The Issue The issue is whether Respondent should approve Petitioner’s Certificate of Need (CON) Application No. 9896 for the establishment of a hospice program in Marion County, Hospice Service Area 3B.
Findings Of Fact Hospice Generally Hospice/palliative care services are provided to patients after their disease process has progressed to point that there is no longer a cure for it. Hospice and palliative care consists primarily of comfort measures to improve the quality of life during life's end stages, including pain control for patients and bereavement counseling for families. The level of responsive care for each patient is individualized. Pursuant to a CON, hospices programs provide services in various settings, including a patient's home, a residential nursing facility, an assisted living facility (ALF), a hospital, or any other setting that the patient and his or her family desires. Hospice care is delivered via an interdisciplinary team of care givers. The team includes nurse care managers, physicians, nurses, spiritual advisors, bereavement coordinators, social workers, home health aides, and family members. The primary reimbursement mechanism for hospice services is through the federal Medicare reimbursement plan on a per diem basis. The four levels of care that are reimbursable under Medicare are as follows: (a) routine; (b) continuous; (c) inpatient; and (d) respite. Some commercial insurance programs, as well as Medicaid, will also reimburse for hospice services. All beneficiaries of Medicare Part A are entitled to hospice services. To obtain the benefit, two physicians must certify that a patient has a terminal prognosis of six months or less if the disease runs its normal course. Due to the fact that approximately 90 percent of reimbursement for hospice services is via Medicare, the price rates for hospice service are fixed, disallowing opportunity for individual hospice programs to compete for patients by adjusting prices. Instead, hospice programs compete on non-price competition factors such as quality of care, including responsive time to admissions, education, and the provision of non-covered services. The Parties HMC is a not-for-profit Florida corporation, originally licensed in 1983 as Ocala Hospice. HMC is the sole existing provider of hospice services in AHCA's Subdistrict 3B (Marion County). HMC's program includes the provision of residential care and inpatient care in four hospice houses with a total of 52 beds. HMC is organized into the following ten major departments: (a) physician services; (b) quality improvement; (c) patient/family care; (d) professional and community education; (e) development (fundraising); (f) thrift stores (manned by volunteers); (g) pharmacy; (h) information technology; (i) human resources; and (j) financial services. HMC owns a number of affiliates, including Florida Palliative Home Care, LLC, Accent Medical, and Summerfield Suites, LLC. Palm Coast is a not-for-profit Florida corporation and the subsidiary of Odyssey Healthcare, Inc. (Odyssey), a for- profit corporation whose shares are publicly traded. Odyssey, as one of the largest providers of hospice care in the United States, currently operates approximately 80 state-licensed and Medicare-certified hospice programs in 30 states. Odyssey developed approximately 75 of its hospice program since 1997. Palm Coast is currently licensed and operates hospice programs in AHCA's Subdistrict 4B (Flagler County and Volusia County) and District 11 (Dade County). Palm Coast operates under a management agreement with Odyssey. Palm Coast currently does not provide inpatient services in a hospice facility and does not propose to do so through the instant application. Palm Coast's focus here is directed as follows: (a) identifying and treating non- traditional hospice patients (not diagnosed with cancer); identifying and treating traditional cancer patients; providing services within three hours of a physician order; daily contact and pain evaluations with every visit from a team member; (e) and end-of-life planning, education, and bereavement programs. Palm Coast plans to contract with a skilled-nursing facility or acute care hospital to provide inpatient services. AHCA is the state agency responsible for administering the CON program and licensing hospice programs. In this case, Palm Coast seeks to establish a new hospice program in AHCA's Subdistrict 3B (Marion County). AHCA denied Palm Coast's application and set forth its reasoning in the State Agency Action Report (SAAR). Stipulated Facts The parties have stipulated to the following facts: Section 408.035, Florida Statutes (2005), and Florida Administrative Code Rules 59C-1.0355 and 59C-1.030 set forth the statutory review criteria and standards applicable here; Sections 408.035(8) and 408.035(10), Florida Statutes (2005), are not applicable or at issue in this matter; Florida Administrative Code Rule 59C-1.0355, subparagraphs (7), (8), (9), and (10), are either not applicable or not at issue in this matter; Palm Coast timely filed its Letter of Intent (LOI); Palm Coast's application and AHCA's review of that application complied with the application and review process requirements of the Florida Statutes and the Florida Administrative Code set forth above; Initially, AHCA projected and published a FNP of one hospice for Subdistrict 3B for the 2005 second batching cycle in the Florida Administrative Weekly, October 7, 2005 edition; The FNP was subsequently amended and a FNP of zero was published in the October 21, 2005, edition of the Florida Administrative Weekly. The zero FNP was not challenged and is not at issue here. Unmet Need As stated above, AHCA's published FNP was zero for the second batching cycle of 2005, applicable to this proceeding. Palm Coast bases its application in part on an alleged "unmet need." Using a combined review of a volume-driven demand analysis and a "hybrid need methodology", the application purports to demonstrate the existence of an "incremental pool" of "potentially unserved hospice patients." Palm Coast's theory of need begins with the number most recently published by AHCA as the "net need," or projected number of unserved patients under the need formula for the applicable batching cycle. In this case, that number is 322, less by 28 than the 350 specified by rule as the threshold for showing need. Palm Coast bases its volume/demand analysis on a straight-line future projection of historic growth and an improper hybrid need methodology. Palm Coast's alternative need analysis, standing alone, cannot establish that there is an unmet numeric need. However, other than failing to show an unmet need or special circumstances that outweigh the lack of a numeric need, Palm Coast's application is approvable. Special Circumstances Palm Coast attempts to demonstrate the existence of "special circumstances" to justify approval of its proposed hospice pursuant to Florida Administrative Code Rule 59C- 1.0355(4)(d), which provides as follows: (d) Approval Under Special Circumstances. In the absence of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify the approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: That a specific terminally ill population is not being served. That a county or counties within the service area of a licensed hospice program are not being served. That there are persons referred to hospice programs who are not being admitted within 48 hours * * * The applicant shall indicate the number of such persons.[1/] Palm Coast does not contend that Florida Administrative Code Rule 59C-1.0355(4)(d)2. is at issue here. Rather, Palm Coast focuses on Florida Administrative Code Rules 59C-1.035(4)(d)1. and 59C-1.035(4)(d)3., asserting first that specific terminally ill populations are not being served, and second that there are persons referred to hospice programs who are not being admitted within 48 hours. Specifically Ill Populations In its application, Palm Coast alleged that two groups of people are underserved: hospice patients age 65 and over with diagnoses other than cancer and residents of nursing homes and assisted living facilities. There is a substantial crossover between those two groups. Palm Coast attempted at hearing to show special circumstances regarding these populations using its hybrid need methodology. The methodology segregates the component parts of AHCA's rule methodology and recalculates need based on penetration rates within individual age and diagnosis cohorts: hospice cancer patients under age 65; hospice cancer patients aged 65 and over; hospice patients under age 65 admitted with all other diagnoses; and hospice patients aged 65 and over admitted with all other diagnoses. As discussed above, this alternative need methodology may not be applied in determining need. However, an applicant is not foreclosed from looking at such specific local penetration rates in attempting to develop a showing of special circumstances. Non-cancer Patients The evidence here does not establish that hospice patients aged 65 and over with diagnoses other than cancer are underserved. There is no pattern of underperformance that would support such a finding. At one point during the hearing, Palm Coast seemed to shift its focus to show that it actually may be cancer patients under age 65 who are underserved rather than patients with a non-cancer diagnoses aged 65 and over. In support of this argument, Palm Coast relied on a single six-month drop in the penetration rate for hospice cancer patients. The drop in the penetration rate is readily explained by a number of significant changes in the Marion County oncology medical community for the period in question. Such anomalous occurrences undoubtedly impacted the number of cancer patient referred for hospice services locally and were unrelated to the performance of HMC. Historically, HMC has provided care for cancer and non-cancer patients, regardless of age. In 1996, non-cancer patients made up one-third of HMC's admissions and two-third of its patient days. Palm Coast emphasized that as a national average, approximately 68 percent of its patients have a non-cancer diagnosis. HMC currently provides approximately 66 percent of its services to non-cancer patients, a level that is not materially different than that of Palm Coast. The most recent data shows that HMC is performing above the statewide average in non-cancer categories for all ages. Nursing Home and ALF Patients Palm Coast argues in general that many non-cancer patients tend to live in nursing homes and ALFs. Palm Coast asserts that many of these patients have chronic conditions that go unrecognized when their condition becomes terminal. There are nine licensed skilled nursing facilities in Marion County. HMC provides services to patients in each facility. HMC also provides continuing professional education to nursing home staff members, particularly with regard to the signs and symptoms of end-stage disease, including non-cancer end-stage conditions. Ms. Alicia Brown is HMC's patient/family care coordinator for the nursing home team. Ms. Brown and her team maintain very close relationships with the directors of nursing homes, education nurses, unit managers, and staff nurses. Ms. Brown has developed educational programs, including an eight-part series based on nursing home survey criteria to help foster understanding and good relationships between hospice nurses and nursing home staff. HMC's medical director is Dr. Segismundo Pares. Dr. Pares has been on staff at HMC for approximately four years. Currently, he concentrates on the provision and development of hospice services in eight of the nine nursing homes in Marion County. Since January 2006, Dr. Pares has developed and expanded programming and direct initiatives in community outreach, initially focusing on the community of hospital physicians and staff who direct so many hospice referrals. Having started the hospitalist program at Munroe Regional Medical Center (Munroe Regional) in Ocala, Florida, as well as having been a leader of those operations, Dr. Pares has credibility and an extensive working relationship with the medical community to effectuate awareness, acceptance, and utilization among potential hospice referrers and patients. Ms. Leigh Hutson has been HMC's community liaison for over three years. Ms. Hutson makes personal visits on a regular basis to all nine nursing homes and 24 licensed ALFs in Marion County. Ms. Hutson provided persuasive testimony that HMC provides hospice services in Marion County ALFs, and regularly has patients in those facilities. HMC's ALF utilization has doubled in the last three years. Through HMC's outreach and education processes, nursing homes in Marion County have had an opportunity to gain a clear sense of the various scenarios in which hospice is appropriate. Nursing homes and ALFs in Marion County regularly refer both cancer and non-cancer patients to HMC. In 2005, HMC self-reported that it provided 13 percent of its patient days to nursing home patients and 25 percent of its combined patient days to patients in nursing homes and ALFs. On the other hand, Palm Coast alleges that 40 percent of Odyssey's patient days nationwide are nursing home patient days. These statistics are not persuasive enough to show that HMC is not providing adequate service to nursing home and ALF patients in Marion County. During the hearing, Palm Coast presented the testimonies of Jon Marc Creighton, its community education representative, and Rema Cole, its general manger in Volusia County. The testimonies were based on 18 informal, preliminary interviews of persons in the Marion County health care community in the fall of 2005. According to Mr. Creighton, his interviews in Marion County revealed frustration with HMC's removal of nursing home patients to its hospice house when services could just as easily be provided in the nursing home. Mr. Creighton testified that he talked to administrators who had not been educated about the full array of hospice services that can be provided in nursing homes. Mr. Creighton stated that the nursing home administrators he talked to did not like the way HMC staff failed to properly communicate with nursing home staff when they entered the facilities. Apparently, Mr. Creighton and Ms. Cole made five contacts with persons associated with nursing homes. One of the five nursing homes was Life Care of Ocala, a facility that strongly supports HMC in this proceeding. Interview notes for the other four nursing homes reveal no substantial support for the proposition that nursing home patients are underserved. The testimony of Mr. Creighton and Ms. Cole that HMS is not adequately and appropriately serving patients in nursing homes is not persuasive. Palm Coast also presented the testimony of Robert Mundrone, the administrator at Marion House Healthcare Center, a nursing facility in Marion County. Mr. Mundrone testified that HMC was not fulfilling their contractual responsibilities to provide hospice service to his facility. According to Mr. Mundrone, nine of his residents were "taken" from his facility in 2005 despite a contractual agreement for HMC to provide inpatient services at the nursing home. Mr. Mundrone believed that HMC failed to adequately evaluate the former living arrangements of nursing home patients before the patients were discharged from the hospital to HMC's hospice house. Mr. Mundrone's testimony actually establishes his awareness of available hospice services. He also confirmed the prevalence throughout his hospice career of hospice services being provided in his facility by HMC. He expressly endorsed the clinical quality and accessibility of HMC services. A large percentage of nursing home residents who receive HMC hospice services are put in contact with hospice during the course of a hospitalization. Ms. Ladonna Kellum, social work case manager at Munroe Regional, testified about these initial contacts. According to Ms. Kellum, her department works with patients and families to establish discharge plans and to arrange care for patients, including patients that are admitted to the hospital from nursing homes. Before discharge, Ms. Kellum's department makes sure that patients are aware of their choices such as home health, rehabilitation, or hospice. When patients are ready to leave the hospital, and their physician recommends hospice, Munroe Regional works together with HMC to present hospice placement alternatives to patients and family members, including the option of returning to their former nursing homes. HMC does not make any decision about the placement of Munroe Regional's patients nor "take" patients from nursing homes. Palm Coast provided five letters, collected in 2005, generally supportive of an additional hospice provider in Marion County. Two basic form letters came from staff at The Bridge, an ALF affiliated with Life Care Center of Ocala, which supports HMC. Two other letters of general support came from home health agencies that compete with HMC's affiliated home health entity. Interviews conducted and letters collected in 2005 have limited probative value in 2007. The greater weight of the evidence indicates that nursing homes and ALFs in Marion County know what hospice services are available and do not lack awareness of the availability of hospice services in their facilities. Hospice Houses Under Section 400.606(6), Florida Statutes (2005), "A freestanding hospice facility that is primarily engaged in providing inpatient and related services and that is not otherwise licensed as a health care facility shall be required to obtain a certificate of need." (Emphasis added). On the other hand, a hospice facility that performs 49 percent inpatient care and 51 percent non-inpatient services does not require a CON. HMC's hospice houses are not subject to a CON because they do not provide a majority of their services at the inpatient level of care. Nursing homes often refer patients for hospice house services upon determination that the patients are not economically attractive to the nursing home. On the other hand, patients returning to a nursing home from a hospitalization as a "skilled" patient under the Medicare reimbursement structure, qualify the facility to be reimbursed at a much higher rate for up to 100 days. While HMC's hospice utilization in nursing homes has been somewhat below the statewide average, several factors serve to explain the variance. Marion County has significantly fewer nursing home beds per/1000 population than the state on average. Further, over the last few years, hospice utilization among ALF residents has increased significantly. In the most recent reported annualized period, over one in three patients who received care from HMC is in a nursing home, ALF, or hospice house. The percentage of patient days provided in nursing homes by HMC also is likely to have been affected by the availability of hospice houses in Marion County. HMC operates more hospice house beds than any hospice of comparable size. The relative availability and general attractiveness of a home- like environment in a hospice house has likely affected patient and family choice as to hospice placement. There are a relatively small number of physicians who provide services to nursing home residents in Marion County. Out of approximately 80 primary care doctors, only 10 to 12 provide such care, creating an obstacle to developing hospice referrals of nursing home residents. Those doctors have a high patient load and relatively less time available for learning and understanding the benefits of hospice. Admission Within "48 Hours" of Referral Florida Administrative Code Rule 59C-1.0355(4)(d) allows an applicant that is confronted with a zero FNP to show another special circumstance justifying approval of a new hospice. The circumstance requires a showing "[t]hat there are persons referred to hospice programs who are not being admitted within 48 hours." See Fla. Admin. Code R. 59C-1.0355(4)(d)3. The rule requires an applicant to indicate the number of such persons. Id. There is no requirement for hospice programs to maintain a record of the time it takes to admit a patient or to track the number of admissions that occur 48 or more hours after referral. Such information, if it exists for a particular hospice program, is not public information. Prior to litigation involving an existing hospice, the only way an applicant can establish the special circumstance is by showing a pattern of delays as related by physicians, hospital discharge planners, nursing home social workers, family members, and others in a position to know whether admission delays are occurring. Even then, such anecdotal evidence may not provide the specificity required by the rule. In this case, Palm Coast had little or no evidence prior to filing its application that anyone in Marion County had complained about untimely admissions. Palm Coast's application refers to the special circumstance set forth in Florida Administrative Code Rule 59C- 1.0355(4)(d)3., only generally, stating in its Summary of the Need for the Proposed Project as follows, in relevant part: Hospice of the Palm Coast believes that the entrance of a new provider that has the management affiliation of a national provider, as well as the establishment of a new hospice model will enhance services to those terminally ill patients that are not currently being served and will place a greater focus on the need to provide responsive and efficient hospice care within 48 hours of a referral. (Emphasis added). Palm Coast's application contains five letters of support from Marion County, including two letters from the same ALF and two letters from home health agencies. The fifth letter is from a nursing facility that specifically supports Palm Coast's service standards, including its turnaround admission time of three hours after referral. However, the record is not so clear as to the point in the admissions process that Palm Coast intends to start the clock running. HMC's goal is to admit appropriate patients within 24 hours of an initial contact, if at all possible. To HMC, an initial contact could be just an inquiry for information. It also could be a request for services from a prospective patient or his or her family members, friends, and neighbors. An initial contact could originate from a physician or the staff of a nursing home or ALF. On its admission log, HMC labels the date and time of an initial contact as a "referral." HMC records the date and time of the initial contact not for purposes of achieving an admission within 48 hours as contemplated by the rule, but to measure the time from initial contact to admission for internal monitoring purposes. HMC uses the information from the admission logs to create lag-time reports. The lag-time reports are presented to and reviewed by HMC's quality improvement committee to look for trends and identify circumstances where the process can be improved. HMC also documents the status of any admission and the reason for any delay after the initial contact. This process begins when a call is received by an intake facilitator. The status of an admission is tracked on a dry erase board. It is also documented in the comment section of an electronic record. If the reason for a delay is not documented in HMC's records, it could mean that the intake facilitator's efforts were producing no change. It could also mean that it was a particularly busy day and the status of an admission changed faster than could be recorded. HMC does not consider an initial contact to have developed into a referral that allows it to pursue an admission until it receives an authorized request for service and a written or verbal physician certification of terminal illness. An authorized request is important because many hospice patients have health-care surrogates or other authorized representatives that have to consent to admission. Patients, authorized representatives, families, and physicians often require time to meet, discuss, and deliberate about such a profound decision as requesting and/or recommending hospice services. The process of obtaining an authorized request and a doctor's certification may take more or less time, depending on any number of circumstances beyond the control of the hospice. During discovery, HMC produced documents reflecting that in 2004 there were 352 patients, and in 2005 there were 406 patients with a lag time from initial contact to actual admission greater than 72 hours. There is no evidence to show how many of the delays in admission were beyond the control of HMC. From January 1, 2006, through November 23, 2006, there were 460 identified patients who were admitted to HMC for hospice services after 48 hours from their first contact with HMC. Of those 460 patients, only four delays were the result of HMC's staffing problems. Other delays in admission are justified as follows: (a) 93 due to patient/family requests; (b) 58 due to wait for discharge from hospital; (c) 62 due to need for family conference; (d) 44 due to patient's choice to wait for a bed in a particular hospice house; (e) 36 due to unavailability of power of attorney; (f) 35 due to no response to request for physician order; (g) 32 due to patient not being in county; (h) 23 due to lack of documented information; (i) 19 due to indecision by patient; (j) 17 due to wait for discharge from skilled nursing facility; (k) 14 due to patient's desire to continue seeking aggressive treatment; (l) 12 due to inability to contact patient/family or unavailability of patient/family; and (m) 11 others due to miscellaneous reasons, including skilled nursing facility having no weekend staff to sign a contract. From January to November 2006, HMC admitted 411 patients on the same day it received the initial patient contact. It had a total of 2190 admissions, averaging 6 admissions a day. The evidence does not establish a special circumstance under the terms of the 48-hour delayed admission rule. To the contrary, HMC admits patients and provides services in timely manner. HMC's admission process is well staffed and capable of performing timely admissions within 24 hours of a complete referral, 24-hours a day, seven days a week, 365 days a year. Other Special Circumstances Apart from the special circumstances set forth in Florida Administrative Code Rule 59C-1.0355(4)(d), Palm Coast has not established the existence of any other special circumstances. First, the total population of Marion County is projected to grow by larger percentages than either the district or the state through 2010. However, the amount by which the service area's growth is projected to exceed growth of the district and state is not unusual. Such slight differences in growth percentages of the state, district, and service area are not so exceptional as to support an approval outside of published need. Second, the 65 and over population of Marion County is projected to grow by larger percentages than either the district or the state through 2010. Even so, as with the total population increases, the amount by which the service area's 65 and over population growth is projected to exceed growth of the district and state, the differences in growth percentages are not so exceptional as to support an approval outside of published need. This is especially true where there is no evidence that the over-65 population is unserved or underserved as discussed above. Third, there is no persuasive evidence of an underserved non-cancer population in Marion County. Just because a 2.37 percent discrepancy exists between the percentage of hospice non-cancer patients admitted by HMC and the average statewide, it does not mean there is an underserved non-cancer population. Fourth, there is no persuasive support for Palm Coast's contention that the service area's penetration rate would increase with the introduction of second provider. There is no observable problem with penetration rates that needs to be remedied. Additionally, there is no evidence to suggest that approval of Palm Coast's application would lead to improved quality, greater access, or cost-effectiveness of any types of services not already being provided by HMC. To the contrary, another hospice in Marion County will result in unnecessary duplication of overhead, administration, marketing, advertising, training, travel, outreach, recruitment, and "branding" costs. It is clear that another hospice will strain HMC's ability to maintain an adequate corps of volunteers. HMC's ability to recruit and maintain professional staff also will suffer as Palm Coast hires staff at salaries higher than those currently paid by HMC. Palm Coast projects that it will take as much as 25 percent of the Marion County market share of admissions within four years by virtue of its entry into the market. HMC will suffer an adverse financial impact as Palm Coast seeks to maximize revenue per admission while not exceeding applicable Medicare "caps" by managing patient mix for the most profitable balance. In that event, HMC will not only lose admissions, but will lose a disproportionate number of the more profitable admissions. Statutory and Agency Rule Criteria The parties stipulate that Section 408.035, Florida Statutes, and Florida Administrative Code Rules 59C-1.0355 and 59C-1.030 are applicable here. They also stipulate that certain provisions of those statutes and rules do not apply or are not at issue. During the hearing, Jeffery N. Gregg, AHCA's Chief of the Bureau of Health Facility Regulation, testified on behalf of the agency. According to Mr. Gregg, other than failing to show the existence of special circumstances in the face of zero numeric need, the application is "approvable." Mr. Gregg went on to clarify that there was nothing in the application that AHCA would consider a fatal error. Regarding Section 408.035, Florida Statutes, Palm Coast established the following: (a) the availability of resources for project accomplishment and operation; immediate and long-term financial feasibility; and (c) its past and proposed provision of health care services to the medically indigent. Palm Coast has not established the following criteria under Section 408.035, Florida Statutes: (a) that a numeric need exists; (b) that HMC's services are unavailable or inaccessible to any segment of the population or that its quality of care is unacceptable; (c) that Palm Coast's quality of care is superior to that of HMC; (d) that the proposed services will enhance access to hospice services; and (e) that the proposal will foster competition that promotes quality and cost-effectiveness. As to the preferences set forth in Florida Administrative Code Rule 59c-1.0355(4)(e), Palm Coast has shown the following: (a) that it has a commitment to serve populations with unmet needs; (b) that it will provide the inpatient care component of the hospice program through contractual arrangements with existing health care facilities; that it is committed to serve patients who do not have primary caregivers at home or the homeless and patients with AIDS; and (d) that it will provide services that are not specifically covered by private insurance, Medicaid, or Medicare. For the most part, Palm Coast meets the requirement of Florida Administrative Code Rule 59C-1.0355(5) by showing that its proposal is consistent with the needs of the community and other criteria contained in the local health council plan. Palm Coast intends to provide community education and to provide support groups and bereavement programs for all community residents. However, Palm Coast presented little or no evidence regarding its ability to provide culturally competent care or its specific strategy for volunteer recruitment in Marion County. To comply with Florida Administrative Code Rule 59C- 1.0355(6), Palm Coast provided a detailed program description. The description includes proposed staffing levels and use of volunteers. Palm Coast states that it will seek patient referrals from physicians, long-term care facilities (including nursing homes and ALFs), hospitals, managed care companies, and insurance companies. The description of Palm Coast's proposed program included 405 projected admissions in year two of operation. The projected admissions were described by payer type, by type of illness, and by age group. The application states that most hospice services will be provided directly by hospice staff and volunteers. Palm Coast intends to contract with physicians, nutritionists, physical therapists, speech therapists, and occupational therapists. Palm Coast proposes to provide inpatient care through contracts with existing health care providers. However, there is limited evidence regarding the following: (a) the number of inpatient beds that will be located in hospitals and nursing homes; (b) circumstances under which a patient would be admitted to an inpatient bed; and (c) specific provisions for serving persons without primary caregivers at home. Regarding fundraising activities, Palm Coast states that Odyssey has a contribution program that gives back to the communities being served. Palm Coast individually does not have active local fundraising projects and activities. Therefore, any funds donated will be used to support other local not-for- profit community programs.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered denying CON Application No. 9896. DONE AND ENTERED this 21st day of August, 2008, 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 21st day of August, 2008.
The Issue Whether the Agency for Health Care Administration (“AHCA” or “the Agency”) should approve Continuum Care of Sarasota, LLC’s (“Continuum of Sarasota”), application for a Certificate of Need (“CON”) to provide hospice services in Sarasota County, Florida.
