area 8D, with six beds in the hospice house located in Venice and 12 beds in Sarasota. A hospice house residential patient is a patient receiving the hospice routine home level of care when the patient does not have anywhere else available or safe to receive the care (e.g. homeless patients and patients without a caregiver). Although Tidewell maintains contracts with all the hospitals and nursing homes in its Service Areas to utilize facility beds for general inpatient, respite care and residential care, Tidewell’s hospice houses provide a more homelike environment, and are more accessible and preferred by families. Tidewell makes all of its hospice program services, hospice houses, and community services available to patients regardless of their ability to pay, religious preference, race, nationality, ethnicity, or sexual orientation. Tidewell is Medicaid and Medicare certified to serve patients and families eligible for those program benefits, and is accredited, with “deemed” status, by the Community Health Accreditation Program (CHAP) (i.e. AHCA defers to and accepts CHAP accreditation surveys in lieu of routine AHCA operational surveys). CHAP’s standards and practices mirror those contained in the Federal Medicare Hospice Conditions of Participation (CoPs). Tidewell is accredited by the National Institute for Jewish Hospice, and Tidewell has a full time Rabbi available and accessible in Service Area 8D. Tidewell effectively competes with other types of post-acute care providers, like private duty home health companies in its Service Areas. Tidewell allocates its excess revenue philanthropic contributions to operating reserves and to provide additional and enhanced services for patients, families, and the community at large. In Sarasota County, Service Area 8D, Tidewell deploys one assisted living facility (ALF) team, two home teams, one nursing home team, and three hospice house teams, and has coverage from its crisis/continuous care, admissions, and triage (after hours and weekends) teams. Each of these service teams in Sarasota County includes seven to eight registered nurse (RN) case managers (one RN for every 12 patients), one licensed practical nurse (LPN), four to five certified nursing assistants (CNA), three social workers (SW), and one chaplain. Tidewell also employs, for use in Service Area 8D, additional clinical staffing personnel for upticks in census, after hours and triage, admissions and crisis care, including 20 as-needed CNAs, 25 crisis care LPNs, 20 RNs and one LPN for triage and after hours, a wound care coordinator, and a certified child life specialist. Tidewell has access to contracted RNs and LPNs if the census ever exceeds employed staffing ratios. Beyond the interdisciplinary group (IDG) positions required by the CoPs, Tidewell supplies each IDG team with an experienced hospice RN clinical director and a team coordinator. Tidewell also employs an RN wound care program coordinator to assist RN case managers in managing patients with wounds and a specialist trained in therapeutic play for children and how to support parents of chronically ill children. Tidewell maintains a state-of-the-art call center to immediately dispatch and track triage RNs and to respond to requests for information from patients, families, and physicians during evenings and weekends. Tidewell gives all patients eligible for general inpatient, residential, and respite care a choice of all contracted venues and hospice houses that have a bed available. Families often choose the geographically closest hospice house available, without regard to the Service Area where they reside. In hospice, the location where the patient receives care is considered the patient’s residence. When the geographically nearest hospice house selected by a patient and family for their convenience is in a Tidewell Service Area, other the one in which the patient is currently receiving care, AHCA requires that the transfer to the new Service Area be reported as a new admission on the hospice’s semi-annual utilization report to AHCA. AHCA considers this approach to be consistent with the requirements of rule 59C-1.0355(8)(a)2., which links reported admissions to Service Areas. Tidewell’s size and economies of scale allow it to provide an array of enhanced counseling services to patients, families, and the community. Tidewell operates a grief education and support center (the Center), managed by an expert in bereavement, with 10 full-time grief specialists who hold either a license as a clinical social worker or a Master’s degree in counseling, or both. Three Tidewell grief counselors are assigned to hospice patients and families in Sarasota County. In addition to counseling individuals, the Center organizes grief groups in the community. In fiscal year 2015, in Sarasota County, 865 hospice family members accessed Tidewell community group bereavement services beyond the 13-month Medicare hospice benefit period, and Tidewell also served 1,623 community group attendees with no prior hospice connection. The Center also provides, at no charge, emergency counseling interventions. Tidewell grief counselors are on call and respond to calls from law enforcement, fire-rescue, and medical personnel in the community to deal with grief associated with serious accidents and disasters. Tidewell has an extensive and well-organized professional relations and outreach program to ensure that existing and new physicians, nursing homes, ALFs, and other potential referral sources are aware of Tidewell’s services. Tidewell provides literature to physicians, nurse practitioners, and physician assistants for use in promoting end-of-life conversations with patients early, and to let physicians know that Tidewell is available 24/7, every day, to evaluate their patients for hospice eligibility. Tidewell provides a significant number of well- organized, well-staffed, professional programs to patients, families, and the community free of charge, which are not otherwise required or reimbursed under the Medicare hospice benefit. The programs include complementary services, the Tidewell Honors Veterans program, and the Transitions program. Complementary services are methods of intervention that work in conjunction with traditional medicine and nursing interventions to provide the patient with moments of joy, stress relief, and lasting legacies for the family. Complementary service therapies include pet therapy, massage, horticultural intervention, expressive arts, music therapy, humor, Reiki, aromatherapy, care and touch, life legacy and reminiscence. The complementary therapy department is staffed by two massage therapists and one expressive arts facilitator, contracts with two horticulture contractors and one expressive arts contractor, and relies heavily on volunteers. Sarasota Service Area 8D had a total of 1,201 complementary visits from Tidewell staff, contractors, and volunteers in fiscal year 2015. In fiscal year 2015, Tidewell served 478 veterans in its Tidewell Honors Veterans hospice program and 42 patients in its Transitions program in Sarasota County. The Tidewell Honors Veterans is a program that recognizes veterans and expresses the community’s gratitude for military service. The Transitions program is a pre-hospice, volunteer- operated program that offers practical assistance to those in the community with a diagnosis of one year or less life expectancy, but who have not elected hospice care. Tidewell employs a child life specialist and participates in Florida’s Partners in Care (PIC) program, which allows pediatric patients with chronic terminal illnesses to receive curative care while also electing hospice palliative care. Tidewell currently has 21 children enrolled in its PIC program and four pediatric hospice patients. The PIC program operates at a deficit because the reimbursement rate from the waiver program is insufficient to fully compensate the staff. Other than the waiver program funding, there are no grants or other funding services for the PIC program. Tidewell has a contract with music therapists for a combined 30 hours a week to see PIC patients and consult with pediatric hospice patients. Currently, Tidewell has a total of 1,002 volunteers that are active and available for assignment. Tidewell employs an expert in non-profit management to organize and maintain its volunteer services. Tidewell has four volunteer coordinators physically located in Sarasota County. Each of the Sarasota volunteer coordinators works with 120 to 150 volunteers. CCH submitted anecdotal evidence that one cardiologist (Dr. Rosenfeld) and two nursing facilities (according to Dr. Robinson) have had difficulty with referrals to Tidewell. That evidence, however, from a health planning perspective, especially in view of the credible evidence submitted by Tidewell demonstrating the quality, accessibility, and extent of utilization of Tidewell services in Sarasota County, is entitled to little weight. Persuasive evidence submitted by Tidewell showed significant volume of admissions at Tidewell, effective overall outreach to physicians, and Tidewell’s success in penetrating Service Area 8D. The ability of Applicant to provide quality of care and Applicant’s record of providing quality of care. § 408.035(1)(c), Fla. Stat. In the State Agency Action Report (SAAR), AHCA addressed CCH-LTD’s history of providing quality of care in its existing Florida operations and found that CCH-LTD attained a “five-of-five star rating” in each of five survey questions, meaning “respondents were 90 to 100 percent satisfied with the hospice’s performance.” CCH-LTD has an established Quality Assessment Performance Improvement (QAPI) program in place throughout all of its operations, with continual assessment of quality measures, ongoing and periodic audits of patient medical charts, quarterly meetings between 12 Regional QAPI coordinators and local programs, and monitoring to assure follow-up on improvement items. In addition, CCH-LTD conducts internal periodic surveys to assure ongoing compliance. All of CCH-LTD’s 39 programs have been accredited by CHAP, which is considered as the “gold standard” for hospice quality. According to CCH-LTD’s current Florida regional director, the CCH-LTD affiliate in Florida Service Area 6B had a “miscommunication” with AHCA in 2015 regarding its hospice license renewal application. In February 2015, AHCA required CCH-LTD to close its affiliate’s hospice in Service Area 6B for failure to submit a renewal application and to discharge or transfer its approximately 230 patients to other hospices, until the affiliate obtained a new license in June of 2015. This incident, in all probability, interfered with the continuity of care for those patients because of CCH-LTD’s miscommunication with AHCA. CCH, however, cooperated in the transfer of patients and the transfers were made in an orderly process until the issue with the temporary lapse in license was fully resolved. After that, AHCA reissued CCH its license, and AHCA has subsequently surveyed the program and found it to be without deficiencies. The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation. § 408.035(1)(d), Fla. Stat. CCH demonstrated that it has the resources available, or can secure the necessary resources, for accomplishment of the proposed project. The extent to which the proposed services will enhance access to healthcare for residents of the service district. § 408.035(1)(e), Fla. Stat. While the addition of another hospice would provide a choice for hospice care in Sarasota County, considering the present zero fixed need determination for Service Area 8D, as well as evidence of the quality services and accessibility currently provided by Tidewell, it is found that approval of the Application would not materially improve access to hospice care for residents of Service District 8D. To the contrary, evidence presented by Tidewell demonstrated that approval of CCH’s proposed program will, immediately and over the long term, have a material adverse impact on Tidewell and the hospice services provided by Tidewell to the Sarasota community. Tidewell, using reasonable assumptions regarding length of stay, number of patients that would be lost to CCH, and variability of Tidewell’s expenses, demonstrated that a reasonable expectation from approval of the Application will cause Tidewell to incur a lost contribution margin per patient day of $72.92, totaling at least $1.2 million for each year that CCH captures 300 or more of Tidewell’s Service Area 8D admissions. If CCH captures 300 admissions annually, Tidewell reasonably and conservatively expects, based on a calculation of average historical donations per admission, to lose at least $145,000 in philanthropy annually. Considering available options to absorb the contribution margin and philanthropic losses in the event CCH is approved, and because Medicare hospice benefit core services are required by law, Tidewell determined that operational and administrative costs for core patient and family services costs would not be cut (except for reducing the variable costs associated with the 300 lost admissions accounted for in Tidewell’s contribution margin analysis). Given the impact, approval of the Application would require Tidwell to look for reductions to costs in its enhanced patient services (not otherwise required by the Medicare hospice benefit) and community education and support services, which Tidewell currently provides and for which Tidewell incurred costs in fiscal year 2015 of approximately $1.5 million exclusive of grants. Specifically, and within two years of CCH’s second year of operation, Tidewell reasonably estimated that it will need to eliminate: 100 percent of Tidewell’s community grief education and support groups; the Transitions Program; 100 percent of complementary services to patients; 100 percent of its volunteer program; and Tidewell’s Childrens Program. Tidewell has cut community services in the past when operating revenue dropped significantly. Between fiscal year 2012 and fiscal year 2014, when operating revenue dropped $10 million, Tidewell had to cut $346,000 from bereavement services and over $300,000 from complementary services. This history indicates a willingness and likelihood Tidewell would make similar cuts if a competitor reduces Tidewell’s contribution margin by $1.5 million. CCH contends that Tidewell can easily absorb any lost margin because Tidewell had an increase in unrestricted net assets in 2015 of approximately $10 million. However, approximately $6 million of Tidewell’s 2015 asset increase came from philanthropy, of which $2.5 million came from a single donor. Another $1 million of the increase came from investments. Neither philanthropy nor investment income are considered assured for purposes of projecting future net assets and funding losses. In reality, and disregarding philanthropy and interest, a net operating revenue of only approximately $2.7 million would have been available to Tidewell to absorb a contribution margin loss of $1.2 million in 2015. It is fair to characterize the impact of terminating these Tidewell programs as significant and adverse in the short- and long-term for Tidewell and the services it provides to the Sarasota community. The immediate and long-term financial feasibility of the proposal. § 408.035(1)(f), Fla. Stat. Assuming CCH secures 300 admissions in year two of its proposed project, its project appears financially feasible in the near and long-term. The extent to which the proposal will foster competition that promotes quality and cost effectiveness. § 408.035(1)(g), Fla. Stat. While approval of the Application would increase competition, in view of other findings regarding the negative impact on Tidewell and likely interference with its thriving hospice program with complementary, voluntary and overall quality, it is concluded that competition of the type proposed by CCH is not needed in Service Area 8D, nor would it promote quality and cost effectiveness. The applicant’s past and proposed provision of healthcare services to Medicaid patients and the medically indigent. § 408.035(1)(i), Fla. Stat. CCH demonstrated a history of providing services to both Medicaid and charity patients. The Applicant projects 4.3 percent of patient days to be provided to Medicaid and charity patients and conditioned the Application on contracting with the Medicaid managed care plan provider.
Recommendation Accordingly, based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order denying CON Application No. 10337. DONE AND ENTERED this 19th day of September, 2016, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 19th day of September, 2016.
The Issue The issue is whether the Agency for Health Care Administration properly determined that the application of Covenant Hospice, Inc. meets the statutory and rule criteria for a hospice program in Service Area (SA) 2B.
Findings Of Fact Hospice Care Hospice care is a medically coordinated group of services that is designed for people who have a terminal diagnosis with a life expectancy less than six months. Hospice care provides palliative care as opposed to curative care. The patients' and their families' needs are multi-dimensional and include physical, psychological, emotional, spiritual, and financial needs. Hospice care includes physician directed medical care, nursing services, social work services, bereavement counseling, and other ancillary services such as community education. Hospice care is reimbursed by Medicare, Medicaid, Champus/Tri-Care (for military populations), and some commercial insurance programs. For example, under the Medicare reimbursement system, hospices are reimbursed based on an identifiable flat per diem rate for a bundled package of services. Medicare does not reimburse hospices for bereavement services. The Medicare benefit is based on level of care. Routine home care is the basic level of care. Routine home care is provided as long as a hospice can care for a patient in a home-like environment. The second level of care is continuous care, which provides between eight and 24 hours of nursing care per day. The third level of care is inpatient care, which a hospice can provide in a hospital, a skilled nursing unit of a nursing home, or a freestanding hospice inpatient facility operated by a hospice. The fourth and final level of care is respite care. The primary reimbursement agent for hospice care is Medicare, but it is becoming more common for private insurers and health maintenance organizations to provide the benefit. Hospices also provide care to charity patients who have no source of payment and no or insufficient assets or income. Hospice SA 2B Hospice SA 2B comprises eight counties: Franklin, Gadsden, Jefferson, Leon, Liberty, Madison, Taylor, and Wakulla. SA 2B covers 5500 square miles. It has an average of 67 persons per square mile. While Leon County has 345 persons per square mile, Taylor, Franklin, Liberty, Madison and Jefferson Counties all have less than 30 persons per square mile. Liberty County is the least populated county in the state of Florida. Liberty County has a low-income population but is better off economically than some of the other counties in the SA. Madison County has a population of approximately 17,000, with mostly low-to-middle income families. The majority of residents in Madison County have a high school education or less. Like most rural communities, Madison County is resistant to change or "outside intervention." Only two SAs in Florida have fewer projected deaths than SA 2B. Those are SA 2A and SA 7C. The providers in SA 2A and SA 7C serve multiple SAs. The Parties AHCA AHCA is the state agency that is responsible for administering the CON program and laws in Florida. In conjunction with these duties, AHCA reviews applications for new hospice programs pursuant to Sections 400.601, 400.602, 400.609, 400.6095, 408.034, 408.035, 408.036, and 408.043, Florida Statutes, and Rules 59A-2 and 59C-1.0355, Florida Administrative Code. Covenant Covenant, formerly known as Hospice of Northwest Florida, is a not-for-profit community organization that was founded by a committee in 1982. The committee included community leaders and several hospitals in the Pensacola, Florida, area. Covenant began treating its first patients in 1984 and is currently licensed to provide hospice services in SA 1 and SA 2A. The following counties are located in SA 1: Escambia, Santa Rosa, Okaloosa, and Walton. The following counties are located in SA 2A: Holmes, Washington, Jackson, Calhoun, Bay and Gulf. Covenant obtained its first CON for SA 1 and three counties in SA 2A. Covenant later expanded to cover all of SA 2A. In 1994, Hospice of the Emerald Coast (formerly known as Bay Medical Hospice and hereinafter referred to as Emerald Coast) was the dominant provider in SA 2A, but Covenant became the dominant provider within six years after expanding its coverage. Emerald Coast also has expanded its coverage and is licensed now to provide hospice services in SA 1 and SA 2A. Emerald Coast is now gaining market share in SA 1. Covenant is licensed to provide hospice services in 26 southern Alabama counties. However, Covenant currently provides services in only nine or ten Alabama counties. Covenant currently shares its Alabama SAs with five or six other providers and is considering further expansion in Alabama. On average, Covenant serves 429 Florida hospice patients per day. It admits patients and provides service 24 hours a day, seven days a week, without regard to their ability to pay. Covenant's main office and its eight-bed inpatient/residential facility, the Joyce Goldberg Hospice Inpatient Residence, are located in Pensacola, Florida. The room and board residential component of the inpatient facility is not reimbursed by any government agency and most often provides services on a charitable basis. Covenant built the inpatient facility to provide services to the homeless. However, Covenant does not consider patients who present with subjective signs of imminent death to be appropriate for admission to the facility. Covenant performs a financial assessment of patients at the time of their admission to the inpatient facility. If the patient or his or her representative elect not to provide Covenant with financial data, patients and their families understand that the full rate per day for room and board will be charged on a monthly basis at the beginning of each month, even when there is little or no chance that Covenant will ever collect the amount owed. Patients that have the ability to pay for some or all of their treatment at the facility do so on a sliding scale basis. However, the bottom line is that Covenant admits patients to the inpatient/residential facility without regard to their ability to pay. Covenant historically has provided inpatient care to children in one of the area's children's hospitals, Sacred Heart Hospital. Providing inpatient hospice care to children in a special hospital is appropriate from a quality of care perspective. Covenant operates the following Florida branch offices: Okaloosa County at Niceville, Florida; Jackson County at Marianna, Florida, and Bay County at Panama City, Florida. Covenant operates Florida community support centers in Okaloosa County at Crestview, Florida, and in Walton County at Destin, Florida. Volunteers staff Covenant's community support centers. Among other activities, the centers conduct blood drives and provide space and volunteer training for organizations such as the American Cancer Society and various Alzheimers groups. Covenant provides the centers on a charitable basis. Covenant's growth and expansion has focused on serving persons in underserved areas and populations. Its mission is to provide direct care to dying patients, their families and friends, and to provide education to the community. Covenant is the 30th largest hospice in the United States. It serves the largest geographic area in Florida. Covenant's audited finances demonstrate the corporation's growth. In the past five years, Covenant has nearly tripled its number of patient days. Covenant has purchased management software and systems, with a useful life of five years, to facilitate support for a corporation twice its size. It has secured contracts for services with every hospital, nursing home, and assisted living facility in SA 1 and SA 2A. Covenant's vision is to create and foster a corporate culture of excellence. In order to achieve its goals, Covenant has recruited personnel from the for-profit industrial sector. As incentives for achievement of performance goals, Covenant pays bonuses to its top management. It also has a separate staff bonus pool. Covenant made a profit in 2001 despite paying such bonuses out of its operational funds. Covenant has achieved its growth and expansion, in part, by implementing a continuous quality improvement process in which it constantly looks for ways to improve its operations and services. Expansion into SA 2B will improve Covenant's operations by allowing it to spread its fixed overhead costs. Consistent with its objectives, Covenant chose to pursue accreditation from the Joint Commission on Accreditation of Health Care Organizations (JCAHO) four years ago. Covenant became accredited without outside consultation, using its own staff and resources. Since then, JCAHO has re-accredited Covenant, pursuant to a 98 percent survey report with no Type I recommendations. Covenant provides hospice care in a way that ensures sensitivity to cultural diversity and the hospice patient's cultural values. For example, Covenant has informational brochures and material in various foreign languages, including Vietnamese and Spanish. Covenant's policies and procedures comply with all applicable requirements of the U.S. Department of Health and Human Services related to discrimination in the workplace. They are sufficient to ensure confidentiality for any employee with HIV and to ensure protection of all other employees. Covenant provides substantial "unfunded" and "underfunded" programs to