Findings Of Fact Based on the evidence adduced at the final hearing, the record as a whole, and matters subject to official recognition, the following Findings of Fact are made: The Parties AHCA is the state agency responsible for evaluating and rendering final determinations on CON applications. See § 408.034(1), Fla. Stat. In order to establish a hospice program in Florida, one must apply for and receive a certificate of need from the Agency. See § 408.036(1), Fla. Stat. Tidewell is a not-for-profit corporation that is the sole hospice provider in Service Area 8D, which consists of Sarasota County. Tidewell has been providing hospice services in Sarasota County since 1980. Tidewell is also the sole hospice provider in: (a) Service Area 6C, which consists of Manatee County; and (b) Service Area 8A, which consists of Charlotte and DeSoto Counties. Manatee, Charlotte, and DeSoto Counties are all contiguous to Sarasota County, and there is no other Florida hospice that is the sole provider in three adjacent service areas. Continuum of Sarasota is a for-profit development stage corporation formed for providing hospice services in Sarasota County. When Continuum of Sarasota filed the CON application at issue in the instant case, it was affiliated with six other hospices in California, Massachusetts, New Hampshire, Washington, and Rhode Island. At that time, all of the aforementioned hospices were owned by Samuel Stern. After the application at issue was filed and prior to the final hearing, Mr. Stern sold his ownership interest in the California, Massachusetts, and New Hampshire hospices. Now that he has been awarded a CON to operate a hospice in Broward County, Florida, Mr. Stern intends to focus his energies on the Washington and Florida hospices.4 Overview of Hospice Services In Florida, hospice programs must provide a continuum of palliative and supportive care for terminally ill patients and their families. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice benefit if his or her life expectancy is six months or less. “Palliative care” refers to services or interventions that are not curative, but are provided in order to reduce pain and suffering. 4 The Continuum organization as a whole will be referred to herein as “Continuum.” There are four levels of hospice services: routine home care; continuous care; general inpatient care (“GIP”); and respite care. Routine home care is provided where patients reside and describes a situation in which the patient is not receiving continuous care. Routine home care accounts for the vast majority of hospice admissions and patient days. Continuous care is provided wherever the patient resides for short durations when symptoms become so severe that around-the-clock care is necessary for pain and symptom management. GIP care is provided in either a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient unit. GIP care occurs for short durations when symptoms become so severe that they cannot be managed in the patient’s home. Respite care is intended for caregiver relief. It allows patients to stay in facilities for brief periods. Hospice services are 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. As a condition of participation in Medicare, there is a baseline of care that hospices must provide, but hospices can differentiate themselves by using different staffing levels, offering different programs, and utilizing different approaches to pain management and nonessential medication. Sarasota County – Service Area 8D Sarasota County has 417,442 residents, and 34.4 percent of those residents are 65 and older. Sarasota County’s three-year average death rate is among the highest in Florida and is 43 percent higher than the State’s three-year average death rate. Sarasota County’s population is expected to grow, and it is anticipated that people 65 and older will make up at least 39.3 percent of the County’s population by 2030. Sarasota County’s substantial elderly population is significant to the instant case because the elderly are the most frequent users of hospice services. Sarasota County has six hospitals with 1,542 licensed beds, 29 skilled nursing facilities with 3,058 beds, 86 assisted living facilities with 4,858 beds, and 68 home health agencies. With only one hospice provider, Service Area 8D ranks fourth in the State in terms of population per hospice program. Comparing deaths to the number of hospice programs shows that Service Area 8D had 5,873 deaths in 2018 and 5,986 deaths in 2019. As a result, Service Area 8D has the third highest ratio of deaths per hospice program in Florida, and that is two times the State average. With regard to deaths of residents 65 and older, Service Area 8D has the second highest number of elderly deaths to hospice programs. IV. The Fixed Need Pool Calculation and AHCA’s Justification for Granting Continuum of Sarasota’s Application AHCA determines the need for a new hospice program in a service area by utilizing a formula set forth in Florida Administrative Code Rule 59C-1.0355(4). The formula applies a three-year historical death rate to a service area’s forecasted population to project the number of deaths for a future “planning horizon.” Then, the formula determines the statewide hospice-use penetration rate (i.e., the number of hospice admissions divided by current total deaths for four categories: cancer over age 65; cancer under age 65; non-cancer over age 65; and non-cancer under age 65). By multiplying the statewide penetration rates by the projected number of service area deaths in each of the four categories, the formula derives the service area’s projected hospice admissions in each category. The service area’s most recent published actual admissions are then subtracted from the projected admissions to determine the number of unserved patients for a future planning horizon. If the number of unserved patients equals or exceeds 350, then a new hospice program is needed. AHCA determined in October of 2019 that there would be 4,311 hospice patients in Service Area 8D during the course of 2021. Because Tidewell had recently served 4,410 patients on an annual basis, AHCA calculated that there was a negative net need of 99 for Service Area 8D, and the Agency announced on October 4, 2019, that there was a fixed need pool of zero for new hospice programs in Service Area 8D for the January 2021 planning horizon. The aforementioned fixed need pool calculation was not timely challenged by any party. As a result, the lack of numeric need for a new hospice program in Sarasota County for the January 2021 planning horizon and the underlying date used to make that determination could not be challenged during any subsequent CON cases for the relevant batching cycle. See Fla. Admin. Code R. 59C-1.008(2)(a)2. (providing that “[a]ny 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.”). AHCA’s determination results in the creation of a rebuttable presumption that a new hospice program is not needed in Sarasota County for the January 2021 planning horizon. See Fla. Admin. Code R. 59C- 1.0355(3)(b)(providing that “[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 numeric need.”). Despite the lack of a fixed need for Service Area 8D, Continuum of Sarasota filed an application to provide hospice services in Sarasota County premised on the following circumstances that Continuum of Sarasota characterized as being “not normal and special circumstances”: (a) Tidewell operates a regional monopoly that includes Service Area 8D and two other contiguous hospice subdistricts; (b) Tidewell’s hospice house model of care breaks a patient’s continuity of care; (c) admissions and readmissions to Tidewell have resulted in an artificial suppression of fixed need; (d) Florida’s Medicaid managed care statute requires “hospice choice” to maintain network adequacy and health plans have the right to terminate hospice providers based on quality metrics; and (e) the local community wants choice and competition among its hospice providers. Continuum of Sarasota’s application was buttressed by three letters of support from hospitals, seven from skilled nursing facilities, 14 from assisted living facilities, 15 from other healthcare organizations, and five from community/business leaders. Those letters asserted that the residents of Sarasota County should have more than one hospice provider. James McLemore, the manager of AHCA’s CON unit, presented the following testimony as to why the Agency approved Continuum of Sarasota’s CON application: Q: And overall, in the weighing and balancing, just tell me in your own words, when you are weighing and balancing all the factors, what do you come down to and say this is how we weigh and balance this as an agency, weighing towards approval as set forth in the state agency action report? A: Basically we found that there is a regional monopoly here, and that we felt like and do feel like that there was a possibility that the hospice [house] model of care does indeed break the continuity of care between the ALF patients and the nursing home patients. Again, there was evidence or statements from these people saying that it did. We also agreed that admissions and readmissions could, could result in an artificial suppressing of fixed need. That’s why I keep getting back to [hospice admissions for] cancer 65 and older and 64 and under, because the situation is you’ve got more admissions than you’ve got deaths. We also took into account that Florida’s Medicaid managed program indicates that the Medicaid recipient should have a choice of hospice providers, and in this instance, you can’t, they have to get a waiver to meet that criteria. And we did take into account that there is a lack of competition, and the community voiced a need for such competition and at least an alternative provider. And that’s pretty much how – we basically, on those factors, felt like that that was [sufficient] reason to approve this application, that and [the] care that they proposed. Q: The factor of promoting competition and discouraging regional monopoly, was that a factor that you gave more weight to than some of the other factors? A: I presented all of the information to the deputy secretary, who discussed the recommendations that I made with the Secretary. So, you know, I – a regional monopoly is a very important factor in this, of course, especially in light of the DCA ruling[5]. But the other factors all factored in. AHCA’s approval was premised on Continuum of Sarasota satisfying the following conditions: (a) implementing virtual reality, music therapy, and equine therapy programs at the onset of its hospice services; (b) becoming accredited by the Community Health Accreditation Partner; (c) assuring that each patient has five to seven home health aide visits per week and at least two registered nurse visits per week, provided that is acceptable to the interdisciplinary team, patient, and family; (d) responding to all referrals within one hour, initiating the assessment process within two hours, and expediting admission subject to having a physician order and the patient/family selecting the hospice option; (e) implementing a palliative resources program within six months of receiving Medicare certification; (f) not building or operating any freestanding hospice houses in Sarasota County; and (g) implementing a Veterans outreach program. The Statutory and Rule Review Criteria As will be discussed in more detail in the Conclusions of Law, the evaluation of Continuum of Sarasota’s application is based on the criteria set 5 Mr. McLemore was referring to Compassionate Care Hospice of the Gulf Coast, Inc. v. State of Florida, Agency for Health Care Administration, 247 So. 3d 99 (Fla. 1st DCA 2018). As will be discussed in the Conclusions of Law below, the Compassionate Care case also involved Service Area 8D and is substantially similar to the instant case. In affirming AHCA’s decision to deny a CON to Compassionate Care Hospice, the First District Court of Appeal held that “[i]n this case, Tidewell likes the balance that AHCA has struck, supporting Tidewell’s continued regional monopoly in Sarasota County. But AHCA could alter course policy-wise and give greater weight to eliminating regional monopolies and increasing competition by allowing more entry into Hospice Service Area 8D; that change of policy would alter the dynamics of the hospice marketplace, potentially putting Tidewell in the position of explaining why the issuance of a certificate of need to CCH or another competition was improper.” forth in section 408.035, Florida Statutes, and rule 59C-1.0355. The relevant criteria are discussed below.6 Section 408.035(1)(a) – The Need for the Healthcare Facilities and Health Services being Proposed and the Existence of Special and/or “Not Normal” Circumstances in Service Area 8D. As noted above, AHCA determined that there was no need for an additional hospice in Service Area 8D for the January 2021 planning horizon, and no one timely challenged that determination. Nevertheless, Continuum of Sarasota devoted a substantial amount of time at the final hearing attempting to discredit the data used to determine that there is no need for an additional hospice in Sarasota County. Patricia Greenberg, Continuum of Sarasota’s health planning expert, opined that AHCA’s fixed need pool determination should be given little weight because AHCA allows a patient transferred from one service area to another to be counted as two admissions. Tidewell’s status as the only hospice provider in the contiguous counties of Sarasota, Manatee, Charlotte, and DeSoto leads to a distortion in the data used to calculate the fixed need for hospice services in Sarasota County. Ms. Greenberg reviewed hospice admission data reported to AHCA (which includes double counts of admissions) and compared it to hospice admission data reported to the Florida Department of Elder Affairs (“DEA”) (which does not include double counts of admissions). Ms. Greenberg found a substantial number of double counted admissions in the AHCA reports for Sarasota County, which she described as “noise” or “distortion” in the data, and that caused her to doubt the accuracy of AHCA’s fixed need calculation. 6 With regard to the criteria set forth in section 408.035, the following subsections were not at issue in the instant case: subsection (8) pertaining to the “costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction”; and subsection (10) pertaining to “[t]he applicant’s designation as a Gold Seal Program nursing facility pursuant to s. 400.235, when the applicant is requesting additional nursing home beds at that facility.” Ms. Greenberg examined the statewide data and found that the existence and degree of double counting of admissions was unique and far more prevalent in Sarasota County when compared to all other counties in Florida. Overall, the data showed that other than the service areas where Tidewell operates, there were no other areas in Florida where there was a material difference between the data reported to AHCA (with double counts) and the data reported to DEA (without double counts). Ms. Greenberg concluded that this anomaly resulted from the fact that Tidewell is a monopoly provider in three adjoining service areas and transfers patients back and forth. According to Ms. Greenberg, no other hospice in Florida has a comparable ability to transfer patients back and forth between contiguous service areas. In sum, Ms. Greenberg asserts that Service Area 8D is less well-served than AHCA’s fixed need pool would indicate. The double counting described by Ms. Greenberg is not an attempt by Tidewell to manipulate the fixed need pool calculation. Tidewell reports its admission data in the manner required by AHCA. In addition, Armand Balsano, Tidewell’s health planning expert, explained that there are legitimate reasons why a single hospice patient could be counted as two admissions: Q: Mr. Balsano, are you aware of multiple different scenarios where under AHCA’s methodology for counting admissions, the same person may be counted more than one time as an admission? A: Yes. Q: And what are some of those scenarios? A: A patient is in a hospice program in the county, rebounds and goes off hospice. And then at some point in the future, because unfortunately we are all mortal, they realize either the condition or some other condition has reoccurred and they reenter the hospice program. So that admission is appropriately counted twice. If a patient is in a hospice program and transfers to another subdistrict, that admission is counted twice. If a patient goes to a hospice house outside their district, and I am not speaking specifically of Tidewell here, that admission is counted twice. So, there’s a variety of very legitimate reasons which the State has established and has a long- term establishment as to how we count admissions. To whatever extent that Continuum of Sarasota is attempting to undermine AHCA’s determination that there is zero fixed need for additional hospice services in Sarasota County, that argument is rejected as an untimely challenge to the fixed need pool. Accordingly, Continuum of Sarasota must overcome the rebuttable presumption described in rule 59C- 1.0355(3)(b) by demonstrating that “not normal” or special circumstances justify granting its CON application. However, Continuum of Sarasota’s evidence about a distortion in the admission data for Service Area 8D will be considered when considering the accessibility and utilization of hospice services in Sarasota County under section 408.035(2). Rule 59C-1.0355(4)(d) sets forth special circumstances that can override the lack of numeric need, and the special circumstance applicable to the instant case pertains to whether a specific terminally ill population is not being served. Continuum of Sarasota argues that African-Americans needing hospice care are a specific terminally ill population that is not being served. In support thereof, Continuum of Sarasota notes that Tidewell’s penetration rate among Caucasians rose from 61.5 percent in 2015 to 68.65 in 2019. In contrast, Tidewell’s penetration rate among African-Americans rose from 35.2 percent in 2015 to 42.4 percent in 2019. Because a Continuum affiliate had success in California with a minority outreach program, Continuum of Sarasota argues that it can increase the number of African-Americans utilizing hospice services in Sarasota County. However, Mr. Balsano explained that the disparity between the Caucasian and African-American penetration rates is not unique to Sarasota County or Florida: Q: Mr. Balsano, do you have an opinion as to whether this exhibit demonstrates the existence of a specifically terminally ill population that is not being served within the meaning of paragraph of (4)(d)? A: It’s my opinion that this exhibit does not, nor the supporting testimony indicate a not-normal circumstance. And why do I say that? Well, if you look at the penetration rates, you can see that for Caucasians, it was roughly 62 percent to 68 percent. And then when you look at the penetration rates for the identified minorities, it’s a high of 49 percent for Asian, high of 45 percent for African-Americans, and for Hispanic, about 41 percent. So clearly the exhibit shows that Caucasians access hospice are to a higher degree, and by that I mean a greater percentage of the population accesses it compared to minorities. Higher penetration rate in Caucasians compared to minorities. What the exhibit – what it fails to recognize or fails to deal with is any identification that somehow this is indicative of a unique situation or not reflective of a broader comparison. In other words – well, let me simplify it for you, Mr. Frehn. Anyone who does hospice work in planning or in operations knows that black and Hispanic patients for cultural or other reasons access hospice to a lesser extent. Much has been written about this in the literature. So this is what’s happening here. There’s no basis of comparison, given this general recognition that minority access to hospice is lower than Caucasian access to hospice. I would also point out this [Continuum of Sarasota Exhibit #95] is looking at the penetration rate by race and ethnicity for all three of the hospice markets that Tidewell serves, all three of the service areas, so it’s not specific to Sarasota. So looking at about half of the numbers that are reflected here, a little bit more than half the numbers that are reflected here are residents and deaths that are occurring outside of Sarasota County. Just to put a finer point on it, I think what is missing here is some recognition that there’s unmet access, indicative of a problem. Q: Now, what evidence did you see or did you hear through the testimony as to why the disparity exists between the usage or the access by minorities versus the white population? A: I didn’t hear any explanation on that and, again, my recognition is that is just a reality in the district. So what was missing, what would have perhaps provided some quantifiable support to that was if there was a comparison to the state of Florida, for example, that says within the state of Florida, we know there is an overall penetration rate of about 60, 66 percent, but for the Hispanic community that number is 50%, and yet Tidewell is only at 42. I mean, something that was a frame of reference beyond just the absolute numbers here. The greater weight of the evidence demonstrates that the disparity in Tidewell’s penetration rates between Caucasians and minority groups is common in the hospice industry, and there is no evidence that Tidewell denies hospice services to any minority group.7 In addition to African-Americans, Continuum of Sarasota identifies the following groups as terminally-ill populations who are not being served: (a) people who had a bad experience with Tidewell; (b) healthcare providers who will not refer patients to Tidewell based on a prior bad experience; and (c) patients who desire the opportunity to select a hospice provider that offers a different model of care. As was the case with African-Americans, there is no evidence that Tidewell denies hospice services to anyone. Also, Continuum of Sarasota’s arguments on this point pertain more to Tidewell’s quality of care than its failure to serve a specific terminally-ill population. While not set forth as a special circumstance that could rebut the lack of numeric need, Continuum of Sarasota cites multiple “not normal” circumstances supposedly demonstrating the need for another hospice provider in Sarasota County.8 Specifically, Continuum of Sarasota cites Tidewell’s alleged status as a “regional monopoly” provider in Sarasota County and two other contiguous subdistricts; an outmigration rate of 35.8 percent that disrupts continuity of care; the readmission data that results in an artificially reduced fixed need pool calculation for Service Area 8D; the fact that Medicaid requires that there be at least two hospice providers; and 7 Tidewell asserts that Continuum of Sarasota is attempting to impermissibly amend its CON application by asserting that African-Americans are not being served. See Fla. Admin. Code R. 59C-1.010(4)(e)(stating that “[s]ubsequent to an application being deemed complete by the Agency, no further application information or amendment will be accepted by the Agency, unless a statutorily required item was omitted and the Agency failed to clearly request the specific item in its omission request.”). Because Continuum of Sarasota’s argument on this point has no factual support, the undersigned considers the question as to whether it amounts to an application amendment to be moot. 8 Wellington Regional Medical Center, Inc. v. Agency for Health Care Administration, Case No. 03-2701(Fla. DOAH Sept. 29, 2004), rejected in part, Case No. 2003004778 (Fla. AHCA Mar. 7, 2005) instructs that “[t]here is not a list of enumerated ‘not normal’ circumstances; however, ‘not normal’ circumstances traditionally involve ‘issues related to financial, geographic, or programmatic access to the proposed service by potential patients, and not facility specific concerns.” the desire within Sarasota County for competition and choice among hospice providers. Continuum of Sarasota’s argument regarding Tidewell’s regional monopoly status is summarized in the following excerpt from its proposed recommended order: Tidewell is the sole hospice provider in three adjoining hospice Service Areas encompassing Sarasota County (Service Area 8D), Charlotte and Desoto Counties (Service Area 8A), and Manatee County (Service Area 6C). This situation is unique in the state. There are only 6 subdistricts [consisting of nine counties] Florida with a sole hospice provider. Tidewell is the sole hospice provider in three of those subdistricts, which are all contiguous. The other three sole hospice provider subdistricts are operated by three different providers who do not operate hospices in adjoining subdistricts. Thus, 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 is the sole hospice 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 (“CSA”) used for federal planning and budgeting decisions. It was found in a prior CON case, Compassionate Care Hospice of the Gulf Coast v. AHCA, DOAH Case No. 15-2005 CON (2016), that Tidewell’s sole hospice provider status in these three contiguous Service Areas was a regional monopoly. The evidence presented in this case consistently demonstrated that five years after the filing of the Compassionate Care CON Application, Tidwell continues to have a regional monopoly in the three adjoining service areas. Regardless of whether Tidewell is a monopoly or a regional monopoly, its status as the only provider of hospice services in a county is not typical in Florida. Of Florida’s 67 counties, only nine are served by a single hospice provider, and three of those nine are served by Tidewell. Therefore, Tidewell’s status as the only provider of hospice services in Sarasota County is a “not normal” circumstance. With regard to the assertion that Tidewell has an excessively high outmigration rate of 35.8, Continuum of Sarasota argues that patients should be treated in their homes and transferring them to hospice houses outside Service Area 8D disrupts the continuity of the patients’ care. This argument will be addressed below when the factors determining whether all of the relevant criteria justify approving or denying Continuum of Sarasota’s application. As for the fact that Medicaid requires that there be at least two hospice providers, AHCA has transitioned its Medicaid program to a managed care delivery model and was thus required to develop “adequate network” standards for healthcare services offered to Medicaid patients, including hospice services. The model contracts developed by AHCA for managed care plans include “adequate network” standards for hospices and mandates that there must be at least two hospice providers per county. This circumstance will be addressed below in the analysis of the factors determining whether all of the relevant criteria justify approving or denying Continuum of Sarasota’s application. Continuum of Sarasota also argues that another “not normal” circumstance includes the strong support among the community in Sarasota County for having a choice in hospice providers. Continuum of Sarasota also cites residents who have had a bad experience with Tidewell and want the ability to choose a different provider if they need to utilize hospice services in the future. The letters of support and the deposition testimony of community members who support the application overwhelmingly cite a generalized need for there to be a choice among hospice providers in Sarasota County. The depositions also cite a belief that the presence of competition motivates providers to stay diligent in their provision of care. In general, the letters of support and the depositions do not claim that Tidewell is a bad provider, but there are descriptions of instances in which Tidewell staff could have been more responsive or acted more quickly. Given that Tidewell serves well over 4,000 patients a year, it is not surprising that there are individual instances when Tidewell could have provided better service. To the extent that Tidewell’s program could be improved, it is reasonable to expect that the presence of a competitor in Sarasota County would encourage Tidewell to be as diligent as possible with ensuring that it provides good service. The undersigned reviewed the Yelp reviews submitted by Continuum of Sarasota. As described above, they were given little weight, but they corroborated the depositions’ recurring theme that there have been individual instances during which Tidewell could have been more responsive to client needs. Section 435.035(2), Florida Statutes – the availability, quality of care, accessibility, and extent of utilization of existing healthcare facilities and health services in the service district of the applicant. Sarasota County has a robust healthcare delivery system with 6 acute care hospitals, 29 skilled nursing facilities, 86 assisted living facilities, 68 home health agencies, and 1,606 physicians serving a population of over 400,000 people. However, Tidewell is the only hospice in Sarasota County. Continuum of Sarasota’s application included letters from 30 percent of all nursing home operators and 15 to 20 percent of all assisted living facility (“ALF”) operators in Sarasota County supporting the idea that residents should have a choice in hospice providers. Tidewell’s model of care is substantially based on providing services via hospice houses. Tidewell’s hospice houses are designed and furnished to be home-like settings so that the patient and family feel like they are in the comfort of their own home rather than in an institution. All of the rooms are private and spacious. The hospice houses also have kitchenettes and living- room-like spaces where families can congregate. Hospice houses are costly to operate partially because of the significant staffing that is required to provide GIP care. Each of Tidewell’s hospice houses is staffed with persons from a variety of disciplines who are available to address the needs of patients. The hospice house staffing includes a medical director trained in hospice care, as well as a registered nurse (“RN”), certified nursing assistant (“CNA”), licensed practical nurse (“LPN”), social worker, grief specialist, dietary aide, nurse practitioners, chaplains, and volunteers. The RNs and CNAs remain on site at each hospice house 24 hours a day, seven days a week. Patients also receive complementary service visits by pet therapists, music therapists, and horticulturists. Despite the high cost associated with hospice house care, Tidewell made the decision to establish hospice houses as one part of a comprehensive continuum of hospice services. As expressed by Tidewell’s CEO: [I]f our goal is to make money and drive the bottom line, we would not have hospice houses. This is not . . . about money. This is about giving people the most comfortable, caring and compassionate end-of-life experience that they can have. * * * We were built as a hospice that was committed to serving all of the various levels of hospice services needed across the continuum of the benefit. That certainly includes GIP. . . . We are committed to providing every single component of service necessary to provide the comprehensive hospice benefit so that patients can come in and out of that continuum throughout their end-of-life experience. * * * So this is not about the bottom line, as a not-for- profit community rooted organization. We have invested millions and millions of dollars in these hospice houses because of our mutual commitment to the community. They donate to us so that we can provide the service back to the community for their loved ones at the end of life. I will say it a second time. If our goal was to make money, we would not have hospice houses, which is the way most for- profit hospices are operated. The two hospice houses Tidewell operates in Sarasota County have a total of 18 inpatient beds. Two other Tidewell hospice houses are located in close proximity to Sarasota County and were established to serve communities that include portions of Sarasota County. Any shortage in hospice house availability is about to be corrected by new capacity within Sarasota County. Tidewell opened a new 7-bed inpatient unit in January of 2020, and anticipated opening an 8-bed inpatient unit at a skilled nursing facility in October of 2020. Tidewell has also developed multiple programs that are ancillary to basic hospice care. Examples include a We Honor Veterans program; a grief education and support program intended for families who suffer a loss due to suicide, car accident, or other tragedy; the Blue Butterfly center, which specializes in helping children through grief; a nurse residency program for training new nursing graduates on how to be hospice nurses; the transitions program, which helps pre-hospice patients or those who lose hospice eligibility; and the Partners in Care program, which provides palliative care services to children not in hospice. Complementary services provided by Tidewell include massage therapy, music therapy, a bedside music program, a certified music and memory program, pet therapy, a horticulture program, a humor program, a Reiki9 program, and an expressive arts program. These programs are referred to as “complimentary services” because they are nonpharmacological services that complement traditional medical care and help distract patients from pain. Some of the complimentary services are staffed with volunteers; however, that is only the case for services such as pet therapy and expressive arts that are not licensed or certified therapies. As to complementary services that are volunteer-based, each volunteer receives a comprehensive orientation and training, is subject to ongoing supervision, and receives annual competency and performance evaluations. Many of Tidewell’s special programs and services, which are not part of the Medicare benefit, required a substantial initial capital investment and have ongoing operating costs, which are also substantial and generally must be funded through donations. Tidewell receives high scores from surveys intended to assess a healthcare provider’s quality. One such survey is the Consumer Assessment of Healthcare Provides and Systems (“CAHPS”) developed by the Centers for Medicare and Medicaid Services (“CMS”) to provide consumers with a means of objectively comparing healthcare providers. CAHPS presents a series of 47 questions to the individual most knowledgeable about a patient’s care, and that individual responds to each question by selecting from answers such as definitely, probably, always, sometimes, or never. Respondents can also give ratings from 1 to 10. 9 Reiki is a form of alternative therapy commonly referred to as energy healing. See Reiki, Wikipedia, http://en.wikipedia.org/wiki/Reiki (last visited January 6, 2021). Using CAHPS data from August of 2020, Mr. Balsano reported that 82 percent of respondents rated Tidewell a 9 or 10, and 89 percent of respondents gave Tidewell a 9 or 10 with regard to whether they would be willing to recommend Tidewell. Both of the aforementioned scores exceeded like scores for the national average, the Florida average, and the scores for Continuum hospices based in California and Rhode Island. Mr. Balsano also reported that Tidewell’s CAHPS scores have increased in recent years with regard to the following categories: communication with family; getting timely help; treating the patient with respect; providing emotional and spiritual support; helping with pain and symptoms; training family members to care for the patient; and willingness to recommend this hospice. Mr. Balsano testified that 89 percent of respondents indicated they would definitely recommend Tidewell and 7 percent said they would probably recommended Tidewell. Only 4 percent said they would not recommend Tidewell. Mr. Balsano’s CAHPS data also includes ratings from caregivers in which 82 percent of caregivers rated Tidewell a 9 or 10, and 13 percent rated Tidewell a 7 or 8. A rating of 6 or lower is considered to be a poor rating. Continuum of Sarasota is critical of Tidewell’s hospice house-based model of care. Continuum of Sarasota notes that between 23 and 27 percent of Tidewell patients die in hospice houses each year, and over 32 percent of patients spend a portion of their time on hospice in a hospice home. According to Continuum of Sarasota, that is an unusually high percentage of patients to die in a setting that is not their home.10 In addition, Continuum of Sarasota asserts that Tidewell’s hospice house-based model of care is responsible for outmigration and a resulting 10 As will be discussed in more detail in a subsequent section, Continuum’s model of care is substantially based on keeping patients in their homes. disruption in continuity of care for patients residing in ALFs and skilled nursing facilities. As explained by Ms. Greenberg: Tidewell reports that [ ] about 33 percent of their patients are served in hospice houses. That means that they are relocated from their home to a licensed hospice facility, whether they are sending them for general inpatient care or even routine care. They have routine patients in there, they would be called residential or routine patients. So they are relocating them out of their homes to a different facility, and many of those facilities are outside of Sarasota County, so they are actually outmigrating them to the other – their other hospice houses in Charlotte, DeSoto, and Manatee Counties. Another criticism leveled by Continuum of Sarasota is that nearly 40 percent of Tidewell patients die while on GIP, which is far in excess of the national average of 8.6 percent. This is significant because the GIP level of care is only appropriate for those patients whose pain and other symptoms cannot be managed at home. While the parties appear to agree that hospice care is best when it is provided in a patient’s home, there is no indication that patients are dissatisfied with receiving care in a hospice house or that any disruption to continuity of care is a significant problem. According to a survey from Healthcare First conducted between October of 2017 and March of 2020, 91.9 percent of residents in Tidewell’s Sarasota Hospice House and 94.2 percent of residents in Tidewell’s Venice Hospice House rated their patient care as a 9 or 10. That compares to a national average of 85.4 percent. As for being willing to recommend a hospice, 93.2 percent of residents of Tidewell’s Sarasota hospice house residents and 96.6 percent of residents in Tidewell’s Venice hospice house gave a rating of a 9 or 10. That compared to a national average of 86.6 percent. As for Continuum of Sarasota’s criticism about Tidewell not providing care in patients’ homes, Mr. Balsano provided data indicating that 45 percent of Tidewell’s patient care in 2019 was provided in a patient’s home as opposed to a nursing home, ALF, hospice facility, or inpatient hospital. In contrast, 37 percent of Continuum Care Hospice, LLC’s (located in California), and 24 percent of Continuum of Rhode Island, LLC’s, care was provided in a patient’s home. With regard to Tidewell patients spending an inordinate amount of time on GIP, Mr. Balsano noted that not all providers offer GIP care. Mr. Balsano also noted that Tidewell receives about half of its patients directly from hospitals, and patients discharged directly from hospitals tend to be more acutely ill and thus more likely to require GIP care. The depositions and letters of support submitted by Continuum of Sarasota indicate there may be areas of Tidewell’s program that could be improved. However, the greater weight of the evidence demonstrates that Tidewell is a quality provider of hospice services. Any problem with availability/accessibility is likely to be resolved by Tidewell’s addition of two new hospice houses. Section 435.035(3) – the applicant’s ability to provide quality of care and the applicant’s record of providing quality of care Continuum of Sarasota has no operational history because it is a development stage corporation formed for the purpose of initiating hospice services in Sarasota County. However, inferences about the future performance of a Continuum hospice in Sarasota County can be drawn from the past performance of the other hospices founded by Mr. Stern. Since 2015, Mr. Stern has founded six hospice programs located in five states: California, Rhode Island, Massachusetts, New Hampshire, and Washington. One common characteristic among all of the Continuum hospices is their service intensity model that was described as follows in Continuum of Sarasota’s application: There are several characteristics of Continuum Care Hospice Programs that distinguish [them] from the other hospice programs. But most significant, Continuum Care Hospice prides itself on its service intensity, which far surpasses NHPCO minimum requirements for staffing. If approved to establish services in Sarasota County, Continuum Care of Sarasota will introduce a level of service that extends beyond what is currently available in [the Sarasota County] market. First, every new patient at Continuum Care of Sarasota will be seen within two hours of referral, seven days a week. The two hour turnaround time is a testament to Continuum Care’s dedication to serving the needs of any and all hospice appropriate patients. Most hospice organizations will tell a caller on a Saturday that someone will be out to see the patient first thing Monday. Continuum Care will see that patient within two hours. Second, Continuum Sarasota patients will be visited by a certified nursing assistant (CNA) 5 to 7 days per week which will enable Continuum Care to recognize changes in the patient ahead of the curve and be proactive rather than reactive. This will assist in providing more comfortable outcomes for the patient and dually prevent unnecessary hospitalizations. The 5 to 7 visits weekly are an enormous benefit not only for the patient but for facilities in which the patients reside as it helps with their staffing levels. A third service intensity feature that will be employed by the Applicant is that a registered nurse will visit every patient at least two times weekly, and daily if the patient is actively passing to provide symptom management and proper planning. Lastly, Continuum Care of Sarasota will provide a social worker and chaplain (if the patient and family want a chaplain visit) at least weekly, which helps to keep families and loved ones well supported. The support can be a preventative measure so as to not have a crisis at the end of life resulting in a hospitalization or the patient being moved to an inpatient unit. The social worker and chaplain work vigorously to support the family so they are adequately prepared. Indicative of its commitment to providing a service intense hospice program, Continuum of Sarasota has conditioned its CON application on providing minimum core staffing: The Applicant will assure each patient has 5 to 7 Home Health Aide visits per week, provided this is acceptable to the [interdisciplinary team], patient and family. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA The Applicant will assure each patient has a minimum of 2 RN visits per week, provided this is acceptable to the [interdisciplinary team], patient and family. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA. The Applicant will seek to respond to all of its referrals within one hour, initiate the assessment process within two hours, and expedite admission to the hospice subject to having a physician order in hand and the patient/family selecting the hospice option. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA. In the second year following licensure, Continuum of Sarasota’s proposed staffing model will exceed the guidelines set forth by the National Hospice and Palliative Care Organization (“NHPCO”), a national trade group of hospices. While the NHPCO calls for one nurse manager for every 11.2 patients, a social services employee for every 24.3 patients, one hospice aide for every 10.8 patients, and one chaplain for every 31.4 patients, Continuum of Sarasota expects to have one nurse case manager for every 10.0 patients, one social services employee for every 22.6 patients, one hospice aide for every 6.1 patients, and one chaplain for every 22.6 patients. Nevertheless, Continuum of Sarasota agrees that the amount of care provided to a particular patient will ultimately depend on that patient’s care plan and an individualized assessment of that patient’s needs. As discussed above, Continuum of Sarasota is critical of Tidewell’s percentage of GIP care, and Ms. Greenberg explained how Continuum of Sarasota promises to use high cost GIP care to a much lesser extent: A: With respect to competition, these exhibits relate to GIP and death in a hospice house. And death on GIP is – the national average is eight and a half percent, and Continuum – Tidewell is nearly 40 percent. So that’s five times the ratio. Continuum’s experience has only been between 2 and 3 percent of the patients actually pass while they are on GIP. And GIP means they are not in their own home, and it also means that you have an inability to control their acute pain and manage their symptoms in their own home. And Continuum has been successful in accomplishing that and having basically 1 out of 50 – 1 out of 40 to 50 patients only be on GIP, . . . ; so it’s significant. So again, I would suggest that the people in – the program and the model of care takes people out of their home and puts them on GIP. Because to have 4 in 10 uncontrollable acute symptoms seems unusual when there is only eight and a half percent nationally. And, of course, Continuum is much less than the national average. So disrupting them and taking them out of their home and relocating them as a place to die is the Tidewell model of care, but it seems to be an unfortunate model of care. And Continuum is going to give the population in that market the option to die at home. Q: Is the reimbursement rate under Medicare higher for GIP level of service? A: Yes, significantly higher. Within the market itself, within Sarasota County, the actual – the GIP reimbursement is almost a thousand dollars, $978, versus the routine reimbursement, depending on how long the person is on service, ranges between $147 and 185. So an average of about 160 compared to 978. Continuum hospices have a history of offering unique and innovative hospice programming to improve quality of care. A virtual reality program offered at each of the Affiliates allows patients and their families to experience “bucket list trips,” engage virtually in treasured activities or life experiences, or re-live precious memories such as visits to a family home or favorite vacation spot. A Continuum hospice was the first hospice in the country to implement virtual reality technology for the benefit of hospice patients. Another innovative program offered by Continuum hospices is equine assisted healing or equine therapy. Continuum of Sarasota has already contracted with a horse stable in Sarasota so that it can offer this program upon licensure. Many hospices offer music therapy programs staffed with volunteers. Continuum of Sarasota will have a certified music therapist. Continuum of Sarasota’s application is conditioned on providing virtual reality, music therapy, and equine therapy programs: The Applicant will implement its Virtual Reality Program at the onset of its program. It will be made available to all eligible Continuum Sarasota patients. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA The Applicant will implement its Music Therapy Program at the onset of its program. It will staff a minimum of one Board Certified Music Therapist. It will be made available to all eligible Continuum Sarasota patients. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA The Applicant will implement its Equine Therapy Program at the onset of its program. It will be made available to all eligible Continuum Sarasota patients who are physically able to make the trip to the stable partner. This will be measured by a signed declaratory statement submitted by the Applicant to AHCA. Continuum of Sarasota seeks accreditation from the Community Health Accreditation Program (“CHAP”) for each of its hospices and has conditioned the instant application on obtaining CHAP accreditation. An independent, not-for-profit accrediting body for home health and hospices awards this credential. An examination of the Medicare database for Continuum hospices in California and Rhode Island indicates that Continuum typically exceeds the national average for the following quality of care indicators: (a) percentage of patients getting at least one visit from an RN, a physician, a nurse practitioner, or a physician assistant in the last 3 days of life; (b) patients who got an assessment of all seven Hospice Item Set (“HIS”) quality measures at the beginning of hospice care to meet the HIS Comprehensive Assessment Measure requirements; (c) patients or caregivers who were asked about treatment preferences at the beginning of hospice-care; (d) patients or caregivers who were asked about their beliefs and values at the beginning of hospice care; (e) patients who were checked for pain at the beginning of hospice care; (f) patients who got a timely and thorough pain assessment when pain was identified as a problem; (g) patients who were checked for shortness of breath at the beginning of hospice care; (h) patients who got timely treatment for shortness of breath; and (i) patients taking opioid medication who were offered care for constipation. Tidewell offered critiques of Continuum’s operations. For example, the Continuum hospice programs provide a greater proportion of hospice services to patients residing in ALFs and nursing homes than the norm. In 2019, 63 percent of patient care days provided by Continuum’s California hospice were to patients residing in either an ALF or nursing home. ALFs accounted for 44 percent of that hospice’s total patient care days. Another Continuum hospice provided an even higher percentage of its patient care days to patients in one of these settings, with ALFs and nursing homes accounting for a combined 76 percent of the total days. Continuum hospices’ level of service to ALFs and nursing homes greatly exceeds the national average. Nationally, ALFs only account for 19.74 percent of the total patient days while nursing homes account for 17.27 percent. Continuum’s focus on serving patients in ALFs and nursing homes has resulted in an above average and steadily increasing average length of service (“ALOS”) at its hospices. The ALOS at Continuum’s first hospice, which opened in 2015, increased from 86.2 days in 2018 to 126.4 days in 2019, a 47 percent increase substantially above the 89.6-day national average. A newer Continuum hospice, which had its first full year in 2018, saw a similarly dramatic jump in its ALOS from 60.1 days in its first year to 87.7 days in its second year, which represents a 46 percent increase. For the sake of comparison, the ALOS for all hospices only increased 1.3 percent between 2016 and 2017, and only 1.7 percent between 2017 and 2018. As explained by Mr. Balsano, one critique concerned Continuum’s propensity to focus on residents of ALFs and nursing homes: Q: And can you describe what you view as Continuum’s business model? A: Well, their business model is a very successful one. They have strong operating margins and they seem to focus on the patient population that [resides] within ALFs and nursing homes. Within the Sarasota application they talk about these sources of potential referrals and indeed their letters of support largely come from ALFs and nursing homes. These locations, not specific to Continuum, but these locations tend to produce longer lengths of stay and higher profitability compared to other locations. Q: What is the connection between the length of stay and higher profitability? A: Well, it’s twofold. If you are a longer length of stay, then the whole admission process, initial evaluation, all those upfront activities that need to be on a patient that stays 10 days or [ ] zero days, is the same. So by elongating the length of stay, those kind of upfront activities get distributed over a longer stay at lower cost. And then secondly, given that long length of stay patients reside in nursing homes and ALFs, not exclusively but that’s a big part of it, there is just a very pragmatic consideration. If a hospice program has multiple patients in a nursing home or multiple patients in an ALF, then that part of the nurse or social worker or home health aid activity that is normally spent from going from patient A to patient B to patient C, you don’t have to get in the car to go there if you are simply going down the hall or a different floor. So it adds to the efficiency aspect of care delivery if you have patients concentrated in an inpatient setting like a nursing home or an ALF. Q: And how does the intensity of visits for a hospice patient compare at the beginning and end of a patient’s stay in a hospice as compared to the middle portion of the patient’s stay? A: If I understand your question, I alluded to the fact that there’s a greater cost in the beginning, there’s also greater cost at the end. So the longer the middle part, the more profitable the stay, as a general consideration. Tidewell also points out that Continuum’s provision of care is heavily skewed toward home health aides and away from more expensive care such as skilled nursing. In 2019, Tidewell provided an average of 188 home care minutes a week in skilled nursing and 64 minutes a week of home health aides. In contrast, Continuum Care Hospice, LLC, located in California, provided 136 minutes per week of skilled nursing and 175 minutes a week of home health aides. Likewise, Continuum Care of Rhode Island, LLC, provided 113 minutes of skilled nursing and 225 minutes of home health aides. Tidewell also points out that several of the people responsible for Continuum’s operations are no longer affiliated with the company. Specifically, Continuum of Sarasota’s application relied to a great extent on the experience of its six affiliated Continuum hospice programs and their key employees. This included three key employees (excluding the owner Sam Stern) who were expressly identified in the “Managerial Resources” section of the application: Christi Keith, Continuum’s Chief Operations Officer; Ariel Joudai, Continuum’s Chief Financial Officer; and Patricia Putzbach, Continuum’s Chief Compliance Officer. However, just prior to the final hearing, Mr. Stern sold his interest in all but one of his six hospices. As a result, Ms. Keith no longer works for Mr. Stern, and Ms. Putzbach is waiting for an offer from another hospice provider. Although identified by name in the application, Continuum’s National Clinical Director is now working on a temporary basis for Continuum and another hospice provider as a “shared” employee with her future with Continuum undetermined. Mr. Balsano summarized the impact of a talent drain on Continuum as follows: When you look at the application as a whole, there’s multiple references. It’s very clear the applicant is proud of the job that it’s done in these markets and says we would plan on operating the proposed Sarasota facility in a similar fashion. And also the resources that were part of Continuum Care, folks in administration, clinical, patient care, et cetera, at kind of the corporate or oversight level, it calls into question two things. Could they really commit to operating a hospice in Sarasota County when, in fact, all of the other models that they’ve developed have been successfully sold. And secondly, from [that resource] standpoint, just [to] put it bluntly, who’s left when these hospices were entered into the transaction. Again, my understanding that people were still waiting to figure out what was happening, but a lot of them expected that they would be going to the acquired – the acquiring organization, which I think was Hospice Care was the name of the organization. So, as we sit here today, I am not sure who is still left in the clinical and senior leadership positions at Continuum. The greater weight of the evidence demonstrates that Continuum has a substantial record of being a high-quality provider of hospice services. The greater weight of the evidence also demonstrates that Continuum of Sarasota will be a high-quality provider of hospice services if its CON application is granted. Section 408.035(4) – The Availability of Resources, Including Health Personnel, Management Personnel, and Funds for Capital and Operating Expenditures, for Project Accomplishment and Operation Continuum of Sarasota has the resources for project accomplishment and operation, and Mr. Stern has a demonstrated history of successful start- up hospice operations. In terms of health personnel, Schedule 6A of the CON Application provides the proposed staffing plan in terms of full-time employees (“FTEs”) and salaries. The undisputed testimony is that the staffing and salaries are reasonable for the proposed operations. Included specifically within the Schedule are sufficient staff to implement the proposed intensive staffing model for increased hospice visit frequency, as well as specific proposed service programs such as dedicated FTEs for music therapy. The intensive service model is an enforceable condition of the CON Application. With respect to funds for capital and operating expenses, Schedule 1 shows the total project costs of $324,650.00, and Schedule 3 showed $500,000.00 in cash in the operating account, more than sufficient to cover start-up costs. Additionally, Mr. Stern presented evidence of additional financial resources in excess of $4.5 million and his commitment to fund and support the project. At the time of the final hearing, he had made an additional capital contribution of $2 million, with the current cash balance in the operating account of $2.5 million. The greater weight of the evidence demonstrates that Continuum of Sarasota has the resources to be a successful hospice provider in Sarasota County. Section 408.035(5) – The Extent to Which the Proposed Services Will Enhance Access to Healthcare for Residents of the Service Area As discussed above, the opening of two new hospice houses in Sarasota County should eliminate any problems with accessing hospice services. Section 408.035(6) – The Immediate and Long-Term Financial Feasibility of the Proposal The parties stipulated that the proposed project will be profitable and financially feasible in the long term. Section 408.035(7) – The Extent to Which the Proposal Will Foster Competition that Promotes Quality and Cost-Effectiveness Ms. Greenberg is of the opinion that granting Continuum of Sarasota’s application will lead to increases in the quality of hospice services and in the utilization of hospice services in Service Area 8D. As a result of the latter, Continuum of Sarasota and Tidewell will be competing in a growing, as opposed to a static, market of hospice patients. Ms. Greenberg’s opinion is based on an examination of three service areas in Florida in which competitors had entered service areas in the last five years that had previously been served by only one provider. The service areas in question were Lake and Sumter Counties in Service Area 3E, Hillsborough County in Service Area 6A, and Pinellas County in Service Area 5B. Ms. Greenberg examined the HIS scores for the existing providers during the year before the new competition entered the service area and for the two years following the competitors’ entry. Ms. Greenberg also examined the market utilization before and after the competitors’ entry. In Service Area 3E, quarterly hospice admissions averaged 732 during the four quarters of 2014 and then peaked at 976 just when Compassionate Care Hospice of Lake and Sumter Counties initiated services in the first quarter of 2015. While hospice admissions declined during the rest of 2015, they rose to 996 during the first quarter of 2016 and remained above 900 for the remainder of 2016. In Service Area 5B, hospice admissions in Pinellas County were 1,692 during the second quarter of 2018 when Seasons Hospice and Palliative Care entered the market. Hospice admissions increased to 1,755 the next quarter and reached 2,099 by the fourth quarter of 2019. In comparing the incumbent hospice’s HIS scores for quality measures such as treatment preferences, addressing beliefs and values, pain screening, pain assessment, dyspnea screening, dyspnea treatment, and treatment with opioids for the year before and after the competitor entered the market, Ms. Greenberg observed that there was “an uptick in overall quality in just about every measurement ” In Service Area 6A, hospice admissions in Hillsborough County were 1,559 when Seasons Hospice and Palliative Care of Tampa entered the market. Admissions climbed to 1,741 by the first quarter of 2018 and were 1,787 during the first quarter of 2019. In comparing the incumbent provider’s HIS scores during the years before and after the competitor’s entry, Ms. Greenberg observed that nearly all of the scores increased marginally, and a few increased substantially. Ms. Greenberg is of the opinion that Continuum of Sarasota’s service intensity will lead to an across the board increase in Tidewell’s quality. Q: So if Continuum goes forward with the proposed project and meets the conditions that it has set forth in the application and agreed to be conditioned with respect to service intensity, your opinion as a health planner, will that promote competition that fosters quality? A: Absolutely. Because providing that level -- an intensive level of service will have a ripple effect on the community. The existing provider is going to start upping its game, admitting quicker, providing a higher level of service or service intensity. I mean, having an average of less then ten minutes a day on average or 70 minutes a week of nurse’s aides is minimal compared to what’s being proposed and offered by Continuum. As for whether granting Continuum of Sarasota’s CON application will lead to hospice patients in Service Area 8D having a greater variety of programs, Ms. Greenberg testified that Tidewell has already taken actions to address Continuum of Sarasota’s potential entry into the market by duplicating some of the unique services Continuum of Sarasota proposes to offer: Exhibit 110 is entitled Competition at Work, and this relates to criteria that foster competition that promotes quality and cost effectiveness. And specifically, relative to the need for the additional competition, if you will, what we have seen in that market is historically when you actually see more competition enter the market, the existing provider will up its game, and I showed how some of those things happen with quality in some prior exhibits. But what I found in the Sarasota market is, in response to Continuum [of Sarasota]’s proposal and discussions in the community, is that Tidewell was already attempting to up its game. Tidewell earlier this year announced it was having a virtual reality program. And again, Continuum had been in the Sarasota market since mid last summer, and so then that appears to be a . . . reaction to the Continuum [of Sarasota] virtual reality program, which Continuum conditioned its application on. Similarly, music therapy, that was a new program that was added at the end of 2019, and historically, the music therapy provided by Tidewell was limited to . . . volunteers, not therapists . . . So the upping game has already started. They recently announced they are going to do equine therapy, and lastly, they’ve just produced a policy that involves a two-hour admission process for patients that are high acuity or are in the hospital. Historically, that’s where the high acuity patients would be. So my conclusion is, even the threat of competition is already demonstrating that Continuum is upping its game in certain areas. As for cost effectiveness, Ms. Greenberg discussed how nearly 40 percent of Tidewell’s patients die while on GIP care. In contrast, the national average is 8.5 percent and between 2 and 3 percent of Continuum’s patients die while on GIP. Therefore, with the daily per diem Medicare reimbursement for GIP care being $978.00 as opposed to $160.00 for routine care, Ms. Greenberg is of the opinion that granting Continuum of Sarasota’s application will increase cost effectiveness. Overall, the greater weight of the evidence demonstrates that granting Continuum of Sarasota’s application is likely to lead to marginal increases in Tidewell’s service quality and to an increase in the utilization of hospice services in Service Area 8D, especially in light of Continuum’s prior experience with minority outreach.11 The parties offered a great deal of evidence regarding what impact granting Continuum of Sarasota’s application would have on Tidewell’s financial condition.12 In order to understand the potential impact on Tidewell, it is necessary to discuss the creation of Stratum Health Services (“Stratum”). Stratum was established in 2016 to act as a parent/management company for Tidewell. Tidewell’s senior management works under the 11 The fixed need pool calculation and the supporting data suggested that hospice utilization in Sarasota County is close to 100 percent. However, Continuum of Sarasota persuasively demonstrated that the counting of readmissions caused the fixed need pool calculation to be skewed. While that information does not excuse Continuum of Sarasota from demonstrating that special and/or not normal circumstances in Sarasota County justify granting the CON application, it is relevant for demonstrating that utilization of hospice services in Service Area 8D can rise. 12 The statutory and rule-based criteria by which hospice CON applications are judged do not expressly call for an evaluation of how granting the application will impact a current provider’s financial situation. Nevertheless, consideration of the impact on the existing provider is customarily considered in CON cases. See Hospice of Naples, Inc. v. Ag. For Health Care Admin, Case No. 07-1264CON (Fla. DOAH Mar. 3, 2008), rejected in part, Case No. 2007002739 (Fla. AHCA, Apr. 3, 2008)(discussing in paragraphs 251 through 262 and 270 the impact on the existing provider). Stratum umbrella and several of Tidewell’s essential administrative functions are performed by Stratum. In order to reimburse Stratum for those services, Tidewell typically transfers at least $12 million a year to Stratum. When asked why it was appropriate to consider Stratum and Tidewell together when evaluating the impact on Tidewell of granting Continuum of Sarasota’s CON application, Ms. Greenberg testified as follows: A: You have to look at them as a combined entity because the parent – there [are] only two tax returns filed for that combined entity, one is Tidewell and one is the parent. And the parent’s primary business is managing Tidewell. And all of the senior executives and the chief medical officer and chief nursing officer and chief clinical officer, if you look at the tax returns, are identical between the two, and they are identified on both tax returns with the same salaries and same benefits but they’re sitting in Stratum. So it’s not akin to a company that manages a hundred facilities and there’s a CEO at every facility and you have actually support services at the corporate level. This is – it was just a shifting of the whole management team to the parent. And there are a few other small operating businesses, but on a comparative basis, Tidewell is the one that’s $90 million a year in revenues, and these other small businesses are about $5 million in revenues now. So it really – you have to look at it as a combined entity, it’s just a shifting of assets and income that were once Tidewell’s as a corporation. Q: Just so we are clear on that, does Tidewell own the parent company? They gave them $135 million in assets. Do they own it? A: No, they don’t. The parent owns them, or the parent is the sole member. It’s a nonprofit corporation, so the parent is the only stockholder. If you were a for-profit, but it’s the sole member of the corporation. The combined entities of Tidewell and Stratum are very strong from a financial perspective. For the 12 months ending on June 30, 2012, Tidewell had net assets of $113,152,959. For the 12 months ending September 30, 2019, Tidewell and Stratum had combined net assets of $196,940,081. That represents a 74 percent increase and an average annual dollar increase of $13.4 million. Prior to the formation of Stratum, Tidewell’s net income was $12,128,594 for the 12 months ending June 30, 2015. For the 12 months ending September 30, 2018, Stratum and Tidewell’s combined net income was $14,034,322. The impact incurred by the combined entities of Stratum and Tidewell is evaluated via a contribution margin analysis. In the instant case, one forecasts how many patients Tidewell will lose in the second year of hospice operations by Continuum of Sarasota. The next step is to calculate the ALOS for each patient Tidewell will lose to Continuum of Sarasota. Multiplying the number of lost patients by the ALOS results in the number of lost patient days. The next step in the contribution analysis is to determine Tidewell’s variable cost per patient day. This figure is Tidewell’s decrease in daily costs for every patient that it loses to Continuum of Sarasota. With Tidewell’s variable cost per patient day in hand, one calculates Tidewell’s contribution margin per patient day by subtracting the variable cost per patient day from the revenue per patient day. Ms. Greenberg determined that Tidewell could expect its net income to be lower by $565,436.00 by year two of Continuum of Sarasota’s hospice operations. However, her analysis is flawed. First, she assumed that all, or a substantial portion of, the management fee paid from Tidewell to Stratum is 100 percent variable. That assumption is not credible because Tidewell will incur a certain amount of expenses for accounting, budgeting, human resources, and management regardless of its patient volume. It is unreasonable to assume that the aforementioned expenses would decrease in perfect lockstep with a decrease in patient volume. Ms. Greenberg’s analysis is also undermined by basing the calculation on Tidewell’s average length of stay rather than Continuum of Sarasota’s anticipated average length of stay. As discussed above, Continuum has a history of focusing on patients from ALFs and nursing homes who tend to have longer lengths of stay in hospice care. Thus, it is reasonable to assume that the patients that Continuum of Sarasota takes from Tidewell will tend to be those with longer lengths of stay than Tidewell’s average. Mr. Balsano calculated that Tidewell and Stratum’s combined net income would be reduced by an amount ranging between $1,426,763 and $2,539,347 by year two of hospice operations by Continuum of Sarasota. Mr. Balsano’s calculation was more reasonable than Ms. Greenberg’s. Given that Stratum and Tidewell’s combined net income was $14,034,322 for the 12 months ending September 30, 2018, the greater weight of the evidence demonstrates that Tidewell will still be able to operate as the dominant provider of hospice services in Sarasota County even if AHCA grants Continuum of Sarasota’s CON application.13 13 Tidewell makes the following assertion in its proposed recommended order: “But based on 2019 financial results, which is the last complete year, a contribution margin loss of only $1.4 million, which is on the low end of the possible range, would reduce Tidewell’s operating income to only $2.7 million (which, again, includes $3.3 million in charitable contributions) and reduces its operating margin to only 2.9 percent. Essentially, without the charitable contributions, Tidewell’s hospice business would be on the verge of breaking even or, perhaps, even losing money. As a result, Tidewell might be forced to use nonoperating income to fund the basic core Medicaid benefits Tidewell is required to provide in addition to the complementary services and programs that are outside the Medicare benefit.” This statement does not seem to account for the possibility that the Sarasota County market is growing and that any patient volume lost to Continuum of Sarasota is likely to be regained in the near future through market growth. In addition, this statement from Tidewell is based on the premise that a financial analysis should only focus on Tidewell and ignore the reality that Tidewell and Stratum are essential components of the same enterprise rather than separate operations. Finally, given that Tidewell’s charitable receipts are likely a product of Ultimate Findings If Continuum of Sarasota was not required by rule 59C-1.0355(4)(d) to demonstrate that a specific terminally ill population was not being served, then the undersigned would conclude that the statutory criteria in section 408.035 and “not normal” circumstances justify granting the CON application. Tidewell’s status as a monopoly provider and the resulting lack of choice for residents of Sarasota County are “not normal” circumstances that weigh heavily in favor of granting the application. As for the statutory criteria, the greater weight of the evidence demonstrates that Continuum of Sarasota will be a quality provider of hospice services and will enable residents to choose between two different models of care. Moreover, even if Tidewell and Stratum’s combined net income would be reduced by an amount ranging between $1,426,763 and $2,539,347 by year two of hospice operations by Continuum of Sarasota, the greater weight of the evidence demonstrates that Tidewell will still be able to operate as the dominant provider of hospice services in Sarasota County. However and as discussed in more detail in the Conclusions of Law, the undersigned’s assessment of the present state of the law indicates that Continuum of Sarasota is required by rule 59C-1.0355(4)(d) to demonstrate that a specific terminally ill population was not being served. Because Continuum of Sarasota was unable to carry its burden of proof on that point, the CON application must be denied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration deny Continuum Care of Sarasota, LLC’s, application for a Certificate of Need to provide hospice services in Sarasota County, Florida. DONE AND ENTERED this 13th day of January, 2021, in Tallahassee, Leon County, Florida. S G. W. CHISENHALL 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 13th day of January, 2021. COPIES FURNISHED: Jeffrey L. Frehn, Esquire Radey Law Firm, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Julia Elizabeth Smith, Esquire Julia E. Smith, P.A. 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Geoffrey D. Smith, Esquire Smith & Associates 3301 Thomasville Road, Suite 201 Tallahassee, Florida 32308 (eServed) Susan Crystal Smith, Esquire Smith & Associates 3301 Thomasville Road, Suite 201 Tallahassee, Florida 32308 (eServed) Sabrina B. Dieguez, Esquire Smith & Associates 709 South Harbor City Boulevard, Suite 540 Melbourne, Florida 32901 (eServed) Laura M. Dennis, Esquire Radey Law Firm 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Christopher Brian Lunny, Esquire Radey Thomas Yon & Clark 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) Angela D. Miles, Esquire Radey Thomas Yon & Clark, P.A. 301 South Bronough Street, Suite 200 Tallahassee, Florida 32301 (eServed) D. Carlton Enfinger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 7 Tallahassee, Florida 32308 (eServed) Maurice Thomas Boetger, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Richard J. Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Shevaun L. Harris, Acting Secretary Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 1 Tallahassee, Florida 32308 (eServed) Bill Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed) Shena L. Grantham, Esquire Agency for Health Care Administration Building 3, Room 3407B 2727 Mahan Drive Tallahassee, Florida 32308 (eServed) Thomas M. Hoeler, Esquire Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308 (eServed)
The Issue Does Certificate of Need (CON) Application 10065 of VITAS Healthcare Corporation of Florida (VITAS) or CON Application 10064 of United Hospice of Florida, Inc. (United), or both, best meet the CON criteria to establish a new hospice program in Service Area 4A (Area 4A), consisting of Duval, Clay, Baker, Nassau, and St. Johns Counties?
Findings Of Fact The Parties AHCA AHCA is the state agency responsible for the administration of Florida's Certificate of Need (CON) Program. It is the only state agency with authority to issue, revoke, or deny certificates of need. VITAS VITAS is a for-profit Florida corporation presently licensed and Medicare/Medicaid certified. It is the oldest, largest, and most experienced hospice service provider in Florida. VITAS is a wholly-owned subsidiary of VITAS Healthcare Corporation (VHC). VHC is headquartered in Miami. It operates over 40 hospice programs nationwide. VHC has approximately 10,000 employees and cares for about 12,000 terminally ill patients each day. VITAS and its predecessor entities date back to the mid-seventies when Hugh Westbrook, an ordained United Methodist minister, and Esther Colliflower, a registered nurse, organized a group of hospice volunteers. In order to raise capital to expand its operations, VHC converted to for-profit status in 1992. At that time Chemed Corporation purchased a minority interest. VHC expanded greatly during the 1990s. Chemed largely funded this period of expansion. Chemed acquired 100% of VHC n 2004. The acquisition did not cause operational changes. Most of the senior management remained after the acquisition. VHC is a hospice industry leader and a socially responsible company. It has been largely focused on hospice care since its start in the late 1970s. VHC's core values are: Patients and families come first; We take care of each other; and We pledge to do our best today and even better tomorrow. VITAS’ significant involvement with the National Hospice and Palliative Care Organization’s and local ethics committees manifests its social responsibility. VITAS is also involved with Certified Pastoral Education programs. United United is a wholly-owned subsidiary of UHS-Pruitt Corporation (UHS-Pruitt), a family-owned, for-profit corporation. United provides long-term care, hospice, home health, and community based services for the elderly. United is also a socially responsible company. UHS-Pruitt, through its affiliates in United Hospice, successfully operates 25 hospice programs in Georgia, South Carolina, and North Carolina. All of the programs were start- ups as opposed to acquisitions. UHS-Pruitt is the largest provider of community nursing home services in Georgia. It is one of the largest providers of hospice services in the southeastern United States. In the early 1990s, Neil Pruitt, Sr., the founder of UHS Pruitt, determined that community nursing home services would not be the model of care delivery for the elderly in the future. He concluded that home and community-based programs such as hospice, home heath, durable medical equipment, and other alternatives to institutional care should be the company's direction. UHS-Pruitt's emphasis on home and community-based services has succeeded. Today, it provides a full continuum of health care services for the elderly, including 71 long-term care facilities, 25 hospice programs, 13 home health agencies, five pharmacies, a healthcare management company, a nutritional services company, a clinical service company, and 14 Medicaid diversion and case management programs. UHS-Pruitt subsidiaries and divisions support United's hospice operations. The subsidiaries and divisions include: (a) United Clinical, which provides clinical consultants and expertise and support services for a full range of health care professions; (b) United Pharmacy, with Doctor of Pharmacy consultants that review each hospice patient's medication regimen; (c) United Rehab, which provides physical and occupational therapies to end of life patients to improve quality of life; (d) United Medical, a full service Durable Medical Equipment and home equipment company; (e) United Home Care, offering a full range of home health services; (f) United Community Services, which provides services such as meals, outdoor activities and monthly field trips; and (g) United Care Management, which operates Medicaid nursing home diversion programs. United offers specialized programs for specific end- of-life patients and their families. Camp Cocoon, a children's grief camp open to any child who has lost a loved one, is one example. United is also the largest provider of post-acute services to veterans in the Southeast. United Veterans Services provides specialized services to veterans participating in all United Hospice programs. It also operates nine specifically certified Veterans Nursing Homes, five in Georgia and four in North Carolina. The Georgia facilities partner with the Veterans Administration to provide hospice services. Community Community is a Florida, private, non-profit corporation. Community is also a socially responsible company. It operates a full service hospice in Area 4A. Community employs approximately 800 people who provide hospice care to an average daily census of 1,100 patients and their families. Community's annual operating budget is $70,000,000. Community has one or more offices located in each of the 5 counties in Area 4A, except for Baker County. Community is Medicare and Medicaid certified. Approximately 80% of Community’s patients are Medicare patients. Medicare pays a fixed rate per day for each of the four levels of care that Medicare requires a certified hospice to deliver. During its 20-plus years of existence, Community and its volunteer board and foundation have reinvested all revenues in excess of expenses, including donations, back into patient care and serving the community in Area 4A. Community’s main office and a 38-bed hospice general inpatient and residential facility, the Hadlow Center, are located on a campus in southern Duval County to serve the most densely populated area of consolidated Jacksonville/Duval County. Community's Acosta Rua Center is a freestanding inpatient and residential facility on the West side of Duval County. Acosta Rua has 16 general inpatient beds that can also be used as residential beds. Community selected the location for Acosta Rua because it is accessible to patients from rural Baker and western Clay County and is in an area heavily populated with lower income elderly persons and African- Americans. Community located its McGraw Center for Caring, a freestanding general inpatient and residential bed facility, on the Mayo Clinic campus. This location facilitates access for patients in east Duval, northern St. John’s, and southern and southeastern Nassau Counties. Community also operates a dedicated hospice general inpatient and residential bed facility in the Pavilion at Shands Hospital in Jacksonville. Community located the facility at Shands to make it available to a large population of inner city, lower income residents who use Shands. In 2011, Community will open a dedicated general inpatient and residential bed unit at Flagler Hospital. The unit will serve patients and families in the southern part of the Service Area, southern St Johns, and south and east Clay Counties. The unit will be like all of Community’s freestanding facilities and units — homelike and designed to provide end of life care with dignity. In addition to its freestanding and dedicated inpatient and residential units, Community contracts with local hospitals for available acute care beds in the hospital, if needed. Community operates a variety of programs that provide services beyond the required minimum standards and levels of care. Examples of its programs include Community Peds Care, enhanced and extended bereavement services, veterans outreach, Camp Healing Powers for children, advanced care planning, and community professional education on end of life issues. Community operates the Neviaser Institute, on its Hadlow campus. The Institute provides professional end of life, health care, and community education to Community's staff and residents of Area 4A. Outreach programs and freestanding facilities, like Community’s, take years to develop. They involve partnerships built on trust, over the long term, with other community health care providers in Area 4A and the community. One example is the "Community Peds Care" program. The program currently serves 117 children facing end of life and their families. Community partners with the State, Nemours Children’s Clinic, the University of Florida, and Shands Hospital Jacksonville for this program. Its services go beyond hospice care. It includes perinatal planning for women at risk. The interdisciplinary, multi-provider "Community Peds Care" program is not restricted to insured or Medicaid patients. "Peds Care" in its present form took three iterations and a decade to succeed. Community spends $640,000 a year in connection with its participation in the Community Peds Care partnership. Community is the only hospice provider in Area 4A that operates freestanding hospice inpatient and residential facilities and dedicated units on hospital campuses, staffed exclusively by hospice personnel. Community’s inpatient and residential facilities and units also provide homelike accommodations (residential beds), on a sliding fee scale, for hospice patients who are temporarily or permanently homeless and are receiving the routine home care level of hospice care. Community has put its financial capital at risk to create program enhancements with an understanding that competition in the market, for the finite set of hospice patients in Area 4A, would increase every time a new provider is added. Community was aware that CON regulations permitted approval of new hospice providers when application of the regulations resulted in the "need" for a new provider. Community was also aware that the regulations permitted approval of a new provider in "not normal" circumstances, even if the "need" rule did not project the need for a new provider. Overview of Hospice Services Florida and federal laws and rules require hospice programs to provide a continuum of palliative and supportive care for terminally ill patients and their families. Palliative care generally refers to services or interventions that are not curative but are provided for the reduction or abatement of pain and suffering. Under Florida law, a terminally ill patient may qualify for hospice care if his or her life expectancy is one year or less if the illness runs its normal course. Under Medicare, a terminally ill patient is eligible for the Medicare Hospice Benefit if the patient's life expectancy is six months or less. A provider must make hospice services available 24 hours a day, seven days a week. The services provided must include nursing, social work, pastoral care or spiritual counseling, dietary counseling, and bereavement counseling. A hospice may provide physician services directly or through contract. Hospices must provide four levels of hospice care: routine, continuous, in-patient and respite. A hospice provides services to a patient and family either directly or by others under contractual arrangements with a hospice. A hospice may provide services in a patient's temporary or permanent residence. If the patient needs short-term institutionalization, the hospice provides services in cooperation with contracted