the community. Underfunded programs include palliative chemotherapy and palliative radiation therapy. In addition to unfunded community support centers, Covenant provides unfunded bereavement programs in schools and grief-in-the-workplace seminars. Through its physicians and medical teams, Covenant provides unfunded physician care for non-Medicare patients. In fact, Covenant provided approximately $1.5 to $1.7 million in unreimbursed care in the calendar year 2001, and anticipates that it will provide more such care in 2002. Covenant, like all not-for-profit organizations, must raise funds to pay for non-reimbursed expenditures that support charitable services. Covenant has developed a strategic plan to identify ways to measure its success in meeting the needs of underserved populations. As a part of its ongoing strategic planning process, Covenant determined that there was an unmet need for hospice services in SA 2B, the area currently exclusively served by BBH. After receiving requests from physicians for hospice services in SA 2B, Covenant approached BBH to offer assistance and support. Covenant also consulted with its health planner regarding the need for additional hospice services in SA 2B. After AHCA determined that there was a numeric need for an additional hospice in SA 2B, Covenant's chief executive officer (CEO) toured SA 2B to assess the potential for expansion and to look for potential properties. Eventually, Covenant became convinced that there were compelling reasons to apply for a CON in SA 2B because of an unmet need for hospice services. Covenant has strong reserves of ready cash and equivalents, including $2.9 million in cash and over $1 million in investments, to underwrite the SA 2B expansion. Covenant has approximately six times more working capital than BBH. The $84,000 stated in Covenant's application as required expenditures to develop the new program in SA 2B is insignificant compared to the corporation's ability to provide "unlimited funds" for the project. The fact that Covenant has sizable cash and investment reserves despite having to subsidize it SA 2A offices demonstrates its financial power. BBH Community volunteers began organizing BBH in 1981. After its incorporation in 1983 as a not-for-profit community organization, BBH commenced operation under a license that authorized it to provide hospice services only in SA 2B. On average, BBH serves 162 patients per day. BBH's main office is located in Tallahassee, Florida, but it operates the following branch offices and/or community support centers: Franklin County at Carrabelle, Florida; Gadsden County at Quincy, Florida; Jefferson County at Monticello, Florida; Madison County at Madison, Florida; and Taylor County at Perry, Florida. BBH plans to create additional branch offices/community centers in the following locations: Franklin County at Apalachicola, Florida; Gadsden County at Chattahoochee and Havana, Florida; and Wakulla County at Crawfordville, Florida. BBH also operates a 12-bed inpatient facility. The facility, known as The Hospice House is located in Tallahassee, Florida. It usually operates at 80 percent of its capacity. The Hospice House was built using funds raised in a capital funds campaign and $250,000 in community grants. The facility is designed so that family and friends can spend as much time as they can with their loved ones. The facility provides 24-hour care for various reasons, including pain management, respite care, routine residential care as an alternative to continuous care in a patient's home, transition care after leaving a hospital, and care for patients facing imminent death who for personal reasons do not want to die at home. Occasionally, The Hospice House helps local hospitals manage oncology floor bed shortages. BBH has a policy that requires paying patients to pay in advance on a weekly basis because many times patients do not stay at the facility for longer than a week. The rate charged depends on the patient's ability to pay. Frequently, patients stay at the facility for free due to their low-income status. BBH does not bill patients for services that it does not intend to collect. BBH has a 24-member Board of Directors. The Board is comprised of a broad mix of people with backgrounds in law, business, medicine, education, nursing, and insurance. BBH has one or more community advisory councils (CACs) for each county in SA 2B. The CACs hold public meetings in their respective counties each month. The purpose of the CACs is to support BBH's effort to reach out to civic and church groups and to advise BBH on how to gain acceptance in the SAs diverse communities. Like BBH's Board of Directors, the CACs are comprised of a broad group of people who are racially and ethnically diverse. The CACs include local clergy who assists BBH's outreach to the faith-based community. BBH has a minority advisory council (MAC) that supports BBH's outreach efforts in the African-American community. The MAC hosts lunches and dinners at churches and sponsors gospel sings that include education about hospice care. For example, a gospel sing that was conducted at Florida A&M University was preceded by an hour-long seminar on hospice care on National Public Radio. BBH has had an ethics committee since 1994. The purpose of the committee is to educate BBH's staff and the community about ethical issues. The committee routinely reviews BBH's policies and when necessary, reviews particular patient dilemmas. The ethics committee includes a rabbi, a protestant chaplain, a religion professor, a Muslim pharmacist, a social worker, a nurse, and other interested individuals. BBH is a member of the National Hospice and Palliative Care Organization (NHPCO). BBH is accredited by the Community Health Care Accreditation Program, one of the first accreditation programs. AHCA has approved BBH after every licensure survey with no deficiencies. BBH's mission is to provide care and education to terminally ill patients and their families. BBH's mission includes providing emotional support to anyone dealing with grief from loss of a loved one. BBH serves all individuals who meet the clinical criteria for admission to hospice, regardless of their ability to pay. It provides care to indigent patients without concern for financial reimbursement. BBH responds to patient referrals within 24 to 36 hours. BBH does not discriminate against any group on any basis. BBH delivers hospice services with a minimum of administrative costs. Out of the funds raised by BBH through charitable gifts, 86 cents of every dollar goes directly to patient care. BBH does not spend substantial funds on marketing or advertising. BBH has five interdisciplinary teams (IDTs). Each team has a medical director and staff who live in their IDT area. BBH has nurses who live in every county in the SA except Liberty County. The IDTs have separate back-up on-call nurses to provide coverage 24 hours a day, seven days a week. The on-call nurses can provide care to patients within 30 minutes of a call. BBH has a full-time medical director, four part-time IDT associate medical directors, and a part-time associate medical director for its inpatient facility. The associate medical directors meet with the IDTs weekly to review patient care. They also provide advice and education to other providers and physicians in the community. The IDT medical directors provide emergency consultation should an acute situation arise with a patient. In addition to its core services, BBH provides other services to the community and patients that are not reimbursed from any source. These services include grief counseling to adults and children, crisis intervention in schools after a student's death, and the music therapy program. BBH's music therapy program, which is non-reimbursed, is one of only two such programs in Florida that the National Association of Music Therapists has certified as a music therapy site and as a music therapist training site. BBH has the equivalent of five full-time staff members that provide music therapy through out SA 2B as requested by patients or recommended by an IDT. Over 30 percent of BBH's patients receive music therapy. BBH provided over 1,500 hours of music therapy in the six months prior to the hearing. Part of BBH's outreach efforts includes conducting physician education seminars. About 200 out of 320 local physicians in SA 2B periodically refer patients to BBH. BBH provides palliative chemotherapy and radiation treatment on a case-by-case basis. There is no persuasive evidence that BBH has ever denied a physician's recommendation for such services. At times, BBH has reimbursed a local hospital for palliative radiation services for BBH patients. BBH solicits feedback from patients, their families, and their physicians through surveys that are sent out three weeks after patients begin receiving care and again after patients pass away. BBH's committee for quality improvement reviews the results of the surveys on a monthly basis as part of BBH's continuing quality improvement program. Recent results show a high degree of patient and family satisfaction because they are equal to or higher than national palliative care statistics. Physician survey responses show 90 percent or better satisfaction. BBH follows up on any survey response that is less than "very good" from patients or "average" from physicians. Covenant's Application Covenant's Board of Directors duly authorized the filing of Covenant's letter of intent and application. The Executive Committee of Covenant's Board of Directors authorized the filing of the letter of intent on August 27, 2001. Covenant timely filed the letter of intent with AHCA on August 29, 2001. The Board of Directors authorized the filing of the application on August 30, 2001. Covenant filed the application with AHCA on September 4, 2001. After receiving an omissions letter from AHCA, Covenant timely filed its omissions response and complete application along with the appropriate application fee. AHCA has preliminarily approved Covenant's application to establish a new hospice program in SA 2B. AHCA's preliminary approval is subject to the following conditions: (a) Within the first two years of operation, Covenant must open a branch office in Perry, Taylor County, Florida; and (b) Covenant must establish a special non-cancer outreach program to educate the medical community on the effectiveness of hospice care for patients with non-cancer diagnoses. Fixed Need Pool Rule 59C-1.008, Florida Administrative Code, relates to CON application procedures in general. Rule 59C-1.0355, Florida Administrative Code, relates to specifically to hospice programs. Both rules contain provisions that relate to published fixed need pool projections. In this case, Covenant filed its application in response to a published fixed need for an additional hospice program in SA 2B. BBH has challenged that published need in DOAH Case No. 01-4415 CON. A Recommended Order in that case is being issued concurrently with the instant case. Conformance with District Health Plan Preferences Covenant's application is in conformance with the applicable district health plan as required by Section 408.035(1), Florida Statutes, and Rule 59C-1.030(2)(c), Florida Administrative Code. The applicable local health plan preferences are set forth in the District 2 CON Allocation Report, approved October 2000. With respect to the first local health plan preference, Covenant currently provides and commits to providing district-wide services. Covenant will provide the services 24 hours per day, seven days a week, regardless of a patient's ability to pay. As to the second local health plan preference, Covenant currently contracts with and commits to contracting with existing hospitals and nursing homes for the provision of inpatient care. The proposed program does not require the construction of a new facility or the addition of beds. Conformance with Agency Rule Criteria The application conforms to the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which requires hospice programs to comply with the standards for program licensure described in Chapter 400, Part VI, Florida Statutes, and Chapter 58A-2, Florida Administrative Code. Covenant has demonstrated that it meets these statutory and rule requirements. Some of the requirements, including but not limited to "quality of care," are discussed in detail below. The application is in conformance with the five-rule preferences set out in Rule 59C-1.0355(4)(e), Florida Administrative Code. As to rule preference one, Covenant evidences a commitment to serve populations with unmet needs. One such population includes non-cancer patients as discussed below. With respect to the rule preference two, Covenant proposes to provide the inpatient care component of its proposed program through contractual arrangements with existing health care facilities. Covenant does not propose the development of an inpatient facility. The application conforms to rule preference three. Covenant has demonstrated a commitment to serve the homeless, patients with AIDS and patients who do not have primary caregivers at home. Covenant is entitled to credit for rule preference four. Covenant proposes a project in SA 2B, which has eight counties. It intends to establish its main office in Tallahassee, Leon County, Florida, with a branch office in Perry, Taylor County, Florida. Covenant anticipates opening community support centers in Madison County and in Gadsden County during the third year of operation. Covenant has presented persuasive evidence that Madison and Taylor Counties are underserved as discussed below. The application meets the expectations of rule preference five. Covenant is committed to providing services not specifically covered by private insurance, Medicaid, or Medicare. These services include, but are not limited to, chaplain services, support for seriously ill patients not yet appropriate for hospice services, non-health care items such as hot water heaters and telephones that provide quality of life and allow patients to stay at home, bereavement services, and volunteer services. The application is in conformance with Rule 59C-1.0355(5), Florida Administrative Code. Covenant's proposal is consistent with the needs of the community and other criteria contained in local health council plans and the State Health Plan. Rule 59C-1.0355(5), Florida Administrative Code, specifically requires an applicant to provide letters of support from health care organizations, social services organizations, and other entities within the proposed SA that endorse the applicant's development of a hospice program. In order to comply with this provision, Covenant sent approximately 206 letters to individual and entities in SA 2B requesting support of its application. Even though health care providers in SA 2B have limited knowledge about or experience with Covenant, it received the following letters of support: (a) eight letters of support from physicians who practice in SA 2B; (b) three letters of support from hospitals located in SA 2B; (c) 18 letters of support from nursing homes and assisted living facilities located in SA 2B; and (d) six letters of support from other health care professionals and/or residents who live and work in or adjacent to SA 2B. These letters of support are sufficient to show compliance with Rule 59C-1.0355(5), Florida Administrative Code, despite the fact that AHCA received 160 letters of opposition to the proposed project from various individuals and entities in SA 2B. The application is in conformance with Rule 59C-1.0355(6), Florida Administrative Code, because it provides a detailed description of the proposed program. First, proposed staffing for the project will be 9.54 full-time equivalents (FTEs) in the first year of operation and 18.79 FTEs in the second year of operation. The volunteer staff will number about one per patient and will increase from about 15 in the first year to about 35 in the second year. The record contains competent evidence showing how Covenant will recruit and train its staff and volunteers. Second, Covenant expects to obtain patient referrals from hospitals and doctor's offices. Based on Covenant's prior experience in starting new hospice programs, the expected sources of patient referrals are reasonable and appropriate. Third, the application sets forth the projected number of admissions for the first two years, by payer type, by type of terminal illness, and by age groups. Covenant expects Medicare patients to comprise about 80 percent of the admissions. The majority of Covenant's patients will have diagnoses other than cancer, such as heart disease, emphysema, liver disease, and Lou Gehrig's disease. During the first year, Covenant expects to have 27 patients, under 65, and 82 patients, 65 and older. In the second year, Covenant expects to have 56 patients, under 65, and 184 patients, 65 and older. These projected utilizations are reasonable and achievable. Fourth, Covenant has identified the services to be provided by staff and volunteers and those to be provided through contractual arrangements. Covenant plans to provide direct care in the following areas: physician services, nursing services, home health aide services, dietary counseling, social work services, chaplain services, counseling services, and bereavement services. Physical, speech, and occupational therapy services will be provided through contractual arrangements. Fifth, Covenant will provide inpatient services through contractual arrangements with nursing homes and hospitals. Covenant has gained expertise in providing hospice care in nursing homes in its existing SAs. Sixth, the application sets forth provisions for serving persons without primary caregivers at home. Covenant's plan allows patients to be responsible for their own care as long as they are able to do so. When that is no longer possible, Covenant provides the patients with a list of alternatives. Seventh, Covenant will provide bereavement services to its patients before death and to patients' families and friends after death for at least one year. Covenant also provides grief counseling in schools and in the community. Covenant offers grief support to its staff and volunteers. Covenant uses seminars, workshops, and special programs to train and educate its staff, volunteers, and individuals in the community about particular bereavement topics. Next, Covenant will provide extensive community education activities concerning hospice programs. Some of these are discussed in detail below. As indicated above, Covenant has agreed to provide a special non-cancer outreach program to educate the medical community in SA 2B about the effectiveness of hospice care for non-cancer diagnoses. Finally, Covenant's application includes policies for the receipt, acknowledgement, management and utilization of fundraising activities. Covenant expects fundraising to account for 2-3 percent of net revenue for the proposed program. The application does not include specific proposed methods for fundraising activities in SA 2B. However, during the hearing Covenant provided sufficient evidence about its past experiences to support the conclusion that it will be successful in this regard. 80. Rules 59C-1.0355(6)(h) and 59C-1.0355(6)(i), Florida Administrative Code, do not apply here. Covenant does not intend to establish a freestanding inpatient facility in SA 2B. Covenant's proposals, expectations, and projections are reasonable and appropriate as they relate to the factors set forth in Rule 59C-1.0355(6), Florida Administrative Code. Based upon Covenant's experience, the proposed program as described in the application is conservative and achievable. Conformance with Applicable Statutory Criteria As stated above, the proposed project complies with the standards for licensure described in Chapter 400, Part VI, Florida Statutes. Specifically, the application conforms to the requirements of Section 400.606(1), Florida Statutes, because it provides a plan for the delivery of home, residential, and home-like inpatient hospice services to terminally ill persons and their families. Covenant's plan contains, but is not limited to, the following: (a) the estimated average number of terminally ill persons to be served monthly; (b) the geographic area in which hospices services will be available; (c) a listing of services which will be provided, either directly by the applicant or through contractual arrangements with existing providers; (d) provision for the implementation of hospice home care within three months after licensure; (e) the provision of inpatient care in nursing homes and other health care facilities; (f) the number and disciplines of professional staff to be employed; (g) the name and qualifications of potential contractors; (h) a plan for attracting and training volunteers; (i) the projected annual operating cost of the hospice; and a statement of financial resources and personnel available to the applicant to deliver hospice care. Some of these plans are discussed in detail herein. Rule 59C-1.0355(3)(b), Florida Administrative Code, requires an applicant to be in conformance with Sections 408.035 and 408.043(2), Florida Statutes. Covenant meets the standards sets forth in these statutes as indicated below. Section 408.035(1), Florida Statutes, requires consideration of the need for the proposed project in relation to the applicable district health plan. As discussed above, Covenant meets this criterion. Sections 408.035(2) and 408.035(7), Florida Statutes, relate to the need for the proposed project as evidenced by the availability, quality of care, efficiency, accessibility, and extent of utilization of existing health care facilities and health services in the applicant's SA. Covenant meets these statutory criteria for the following reasons: (a) SA 2B is characterized by lack of hospice competition; (b) The proposed project will ensure access to hospice care in the SA's rural communities; (c) Covenant's special non-cancer outreach program will increase utilization for patients with non-cancer diagnoses; (d) With projected admissions of 109 patients in year one, 240 patients in year two, and 305 patients in year three, the proposed project will achieve a 25 percent market share in the third year; and (e) Covenant is Medicare and Medicaid certified and has a history of providing quality of care. Sections 408.035(2) and 408.035(12), Florida Statutes, relate to the applicant's history of providing quality of care and its demonstrated ability to provide such care. Covenant meets these criteria because it has a quality assurance program that provides a comprehensive, centrally coordinated system by which Covenant can conduct an ongoing evaluation of patient care and family services. Covenant's Performance Improvement Plan (PIP) is discussed in detail below. Section 408.035(4), Florida Statutes, relates to whether the applicant will provide services that are not reasonably and economically accessible in adjacent SAs. It is preferable for hospice services to be delivered in patients' homes or in home-like environments. It is undisputed that residents of rural populations often are reluctant to accept hospice services from a local provider. It follows that rural populations would be even more reluctant to seek hospice services in an adjoining SA. Some SA 2B patients from Liberty and Franklin Counties receive hospice services in SA 2A. Additionally, some residents of Madison and Taylor Counties receive hospice services in SA 3A. However, there is no persuasive evidence that a significant number of the underserved patients in the rural populations of SA 2B ever received services in an adjoining county for any one year. To the contrary, the greatest weight of the evidence indicates that for a substantial number of patients in SA 2B, hospice services are not reasonably or economically accessible in adjoining SAs. Section 408.035(5), Florida Statutes, relates to the needs of research and educational facilities in the SA. This criterion does not apply because Covenant's proposed project is not located in a teaching hospital and does not involve research or formal education and training programs for physicians and other health care professionals. Section 408.035(6), Florida Statutes, relates to the applicant's resources, including health personnel, management personnel, and funds for capital and operating expenditures, that are available for project accomplishment and operation. Section 408.035(8), Florida Statutes, relates to the applicant's immediate and long-term financial feasibility. Covenant meets these criteria because it has demonstrated the short-term and long-term financial feasibility of the proposed project. Section 408.035(9), Florida Statutes, relates to whether the proposed project will foster competition to promote quality and cost-effectiveness. Covenant's proposed project will meet this criterion because it will provide the patients of SA 2B a choice of providers. Benefits accrue from competition among hospice providers because hospice utilization is strongly related to awareness and education. Competition creates an environment in which hospices must do more to educate the community, promoting quality of care. Covenant's proposed project also will increase the hospice penetration rate in SA 2B, thereby resulting cost effectiveness and overall savings to the health care system. This is true even though a large majority of patient care is provided by fixed price government payer sources that are not influenced by competition. Section 408.035(10), Florida Statutes, relates to proposed costs and methods of construction associated with the proposed project. This criterion does not apply because the proposed project does not involve any construction. Section 408.035(11), Florida Statutes, relates to the applicant's history of and commitment to providing health services to Medicaid patients and the medically indigent. In 2000, Covenant provided about 7.8 percent of its patient days to Medicaid patients. That same year, Covenant provided