institutions or in a hospice inpatient facility. Routine home care makes up the vast majority of hospice patient days. Florida law states that hospice care and services provided in a private home shall be the primary form of care. Hospice care and services, to the extent practical and compatible with the needs and preferences of the patient, may be provided by the hospice care team to a patient living in an assisted living facility (ALF), adult family-care home, nursing home, hospice residential unit or facility, or other nondomestic place of permanent or temporary residence. A resident or patient living in an ALF, nursing home, or other facility who has been admitted to a hospice program is considered a hospice patient. The hospice program is responsible for coordinating and ensuring the delivery of hospice care and services to the person consistent with statutory and rule requirements. The inpatient level of hospice care provides an intensive level of care within a hospital setting, a skilled nursing unit, or in a freestanding hospice inpatient facility. Inpatient care is a short-term adjunct to hospice home care and home residential care. It should only be used for pain control, symptom management, or respite care in a limited manner. In Florida, the total number of inpatient days for all hospice patients in any 12-month period may not exceed 20% of the total number of hospice days for all the hospice patients of the licensed hospice. Continuous care is basically emergency room or crisis care. It may be provided in a home care setting or in any setting where the patient resides. Continuous care, like inpatient care, was designed to be provided for short periods of time, usually when symptoms become severe and skilled and individual interventions are needed for pain and symptom management. Continuous care is the costliest care for payors and has the lowest profit margin for providers. Respite care is for caregiver relief. It allows patients to stay in hospice facilities for brief periods to provide breaks for their caregivers. Respite care is typically a minor percentage of overall patient days. Medicare reimburses the different levels of care at different rates. The highest level of reimbursement is for continuous care. Medicare covers payment for approximately 85% to 90% of hospice care. The goal of hospice is to provide physical, emotional, psychological, and spiritual comfort and support to a terminally ill patient and the patient's family. Hospice care focuses on palliative care and comfort measures. Hospices provide services according to a plan of care developed by an interdisciplinary group of physicians consisting of nurses, social workers, and various counselors, including chaplains. Individual hospice patients sometimes benefit from services that are not covered by Medicare and/or private or commercial insurance. These services may include music therapy, pet therapy, art therapy, massage therapy, and aromatherapy. There are also more complicated and expensive non-covered services such as palliative chemotherapy and radiation that may be helpful for severe pain control and symptom control. Community provides, and both VITAS and United propose to provide, all of the core hospice services and many of the other services mentioned above to patients. Fixed Need Pool AHCA'S hospice rule includes a numeric need formula for determining the need for an additional hospice program in a Service Area. See, Fla. Admin. Code R. 59C-1.0355(4)(a). The Agency's formula uses an average three-year historical death rate. It applies this average to an area's forecasted population for a two-year planning horizon to project the number of deaths in the area. Then the formula uses a statewide hospice use penetration rate. This is the number of hospice admissions divided by current total deaths. The statewide average penetration rate is subdivided into four categories: cancer over age 65, cancer under age 65, non-cancer over age 65, and non-cancer under age 65. By applying the penetration rates to the projected numbers of death in each category in an area, the rule formula projects hospice admissions (based on death rate and projected population growth) in each category. The most recent published actual admissions are subtracted from the projections to determine the number of projected un-met admissions in each category. If the total un- met admissions in all categories exceed 350, a new hospice is "needed," unless there is a recently approved hospice in the service area or a new hospice provider has not been operational for two years. In this case, application of the numeric need rule projected a "need" for one additional hospice in Area 4A. Subtracting the most recently reported published hospice admissions in Area 4A from the projected number of likely hospice admissions calculated by applying the penetration rates to the projected deaths in Area 4A indicated that there would be 925 more projected admissions than there had been for the period for which the admissions were published. The hospice service use rate in Area 4A has consistently been below the statewide average use rate for the past ten years. Area 4A Area 4A consists of five counties. The central and most heavily populated county is Duval. It includes the urban center of Jacksonville and its population of approximately 860,000 people. Clay and St. Johns County each have approximately 186,000 residents. Nassau County is north of Duval. Part of Nassau County is considered part of the Jacksonville metropolitan area. There are resort and retirement communities along the east coast of Nassau County. The western part of Nassau County is less densely populated and rural. The fifth county, Baker County, is west of Duval County. It is the only state-designated rural area in Area 4A. Baker County's small population is largely concentrated in the southeast quadrant of the county. A large part of the county is part of the Okefenokee Wildlife Refuge. Baker County has the lowest hospice admission rate of any county in Area 4A. None of the existing providers have an office in Baker County. Approximately 72% of Area 4A's population is Caucasian. Approximately 22% of the area's population is African-American. Community has served Area 4A for approximately 30 years. It accounts for approximately 90% of all hospice admissions in the area. In the most recent year for which figures are published, Community had 5,216 admissions. Haven Hospice began operating in Area 4A in 2001. It has an approximately 8% market share and 481 admissions annually. Heartland Hospice opened in 2007. In the most recent 12 month period for which there are published figures, Heartland served 108 patients. The Proposals VITAS and United propose to provide hospice patients in Area 4A with all of the core services and many of the other services mentioned above. The proposals are similar in many respects. Both will provide quality services and propose financially feasible programs. Either applicant could serve Area 4A well if approved. Either applicant would serve the "need" projected by AHCA. Both applicants emphasize what they describe as "underserved" African-American populations and rural populations. Each applicant maintains that its plan for serving these populations is a primary reason to approve its application. "Underserved" is not an accurate description. There is no persuasive evidence that African-American or rural patients in Area 4A who desire hospice services do not have timely access to them. The populations each use hospice services at a lesser rate than Caucasian or urban and suburban populations. But nothing indicates that this is because the services are not available. African-American utilization of hospice services in Area 4A is lower than utilization by the Caucasian population. This is not unique to Area 4A. Lower hospice utilization by African-Americans is common throughout the nation. Nothing indicates that the lower hospice utilization by African- Americans in Area 4A is not normal. To the contrary, the credible evidence establishes that this is the normal state of affairs. Each applicant also identifies a need to serve more non-cancer patients and serve more patients in need of continuous care. There is no persuasive evidence that non- cancer patients or patients needing continuous care in Area 4A who desire hospice services do not have timely access to hospice services. United also maintained that homeless persons with terminal illnesses were individuals who needed more hospice services. There is no persuasive evidence that homeless individuals in Area 4A who desire hospice services do not have timely access to them. Each applicant advances secondary arguments about features of its operations that make it superior to the other. Each applicant acknowledges, as the evidence established, the quality of the other applicant. The applicants make limited criticisms of the reasonableness of each other's proposals. The distinctions between the applicants' proposals are relatively fine and are discussed later. The VITAS Proposal VITAS proposes to establish a main office in Duval County with satellite offices in Baker and Nassau counties. It will open the Baker County office the first year of operation. VITAS projects equipment costs of $170,000 and start- up costs of $83,500. The projections are reasonable. VITAS projects 162 admissions in Year 1 and 297 admissions in Year 2. The projections are conservative and reasonable, especially in light of the market dominance of Community. VITAS' own start-up experience in Brevard, Collier, Volusia, and Flagler counties also supports the reasonableness of the utilization projections. VITAS is able to recruit staff. Its proposed staffing levels and salaries are reasonable. Factors considered in assessing reasonableness include ratios of census to discipline and the number of core employees that will be needed. The proposal of VITAS budgets sufficient funding for physician services and contracted services. VITAS's total projected costs for the proposal are $338,353. This projection is reasonable. VITAS's proposal satisfies both the Local Health Planning Council's general preferences and its hospice specific preferences. VITAS complied with all applicable AHCA rules and preferences. VITAS has well-developed and effective information technology systems that help it deliver hospice services efficiently over large geographic areas. It will use these systems in its proposed Area 4A hospice. VITAS made a number of enforceable commitments in the proposed conditions for the Area 4A hospice. VITAS commits to the following: -Minimum of 3% total patient days to persons in need of continuous care -Minimum of 65% patients with non- cancer diagnoses -Exceed statutory pain control outcome measures -Death attendance of at least 90% of deaths -Patient-family satisfaction score of 90% or greater -Discipline specific satisfaction of 90% or greater -Provide pet therapy -Establish satellite offices in Baker and Nassau Counties -Implement TeleCare Program with 24/7 nurse availability -Establish Local Ethics Committee -Implement CarePlanIT a handheld bedside clinical information system -Provide palliative radiation, chemotherapy, and transfusions where appropriate -Provide hospice services 24/7 as indicated by patient’s medical condition -Patient assessment by physician upon admission -Medical Directors must be board certified in Hospice or Palliative Care medicine within 5 years of employment -RNs encouraged to become certified in Hospice and Palliative Care nursing; with 50% of all supervisory nurses attaining such certification by second year of operation -Chaplains will be Masters of Divinity, from accredited CPE program -Social workers will be Master’s level or Licensed Clinical Social Workers -Designate hospice representative to provide community outreach, promote hospice awareness, and enhance access to African- American individuals in Service Area 4A -A Physician will serve as member of every care team -VITAS will provide bereavement services beyond the normal one year after death of patient, if needed -VITAS will not solicit or accept donations from hospice patients, their families, or the general community -Immediately establish a Clinical Pastoral Education program In addition, VHC (the parent of VITAS) will provide: -A charitable contribution of $300,000 to Florida State College of Jacksonville to fund an Endowed Teaching Chair, Scholarships and the Northeast Florida Initiative for Nursing Workforce Diversity; -A charitable contribution of up to $500,000 to the United Way of Northeast Florida, during the first three years of licensure; -A charitable contribution of $50,000 to the Jacksonville Urban League to expand health and quality-of-life initiatives in the greater Jacksonville area. Florida State College of Jacksonville is the second largest state college in Florida. It has a full array of health programs from entry level to bachelor’s degree. The college produces more nursing graduates than all other colleges and universities in the region combined. The fundraising arm of Florida State College is the Florida State College Foundation. Its sole purpose is supporting the college by raising money to support academic programs and help develop facilities. One component of the VITAS/Florida State College Foundation Hospice Care Partnership Proposal is linked to factors that affect African-American utilization of hospice care. That is the $130,000 contribution to support Florida State College's operation of a Northeast Florida Initiate for Nursing Workforce Diversity. The initiative strives to increase the number of registered nurses from disadvantaged or under represented backgrounds and ensure all citizens have access to culturally, ethically and linguistically appropriate health services. This addresses two factors identified as contributing to lower utilization of hospice services by African-Americans. The remaining components of the $300,000 VITAS proposal are not directly related to factors affecting African- American hospice utilization. VITAS's proposed measure of fulfillment of this commitment is only a signed statement by VITAS and evidence of funds transferred. VITAS proposes a donation of $500,000 to the United Way of Northeast Florida. United Way’s mission is to identify critical issues in the community, perform a needs assessment, and then raise the dollars to address those issues. The organization serves Duval, Clay, Nassau, Baker, and northern St. Johns Counties. The United Way partners with two area hospitals, Baptist Medical Center and Shands of Jacksonville. Shands has a contract with the City of Jacksonville to provide care for indigent and low income persons. It is the largest provider of health services to the indigent in the area. The United Way will use VITAS's donation to expand its elder care advocacy program and to develop better support for caregivers. Through the United Way’s partnership with Shands, donations by VITAS will reach the community’s homeless population. VITAS’ funding would also support United Way’s ?Life: Act 2.? This is a seniors initiative focused on assisting working caregivers, predominantly minority families with low and moderate incomes, to access information and support services, including end of life services. The mission of the Jacksonville Urban League is to assist African-Americans and others achieve social and economic equality. It serves Duval, Nassau, Baker, and Clay Counties, as well as a portion of South Georgia. VITAS commits to a $50,000 grant to the Jacksonville Urban League if approved. The grant addresses the fact that African-Americans utilize hospice services at a lower rate than Caucasians. The Jacksonville Urban League committed to spend $15,000 of the $50,000 grant on expanding community health and end-of-life awareness initiatives offered under the League's African-American Health Network. It also committed that $3,500 would provide educational components about end-of-life care and advance directives as part of quarterly Health and Quality of Life seminars and workshops. The remaining $31,500 is earmarked as follows: $10,000 -- four quarterly community education workshops conducted by a nutritionist focusing on healthy cooking and healthy eating; $12,000 -- sponsorship of the Jacksonville Urban League Centennial Celebration Walk-A-Thon community fund-raiser; $5,000 -- promotion for an employee/community walking program with a goal of each participant walking at least 100 miles during the year as part of the Urban League Centennial Celebration; and $4,500 -- individual incentives for people who sign up for various programs and meet specific goals. VITAS proposes only a signed statement by a VITAS representative and evidence of payment to the Jacksonville Urban League as measurement of fulfillment of the condition. VITAS has been actively involved in the Foundation for Hospices in Sub-Saharan Africa (FHSSA) since 1998. The FHSSA is a national initiative of the National Hospice and Palliate Care Organizations (NHPCO). VITAS is its leading participant, providing both monetary and clinical support over the years. Robin Fiorelli, Senior Director of Bereavement Volunteers for VHC, sits on the FHSSA Board. VITAS participates in FHSSA because that is part of its philanthropic mission. The United Proposal Like VITAS, United relied in its application upon AHCA's projected need for a hospice in Area 4A. United's letter of intent and its application did not propose approval of two programs, one based on the need projection and one based upon special or "not normal" circumstances. United advanced that proposal for the first time in this proceeding. United proposes to establish a main office in Jacksonville and satellite offices in rural Baker and Nassau Counties. United projects admissions of 222 in its first year of operations and 702 in its second year of operations. United's projected increase in second year admissions relies upon its plan to develop home health services in the area if it obtains the certificate of need. United plans to bring its allied services and programs to the area if approved. But none are presently provided in the area. United's second year projections are aggressive but not unreasonable in light of AHCA's projected 925 additional hospice admissions. In any event, United can be reasonably expected to achieve or exceed the same utilization as that projected by VITAS. United projects equipment costs of $170,000, project development costs of $84,853, and start up costs of $83,500. These are reasonable projections. United's total projected costs of $338,353 are reasonable. United's proposal will be financially feasible. It will be financially feasible even with lower utilization than projected. This is because the costs of operation are primarily staffing, which is a variable expense directly related to utilization. The ?break even? point for United is 360 admissions. Thus, even if admissions were reduced dramatically from United’s Year 2 projections, the United proposal remains financially feasible. UHS Pruitt will fund the proposed United project. United, with the support of UHS Pruitt, has the financial resources to fund, accomplish, and operate its proposed hospice program at the cost stated in its CON Application. UHS Pruitt has well-developed recruitment, training and education programs. It operates the Pruitt Online University, with numerous education modules available for each specific discipline in a patient care team. Additionally, United’s parent organization operates a state-of-the-art training and education center at its corporate headquarters in Norcross, Georgia, where it routinely conducts orientation and continuing education classes. The facility is equipped with video conferencing capabilities, multiple classrooms and lecture halls. United will use these resources to establish and operate its proposed hospice program. United will be able to appropriately staff and operate its proposed hospice program. Like VITAS, United is an established provider of high- quality hospice services. United also conditions its CON on becoming accredited by the Community Healthcare Accreditation Program (CHAP), an outside accreditation body. This will help United ensure that it provides high quality care. United commits to several conditions upon its CON. They are: -UHS Pruitt will make all of the services that it provides available to any hospice provider that wishes to contract for the services. This includes services from United Home Care, United Medical, United Pharmacy Services, and United Clinical Services. -A staff member will be responsible for outreach initiatives to the African-American community. -Form an African-American Community planning and outreach team -United will host listening sessions with African-American leaders, African- American clergy and other members of the African-American community -Based on the listening sessions United will develop message, presentation, and marketing materials addressed to the African-American community -Continually assess existing tools and obtain or develop new resources to provide culturally meaningful and appropriate educational opportunities for the African- American community -Provide ongoing comprehensive training for staff and volunteers involved in the outreach program -Develop and maintain a calendar of events that address, support, and celebrate African-American issues, heritage, and healthcare concerns. Staff members will attend the events -Develop a tool to track referrals generated by the outreach program to measure its effectiveness. -Report admissions annually by race to AHCA -Continue active membership in the Emergency Services and Homeless Coalition (ESHC) of Jacksonville, Inc., a non-for- profit alliance of organizations dealing with homeless issues. -Provide hospice services to the homeless in shelters and help with placement -Provide health screening by a registered nurse once a month at a local social service organization chosen in collaboration with the ESHC -Open a centrally located Baker County office immediately upon licensure -Open a centrally located Nassau County office by the end of the second year of operation -Join the St. Johns Rural Health Network -Provide a minimum of 2.5 % of patient days in continuous care by the end of year two -Obtain CHAP accreditation -Join Florida Hospice and Palliative Care, Jacksonville Regional Chamber of Commerce, St. Johns County Chamber of Commerce, Clay County Chamber of Commerce, and Baker County Chamber of Commerce -Make the four annual $2,000 scholarships offered by United Hospice Foundation available to Florida residents. -Meet or exceed all NHPCO Guidelines for qualifications and staffing ratios of patient care staff -Implement rapid pain management protocols to ensure 75% of patients who report severe pain will report a reduction to 5 or less by the end of the second day of care. Statutory and Rule Review Criteria Rule Preferences AHCA 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. Commitment to serve populations with unmet need Both applicants propose to serve populations that they maintain have an unmet need for hospice services. Those populations are African-Americans, rural residents, and the homeless. The evidence does not establish an unmet need for hospice services for these populations in the sense of people desiring hospice services not being able to obtain them. The evidence establishes that these populations use hospice services at a lower rate than other populations. What the applicants really propose is outreach and marketing of various sorts to increase utilization by these groups. AHCA's apparent health policy and planning goal is to increase utilization by these groups. VITAS and United proposed offices in rural areas. Their plans to increase utilization by rural residents are comparable. One is not better than the other. Both proposals include efforts to improve utilization by the homeless. Neither is superior to the other. Similarly both applicants make plausible and equivalent proposals to increase hospice utilization by non- cancer patients and people needing continuous care (3% for VITAS and 2.5% for United). Neither is superior to the other. Both applicants commit to outreach to the African- American population. Both have a history of serving African- Americans and plans to reach out to the African-American Community. VITAS also has a history of working with the community to increase awareness of end of life options. Finally, VITAS has a more concrete and expansive plan to increase African-American utilization. VITAS's commitments to make donations to the Jacksonville Urban League, the United Way, and Florida State College are specifically linked to activities that designed to increase awareness of hospice services and improve comfort with the idea of hospice in the African-American Community. This specificity and VITAS's history of engagement in the issue of hospice services for African-Americans make its proposal the better one for increasing African-American utilization of hospice services. Commitment to provide in-patient care through contracts with existing health care facilities VITAS and United intend to use scatter beds to provide in-patient care. Both intend to contract with existing health care providers. Commitment to serve patients who do not have primary caregivers at home; the homeless; and patients with AIDS The applicants make equivalent commitments to serve these patients. Commitment to provide services not covered by insurance, Medicare or Medicaid VITAS and United each have a history of providing services not covered by insurance, Medicare, or Medicaid. Both propose to do so in their applications. There proposals on this subject are equivalent. Consistency with plans; letters of support Both applicants provided letters of support demonstrating their outreach to the community and sufficient support within the community. Neither is superior in this factor. Similarly, both applicants demonstrated that their proposals are consistent with the needs of the community and other criteria contained in local and state health plans. Required Program Description VITAS and United provide detailed program descriptions in their CON applications. Both establish reasonable staffing, referral sources, projected admissions, volunteer recruitment, community education, and bereavement services. Although there are differences between the proposals, there is no significant distinction between the two in the quality or feasibility of the proposed programs. Section 408.035(1)(a), Florida statutes -- The need for the health care facilities and health services being provided AHCA projected a need for one new hospice program in Area 4A. There are no special circumstances in Area 4A that would justify adding a new program in the absence of a calculated need. Section 408.035(1)(b), Florida Statutes -- availability, quality of care, accessibility, and extent of utilization Existing providers offer quality and accessible hospice care to the residents of Area 4A. Each applicant can serve the need projected by AHCA. VITAS and United each would provide quality care to the area. It is unlikely, given the utilization rate in Area 4A and the market dominance of Community, that all of the hospice admissions projected will go to the new provider. However, each applicant is capable of satisfying the projected need. Section 408.035(1)(c), Florida Statutes -- ability to provide quality of care and record of providing quality of care VITAS uses over 40 Quality Assurance Performance Improvement measures and reports from them that help it provide high quality care. VITAS has and uses guidelines for intensive palliative care for both internal and external use. The guidelines outline how to approach and manage symptoms pharmacologically and non-pharmacologically. VITAS's medical director will be a direct employee of VITAS. In March of 2010, AHCA cited VITAS's Palm Beach hospice for deficiencies related to, but not causing or hastening, a patient's death. This was an isolated error. Because of a time lag in updating the patient records, the patient was discharged when she should not have been. AHCA made a finding of immediate jeopardy. VITAS responded promptly and correctly with a plan of correction that AHCA accepted. Since then the Palm Beach VITAS program has passed its bi-annual licensure survey. AHCA has also accepted other corrective action plans for unrelated VITAS deficiencies. Given the size of VITAS's operations, the number of people it serves, and VITAS's prompt attention to the deficiency, this incident does not indicate material problems with VITAS's quality of care. United has extensive internal quality assurance and performance improvement programs. United Clinical Services provides consulting services to all of United's hospices from an interdisciplinary care team. United also conducts surveys and audits of United's hospice program. That is one way United ensures quality care for its patients. United also conditioned its Certificate of Need on becoming accredited by the Community Healthcare Accreditation Program. This is an outside accreditation body. United will employ Medical Director services by engaging a physician under contract. Both applicants have a history of providing quality hospice services. Each demonstrated the ability to provide high quality care. VITAS and United each employ qualified people and provide them all needed training. Both applicants proposed appropriate staffing for their programs and good quality control and review practices. Neither applicant's proposed quality of care is superior to the others. They are equivalent. Section 408.035(1)(d), Florida Statutes -- availability of resources, including health personnel, management personnel, and funds for project accomplishment and operation United has adequate financial resources to establish and operate its proposed hospice program. Its parent company is committed to providing the full amount of project costs and is able to fulfill that commitment. VITAS also has adequate financial resources to establish and operate its proposed hospice program. Its parent company is committed to funding the community contributions that VITAS includes in its proffered conditions. Both applicants have the necessary personnell resources available to start and operate their programs. Section 408.035(1)(e), Florida Statutes -- extent to which proposed services will enhance access to health care for residents of the service district None of the existing providers have an office in Baker County. VITAS and United propose to establish an office in Baker County. This will improve the availability of hospice services to rural residents. Between the two applicants, neither proposal to increase availability to rural residents is superior to the other. The applicants and AHCA agree that increasing the low African-American utilization rate is an important goal. There is no persuasive evidence, however, that the lower rate is due to a lack of access to hospice services. The low rate results from a combination of historical distrust of the medical system; reliance upon family, church, and community during a patient's final days on earth; and difficulties with access to health care in general. Both applicants commit to reach out to African- Americans and work with leaders in the community to increase utilization of hospice served. Their commitments include making outreach a primary responsibility of a designated employee. VITAS, through its parent company, has a substantial record of working closely with and supporting the African- American community. Diane Deese, Director of Community Affairs for VHC, works with all minority communities. She works predominately with African-American and Hispanic organizations. Ms. Deese works with the boards and executive leadership of groups and organizations such as the National Medical Association, the largest African-American physician organization in the U.S.; the National Federation of Licensed Practical Nurses; Rainbow/PUSH; the Samuel DeWitt Proctor Conference; and the Full Gospel Baptist Church Fellowship International. The New Orleans Chapter of the National Black Nurses Association asked VHC to help in providing education and support for its nurses, although VITAS has no licensed program in the area. VITAS helped. Since 2003, VITAS has been the only hospice provider actively involved with the National Medical Association. On behalf of VITAS, Ms. Deese works closely with the president of the National Black Nurses Association, as well as with the organization’s Daytona Beach Chapter. Both wrote letters of support for the VITAS proposal. The National Black Nurses Association has a chapter in Jacksonville. For many years VITAS has supported informing African- Americans about hospice care through its engagement with The Duke Institute on Care at the End of Life, a program of the Duke Divinity School. The program was established with a founding gift from Hugh Westbrook (VITAS founder), VHC, and the End of Life Foundation. Crossing Over Jordan is one of the educational programs of the Duke Institute. The Institute created the program to focus on the role of African-American churches in supporting terminally ill members of their congregations. The Full Gospel Baptist Church Fellowship International is a group of predominantly African-American clergy who have worked with the Crossing Over Jordan conferences to educate communities, particularly African-American communities, about hospice and end-of-life care. The Full Gospel Baptist Church Fellowship International has several ministries in Jacksonville, Florida. It has worked with VITAS to educate African-American church congregations about the benefits of hospice and to encourage members to volunteer. The Samuel DeWitt Proctor Conference is a group of African-American pastors. The group leads a number of large and influential churches around the country that have entered into a partnership with the Duke Institute on Care at the End of Life to help it spread the word about the need for African-Americans to know more about hospice and palliative care options for end- of-life care. United has a record of providing hospice services to African-Americans. Overall in 2009, United provided 26% of its hospice patient days to African-Americans in 2009. In communities with large African-American populations similar to Duval, United provided in excess of 46% of its patient days to African-Americans. In 16 of its 25 hospice programs, 26% or more of United’s hospice admissions were persons of African-American descent. In five of United's hospice programs, African- Americans accounted for more than 40% of admissions. United is committed to increasing access to hospice services for African-Americans. Claudia Warren-Wheat is a Clinical Social Worker with United Clinical. She assists the United Hospice programs in the social work and community outreach functions. Ms. Warren Wheat coauthored an article published in the Journal of the National Association of Social Workers examining barriers to access for hospice use by African- Americans entitled "Hospice Access and Use by African-Americans: Addressing Cultural and Institutional Barriers through Participatory Action Research" (Nov. 1999). This Article includes recommendations for dismantling barriers to access to hospice care for African-Americans. United's plan to increase African-American utilization of hospice services includes developing a census tracking tool to routinely track referrals generated by the outreach program to measure its success. Section 408.035(1)(f), Florida Statutes -- immediate and long-term financial feasibility VITAS’s operating cash flow will fund the proposed project cost of $338,000. It is more than adequate to cover the VITAS's project costs. VITAS is an existing hospice provider in Florida and in sound financial condition. VITAS's parent, VHC, will fund the project's charitable contribution commitments. The VITAS proposal is financially feasible in the short-term and long-term. The VITAS pro forma was derived from the same financial model it has used successfully for years. The assumptions used by VITAS for revenues and expenses are reasonable and achievable. Its existing operations in Florida provide sufficient net income and cash flow to ensure the project’s financial success. VITAS’ projected utilization is conservative and is both reasonable and achievable. United has a successful history of establishing new hospice programs. It too has the resources to establish and operate the proposed program. If United does not achieve its projected utilization and linked revenue in the second year of operation, that will not impair its financial feasibility. United can adjust staffing as needed. And United is likely to achieve the utilization needed to "break even. The United project is financially feasible in the short and long term. Section 408.035(1)(g), Florida Statutes -- extent to which proposal will foster competition that promotes quality and cost- effectiveness Both applicants are capable, established hospice service providers with the backing of experience and committed parent companies. Either applicant will foster competition with the existing providers in all arenas including quality and cost effectiveness. Section 408.035(1)(h), Florida Statutes -- costs and methods of construction, etc. Neither applicant proposes construction as part of its proposal. Section 408.035(1)(i), Florida Statutes -- the applicant's past and proposed provision of health care services to Medicaid patients and the medically indigent The applicants present comparable records of providing services to Medicaid and medically indigent patients. VI. Ultimate Findings of Fact Both applicants would provide quality care to their patients. Neither is demonstrably superior to the other. Both applicants will improve access of rural and homeless residents of Area 4A. Neither is demonstrably likely to improve access more than the other. Both applicants propose financially feasible projects. There are no "not normal" or "special" circumstances related to the need for hospice services in Area 4A. Both applicants are committed to and capable of providing care to non-cancer patients. Neither has a demonstrably superior plan for doing this. Both applicants are committed to and capable of providing continuous care to those who need it. Neither has a demonstrably superior plan for doing this. VITAS's plans for increasing utilization by African- Americans, in light of its conditions, are more likely than those of United to improve African-American utilization.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law it is, RECOMMENDED that the Agency for Health Care Administration issue a Final Order denying the application of United Hospice of Florida, Inc., and granting VITAS Healthcare Corporation of Florida, Inc., a Certificate of Need to establish a hospice program in AHCA Service Area 4A with the conditions stated in VITAS's Certificate of Need Application. DONE AND ENTERED this 22nd day of March, 2011, in Tallahassee, Leon County, Florida. S John D. C. Newton, II 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 22nd day of March, 2011.
The Issue Which of two applications for a Certificate of Need (CON) to operate a hospice in Service Area 8B, Collier County, Florida, should be granted: CON 9967 filed by Hope Hospice and Community Services, Inc., or CON 9969 filed by VITAS Healthcare Corporation of Florida?