approximately $480,000 in non-billable services. In SA 2B, Covenant proposes to provide 10 percent of its patient days to Medicaid patients and 4 percent to charity. The record is clear that Covenant meets this statutory criterion. Section 408.043(2), Florida Statutes, relates to the need for and availability of hospice services in the community. The application is in conformance with the requirements of this statute because there is a need for additional hospice services in SA 2B, especially for non-cancer patients and in rural populations. Additionally, a new hospice program will promote competition. Need for an Additional Hospice Published Fixed Need Pool and Special Circumstances The hospice penetration rate is defined as the ratio of hospice admissions in a SA divided by the number of resident deaths for that SA. Hospice penetration has grown in Florida and the United States in recent years, due primarily to increased awareness among the lay and health care communities. In Florida, overall hospice penetration is currently about 40 percent. Like the rest of the state, Covenant has increased its utilization in the past few years. The licensing of Emerald Coast in SA 1 created a competitive environment with Covenant and resulted in increased admissions and penetration in SA 1. The same result was achieved in SA 2A when Covenant was licensed to serve all of SA 2A in competition with Emerald Coast. In contrast, BBH has been the sole provider in SA 2B, which has experienced a penetration rate gap that has persisted over a seven-year period. For the batching cycle at issue here, SA 2B has one of the lowest penetration rates (29 percent) in the state, ranking 26th out of 27 SAs. In the instant case, AHCA calculated a net numeric need under Rule 59C-1.0355, Florida Administrative Code, of 351, which exceeds the need threshold of 350, and indicates the need for one additional hospice program in SA 2B. The rule's methodology takes into account the demographic differences between SA 2B and the rest of the state. With a projected need of 1,209 patients for the planning horizon at issue here and only 858 BBH admissions for the relevant historical period, BBH would have needed 41 percent more admissions to close the penetration rate gap regardless of the fact that there is only a difference of one between 350 and 351. It is clear that the net numeric need here correlates to the local reality. Special Circumstances Rule 59C-1.0355(4)(d), Florida Administrative Code, identifies the following special circumstances that may merit approval of a new program even if there is no published need. These special circumstances are as follows: (a) that a specific terminally ill population is not being served; (b) that a county or counties within the SA of a licensed hospice program are not being served; and (c) that there are persons referred to hospice programs who are not being admitted within 48 hours (excluding cases where a later admission date has been requested.) AHCA did not review Covenant's application to determine whether a CON should be awarded based on special circumstances. Instead, AHCA gave preliminary approval to the proposed project based on the publication of need. However, AHCA's State Agency Action Report (SAAR) indicates that the agency considered and did not agree with Covenant that Madison and Taylor Counties were "underserved." AHCA also determined that there was a need for educational outreach to non-cancer patients in SA 2B and conditioned the award of the CON on Covenant's provision of that service. During the hearing, Covenant presented persuasive evidence that underserved non-cancer patients and underserved rural populations in SA 2B constitute special circumstances within the meaning of Rule 59C-1.0355(4)(d), Florida Administrative Code. The special circumstances would have warranted approval of Covenant's application in the absence of numeric need. Non-Cancer Patients Care to non-cancer patients has increased dramatically during the past 20 years. Generally, non-cancer patients comprise more than half of all hospice patients. The SA 2B penetration rate of non-cancer patients, under age 65 and age 65 and over, lags behind the overall state penetration rate. This is especially significant because the non-cancer deaths rates are higher in the panhandle of Florida than for the State as a whole. For the batching cycle applicable to this proceeding, the penetration rate gap in SA 2B was most remarkable for elderly non-cancer patients, who make up 69 percent of the net need of 351 patients. The current overall state penetration rate for non-cancer patients, age 65 and older, is 32 percent. In SA 1 and SA 2A, the current overall state penetration rate for non-cancer patients, age 65 and older, is 27.7 percent and 26.6 percent respectively. In SA 2B, the current penetration rate for non-cancer patients, age 65 and older, is 20.1 percent, indicating a gap of 11.9 percent with respect to the state penetration rate. The lack of availability of hospice services in SA 2B nursing homes is another indication of the underserved need of elderly non-cancer patients. Underserved Rural Populations SA 2B is underserved as a whole relative to the rest of the state. All counties in SA 2B, except Jefferson County, had a penetration rate lower than the state average. Comparing the overall penetration rate for SA 2B to the penetration rate for each county in the SA shows that Madison and Taylor counties are significantly underserved. Based upon the most recent data available from the United States, Health Care Finance Administration, there is a 30 percent penetration rate for SA 2B, but for Madison and Taylor counties, it was about 16 percent. For non-cancer diagnoses, the penetration rate was only 8 percent for Madison and Taylor counties, well behind the SA 2B's averages for non-cancer diagnosis. Covenant Hospice Programs Quality of Care Covenant's application is in conformance with the requirements of Rule 59C-1.0355(3)(a), Florida Administrative Code, which provides that the proposed program shall comply with the quality of care standards described in Chapter 400, Part VI, Florida Statutes, and Rule 58A-2, Florida Administrative Code. The best evidence of Covenant's ability to provide quality of care is the finding of no state or federal deficiencies on the three most recent State of Florida compliance surveys. On a yearly basis, Covenant develops a Performance Improvement Plan (PIP) based on its ongoing continuous quality improvement program. The PIP ensures Covenant's ongoing compliance with all state and federal regulations as well as the standards established by JCAHO and NHPCO. Covenant also reviews and updates its corporate and clinical policies and procedures to ensure on-going quality improvement. These policies and procedures are consistent with all state and federal regulations and professional guidelines. The policies and procedures are reasonable and appropriate for all operations, including medical and nursing care. Medical Direction and Medical Quality of Care Covenant's medical director is qualified to take an examination for certification in hospice palliative care. He has completed the American Medical Association's curriculum in Education for Physicians in End-of-Life Care. He is board-certified in geriatrics. In addition to the medical director, Covenant employs physicians as adjunct medical directors and branch office physicians. These doctors provide direct patient care when they make home and nursing home visits. They serve as consultants to IDTs or patients' attending physicians. Covenant's physicians also serve on its quality improvement committee and review records to ensure quality of care. Covenant provides access to physician care for all hospice patients. Physician coverage is available for all patients, 24 hours per day, seven days a week, as appropriate. Covenant physicians follow its clinical procedures manual, which is in conformance with all state and federal regulations and professional guidelines. Covenant provides high quality pharmaceutical services. The policies and procedures related to these services are appropriate to ensure compliance with all state and federal regulations. Partners in Care Program Covenant developed its PIC program in part to ensure appropriate education of its own staff and the community in general. However, the main purpose of the program is to educate and train the staff of nursing homes and other health facility settings. The PIC program promotes continuity and quality of care for patients in such facilities, which house about 47 percent of Covenant's patients. The PIC program is based on a procedures manual known as "The Grey Book." The procedures manual is a toolbox that facility staff can reference at any time. The manual has been instrumental in making the PIC program so successful in addressing the needs of critical patients in extreme pain and discomfort associated with certain terminal illness. Education and Outreach Covenant has a comprehensive education program. It develops an education calendar on a yearly basis and presents extensive educational programs to all applicable audiences. Covenant's education program includes a clinical education program that is designed to ensure high professional competency for nurses, social workers, home health aides, nursing aides, and other health care providers. For example, Covenant's program for nurses requires them to demonstrate "knowledge based competencies" within the first 30 days of employment and on an on-going basis. The competencies are important in achieving high quality of nursing care. Covenant has produced its own comprehensive educational modules on an array of topics. They are "in-depth" courses, not "Hospice 101" or survey courses. They deal with such issues as advanced pain management, advanced symptom management, physiology of dying, ethical issues in the end-of- life care, just to name a few. Many of the advanced training modules are approved by various professional organizations for continuing education credit, including continuing medical education credits. The use of the modules will facilitate hospice utilization and penetration wherever they are used. Another facet of Covenant's education and outreach program is its Patient and Family Handbook that Covenant gives to patients and their families. The handbook provides extensive resources and guidelines to patients and their caregivers. The handbook is clinically appropriate to ensure high quality of care. Covenant's education program also includes extensive and intensive community education. This part of the program increases hospice utilization or penetration by ensuring that the community knows about the availability of hospice services and understands the benefits of those services. Covenant has specific education materials directed to non-cancer diagnoses to ensure access to hospice patients with non-cancer diseases. The materials assist clinicians in determining when a terminally ill non-cancer patient is appropriate for hospice care. They provide the community with knowledge about the availability of hospice care for non-cancer patients. The use of the materials results in greater non- cancer admissions to hospice. In fact, Covenant provides educational programs for physicians to assist them in caring for all types and ages of hospice patients. Referring physicians routinely receive newsletters, written and edited by Covenant's medical staff. At times, Covenant provides one-on-one education of physicians, in-service training, and other modes of education as appropriate. Covenant maintains medical advisory groups in each area office. These groups meet on a regular basis for education and to provide participants input and feedback to Covenant. Covenant has developed educational materials in Spanish and Vietnamese in order to facilitate access to those minority populations. Covenant uses its community support centers to distribute the materials. In contrast, BBH provides far fewer educational opportunities to the community than Covenant. In some months, BBH only provided four or five programs. In other months, none of BBH's programs were provided by trained clinicians. Most of BBH's programs were introductory, not advanced or continuing education level presentations directed to health care professionals. BBH's education programs are insufficient to create adequate public and professional awareness of hospice services in an eight-county area. It appears that BBH has increased the number of programs it presents on a monthly basis after Covenant submitted its application. Rural populations often have religious or conservative belief systems that cause them to be reluctant to accept hospice services. Such barriers to access for hospice services can be overcome by sufficient and appropriate education and outreach to the community and to physicians or other health care providers. Competition of an additional hospice in SA 2B will stimulate additional education and outreach, resulting in higher levels of hospice utilization and penetration rate. Volunteer Program State and federal regulations require a hospice to involve community volunteers in the delivery of hospice services. Hospices use volunteers for a variety of functions including, reading to patients, transportation, housekeeping, and office administrative support. Covenant has developed a comprehensive and high quality volunteer program based upon excellent recruitment and training of volunteers. In an attempt to encourage more patients to remain at home for hospice care, the Escambia County Council on Aging reimburses Covenant for care-giver training and in-home respite care, charged on an hourly basis. Currently, Covenant has over 850 active, trained volunteers. Between 2/3 and 3/4 of Covenant's volunteers come from patient families and friends. Covenant's volunteer training program and manual comply with all state and federal regulations and professional guidelines. Faith in Action Programs Covenant has a special volunteer program referred to as the Faith in Action Program. Covenant developed the program in conjunction with initial Robert Wood Johnson Foundation grant funding. Currently, Covenant provides the service on an unfunded basis. The program sponsors activities to involve faith communities in the care of terminally ill members. Thus, the program enhances access to hospice care by members of the faith communities. Covenant also has established a Faith in Action AIDS Program. The program focuses on the needs of AIDS patients and their families. The educational component of the Faith in Action AIDS program teaches faith communities about the needs of HIV and terminally ill AIDS patients, including children. The Faith in Action AIDS program provides a high level of community service to the AIDS community. It links persons living with HIV to faith communities. It directly addresses many practical needs of individuals with HIV and AIDS. The program was initially grant-funded but is now supported by Covenant as a charitable service. The Faith in Action AIDS program utilizes approximately 75 trained volunteers. Currently the program is based in Pensacola and Escambia Counties and primarily serves those areas. However, Covenant is expanding the program through its SAs. Covenant also has developed a clinical AIDS program as a dedicated hospice program. Covenant provides excellent care and comprehensive services to hospice patients with AIDS and their loved ones through this special program. Chaplain Services Covenant's chaplains function as core members of the IDTs. They provide spiritual care to patients and their families, 24 hours per day, seven days per week. The chaplains are employees of Covenant who receive comprehensive hospice training. This ensures high quality services and proper professional development. For the most part, Covenant's chaplains are ordained ministers with five years of experience and a masters of divinity degree. Covenant's 14 full-time or part-time chaplains are distributed across Covenant's SAs. The program meets state and federal regulations and professional guidelines. Social Work and Bereavement Services Covenant's social work begins at admission with comprehensive assessments of the patients' and their families' needs. Bereavement services focus on the family and loved ones during the terminal illness and after the death of the patient. Both of these services provide extensive education to patients, their families, and the community. Covenant's social work and bereavement programs provide educational seminars and workshops in the community on an unfunded basis. Social workers and bereavement specialists are required to complete competency-based instruction in hospice social work. Covenant's corporate and clinical policies and procedures related to social work and bereavement ensure high quality of care. They meet or exceed all state and federal regulations and professional guidelines. Covenant's social workers are core members of the IDTs. The social worker networks with other members of the team to plan and implement services. They help the patient set and achieve goals. Children's Services Covenant provides children's services through a program that is dedicated to terminally ill children and their families or to children of terminally ill parents or grandparents. The children's program includes unfunded bereavement services even if the bereavement in not associated with a hospice patient. Covenant has been selected to participate in one of eight demonstration projects for children's hospice services known as Program for All Inclusive Care for Children (PAC). The PAC project is a Medicaid waiver program. It will allow hospices to interact with dying children and their families earlier than would be otherwise allowed for enrollment in hospice based upon Medicaid program requirements. Participation in the project is unfunded. Covenant's children's program is comprehensive and provides high quality of care. It meets or exceeds all state and federal regulations and professional guidelines. Competition and Impact of the Proposed Project on the Existing Provider Covenant's application is in conformance with the requirements of Section 408.035(9), Florida Statutes. The proposed project will foster competition and promote quality and cost-effectiveness. The effect of the competition will have a positive impact in the SA and increase hospice penetration, particularly for elderly patients with non-cancer diagnoses and rural populations, due in part to Covenant's comprehensive community education programs. There is no merit to the argument that SA 2B's penetration rates and population size are not sufficient to support two hospices. BBH's own strategic plan shows that its admissions and census will increase even if Covenant is approved. In fact, since AHCA preliminarily approved Covenant's application, BBH has taken numerous steps to increase its referrals and its community outreach and education. These actions show how the mere threat of competition has improved BBH's services. BBH has set a goal of increasing its referrals by 50 percent. Approval of the application will have an adverse impact on BBH only if it does not appropriately respond to the presence of a new provider in the area. Based upon data presented by BBH, its net assets have increased each year. At historical admissions and census levels below that projected by BBH, it actually made money and had an increase in net assets at the end of each year. There is no persuasive evidence that BBH will lose patients days or that its admissions will decrease if Covenant's application is approved. The most credible data indicates that BBH will have at least 970 admissions in year zero, 1,085 admissions in year one, 1,202 admissions in year two, and 1,219 admissions in year three. Covenant will have 0 admissions in year zero, 109 admissions in year one, 240 admission in year two, and 305 admissions in year three. By year three, BBH will still be the dominant provider in SA 2B with 75 percent of the market share. When AHCA approved Emerald Coast for an additional hospice program in SA 1, Covenant undertook certain actions to strengthen its position in the community and to become an even better and more effective provider of hospice services. As a result of these and other actions, the addition of a competitor in SA 1 did not have an adverse impact on Covenant. To the contrary, Covenant grew, increasing its admissions, referrals, fundraising, and volunteer participation. Competition from Emerald Coast brought heightened community awareness about the benefits of hospice services to SA 1. Because Covenant increased community education concurrent with the development of the new hospice program, there was no resulting confusion over the identities of the two programs. Nor did the approval of Hospice of the Emerald Coast erode the economic base of Covenant because Covenant took steps to strengthen its referral base. Emerald Coast did not have an office in Pensacola, or within sixty miles of Pensacola, until approximately May 2002. The admissions and census of Emerald Coast have grown since establishing that office. The change in the competitive environment in SA 1 resulted in increased admissions and penetration in that SA. Covenant increased its admissions and penetration in SA 2A after Covenant AHCA authorized Covenant to serve all of that SA. The same can be expected in SA 2B if AHCA approves Covenant's application to provide hospice services in SA 2B. With Covenant’s approval for an additional hospice service in SA 2B, BBH can and will be expected to do the same kinds of things that Covenant did in SA 1 to preserve market share. All of the things that Covenant can do to increase penetration or obtain market share, BBH can do to preserve market share. These activities include providing education and outreach, developing a referral base, and developing contacts with physicians, hospitals, nursing homes, and other health care facilities. In performing these activities, BBH has a competitive advantage in SA 2B based upon its experience, history, and reputation in the SA. For example, BBH already has contracts with all hospitals and nursing homes in SA 2B. BBH was financially viable at a service volume of 34,404 patient days in 1997, and at a volume of 35,721 patient days in 1999. Big Bend has been financially viable at substantially lower volumes than it will have in the future, even if Covenant is approved and operational in SA 2B. Approval of Covenant will not have an adverse impact on the ability of BBH to recruit and retain sufficient numbers of volunteers in SA 2B. BBH currently does not have difficulty recruiting and retaining sufficient numbers of volunteers, which evidences a substantial pool of volunteers in the SA. In addition, Covenant will draw its volunteers primarily from persons served by it, families and friends of Covenant patients. Covenant is willing to work with BBH cooperatively to ensure training and recruitment of sufficient numbers of volunteers. Approval of Covenant in SA 2B will not have an adverse impact on the ability of BBH to effectively raise funds. In SA 1 and SA 2A, Covenant has tailored its fundraising activities so that they do not conflict with Emerald Coast's efforts to raise funds. Covenant and Emerald Coast continue to grow their fundraising in both SAs. The fundraising pool in any SA is elastic and can be expanded. Hospice in particular opens up a new pool of potential donors. The additional education and community outreach provided by Covenant will increase hospice penetration, thereby increasing the pool of hospice donors. Both hospices can increase the fundraising base by utilizing grant revenue. Covenant is stronger today than it would have been without competition. As friendly competitors, Covenant and BBH will be able to engage in collaborative activities that benefit both hospices, including education and fundraising. Dale Knee, Covenant's CEO, did not always believe that competition would foster such benefits. In 1996, Emerald Coast, located in Panama City, Florida, applied for and was preliminarily approved for a CON in SA 1, which includes the Pensacola home office of Covenant. Mr. Knee testified extensively that the approval and development of another hospice in SA 1 would adversely impact Covenant and would not increase hospice penetration in SA 1. He now holds the opposite view based upon Covenant’s actual experience in a competitive environment. Approval of Covenant in SA 2B will increase access to hospice services. It will have a positive impact on the quality of care in the SA as utilization increases. This is consistent with the prior experience of Covenant. Further, the approval of Covenant will result in substantial cost savings to the health care system generally. Hospice care is more cost effective and less costly than conventional medical care, such as the pursuit of curative or maintenance treatments provided by hospitals, nursing homes, home health agencies, and other settings. The approval of Covenant will result in an overall savings of approximately $1.6 million by Covenant's third year of operation. This is true even through the large majority of patient care is provided from fixed price government payer sources. The approval of Covenant in SA 2B will make "continuous care" available to hospice patients. Continuous care is a required level of care under the Medicare conditions of participation. Continuous care is nursing care in excess of eight hours per day, sufficient to maintain the patient with critical needs at home. BBH currently does not provide continuous care to its patients. Instead, BBH uses home health aides with nurses in attendance for shorter periods of time that is billed to Medicare as routine home care. When a patient needs continuous care to remain at home, BBH places the patient in a hospital or its in-patient facility. Upon approval and initiation of operations, Covenant will make continuous care available to the hospice patients, improving quality of