Findings Of Fact The Parties AHCA The Agency for Health Care Administration is responsible for the administration of the Certificate of Need (CON) Program in Florida and for carrying out Florida's CON Law. See § 408.031, Fla. Stat., et seq. The Agency is designated both "as the state health planning agency for purposes of federal law . . . [and as] the single state agency to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat. HON Hospice of Naples, Inc. (HON), a not-for-profit corporation qualified as a "501(c)(3)" charitable organization under the Internal Revenue Service Code, is a community-based full service hospice. Founded in 1983 by a group of volunteers who wanted to improve care for those suffering terminal illnesses in Collier County, HON is governed today by community representatives that comprise a 19-member board of directors. HON is the only hospice currently licensed to provide hospice services in Service Area 8B, Collier County. It is licensed to provide hospice program services and to operate a freestanding general inpatient program facility in the county. Since 1988, HON has been continuously Medicare and Medicaid certified. It has been accredited by the Joint Commission for Accreditation of Health Care Organizations since 2001. HON accepts all Collier County patients, regardless of religious beliefs, sexual orientation, and circumstances, including how the patient may be challenged physically or mentally. HON provides its services wherever the Collier County patient resides: in their own homes (approximately 50%); in skilled nursing facilities and assisted living facilities (45%); in jails, shelters and the Georgeson Hospice House (5%); and in a small fraction of cases in hospitals. Patients are also accepted regardless of ability to pay. In 2006, HON provided $344,000 in charity care to those who did not have the resources to pay for hospice care. HON's principal office is located on the same campus with the Frances Georgeson Hospice House (the "Georgeson House"), HON's 16-bed freestanding hospice general inpatient facility. The main office and Georgeson House are centrally located and geographically accessible in relation to the most populated portions of the county. HON has four branch offices placed where the greatest number of hospice patients reside in the county. The offices are in Marco Island, Immokalee, North Naples (near the Collier-Lee County line), and South Naples. HON consistently relies on donations from the community to cover shortfalls from operations. From 2002-2006, HON lost between $1.5 million and $4.5 million annually on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies on contributions to allow it to continue to provide a wide array of enhanced core, non-core and community services beyond what reimbursement covers. Collier County has been well served by HON, an available, accessible, high quality, not-for-profit community-based hospice. VITAS VITAS is a for-profit Florida corporation licensed to provide hospice services in Florida. It is a wholly-owned subsidiary of VITAS Healthcare Corporation ("VITAS Healthcare") which operates more than 40 hospice programs in the nation and is the largest hospice provider in the country. VITAS has a sister corporation, VITAS of Central Florida, Inc. The two operate hospice programs in Hospice Service Areas 4B, 7A, 7B, 7C, 9C, 10, and 11 that include Orange, Osceola, Seminole, Brevard, Volusia, Flagler, Miami-Dade, Monroe, Broward, and Palm Beach Counties. VITAS and its predecessor entities have provided comprehensive hospice services throughout South Florida in excess of 28 years. It has a storied history that commenced in the mid-seventies with the organization of a group of hospice volunteers by Hugh Westbrook, an ordained United Methodist minister, and Esther Colliflower. These initial efforts led to the incorporation of Hospice Care, Inc., in Miami as one of the nation's first hospice programs. Reverend Westbrook and Ms. Colliflower continued their pioneering endeavors in hospice as leaders in the successful effort to create a federal payment system for hospice. In the early 1990's Hospice Care, Inc., was converted into a for-profit entity. The term VITAS, derived from the Latin word for "lives," was incorporated into the name of the corporation to symbolize the mission of VITAS Healthcare: the preservation of the quality of life for those who have a limited time to live. VITAS Healthcare is a wholly owned subsidiary of Chem-Ed, a for-profit corporation. Chem-Ed has had an interest in VITAS Healthcare at least since 1991 when it was an owner of 25% of VITAS Healthcare stock and one of its executives, Tim O'Toole took a seat on the VITAS Healthcare board of directors. In 2004, the majority ownership of VITAS Healthcare was sold to Chem-Ed and Tim O'Toole became VITAS Healthcare's Chief Executive Officer. Most of the senior management stayed intact after the acquisition by Chem-Ed. Among the reasons for retaining senior management was to continue VITAS Healthcare's values in the wake of the acquisition. The main value is "putting patients and their families first." Hope Hope Hospice and Community Services, Inc. (Hope), is a not-for-profit community-based hospice organization incorporated as a 501(c)(3) charitable corporation under the Internal Revenue Code. Hope is governed by a board of directors, all of whom are residents of Hope's service area. As business and community leaders in Southwest Florida, Hope's Board members know the Hope service area well. Their in depth knowledge of the community enhances their sensitivities to the needs of the communities served by Hope. Founded in 1979 by a group of clergy, nurses, and other volunteers in Lee County, Hope became a Medicare certified hospice in 1984. Since 1991, Samira Beckwith has served as Hope's President and CEO. Ms. Beckwith has been actively involved in hospice since 1976, and has received numerous state and national awards for her work in hospice and end-of-life issues. Originally licensed to serve Service Area 8C (Lee, Hendry, and Glades Counties), Hope has been licensed since 2006 to serve Service Area 6B (Polk, Hardee, and Highlands Counties) as well. Hospice Care Hospice care may be provided in any location where a patient has lived or is temporarily residing such as a private home, family member's home, assisted living facility (ALF), nursing home, hospital or other institution. There are four levels of hospice care: routine home care, general inpatient care (GIP), continuous care and respite care. The majority of hospice patients receive routine home care. This level of care may be provided in the patient's home, a family member's home, a nursing home or an ALF. Routine care comprises the bulk of hospice patient days. Continuous care is also provided in the patient's home. Unlike routine home care, continuous care is nursing assistance at a time of crisis for the patient. Typically, it is for control of acute care pain or symptom management on a short-term basis. Continuous care is usually intermittent. The use of the term "continuous" as a descriptive adjective to describe this type of hospice care, therefore, makes "continuous care" a misnomer. Continuous care requires a minimum of 8 hours of one-on-one care in a 24-hour period with at least 50% of the care provided by a nurse. The other half of the care may be provided by personal care assistants or nurses' aids. General inpatient care or GIP refers to the care a hospice patient receives in an inpatient setting such as a hospital, a Medicare-certified nursing home or in a freestanding hospice unit. This type of care involves increased nursing and physician care for patients with symptoms temporarily out of control and in need of round- the-clock nursing to manage complications. The least used level of hospice care, respite care is provided to patients in an institutional setting such as a nursing home, ALF or freestanding hospice unit in order to allow care givers at home, such as family members, a short break or "respite" from the demands of caring for a terminally ill patient. Penetration Rates An objective measure of accessibility of a hospice program is the penetration rate ("P-rate") in the hospice's service area. P-rate is the ratio of hospice admissions to total deaths in a service area. It is a basis for planning for hospice programs in the state of Florida. Hope touts its P-rate in Service Area 8C as a basis for its superiority over VITAS. Its P-rate in Service Area 8C has always exceeded the state-wide average. For the June 2006 reporting period, its P-rate was 62% when the statewide average was 56%. Hope has continually increased its P-rate at a rate higher than the rate of increase of the statewide average. The Fixed Need Pool and the SAAR On October 6, 2006, AHCA published a fixed need pool for one new hospice program in Service Area 8A for the second batching cycle of 2006. On October 27, 2006, HON filed a challenge to the fixed need pool. The challenge was denied by final order. HON appealed. The appeal was dismissed. In the meantime, five hospice organizations submitted letters of intent and CON applications for a new hospice in Service Area 8A: VITAS, Hope, HCR Manor Care Services of Florida (HCR), Evercare Hospice of Collier County (Evercare), and Odyssey Healthcare of Collier County, Inc. AHCA issued its State Agency Action Report (SAAR) on February 23, 2007. The SAAR approved VITAS' application and denied the others. Notice of AHCA's decision was published in the March 9, 2007, edition of the Florida Administrative Weekly. Between March 12, 2007 and March 29, 2007, HON and three of the denied applicants (Hope, Odyssey, and HCR) filed petitions challenging the approval of VITAS' application. The petitions of Hope, Odyssey, and HCR also challenged the denials of their respective applications. Evercare did not challenge any of the Agency's decision. On March 23, 2007, VITAS filed a petition supporting the decisions of the Agency and requesting comparative review of its application with the applications of the other applicants that had challenged AHCA's decision. In their applications, VITAS and Hope aspire to meet the need published for a single new hospice in Service Area 8A. They also contend in their applications that "special circumstances" demonstrate need for an additional hospice program in Collier County. The need formula in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"), produces a fixed need pool for "1" or "0." The Agency's position is that the formula can never generate a fixed need pool in excess of 1. See Fla. Admin. Code R. 59C-1.0355(4)(a): Numeric Need for a New Hospice Program. Numeric need for an additional hospice program is demonstrated if the projected number of unserved patients who would elect a hospice program is 350 or greater. The net need for a new hospice program in a service area is calculated as follows . . . . (Emphasis supplied). The existence of a fixed need pool of "1," alone, does not prove there are gaps in service if there is an existing hospice provider in the service area. HON's expert, Mr. Davidson elaborated on this point at hearing: The purpose of the rule is not to identify service areas where existing providers are not getting the job done now . . . it's a temptation to interpret a fixed-need pool that way but it's an incorrect temptation. [T]he rule . . . identifies service areas where the growth in hospice admissions is projected to be sufficiently large to enable a new program to be approved without digging into the level of service of the existing provider. Tr. 3708-3709. In this case, the fixed need pool of 1 was attributable more to projection of service area deaths than the use of penetration values used in the formula for calculating fixed need. When a fixed need pool of "1" has been published, and an applicant responds to the numeric need and also alleges that special circumstances exist to justify approval of a new hospice, the Agency views the special circumstance allegation, even if proved, to be a potential preference for the applicant in the context of comparative review. The existence of a special circumstance is not a basis for the approval of more than one applicant in a batching cycle. The Hospice Programs Rule is interpreted by AHCA to permit the approval of only one hospice program in any one batching cycle. This interpretation stands so that only the superior application may be approved even in cases where: a.) there are two hospice organizations qualified to meet numeric need and b.) coincidentally there are special circumstances that would otherwise justify the inferior application's approval. Adverse Impact to HON if Two Programs Approved If the applications of both VITAS and Hope were to be simultaneously approved, HON would experience a significant reduction in average daily census (ADC). By 2009, it is reasonably projected that its census would be reduced to 180 patients, a decrease from 2007 of about 61 patients in the second year of operation for the two new programs. Net income (including donations) for HON in the second year of operation for two new programs, if ADC were decreased by 61 patients, would likely be reduced by approximately $1.2 million. Historically, HON has a net operating loss before contributions ranging from $1.5 million to $4.5 million. The likely reduction in net income would be significant. Reduction in HON's programs would be necessary to make up for the lost revenue. A number of community programs would have to be eliminated. Core and non-core services would have to be reduced. It is possible that there would an indirect adverse impact to HON as well: a breach of trust perceived by the community and donors when community services which have come to be expected are reduced or withdrawn. Service Area 8B: Collier County Service Area 8B, located in Southwest Florida along the coast of the Gulf of Mexico, consists of one county. Collier County is relatively large in area. Its population of around 360,000 is most dense along the coast in the county's westerly parts. Service Area 8A borders Service Area 8C to the north and Service Area 10 and 11. The more populated communities in Collier County are more congruent with communities in adjacent Service Area 8C, where Hope operates. Service Areas 10 and 11, where VITAS operates, on the other hand, are separated from the densely populated areas of Collier County by wide expanses of relatively unpopulated borderlands. Service Areas 8A and 8C have some similar demographics. For example, both are less densely populated than the state as a whole. Both service areas are growing at a rate that is faster than the rate of growth of the state as a whole. The percentage of the two service areas in the 65+ age cohort is the same and is higher than the statewide average for that age cohort. The two have a similarity in the percentage of Hispanic population. The median household net worth in both service areas is higher than the statewide average, considerably so in the case of Collier County. The two service areas have similar mortality rates and a similar array of causes of death for their residents. Proximity of Hope to Collier County Health Care Facilities Collier County has four hospitals, two within each local health care system. NCH Health System (NCH) operates Naples Community Hospital and, less than 10 miles from the Lee County line, North Naples Hospital. Health Management Associates (HMA) operates Physicians' Regional Hospital at Pine Ridge Road and at Collier Boulevard. The two NCH hospitals have 681 beds, while the HMA hospitals have approximately 180 beds. Collier County has many skilled nursing facilities. Collier County hospitals serve some residents of Service Area 8C. The import of the proximity of Hope's current operations in Lee County and Service Area 8C to Service Area 8A was summed up at hearing by Hope's expert planner, Jay Cushman: Because of Hope's proximity to the proposed service area, it has relationships that already exist between important providers of health services in service area 8B including hospitals. From time to time, residents of Hope's service area are hospitalized in Collier County, and Hope's staff visits them if they are going to be referred back to Lee County or other counties in service area 8C as hospice patients. Hope Hospice also operates a long-term care diversion program ["LTCD Program"] which includes services to residents of Collier County. So Hope Hospice is already engaged in providing social and health services to service area 8B in a way that puts them in a natural position to identify patients who are in need of hospice care and to see that their admission to hospice care is accessible and a matter of continuity of care between their participation in the [LTCD Program] and potential admission to hospice. Tr. 2899-2900. Furthermore, of Collier County residents requiring hospitalization, six percent are admitted to hospitals in Lee County. In contrast, the relationship between Collier County residents and admissions to Miami- Dade or Broward County hospitals is insignificant. Having a presence in an adjacent service area does not guarantee success for Hope. When Hope sought to expand to Service Area 6B (Polk, Highland, and Hardee Counties), it made arguments of "contiguous" communities and "established referral networks." Yet, Hope only achieved approximately one-third of its projected first year admissions in Service Area 6B. If Hope is approved as a result of this proceeding and Hope continues its management of the LTCD program in Collier, moreover, it is likely to have an adverse impact on HON with regard to certain referrals. If VITAS is approved, the potential for a hospice operated LTCD program to facilitate referral advantages will not exist. VITAS will not start an LTCD program if its application is approved. The differing impact that co-batched applicants might have on an existing provider is considered by AHCA to be relevant to comparative review. COMPARATIVE REVIEW Relative Impact on HON; Donations Unlike VITAS, which has an affiliated foundation that accepts memorials, bequests and unsolicited donations, Hope and HON actively solicit and depend on donations to cover operating losses annually. HON's only source of revenues are Medicare, Medicaid, and Insurance (combined 82%); Contributions and fundraising (16%); and thrift shop revenue (2%). From 2002-2006 inclusive, HON lost between $1.5 million and $4.5 million on operations, before contributions were considered. Contributions over the same period ranged from $1.5 million to $4.4 million. HON relies heavily on contributions to make up annual shortfalls in revenue and to allow it to continue providing a wide array of core, non-core and community services beyond what reimbursement covers. HON's operational expenses annually exceed revenue, because of HON expenses incurred to ensure quality and accessible care. For example, HON employs highly trained clinicians and deploys them on specialty teams. In addition to its regular home care teams, HON has a Float Team, to ensure there are no service gaps. It also has a Central Facilities Team, comprised of RNs and Aides, experienced with the unique needs of nursing home based hospice patients who exclusively serve HON's patients in nursing homes and assisted living facilities. It also has an On-Call/After Hours Team, a special Weekend Home Care Team, an Admissions and Intake Team, and complementary therapies. Besides the RNs assigned to direct patient care, HON also employs RNs for all key managerial positions. At HON the CEO, Director of Compliance, Clinical Services Directory, Quality Manager, Clinical Education Director, General Inpatient Care (GIP) Clinical Manager and all team managers are all experienced RNs. This depth in personnel allows more clinicians to spend more time with patients and families and to deliver high quality specialized care. It is expensive. It involves hiring and retaining the most experienced, specialized and certified clinicians available. HON has one of the lowest nurse to patient ratios in Collier County: 1 nurse to every 11 patients in home care and 1 nurse to every 4 patients in GIP. These lower ratios mean more care at the bedside and more support for the patient and family. HON uses certified home health aides and nurses assistants rather than homemakers to perform homemaker services for patients. HON has placed certified RNs in all of its key management and care giver positions, with high concentrations of certified RNs on the specialty teams. The certification of hospice and palliative care nurses and home health aides signifies the highest level of competency and specialization in the end of life clinical care. Charitable contributions received by HON, to offset operational losses are broadly categorized as "solicited" and "unsolicited." Solicited funds are monies that HON raises through newsletters, direct solicitation, special events, and individual and corporate underwriting. Unsolicited money comes from memorial gifts and bequests, primarily from patients and patient families. Although Naples may be the one of the wealthiest communities in Florida in terms of disposable wealth, it does not mean there is an inexhaustible pool of money for charitable contributions. The window of opportunity to sponsor a well attended charitable fundraising event in Collier County is January through April. A Naples Charity Register is published annually, to confirm for the donors and event sponsors how the limited space on the calendar of charitable events has been allocated. Each year, there are over 300 not-for-profit organizations in Collier County competing for a weekend, between January and April, to schedule their fundraiser. Solicited funds received from special events are the result of relationship HON nurtures with other organizations in the community. Special event funding is not limited to HON; the market for fundraising in Collier County is highly competitive. Each new fundraising season requires that HON renew relationships, which can be preempted at any time by another charity. HON's historical relationships simply do not guarantee that a community organization will in the future choose to give charitable dollars to HON. HON's ability to maintain these relationships with donors is enhanced by the fact that it is currently the only not-for-profit hospice in Collier County. Like HON, Hope is also heavily dependent on donations and charitable contributions to cover Hope's annual operating losses, which historically range from $1 million to $5.1 million annually. As in the case of HON, Hope is a 501(c)(3) charitable organization, authorized to solicit donations from the general public and to provide receipts for those donations, so that donors can take tax deductions for their donations. The amount of contributions Hope solicits is impressive. In 2006, when all contributions and net assets released from restrictions/satisfaction of donor requirements were considered, Hope raised $4.3 million in charitable contributions. Hope is more successful than the average hospice at raising charitable donations for its hospice program. It has a track record of being committed to raising substantial amounts of money in its own service area through special events. Hope solicits its larger donations from the same sort of activities (tennis and golf charity events) as does HON. Hope's enthusiasm for special event soliciting is exemplified by Hope's decision to include a notice of the "Hope Gala" in the 2006-2007 Naples Charity Register, to directly solicit funds from the Naples area in which Hope is not licensed as a hospice, to fund a Hospice House that Hope had already built in its own service area. It is reasonable to expect that if awarded a CON, Hope would solicit contributions by sponsoring special events in Collier that would directly compete with HON for a seasonally limited pool of solicited special event and corporate donations. It is also reasonable to expect that corporate and individual donors with a history of giving to HON would instead split hospice donations between Hope and HON. In CY/FY 2006, 71% of the charitable contributions received by HON were from solicited sources. Solicited sources can be divided into three broad categories. Special events accounted for 18% of charitable contributions, solicited corporate underwriting 19%, and direct mail and newsletters 34%. Unsolicited bequests and memorials accounted for the remaining 29% of charitable contributions. Solicited contributions from special events and corporate donations exceeded $750,000. If Hope is awarded a CON, HON's fundraising expert project Hope will reduce solicited donations from special events and corporations, which HON would have otherwise received, by at least one half the first year and potentially more than one half in successive years. While the projection may overstate the immediate reduction in HON's share of solicited donations, it is reasonable to project that HON's share of all solicited donations will be reduced roughly by half at some point not long after Hope received a CON were it to do so. It is logical also to conclude that Hope would compete for and reduce HON's receipts from direct mail and newsletter solicitations. VITAS is a for-profit corporation. It is not likely to compete with Hospice of Naples for charitable contributions from the community. Nor does VITAS' charitable Foundation receive contributions on the scale of Hope. VITAS raises approximately $1 to 1.5 million per year nationwide from its hospice programs, most of which is the result of memorial gifts, rather than community fundraising. It is virtually certain that VITAS' entry into the community will have minimal impact on HON's fundraising efforts. VITAS has committed to working collaboratively with HON to limit the impact VITAS would have on HON's donations. VITAS has agreed, as a condition subsequent to approval of its CON, to provide HON's charitable donation solicitation materials and brochures to VITAS patients and families. VITAS' charitable foundation primarily helps fund and support end of life research, such as the Duke Institute for End-of-Life Care, which benefits all hospices. It is reasonable to expect that if VITAS was awarded a CON, HON would continue to receive much needed solicited donations from direct mail, newsletters, corporations, and special events, in an amount approximating HON's historical solicitations. In sum, an approved VITAS program will have significantly less adverse impact on donations to HON than will an approved Hope program. VITAS' offer to accept as a condition on its CON a requirement that VITAS make HON donation solicitation literature available to VITAS' patients is significant. It confirms a collaborative approach to informing the community. It also gives potential donors a choice: donate to a hospice that uses its donated dollars locally or to one that funds end of life care research and improvement. Different Models of Care VITAS offers a model of care different than that provided by HON or that would be provided in Collier County by Hope. The difference flows from the nature of VITAS' organization as a business. It is a wholly-owned subsidiary of a large, for-profit corporation with national resources, VITAS Healthcare Corporation. VITAS Healthcare Corporation, in turn, is a wholly-owned subsidiary of Chem-Ed, a for-profit corporation that is publicly traded and that engages in business unrelated to hospice with nation-wide scope. Chem-Ed, operates under a business model that seeks to maximize shareholder value and returns. Publicly traded companies often make strategic decisions based upon the stock's performance rather than the business' viability or services provided. Chem-Ed provides its executives at VITAS with performance-based compensation incentives that reward them with bonuses premised upon performance. Chem-Ed monitors the financial performance of its hospice programs with respect to the Medicare spending limit (the "Medicare Cap"). The Medicare Cap is a limit on the total annual payments Medicare makes to a hospice based on the number of first time hospice beneficiaries served by the hospice. The Medicare Cap is intended to ensure that Medicare does not spend more for hospice patients, on average, than for conventional medical care patients at the end-of-life. From Chem-Ed's perspective, hospice programs that operate just below or just above the Medicare Cap optimize profitability. A Medicare provider that exceeds its Medicare Cap must pay back to the government the money it was paid by the government above the cap. In the event that VITAS Healthcare determines that one of its subsidiary programs is going to exceed its cap, there is incentive, especially under a business model of delivering hospice care, to take corrective action. Corrective action could be directed at patient mix and patient admissions. This potential was described at hearing by Hope's expert health planner as: [M]anaging patient mix and admissions from the highest levels of the company for a local program in order to protect the bottom line. And this is without regard . . . to whether or not the needs of the community are being met; whether or not changing the patient mix would enhance or deny access to groups of patients; whether the admission discharge rate and length of stay are appropriate or not. It's all regard to whether the [hospice] program is exposing the [parent] company to a financial risk. Tr. 3034. The business organization context within which VITAS Healthcare operates will provide VITAS with the benefits of economies of scale in a number of its activities. In stark contrast, HON and Hope are two local, not-for-profit, community-based hospice providers. Hope employs a model of care called the Open Access Model because it emphasizes the elimination of barriers to access to hospice care. These barriers may include costliness and the difficulty posed for a patient having to choose between parenteral nutrition and hospice care as described in Hope Ex. 27. The exhibit is an article described by Mr. Cushman as: [S]uggest[ing] that the financial exposure that a hospice assumes when it adopts an open access model of care may be too great to bear for hospice programs that are less than an average daily census of 200. [The article] also discusses some of the issues facing patient and physician who want to refer patients to hospice, as they transition between curative and palliative care, and how open access programs, by providing an easier transition . . . assume a greater cost . . . provide more access to hospice services and lengthen the hospice stay. Tr. 3005-3006. Other barriers include a primary language of the patient other than English, cultural traditions, remote location of the patient's home, lack of access to basic social and health services, lack of information about hospice care, and the reluctance of the attending physician to deal with end-of-life issues. An example of Hope's use of the Open Access Model is its willingness to pay for necessary palliative chemotherapy and radiation therapy when there are no other resources available to a hospice patient to cover such care. Hope's related social and health services such as the Long Term Care Diversion Program enhance access to hospice services in Hope's service area. Employment of the model is reflected in Hope's higher than average hospice penetration rates for Service Area 8C. There are other differences between the approaches to hospice care taken by VITAS and Hope. For example, Hope favors Freestanding Hospice Houses for inpatient care whereas VITAS favors Hospital Dedicated Inpatient Units. Freestanding Hospice Houses vs. Hospital Dedicated Inpatient Units Both freestanding hospice houses and hospital dedicated inpatient units have advantages and disadvantages. See VITAS Ex. 57, Ch. 2, p. 35. VITAS sees Hospital Dedicated Inpatient Units as superior particularly from the viewpoint of doctors and ancillary services. VITAS frequently contracts for dedicated hospital inpatient units. It has never built a freestanding hospice house and does not intend to build one in Collier County. VITAS proposes, instead, to begin providing care in scatter beds in hospitals and then would seek to establish dedicated units when the census justified it. Two Collier County hospitals have indicated intention to enter contracts with VITAS if its application is approved. Naples Community Hospital has done the same. Hope prefers freestanding hospice houses because with a homelike environment they provide a secure and comfortable place for those who prefer not to die at home or who may not have a caregiver at home. Furthermore, consistent with the nature of Hope as a community-based hospice, freestanding hospice houses provide community identity and visibility. Hope operates three freestanding hospice houses to provide GIP and residential hospice services. They are HealthPark (16 GIP beds), Cape Coral (24 GIP beds and 12 residential beds) and Joanne's House/Bonita Springs (16 GIP and 8 residential beds). They are staffed by on-site nurses social workers, aides, therapists, and physicians. Medications and other supplies are available on site. Hospice houses are Hope's primary mechanism for providing inpatient care but it also provides GIP services in a dedicated unit at Shell Point, a SNF/CCRC located in Lee County. Hope developed the polices and procedures in place in the unit and is responsible for managing patient care. The unit is jointly staffed by Hope and Shell Point employees with Shell Point providing the routine nursing care. Even though the unit is dedicated for use by Hope, Hope pays a per diem only for the beds actually occupied by its hospice patients. No costs were incurred by Hope to renovate the space for use as a hospice unit. Hope also provides GIP through a "scatter bed" arrangement with other nursing homes and hospitals within Service Areas 8C and 6B. Hope staff provide daily visits to Hope patients in the hospital setting and regular visits in the nursing homes. Hope staff attend team meetings in nursing homes and ALFs for purposes of reviewing care plans and participating in joint care planning with facility staff. Hope staff also regularly meet with the facility administrators and nurses to obtain feedback on the quality of services provided by Hope. For Collier County, Hope's CON application proposed a mixture of scatter beds in hospitals and nursing homes and to use Joanne's house in Bonita Springs. Just as VITAS intends to resort to its primary mechanism for the delivery of inpatient services once its census in Collier County justifies it, Hope intends to build a freestanding hospice house in Collier County when its census reaches 100 patients. It projects that it will reach such a census in Year 4 of operation. HON operates a freestanding hospice house in Collier County. While it has some scatter beds, most of HON's inpatient care is provided in its hospice house. Hope, in its current operations, builds and utilizes hospice houses as its main mechanism for providing inpatient service. VITAS does not. VITAS provides inpatient service in dedicated units in hospitals. The criteria for a patient to receive GIP are substantially the same as the criteria for continuous care: emergency care or control of acute pain or symptom management. The big difference between the two is where GIP is provided. Inpatient care, for the most part, is provided by VITAS in the hospital. The patient's home is generally the site of where the hospice patient receives continuous care. Aside from the different models of care and approaches to GIP care, there are other differences between Hope and Vitas. VITAS CON Conditions In its application, VITAS offered to condition its CON in the following ways: Conditions of the Application Core Services Provide palliative radiation, chemotherapy and transfusions as appropriate for treating symptoms: It is VITAS Healthcare Corporation's position that these services are a core service as appropriately provided palliative care is a requirement of Medicare conditions of participation. This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. Provision of hospice services 24 hours a day, seven days a week as indicated by the patient's medical condition: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. VHCF will admit all eligible patients without regard to their ability to pay: It is VHCF's position this is a requirement of Medicare conditions of participation. This will be measured by VHCF's continued Medicare certification. Non-Core Services Commit to having every patient being assessed by a physician upon admission to the hospice: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. A physician will serve as a member on every care team and provide patient visits as required: This will be measured via a signed declaratory statement by VHCF which may be supported via review of patient medical records. On the first day of hospice care responsive patients will be asked to rate their pain on the 1-10 World Health Organization pain scale (severe pain to worst pain imaginable). A pain history will be created for each patient. These measures will be recorded in Vx via a telephone call using the telephone keypad for data entry. These outcome measures will include greater than 60 percent of patients who report severe pain on a 7-10 scale will report a reduction to 5 or less within 48 hours. Implement a Pet Therapy program to begin immediately: This will be measured via a signed declaratory statement by VHCF. Operational/Programmatic Conditions Establish satellite hospice offices in Immokalee and Marco Island during the first year of operation: This will be measured via submission of the office address and location to AHCA and publication of such addresses in the provider's collateral material. Implement a TeleCare Program to begin immediately: This will be measured via publication of the relevant collateral materials for the provider and patient community. Establish a Local Ethics Committee to begin upon certification: This will be measured via publication of the names and relevant information of the Ethics Committee members and the related scheduled of meetings. Implementation of CarePlanIT, a handheld bedside clinical information system, by the end second year of operation: This is measured by identification of the CarePlanIT budget on Schedule 2 of this application and will be measured at the time of implementation via a signed declaratory statement by VHCF. See VITAS Ex. 1, Tab 5, Summary of Conditions attached to Schedule C of CON 9969. In its PRO, the Agency lists five other conditions1 provided by VITAS: Offer VHCF educational programs to Hospice of Naples staff, physicians and patients. Provide Hospice of Naples Foundation information to VHCF patients and their families seeking to donate funds to hospice services. Upon certification of VHCF Collier, its parent entity - VITAS Healthcare Corporation - will make a $20,000 charitable contribution to Hospice of Naples. 65% Non-Cancer patients. Establish a Clinical Pastoral Education program to begin immediately. Core services are required to be offered by hospice programs. The three conditions in VITAS' application related to "Core Services," therefore, cover services that are not typically subject to conditions since they must be provided whether the application is conditioned upon them or not. The advantage to making them subject to a condition, however, is that the CON holder can be fined for not meeting the condition. The Agency approved the VITAS application and denied the others because in its estimation the VITAS application was clearly superior. See VITAS Ex. 274, Deposition of Jeffrey Gregg, at 16. The decision was described as an "easy call," id., at 17 because no other applicant proposed conditions that were close to the significance of the conditions proposed by VITAS. In its PRO, the Agency continues to maintain that the VITAS' conditions are far superior to those offered by Hope: Hope's conditions, by contrast [to those offered by VITAS], were less impressive: Hope Hospice will open an office in Naples and an office in Immokalee during the first year of operation. Hope Hospice will conduct education and outreach programs in Collier County aimed at enhancing access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will implement an emergency preparedness plan capable of maintaining the hospice admissions function during hurricane emergencies. To show conformance with the condition related to office locations, Hope Hospice will forward to the Agency copies of the business licenses and/or certificates of occupancy that who that Hope Hospice has occupied office space in Naples and in Immokalee in Service Area 8B during the first year of operation. Hope Hospice will also forward to the Agency copies of educational and outreach programs and attendance sheets that document efforts to enhance access to the population under 65 and to cancer patients who require palliative therapies. Hope Hospice will also forward to the Agency copies of its emergency preparedness plan for Service Area 8B. Recommended Order Proposed by the Agency for Health Care Administration, at 8, paragraph 26. Experienced Staff/Industry Leaders Many VITAS employees have 15-20 years of hospice experience, including employees in positions of leadership. VITAS' management team consists of recognized leaders in the hospice industry. Its founders were founding members of the National Hospice and Palliative Care Organization (NHPCO). VITAS has maintained an active leadership within the organization. VITAS' employees serve on a number of significant NHPCO committees. They have actively participated in shaping NHPCO's guidelines on a multitude of topics and are frequent lecturers at NHPCO conferences. The size of VITAS allows it to attract and recruit high caliber physicians, RNs, social workers and chaplains. Ability to grow within the company allows VITAS to retain its best employees. Extensive Education and Training Resources VITAS' economies of scale have allowed it to amass extensive hospice internal and external education materials. VITAS has developed unique training materials for staff. It has also developed specific physician and easy to understand community educational materials for patients and families. Many educational materials are translated into other languages including Spanish. All of VITAS materials are easily accessible on VITAS Intranet Service. VITAS, because of size, is able to dedicate significantly more resources to staff education and training than most hospices. VITAS has a significant distance learning program, as well as ongoing dedicated corporate personnel that visit local programs for training. It also maintains teaching affiliates with universities and community colleges for residency and fellowship training of RNs, physicians, and other healthcare professions. Among its training and education efforts is the coordination of specialized training. For example, Dr. Kinzbrunner has dedicated substantial time to writing the Jewish Hospice Manual and traveling to various programs to help educate them to become certified by the National Institute for Jewish Hospices. Similarly, Colonel Jaracz's full-time responsibility is to formulate VITAS' Choices for Veterans initiatives and visit local programs to ensure they are carrying out these initiatives. VITAS places a great deal of emphasis on educational materials for the patient and family. Hope has a different philosophy, at least at the time of admission. On some occasions Hope might provide brochures related to specific therapies if the patient will be receiving them at home. Usually, however, Hope limits the educational materials it provides at admission to a single brochure about Hope Hospice in general. As Toni Granchi, Professional Relations Coordinator for Hope Hospice, explained in her deposition: "I don't want to inundate them with a bunch of brochures . . . . I don't want to give them everything on the first visit. It's very overwhelming." Hope Ex. 152, at 9-10. In contrast to Hope's approach at the difficult moment of admission to hospice, VITAS sees "reinvesting in the materials that will improve [VITAS'] care and educate the family [as] critical." Tr. 116. Whichever approach is superior, the extent of VITAS' educational materials that would be available in Service Area 8 if VITAS is approved will add a new dimension to hospice education in Collier County. Dedicated New Start Team VITAS has had a dedicated start up team since 2002. This group is headed by Executive Vice President Deirdre Law, an RN with more than 20 years of hospice experience. The team includes several RNs with extensive hospice experience. They train clinical managers, ride with new hire nurses and provide patient care until the new nurses demonstrate competency. An example of the work of the VITAS start up team was offered at hearing by Kathy Laporte, VITAS' Senior General Manager for the Brevard and Volusia County programs. When VITAS' program started in Brevard County, a patient care administrator helped Ms. Laporte learn VITAS' policies, procedures and support tools. Support was offered to the business manager and in managing continuous care. The start-up team stayed with the Brevard Program until the program could be sustained without them, for "about a year." Tr. 1224. The success of the VITAS start- up team is demonstrated by VITAS' growth in five years to become the largest provider in the Brevard market despite competition from three exiting providers, two affiliated with hospitals. In addition to the full-time dedicated start-up team, VITAS uses specialized personnel who are active in new start programs. Among them are Sarah McKinnon who provides start-up services in general staff education, Dr. Kinzbrunner in Jewish hospice training and certification and medical directorship, Colonel Jaracz in Veteran training and outreach, Robin Fiorelli in bereavement and volunteer services and Mike Hansen in IT services. VITAS start up teams and specialized start-up services have had significant new start experience in opening hospices in a number of competitive environments. It has opened 20 programs in the last five years, three in Florida. VITAS has never had a start-up program fail. As a community-based hospice much smaller relative to VITAS, Hope has not had start-up experience comparable to that of VITAS. Its one new start is in Service Area 6B. In its CON application, Hope had projected 321 admissions in Year 1. In its first year of operation, Hope achieved 92 admissions. Service Area 6B is Hope's only experience in a competitive market because it is the only provider of hospice services in Service Area 6C. Advanced Information Technology Because of the strength of its financial resources, VITAS has been able to invest $10 million into its customer computer system called Vx or "VITAS Exchange." The system allows it to perform patient analysis and research studies that improve hospice care. After testing in the Fall of 2007, VITAS will begin to roll out VxNext to make Vx more user friendly allow the gathering of more detailed patient information. A technology refresher to Vx, VxNext requires an investment of $13 million. The latest VITAS Information Technology (IT) project is CarePlanIT, a customized care planning system and electronic medical record. Currently 14 hospice programs, about one in three VITAS programs, are operational on CarePlanIT. The rollout of CarePlanIT has been going on for about three years. Increase in the percentage of VITAS hospice programs over those years has been slowed by the addition of so many new VITAS programs in the past five years. VITAS reasonably conditioned its CON on having CarePlanIT operational in Collier County by Year 2. Hope uses an "off-the-shelf" system, Misys, for its medical records. Unlike CarePlanIT customized for VITAS, Misys was not customized for Hope; nor is it specifically designed for hospice. Put simply, Hope's system is not "leading edge" information technology like CarePlanIT. Customized, leading edge, information technology is too expensive for Hope, as one would expect for a community-based hospice. Telecare VITAS' Telecare system is a centralized call center that answers the telephone calls for VITAS' programs after