care and continuity of care in SA 2B. Financial Feasibility and Financial Schedules and Projections Schedule 1, Estimated Project Costs. Schedule 1 depicts the estimated project costs for the proposed project. The total estimated project cost is $82,648. The costs are based substantially on the start up experience of Covenant in its Dothan, Alabama, office. The $20,000 in cost proposed for recruitment and training of staff is reasonable and appropriate. The amount includes advertising for staff positions, start-up salaries, rent, utilities, and such expenses for a month of start-up operations. The projections for recruitment and training are consistent with prior start-up experience of Covenant. Covenant provided sufficient costs to hire an office manager for the Tallahassee office 30 days prior to opening. This is a reasonable planning assumption and would be sufficient to provide training and orientation. But this may not be necessary, because Covenant may transfer a manager from an existing office. Prior to initiation of operation, Covenant would need to hire an office manager, a registered nurse, a home health aide, a social worker, an administrative assistant, and a community educator. A medical director would not be necessary initially for the Tallahassee office prior to start-up. Start-up on the Dothan, Alabama, office entailed a different process than starting up a new office in Florida. In Alabama, the office had to become separately licensed by the State of Alabama. The next step in the process was for the office to apply for Medicare certification, which required Covenant to be admitting and treating Medicare eligible patients. This accounts for the fact that Dothan had a longer pre-opening period that is projected for the Tallahassee office. The initial Dothan staff spent a full week at Covenant in orientation. During the next five weeks the Dothan office manager worked in Covenant's Panama City, Florida, awaiting certification for Dothan. The Dothan start-up provides insight to Covenant’s success in initiating hospice start-up such as that proposed for SA 2B. Covenant began in Dothan by educating the medical community and others, particularly in the rural communities, where Covenant encountered a lack of understanding of hospice and some reluctance to acceptance of hospice services. Covenant's program in Dothan has shown a steady increase in census. This is true even though three other hospices serve the same service area. The census of the other three hospices has continued to increase as well, due to increased public awareness of hospice care generally. The $5,000 in Covenant's proposed costs for moveable equipment is reasonable, appropriate, and adequate. Covenant generally relies on donated equipment to meet such needs. Covenant already has on-hand equipment for use in SA 2B. This is consistent with prior start-up experience of Covenant, including the start-up of the Dothan office. Covenant intended the proposed costs for movable equipment in the application to cover incidental items only. The phone system for the Tallahassee office is already in inventory, and no expenditure would be necessary for a phone system. At the time of the application, Covenant had an extensive inventory of donated furniture and other items that could be used in the Tallahassee office. Covenant made a planning assumption that at the time of implementation, sufficient donated items would be on hand to furnish and equip the Tallahassee office. The expectation and assumption that furniture and other furnishing sufficient for the Tallahassee office would be available was reasonable based on the specific prior experience of Covenant. The line item of $5,000 for moveable equipment was placed in the budget as a contingency for incidental items, as needed. Donated equipment is not included in Schedule 1, Line 23, because it is not required to be included. Overall, the amounts projected on Schedule 1 of the application are reasonable and appropriate. They are conservative estimates and sufficient to cover all anticipated and expected costs. Schedule 2, Listing of Capital Projects. Schedule 2 sets out a complete listing of all projected and proposed capital projects planned by Covenant. The schedule completely and accurately depicts all such projects and expenditures that were planned, approved, or under way when Covenant submitted its application. Covenant's audited financial statements and balance sheets indicate that it has sufficient resources to fund the proposed project without adversely affecting Covenant's ability to fund other projects and expenditures. Schedule 3, Source of Funds. Covenant has available cash and other funding sources sufficient to fund the proposed project. There are no other demands on the applicant’s available cash. The information depicted in Schedule 3 is reasonable and appropriate. Schedule 4, Utilization of Existing Beds. Schedule 4 is not applicable to the application of Covenant. Schedule 5, Projected Utilization. The utilization projections set out in Covenant's Schedule 5 are reasonable and appropriate. The projections of patient days projections are obtainable and achievable. Schedule 6, Staffing. The staffing and FTE’s proposed by Covenant on Schedule 6A of the application for the first year and the second year of operations are reasonable and appropriate. The staffing projections are sufficient to ensure quality of care. The projections are consistent with the prior start- up experience of Covenant. They are based on a reliable computer model used by Covenant to staff its operations and administration. The staffing model generally supports staffing ratios for all disciplines, which meet or exceed guidelines established by the NHPCO. The salaries projected also were developed based on the actual experience and mid-range salaries of Covenant. The salaries are sufficient to recruit and retain sufficient numbers of qualified staff at the salary levels indicated in Schedule 6A. Covenant has been able to recruit and retain sufficient numbers of qualified staff, including registered nurses and licensed nurses, in its existing SAs at the salary levels indicated. The proposed nurse salaries are approximately equivalent to salaries paid in SA 1, SA 2A, and SA 2B, including the salaries paid in hospitals. Covenant's ability to recruit and retain nurses at the proposed salary levels is corroborated by the fact that some of the registered nurse salaries are higher in the Pensacola, Florida, metropolitan service area (MSA) than in the Tallahassee, Florida, MSA. Even with higher average salaries in Pensacola than in Tallahassee, Covenant has been able to recruit and retain sufficient numbers of registered nurses at the proposed salary levels. The ability of an organization to recruit and retain sufficient numbers of qualified staff is a function of several factors, including work environment, reputation of the employing organization, satisfaction and morale level of the staff, opportunity for staff development and growth, flexibility and respect of the organization for its staff and, of course, salary and benefits. Many such factors attract nurses and other staff specifically to Covenant. If approved in SA 2B, Covenant will not have a significant adverse impact on the ability of BBH to recruit and retain sufficient numbers of qualified staff. This is true because Covenant does not require that nurses have hospice experience. However, Covenant will recruit from the same pool of nurses and thus compete in its recruiting with hospitals, home health agencies, doctors' offices, and any other organization that employs nurses, including BBH. Any adverse impact on BBH's ability to recruit and retain nurses will be minimal. Further Covenant will recruit its staff across the entire eight-county area that comprises hospice SA 2B. Covenant will fill approximately 3.5 FTEs by the end of the first year. Those numbers are not sufficient to have an adverse impact on BBH's ability to recruit and retain sufficient numbers of staff, including nurses. Nor will Covenant have an adverse impact on the staffing costs in SA 2B by driving up staffing costs. It is undisputed that there is a shortage of nurses nationwide. Covenant will be able to recruit and retain sufficient numbers of skilled staff, including nurses, in SA 2B, notwithstanding that shortage, in part due to the positive work environment that it will provide. Schedules 7A and 8A, Projected Revenues and Expenses. Schedule 7A of the application depicts projected revenue for the proposed project. The starting point for the revenue projections is the utilization and patient day projections for the first two years of operation, set out in Schedule 5 of the application. The revenue projections are based upon an established rate for levels of care and payer source. They are based on obtainable volumes and payer source projections. Covenant used a reliable computer model in making the revenue projections. Covenant also projected revenues in a manner consistent with its experience. The overall revenue projections in Schedule 7A, the assumptions underlying their calculations, and the methodology used in making the projections are reasonable, appropriate, and conservative. Schedule 8A sets forth the projected income and expenses for the proposed project. Covenant used the same computer model discussed above and its experience to project income and expenses. The bottom line is that the project is expected to have a net operating surplus of $23,695 in the second year of operation. The income and expense projections, their underlying assumptions such as inflation factors, and the methodology used in making the calculations are reasonable, appropriate, and consistent with Covenant's experience. They are conservative in that they underestimate income and overestimate expenses. Of particular note is that the proposed non-operating revenues for year one and year two include grant revenues, donations, and fundraising. Additionally, property expenses include the cost of rent. Regarding health insurance costs, Covenant has experienced substantial increases in health care insurance premiums. However, health insurance premiums are a component of benefits, and Covenant’s overall benefit rates are conservative, sufficient, and reasonable. Finally, the projected general and administrative costs and ancillary costs, including contractual costs, are reasonable, appropriate, and conservative. Immediate or short-term financial feasibility is the ability of the applicant to secure the funds necessary to capitalize and operate the proposed project. Schedules 1, 2, and 3 and the audited financial statements of Covenant demonstrate that it has sufficient funds and cash-on-hand to fund the project. The capital projects listed on Schedule 2 do not adversely affect the ability of Covenant to fund the project, nor does the project adversely affect the ability of Covenant to carry out all projects listed on Schedule 2 of the application. Therefore, the project is financially feasible in the short term. Long-term financial feasibility is the ability of the project to reach a break-even point within a reasonable period of time and at a reasonable achievable point in the future. Based upon a review of the reasonableness of the volume and patient day projections, the staffing and income and expense projections, it was established by competent substantial evidence that the proposed project is financially feasible in the long term. It is important to note that the reasonableness of the income and expense projections depicted on Schedule 8A of the application, which result in a second year net operating surplus, are driven by the admissions and patient day projections. Persuasive evidence indicates that Covenant's admissions and patient day projections are reasonable and achievable. Financial feasibility analysis is different for hospices than for other organizations because hospices are not- for-profit entities. They rely to a great extent on grants, donations, and other non-operating revenue to sustain operations. Covenant has an excellent record in regard to fund- raising. It has strong reserves of ready cash and over $1 million in investments. This project would be financially feasible even if it did not show a net profit in the first two years of operation. Covenant has the ability to support the project, and the commitment to do so, such that the program would continue to operate as a viable operating entity.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That AHCA should grant Covenant a CON to establish an additional hospice program in SA 2B. DONE AND ENTERED this 7th day of November, 2002, in Tallahassee, Leon County, Florida. SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of November, 2002. COPIES FURNISHED: Michael D. Mathis, Esquire Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308-5403 J. Robert Griffin, Esquire J. Robert Griffin, P.A. 2559 Shiloh Way Tallahassee, Florida 32308 W. David Watkins, Esquire R. L. Caleen, Jr., Esquire Watkins & Caleen, P.A. 1725 Mahan Drive, Suite 201 Post Office Box 15828 Tallahassee, Florida 32317-5828 Lealand McCharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
The Issue The issues in this case are: Whether Petitioner, Agency for Health Care Administration (“Petitioner” or “AHCA”), is entitled to recover Medicaid funds paid to Respondent, HCR Manor Services of Florida, LLC, d/b/a Heartland Home Health Care and Hospice (“Respondent” or “Heartland”), for hospice services Respondent provided during the audit period between July 1, 2011, through December 31, 2014; Whether Heartland should be required to pay an administrative fine, pursuant to Florida Administrative Code Rule 59G-9.070(7)(e); and The amount of any investigative, legal, and expert witness costs that AHCA is entitled to recover, if any.
Findings Of Fact Based on the evidence presented at the final hearing, the prehearing statement, and the record in this matter, the following Findings of Fact are made: Parties AHCA is the state agency responsible for administering the Florida Medicaid program. Medicaid is a joint federal/state program to provide health care and related services to qualified individuals. Heartland is a provider of hospice and end-of-life services in Florida. During the Audit Period, Heartland maintained a hospice program headquartered in Jacksonville, Florida. The program is enrolled as a Medicaid provider and has a valid Medicaid provider agreement with AHCA. As a hospice care provider, Heartland has an inter- disciplinary team ("IDT"), which includes persons with medical, psychosocial, and spiritual backgrounds to provide comfort, symptom management, and support to patients and their families. Each patient is reviewed in a meeting of the IDT every two weeks. A Medicaid provider is a person or entity that has voluntarily chosen to provide and be reimbursed for goods or services provided to Medicaid recipients. As an enrolled Medicaid provider, Heartland is subject to statutes, rules, and Medicaid handbooks incorporated by reference into rule, which were in effect during the Audit Period. See, e.g., Florida Medicaid Hospice Services Coverage and Limitations Handbook, 2007 (“Handbook”), adopted by Fla. Admin. Code R. 59G- 4.140(2)(2007). Audit Process The Handbook contains six bullet points for a physician to consider when making a determination regarding a patient’s initial certification for hospice eligibility. While those six bullet points provide factors for consideration by the certifying physician, each recipient is not required to meet each bullet point to be eligible for hospice care. The six bullet points are as follows: Terminal diagnosis with life expectancy of six months or less if the terminal illness progresses at its normal course; Serial physician assessments, laboratory, radiological, or other studies; Clinical progression of the terminal disease; Recent impaired nutritional status related to the terminal process; Recent decline in functional status; and Specific documentation that indicates that the recipient has entered an end-stage of a chronic disease. The initial certification for hospice applies for a 90-day period. The patient can then be recertified for a second 90-day period. Thereafter, all subsequent recertifications apply for a 60-day period so long as the patient meets the requirements to receive hospice benefits. To determine eligibility, the Handbook provides: The first 90 days of hospice care is considered the initial hospice election period. For the initial period, the hospice must obtain written certification statements from a hospice physician and the recipient’s attending physician, if the recipient has an attending physician, no later than two calendar days after the period begins. An exception is if the hospice is unable to obtain written certification, the hospice must obtain verbal certification within two days following initiation of hospice care, with a written certification obtained before billing for hospice care. If these requirements are not met, Medicaid will not reimburse for the days prior to the certification. Instead, reimbursement will begin with the date verbal certification is obtained. * * * For the subsequent election periods, written certification from the hospice medical director or physician member of the interdisciplinary group is required. If written certification is not obtained before the new election period begins, the hospice must obtain a verbal certification statement no later than two calendar days after the first day of each period from the hospice medical director or physician member of the hospice’s interdisciplinary group. A written certification must be on file in the recipient’s record prior to billing hospice services. Supporting medical documentation must be maintained by the hospice in the recipient’s medical record. The U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services (“CMS”), contracted with HI, a private vendor, to perform an audit of Heartland. HI retained Advanced Medical Reviews (“AMR”) to provide physician reviews of claims during the audit process in order to determine whether the patients met the criteria for Medicaid Services. HI notified Heartland of the audit on or about June 30, 2016. The audit was conducted between August 25, 2016, and December 20, 2016. The scope of the audit was limited to Medicaid recipients that received hospice services from Heartland during the period of July 1, 2011, through December 31, 2014, the Audit Period. The files were identified for review using the following criteria: The recipient was not dually eligible (eligible for both Medicaid and Medicare); Heartland provided hospice services for 182 days or longer, based on the recipient’s first and last day of service within the Audit Period; and HI excluded recipients who had at least one malignancy (cancer) primary diagnosis and had a date of death less than one year from the first date of service with Heartland. Thus, the objective of the audit was to determine whether certain Medicaid patients were, in fact, and pursuant to applicable law, eligible for hospice benefits provided by Heartland. When HI applied the audit criteria to the Medicaid claims paid by AHCA to Heartland, HI determined that Heartland had provided hospice services to five Medicaid recipients for 182 days or longer during the Audit Period. To qualify for the Medicaid hospice program, all recipients must, among other things: a) be certified by a physician as terminally ill with a life expectancy of six months or less if the disease runs its normal course; and b) voluntarily elect hospice care for the terminal illness. HI employed claims analysts who performed an initial review of Heartland’s patient records to determine if the recipients were eligible for Medicaid hospice benefits. All HI claims analysts are registered nurses. If the HI claims analyst was able to assess that the patient’s file contained sufficient documentation to justify eligibility for hospice benefits for the entire length of stay under review in the audit, there was no imposition of an overpayment for that file pursuant to the audit process and, thus, the claim was not evaluated further. If the HI claims analyst was unable to assess whether the patient’s file contained sufficient documentation to determine eligibility for hospice benefits, or if only a portion of the patient’s stay could be justified by the HI claims analyst, the file was forwarded to an peer review physician to make the ultimate determination as to eligibility for Medicaid hospice benefits and whether an overpayment was due the Florida Medicaid program. HI contracts with peer review organizations that provide physicians to perform the peer review. One of those organizations was AMR, which provided peer review services for the Heartland audit. Heartland Audit Regarding the Heartland audit, HI staff members identified the physicians who provided care to the recipients at Heartland. The physicians at Heartland had an active specialty in family medicine. Because HI did not have any family physicians on staff at the time of the audit, HI identified physicians specializing in internal medicine. Internal medicine was selected because the nature of the practice involves treatment of various medical conditions. The peer reviewers selected to review recipient records to determine eligibility for hospice were, to the maximum extent possible, of the same specialty as the Heartland physicians. The HI claims analysts reviewed Heartland’s patient records for five recipients and determined that no further action was warranted with respect to two recipients. The claims analysts were registered nurses. As a result, three files were referred for physician peer review by AMR. AMR maintains a secure portal (“AMR Portal”) that HI personnel access to transmit all received provider files to AMR. AMR’s peer review physicians use the AMR Portal to review the totality of the provider’s submitted documentation, including all patient records, and provided their comments. Initially, AHCA selected Ankush Bansal, M.D., to review the patient files identified for physician review. Dr. Bansal determined that all three recipients were ineligible for hospice services. HI prepared a Draft Audit Report (“DAR”), which identified overpayments of Medicaid claims totaling $127,015.43, relating to three recipients. On March 7, 2017, HI presented the DAR to Heartland for comment and response. The alleged overpayments for the three recipients were for the time periods as follows1/: Patient P.C., for service dates 03/13/2012 – 9/11/2012. Patient S.L., for service dates 03/02/2013 – 9/22/2013; and Patient V.P, for service dates 11/13/2012 – 2/28/2014; During the pendency of the audit, but after the DAR was provided to Heartland, Dr. Bansal became unavailable for further work on the audit. Thus, AMR retained two new physicians (Ibrahim Saad, M.D., and Patrick Weston, M.D.) to perform the re-reviews of the patient records. After Heartland responded to the DAR, Heartland’s response was provided to the two new AMR peer review physicians, who, after reviewing Heartland’s response to the audit, reevaluated the medical documentation in light of the additional information and argument provided by Heartland. The new peer reviewers, Drs. Saad and Weston, agreed with the original peer reviewer, Dr. Bansal, that the three recipients were not eligible for hospice services. As a result of that comment and review process, no claims were adjusted. Once approved by CMS and AHCA, the DAR became the FAR. The FAR set forth an overpayment amount of $127,015.43 in Medicaid overpayments owed to AHCA based upon the three Medicaid recipients serviced by Heartland during the Audit Period. HI submitted the FAR to CMS. CMS provided the FAR to AHCA with instructions that AHCA furnish the FAR to Heartland and initiate the state recovery process. The FAR contains the determinations made by the AMR peer review physicians finding that each of the three patients identified therein were ineligible for hospice coverage as the documentation did not support the eligibility requirement of having a terminal illness with a life expectancy of six months or less if the illness ran its normal course. AHCA sent the FAR to Heartland. In the Notice letter, AHCA explained that a fine of $25,403.09 had been applied and costs were assessed in the amount of $75.55. The total amount due for the alleged overpayment, fines, and costs was $152,494.07. Experts Due to the nature of the review and re-review process, the final hearing primarily focused on the testimony of each parties' experts regarding whether particular recipients met the criteria of Medicaid hospice benefit eligibility. The undersigned notes that Heartland did not offer testimony regarding the patients’ eligibility from the physician who actually evaluated the recipients in dispute or certified any of the recipients as terminally ill during the Audit Period. Dr. Stevens, the certifying physician for at least two of the three patients, testified but did not offer specific testimony about the respective patients’ Medicaid hospice eligibility. The experts presented by AHCA and Heartland in this matter did not examine the recipients. For each patient, an AHCA and the Heartland expert reviewed the patient records and provided an opinion as to whether the six bullet points of the Handbook were satisfied to determine whether the recipient was "terminally ill with a life expectancy of six months or less if the disease runs its normal course." In performing their respective peer reviews, the peer review physicians were instructed to use their clinical experience and the Handbook. As set forth above, the Handbook, adopted by Florida Administrative Code Rule 59G-4.140, requires a recipient to have a terminal diagnosis with a life expectancy of six months or less if, the terminal disease follows its normal course in order to be eligible for Medicaid hospice services. It also requires that the hospice maintain documentation supporting that prognosis at