hours. There are several advantages to Telecare. Clinicians are available to answer questions immediately. The system uses defined criteria to determine if an after hours visit should be made. It divides responsibility between the decision-maker as to whether an after hours visit is needed and the RN who actually makes the visit. This division is advantageous because after hours care occurs at a time that is regarded by many as inconvenient. When the decision is made to undertake a visit, the local on-call RN is dispatched immediately. Many of VITAS' clinicians at the call center are fluent in Spanish and other languages minimizing the barrier that language can be at a moment of stress. Disaster Capability VITAS' IT systems have built-in redundancy. The main site is in a bunker in Miami above the 100 year floodplain in a facility that had been an AT&T switching center. The walls are three feet thick concrete. In addition, VITAS is running concurrent dual systems in Chicago and has 100% redundancy for all systems in a bunker in Phoenix, Arizona. The Miami site has generator capacity to run for two weeks without power but could be switched to Phoenix with little to no down time in the event of a disaster. VITAS' size gives it the advantage of the ability to bring in clinical personnel from other parts of the country should there be a disaster that displaces some staff. Outreach Programs There are no existing hospice outreach programs for the Jewish population in Collier County, but the special needs of Collier County Jewish hospice patients are being served by HON. Dr. Kinzbrunner championed the Jewish hospice initiative for VITAS. At hearing, he offered reasons why some Jewish people might be less likely to utilize hospice service than non-Jewish people. Through its educational and training programs, VITAS teaches staff to be sensitive to Jewish cultural and religious issues including understanding specific Jewish customs and traditions. VITAS also makes an effort to reach the Hispanic populations in the areas it serves. It has a significant number of Spanish speaking staff. Its experience in South Florida and Texas consists of work with highly concentrated Hispanic populations. Furthermore, VITAS offers all of its standard hospice forms and much of its educational materials in Spanish. The African American population in Collier County is not as high as other parts of the state; it constitutes 20,000, just less than 7% of the population. VITAS' efforts to educate and reach into minority communities is significant. Its staff is recognized in the industry as providing substantial resources to increase minority access to hospice. Collier County has a significant population of Veterans. The Department of Veteran Affairs has determined that in recent years the number of Veterans' deaths in the county has been approximately 1550 annually. Veterans have special needs at the end of life. These include unique psychosocial needs related to military service, retrieval and obtaining military awards and medals and coordination of military benefits to which patients and families may be entitled. VITAS has a well-developed, detailed program targeted to meet the special needs of veterans. Hope makes an effort to recognize and serve the special needs of Veterans as well. Its psychosocial staff must participate in a special training program designed to educate the staff on the needs of Veterans. Its "Wounded Warrior" program sensitizes Hope staff to the special needs of combat veterans as opposed to those who did not experience combat, the psychosocial needs of veterans of different wars, the special needs of women veterans and special needs of veterans suffering from post-traumatic stress disorder. Hope staff and volunteers, many of them veterans themselves, are trained to build a rapport with Veterans and to help them deal with guilt, anger and anxiety when associated with the Veteran patient's service. Hope regularly reaches out to the Veteran population through local veterans organizations such as the Veterans of Foreign Wars. The special needs of its patients who are Veterans are provided for in a number of other ways as well by Hope. HOPE Required Services Hope provides all of the required Medicare core services directly through its employees, including physicians. It also provides all of the required Medicare non-core services. Unlike some hospices, Hope provides home health aide services and homemaker services directly through its employees in order to better assist its patients and their families. Complementary Therapies Hope offers complementary therapies that enhance the quality of care and the quality of life for hospice patients. Hope offers music therapy through its six licensed music therapists. Other complementary therapies offered by Hope are art therapy, pet therapy and aromatherapy. Hope also offers massage therapy as part of its holistic approach to the care of its patients. Massage therapy can reduce the amount of pain medication that a patient requires and can help alleviate other symptoms as well. Non-required Services In addition to the required core and non-core services, Hope provides non-required services to its patients. They include residential care, a caregiver program for patients who do not have a caregiver at home or whose caregiver at home is not able to provide necessary home care services, and grief services beyond the scope of hospice bereavement services. Other non-required services offered by Hope include the "Dream a Dream" Program. Through this program, Hope patients with a final wish are assisted in making it a reality. Examples include fishing in a private fishing pond, providing plane tickets for far away loved ones to visit the hospice patient, and holding a wedding in the hospice house chapel to enable the Hope patient to attend. Hope has also provided funds for home improvements to make a patient's home more comfortable, providing memorial services conducted by a Hope chaplain at a Hope chapel free of charge to the family of a Hope patient. Hope exceeds the Medicare COP requirement that volunteers provide 5% of patient care. It has done so through special volunteer programs that include "vigil volunteers" sitting at the bedside of the patient, "video volunteers" who make video and audio remembrances for the family and "personal treasure volunteers" who make keepsake items for the family from an article of the patients clothing. Hope offers classes in Continuing Education (CEUs) to all nurses and social workers in the community. It has conducted workshops on coping with grief and loss during the holidays and presentations by Rabbi Kushner on loss and issues related to death and dying. Since 1990 Hope has offered an annual bereavement camp for children aged 6 to 16. The weekend camp is attended by about 70 children from across southwest Florida. Hope sponsors numerous programs designed to educate the physician community about hospice and special programs to help the community deal with specific tragedies or life events. These have included programs for families of service men and women deployed to the Middle East, a 9/11 support group and programs for persons dealing with stress and loss caused by hurricanes. Community Services and Programs Hope provides other community services not required for Medicare certification that are also not provided by HON or VITAS. Hope Life Care is a long term care diversion Medicaid-waiver program Hope provides together with AHCA and the Florida Department of Elder Affairs. PACC is a program for all-inclusive care for children who have a life-limiting illness but may not be eligible yet for hospice. Located in central Lee County, the HOPE Adult Day Health Center is available for elders who cannot be at home by themselves during the day and require a setting with limited supervision. Funded through the Area Agency on Aging, HOPE Connections is a continuing care for the elderly program designed to help frail elderly continue to live in their homes and avoid being admitted to a nursing home or hospital. These community-based non-hospice programs are consistent with Hope's mission of assisting all in need, especially the frail and the elderly who may not qualify for hospice services, across different levels of care that best meet their needs. They also enhance continuity of care for the those who ultimately qualify for hospice care and receive it from Hope. Hope's Clinical Services Hope has received numerous awards in recognition of the excellent quality of care it provides. There are other outward signs of the excellence of its quality of care. For example, it completed its most recent Medicare/Medicaid certification survey with no deficiencies. Hope is accredited by the Community Health Accreditation Program (CHAP) although not by JCAHO. CMS relies upon CHAP certification for participation in Medicare and Medicaid programs. Hope chose to seek accreditation through CHAP rather than JCAHO because of its view that CHAP's accreditation process is more stringent and comprehensive. Hope exceeds the voluntary standards established by NHPCO. It is also a participant in the NHPCO Quality Initiative, which requires a self-assessment as well as other activities related to quality assurance. Hope places emphasis on an individualized approach to every patient and family members over making printed materials available. Hope staff spends time with patients and family in order to establish an individualized plan of care. Hope's Admission Process Hope's Care Resources Department has a staff of 16 who handle the intake of patient referrals to hospice. The Department handles initial inquiries and coordinates the collection of medical records and the physician's order that certifies the patient's condition as terminal. This admission process ensures that the patient meets Medicare eligibility guidelines. All calls pertaining to patient referrals are taken by Hope immediately. Staff typically responds to a referral within 24 hours of request for services. After normal working hours and on weekends and holidays, the After Hours Triage Staff of local registered nurses responds to a referral as well as answering questions of families and dispatching staff, including on-call physicians, as needed. The referred patient is assigned to an inter- disciplinary care team (the "IDT Team") that will provide care for the admission visits, development of the patient's plan of care, and care thereafter. Having the IDT Team conduct admission visits provides the advantage of continuity of care. It fosters early development of a relationship between the IDT and the patient and family and promotes arrangements for the unique and special needs that a patient and family may have. Hope's Medical Team Hope's Medical Director, Mary Stegman, M.D., is board-certified in Hospice and Palliative Medicine, Pain Management and Internal Medicine. She is board-eligible in Hematology-Oncology. Hope employs five physicians other than Dr. Stegman including Dr.Guercio who is board- certified in internal medicine. Dr. Guercio is also board- eligible in pulmonary medicine and serves as the medical director of Joanne's House and the physician on one of Hope's IDT teams. Hope employs ten part-time physicians, including a surgical and pediatric specialist. Dr. Lipschutz is board certified in Hospice and Palliative Care Medicine. A liaison as needed to facilitate patient care discussions between Hope staff and community physicians, Dr. Lipschutz has been involved with Hope since 1992. Hope provides several different types of therapies not provided by other hospices. It has developed evidence-based algorithms for the care of its patients. They include specific clinical pathways or protocols for dealing with specific diseases or symptoms. Veteran Care All of Hope's psychosocial staff must participate in a special training program designed to educate them on the special needs of veterans. The "Wounded Warrior" program sensitizes Hope staff to the special needs of combat vs. non-combat veterans, the psychosocial needs of veterans of the different wars, women veterans, and veterans suffering the effects of post- traumatic stress disorder ("PTSD"). Hope staff and volunteers (many of whom are themselves Veterans) are trained to build a rapport with these veterans and to help them address the feelings of guilt, anger, and anxiety they may have. In addition, Hope nurses are trained to recognize the physical symptoms of patients with PTSD (such as terminal restlessness) and in effective methods to treat such symptoms. All of Hope's veteran patients are presented with a personalized certificate of appreciation and "Thank You letter" from Hope's CEO in a formal ceremony honoring their service to our country. Hope regularly reaches out to local veterans organizations such as the VFW and Knights of Columbus, and provides speakers to educate their members about hospice. Hope is successful in providing for the special needs of its veteran patients. Hope's Pastoral Counseling/Chaplaincy Program Hope employs 15 chaplains who provide spiritual support and counseling to patients and their families. As members of the IDT, Hope chaplains participate in the team meetings, provide resources to patients and families, and serve as an advocate for the patient. Team chaplains regularly consult with other members of the IDT as spiritual issues arise with individual patients or family members. When requested, Hope chaplains also perform memorial or funeral services for Hope patients. Hope chaplains serve as liaisons with community clergy and community leaders, and attend ministerial association meetings. Finally, Hope chaplains provide in-service training for other Hope staff, as well as for community clergy interested in learning about hospice care. All of Hope's chaplains have Masters of Divinity or masters degrees in religious training. All are ordained and certified by their faith group, and all must complete Hope's orientation, clinical training, and mentoring programs. In addition, many of Hope's chaplains have undergone CPE training. Following admission, every patient and the patient's family are visited by the IDT chaplain unless they decline such a visit. The chaplain assesses the spiritual care needs of the patient and family. Hope chaplains do not approach spiritual care in a "cookie cutter" fashion, since even persons of the same faith may have different spiritual needs. Rather, Hope addresses each patient's needs on an individual basis, and strives to meet those specific needs. For example, depending on the patient, Hope chaplains may provide active or passive counseling, life reviews, facilitate the resolution of problems among family members, join in prayer or read scripture. Spiritual care is available to Hope patients on a 24-hour/7-day per week. If a patient requests clergy of a particular faith, the IDT chaplain serves as a liaison to community clergy to ensure that the appropriate clergy visits the patient. Hope's interdenominational chaplains have successfully met the spiritual care needs of patients of a variety of faiths including Buddhism. All of Hope's chaplains are educated and trained in different faiths, including the Jewish faith. When a Hope patient wishes to be attended by a rabbi, those arrangements are made by Hope. Hope has a good relationship with all of the rabbis in its service area and provides excellent care to its Jewish patients. Many local rabbis serve on Hope committees, and some have provided training to Hope staff. Local rabbis also have participated in educational programs which Hope has presented or sponsored which touch upon grieving and mourning in a Jewish context, including lectures by authorities like Rabbi Grolman and Rabbi Kushner. Although Hope at one time sponsored a CPE Program, Hope now sponsors and participates in programs leading to certification by the Association of Death Educators and Counselors ("ADEC"). Persons completing the ADEC program are certified in thanatology (the study of death, dying, grief, and bereavement). Unlike CPE, ADEC certification is not restricted to chaplains, but rather is open to other IDT members, social workers, private therapists, school counselors and other professionals. For these reasons the ADEC curriculum is preferred by Hope over CPE. Hope's Bereavement Services Hope provides a comprehensive array of bereavement and grief counseling services. Each of Hope's IDT's includes a master's level social worker or bereavement counselor trained to assist the patient and family in addressing issues of grief and providing bereavement support. Volunteers who have received special training in helping persons cope with grief and loss are also involved in providing bereavement support. All patients receive a psychosocial assessment at the time of admission, which includes a bereavement assessment. That information is then provided to the IDT, and a determination made as to whether an "anticipatory grief referral" requiring immediate attention is necessary. If so, a counselor will visit with the patient and family within 24 hours to begin assisting the patient and family. Once the patient dies, another assessment is done of the patient's family and loved ones to determine whether early bereavement counseling is required, or whether the normal bereavement process will be followed. Ordinarily, three weeks following death, Hope counselors will contact all persons who have been identified by the IDT as significant in the patient's life to determine whether they would like to receive bereavement counseling, on either an individual or group basis. Letters are sent to family and significant others at 3 weeks, 3 months, 6 months, 12 months, and 15 months following the patient's death. Each of the letters includes an invitation to attend one of the many support group meetings offered by Hope, or to arrange for individual counseling if desired. About 800 persons attend one or more of the Hope-sponsored group sessions each month. Although Medicare guidelines require that bereavement support be provided for up to 13 months following the patient's death, Hope provides bereavement counseling for a minimum of 15 months and for as long as an individual chooses. Hope offers bereavement counseling and grief support to the community at large. This includes the Rainbow Trails Program, a camp for children ages 6 to 16 who have suffered a loss. Hope also offers a Healing Hearts Program which is specifically geared to persons whose loss is the result of a suicide, and another program for persons who have lost a same-sex partner, among others. Hope also offers special crisis response counseling for persons dealing with deaths in school or the workplace. If approved, Hope will provide excellent quality chaplaincy and bereavement programs for its patients in Collier County. Hope's Success in Staff Recruitment and Retention Hope has in its management several people who have obtained certification as Senior Professionals in Human Resources ("SPHR"). SPHR certification assures that these individuals have demonstrated expertise in the core principals of human resource practices such as staff training, development, performance management and assessing current as well as future workforce needs. Hope provides a benefits package which actually attracts new staff to seek employment with Hope. Hope provides quality education to its staff and has supervisory staff certified to assist new staff in achieving accreditation and certification, including certified hospice and palliative care nurses (CHPN). Hope provides cross-training, assistance, and management to avoid burn- out. Hope has considerable experience in recruitment in Southwest Florida. Hope recruits staff through advertising, job fairs and on-site recruiting at local schools. Hope has partnerships with Hi-Tech, Lorenzo Walker, Edison College and Florida Gulf Coast University (FGCU) for developing new nurses and social workers. Hope serves as a clinical site for student interns, who participate in rotations at Hope. These are primarily nursing students, but health care administration, social work and music therapy students also participate. Both Edison and FGCU have campuses in Lee and Collier Counties. HON and Hope currently compete for staff. Healthcare providers in Lee and Collier advertise and compete in both counties to recruit new staff. Hope has some staff living in Collier County. Numbers of staff members have worked for one of the two at one time and the other hospice at another time. The competition would intensify and the overlap increase if Hope's application is approved. Hope also has many employees living in the Bonita Springs area, close to Collier County. One is Dr. Guercio, the IDT physician for Team 100, which would help serve Collier County. He lives in Bonita Springs. Before joining Hope he practiced medicine in Collier County for over 20 years. Hope has not had any difficulties maintaining staff. Hope's salaries are in-line with other local healthcare providers, and Hope could successfully recruit the staff needed for its Collier County program. Hope's Proposed Program for SA 8B Hope will use contract facilities in Collier County for most of the GIP and respite services required by its patients in Service Area 8B. Hope plans to open at least one dedicated GIP unit in a nursing home within Collier County soon after approval of its application. Hope will also be able to enter into contracts for GIP with all four local hospitals. Hope's three hospice houses, moreover, will be available to meet some of the needs of the residents of Service Area 8B for GIP, respite and residential services. Hope has commitments in writing from two hospitals and two SNFs. These contracts will provide for coordinated care whenever a hospice patient is also a nursing home resident or a hospital patient. Hope has inpatient, nursing facility, and ambulatory care service contracts in areas accessible to patients in both Service Areas 8B and 8C. Hope's proposed Service Area 8B hospice program will provide a comprehensive range of hospice services, including physician services, nursing services, home health aide services, social services, and all other services required by state and federal law. Hope will provide services that are not reimbursed by Medicare or other insurance, such as bereavement and chaplain services, massage, music, art, and pet therapies. If approved, Hope will provide the required core and non-core services in its Collier County program as well as the non-required services it now offers in 8C and 6B. Hope currently operates in conformance with Medicare COPs and will do so should its Collier County program be approved. If approved, Hope will establish team offices in Bonita Springs, South Naples, and Immokalee. These locations will provide visibility for Hope's program and increase access to hospice services throughout Collier county. Joanne's House is located in Bonita Springs, less than two miles from the Lee/Collier County line. This new facility will be available and convenient to most northern Collier County patients requiring GIP, residential, and respite care. The IDT assigned to Hope's Immokalee office will serve the entire eastern region of Collier County. This office will be approximately 25 miles from Hope's Lehigh office and therefore convenient if staff are needed to travel between those offices. In addition to servicing the IDT, the Immokalee location will also be available for volunteer training, bereavement support meetings and providing information about hospice. Like Service Area 8C, Service Area 8B is also culturally diverse. As with its Service Area 8C program, Hope will also be successful in addressing the special needs of the culturally diverse communities of Service Area 8B. Hope's startup experience in Collier County will differ from the startup of its Service Area 6B program, where Hope served the more rural areas first. As noted, Lee and Collier counties are contiguous and continuous and Hope already has a substantial presence in Collier County, including its long term care diversion program, staff and volunteers who live there, and the numerous existing relationships with physicians, hospitals, nursing homes, and ALFs. Hope will be even more successful in expanding its hospice program into Collier County. Since they are frequently in Collier County on a regular basis, Hope's key leadership staff are familiar with Collier County and will be available to assist with Hope's Collier startup. If approved, Hope will be successful in implementing its proposed hospice program. Hope has the manpower, expertise and know-how to successfully implement a quality program in Collier County. Community Support for Hope Hope's application is supported by at least 133 local letters of support submitted to AHCA. A number of the letter writers testified by deposition in support of the application. They include hospital CEOs; the CEOs of SNFs, ALFs and other elder services; heads of regional businesses; and other involved in Collier County community organizations. The Lee and Collier County communities are related. The business and residential corridor is continuous between the two counties and there is no visible demarcation between them. Many businesses that operate in Lee also operate in Collier. Over the years, Hope has developed relationships with community leaders whose business serve both counties. Hope has volunteers who live in Collier County and has identified others who would volunteer for Hope if its application is approved. There are several physician group practices with offices and hospital practices in both Lee and Collier County. Hope has relationships with physicians located in Bonita Springs and northern Collier County whose practices include residents of both Lee and Collier counties. These physicians include oncologists, cardiologists, pulmonologists, gerontologists, and family practitioners, many of whom refer patients to Hope. Hope staff are familiar with Collier County health care providers and it enjoys a good reputation in Collier County. Through the Hope Life Care Program, Hope has contracts with two SNFs and seven ALFs in Collier County. A number of Collier County SNFs have transferred patients to Joanne's House. Naples Community Hospital and two HMA hospitals in Collier County have indicated intention to enter contracts for GIP with Hope if its application is approved. Underserved Groups? In its CON Application, Hope identified four groups in Service Area 8B it claims to be underserved. One of the groups is "patients under the age of 65." Hope's proof that the group is underserved consists of a comparison between historical deaths for the group to projected admissions for the group. Although the Hospice Program Rule uses this approach in its formula for calculating the Fixed Need Pool, the approach does not support the conclusion that existing providers have not historically been accessible to a particular demographic cohort or that the group suffers due to a gap in service. As Mr. Davidson opined at hearing, the approach: could suggest that there is [a gap in service]. But the data [relied on by Hope]. . . do not provide any kind of a reliable basis for . . . substantial levels of underservice . . . with rare exceptions. And this case is not one of those exceptions. (Tr. 3698). In order to establish the existence of a service gap using a penetration rate as the measure, it is necessary to compare historical deaths to historical admissions. Hope did not do so. Its comparison of historical deaths to projected admissions renders unpersuasive its claim that patients under the age of 65 are underserved in Collier County. Hope claims there are other underserved groups: (1) cancer patients in need of palliative chemotherapy and/or palliative radiation (PC/PR); (2) residents of the Immokalee area, and (3) patients needing access to hospice services during periods before and after hurricanes. Patients in Need of PC/PR The claim that there is an underserved group of patients in need of PC/PR in Collier County is problematic. The Agency does not have a standard for evaluating the appropriateness of PC/PR; nor is there a standard universally accepted in the hospice industry. In the absence of a standard, the propriety of using PC/PR in any one case, therefore, is up to the clinician. Whether it goes forward, too, is additionally dependent on patient choice. Patient choice requires adequate information and understanding on the part of the patient and family, in other words, "fully informed choice." Hope relies on its level of spending on PC/PR compared to levels of spending elsewhere to support its claim that there is a gap in PC/PR service in Collier County. Hope has spending on PC/PR that is high compared to other hospice programs. Hope attributes the high levels to its Open Access Model of Care, a model that reveals, in its view, need for PC/PR that might not be discovered in service areas without a provider that follows the Open Access Model. Comparing PC/PR delivered in different service areas on the basis of dollars spent or volume of patients receiving PC/PR, however, is not sufficient to show that PC/PR is required more often in service areas in which less is spent on PC/PR. The record in this proceeding does not show that Hope patients were inappropriately provided PC/PR. Nonetheless, it does not support the level of PC/PR service provided to Hope patients either. Hope did not provide case-by-case clinical evidence that its PC/PR service were required. Furthermore, and most significantly, Hope did not submit clinical evidence that patients in need of PC/PR in Collier County did not receive it. Both applicants indicate they will provide PC/PR to patients in need of such service. Only VITAS, however, agreed to a condition of its CON to have patient records audited to determine that receipt of the service was supported by fully informed choice. Immokalee The Immokalee area is a low income migrant community. Predominantly Hispanic, Immokalee also has a Haitian Creole community. Much of the population lacks education. Hope proposes to establish an office in the Immokalee area. It would serve the entire eastern Collier County area and will be a center where people can come for volunteer training, for bereavement support meetings, and for getting information about hospice care. Hope plans to locate an IDT in Immokalee. The IDT will serve the county's eastern region. From a service perspective, HON views Immokalee as part of North Collier County. North Collier County includes north Naples, portions of Bonita Springs located in Collier County, Immokalee, Golden Gate, and adjacent rural areas. North Collier County is served by HON's Central and North Teams. The Central team is a specialty team that sees only patients residing in nursing homes or ALFs. The North Team sees patients receiving home care and who are residing in their homes, halfway houses or anywhere else their home may be. HON has two offices to serve North Collier County; the North Branch Office located about 1/2 miles from the Collier/Lee County line, and an office located in Immokalee. HON's presence in Immokalee, however, has not been constant since it was first initiated. The office had been opened and then closed before being opened again. HON opened the North Branch Office in 2003. It accommodates the North Interdisciplinary Team. The office has two suites, appropriate signage, and ample space to accommodate the IDT and various groups who meet there for bereavement and other events. The geographic location of the North Branch Office is appropriate to allow the team members to reach Immokalee. But it would be a service improvement for an IDT to be located in Immokalee as proposed by Hope. HON's office in Immokalee is located in the Career and Service Center, also known as the "One Stop." The One Stop consists of approximately nine different social service organizations located in one building. The One Stop is considered a key location in Immokalee. Immokalee residents can access the services of the Department of Children and Families, as well as food stamps, Medicaid, employment and vocational-rehabilitation services. By having its office located in the One Stop, people are easily able to access information on end-of-life care services. As a tenant of the One Stop, HON's hospice office has use of the One Stop conferences rooms, which have capacity for over 200 people. HON uses the conferences rooms to hold different functions, such as volunteer training or seminars on coping with the holidays. HON's ADC for the north Collier area is 50-60 patients, and of those, the Immokalee area has an ADC of approximately 6-7 patients. The North Team is staffed and organized to deliver direct hands-on hospice care to Immokalee and adjacent rural areas, especially to the Hispanic population. The North Team includes 5 RNs, two social workers, a chaplain, four home health aides, a volunteer coordinator, a physician, a bereavement counselor, an RN clinical manager, and a clinical assistant. Staffing ratios are 10 patients per RN, which is a more intense level of staffing and patient care than the prevailing NHPCO guidelines of 12 patients per RN. The Team includes an additional RN who is a pediatric nurse specialist and who speaks Creole and Spanish. Seven of the IDT members of the North Team are bilingual. Fluency in Spanish, French, and Creole allows North Team clinicians serving this area to directly communicate with patients, a better alternative than resort to non-clinician employees or telephonic language services. When not deployed in the field visiting patients, the Team uses the north branch office and the Immokalee branch office. Three of the nurses and two of the certified home health aides on the North Team are certified in Hospice and Palliative Care. The sparse populations in large portions of the North Team's service area has not justified in HON's view the addition of a third branch office in North Collier County. All HON patients and families receive a Caregivers Guide, either in a Spanish or English version. In addition to general patient care information, which is reviewed and re-reviewed with the patients and families by IDT members, the Guide includes a number where hospice clinicians can be reached 24 hours a day, 7 days a week. HON's Immokalee office is staffed with a full time community resource coordinator, whose primary function is to support the communities in Immokalee. HON's resource coordinator is the contact person for education, referrals and access to HON's services in Immokalee. She speaks English and Spanish. Another role of the resource coordinator is to provide bereavement support to the community. The resource coordinator facilities a monthly bereavement community support group for grief and loss in Immokalee. She also recruits volunteers from Immokalee. Immokalee residents primarily get their information by word of mouth. HON has been successfully involved in Immokalee social service events, not only to support the community, but also to provide education and information to the different social service organizations and the participants of the programs. HON's presence in Immokalee has made it easier for people to develop a rapport and dialogue regarding the end-of-life care issue. HON's community resource coordinator in Immokalee is an active member of the Immokalee Interagency Council, the Weed and Seed initiative, and the HIV and AIDS Network Coalition for Collier County. The Immokalee Interagency Council consists of over 90 different agencies, which provide services in the Immokalee Community. The Council meets monthly. Their general purpose is to inform the community and the other organizations of their individual services. The Immokalee Weed and Seed initiative is a federal government, juvenile justice initiative that was provided to the Immokalee community to better establish relations between community residents and law enforcement. It is in its fifth and final year. The HIV and AIDS Network Coalition for Collier County is a committee comprised of individuals that come together from different medical and social service organizations to better understand and meet the needs of the Immokalee community. The involvement by HON's community resource coordinator in these important organizations promotes awareness of hospice services. When an emergency such as a hurricane is declared in Immokalee, HON's community resource coordinator reports to the hurricane shelter in Immokalee. Seventy-two hours before a hurricane, she is provided with a list of HON patients. Her role is to maintain contact with HON home care staff, and if they are unable to make contact with a hospice patient during that time, she will physically check on the patient and report back to the main office. All services provided by HON are available to the residents of Immokalee. HON provides information on hospice services to the library, for distribution to the public, on a regular basis. The Immokalee Friendship House is a temporary emergency homeless shelter in Immokalee that serves as a referral source for the community. Annually it assists approximately 1,000 homeless families and individuals. Friendship House has 8 to 15 residents per year who are HON hospice patients. HON has never declined to see a hospice patient at Friendship House or declined to deliver care there. Immokalee Friendship House is completely satisfied with Hospice of Naples. Their clients are well taken care of by HON. From Friendship House's perspective, HON is one of the stronger agencies in Immokalee. HON's community resource coordinator comes to the Immokalee Friendship House for individual and group bereavement counseling. She has also provides bereavement training to the Friendship House staff. Despite HON's efforts toward serving residents of the Immokalee area, they have less access to hospice than do residents of the more urban portions of Collier County. Hope would be able to serve Immokalee through its new local office, through the use of contracted inpatient beds in Lehigh and their planned new hospice house. These locations would provide a real option to hospice patients from Immokalee as evidenced, for example, by travel patterns from the Immokalee area. They trend toward Lehigh and Fort Myers rather than to Naples. Collier Health Services is a not-for-profit primary care provider with multiple locations throughout Collier County. It operates a primary care clinic in Immokalee, provides about half of all services provided AIDS/HIV patients in the county and is part of a program to bring Florida State University medical students to Immokalee for training in rural family medicine. Collier Health Services has indicated a willingness to coordinate care with Hope in the Immokalee community and believes it would be a good relationship based upon past experience with Hope. Hope criticizes HON's commitment to Immokalee because of the lack of a continuous presence there as shown by the opening, closing and the re-opening of its office. But a continuous presence by Hope is not guaranteed either. It conditioned its application on opening "an office in the first year of operation." Hope Ex. 1, Schedule C. To show conformance with the condition, as a special feature of the condition, Hope promised to forward to the Agency copies of the business license and/or certificate of occupancy that show occupation of office space in Immokalee during the first year of operation. Neither the condition nor the special feature of the condition guarantees that Hope's office in Immokalee will be present after the first year of operation. Nonetheless, Hope's presence if continuous, would aid and enhance effective service of the Immokalee community's hospice needs. Hope conditioned its application on having an office in Immokalee but so did VITAS. Unlike VITAS, Hope has a history of serving rural areas in Florida. However much Hope's presence would enhance service to the Immokalee area, the evidence is unpersuasive that the Immokalee area is underserved. HON efforts to serve the Immokalee area are effective. Patients in Need of Service When Disaster Strikes Hope's claim that there have been underserved patients in Collier County in times of disaster is based on events associated with Hurricane Wilma. The eye of Hurricane Wilma made landfall just south of Naples in Collier County on October 24, 2005. The impact of the storm was greater in Collier County than it was in Lee County. More services were interrupted and more people were without power and transportation in Collier County than in Lee County. In Collier County, "all of the government services and most community agencies, physicians' offices, . . . were shut down and . . . went into lockdown mode." Tr. 3462. During the hurricane and in its wake, HON continuously operated the Georgeson House. It accommodated the needs of 23 patients who were relocated to the House right before the arrival of the storm. The Georgeson House is rated to withstand a Category 4 hurricane and can accommodate up to 32 patients with all the equipment, supplies and staff to support those patients in an emergency. In the event of evacuation, HON has an agreement with Physicians Regional Hospital, about 1/8th of a mile from Georgeson House to relocate the patients to hospital beds. For a five-day period, two days before the arrival of the hurricane, the day of the storm and the two days after, HON received no referrals. Consequently, it admitted no patients from October 22 through October 26, 2005. Had it received referrals during the five days, HON was accessible and had the ability to admit patients. On the day the hurricane made landfall and for the two days afterward, in addition to the service provided at the Georgeson House, HON contacted its patients by telephone. As soon as the authorities allowed road travel, HON was able to visit its patients. It visited the majority within 48 hours of the storm event. Hope admitted approximately 20 patients during the same five-day period. In Lee County, there was only a short time that Hope was not able to admit or visit patients. It ended shortly after Hurricane Wilma made landfall when the emergency operations center announced that road travel was safe. Hope has a detailed Disaster Management Plan. See Hope Ex. 1, CON 9967 Vol. 2, Supplementary Appendices, Tab 22. In the event of a Disaster Watch, the plan dictates, "Admissions to Hope Hospice and Hospice Houses will be discontinued." Id., I. Disaster Watch, 1. e. iii. There is no persuasive evidence that had Lee County suffered the same impact that Collier County did from Hurricane Wilma that it would have been able to respond any better than HON did in October of 2005. There is, in short, no evidence that there has been unmet need for hospice services by disaster victims in Collier County. Utilization Projections and Financial Feasibility Each Applicant's projected utilization appears reasonable and achievable. Each applicant demonstrated short-term and long- term financial feasibility. Medicaid Patients and the Medically Indigent Both Hope and VITAS have documented a history of service to Medicaid and medically indigent patients. Hope will serve Medicaid patients and the medically indigent if its application is approved. So will VITAS.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administration approve CON 9969, an application for a new hospice program in Service Area 8B filed by VITAS Healthcare Corporation of Florida, and deny CON 9967, an application for a similar program filed by Hope Hospice and Community Services, Inc. DONE AND ENTERED this 3rd day of March, 2008, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 2008
The Issue Whether the Certificate of Need application of Hospice of the Palm Coast to establish a new hospice program (CON Action No. 9798) in AHCA Hospice Service Area 11 (Miami-Dade and Monroe Counties) should be approved.
Findings Of Fact THE PARTIES The Agency for Health Care Administration AHCA is the single state agency responsible for administering the Certificate of Need program, and for licensing hospices and other programs and facilities pursuant to the authority of the Health Facilities and Services Development Act, Sections 408.031 - 408.045, Florida Statutes. In performing these duties, AHCA determines, on a semi- annual basis, the net numeric need for new hospice programs. The Agency publishes such need in the Florida Administrative Weekly. Hospice of the Palm Coast, Inc. Hospice of the Palm Coast, Inc., is a not-for-profit Florida corporation, developed for the purpose of establishing hospice programs in Florida. Palm Coast is a wholly-owned subsidiary of Odyssey Healthcare Corporation (Odyssey"), a for-profit and publicly traded corporation. Odyssey is one of the largest for profit providers of hospice service in the United States, operating 74 hospice programs in 29 states. Odyssey has successfully implemented start-up hospices in other states. While Odyssey currently has no hospice operations in Florida, it is in the process of seeking licensure and certification for a new hospice program in Volusia County. The Volusia County program employed Odyssey's rapid start-up model. Palm Coast complies with all of Florida's not-for- profit corporation laws and filing requirements and meets the definition of a "corporation not for profit" contained in Chapter 617, Florida Statutes. Palm Coast has its own Articles of Incorporation and By-Laws; has its own audited financial statements; and has its own managing board. Palm Coast will have its own bank account into which all of its revenues and out of which all of its expenses will be paid. If Palm Coast has a positive cash flow from its operations, those funds will stay with Palm Coast to be used for patient care and operations. Palm Coast will comply with all Florida not-for-profit laws relating to surplus funds. Odyssey has experienced compliance issues with respect to some of its hospice programs in other states. In five of its programs, Odyssey has exceeded Medicare "cost caps" that limit the total number of eligible days that a hospice program may bill the federal government for reimbursement. In addition, several of Odyssey's programs have been found not to meet certain Medicare "conditions of participation" due to significant operational deficiencies. All of these "conditional level" deficiencies have been corrected. Odyssey has recently received notification from the Department of Justice ("DOJ") of an investigation into the manner in which it provides hospice services. As a result, Odyssey made the required Securities and Exchange Commission ("SEC") filings to notify the public of the pending DOJ investigation as a "significant event." A class action lawsuit is also currently pending against Odyssey by some of its shareholders and investors who allege that the company admitted hospice patients who were not eligible for Medicare, but that claims were submitted that they were so eligible for Medicare. As a result, Odyssey's financial results were materially inflated due to its exceeding Medicare "cost caps." Recent changes have occurred at the senior management level within Odyssey, including the resignation of its Chief Executive Officer in late 2004, and the termination of its Executive Vice President of Marketing in January 2005. Since the announcement of the DOJ investigation and the class action lawsuit, Odyssey's stock value has fallen from about $19.00 a share to $13.00, a decline termed "material" by the company's Chief Financial Officer. VITAS Healthcare Corporation of Florida VITAS Healthcare Corporation, a for-profit entity, is the largest provider, in terms of patient days, in the United States. It is currently in 12 states with 32 licensed programs serving an average daily census of 9,000 nationally. VITAS currently has two for-profit entities operating in Florida: VITAS-Florida and VITAS Healthcare Corporation of Central Florida. Collectively, these two operating entities have five licensed for-profit hospices in Florida. VITAS is the only for profit hospice provider allowed to operate in Florida pursuant to special exemption language contained in Section 406.602(5)-(6), Florida Statutes. VITAS currently operates hospice programs in Districts 11 (Miami-Dade and Monroe Counties), 10 (Broward County) and 9 (Palm Beach County). In addition to the VITAS hospice program in District 11, five other hospice programs are currently licensed in Miami- Dade and Monroe Counties. None of these five programs intervened or participated in these proceedings. All of VITAS' hospice programs are in full compliance with Medicare conditions of participation, and none of its programs have exceeded Medicare "cost caps." The VITAS program has been in Miami-Dade County for 28 years, and was the first VITAS program in the country, having been initiated by Hugh Westbrook, a Methodist Minister, and Ester Colliflower, a nurse with an oncology background. Both were professors at Miami-Dade Community College where they offered courses on death and dying issues, and were early pioneers in the hospice movement. VITAS was instrumental in the development of hospice licensure standards in Florida, and in the establishment of federal Medicare benefits for hospice services. VITAS has been a leader in hospice research and development, and has created pain management tools and hospice care manuals that are widely used among hospice providers around the nation. For example, VITAS developed the Missoula-VITAS quality of life index, which is licensed and used by over 125 hospices nationwide. The publication "20 Common Problems in End of Life Care" was authored by VITAS employees and is considered a standard teaching textbook for delivery of hospice care. HOSPICE CARE Hospice care is a medically coordinated group of services that is designed for patients who are terminally ill, having a life expectancy of less than six months. The patient's and family's needs are multi-dimensional and include physical, emotional, spiritual, financial, and social care. 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 provided by an interdisciplinary team of professionals, including physicians, nurses, social workers, home health aide services, spiritual advisors (chaplain, priest, rabbi, or other), and bereavement counselors. Palm Coast will provide an interdisciplinary team to provide care in its program that is reflective of the Miami-Dade community. A hospice is also required, pursuant to federal and state regulations, to involve community volunteers in the delivery of hospice services. Volunteers may run errands, perform non-medical duties (such as reading or entertainment) or provide companionship to the patients and their families. Volunteers provide an extra level of service to the patient. Palm Coast will hire a full-time volunteer coordinator who will recruit volunteers for its program. Hospice care is both a philosophy of care and a method of care for terminally ill patients, their families, and loved ones. The philosophy behind hospice care is to provide pain and symptom management for those patients who can no longer be cured. A patient must choose hospice in order to receive its services when the goal is no longer to cure a disease, but to live as pain and symptom free as possible. Treatment for pain control is part of the regimen; treatment for cure is not. Hospice is reimbursed by Medicare, Medicaid, CHAMPUS/Tri-Care (for the military), and some commercial insurance programs. Under the Medicare reimbursement system, hospice programs are reimbursed based on one of four identifiable levels of service: routine home care; in-patient care; continuous care; and respite care. Routine home care is the basic level of care, and is provided as long as a hospice can care for a patient in a home- like environment including a nursing home or assisted living setting. Approximately 95 percent of the care provided by Odyssey is routine care. The next level of care is continuous care, which provides between eight and 24 hours of nursing care per day. Continuous care can be provided in a routine home setting, a nursing home, an assisted living setting, or in a hospital. The third level of care is in-patient care, which a hospice can provide in a hospital, a skilled nursing unit, or in a freestanding hospice in-patient facility operated by a hospice. Typically, in-patient care is required when there is a change in the patient's condition which requires hospitalization. It can also be provided at the start of service to help the patient make the transition from a curative method of care to a palliative one. If a hospice program does not have its own in-patient facility, it will contract with a skilled nursing facility or hospital. In such cases, reimbursement is seen as a "pass through" because the amount the hospice receives for providing care is then provided to the in- patient unit of the hospital or other health care facility where the patient is being treated for the acute episode. The final level of hospice care is respite care, which is designed for caregiver relief and is not necessarily indicated based upon a change in the patient's condition, but when the need arises for very temporary caregiver relief. Medicare reimburses the four levels of hospice care at varying rates. Certain services are required by specific hospice patients that are not necessarily covered by Medicare and/or private or commercial insurance. These services will be paid for by Palm Coast as part of its commitment to patient care. Some of these services include music therapy, pet therapy, art therapy, and aromatherapy. In addition, more complicated and expensive non-covered expenses, such as palliative chemotherapy and radiation may be indicated for severe pain and symptom control. The primary reimbursement agent (approximately 90 percent) for hospice is Medicare. As a result, the government fixes the rates to eliminate opportunities to compete on pricing. Hospice cannot discount prices of its services, and rarely do patients and families pay for any services. The services are a prepaid benefit so that any competition in hospice is most simply expressed as the number of providers in a given market providing services on a non-economic basis. With multiple providers in a service area, quality of care and quantity of services rises for the patients and their families. Most major metropolitan areas in the country have several hospice providers. For example, Atlanta has 30-35 providers; Dallas has about 30 hospice programs; and Chicago has 20-30 providers. The average number of providers in a city the size of Miami (approximately two million people) would range from 20 to 30. The largest sources of referrals for hospice care are hospitals, nursing homes, and assisted living facilities, and physician groups. PALM COAST'S APPLICATION Palm Coast proposes to establish a new hospice program to serve persons in Hospice Service Area 11, which is comprised of Miami-Dade and Monroe Counties. Palm Coast filed a timely Letter of Intent on or before April 26, 2004, followed by a timely initial CON application on or before May 26, 2004. Both the LOI and the CON application were accepted by AHCA. Palm Coast filed its omissions response, which was accepted by AHCA, on June 30, 2004. The Agency's preliminary action was to approve Palm Coast's application for CON No. 9798, for the establishment of a hospice program in Hospice Service Area 11. Fixed Need Pool On April 9, 2004, AHCA published a notice in the Florida Administrative Weekly indicating a numeric need for one additional hospice program in Service Area 11. In forecasting need, the Agency first forecasts the expected number of deaths within a Service Area, in four categories: Cancer under age 65, Cancer over age 65, Non-Cancer under age 65, and Non-Cancer over age 65. The Agency next applies a statewide average (called a "conversion rate") to each of the four categories to forecast the expected number of hospice patients for a Service Area. The Agency takes that number and subtracts from it the number of patients who are currently being served by the existing hospice programs in the Service Area to arrive at the "net need" of patients who are expected to need hospice care in the future. If the net need exceeds 350, then numeric need for a new hospice is demonstrated. The forecasted need for hospice patients in Service Area 11 was 2,093 patients, which greatly exceeds the need threshold of 350 identified in the fixed need pool rule. The numeric need for one additional hospice program in Service Area 11 is indicated. In fact, based upon the 350 patient threshold for numeric need, the argument could be made that, based on the numeric need formula alone, the net need for hospice programs in Service Area 11 is five. The hospice fixed need pool rule only permits need for one new program to be published. Moreover, in an attempt to give new providers sufficient time to start up their programs, the net need will be shown as zero if any hospice programs are less than two years old. Currently, Service Area 11 has six hospice providers: The Catholic Hospice, Douglas Gardens Hospice, Hospice Care of Southeast Florida, Hospice Care of South Florida, Hospice of the Florida Keys, and VITAS Healthcare-Dade. None of these entities challenged the fixed need pool. The parties have a marked difference of opinion as to whether a need exists for Palm Coast's proposed hospice program. Palm Coast, through its expert, Mark Richardson, confirmed the Agency's need determination, and also performed other needs analyses to determine the market's overall need. He noted that the Agency uses a statewide average, which includes areas where the conversion ratios are much higher than the average. He states that AHCA uses an expected average of what is occurring statewide rather than an expected cap. His analysis of Service Area 11, especially the unmet need of 2,093 hospice patients, is the largest unmet need ever seen in Florida, and clearly indicates the need for four to five new hospice programs in Service Area 11. Mr. Richardson opines that what drives the large unmet need is the local utilization below the statewide utilization in each of the four categories: Cancer over age 65, Cancer under age 65, Non-cancer over age 65, and Non-Cancer under age 65. This is unlike other service areas where potentially only one or two of the categories show underutilization. Further, according to Mr. Richardson, a look at the continuation of historical trends reveals that significant growth will occur within the marketplace, which will produce enough volume to support Palm Coast's program without adversely affecting the existing providers' programs. The incremental growth alone, he states, indicates the need for another hospice program, and further demonstrates that the existing programs will suffer no adverse affects. VITAS opposes Palm Coast's analysis of numeric need by noting that the "critical factor" in the Agency's determination of a net numeric need for one hospice program in Service Area 11 is the use of the statewide average utilization or "penetration rate" in the numeric need formula. VITAS contends that the use of the local hospice utilization rate and current hospice admissions for Service Area 11 will yield a net numeric need of only 46 patients. VITAS concludes that no numeric need for an additional hospice exists in Service Area 11 first by noting that, while the statewide utilization rate for hospice is 48 percent, the Service Area 11 utilization rate is only 38 percent, a full 10 points below the statewide average. VITAS offers, as proof of why the utilization rate is so much lower in Service Area 11 than in Florida as a whole, that Miami-Dade County is unique due to its multicultural, particularly Hispanic, population. Palm Coast's expert, Deborah Hoffpauir, testified that the addition of more hospice providers to an area, tends to increase the utilization rate within the area. VITAS' expert, Deirdre Lawe, testified that Miami-Dade County has six providers, yet has a utilization rate far lower than the statewide rate. Six of nine Florida Hospice Service Areas with high utilization rates, however, have only one provider. In some states, where CON regulation does not exist, metropolitan areas may have as many as 30 hospice providers. These areas, however, do not experience as high a penetration rate as CON-regulated Florida. The low utilization rate in Service Area 11, according to VITAS, is explained by Miami-Dade County's 57 percent Hispanic population. Nationally, the Hispanic population utilizes hospice at a lower rate than the non-Hispanic population. A study published in 2000, by the National Hospice and Palliative Care Organization shows that Hispanics accounted for 4.5 percent of national deaths, but accounted for only 2 percent of hospice patients. More recent data indicate that that the hospice penetration rate for Hispanics is 26 percent at the national level, significantly less than the penetration rate for Miami-Dade County's Hispanics of 34 percent. The hospice penetration rate in Miami-Dade County in 2003, was 34 percent compared with 45 percent for the non- Hispanic population. Palm Coast's expert, Mark Richardson, conceded that cultural differences can account for variation in the rates at which a population will use a health care service. He did not factor the high percentage of Hispanics in Miami-Dade County into his calculations, but relied upon AHCA's fixed need pool projection of need for one additional hospice program. Patricia Greenberg, VITAS' health planning expert, testified that the fixed need pool overstates the need for hospice care in Miami-Dade County due to the lower utilization rate for hospice services among the Hispanic population. To arrive at this conclusion, she examined the differences between the Hispanic and non-Hispanic populations to determine why the latter utilizes hospice services at a significantly greater rate. Looking at the three adjoining southeast Florida counties (Miami-Dade, Broward, and Palm Beach), Ms. Greenberg found an inverse relationship between the percentage of Hispanic deaths in the county, and the hospice penetration rate: the higher the percentage of Hispanic deaths, the lower the hospice penetration rate. Testimony from additional witnesses at hearing pointed to the reasons that fewer Hispanics seek hospice care than in the non-Hispanic population. A strong sense of family responsibility; religious values of a largely Catholic population; fear of authorities by illegal aliens and their family members; and reluctance to discuss death and dying were identified as cultural norms among the Hispanic population. Ms. Greenberg, in challenging the results of the fixed need pool calculation of need for one additional hospice program, re-calculated the need using the Miami-Dade utilization rate, rather than the statewide rate. This resulted in no need for another hospice program in Service Area 11 since the calculation results in a net number of patients to be served of 46, far below the Agency's standard of 350. In arriving at her net need, however, Ms. Greenberg erred by not utilizing the data for the same period throughout her calculation of need. She used the 2003, number of hospital admissions and the 2003, number of hospice deaths for Service Area 11 in the four hospice categories to determine what the specific Service Area 11 penetration rates for these categories would be. She then applied this Service Area specific penetration rate to the 2005, projected deaths. This calculation provided Ms. Greenberg with the total number of forecasted admissions of 7,733 (versus 9,401 projected patients using the statewide methodology). Then, rather than subtracting the 2003, admissions of 7,308 (used by Ms. Greenberg to determine the applicable penetration rate), she instead substituted a different data set, the 2003-2004, admission number. By using the 2003-2004, admissions rather than the 2003 admissions, the results of the calculation were flawed. Had Ms. Greenberg used the 2003, admissions number in her Service Area 11 specific need calculation, she would have subtracted 7,308 admissions from the total number of 2005, projected admissions of 7,733 to arrive at a projected need of 425 which, using the Agency's baseline of 350 admissions, thus demonstrating the need for a new program. The testimony was unclear as to why Ms. Greenberg used one incorrect set of data to demonstrate no numeric need for an additional hospice program, but the application of the correct data, even using her Service Area specific (not, as sanctioned by the Agency, the statewide methodology) shows numeric need for a new hospice program. Financial Feasibility and Underlying Assumptions Palm Coast performed a detailed evaluation of the proposed project on the cost of other services provided by it and its affiliate, Odyssey HealthCare, Inc. ("Odyssey"). This evaluation considered the magnitude of the proposed project; the expected benefit the project will generate for Palm Coast; and the expected patient charge increase levels anticipated during the first two years after the proposed project comes on line. Although Palm Coast is a newly formed corporation, a review of the financial strength of its management affiliate, Odyssey, clearly demonstrates the financial resources necessary to develop and operate the proposed project. With $39 million in cash and investments, and a $31 million operating income during fiscal year 2003, Odyssey has the resources necessary to ensure that Palm Coast is developed as a strong community provider, and has all the resources necessary to operate as a full service hospice provider in both the short and long term. The proposed project will provide a significant amount of income to Palm Coast by the second year of operations, and will accomplish this with a modest increase in patient charges of 2 percent in the second year of operations. Palm Coast intends to fund the initial capital required of $487,125 from the proceeds of an inter-company loan from Odyssey. Palm Coast shows a strong performance in both the first and second year of operations. The proposed project is financially feasible in both the short and long term. The start-up costs are budgeted at $380,000, which is $250,000 more than what is typically seen in other hospice applications. This additional money provides the foundation for what Palm Coast calls a "rapid start up" of the proposed project. Under a rapid start-up, as proposed by Palm Coast, and employed by Odyssey in other new operations around the country, including Volusia County, Florida, the program will begin to admit patients once licensure is achieved, but even before Medicare certification is attained. This rapid start-up was taken into account by Palm Coast's health care planners in generating the patient days figures used for Palm Coast's financial projections. A rapid start-up program will cost Palm Coast money that it will not be able to recoup from Medicare since it will be for services provided pre-certification. Palm Coast's parent corporation, Odyssey, has agreed to provide the funds necessary for this project. With $179.6 million in assets, $144.7 million in shareholder's equity, $274.3 million in revenues, and $27.6 million in cash flows from operating activities, Odyssey has the strength to provide the necessary funding for this project. Palm Coast's application fully complies with the requirements of Schedules 1 and 3 of the CON application. Schedule 2 sets out a complete listing of all projected and proposed capital projects planned by Palm Coast. This Schedule completely and accurately depicts all capital projects that are approved or underway. Schedule 4 is not applicable to this project. The utilization and patient day projections set out in Schedule 5 are reasonable and appropriate. The staffing forecasts set out in Schedule 6A reflect the staffing necessary for the patient volume and levels of services expected for the proposed program. The projections are consistent with the experience of Palm Coast's management affiliate, Odyssey's prior start-up experience, and is based upon a reliable model used by Odyssey to staff its operations and administration. This staffing model meets the guidelines established by the National Hospice and Palliative Care Organization ("NHPCO"). The salaries depicted in Schedule 6A are reasonable and reflect salary rates commensurate with the local area, and trended forward approximately 3 percent annually. The proposed project is financially feasible in the long term as reflected on Schedules 7A and 8A. In developing the financial portion of the CON application, Palm Coast's expert health care planners began with a baseline template model provided by Odyssey. This template served as the model for the categories of net revenues and expenses that Odyssey expected Palm Coast to experience at its Service Area 11 program. The model was not used for or intended to serve as the basis for any volume projections. The projected volumes needed to project patient days were provided by Mr. Richardson. Since projected revenues are driven by patient days, the projected admissions for Year 1 and Year 2 must be translated into a patient day forecast. Accordingly, the projected admissions for Year 1 and Year 2 were multiplied by a 70-day length of stay. The 70-day length of stay is reasonable when compared with Odyssey's national average length of stay and when comparing it with the average length of stay in Service Area 11. Accordingly, Palm Coast forecasted Year 1 volume of 26,320 patient days and Year 2 volume of 33,250 patient days. Mr. Richardson than provided Year 1 and Year 2 volume forecasts to Palm Coast's financial expert, Rick Knapp, to assign a dollar amount to the volume to include in the CON Application financial schedules. Mr. Knapp then projected the gross and net revenues based upon the projected volumes, and for Year 2 concluded that the program would generate a pre-tax income of $688,000, thereby supporting his conclusion that the project is financially feasible. To confirm the financial feasibility of the project, Mr. Knapp also performed reasonableness tests. First, he determined whether the information provided by Odyssey "offended his sensibilities." He considered the fact that Odyssey is experienced in operating hospices, so it is reasonable to assume that it would not start up a program it did not believe would succeed. This is supported by the fact that Odyssey has not had any of its 29 start-up projects fail. Mr. Knapp then examined the most recent 10K filing by Odyssey with the Securities and Exchange Commission, and noted that the ratio of expenses to net revenues was approximately 81 percent. This compared favorably with the pro forma projections by Palm Coast of 88 percent. Mr. Knapp reviewed the budget provided by Odyssey and found it to be a credible document. He made changes to this document giving effect to Mr. Richardson's final projected volume and final projected patient class mix. This became the basis for Schedule 7A for net revenues and Schedule 8A for projected expenses. VITAS challenged Palm Coast's patient day and patient mix projections, opining that the patient volume projections were overstated by Palm Coast and that the patient mix projections are unreasonable based upon VITAS' experience in Florida and Service Area 11. VITAS believes that the volume projections of Palm Coast are unreasonable based upon the Odyssey model provided to Palm Coast's health care experts and VITAS' experience. VITAS points to a more gradual "ramp up" of patient volume than that projected by Palm Coast. VITAS believes that Palm Coast's projections are far too aggressive for a start-up program. VITAS further points to its own national average length of stay of approximately 50 days and the overall hospice national length of stay of 47 days as more reasonable projections of what Palm Coast should expect, even though Palm Coast's national length of stay averages 75-80 days. Additionally, VITAS opines that the 70-day average length of stay proposed by Palm Coast is unreasonable in light of its proposed patient mix which includes 9 percent of its patient days as being in-patient, which is generally a much shorter, acute length of stay than the other forms of hospice care provided. The level of service mix in a hospice program has a direct impact on projected average length of stay, patient admissions, patient days, staffing requirements, revenues, and expenses. Medicare reimbursement for the different levels of service is significantly different. Medicare reimbursement for in-patient days is projected to be $538.80, while reimbursements for routine home care days is projected at $121.34, for continuous care days is projected at $708.22, and for respite care days is projected at $124.81. In its CON Application, Palm Coast projects the following level of service mix by the percentage of patient days in each category: routine home care--89 percent; in-patient care--9 percent; continuous care--1 percent; and respite care--1 percent. At hearing, Palm Coast's witnesses conceded that the projected level of service mix in the CON Application was a mistake, and is not the level of service mix that is actually expected for the proposed hospice program. The mistake occurred when Mr. Richardson relied upon Odyssey's 10K filings showing the level of service breakdown as a percentage of revenues, but then used these figures to project the percentage of patient days. Mr. Knapp, the Palm Coast financial expert, who prepared the financial pro formas, conceded that, because of the error in level of service mix, the projection of revenues on Schedule 7A of the CON Application is not correct, and that, viewing this financial schedule alone, there is a material difference between the actual expected revenues and the projection of revenues on Schedule 7A. For example, the in- patient component as set forth in the CON Application, accounts for nearly 30 percent of projected revenues, when in reality it is expected that only 9 percent of the revenues would come from this source. Mr. Knapp conceded that the mistake in level of service mix also has a material impact on the projected income and expenses shown on Schedule 8A. Although the errors in service mix have a material affect on the projections contained in Schedules 7A and 8A, Mr. Knapp opined that, since in-patient revenues are essentially a "pass through" since the hospice pays the money received from Medicare directly to the in-patient facility, the effect on the bottom line for the Palm Coast program would not only be immaterial, but it would improve the profitability of the proposed program. Every scenario proposed by Mr. Knapp in redistributing the service mix leads to an enhancement of Palm Coast's bottom line for the project. The most likely redistribution of the patient mix would be 98 percent routine home care; 1 percent continuous care; and 1 percent respite care. John Williamson, the Agency's financial reviewer for the Palm Coast CON Application, testified that he was not aware of the errors in service mix when he reviewed the Palm Coast application. While he opined that he believed the service mix errors would not have an adverse impact on the bottom line of the proposed program since in-patient revenues are essentially a pass through, he could not give a firm opinion without personally "crunching" the new numbers. Ms. Greenberg, VITAS' health planning expert, testified that the change in service mix was critical to understanding the proposed hospice program, and that any material change to the service mix would have to be modeled and reviewed to determine the feasibility of the proposed program. Ms. Greenberg concluded that the error in service mix would result in a significant decrease in revenues ($1.6 million) and result in a smaller payment to Odyssey, the managing affiliate to Palm Coast ($112,000 based upon a 7 percent management fee). This, she states, along with the failure of Palm Coast to accurately reflect all of its expenses in its financial pro formas would result in a deficit to Odyssey and might, she implies, call into question whether this is a worthwhile project for Odyssey. Ms. Greenberg further testified that Palm Coast failed to account for various expense items in its financial pro formas that would significantly reduce, or even eliminate, its projected net profits of $450,167 in Year 1 and $687,560 in Year Specifically, she noted that the missing expense items were: federal income taxes, employee fringe benefits, property taxes, the "unified rate" shortfall for nursing home residents, insurance, and palliative chemotherapy and radiation. Mr. Knapp conceded that the federal income taxes, property taxes, and the unified rate shortfall were not included in the pro formas. With respect to federal income taxes, Mr. Knapp noted that the payment of any income taxes due would never take a project from a profitable status to an unprofitable status since they are paid only on the profit margin. The property taxes not reflected on the pro formas amount to $2,000, which Mr. Knapp deemed immaterial. The unified rate shortfall should have been included on the pro formas, but amounts to only 1 percent of the net revenues of the project, not 2 percent as suggested by Ms. Greenberg. The other expenses that VITAS testified were omitted by Palm Coast were "embedded" in the management fee Palm Coast proposes to pay its affiliate Odyssey. Odyssey's Chief Financial Officer testified that the insurance expense is included within the management fee. Mr. Knapp testified that the fringe benefits of 20 percent were included in the financial schedules as well as within the management fee (9.1 percent was reflected as payroll-related such as Medicare and FICA, the remainder such as health insurance within the fee). Ms. Greenberg's opinion that an additional 17 percent should be added to the fringe benefits category is not in keeping with Odyssey's experience as a national provider of hospice care. Ms. Greenberg noted that the pro formas did not include $107,000 for a satellite office in Monroe County. Since the satellite office was made a condition on the CON by the Agency, Palm Coast could not have anticipated this at the time of its submittal of the CON Application. Although this will have an effect on the expense side of the pro formas, Palm Coast has the ability to fund this condition. Further, the expected revenues of $139,000 from the satellite office will more than offset any start-up costs. Finally, Ms. Greenberg noted that Palm Coast failed to provide for palliative chemotherapy or radiation in its pro formas. Since the number of patients requiring such care cannot be estimated, and since this is a non-reimbursable expense, Palm Coast did not budget for this type of care. Palm Coast is committed to providing this care when necessary. After concluding that Palm Coast understated its expenses and that its service mix was flawed, Ms. Greenberg recast the Palm Coast financials in six possible scenarios. None of the six showed financial feasibility for the proposed hospice program. Ms. Greenberg attempted to achieve her goal of demonstrating the Palm Coast project will not be financially feasible in the short term (her analysis does not extend beyond two years) by not accepting Palm Coasts 70-day average length of stay projections; by not accepting Palm Coast's rapid start-up program because it was not accounted for in the financials; that the overstatement of the in-patient days renders the project not financially feasible; and that the omission of significant expense items significantly reduces or even eliminates the projected profits in the first two years of the project. Palm Coast responded to the six scenarios raised by VITAS' expert by demonstrating that the re-cast financials have significant calculation errors and that conservatism was built into the financial pro formas (e.g., depreciation expenses that were amortized in accordance with GAAP which would have a significant positive effect on the bottom line if not amortized) which VITAS overlooked in analyzing them; VITAS refuses to acknowledge that the rapid start-up program was considered by the Palm Coast Health care planners when developing the CON Application (as evidenced by the higher number of patient days forecasted than is typical for a hospice application); VITAS refuses to acknowledge Odyssey's national average length of stay data; VITAS refuses to accept the inclusion of fringe benefits and other items in the management fee to be paid by Palm Coast to Odyssey; and VITAS refuses to admit that the in-patient days error, when corrected, can only have a positive impact on the bottom line for Palm Coast. Patient Care, Community Education, and Community Support Palm Coast will provide each patient with a "Circle of Care," an interdisciplinary team of Palm Coast employees, volunteers, and the patients' physician dedicated to providing a high level of care and assistance to patients and their families. This interdisciplinary team specializes in end of life care and uses experts in pain and symptom management. The manager of the team is the registered nurse who assesses the needs of the patient and family and develops a specific plan of care with the physician. The case manager (all are registered nurses) coordinates care with others on the team while the patient's physician works with Palm Coast's medical director and other team members to ensure that the symptoms are controlled, the pain is managed, and the patient and family are informed. In addition to the nurse case manager, the patient's attending physician and the medical director, Palm Coast's interdisciplinary team includes: A chaplain who addresses the spiritual concerns of patients and family members within each patient's individual belief system, as well as addressing concerns of a more generalized spiritual nature; A home healthcare aide who is specially trained to work with the terminally ill and who will provide direct patient care; A social worker who helps with a wide variety of psycho-social needs of patients and families ranging from financial considerations to dealing with grief and the loss of a loved one, as well as providing access to community agencies for support programs; Trained volunteers who provide companionship and non-medical services for the patient, respite time for the family, and support at the time of death and during bereavement; A bereavement coordinator who provides support groups, newsletters, and referrals to community services. The bereavement coordinator also provides pre-bereavement assessment and counseling, and can provide individual counseling as well. The bereavement coordinator provides support to family members and significant others for up to 13 months following a patient's death; An on-call nursing team is always available after hours and on weekends for visits and phone consultation. Other specialists, such as nutritionists and physical, speech, or occupational therapists, are part of Odyssey's care services, and are added to a patient's team as needed. Palm Coast's team will continue to care for the family even after the patient's death. Palm Coast will have a variety of options to help families through their difficult time, including the following: one-on-one counseling; grief support groups; written correspondence related to bereavement, loss, and grief; written materials, articles, and resources; bereavement letters; memorial services; holiday bereavement programs; and referral to community agencies as needed. These bereavement services begin with the initial assessment of the patient into the program, even though most do not occur until after the patient's death. A significant component of Palm Coast's proposed hospice program will be its ability to provide community education and outreach to a culturally diverse market like Miami-Dade County. Palm Coast, through its affiliation with Odyssey, will bring a wealth of experience in working in culturally diverse markets with different ethnic groups. Palm Coast currently offers services in numerous locales in culturally diverse areas. Of specific relevance to the large Hispanic population of Miami-Dade County, Odyssey has significant experience in working in Hispanic areas. For example, Odyssey provides services in El Paso, Texas, a 90 percent Hispanic area, and employs staff, 100 percent of whom are bi-lingual, to serve this group. Additionally, Odyssey has programs in other parts of Texas, such as San Antonio, Conroy, Brownsville, and Houston, that have large Hispanic populations. In order to assure that appropriate services are provided in culturally sensitive areas, Odyssey identifies and hires staff that is fluent in the culture's first language, understands the particular culture, and is familiar with the geographic location. Odyssey has dedicated interdisciplinary teams that are comprised of Hispanic medical directors, home health aides, social workers, Catholic priests, ministers, and nurses. Palm Coast will have access to all of Odyssey's resources that have been developed for use in culturally diverse areas, like Miami-Dade, through its management agreement with Odyssey. While the Miami-Dade Hispanic community is predominantly Cuban, not Mexican as in Texas, the techniques and methods developed by Odyssey for entrance into a culturally diverse community are the same, and Palm Coast will employ those techniques in Service Area 11. Referrals are most important to the success of a hospice program. The major sources of referrals for hospice patients are physician groups, nursing homes, assisted living facilities, and hospitals. Prior to submitting its CON Application, Odyssey sent staff to Miami-Dade County to speak with local area health care providers and to solicit letters of support. Although they visited physician groups, nursing homes, assisted living facilities ("ALFs"), and hospitals, Odyssey was unable to secure any letters of support from those organizations. Odyssey did receive four letters of support from Medicaid independent support coordinators which were submitted with its CON Application. VITAS is well entrenched in the local health care community. VITAS has contracts with nearly every hospital provider in Miami-Dade County, and has established hospital in- patient units at four hospitals, including at Hialeah Hospital, located in the midst of the Cuban-American community. Two additional in-patient units are expected to open in the near future, including one at Kendall Regional, considered to be a largely Hispanic hospital. In addition to its contracts with hospitals, VITAS is well-established with contacts among the local physician community, receiving referrals from specialists in numerous areas. VITAS has contracts with over 90 percent of the nursing homes in the county and with multiple ALFs in the community. In addition to VITAS' established relationships in the health care provider community, the other hospice providers, while significantly smaller than VITAS, are well-established. Recently, the Miami Jewish Home and Hospital also established a hospice program in Service Area 11. Many of these other hospice providers in Service Area 11 cater to specific patient populations and referrals such as the Catholic and Jewish communities and individual nursing homes. While it is likely that each of the existing programs can serve more patients than they currently do, none of these other providers participated in the hearing or provided testimony as to why their numbers of patients are not greater. Palm Coast is not the only provider who engages in extensive community education and outreach in those communities it serves. VITAS has invested great resources to develop strong and successful community education resources. Such materials include separate sets of educational materials targeted to hospitals, physician groups, nursing homes, ALFs, and to patients and their families. These materials are available in English, Spanish, Creole, and other languages. One set of multi-lingual materials is known as "WINKS," an acronym for "What I Need to Know," which describes the problems encountered by health care professionals or patient families in working with a dying patient, as well as appropriate responses to common problems. Brian Payne, VITAS' General Manager for the Miami- Dade program, testified about the dedication of 10 full-time community outreach representatives who target hospital discharge planners, physician groups, nursing homes, ALFs, and other community groups for education and outreach programs. VITAS has also partnered with local educational institutions, including Miami-Dade Community College, and the two statutory teaching hospitals (Jackson Memorial and Mount Sinai) to ensure adequate education of the health care professional community. VITAS has also developed a specific program on hospice benefits that is incorporated as a required part of the licensure process for applicants seeking licensure as an administrator of an ALF. In addition to VITAS, other hospices reach out to the community and participate in community education. Although none of these programs testified or offered evidence at hearing, it is fair to assume that they do not provide community education or outreach on a scale approaching VITAS', what Odyssey has done in other communities, or what Palm Coast proposes here. VITAS does not believe that the addition of Palm Coast will have a significant positive impact on community education and outreach concerning hospice services. Palm Coast believes that the more education that can be brought to an area about hospice, the greater the penetration rate of hospice patients will be. CONFORMANCE WITH DISTRICT HEALTH PLAN PREFERENCES Palm Coast's application conforms with the applicable district health plan. The District 11 Allocation Factors Report contains generic preferences relevant to certificates of need for all types of services, including hospice services, and also contains specific preferences related to hospice services. Palm Coast has recruitment and retention programs in place to develop staff. Recruitment efforts focus on the one- to-one nursing that hospice offers, the role of the nurse as the case manager, and the education benefits Palm Coast will offer through its management agreement with Odyssey. Additionally, Palm Coast will offer incentives to staff to attain the next level of professional development within their careers. Palm Coast will reflect the cultural diversity of the area in its staff and will also provide staff with access to translators 24 hours a day, seven days a week. Upon admission, Palm Coast's patients will be assessed as to their needs and the resources available to them with regard to disasters or emergency. A plan for such contingencies will be contained in the patient's admissions documents and covers fire safety, home care safety, and symptom control. When a Palm Coast patient is admitted, staff will assist in the completion of forms and will document the patient's understanding of his or her rights and responsibilities. Palm Coast has the ability to admit patients 24 hours a day, seven days a week, and will ensure that patients are admitted as soon as possible. Palm Coast (or Odyssey) sent representatives to meet with local providers, including facilities staff and Medicaid-independent support coordinators to identify the local characteristics of Service Area 11. These support coordinators provide advocacy services by helping patients find needed services. These support coordinators indicated that service has not always been timely received and they supported the Palm Coast application. While it is true that Palm Coast did not submit a large number of letters of support from the community for its proposed hospice program, since this is a case where numeric need had been demonstrated, letters of support are not as important as in a no need or not normal circumstances case. Palm Coast intends to implement a community education plan utilizing three or more dedicated community education representatives who will establish referral sources and educate medical providers regarding hospice care. VITAS admits that it is not the only hospice provider in the area and that there is nothing to prevent any of the area's health care providers from contracting with Palm Coast. The determining factor in establishing a relationship with a referral source is the ability to provide quality of care. Clergy are included in the interdisciplinary team that will be in place at Palm Coast. These staff will participate in a specific program that encompasses classical and contemporary theories on death, including: Grief; Myths about Grief and Mourning; the Kubler-Ross Stages; and Myths, Death, and Dying. Palm Coast, through its affiliation with Odyssey, will provide educational services to the medical community regarding the benefits of hospice care, especially to those patients with a non-cancer diagnosis since many people believe that hospice is only for cancer sufferers. Palm Coast will also utilize the hospice case studies developed by Odyssey for the physician audience in order to inform/educate referral sources concerning the indicators of hospice appropriateness for specific non-traditional hospice patients' diagnoses. Another tool that Palm Coast will utilize is a "Slim Jim," a quick reference guide with clinical information to educate physicians on when hospice may be appropriate. Palm Coast, through its affiliation with Odyssey, will have access to the extensive educational materials and protocols that Odyssey has developed for each disease process. Conceptually, these materials are similar to those developed and used by VITAS. The information and techniques acquired and applied from different locations around the country allow Odyssey and its affiliates, including Palm Coast, to continuously improve. These improved techniques and protocols, much like those brought to the area by VITAS, will permeate the system and will cause competitors to improve. As a start-up program, Odyssey will provide Palm Coast with a designated clinical team that will provide all the resources and support necessary to initiate the program. This team will provide education and training to the new office to ensure that everything is set up on a clinical basis and that all of the necessary pieces are in place. Palm Coast's affiliate, Odyssey, has a comprehensive volunteer program that will be implemented at this location. All volunteers will receive special training and will be under a staff member who is responsible for the volunteer program. Palm Coast intends to maintain a volunteer program that, at a minimum, equals 5 percent of the total patient care hours of all paid hospice employees and contract staff. CONFORMANCE WITH AGENCY RULE CRITERIA The application submitted by Palm Coast conforms with the preferences set forth in Florida Administrative Code Rule 59C-1.0355(4)(e). Palm Coast evidences a commitment to serve populations with unmet needs and has established the existence of such populations in Service Area 11. This conforms with Preference 1. Palm Coast's application conforms with Preference 2 in that it proposes to provide the in-patient component of its proposed hospice program through contractual arrangements with existing health care facilities. Palm Coast's application conforms with Preference 3 since it has demonstrated a commitment to serve patients who do not have primary caregivers at home, the homeless, and patients with AIDS. Palm Coast's application conforms with Preference 5 since it will provide services not covered by private insurance, Medicaid, or Medicare. These services include pet, music, massage and aroma therapies, dialysis, palliative radiation, and palliative chemotherapy treatments. Palm Coast will provide 2 percent charity care, in addition to serving all patients who present for care, regardless of their ability to pay. Accordingly, Palm Coast's application conforms with Florida Administrative Code Rule 59C-1.3055(5), and the District 11 Health Plan Criteria. Palm Coast's application conforms with Florida Administrative Code Rule 59C-1.0355(6), since its proposal contains a detailed program description including staffing and use of volunteers, expected sources of patient referrals, and projected number of admissions, by payer type, for the first two years of operation. The sources of patient referrals are reasonable and appropriate. The projected utilization for the proposed hospice program, including the number of admissions and payer mix, is reasonable and achievable utilizing Odyssey's rapid startup program. The Palm Coast start-up is reasonable based upon Odyssey's experience in start-up and operation of hospice programs around the country. Based upon the reasonableness of the utilization projections, the projected increase in admissions for Service Area 11, and Odyssey's experience in other start-up and ongoing hospice programs, Palm Coast should achieve a 5 percent market share by the second year of operations. The increase in overall utilization will, in part, be a result of the education and outreach efforts of Palm Coast. Palm Coast's projections are reasonable based upon the national experience, much of which has been in areas with large Hispanic populations, of Odyssey. Much as VITAS has experienced substantial growth over the years based upon its outstanding education and outreach, as well as its excellent standard of care, a sophisticated provider like Palm Coast, working with its management affiliate Odyssey should increase the market penetration of hospice services in Service Area 11. High level competition between providers such as VITAS and Palm Coast will increase utilization for both providers of hospice services. CONFORMANCE WITH APPLICABLE STATUTORY CRITERIA Palm Coast's application conforms with Section 408.035(1),(2), and (7), Florida Statutes. Need for an additional hospice program is evidenced by the availability, accessibility, and extent of utilization of like and existing health care facilities and health services in the service area, as well as the published need for one additional hospice program in Service Area 11. Palm Coast, through its affiliation with Odyssey, will have the necessary resources to fill current service gaps in Service Area 11. In each area where it currently provides service, Odyssey has implemented a community education plan specific to the needs of the area, including those areas with culturally diverse populations. Palm Coast will implement an appropriate program for the community in Service Area 11. While, clearly, VITAS does an excellent job in the community it serves, its own witnesses admitted that more can be done. Even with the 72 percent market share commanded by VITAS, the published fixed need pool projects 2,093 un-served patients. What was left unexplained at hearing is why the other five hospice providers have not picked up the excess of patients. Perhaps it is because these other providers have not devoted as many resources to education and outreach as has VITAS. Perhaps these other providers are seeking to serve only a specialized population of patients. The evidence at hearing did not provide answers to these questions. Further, while VITAS makes a compelling case for why market penetration is suppressed in the Hispanic population, they offered no specific data or studies to prove that the Hispanic (or in this case Cuban-American) population, given the proper education, will not better utilize hospice programs. Odyssey has proven its ability to respond to the needs of the Hispanic community in other parts of the country with large concentrations of Hispanic persons. It is clear that Palm Coast has the resources available and is committed to devoting them to Service Area 11. Palm Coast appears poised to achieve a strong share of the new admissions projected by the Agency. Palm Coast's application conforms with Section 408.035(3) and (12), Florida Statutes. Although Palm Coast does not have a licensure history in Florida, its parent corporation, Odyssey, has a history of providing quality hospice care and is a member of the National Hospice and Palliative Care Organization. At the time Palm Coast filed this application, Odyssey had 69 Medicare certified hospice programs in 29 states. Palm Coast, through its management contract with Odyssey, intends to adhere to all of Odyssey's policies and procedures, including policies related to access to care, admissions, and patient/family rights, patient services, infection control, and continuous quality improvement. Section 408.035(5), Florida Statutes, does not apply since the proposed program will not be located in a research or teaching hospital. The establishment of the program, however, will enhance the clinical needs of health professional training programs due to Odyssey's numerous educational affiliations. Palm Coast's application conforms with Section 408.035(6), Florida Statutes. Palm Coast, through its affiliation with Odyssey, will have the tools to effectively recruit and retain the necessary staff for this program. Odyssey has effective recruitment and retention policies that have allowed it to successfully staff and operate its 69 Medicare-certified hospice programs in 29 states, serving an average of 7,300 patients a day. Odyssey uses all the traditional methods of recruiting staff, such as newsprint and website postings, as well as working with headhunters and providing referral bonuses. The company's transfer policy and internal posting program provides the opportunity for employees to transfer to other Odyssey locations. Odyssey offers competitive pay and benefits, as well as flexible work schedules. It also provides bonuses for its employees who receive certifications from NHPCO. Accordingly, Odyssey and Palm Coast do not anticipate facing recruitment and retention problems since they have faced similar issues in other areas with diverse cultural populations. Palm Coast's application conforms with Section 408.035(9), Florida Statutes, as the project will foster competition and promote quality care and cost effectiveness. Patients are better served when multiple providers exist in a market. Odyssey has operated in similar sized markets with 20- 30 hospice providers, and has achieved strong average lengths of stay, quality of care, and financial performance. A new hospice in the service area does not provide price competition because the rates are primarily fixed by Medicare and Medicaid. The addition of new programs, therefore, allows the providers to compete based upon the types and quality of services they provide. This "non-price" competition raises the bar on the services provided by programs in the service area. A new competitor organization offers physicians and patients a choice. This is especially true for hospice, because hospice utilization is strongly related to awareness and education. Competition creates an environment in which hospices must do more to educate the community. New disease process protocols, admissions within three hours of initial contact, and other benefits will occur when a new competitor enters the market. New incremental patients will utilize the service because of increased awareness in the benefits of hospice. Palm Coast's application conforms with Section 408.035(11), Florida Statutes. Although Palm Coast does not have a licensure history in Florida, its parent corporation, Odyssey, has a history of providing care to all patients without regard to gender, origin, race, creed, sexual orientation, disability, age, place of residence, or ability to pay. Odyssey's policies and procedures, which will be the basis for Palm Coast's policies and procedures, confirm this. IMPACT ON EXISTING PROVIDERS VITAS suggests that the establishment of a new hospice program in Service Area 11 would have an impact on existing providers of hospice services. If Palm Coast's utilization projections are to be believed, opines VITAS, existing providers will experience a substantial adverse impact. The nature of the impact to VITAS, it argues, will be twofold. First, VITAS will experience even greater problems in the recruitment and retention of professional staff than it currently experiences. VITAS currently has difficulty in recruiting a sufficient number of nurses who are both bilingual and willing to work in hospice care. Further, VITAS has lost staff in the past when Odyssey has entered a market where they are providing services. In such cases, VITAS has lost staff to Odyssey, which has had a negative impact on VITAS, because it had paid to recruit and train these employees. VITAS further claims that it will lose market share if Palm Coast's projections of patient days in its pro formas are accurate. VITAS bases its loss of market share on an allocation of 72 percent of Palm Coast's projected patient days coming directly from VITAS. This would equate to a loss of $1.5 million (on revenues of $18,851,604). VITAS' analysis does not take into account the underserved market of 2,093 patients identified by the Agency in its unchallenged fixed need pool methodology. This does not even take into account VITAS' own expert's acknowledgment that at least 425 patients remain underserved based on her calculation of need. VITAS claims that it will be substantially and adversely affected by the addition of the Palm Coast program in terms of both lost revenues and inability to recruit and retain staff, yet VITAS has experienced large growth during the past four years and projects a "rosy" future as described by the Miami program's General Manager and by VITAS' parent company Chemed. None of the five other hospice providers in Service Area 11 intervened in the proceeding, appeared at hearing, or offered evidence of any adverse impact the approval of Palm Coast as a new provider might have on them. VITAS was unable to provide much evidence, other than the fact that some of these providers have experienced low utilization, to demonstrate any adverse impact by the entry of Palm Coast into the Service Area 11 market. HOSPICE MUST BE NOT-FOR-PROFIT CORPORATION Odyssey is a for-profit company, publicly traded on the NASDAQ. Palm Coast is a wholly-owned subsidiary of Odyssey. Palm Coast is registered as a corporation not-for- profit pursuant to Chapter 617, Florida Statutes. Under generally accepted accounting principles ("GAAP"), which apply to health care companies as well as other companies, the income of a wholly-owned subsidiary is reflected as the income of the parent. Here, the income of Palm Coast is the income of Odyssey, according to GAAP.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Hospice of the Palm Coast, Inc., for CON No. 9798, be APPROVED. DONE AND ENTERED this 14th day of June, 2005, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 2005. COPIES FURNISHED: Kenneth W. Gieseking, Esquire Agency for Health Care Administration Fort Knox Building, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A. 204 South Monroe Street Tallahassee, Florida 32302-3068 Thomas E. Panza, Esquire Deborah S. Platz, Esquire Panza, Maurer & Maynard, P.A. Bank of America Building, 3rd Floor 3600 North Federal Highway Fort Lauderdale, Florida 33308-6225 Richard Shoop, Agency Clerk Agency for Health Care Administration Fort Knox Building, Mail Station 3 2727 Mahan Drive Tallahassee, Florida 32308 William Roberts, Acting General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 Alan Levine, Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116 2727 Mahan Drive 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 In the first batching cycle of 2006, Hospice of the Palm Coast, Inc. ("Palm Coast") and Catholic Hospice, Inc. ("Catholic Hospice"), applied to the Agency for Health Care Administration ("AHCA" or the "Agency") for a certificate of need to establish a new hospice program in Broward County. Palm Coast's application number is CON 9931; Catholic Hospice's is CON 9928. The issues in this case are whether either, both or neither of the applications should be approved.