initial certification and for every recertification. AHCA’s Experts Dr. Ibrahim Saad Dr. Saad, board-certified in internal medicine, was actively practicing in Florida at the time of the audit. Dr. Saad regularly sees and treats patients with liver disease and congestive heart failure as part of his practice. Dr. Saad reviewed and rendered his opinion as to the hospice eligibility of two recipients in the FAR, patients P.C. and V.P. Dr. Saad is a physician licensed under chapter 458, Florida Statutes, who has been regularly providing medical care and treatment within the past two years and within the two years prior to the audit as explained above. Dr. Saad began practicing medicine in Florida in August of 2015. Prior to practicing in Florida, he completed a three-year residency in Michigan, during which he actively treated patients. He was the chief resident his last year of the residency. The last two years of his medical school consisted of clinical rotations, during which he actively treated patients. In its PRO, Heartland argued that Dr. Saad did not have “five years full-time equivalent experience providing direct clinical care to patients.” However, there is no statutory requirement for a peer reviewer to have five years of experience. Although attesting to the statement is a requirement established by AMR, it has no bearing on whether Dr. Saad met the criteria for a peer reviewer under Florida law. Dr. Saad qualifies as a peer reviewer under the Florida Statutes. When weighing the testimony of Dr. Saad, the undersigned considered material factors regarding Dr. Saad’s qualifications. Dr. Saad has not certified a patient as being terminally ill. However, Dr. Saad regularly sees and treats hospice patients and patients with end-stage diseases. Based upon his experience, Dr. Saad understands what factors are properly considered when estimating a patient’s life expectancy. Dr. Saad also routinely makes life expectancy prognostications for his patients. Based on the factors above, Dr. Saad was accepted as an expert in internal medicine. Dr. Patrick Weston Dr. Weston has been actively practicing as a physician since 2009, meaning he had been in practice for 10 years at the time of the hearing. Prior to 2009, Dr. Weston completed a three-year cardiovascular fellowship, and prior to that, he completed a two-year residency in internal medicine. Dr. Weston often sees and treats patients with cancer. Dr. Weston has referred patients to hospice. Dr. Weston reviewed and rendered his opinion as to the hospice eligibility of one recipient in the FAR, patient S.L. Dr. Weston was board-certified in internal medicine in 2007. He was also board-certified in cardiology in 2010 and nuclear cardiology in 2011. Cardiology is a subspecialty of internal medicine. Dr. Weston’s internal medicine certification expired on December 31, 2017. However, he anticipates obtaining the certification again, and at the time of the hearing, was planning to take the test in a few months. Although his certification lapsed, Dr. Weston continued to actively treat patients, spending approximately 50 percent of his time practicing internal medicine. More importantly, the certification was active when he performed the audit. Dr. Weston treats hospice patients and refers patients to hospice on a regular basis. Based upon his experience, Dr. Weston understands what factors are properly considered when estimating a patient’s life expectancy. Dr. Weston routinely makes life expectancy prognostications for his patients. Based on the factors above, Dr. Weston was accepted as an expert in internal medicine. When weighing the testimony of Dr. Weston, the undersigned considered material factors regarding Dr. Weston’s qualifications. Dr. Weston has not certified a patient as being terminally ill. Dr. Weston is not board-certified in hospice or palliative care. After the audit, but before the hearing, Dr. Weston moved to a new practice, in which he has a flexible schedule, sometimes working no hours per week and sometimes working 60 hours per week. However, he testified that on average, he works about 100 hours per month. Heartland’s Expert Dr. Michael Shapiro Dr. Shapiro attended the Ross University School of Medicine, performed his residency at the Medical Center of Central Georgia and Mercer University, and performed a fellowship at the University of South Florida in hospice and palliative medicine. Dr. Shapiro was first exposed to hospice medicine during his residency, where there was both a palliative care service and a hospice service. After his residency, Dr. Shapiro spent a year as a junior faculty member at Mercer University where he performed palliative rounds on a weekly basis, in addition to practicing both general inpatient and outpatient medicine. Dr. Shapiro’s fellowship provided training on both the clinical and significant administrative aspects of hospice and palliative medicine, as well as hospice benefits. As part of this training, Dr. Shapiro learned how to appropriately evaluate patients to determine if they are eligible for the Medicaid hospice benefit. After completing his fellowship, Dr. Shapiro began working full time in hospice with Cornerstone Hospice (“Cornerstone”) as a team physician. In that role, Dr. Shapiro performed patient visits, held admission phone calls for new patient certifications, and performed other tasks as the physician member of the IDT. Dr. Shapiro also assessed patients to determine whether they were eligible for the Medicaid hospice benefits and executed written certifications for patients who were terminally ill and eligible for hospice benefits. Dr. Shapiro is currently the hospice medical director and chief medical officer of Cornerstone. In that role, he oversees all the physicians and hospice clinical practitioners, and actively participates in training. Dr. Shapiro also provides hospice physician training to new Cornerstone employees regarding the hospice benefit beyond the organization’s educational requirements. Dr. Shapiro estimates that, during his time at Cornerstone, he has assessed well over 1,000 patients to determine whether they have a terminal illness of six months or less if, the illness runs its normal course. He has determined eligibility by taking the history and performing a physical examination of patients, as well as by evaluating a patient based strictly on the medical records. Dr. Shapiro is board-certified in family medicine, hospice and palliative medicine, and as a hospice medical director. He also serves as the chair of the National Partnership for Hospice Innovation Medical Affairs Forum, which is a collaborative group of larger, not-for-profit hospices who focus on improving the clinical aspects of hospice. Based on the findings set forth above, Dr. Shapiro was accepted as an expert in hospice medicine, family medicine, and as a hospice medical director. When weighing the testimony of Dr. Shapiro, the undersigned took note of several factors regarding Dr. Shapiro’s qualifications. Dr. Shapiro testified that during his time at Cornerstone, he assessed more than 1,000 patients. He also acknowledged that Cornerstone underwent an audit in 2016, similar to the one at issue in this case, while he was medical director of the facility. The outcome of that audit resulted in Cornerstone being required to pay AHCA more than $700,000 in overpayments. While this factor does not disqualify Dr. Shapiro as an expert, the significant overpayment is a factor when weighing his testimony regarding the eligibility of recipients for Medicaid hospice services. Patient Review Patient P.C. Patient P.C. was a 54-year-old female who was admitted to hospice with a terminal diagnosis of end-stage congestive heart failure on March 13, 2012. P.C. presented with a secondary history of chronic obstructive pulmonary disease (asthma), GERD, and back pain. She had been hospitalized in the prior three years and was dependent regarding six of six activities of daily living (ADLs), including ambulating, toileting, transferring, dressing, feeding, and bathing. The claim period in question is March 13, 2012, through September 11, 2012. At the time of admission, P.C.’s most recent hospitalization, on March 7, 2012, was for a primary diagnosis of acute renal injury, lower extremity pain, and headache with a noted history of cardiomyopathy. During the admission, tests were conducted to rule out an acute kidney injury versus chronic kidney disease. The records noted that cardiology was only following her for her cardiomyopathy condition. Thus, the hospital admission was not related to her hospice-admitting diagnosis of congestive heart failure. Prior to admission, the most recent report from her primary cardiologist was dated December 9, 2011. At that time, the doctor noted that she was “doing generally well from a cardiac standpoint” and that she “appears to be stable from a heart failure standpoint.” Moreover, in the most recent record from her primary electrophysiologist, dated November 11, 2011, it was noted that she had New York Heart Association (“NYHA”) Class II symptoms. Her initial nursing assessment on March 15, 2012, showed that P.C. was able to ambulate 30 feet, she had no complaints of chest pain, no edema noted, she did not need oxygen, and she was independent with activities of daily living. Her ejection fraction was 20 percent at the time, her PPS was 50 percent, and her level of consciousness was not altered. The initial nursing assessment also indicated that P.C. was independent in all six ADLs. The follow-up assessment five days later on March 20, 2012, noted “none” for the ADL dependent category. NYHA’s functional classification is incorporated into the Heartland guidelines for determining prognosis for heart disease. The criteria for Class IV (terminally ill) patients with heart disease include “patients with cardiac disease resulting in inability to carry on physical activity without discomfort. Symptoms of heart failure or of the anginal syndrome may be present even at rest. If any physical activity is undertaken, discomfort is increased. Dr. Saad testified that the NYHA classifications are based primarily on the level of ambulation and whether the patient has significant chest pain at rest. Dr. Saad testified that a patient classified as being in Class II is someone with mild symptoms with ambulation. There may be some shortness of breath or chest pain. P.C.’s records reflect that she was able to ambulate 30 feet, she did not require oxygen, and she did not have chest pain. Based on P.C.’s records, she should have been classified as a Class II cardiac patient. Although the heart disease guideline form in her records indicated she was initially designated as NYHA Class IV, both Drs. Shapiro and Saad agreed that P.C. did not meet the criteria for NYHA Class IV, but rather, she met the criteria for Class II. In addition, patient P.C. was not using any oxygen when she was admitted to hospice and she was on room air. Dr. Saad credibly testified that a patient with end-stage heart failure would need to be on oxygen. During her stay in hospice, P.C.’s PPS was 50 percent and it increased to 60 percent in the second period. Her weight fluctuated between 160 and 170 pounds. Dr. Shapiro’s testimony that P.C.’s weight fluctuation could be attributed to fluid retention was not supported by the patient records. Based on P.C.’s patient records, there was not sufficient evidence to demonstrate that she had six months or less to live. Between the visit at which her cardiologist found her to be stable and her entry into hospice, there was no evidence of any additional complications with her heart disease. Moreover, there was no evidence of functional decline, impaired nutritional status, or overall progression of her heart disease during the recertification periods. Respondent’s expert noted that the patient experienced chronic leg and back pain and had chronic opioid dependency. However, this factor is not sufficient to support hospice eligibility. Dr. Shapiro pointed to several factors to support his contention that P.C.’s condition had progressed and her functionality had declined. During the recertification period with dates of March 13, 2012, through June 10, 2012, P.C. developed symptoms and progression of her underlying condition, including, shortness of breath with ambulation, tiring easily, and experiencing confusion about her medications. She was hospitalized on May 15, 2012, where she presented with oxygen saturations in the low 80s and a chest x-ray finding pulmonary congestion and opacities. During the hospital stay, P.C. was found to have anemia, with a hemoglobin measurement of 9.7. Dr. Shapiro testified that the lowered hemoglobin increased mortality by about 32 percent, and when coupled with untreated arrhythmias and underlying stage II heart disease, P.C.’s mortality at one year was almost 70 percent. During the certified period June 11, 2012, through September 8, 2012, P.C. began using supplemental oxygen for shortness of breath and fatigue and was suffering from orthopnea. The records reflect that P.C. was using a cane to ambulate upon admission to hospice due to vertigo. There was insufficient evidence of her nutritional decline; her weight fluctuated between 160 to 170 pounds; and her eating ranged from 25 to 75 percent. She was also independent regarding six of six ADLs. During the period September 9, 2012, through November 7, 2012, P.C. elected to revoke hospice on September 11, 2012, only three days into the final benefit period at issue. The patient records do not support a finding that P.C. met the Medicaid hospice eligibility standard during the disputed period of March 13, 2012, through September 11, 2012. The greater weight of the evidence supports a finding that P.C. was not eligible for Medicaid services and, thus, AHCA is entitled to recover an overpayment of $28,866.27. Patient S.L. Patient S.L. was a 56-year-old female, admitted to hospice on March 2, 2013, with a terminal diagnosis of squamous cell head and neck cancer. The claim periods at issue are March 2, 2013, through September 22, 2013. Based on her patient records, it is noted that S.L. had a history of cancer in the neck and upper lip. She had a wide local resection of her upper lip to remove the cancer on July 28, 2011. In May 2012, a CT scan of her neck showed evidence concerning cervical metastases. She then had a left neck dissection on May 10, 2012. The patient records did not show any recurrence of cancer after the dissection. In January 2013, her patient records showed that she had complaints of neck and jaw pain. However, her appearance was noted as “[o]therwise healthy looking, well nourished, in mild distress.” Upon discharge, the recommendation was that she continues medications as prescribed by the primary care physician and follow up in three months. On March 1, 2013, the day before she entered hospice, she visited Shands complaining of pain in the neck on the left side. The record noted that she is a “poor historian and emotionally unstable.” The record also noted that she was “sitting comfortably in the chair in no pain or distress” and her vital signs were within normal limits. The report found no evidence of the source of pain on the clinical exam so she was referred for a CT scan for further imaging. There was no referral for hospice services. In fact, there is no referral for hospice treatment by a physician in S.L.’s records. S.L. self-reported a 20-pound weight loss at the time of admission, in addition to increased symptoms of fatigue and shortness of breath. Dr. Shapiro testified that these symptoms, in conjunction with metastatic cancer, demonstrated a clinical need and appropriateness for hospice. However, there were no records to support a current diagnosis of cancer or a 20-pound weight loss. The information in the records that was used to admit S.L. for hospice services was unreliable and at times, inaccurate. There is no evidence to support that S.L. had a current diagnosis of cancer at the time of her admission. Her records reflect a history but no recurrence. There is no evidence to support S.L.’s self-reported 20-pound weight loss at the time of admission. The record demonstrates that within the prior year, S.L.’s weight had a range between 120 to 130 pounds. In addition, in the initial certification assessment, the hospice physician stated in his narrative that the cancer had metastasized to the lungs. However, there is no evidence that demonstrates that cancer was in S.L.’s lungs and, thus, the record does not support this statement. Further, there is a note on the recertification document that “MD visit Mar 2013 pt informed cancer has grown.” However, as stated above, S.L. was referred for a CT scan during her March 1, 2013, visit, but there is no mention of her cancer growing. Based on the foregoing, S.L.’s patient records do not support a finding that S.L. met the Medicaid eligibility standards for hospice services. During the recertification period of March 3, 2013, through May 30, 2013, S.L. was hospitalized for a possible overdose attempt. After this hospitalization, it was found that S.L. was experiencing lower extremity neuropathy, in addition to continued complaints of back and neck pain. However, none of these factors relate to her initial admitting diagnosis of cancer. Further, neither of the factors is noted as comorbidities that would warrant hospice services. A CT scan revealed nodal involvement, which Dr. Shapiro testified that literature suggests results in a 50-percent decrease in the rate of survival. However, follow-up testing was ordered to confirm the nature of the nodal mass, which is not sufficient documentation to demonstrate progression of cancer. S.L. experienced anxiety and she was becoming easily tearful, frustrated, and paranoid. A visit to her maxillofacial surgeon on August 20, 2013, revealed a palpable neck mass, which required further investigation. More importantly, however, the treating physician noted that “[s]he has referred herself to hospice . . . it is not at all clear that she should be a hospice patient at all.” Both a positron emission tomography (“PET”) scan conducted on August 30, 2013, and a biopsy performed by S.L.’s maxillofacial surgeon returned negative. The medical records contained in S.L.’s file do not support a finding that the Medicaid hospice eligibility standard was met during the disputed period. Based upon the greater weight of evidence, it is determined that S.L. was not eligible for Medicaid hospice services at the initial assessment or for the recertification periods. As a result, AHCA is entitled to recover an overpayment of $29,601.95. Patient V.P. Patient V.P. was a 45-year-old male with a history of end stage liver disease with comorbidities of alcoholic cirrhosis and Hepatitis C. His other comorbidities included esophageal varices grade III, hypertension, portal tension, anemia, anxiety, and polysubstance abuse. The claim period at issue is November 13, 2012, through February 28, 2014. V.P. had been admitted to the hospital seven times in the year prior to being admitted into hospice, the most recent of which was six weeks prior to his hospice admission. V.P. was admitted at that time for acute gastrointestinal hemorrhage and anemia due to the hemorrhage. He also had noted cirrhosis, very low blood counts, varices, and portal hypertension. Dr. Shapiro testified that these were significant clinical indicators of decompensated liver cirrhosis and findings suggestive of progressed liver disease. Based on this information, Dr. Shapiro opined that V.P. was appropriately admitted to hospice. Over a month before entering hospice, V.P. had an endoscopy, which showed grade III varices, but no bleeding, which meant that the disease was not active. Dr. Saad testified that this was significant because when looking at a terminal diagnosis, you are looking at a disease that is not responsive to treatment. Dr. Saad testified that the two main factors that are considered in determining the function of the liver are the INR and the albumin levels. V.P. had an international normalised ratio (“INR”) of 1.3 on October 3, 2012, and at admission, which is elevated and shows that he has liver disease, but it had not progressed to become end stage. Similarly, a normal albumin level is 3.5 and his was 3.0, which shows it is slightly decreased. The lower albumin level of 3.0 suggests that V.P. had liver disease, but that the level had not decreased to the point of end stage. More importantly, the patient records reflect that V.P.’s albumin level was 3.5 on September 27, 2012, and it decreased to 3.0 on September 28, 2012. According to the Heartland guidelines, an INR of greater than 1.5 and an albumin level of less than 2.5 coupled with other indicators of progression support a diagnosis of end- stage liver disease. During the recertification period of November 12, 2012, through February 10, 2013, V.P. suffered from increased abdominal pain requiring medication management changes, shortness of breath on walking, dizziness with associated elevated blood pressure, and muscle atrophy, all signs of the severity of his underlying liver disease. V.P. also experienced a fall on November 15, 2012. Due to these factors, Dr. Shapiro opined that V.P. continued to be appropriate for hospice. V.P. experienced abdominal pain during the recertification period of February 11, 2013, through May 11, 2013, which resulted in another medication regimen modification. V.P. was also transferred to a skilled nursing facility due to increased daily care needs. During this period, V.P. also began experiencing increased anxiety and depression. V.P.’s laboratory findings demonstrated an elevated INR of 1.5 from the previous month (of 1.3), which could lead to spontaneous bleeding. Dr. Shapiro also testified that V.P. experienced another fall, demonstrating his general weakness and continued functional decline. During the recertification period of May 12, 2013, through July 10, 2013, the records show increased drowsiness and lethargy, which were found to not be related to his medication but rather to his disease. V.P. experienced increased pain and ineffective control near the end of May, resulting in yet another medication modification. V.P. also had swelling and fluid retention in his lower extremities, which Dr. Shapiro opined illustrated muscle mass wasting in advancing liver disease. V.P.’s alkaline phosphatase increased from 136 to 178, and an ultrasound showed ascites in his abdomen, hepatomegaly, and a renal stone. V.P. also exhibited non-verbal signs of pain, as well as a significant and sharp increase in shortness of breath. The shortness of breath occurred while V.P. was speaking and led to the presence of intermittent orthopnea, which is commonly found in terminal liver patients and demonstrates disease progression. V.P. had documented pancytopenia, when combined with swelling and fluid retention, shows an advancing disease state where a patient is more susceptible to infection. V.P. experienced such an infection during this period, and he was treated with antibiotics for cellulitis. V.P. also suffered an additional fall in September and had continued decline in appetite, consuming only 25 percent to 50 percent of his meals. On December 17, 2013, V.P. was examined by a team physician who noted that V.P. exhibited confusion, forgetfulness, slurred speech, muscle atrophy, frailty, depressed mood, anxiousness, ascites, and moderate dependence in his activities. Other hospice team members also witnessed V.P.’s progressive symptoms, including confusion and repetitive speech. V.P. experienced another fall that resulted in a head injury, followed by slurred speech and lethargy. Despite another change in his medication, V.P.’s clinical symptoms progressed. He started suffering from hypoxia, abdominal tenderness, and ascites. A chest x-ray showed congestive heart failure. V.P. also developed a urinary tract infection requiring antibiotic treatment. Dr. Shapiro testified that these were clear findings that demonstrated V.P. was appropriate for hospice. During the recertification period of January 7, 2014, through February 28, 2014, V.P. required additional nursing needs and visits. V.P. developed crackles (persistent fluid and congestion) in his lungs and had increased abdominal girth, at one point measured as a 1.5-inch increase over a two-week period. In addition, V.P. experienced two separate falls, suffered from increased fatigue and weakness, and had recurrent cellulitis (bacterial infection). A chest x-ray dated February 5, 2014, showed that V.P. developed pneumonia. In the radiology report, it is noted that the exam was overall worse compared to the January 1, 2014, exam. V.P. died on February 11, 2016. Dr. Saad testified that individuals can have good days and bad days and that they can wax and wane, but you look at whether they return to their baseline. While, there were some exacerbations, or infections, each issue may have ultimately resolved. However, V.P.’s records, including his lab results, x-rays which showed development of pneumonia within slightly more than a month, multiple reoccurring falls, a number of infections, increasing ADL dependence, and worsening confusion support a finding that V.P. was eligible for hospice services. The evidence does not support by a preponderance of evidence that V.P. was not entitled to hospice services and as a result, AHCA is not entitled to recover overpayment for patient V.P. Overpayment Calculation Based on the Findings of Fact above, AHCA is entitled to recover overpayment for hospice services to P.C. and S.L. in the amount of $58,468.22. Fine Calculation When calculating the appropriate fine to impose against a provider, MPI uses a formula based on the number of claims that are in violation of rule 59G-9.070(7)(e). The formula involves multiplying the number of claims in violation of the rule by $1,000 to calculate the total fine. The final total may not exceed 20 percent of the total overpayment of $58,468.22, which results in a fine of $11,693.64.
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 directing Heartland to pay $58,468.22 for the claims found to be overpayments and a fine of $11,693.64. The undersigned reserves jurisdiction to award investigative, legal, and expert witness costs. DONE AND ENTERED this 7th day of March, 2019, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 7th day of March, 2019.
The Issue Whether the Certificate of Need (CON) applications filed by Regency Hospice of Northwest Florida, Inc. (Regency), Odyssey Healthcare of Northwest Florida, Inc. (Odyssey), and United Hospice of West Florida, Inc. (United) for a new hospice program in Agency for Health Care Administration (AHCA or the Agency) Service Area (Service Area) 1, satisfy, on balance, the applicable statutory and rule review criteria sufficiently to warrant approval and, if so, which of the three applications best meets the applicable criteria for approval.
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is the state agency authorized to evaluate and render final determinations on CON applications pursuant to Section 408.034(1) Florida Statutes.1 Regency Regency Hospice of Northwest Florida, Inc. (Regency) is a for-profit, wholly-owned subsidiary of Regency Healthcare Group, LLC (RHG). Regency is a start-up corporation formed for the purpose of owning and operating a new hospice program in Service Area 1. (Findings relating to the creation of Regency and Regency Hospice of Northwest Florida, LLC (Regency LLC) are set forth in section III.) RHG was formed in 2005 for the purpose of acquiring and then owning and operating hospice operations in the southeastern United States. The company's sole business is providing hospice services. In February 2006, RHG acquired the hospice operations of Regency Hospice with locations in Georgia and South Carolina. In June 2006, RHG acquired New Beacon Hospice with multiple locations in Alabama. In addition to these acquisitions, RHG opened a new Medicare licensed hospice program in Augusta, Georgia, and also opened two additional satellite offices in Gainesville, Georgia, and Gadsden, Alabama. RHG operates under the "Regency" brand name in Georgia and South Carolina (seven hospice offices) through its wholly- owned subsidiary Regency Hospice of Georgia, LLC, and operates under the "New Beacon" brand name in Alabama (eights hospice offices) through its wholly-owned subsidiary New Beacon Healthcare Group, LLC. Presently, RHG owns and operates ten Medicare certified hospice programs at 15 office locations: eight in Alabama, four in Georgia, and three in South Carolina. The offices are located in urban and rural settings. If approved in Florida, RHG would operate the hospice through the wholly-owned subsidiary Regency Hospice of Northwest Florida, Inc. There is no separate corporate management of Regency at the subsidiary level. The supervision, management, and control of all of the RHG hospice operations, whether operating under the Regency or New Beacon brand name, are centralized in the senior management team of RHG located in Birmingham, Alabama. The mission, core values, service standards, operating practices, protocols and policies are uniform throughout the company regardless whether a hospice program is operated under the New Beacon or Regency brand name. RHG senior management team has demonstrated a history of developing successful hospice operations. The origin of Regency's New Beacon hospice operations in Alabama dates back approximately 25 years when the hospice was first established in Birmingham, Alabama. The Birmingham hospice was initially owned by the Baptist Health System as a department of Montclair Hospital. Over time, the Baptist Hospice expanded its operations through acquisitions and opening of new programs in locations outside of Birmingham. Eventually, Baptist-owned hospice operations merged with the hospice operations of the Catholic health system in 1997. The joint Baptist/Catholic venture was operated under the name of Unity Health Services changing its name to New Beacon in 2001. In 2006, the Baptist and Catholic health systems decided to sell their hospice operations in Alabama. Both Odyssey and Regency submitted bids to purchase the New Beacon operations. Although Odyssey was the highest bidder, the hospice program was sold to Regency, apparently because RHG shared New Beacon's philosophy regarding providing hospice care. The Baptist and Catholic health systems continue to have a minority ownership in Regency and share a seat on the seven-member board of directors. RHG's hospice operations have grown in terms of patient admissions and average daily census since the acquisition of Regency and New Beacon. RHG plans to focus efforts in the southeast and expand into southern Alabama and the Florida panhandle. RHG's present plans are to open from three to ten new hospice locations in 2008 including the three Florida panhandle locations at issue in this case if approved. New Beacon is a recognized provider of choice in Alabama for some health care providers and its operations have been successful. RHG's operations in Georgia and South Carolina have also been successful. Under RHG's management and prior to its acquisition, New Beacon has afforded high quality of care to the patients its served. There are numerous examples of highly complex, difficult, and costly patients that New Beacon has accepted both before and after the acquisition. There have been no apparent changes in New Beacon's direction or philosophy since acquisition by RHG. Some witnesses who testified on behalf of Regency, expressed a preference for New Beacon over Odyssey based on ease of referrals and complexity of care of patients New Beacon accepts. Odyssey Odyssey Healthcare of Northwest Florida, Inc. (Odyssey) is a for-profit, wholly-owned subsidiary of Odyssey Healthcare, Inc. (Odyssey Healthcare). Odyssey is a start-up corporation formed for the purpose of filing a CON application at issue in this proceeding and owning and operating a new hospice program in Service Area 1. Odyssey Healthcare is a publicly-traded company founded in 1996 and focuses on caring for patients at end-of-life care. Odyssey Healthcare's sole line of business is hospice services. Since 1996, Odyssey Healthcare has started up and acquired more than 80 hospice programs in 30 states. Odyssey Healthcare presently operates approximately 76 Medicare certified hospice programs, including the operation of two hospice programs in Florida. Odyssey Healthcare has approximately 5,000 employees through affiliated programs and serves approximately 8,000 patients per day across its 76 hospice programs and serves has approximately 34,000 admissions in a 12-month period. Last year, Odyssey Healthcare started five or six new hospice programs. Odyssey is the only one of the three co-batched applicants with start-up and operational hospice experience in Florida - in AHCA Service Areas 4 and 11. Since 2003, Odyssey Healthcare has started up approximately 40 new hospice programs, but over the past several years, Odyssey Healthcare has closed or sold seven programs as underperforming or, in some cases, in light of unfavorable market conditions. Odyssey Healthcare has not sold or closed other hospice programs, such as those located in New Orleans and Baton Rouge, Louisiana, following the hurricane, or in Boston, Massachusetts, notwithstanding the loss of money in those markets or other market conditions. Odyssey Healthcare's patient population consists of approximately 68 percent non-cancer and 32 percent cancer patients. Odyssey Healthcare was the subject of an investigation by the United States Department of Justice (DOJ) that ultimately resulted in a settlement and the payment of $13 million to the federal government in July 2006. The settlement did not involve the admission of liability or acknowledgement of wrongdoing. As part of the settlement with the United States Department of Health and Human Services, Office of Inspector General, Odyssey Healthcare entered into a corporate integrity agreement (CIA) for five years. Ody 4 at 32. According to Odyssey Healthcare, the federal investigation allowed Odyssey Healthcare to self- audit to ensure compliance with the Medicare conditions for participation followed by an outside verification agency. The federal investigation was not related to quality of care issues. Medicare CAP problems result from longer patient stays that are not balanced by shorter patient stays, thus leading to increased overall revenue per patient. Medicare CAP limitations have been a problem for the hospice industry at large because they place a ceiling on the overall Medicare revenue per patient that a hospice may receive. Odyssey Healthcare's Medicare CAP liability increased from approximately 2 million dollars in 2004 to approximately 12 million dollars in 2005 to approximately 16 million dollars in 2006, but lower in 2007. Odyssey Healthcare has plans in place to reduce its Medicare CAP exposure that may have negative short-term affects. Odyssey Healthcare's net income declined significantly from 2004 to 2006. The decline is due in part to Medicare CAP limitations. Regency has had one cap repayment ($670,000, T 201) and United has had none. United United Hospice of West Florida, Inc. (United) is a wholly-owned subsidiary of United Hospice, Inc. (UH), which, in turn, is a wholly-owned subsidiary of United Health Services, Inc. (UHS) commonly known as UHS-Pruitt. UH is an existing provider of hospice services in Georgia, South Carolina, and North Carolina. UHS has also established a not-for-profit foundation, which offers the public and professional community information and assistance regarding end of life care and planning. UHS-Pruitt was founded in 1969 as a nursing home company and has expanded to become a comprehensive long-term care provider in Georgia, South Carolina, North Carolina, and Florida. UHS-Pruitt provides several services including nursing homes, hospices, assisted living facilities, pharmacy services, medical supplies, durable medical equipment, outpatient rehabilitation, adult day care, and home health services. UHS-Pruitt currently has a 120-bed skilled nursing facility (Santa Rosa Heritage, operated by United Hospice, Inc.), pharmacy services, rehabilitation office (including therapy programs), durable medical equipment, located in Milton, Santa Rosa County, Florida. UHS-Pruitt has approximately 8,000 employees in all of its programs. The main focus of United Hospice, Inc. and UHS-Pruitt has been the nursing home business, with additional product lines developed as an adjunct to the delivery of nursing home services as noted herein. United Hospice Foundation was established to educate individuals about hospice services and end-of-life decision making. The foundation provides training and educational programs to both the professional and the lay community regarding these subjects. The foundation is operated independently from the for-profit portions of UHS-Pruitt. UHS-Pruitt by and through United Hospice, Inc. for the most began providing hospice services in 1993 and offers hospice programs in approximately 13 to 20 locations in Georgia, North Carolina, and South Carolina, with the vast majority of the programs in Georgia. The hospice programs were start-up programs, not acquisitions. There is evidence that approximately 40 to 42 percent of United Hospice, Inc.'s hospice patients reside in company owned nursing homes. United Hospice, Inc. opened one or more new hospice program each year during the past several years and is internally discussing three new hospices "[t]hrough pure development, as opposed to acquisition." Overview of Hospice Services In Florida, a hospice program is required to provide a continuum of palliative and supportive care for terminally ill patients and their family. A terminally ill patient has a medical prognosis that his or her life expectancy is one year or less if the illness runs its normal course. §§ 400.601(3) and (8), Fla. Stat. Under the Medicare program administered by the federal government, a terminally ill patient is a person who has a life expectancy of six months or less. Hospice services must be available 24 hours a day, 7 days a week, and must include certain core services, such as nursing services, social work services, pastoral or counseling services, dietary counseling, and bereavement counseling services. Physician services may be provided by the hospice directly or through contract. § 400.609(1)(a), Fla. Stat. Hospice care and services provided in a private home shall be the primary form of care. Hospice care and services may be provided by the hospice to a patient living in an assisted living facility, adult family-care home, nursing home, hospice residential unit or facility, or other non-domestic place of permanent or temporary residence. The inpatient component of care is a short-term adjunct to hospice home care and hospice residential care and shall be used only for pain control, symptom management, or respite care. The hospice bereavement program must be a comprehensive program, under professional supervision, that provides a continuum of formal and informal support of services to the family for a minimum of one year after the patient's death. §§ 400.609(1)- (5), Fla. Stat. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a dying patient and their family. Hospice care provides palliative care as opposed to curative care, with the focus of treatment centering on palliative care and comfort measures. Hospice care is provided pursuant to a plan of care that is developed by an interdisciplinary team consisting of, e.g., physicians, nurses, social workers, counselors, including chaplains. There are four levels of service of hospice care: routine home care, continuous care, general inpatient care, and respite care. Generally, hospice routine home care is the vast majority of patient days and respite care is typically a very minor percentage of days. Continuous care is basically emergency room type or crisis care that can be provided in a home care setting or in any setting where the patient resides. Continuous care is provided for short amounts of time usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. The inpatient level of care provides the intensive level of care within a hospital setting, a skilled nursing unit, or in a free-standing hospice inpatient unit. Respite care is generally designed for caregiver relief. Medicare reimburses different levels of care at different rates. Approximately 85 to 90 percent of hospice care is Medicare related. There are certain services required by specific patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are other more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be indicated for severe pain control and symptom control. Each applicant proposes to provide hospice patients with the all of the core services and many of the other services mentioned above. However, there are several distinctions among the applicants which are discussed later. Regency's LOI and CON Application Prior to the final hearing, Odyssey and United filed separate motions requesting entry of an order dismissing Regency's petition and CON application. Odyssey and United argue that Regency Hospice of Northwest Florida, LLC's initial LOI and shell CON application were defective because only a corporation, not a limited liability company, authorized to do business in Florida on the date these documents were filed, can be a viable applicant to provide hospice services in Florida. As a result, the Agency should have rejected the LOI and shell CON application because Regency LLC was not an existing corporation on the date the LOI and shell CON application were filed contrary to Florida law. The following findings of fact relate to this issue. On November 2, 2006, Regency Hospice of Northwest Florida, LLC was formed as a Delaware limited liability company for the purpose of pursuing approval of a CON to provide for a new hospice program in Florida. (Regency LLC was 100 percent owned by RHG and did not differ in structure from Regency, except for the difference in entity status.) On November 3, 2006, the Florida Secretary of State certified that Regency LLC was properly registered to conduct business in Florida on November 3, 2006. In October 2006, Odyssey and United filed separate LOIs. By Agency rule, these filings created a grace period for filing additional LOIs. During the grace period, on November 7, 2006, Regency LLC filed a LOI to establish a new hospice program in Service Area 1. On November 9, 2006, the Agency issued a letter to Regency LLC, accepting the LOI. On November 22, 2006, Regency LLC filed its initial shell application with the Agency. The initial CON application consisted of two pages. Reg 7; T 118. Thereafter, Odyssey advised the Agency that Regency LLC's CON application should be withdrawn from further consideration because the applicant entity, Regency LLC, was not a corporation under Florida law, but was instead a limited liability company. On November 28, 2006, the Agency notified Regency LLC that it was withdrawing Regency LLC's CON application for consideration on the basis that Regency LLC was a limited liability company, rather than a corporation. On November 29, 2006, a certificate of incorporation was filed on behalf of Regency Hospice of Northwest Florida, Inc., with the State of Delaware. A certificate of conversion was filed converting the limited liability company to a corporation, i.e., Regency Hospice of Northwest Florida, LLC to Regency Hospice of Northwest Florida, Inc. On December 5, 2006, a certificate of conversion and articles of incorporation were filed on behalf of Regency Hospice of Northwest Florida, Inc. with the Florida Secretary of State. The Florida Secretary of State issued a document stating in part: "The Certificate of Conversion and Articles of Incorporation were filed December 5, 2006, with an organizational date deemed effective November 2, 2006, for REGENCY HOSPICE OF NORTHWEST FLORIDA, INC., the resulting Florida corporation." On October 24, 2007, the Florida Secretary of State certified that Regency Hospice of Northwest Florida, Inc. "is a corporation organized under the laws of the State of Florida, filed on December 5, 2006, effective November 2, 2006." (emphasis added). On December 11, 2006, Regency Hospice of Northwest Florida, Inc., filed a formal petition (by letter) requesting a hearing in connection with the Agency's prior notice indicating withdrawal of the CON application. On or about December 21, 2006, a settlement agreement was reached among representatives of the Agency and Regency Hospice of Northwest Florida, LLC and "now known as" Regency Hospice of Northwest Florida, Inc. The Agency agreed to accept a timely filed and complete CON application by Regency Hospice of Northwest Florida, Inc. The Agency was persuaded that Regency was a proper applicant in light of its conversion from Regency LLC to Regency. On or before December 27, 2006, Regency, Odyssey, and United timely filed their completed CON applications, also known as the omissions responses. In particular, the president and CEO of Regency executed the "certification by the applicant," Schedule D-1, which stated in part: "I certify that the applicant for this project will license and operate the health services, programs, or beds described in this application." Reg 7 at Schedule D-1, p. 9. On January 9, 2007, the Agency adopted and approved the settlement agreement by entry of a Final Order. On January 12, 2007, the Agency published its decision in the Florida Administrative Weekly to accept the Regency Hospice of Northwest Florida, Inc., CON application. On January 16, 2007, the Agency advised Odyssey of the final Agency's decision to accept Regency's CON application. On February 5, 2007, Odyssey filed a petition to challenge the Agency's decision to accept Regency's CON application. On April 19, 2007, the Agency partially granted the Agency's own motion to dismiss "to the extent that the Petition is dismissed as moot and due to the fact that the Petitioner did not have standing to file the Petition at the time it was filed." In essence, the Agency decided that because Odyssey had already filed a petition to challenge the Agency's preliminary decision to deny its CON application and the Agency approval of Regency's application, that the filing of that petition rendered the original petition to challenge the agency's decision to allow Regency of Northwest Florida, Inc. to submit a CON application moot.2 There is no evidence that Odyssey sought appellate review of the Agency's April 19, 2007, Final Order. On November 8, 2007, Odyssey filed a Motion for Summary Recommended Order seeking dismissal of Regency's CON application. A similar motion was filed by United on November 9, 2007. Regency, joined by the Agency, filed a response. On November 26, 2007, a hearing was held regarding the motions and all counsel were heard. After hearing argument of counsel, the motions were denied without prejudice. As a matter of fact, Regency Hospice of Northwest Florida, Inc. did not exist at the time the LOI and shell CON application were filed with the Agency. The LOI and the shell CON application were filed on behalf of Regency Hospice of Northwest Florida, LLC that was not a corporation authorized to do business in the State of Florida and not eligible at that time to file a LOI or CON application to provide a new hospice program. Whether Regency Hospice of Northwest Florida, Inc., formed after the LOI and shell CON application were filed, is a viable applicant turns on whether the "conversion" statutes apply, or if not, whether the 'forgiveness clause,' Section 408.039(5)(d), Florida Statutes, applies. For the reasons stated in the Conclusions of Law, the issues regarding Regency's corporate status, while novel, are resolved in Regency's favor. Fixed need pool Pursuant to its numeric need methodology, the Agency published a fixed need pool or a numeric need for one new hospice program in Service Area 1 for the second batching cycle of 2006. In forecasting need under the rule methodology, the Agency uses the historical average three-year death rate. It applies it against the forecasted population two years out or for a two-year planning horizon, in this case January 2008. The projected first year of operation for a new provider in this case is 2008. Then, the Agency uses the statewide penetration rate, which is the number of hospice admissions divided by hospice deaths. The penetration rate is also considered a use rate in other health care arenas, but in hospice it is generally referred to as a penetration rate. The statewide average penetration rate is subdivided into four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65. The projected hospice admissions in each category are then compared to the most recent published actual admissions to determine the number of projected un-met admissions in each category. If the total un-met admissions in all categories exceeds 350, the need for a new hospice is shown, unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for less than two years. According to the Agency's fixed need pool methodology, the net un-met need for hospice's admissions in Service Area 1 is 450 additional hospice admissions in 2008. Among the four categories, there is a higher need projected among non-cancer patients. The percentage of non- cancer patients can vary from community to community and a hospice patient's admissions will likely reflect that local decedent population. (Historically, for RHG hospice operations, approximately 62 percent of the admissions were non-cancer diagnoses and 38 percent were cancer diagnoses, whereas Odyssey Healthcare's overall hospice experience is approximately 68 percent non-cancer and 32 percent cancer and UHS's experience is approximately 64 percent non-cancer and 36 percent cancer.) Demographics of Service Area 1 AHCA Service Area 1 consists of four counties: Escambia, Santa Rosa, Okaloosa, and Walton Counties, located in the northwest portion of the Florida panhandle. Geographically, the service area is large. It spans from the Florida-Alabama border on the west in Escambia County to the eastern border of Walton County over 100 miles away. The July 2006 population estimates for Service Area 1 indicate that the total population was approximately 700,000 with the four counties having the following population: Escambia (303,578); Santa Rosa County (140,988); Okaloosa County (193,298); and Walton County (56,900). In the most recent calendar year, there were 5,800 deaths in the service area and 6,400 deaths per year projected in the two-year planning horizon. The largest population center is Escambia County (and the city of Pensacola) followed by Okaloosa, Santa Rosa, and Walton Counties. Walton County is the fastest growing county, which experienced 40 percent growth in the last six years followed by Santa Rosa with approximately 20 percent growth. Overall, the service area grew approximately 11 to 12 percent. When Escambia County is excluded, the service area grew approximately 19-20 percent for the three eastern counties. Between 2006 and 2011, Santa Rosa County is projected to grow by approximately 16 percent and Walton County by approximately 20 percent. Service Area 1 has two major east-west arteries, with the I-10 corridor cross the central and more northern portion of the service area, and U.S. Highway 98 running along the coastal beach communities. There are 13 hospitals, 27 nursing homes, and two existing hospice providers in Service Area 1. The two existing hospice providers are Covenant Hospice and Hospice of the Emerald Coast. Covenant Hospice currently has its headquarters in Pensacola, Escambia County, and satellite offices in Milton, Santa Rosa County and Crestview and Niceville in Okaloosa County. It appears that Emerald Coast has its headquarters in Pensacola and a satellite office in Crestview. The existing hospice providers do not have offices in Walton County and neither has an office in Fort Walton Beach along the coast in Okaloosa County. Currently, Covenant Hospice provides approximately 86 percent of the hospice care in Service Area 1 followed by Emerald Coast providing approximately 14 percent of the hospice services. Emerald Coast does not serve hospice patients without primary caregivers. Based upon the 2,000 U.S. Census, the population of the State of Florida is 65.4 percent White; 14.6 percent African-American; 16.8 percent Hispanic; and 3.2 percent in the other category. With respect to Escambia, Santa Rosa, Okaloosa, and Walton Counties, the percentages of African-Americans, Hispanics, and others are as follows: Escambia (21.4 percent African-American, 2.7 percent Hispanic, and 5.0 percent other; Santa Rosa (4.2 percent African-American, 2.5 percent Hispanic, and 4.2 percent other; Okaloosa (9.1 percent African-American, 4.3 percent Hispanic, and 5.6 percent other); and Walton County (7.0 percent African-American, 2.2 percent Hispanic, and 3.5 percent other). The Hispanic population in Service Area 1 is low relative to the State of Florida, although it is projected to grow. On a percentage basis by county, the African-American population is lower than the statewide percentage, except Escambia County, which also has the largest population of the four counties in Service Area 1. The proposals Regency's proposal Regency proposes to establish its new hospice program with the immediate opening of three offices at commencement of operations in Pensacola, Escambia County; along the coast in Fort Walton Beach, Okaloosa County; and along the I-10 corridor in De Funiak Springs, Walton County. In its CON application, Regency projected the number of admissions in years one and two, 2008 and 2009, 242 and 496, respectively. With the projected average length of stay (ALOS) 60 days in year one and 80 days in year two, the overall projected patient days were 14,543 in year one and 39,686 in year two. The ALOS projections were demonstrated to be consistent with other Florida hospice start-up operations. The resulting total average daily census (ADC) from the proposed three office locations is 40 in year one growing to 108 in year two, with continuing growth thereafter. The Regency projections appear to be reasonable and achievable. Regency projects that it can open all three offices for $195,745. Odyssey suggests that Regency has impermissibly amended its CON application by describing proposed programs and services in great detail during the final hearing that were minimally, at best, discussed in Regency's CON application, including the omissions responses. See Odyssey's PRO at 44-52. In its CON application, Regency notes that it is a subsidiary Regency Healthcare Group, LLC, which offers hospice services in three states, Alabama, Georgia, and South Carolina. Regency described the corporate structure, including the entities operating in these states. Regency is also affiliated with two non-profit foundations, which accept donations and provide support to their hospice programs. Regency places heavy reliance on the experience of the existing hospice programs in Alabama, Georgia, and South Carolina. In its CON application, Regency lists several types of programs currently offered. For example, the Regency Hospice/New Beacon programs have a full-time pharmacist (Pharm. D.) on staff to assist their teams. Regency lists the services that its staff will directly provide and provide through contractual arrangements. Reg 7 at 33-34. (Regency [and United] mention providing dietary services through contractual arrangements, but the service is required to be provide by staff. AHCA 1 at 17.) Regency mentions that it will sponsor community education programs. Id. at 16. Regency also lists several non-reimburseable services provided by its affiliated hospice programs such as bereavement (for at last 12 months (13 months according to hearing testimony) following death of the patient) and chaplain services, the recruitment, training, and supervision of volunteers, hospice care for the medically indigent, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities for needy patients. See Reg 7 at 2, 25, and 26. On page 12 of its CON application, Regency notes that for the year ending October 31, 2006, Regency affiliated hospice programs rendered 18.4 percent of total days of care to African- Americans and that "Regency will focus on this population as an outreach group since it is a significant part of the population of Service Area 1. This is particularly the case in Escambia County, which has the largest population, and African-Americans may be an underserved group." Regency mentions a potentially unmet need in Walton County and commits to opening an office in De Funiak Springs to serve the rural areas of the county. Id. at 23-25. Regency commits to providing care to persons without caregivers. Id. In several places in its CON application, Regency references continuous care generically, id. at 5-6, and based on the experience of Regency's affiliated hospice programs in other markets and expectations for the start-up of a new program, Regency projects patient days for continuous home care, routine home care, inpatient respite care, and general inpatient care. Id. at 32. On Schedule 7A, Regency has a line dedicated for continuous care as part of its revenue projections and also Schedule 8A provides for an expense for continuous care for years one and two. Id. at 27-28, 30, and 32. (Regency proposes 1.46 percent of continuous case; Odyssey, 1.33 percent; and United, a negligible amount.) During the final hearing, Regency expounded on these services. For example, there was testimony that as part of the "flower ministry," Regency expects to offer a Christmas tree program. It appears that the flower ministry and Christmas tree programs are local programs within the Birmingham, Alabama, area, spearheaded by a volunteer. It does not appear that Regency presently provides this service on a corporate-wide basis, although there is some intent to do so - it would depend on the leadership of their volunteers. See T 125-126, 142, 368, 537; Reg 83. In its CON application, Regency notes at page 32 that "[t]rained volunteers will provide important services by helping families and loved ones care for patients, by raising funds to support hospice services, and by performing administrative report functions." One witness, Ms. Acton, testified that her testimony was limited to the volunteer program in Jefferson County. Regency included letters of support in the deposition testimony of Richard Mason, Reg 79, indicating that Regency would be able to establish inpatient programs at the three Sea Crest nursing homes in Service Area 1 in Pensacola, Destin, and Crestview. (There is no affiliation between Sea Crest and RHG or its subsidiaries, except for two minority investors in Sea Crest who are also investors in RHG.) Overall, Regency's CON application mentions, although not in elaborate detail, the programmatic aspects of its proposal that were discussed in much more detail during the final hearing. United's proposal United proposes to establish a new hospice program in Service Area 1 with the headquarters in Milton, Santa Rosa County, Florida. It intends to open its first satellite office in Walton County when market forces indicate that it would be more efficient to have another office. United plans to have a dedicated hospice team located in Walton County to ensure access to services to the Walton County residences. United also proposes to have inpatient arrangements at its sister-facility in Milton as well as at nursing homes in Okaloosa and Walton Counties. United included letters of support from all three nursing homes indicating that it would be able to establish the proposed inpatient sites. In its CON application and during the final hearing, United provided a detailed discussion of hospice services it will offer. United is projecting project costs of $336,467. United Hospice of West Florida, Inc.'s parent is UHS- Pruitt, whose principle business appears to be the nursing home business. UHS-Pruitt also has a number of operating subsidiaries that appear to supply or enhance those nursing homes with physical therapy or pharmacy services. In its CON application, United focuses on minority outreach to the Hispanic population in the service area. As noted herein, the population of Hispanics in the service area is quite low compared to the statewide average. In its CON application, United projected that it would achieve 264 admissions in year one and 454 admissions in year two. United applied a median length of stay of 27 days to arrive at its projection of 7,185 patient days in year one and 12,061 patient days in year two. United's admissions and average daily census ramp up through the end of year one and then remain flat showing no growth throughout the second year of operation. United's projections appear to be reasonable and achievable. Odyssey's proposal Odyssey proposes to initiate hospice services by opening an office in Pensacola, Escambia County. In the final quarter of year two, Odyssey proposes to open a second office in Okaloosa County, and an office in Walton County in year three. Within six months following the opening of the Walton County office, Odyssey plans to open a fourth office in Santa Rosa County. Odyssey projected 270 admissions in year one and 411 admissions in year two. Odyssey projected in its CON application that it would have an ALOS of 25 in year one and 50 in year two, resulting in total patient days of 6,750 in year one and 20,550 in year two. Odyssey's projections for routine care for year two are similar to the percentages proposed by United and Regency. Odyssey proposes less cancer, but more respite and non-cancer care than United and Regency. United proposes more inpatient care than Regency and Odyssey. Odyssey's projections appear to be reasonable and achievable. Odyssey anticipates that it will cost $464,720 to start its Escambia office. Odyssey Healthcare, through its not-for-profit affiliate, Hospice of the Palm Coast, currently operates two start-up hospice programs in Florida, Volusia County, with a satellite office in Flagler County, Florida, and one in Dade County, Florida, with a satellite office in Monroe County. Both programs are licensed and Medicare/Medicaid certified. Odyssey will benefit from the clinical experience, expertise, management resources, and financial strength of Odyssey Healthcare in implementing its program within Service Area 1. Odyssey start-up team has a group of experts located in Odyssey's Dallas support center. The team consists of designated experts from several departments including billing, human resources, clinical compliance, and IT. The team meets weekly and is responsible to support the start-up hospice programs. For Odyssey Healthcare, hospice care is delivered via an interdisciplinary team of caregivers who specialize in end- death-of-life care, including nurse care managers, physician, nurses, spiritual advises, bereavement coordinators, social workers, home health aides, and members of the patient's family. The manager of the team is an RN who addresses the needs of the patient and family and develops a specific plan of care with the physician. The RN case managers coordinate care with other team members while the patient's physician works with the Odyssey medical director and other team members to assure that all symptoms are controlled, pain managed, and the patient and family informed. Other members of the interdisciplinary team include a chaplain, home healthcare aide, social worker, trained volunteers, bereavement coordinator, on-call nursing team, and other specialists. The interdisciplinary team delivers these services in a context of Odyssey Healthcare's 14 service standards by focusing on admissions within three hours of a physician admission order. Odyssey Healthcare offers certain educational tools which will be implemented by Odyssey to furnish healthcare providers with information about non-cancer and cancer diagnoses of all types. Odyssey commits to spending $25,000 in its first year of operation for community outreach and marketing. Odyssey identified the African-American community as an underserved population in Service Area 1. Odyssey Healthcare operates in numerous locales where there are culturally diverse areas such as Miami/Dade County and El Paso, Texas, with high percentages of Hispanic population. Other Odyssey Healthcare hospice programs have also reached out to African-American communities in Memphis, Tennessee, and Charleston, North Carolina. Odyssey's interdisciplinary teams are often made up of Hispanic or African-American medical directors, home health aides, social workers, priest, ministers, and nurses. Odyssey Healthcare has recreated a developmental model called community education representatives (CERs) to educate the community as to the benefits of hospice services and the services that are provided by Odyssey. These CERs are used to establish and develop referral sources in part. Odyssey Healthcare programs offer extensive bereavement programs (for 13 months after the death of the patient) as part of the core Medicare services it provides. Odyssey Healthcare operates hospice programs in Birmingham, Montgomery, and Mobile, Alabama. The Mobile program is in Baldwin County, which is contiguous to the Pensacola, Escambia County, an area Odyssey proposes to serve. Odyssey Healthcare's Mobile, Alabama, hospice program has an inpatient agreement with Providence Hospital in Mobile, Alabama, which has a related facility, Sacred Heart Hospital, in Pensacola, Florida, which has the same parent organization. Odyssey will benefit from Odyssey Healthcare's resources and experience with respect to start-ups as well as centralized services such as accounting, centralized billing, and training. All other benefits include the size of Odyssey Healthcare, comprehensive scope of hospice services, service standards, staff education including palliative care center vocation, commitment to education, and investment and technology. Odyssey Healthcare has internally developed an in- house pharmaceutical system called Hospice Pharmaceutical Services (HPS). HPS is a separate company and not a wholly- owned subsidiary of Odyssey Healthcare. HPS provides services 24 hours a day, 7 days a week, including pre-admission consultations on referrals. HPS hotline is housed in the Dallas Odyssey Healthcare corporate office and is staffed by a Pharm. D., a pharmacist, and seven hospice certified RNs and at least two on-call nurses who cover the pharmacy system 24/7. The HPS staff is available to the attending physician and to the local hospice nursing staff when needed. Odyssey included several letters of support in its CON Application. Statutory and Rule Review Criteria Rule Preferences The Agency is required to give preference to an applicant meeting one or more of the criteria specified in Florida Administrative Code Rule 59C-1.0355(4)(e)1.-5. The first preference is for an applicant who has a commitment to service populations with unmet needs. Each of the applicants identified population groups they believe to have unmet needs. Hospice patients can be viewed as consisting of four basic categories: cancer patients under age 65; cancer patients age 65 and older; non-cancer patients under age 65; and non- cancer patients age 65 and older. (This is the breakdown of hospice patients used by the Agency in its need methodology.) It appears that the largest underserved group of these four is the under age 65 non-cancer patients, followed by the non-cancer patients age 65 and older and cancer patients age 65 and older. The only over-served group was the cancer patients under the age 65. All applicants stated a commitment to serve non-cancer patients. However, only Odyssey and United identified this group as an underserved group and provided evidence concerning how they would meet the needs of this group. Historically, RHG hospice programs have provided approximately 62 percent of its patient care to non-cancer patients; whereas UHS has provided approximately 64 percent, followed by Odyssey Healthcare at approximately 68 percent. One witness suggested that a range of 35 to 50 percent was reasonable, although there are factors that affect the range such as age of the program. Regency and Odyssey identified African-Americans as a traditionally underserved group. However, while it is possible to extract the percent of the population by race group in the service area, neither applicant presented any concrete data to show that existing providers in the service area are failing to meet the demands of the African-American population or that this population group is underserved by the existing providers. The percentage of African-Americans in Escambia County according to 2000 Census information was 21.4 percent; 4.2 percent in Santa Rosa County; 9.1 percent in Okaloosa County; and 7.0 percent in Walton County. Regency stated that it "will focus on this population as an outreach group since it is a significant part of the population of Service Area 1." Reg 7 at Odyssey stated that African-Americans in the service area would benefit from Odyssey's experience. See Ody 1 at (bates stamp) 46, 59 and 74. United does not discriminate against individuals based upon ethnicity or for any other reason and it historically provides care to minorities. Both of the existing providers have offices in Escambia County and Regency and Odyssey both propose offices in this county. Odyssey presented data claiming that RHG hospice programs did a below average job in outreach and service to the African-American communities in areas served by RHG. The analysis was flawed in part because it compares the statewide experiences of RHG and Odyssey Healthcare based upon the operations in different local communities (e.g. rural versus urban) that can have different demographic compositions. Overall, the evidence indicates that RHG and Odyssey Healthcare have demonstrated a record of doing a credible job of outreach and service to the African-American community. All applicants agreed that providing continuous care services is an important level of service for hospice patients. In Service Area 1, continuous care accounts for only 0.6 percent of patient days; whereas the national and Florida averages are four and two percent, respectively. As noted herein, Regency and Odyssey propose a specific percent of continuous care, 1.46 and 1.33 percent, respectively, and United projects a negligible amount, see United 1 at Schedule 7A, although United proposes to provide the service. United identified patients without caregivers as an underserved population because Hospice of the Emerald Coast does not accept these patients. All three applicants will serve this population. United identified Hispanics as a population with unmet needs. Service Area 1 has the lowest percent of total population that is Hispanic of all of AHCA's service areas, although there is projected growth. In calendar year 2006, there were 59 Hispanic deaths out of 5,821 deaths in Service Area 1 or approximately one percent. In Santa Rosa County, where United plans to initially open its sole office, there were approximately seven Hispanic deaths in 2006. It was estimated that a little more than 20 Hispanics would use hospice services in the service area per year. Regency and Odyssey deserve preference under this subsection and United to a lesser degree. The second preference shall be given to an applicant who proposes to provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities, unless the applicant demonstrates a more cost-effective alternative. Each of the applicants proposes to serve inpatients through contractual arrangements. No applicant is proposing a freestanding inpatient unit. Through its related skilled nursing facility in Santa Rosa County, United has an existing relationship with a health care facility that will be used to provide inpatient care. United did not include all of the room and board expenses for Medicaid nursing home patients in its financial projections. United provided unauthenticated letters of support to demonstrate that it will be able to offer inpatient services in Santa Rosa, Okaloosa, and Walton Counties. United expects to offer only one office (primary headquarters) in Santa Rosa County that would serve the four- county service area. United expects to establish working teams in the other counties. Regency does not have any directly affiliated inpatient providers. However, Regency has commitments to enter inpatient contracts with, among other facilities, three nursing homes operated by Sea Crest Management through mutual investors. These nursing homes are located in Destin and Crestview in Okaloosa County, and Pensacola in Escambia County. Regency also has a commitment from Healthmark Hospital in De Funiak Springs, Walton County. Although Odyssey did not include any letters of support from any potential inpatient service locations in its original CON application, it stated that it will contract with acute care providers and skilled nursing home facilities in the service area. (Odyssey's CON applications have general letters of support of its application.) At hearing, Odyssey provided letters of support from area nursing homes, including a memorandum of understanding from the administrator of Southern Oaks Nursing Home in Pensacola, a 210-bed facility, indicating a willingness to provide inpatient services for Odyssey patients. Each applicant can be expected to contract for inpatient services and satisfy this preference. The third preference shall be given to an applicant who has a commitment to service patients who do not have primary caregivers at home; the homeless; and patients with AIDS. Each of the applicants presented evidence demonstrating a history and commitment to serve such patients and have in place programs and policies to ensure that such services are provided. The fourth preference provides: "In the case of proposals for a hospice service area comprised of three or more counties, preference shall be given to an applicant who has a commitment to establish a physical presence in an underserved county or counties." The two Service Area 1 existing hospice providers have their headquarter offices in Escambia County and there are currently satellite offices in Santa Rosa and Okaloosa Counties. There are no offices in Walton County, which is the smallest county of the four by population, 56,900 or approximately eight percent in 2006, but with the highest projected growth, 16,299, by percent, approximately 40 percent. Regency plans to open an office in Escambia and Walton Counties and an additional office in Fort Walton Beach along the Okaloosa County coastal area where neither existing providers have a current office location. Regency proposes the widest geographic coverage of offices of the three applicants, although the Escambia County office would add little. Its Walton County office would make it the only service provider with an office in that county. Odyssey plans to initially open an office in Escambia County and open an additional office in Okaloosa County starting toward the end of the second year of operation. Odyssey plans to open an office in Walton County in its third year of operation and a fourth office in Santa Rosa County six months thereafter. United proposes to open an office initially in Milton, Santa Rosa County. United proposes to have a dedicated hospice team in Walton County. No persuasive evidence was presented that residents of Walton County (or any other county in the service area) do not have access to hospice services or are actually underserved. The fifth and final preference provides: "Preference shall be given to an applicant who proposes to provide services that are not specifically covered by private insurance, Medicaid, or Medicare." All of the applicants meet this preference. Odyssey identifies several proposed services such as bereavement, pet, message, aroma, and music therapy, dialysis, palliative radiation, and palliative chemotherapy. United identifies similar services, although United provides bereavement coordination through either a social worker or chaplains. United does not allocate a specific position exclusively for bereavement. Regency identifies similar services such as bereavement following death, chaplain services, recruitment and training of volunteers, flower and music ministries, and assistance with utility bills, food, clothing, and other necessities. (The bereavement services offered, as well as policies and procedures used by RHG's hospice programs, are similar.) Bereavement and volunteer services are not specifically reimbursed by Medicare, but they are conditions of participation. The State of Florida requires all hospice providers to serve indigent patients and the applicants agree to provide hospice services to all regardless of their ability to pay. § 400.6095(1), Fla. Stat. The applicants have established charitable foundations to provide assistance to the medically needy for services that Medicare does not reimburse. Consistency with Plans; Letters of Support Florida Administrative Code Rule 59C-1.0355(5) requires consideration of the applications in light of the local and state health plans. The local health council plans are no longer a factor in this proceeding. Each applicant provided letters of support ranging from three for Regency; approximately 20 for Odyssey; and 161 for United. Statutory Review Criteria Section 408.035(2), Florida Statutes - availability, quality of care, accessibility, and extent of Utilization The Agency published a fixed need for one additional hospice in the service area. See § 408.035(1), Fla. Stat. There is no persuasive evidence to rebut the presumption of need and all parties concur there is a need for one new hospice. The service area is served by two hospice providers: Hospice of the Emerald Coast with a market share of 14 percent and Covenant Hospice with a market share of 86 percent. The extent of utilization of the two providers results in the projection for unmet need of 450 hospice admissions in 2008 growing to an unmet need of 507 admissions in 2009. Regency, United, and Odyssey projected the following admissions for their respective second year or operation (2009): 496, 454, and 411. Each applicant can reasonably meet the projected need in conjunction with the existing providers. Neither of the current providers has offices located in Walton County or in the Fort Walton Beach coastal communities. Regency plans to locate offices in these areas, which may improve accessibility. Odyssey proposes to serve Walton County from its Pensacola office until it opens a Walton County office. United proposes to meet the needs in Walton County by establishing a dedicated hospice team there and by establishing an inpatient treatment center at an existing nursing home. Aside from the numeric need projections, there is no persuasive evidence that any geographic portion of the service area or any discreet population category, such as African- Americans, Hispanic, or by age and cancer versus non-cancer groups, needing hospice services are truly underserved, although there is evidence that there are some gaps in services for the existing hospice providers when compared to statewide numbers of hospice use. Section 408.035(3), Florida Statutes - ability to provide quality of care and record of providing quality of care Each applicant has a history of providing quality hospice services. Each applicant has reported overall good responses on patient and family satisfaction surveys. Each applicant proposes to provide a broad array of hospice services to all persons regardless of their ability to pay. It is expected that each applicant will continue to provide quality of hospice services as they have in their existing programs. Each applicant will staff its hospice programs according to national guidelines. Regency proposes to staff its program with nurses on a ratio of one nurse for every ten patients as opposed to the ratio of one nurse for every 12 patients (the National Hospice and Palliative Care Organization [NHPCO] standard) proposed by Odyssey and United. Regency proposes more home visits per week (five-to- six hours per week) and more direct care hours as a percent of total staff hours than Odyssey and United. (The national average is four visits per week.) Regency and Odyssey have developed service standards. All of the applicants propose to offer similar hospice services that are discussed herein. There is evidence that Regency, in its Birmingham program, accepts medically complex patients when other providers may not. There is no evidence that any Regency or United hospice program has been cited for conditional level deficiencies, whereas Odyssey has been cited in approximately three programs, although the specifics and severity of each deficiency is unclear. It appears the deficiencies have been cleared. T 1244-1252. Odyssey also operates under a CIA, unrelated to any quality of care concerns. RHG has a Doctor of Pharmacy (Pharm. D.) on staff who is experienced in hospice and palliative care pharmacy issues. Dr. Blodgett makes regular visits to the offices in Alabama and at least quarterly visits to each of RHG hospice programs in Georgia and South Carolina; participates in IDT meetings, quarterly in South Carolina and Georgia and on a regular basis in Alabama; and is available for consultations on a regular basis. Dr. Blodgett averages between four to five home visits while working for New Beacon in Alabama. She has not made house calls yet in Georgia and South Carolina, although she consults with nurses in those areas and provides training for the hospice staff. Having a Pharm. D. on staff is advantageous for a hospice program. Dr. Blodgett recounted several representative events when she was able to directly assist a patient in dire straits. Dr. Blodgett currently oversees all of Regency's local hospice operations in Alabama, Georgia, and South Carolina with a combined average daily census of 900 to 1,000 patients, roughly 600 at New Beacon and 350 at Regency Hospice. RHG contracts for pharmacy services when Dr. Blodgett is unavailable. Odyssey provides pharmacy services through a consulting contract arrangement with a specialized pharmacy that is co-located with odyssey at its Dallas, Texas, headquarters. The consulting pharmacy has a Pharm. D. and a pharmacist on staff to provide consulting services to Odyssey's programs. The Pharm D. does not provide home visits. UHS-Pruitt has a subsidiary company, United Pharmacy Services, headed by a Pharm. D., which provides pharmacy services to the company's long term nursing home facilities, including its affiliated nursing home in Santa Rosa County. Fifty percent of United Pharmacy Services business is unrelated to UHS. The Pharm. D. is not responsible for oversight of the hospice operations. There are two licensed pharmacists who are not Pharm. D.'s within United Pharmacy Services who provide training for hospice staff and provide consulting services as needed 24/7. As a normal practice, they do not provide medications for hospice patients who at home. They consult on every hospice admission. Odyssey Healthcare has operational experience in Florida with two hospice programs, beginning in 2004. No confirmed complaints have been reported by the Agency. (Regency and United do not operate hospice programs in Florida.) Odyssey also has contiguous hospice program across Perdido Bay in Alabama. Odyssey Healthcare operates 76 Medicare certified hospice programs (or seeking certification) in 30 states. Odyssey will adopt Odyssey Healthcare's quality and improvement plans and its operational policies and procedures. United has an existing relationships with related party providers, particularly its Milton nursing home in Service Area 1. The United family of health companies located there includes a skilled nursing home, pharmacy, durable medical equipment provider, and a therapy provider. These shared resources may increase efficiency for United's hospice program. It also provides United with local contacts with physicians, hospitals, and nursing homes. Of course, in time, it is reasonable that Regency and Odyssey would develop similar relationships, although having existing relationships is a plus for United. An issue was raised regarding the applicant's commitment to provide continuous care. For the second year of operation, Regency proposes 1.46 percent; Odyssey, 1.33 percent; and United, a negligible amount, although United expects to provide continuous care days as needed by its patients. Given its existing nursing home as a component of its corporate family, United naturally provides more services to patients in its nursing homes and nursing homes owned by others. Section 408.035(4), Florida Statutes - availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation Each of the applicants is a start-up company, relying on its parent organizations for financial and management strength. Each applicant has demonstrated sufficient resources to fund the start-up of a new hospice program. Controversies arose regarding when Regency and Odyssey would actually start-up operations following issuance of a CON and the amount each applicant allocated for start-up costs. Odyssey provided a start-up timeline in its application. The timeline assumes approximately six months from CON approval until Medicare certification. The timeline provides for approximately 60 days between licensure and Medicare certification. The timing of licensure and Medicare certification is imprecise at best. A provider is not entitled to reimbursement from Medicare until after certification. Operational expenses for treatment of patients between state licensure and Medicare certification would generally fall under start-up costs. Approximately three months prior to state licensure, Odyssey intends to hires a general manager who begins interviewing and hiring key staff. Other staff including the admission coordinator, RN, home health aide, dietician, social worker, and chaplain are hired in the third month. Odyssey projected its total project cost of $464,720 and total start-up costs of $350,000, with $240,000 allocated for salaries/benefits/taxes, over the six-month period from licensure approval until Medicare certification. (Odyssey exhibit 39 projects start-up expenses of $343,191.) Regency projected on Schedule 1 that its total project costs would be $195,745, with pre-opening staffing and recruitment costs of $36,500. Total start-up costs are projected at $60,000 for three offices. Mr. Morris joined RHG in February 2006. He is currently CEO for RHG and has experience with hospice programs. Subsequent to RHG's acquisitions, RHG started three hospice programs, one of which is a Medicare certified program in Augusta, Georgia, and two satellite offices. T 47, 50, 59-60, 62, 95-96. United projected on Schedule 1 that its total project costs would be $336,467, with total start-up costs at $57,257. According to Dr. Luke, if Odyssey's start-up model and time line is applied to Regency, i.e., month one is actual Medicare certification rather than licensure, Regency would need $543,408 in pre-opening expenses for the three offices it plans to open instead of $60,000 listed by Regency on Schedule 1. Odyssey also criticized United's projected start-up costs as too low based on Odyssey's six month start-up time line. United proposed it would hire most of its staff 30 days prior to licensure. United's vice president in charge of development who has started 15 to 20 hospice operations stated that it is a reasonable approach to hire, orient, and train staff one month prior to licensure. According to Dr. Luke, if Odyssey's start-up model and time line is applied to United, United would need $201,482 rather than $57,257 projected by United on Schedule 1. If month one is the month when United achieves licensure, then the start- up expenses would be $115,846 according to Dr. Luke. The persuasive evidence shows that Regency and United do not use the Odyssey start-up model and time line. Regency's pre-opening costs on Schedule 1 include only the pre-opening salaries prior to initial state licensure of the hospice rather than Odyssey's approach. The salary and wage expenses for Regency after initial licensure are included on its Schedule 8A projection of expenses, whereas it appears Odyssey started its Schedule 8A expenses on the date of Medicare certification. Dr. Luke agreed that this difference in approach would reduce his estimate of pre-opening expenses from $543,408 to $297,792. In other words, if Regency's month one, year one is licensure not certification, according to Dr. Luke, Regency's start-up expenses would be $297,792. Unlike Odyssey, Regency proposes to hire its local executive director one month prior to licensure. All of the additional patient care staff necessary to care for the low initial patient census in the first month of operation would also be hired and undergo training 30 days prior to licensure. Additional staff would be hired and start on day one of licensure and undergo training during the first month of operation while the patient census is in the ramp up stage. While Odyssey and Regency propose differing start-up models and time lines with differing hiring schedules and Regency's time line appears to be quite concentrated, both applicants have sophisticated parent company's who have experience with hospice operations, albeit that Odyssey has more experience than Regency or United with start-up hospice programs, especially in Florida where Regency and United have no experience and Odyssey has experience with two start-up hospice programs. (Regency has not done any start-up hospice programs in a state where either Regency or New Beacon had no presence, although it was noted by a witness that the markets were similar except for the CON process in Florida.) Like, Odyssey, United has start-up experience and given its time-line, its projected start-up costs are reasonable. The start-up costs and expenses projected by the applicants are reasonable, although it would appear the Regency's projected start-up costs may be overly optimistic. In any event, the parent organizations have sufficient funds to cover projected start-up costs and expenses. All of the applicants demonstrated they can recruit staff to adequately provide hospice services. Section 408.035(5), Florida Statutes - extent to which proposed services will enhance access to health care for residents of the service district There is a projected need for one additional hospice program in the service area. Approval of any of the applicants would enhance access to some degree and it is difficult to predict which applicant would enhance access the best. Regency proposes to open three offices immediately in Escambia, Okaloosa, and Walton Counties. Regency would have the only office offering hospice services located in Walton County. Covenant has an office in Niceville in Okaloosa County and not far from Fort Walton Beach, also a site proposed for a Regency office. The existing providers have their headquarters in Escambia County, also the location of Odyssey's headquarters and initial office. Thereafter, Odyssey plans to open offices in Okaloosa, Walton, and Santa Rosa Counties in this order. United plans to open its initial office in Santa Rosa County where its related nursing home is located. United plans to have dedicated hospice team in Walton County and perhaps a second office located there in the future. Of the three applicants, United would enhance access the least. The proposed office locations for Regency and to a lesser extent Odyssey would probably favor Regency rather than Odyssey, although it is one of degree. Some of the factors that favor Regency and Odyssey over United are: Regency and Odyssey expect to provide a specific percent of continuous care, 1.46 and 1.33, respectively; both project to serve more patients (by patient census) than United; both will focus efforts more on a service area wide basis than related nursing home patients in the case of United; and both will devote more FTEs for community hospice/education representatives and information materials than United. Section 408.035(6), Florida Statutes - immediate and long-term financial feasibility Short-term financial feasibility is considered to be the ability of an applicant to finance the start-up of operations. Each of the parent entities of the applicants has sufficient funds to finance the start-up of operations and, as a result, each applicant demonstrated immediate or short-term financial feasibility. Each of the financial projections relating to long- term financial feasibility submitted by the applicants has problems. There is no rule or statute that expressly defines long-term financial feasibility, notwithstanding the requirement that an applicant provide the Agency with detailed financial projections, including a statement of the projected revenues and expenses for the first two years of operation after completion of the proposed project. § 408.037(1)(b)3., Fla. Stat. The applicants provided financial projections for two years of operation. Thus, as identified by the applicants, long-term financial feasibility relates to whether an applicant has the ability to break even or show a profit by the end of the second year of operations. See generally T 1412, 1533. Regency's errors including typographical errors, admittedly small (the inclusion of Medicare revenue that would not be received for the first 45 days to two months of operation while the hospice program would not yet have Medicare certification), would not affect the projected long-term financial feasibility of its project. The errors affect the year one projections only and resulted in a projected write-off of approximately $31,000 or an increase to the projected loss of approximately $31,000. Regency shows a profit in year two. Also, regardless of whether Regency's projection of pre-opening expenses is reasonable or not, which it appears to be, Regency has adequate cash on hand to open its three proposed offices and the pre-opening expense if greater than projected is not likely to affect long-term financial feasibility. United's financial schedules contained an error by omitting the room and board expenses for Medicaid nursing home residents who receive hospice care. This failure to include the full cost of inpatient care would result in a shortfall in the pro forma of between $50,000 to $150,000 and potentially $373,000 in year two of operation. United also explained that it used a conservative number of patient days on its financial schedules. It is likely that if United had used a mean average length of stay rather than a median length of stay, the projected revenues would likely have increased although offset by increasing expenses. In other words, it would have increased the average daily census and thereby increased the revenues. Mr. Shull testified that he expected that the United proposal would be financially feasible in the long-term based on the experience in its other hospice programs. Odyssey's financial projections were the subject of focus by the applicants. See, e.g., Odyssey's PRO at paragraphs 53-55; Regency's PRO at paragraphs 203-210; and United's PRO at 43-45. On Schedule 6, an applicant sets forth its projected staffing for the project. When reporting full time equivalents (FTEs) for staffing, the Agency does not proscribe the specific format to be used. On its original Schedule 6 contained in the application, Odyssey set forth the number of year-end FTEs as opposed to using a weighted average of FTEs for the year. Regency suggested that, as a result of Odyssey's portrayal of staffing information, there was no link between Odyssey's Schedule 6A FTEs and salaries and the expense for staff's salaries and wages on Schedule 8A. Regency also contended that Odyssey did not account for staffing expenses associated with the provision of respite care and continuous care. Further, although Odyssey proposes to spend $25,000 in community outreach and marketing programs in its first two years of operation, that expense was not included in its pro forma projections. Odyssey prepared numerous exhibits, including revisions, that deal with these areas and various witnesses explained and offered rebuttal in response. Regarding the continuous care/respite issue, if appropriate revisions are made to Odyssey's pro forma, on paper, there is likely to be a projected net loss in year two of approximately $100,000. Odyssey proposes changing the 13.5 percent management fee that was included in the application to a seven percent management fee. Odyssey Healthcare's two not-for-profit Florida hospice entities are charged a seven percent management fee, similar to the fee it charges to other not-for-profit subsidiaries. Odyssey's proposed seven percent management fee is in line with the management fees proposed by Regency (7.2 percent) and United (6.3 percent). It appears reasonable to charge not-for-profit entities a lower fee because these entities would not be charged with the home office costs associated with various regulatory filings associated with being a publicly traded company. On the other hand, other than perhaps being a mistake, Odyssey's rationale for charging a different management fee for the applicant, a for-profit entity, T 1039, than other related for- profit entities is a departure from the norm. Changing the management fee and accounting for all of the adjustments to its financial schedules would result in Odyssey showing a year two profit of approximately $80,000. Section 408.035(7), Florida Statutes - extent to which proposal will foster competition that promotes quality and cost- effectiveness Approval of any of the applicants is likely to foster competition, thereby improving quality and cost-effectiveness in the service area, although there is no evidence that the current providers do not provide quality of care or are not cost- effective. Hospice services are not price competitive because Medicare pays a flat per diem rate to all providers in a given area and the vast majority of hospice patients are Medicare patients. Each provider has the ability to increase community awareness of available hospice services thus increasing the opportunity for increasing market penetration of all providers. United has existing linkages in the community that it serves through its related nursing home and other related companies. United's prospects of achieving cost-efficiencies and economies of scale are increased because of these relationships. Regency and Odyssey can also achieve similar efficiencies through their existing relationships with related entities. Having an office in a particular county such as Walton County, would most likely establish and promote a presence in the area that would be beneficial given its rural setting. However, it was not persuasively proven that opening more versus fewer offices in the short-term is more beneficial to the potential hospice patient pool from the standpoint of actually promoting cost-effectiveness and quality of care, although it does increase the physical presence of a hospice provider and give potential patients more choices. Section 408.035(8), Florida Statutes - costs and methods of construction, etc. None of the applicants are proposing construction as part of their hospice programs, thus, this criterion is not applicable. (Section 408.035(10), Florida Statutes, is also not applicable.) Section 408.035(9), Florida Statutes - the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent All of the applicants propose to serve all eligible patients without regard to ability to pay and have a history of providing patient care to the medically indigent. All of the applicants have allocated patient days to serving, e.g., Medicaid patients. Regency offered to provide 2.5 percent of patient days to the medically indigent as a condition on the CON. Odyssey and United did not offer a similar condition. However, the Agency states in the SAAR that "[b]ecause hospice programs are required to provide services to anyone seeking them, CON conditions are not necessary to ensure such care is given." AHCA 1 at 6. Ultimate findings of fact The Agency determined that there is a numeric need for one additional hospice program in the service area. On balance, each of the applicants satisfies the applicable statutory and rule criteria, although the projected long-term financial feasibility by year two on paper of United's proposal was not proven. This proceeding involves a close question. The Agency preliminarily approved Regency's application. The only evidence of the Agency's rationale for its position is stated in the SAAR, which does not include consideration of the facts presented in this de novo hearing. Each of the applicant's related entities has experience starting-up, owning, and operating hospice programs with Odyssey related entities operating two programs in Florida unlike Regency and United. Each applicant's related hospice entities provide a broad array of hospice services to all persons regardless of their ability to pay, race, severity of illness, or setting where hospice services need to be provided. Each applicant demonstrated a history of service, by related entities, to Medicaid and medically indigent patients. The residents of the service area would benefit regardless of which applicant is approved. The applicants are committed to community outreach and can be expected to heavily market their services. All of the applicants demonstrated that they will actively recruit needed personnel. United's presence in the service area may give United an edge with regard to recruitment, but if so, the edge is slight. Consistent with NHPCO standards, Odyssey and United propose a ratio of one nurse for every twelve patients. Regency proposes a better ratio: one nurse for every ten patients. Regency's Pharm. D., although spread thin given the number of hospice programs served by Regency's related entities in three states, is a positive feature. Despite correcting errors in its financial projections, Regency demonstrated financial feasibility in year two of operations and should receive a comparative advantage. Odyssey and United had problems with proving long-term financial feasibility. Odyssey, after revisions to its financial schedules and reducing the proposed management fee, demonstrated financial feasibility by year two. United can expect to have a loss in year 2, but like Odyssey, its parent organization has a strong financial position and is committed to the project such that it is likely to be financially feasible beyond year two. Regency expects to initially open three offices and, in particular, one in rural Walton County. Odyssey plans to open an office in each county within the service area, although staggered. United plans to open one office initially and takes a wait and see approach regarding opening other offices. The approach of United and to a much lesser extent Odyssey, require less overhead expense but is not necessarily appropriate given the need for an additional hospice services over a four-county area, although the need projection does not indicate which portion or portions of the service area need the additional program the most or where underserved persons may be located, although there are gaps in service. Regency should receive a slight advantage for proposing to offer slightly more continuous care than Odyssey and a greater advantage over United, which expects to provide the service, but did not allocate a specific percentage of care. United receives an edge given its established relationships in the service area by and through its related service providers. The United family includes a nursing home, pharmacy, durable medical equipment provider, and a therapy provider. It gives United the opportunity to share resources among programs to increase efficiency. Odyssey receives a plus given current operations in Florida and contiguous operations across Perdido Bay in Alabama. Odyssey Healthcare's prior problems with the federal government, Medicare cap issues, and unfavorable surveys detract from the overall positive features of Odyssey's proposal. Regency has had one Medicare cap issue. United does not share these problems. Overall, and in a tight comparative review hearing, the persuasive evidence favors Regency followed by Odyssey with United closely behind Odyssey.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered approving of Regency's CON No. 9971 and denying United's CON No. 9955 and Odyssey's CON No. 9954. DONE AND ENTERED this 30th day of April, 2008, in Tallahassee, Leon County, Florida. S CHARLES A. STAMPELOS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2008.