Findings Of Fact The Parties AHCA "[D]esignated as the state health planning agency for purposes of federal law," Section 408.034(1), Florida Statutes, AHCA is responsible for the administration of the CON program and laws in Florida. See § 408.031, Fla. Stat., et seq. As such, it is also designated as "the single state agency to issue, revoke, or deny certificates of need . . . in accordance with present and future federal and state statutes." § 408.034(1), Fla. Stat. Catholic Hospice Catholic Hospice, Inc., has been a licensed provider of hospice services in Miami-Dade and Monroe Counties (Hospice Service Area 11 which adjoins Service Area 10 along the Broward/Miami-Dade County line) since 1988. It is faith-based and mission-driven; in keeping with its nature as such, it is a section 501(c)(3) not-for-profit corporation. Catholic Hospice has two corporate members: the Archdiocese of Miami and Mercy Hospital, a part of Catholic Health East. Neither of its two members provide it with funding. Catholic Hospice is governed by a board of directors with autonomous authority to govern its activities. The members of its board live and work in the local community. Palm Coast Palm Coast is a not-for-profit Florida corporation currently licensed to operate hospice programs in Hospice Service Area 4B and, like Catholic Hospice, in Hospice Service Area 11 (Miami-Dade and Monroe Counties). Palm Coast's provision of hospice services in Service Area 11 is new relative to Catholic Hospice's service for nearly 20 years in the service area. Palm Coast has been licensed as a hospice in Service Area 11 since March 2006. Palm Coast is a wholly-owned subsidiary of a its management affiliate and parent organization, Odyssey HealthCare, Inc. ("Odyssey"), which is a for-profit national chain of hospices. The sole member of Palm Coast is Odyssey HealthCare Holding Company, Inc., a wholly-owned subsidiary of Odyssey. Palm Coast's Board of Directors are managers of Odyssey all of whom live and work in or near Dallas, Texas. Numeric Need for a Service Area 10 Hospice Program Hospice Service Area 10 Hospice Service Area 10 consists of Broward County. Referred interchangeably by the parties at hearing as either Service Area 10 or Broward County, Hospice Service Area 10 will also be referred to in this Order as either Service Area 10 or Broward County. AHCA's Determination of Numeric Need To determine need in Service Area 10 in the "Other Beds and Programs" First Batching Cycle 2006, AHCA employed the numeric need methodology found in Florida Administrative Code Rule 59C-1.0355 (the "Hospice Programs Rule"). The Agency's methodology calculates need using a number of factors. Among the factors are four categories of deaths in the service area: U65C, 65C, U65NC, and 65NC, described by the rule as follows: (a) Numeric Need for a New Hospice Program * * * U65C is the projected number of service are resident cancer deaths under 65 . . . 65C is the projected number of service area resident cancer deaths age 65 and over . . . U65NC is the projected number of service area resident deaths under age 65 from all causes except cancer . . . 65NC is the projected number of service area resident deaths age 65 and over from all causes except cancer . . . Fla. Admin. Code R. 59C-1.0355(4). (Consistent with these four factors, data was introduced at hearing that is discussed further in this order that relates to four categories of patients grouped by diagnosis and age in much the same way: "65 and Over Cancer," "65 and Over Non-cancer," "Under 65 Cancer," and "Under 65 Non-cancer." See paragraph 16, below.) According to the Hospice Programs Rule, "[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." Id. Application of the Agency's methodology to the factors relative to Service Area 10 yielded more than 400 projected unserved patients who would elect a hospice program ("Net Need"). Palm Coast presented a hybrid methodology that yielded a Net Need of 1,340. In Palm Coast's view, the Net Need produced by its hybrid methodology demonstrated need for at least two new hospice programs. The Agency, however, interprets the Hospice Programs Rule to allow only one new hospice program to be added in any one batching cycle no matter what number is yielded by its methodology. True to its calculation of numeric need and its interpretation of the rule, the Agency duly published its fixed need pool of one. The fixed need pool was not challenged. In response to the published need, Catholic Hospice and Palm Coast submitted timely applications for approval of a new hospice in Broward County. In its State Agency Action Report ("SAAR"), AHCA approved Catholic Hospice's application and denied Palm Coast's. Overview and Approaches of the Applications The applications of Catholic Hospice and Palm Coast comply with the application content and review requirements in statute and rule. Both applications include information related to "special circumstances" that would justify approval of a hospice program in the absence of numeric need. Catholic Hospice, however, did not attempt to demonstrate the existence of "special circumstances" at hearing. Palm Coast, on the other hand, attempted to show that more than one new hospice program could be approved in Broward County. Palm Coast's case for approval of more than one hospice program has two bases. The first is justification under the Special Circumstances provisions art of the Hospice Programs Rule found in Subsection (4)(d) of the rule. The special circumstances advanced by Palm Coast are discussed below in paragraphs 138 to 140. The second base is the "hybrid need methodology" discussed above and developed by its expert health planner. Palm Coast's Hybrid Need Methodology Palm Coast's hybrid methodology follows the assumptions of AHCA's methodology in three categories based on age and diagnosis: "Under 65 Cancer," "Under 65 Non-cancer," and "65 and Older Cancer." It differs from AHCA's methodology in that it assumes that penetration in the "65 and Older Non- cancer" population will remain stable. Palm Coast's "hybrid" need methodology suggests that the need in Service Area 10 is greater than the need forecast by AHCA's approved methodology. The hybrid methodology yields a net need of 1,320 admissions rather than the 441 projected by the Agency's methodology. Stipulated Facts Prior to hearing, the parties filed a joint pre- hearing stipulation.1 In Section E.,2 of the document, entitled "Statement of Facts Which Require No Proof," the parties stipulated to following facts: [a.] Section 408.035, Florida Statutes (2005) sets forth the statutory CON review criteria at issue in these proceedings. The parties agree that the following subparagraphs of Section 408.035, Florida Statutes (2005) are either not applicable or not at issue to consideration of the application: (8) and (10); [b.] The Parties agree that the CON review criteria and standards applicable in this proceeding are set forth in Section 408.035, Florida Statutes (2005), and Rules 59C- 1.0355 and 59C-1.030, Florida Administrative Code. The parties agree that the following criteria in Rule 59C-1.0355, Florida Administrative Code, are either not applicable or not at issue to consideration of the application: (7), (8), (9), and (10); [c.] The parties agree that CATHOLIC HOSPICE and PALM COAST's Letter of Intent (hereinafter referred to as "LOI") and CON applications were timely filed with the Agency. [d.] The CON Applications filed by CATHOLIC HOSPICE and PALM COAST comply with the Application content and review process requirements of Sections 408.037 and 408.039, Florida Statutes (2005) and Rule 59C-1.0355, Florida Administrative Code, and the Agency's review of the Application complied with the review process requirements of the above-referenced Statutes and Rule. [e.] A FNP of one (1) was projected and published for Hospice Service Area 10 for the 2006 - 1st Batching Cycle in the Florida Administrative Weekly, Volume 32, No. 14. [f.] The FNP publication of one (1) was not challenged. [g.] The parties agree that Schedules 1 through 10, contained in each of the two CON applications (Nos. 9928 and 9931), may be admitted into evidence as reasonable projections without a sponsoring witness. [h.] The parties agree that the audited financial statements of the two applicants and parent entities, presented in the CON applications are true and accurate copies of the respective entity's audited financial statements and may be admitted into evidence without a sponsoring witness. [i.] As to Schedule 5, the parties agree that the figures presented by both Applicants are reasonable, and each applicant is likely to meet their respective utilization projections presented in Schedule 5. * * * [j.] As to Schedule 6, the parties agree that each applicant can provide hospice services with the staffing positions and volumes presented in Schedule 6, and that the staffing and salaries proposed are reasonable for the services proposed by each applicant. [k.] The stipulations, referenced in paragraphs 8 through 11 above, shall not preclude the parties from presenting comparative evidence about any aspect of the information presented or assumptions contained in Schedules 1 through 10 of either of the two remaining applications. [l.] Section 408.035(1), Florida Statutes (2005) provides in pertinent part as follows: "The need for the healthcare facilities and health services being proposed." Pursuant to AHCA's Florida Need Projections for the hospice program, background information for use in conjunction with the April 2006 Batching Cycle for the July 2007 Hospice Planning Horizon, a need was identified for one (1) additional hospice program in AHCA Service Area 10. Thus, CATHOLIC HOSPICE, PALM COAST, and the Agency agree there is a need for one (1) program. * * * [m.] Section 408.035(3) provides in pertinent part as follows: "The ability of the applicant to provide quality of care and the applicant's record of providing quality of care." Section 408.035 is not at issue with respect to either CATHOLIC HOSPICE or PALM COAST's compliance with the above-referenced statutory criteria. The parties agree that both of the proposed programs can provide quality care and satisfy the criterion in Section 408.035(3), Florida Statutes. [n.] Section 408.035(4) provides in pertinent part as follows: "The availability of resources, including health personnel, management personnel, and funds for capital and operating expenditures, for project accomplishment and operation." [o.] Section 408.035(5), Florida Statutes (2005) provides in pertinent part as follows: "The extent to which the proposed services will enhance access to healthcare for residents of the service district." The parties agree, that to the extent there is a published need, approval of either CATHOLIC HOSPICE or PALM COAST would enhance access to healthcare for residents of the Service Area. Notwithstanding the fact that both CATHOLIC HOSPICE and PALM COAST believe that approval of either program will enhance access to healthcare for residents of the Service Area, nothing herein shall preclude the parties from presenting comparative evidence as to which program would provide better access. [p.] Section 408.035(6) provides in pertinent part as follows: "The immediate and long-term financial feasibility of the proposal." Section 408.035(6) is not at issue in these proceedings. The parties agree that both proposed hospice programs are financially feasible in the short- and long-term, and satisfy the criteria in Section 408.035(6), Florida Statutes. [q.] Section 408.035(8), Florida Statutes (2005), provides in pertinent part as follows: "The costs and methods of the proposed construction, including the costs and methods of energy provision and the availability of alternative, less costly, or more effective methods of construction." Section 408.035(8) is not at issue with respect to a review of the CON applications filed by CATHOLIC HOSPICE or PALM COAST. [r.] AHCA is the state agency responsible for issuance of licenses to hospice providers, and is the sole state agency authorized to make Certificate of Need ("CON") determinations. [s.] North Broward Hospital District is a special hospital taxing district created by Special Act of the Florida Legislature, chapter 27438, Laws of Florida (1951), and operates in the northern geographical area of Broward County. GOLD COAST is an operating unit of North Broward Hospital District. [t.] CATHOLIC HOSPICE is a not-for-profit Florida corporation and existing provider of hospice services in Florida. [u.] PALM COAST is a not-for-profit Florida corporation and existing provider of hospice services in Florida. [v.] CATHOLIC HOSPICE and PALM COAST are each currently providing services through licensed hospice programs in Hospice Service Area 11 (Miami - Dade and Monroe Counties). [w.] Hospice Service Area 10 is Broward County, Florida. [x.] The current hospice providers in Hospice Service Area 10 are VITAS Healthcare Corporation of Florida, Hospice By the Sea, Inc., HospiceCare of Southeast Florida, Inc., and GOLD COAST. Joint Prehearing Stipulation, filed May 9, 2007. The Applicants in Other Service Areas; Existing Providers in Service Area 10 Catholic Hospice is currently licensed and operating in Service Area 11, Dade and Monroe Counties. Palm Coast has programs that are currently licensed and operating in Service Area 4B, comprising of Flagler and Volusia Counties and, like Catholic Hospice, in Service Area 11. Service Area 10 has four existing providers of hospice services. Vitas Healthcare Corporation of Florida (Vitas) is a for-profit hospice. The other three, Hospice By the Sea, Inc., HospiceCare of Southeast Florida, Inc., and Gold Coast, are all community-based not-for-profit hospices. Of the four existing providers, Vitas is by far the dominant provider of hospice services in the service area. Affiliations and Sponsors Palm Coast Affiliation with Odyssey Palm Coast is affiliated with Odyssey Healthcare, Inc., a for-profit corporation. Despite the affiliation, Palm Coast is a distinct entity in accordance with Florida law. It has its own Articles of Incorporation and By-Laws, its own audited financial statements and its own local governing board. It complies, moreover, with all state and federal requirements for AHCA and Medicare licensure and certification. Additionally, each of the individual Palm Coast programs has its own bank account into which all of its revenues are deposited and out of which all of its expenses are paid. If the proposed Palm Coast hospice program in Broward County exhibits a positive cash flow from its operations, those fund will remain with the program to be used for patient care and operations. This is the practice followed by Palm Coast at its existing programs in Service Areas 4B and 11. The Palm Coast model, therefore, which Palm Coast will follow should it be approved in Broward County, will be to act and operate as a community-based hospice. While it will "act locally," it will also benefit from its affiliation with Odyssey. It will be able to take advantage of Odyssey's resources, experience and successful management tactics. These benefits include economies of scale based on Odyssey's buying power and operation of 80 programs in 26 states, Odyssey's experience with a multitude of startup programs, identification and treatment of minority population and non-cancer patients, treatment of cancer patients (traditionally served by hospices), extensive educational tools developed over 10 years of operation, continuing education for all staff members, accessibility to a large clinical database, and access to centralized services such as billing and foundation funds. Through its affiliation with Odyssey and with the assistance Odyssey is reasonably expected to provide, Palm Coast possesses the necessary management and clinical experience, operational systems and corporate resources to efficiently, effectively and successfully implement a new hospice program in Service Area 10. Indeed, the benefit of combining local resources and knowledge with Odyssey's nationwide experience, assets, buying power and success has been demonstrated with the successful establishment of Palm Coast programs in Service Area 4B and Service Area 11, the service area in which Palm Coast's rival in this proceeding gathers its own support and sponsorship. b. Catholic Hospice's Corporate Sponsors in Service Area 11 Catholic Hospice has two corporate sponsors in Service Area 11: the Archdiocese of Miami and Mercy Hospital. The Archdiocese consists of Broward, Dade and Monroe Counties. It places a priority on health care as a large part of its mission. The Archdiocese is the sole corporate sponsor of a substantial network of post-acute health care facilities in Dade and Broward Counties, including rehabilitation hospitals, nursing homes, assisted living facilities, HUD elderly housing facilities and cemeteries. This health care network is managed from its headquarters in Broward County by Catholic Health Services (“CHS”), and extends throughout the geographic boundaries of the Archdiocese. Founded in 1988, Catholic Hospice is the realization of the aspirations of the Archdiocese's Monsignor Walsh. At the time, the hope was for Catholic Hospice to serve the entire geographic area of the Archdiocese; a CON, however, could only be secured for Service Area 11. Hospice services in Broward County is missing from the continuum of care in which the Archdiocese is engaged. There will be a benefit to the patients in the CHS network of care because continuum of care increases continuity of care and is better for patients. The gap in the Archdiocese's continuum of care is therefore significant to the patients it serves. Mercy Hospital, the second corporate sponsor of Catholic Hospice in Dade County, is an acute care hospital managed by Catholic Health East. Catholic Health East is a Catholic network of over 35 acute care hospitals that extends along the east coast of the United States from Maine to Florida. The network includes Holy Cross Hospital in Broward County. Support for Catholic Hospice by Catholic Health and Elder Care Entities The Archdiocese of Miami, Mercy Hospital, Holy Cross Hospital in Broward County and Catholic Health East all share a common identity as faith-based, not-for-profit organizations with the mission of demonstrating reverence for the human body and spirit by bringing the healing and comfort of the Lord to those in need throughout their respective communities. The common mission and identity that Catholic Hospice and the related Catholic health care entities share naturally cultivates collaboration among them. These collaborations within an extended network of health and elder care services are significant. They will allow Catholic Hospice to expand into Broward County quickly and efficiently. Palm Coast's Benefits from Affiliation with Odyssey Palm Coast has available to it through its management agreement with Odyssey, all the resources of the two existing Palm Coast programs as well as the nationwide resources of Odyssey. Due to its experience with new market development, Odyssey has the ability to enter the market rapidly; programs, policies, and operations are already in place, and the strong support resources provide the wherewithal for Hospice Palm Coast to do their job of rapidly, efficiently, and appropriately upon entering the Broward County marketplace. Odyssey has started over thirty hospice programs since 1995, with five new programs established in the 2006 calendar year, evidence of experience in development of new hospice programs, in addition to their experience with hospice acquisitions. The proof of likely success in Broward County as the result of Palm Coast's affiliation with Odyssey can be seen, moreover, in the success of Palm Coast's programs in District 4A and 11, implemented under the guidance and direction of Odyssey. In the marketplaces where Odyssey and Palm Coast have historically initiated new hospice programs, they have become proficient at determining the traditional or existing core of business for the existing providers, and utilized their experience and success to come in and fill the gaps, otherwise known as providing "Hospice Services Beyond the Traditional Model." The addition of Hospice of the Palm Coast in Broward County will allow for the expansion of the Odyssey way of life, through its not-for-profit affiliate, utilizing its successful operational philosophy and Fourteen Service Standards. Odyssey has a dedicated start-up team that, upon CON approval, plans to work with the local providers and other individuals or entities within the local market, to guide the Palm Coast's Broward program from the CON approval, up through Medicare certification. Operationally, based on its size in terms of programs and economies of scale, there are significant benefits to Palm Coast's proposed program in Broward; the ability to contract on a national level for corporate wide benefits including a variety of medical equipment, medical supplies, and pharmacy supplies, due to the operation of over 80 hospice programs nationwide, which yields significant economies of scale. The Odyssey Support Center provides the Palm Coast start-up programs with policies and procedures, forms, educational materials, and training, in addition to centralized services efficiently operated for all the Odyssey programs from the Dallas corporate headquarters. Specifically, Odyssey supports each individual hospice location by providing coordination, centralized resources, and corporate services, including, but not limited to: Financial accounting systems, including billing, accounts receivable, accounts payable, and payroll; Information and telecommunications systems; Clinical support services; Human resource administration; Regulatory compliance and quality assurance; Marketing and educational materials; Training and development; and Start-up licensure and certification. In return for these services provided by Odyssey, the Palm Coast programs pay a management fee, which is calculated as seven percent of the local hospice's net revenue. The same arrangement will be implemented upon Palm Coast's approval for the CON in Broward. These resources allow each local office to focus on Odyssey's primary mission to provide responsive, quality care to patients and their families. Once the Palm Coast entities, including the proposed Broward program, become "cash positive," a separate and distinct bank account will be opened to ensure the funds of the not-for- profit Palm Coast entities are not co-mingled with that of its management affiliate Odyssey. Broward County Diversity and Need The population of Broward County is becoming increasingly diverse. The population that is dying is also becoming more diverse. For example, from 1996 to 2004, Hispanic deaths in Broward County increased by 50 percent whereas deaths of the non-Hispanic population declined. At the same time, African-Americans and non-Caucasians had significant increases in deaths while Caucasian deaths declined. Since 2000, existing providers have not met the needs of all of the age and diagnosis groups in the District. "[P]art of the reason for that is that the underlying nature of the service area has been changing, becoming more diverse … [and] younger, with a growing ethnic population." Tr. 620. While Service Area 10 has been changing, the existing providers have not been able to adapt to the changes in the population. Catholic Hospice's History of Dealing with Diversity For almost 20 years, Catholic Hospice has refined its expertise in ascertaining and meeting the needs of the diverse, multi-cultural population within Dade County, including Hispanics, Haitians, Caribbeans, Jamaicans and African Americans. This history demonstrates Catholic Hospice's ability to ascertain and meet the needs of the diverse population in Broward County if approved. One of the strengths of Catholic Hospice is its culturally and ethnically diverse staff, many of whom are bilingual. Having bilingual staff is significant. For example, Catholic Hospice’s Medical Director, Dr. Kiedrowski speaks Spanish fluently and has seen only one patient whose primary language was English in the year and a half he has been on staff. In fact, seventy to eighty percent of Catholic Hospice’s patients in Service Area 11 are Hispanic. Catholic Hospice is particularly sensitive and responsive to the needs of the Hispanic community – the majority of which identify themselves as Catholic. Palm Coast's History of Dealing with Diversity Palm Coast does not have Catholic Hospice's multi- decade experience of dealing with diversity in Service Area 11 that will be of such benefit in Service Area 10. In contrast to Catholic Hospice in Service Area 11, Palm Coast is a start up that has only been in existence for about a year. Palm Coast is not lacking in the ability to deal with diverse populations, however, because of its affiliation with Odyssey and experience in Service Areas 4B and 11. This ability is demonstrated by Palm Coast's practice while its programs have been in a start-up phase in these service areas. Upon entering a new community, Palm Coast hires caregivers and administrative personnel for the hospice office from the community. These new employees reflect different local cultures, whether Hispanic, African American or other. In Service Area 11, for example, Palm Coast's new employees include Haitian employees to reflect the Haitian component of the diverse local culture in the area. In addition to diversity in hiring practices, cultural diversity training is offered to Palm Coast employees by Odyssey. The training involves education with regard to local cultures, religions, and customs unique to the area. Palm Coast's intent, therefore, is to hire and train a diverse group of individual from the same locale as the patients in order to facilitate the service to patients and increase the patients' comfort levels. Palm Coast makes an effort to recruit a staff that mirrors the racial and ethnic make-up of the community it serves. The effort and experience that Palm Coast has had in Service Area 11 in particular will serve Palm Coast well in Service Area 10 should its application be approved. But Catholic Hospice’s long history with serving the multicultural needs in Dade County is predictive of better capability to deal with Broward County's diversity than Palm Coast's one-year experience in the County and its intent to follow in the footsteps of that experience in Broward County should its application be approved. Hospice Services and Programs Hospice is both a philosophy and method of care for terminally ill patients, their families and loved ones. Hospice services provide palliative care for pain and management of symptoms of a terminal disease process or processes, as well as supportive care to ease the psychological and social strains of a patient and his or her family confronting mortality. Palliative medicine focuses on relieving suffering and symptoms, not curing a patient. Usually provided in the home, hospice services are required to be capable of being tailored based on individual need and are required to be available twenty-four hours a day, seven days a week, including holidays. Catholic Hospice meets these requirements. Palm Coast meets the requirements as well. Palm Coast's Program Palm Coast's program is reflective of a spirit and idea of caring that emphasizes comfort and dignity for the dying, making it possible for them to remain independent for as long as possible and in familiar surroundings. Palm Coast utilizes an interdisciplinary team approach of physicians, nurses, social workers, and others to provide services including palliative care in the home, short-term inpatient services, mobilization and coordination of ancillary services and bereavement support. The patient's plan of care is developed and regularly modified by the interdisciplinary team: a physician, nurse, social worker, chaplain, and bereavement coordinator. The team may include a volunteer coordinator, volunteers, nursing assistants and home health aides. The Palm Coast interdisciplinary team meets on a specific timetable. Paula Toole, an Odyssey Healthcare regional vice president who covers Odyssey's south region described the timetable at hearing and the content of the meetings: "Generally its every two weeks. If [the patient] is on a higher level of care, it may be every week or . . . day." Tr. 962. The interdisciplinary team discusses the patient and the family to determine what services are being provided and whether they are appropriate to provide the patient and the family with the best hospice care. Catholic Hospice’s Continuum of Quality Services There are four levels of hospice care: continuous care, general inpatient care, routine home care, and inpatient respite care. Continuous care and general inpatient care are considered “intensive” services as they involve the most complex, medically unstable patients and a higher level of services. Continuous care is often used when a patient is in crisis and requires more frequent physician visits. A key factor that has improved availability of hospice care is the Medicare Hospice benefit. To be eligible for the Medicare hospice benefit, a patient must be certified by two physicians to have a life expectancy of less than six months if the patient’s disease process runs its normal course. Statutory standards require that a hospice implement home care within three months after licensure and inpatient care within twelve months. Catholic Hospice will be able to make routine and continuous home care visits immediately upon licensure in Broward County. Catholic Hospice can manage operations from its existing office in Miami Lakes and a new office to be almost immediately established in Lauderdale Lakes through a lease with CHS. Catholic Hospice reasonably expects to enter contracts for the provision of inpatient hospice care with existing hospitals and nursing homes immediately upon licensure –- making inpatient hospice immediately available. In addition, Broward residents may choose to access a freestanding inpatient hospice unit in northwest Dade County for which Catholic Hospice has been approved and plans to open in 2008. Upon approval and licensure of Catholic Hospice’s proposed Broward County program, CHS will contract with Catholic Hospice to provide hospice services to persons in its Broward facilities as it does currently for its Dade County facilities. The plans for Broward County will not be the first collaboration between Catholic Hospice and CHS. Catholic Hospice has an approved CON for a 13-bed free-standing inpatient hospice facility in Dade County. The inpatient hospice facility will be on the third floor of a building that will also house a rehabilitation hospital for CHS. That facility is located so that it will be accessible to persons in southern Broward County that require an inpatient level of care, or lack a caregiver or are homeless and require residential care. Catholic Hospice will employ existing policies and procedures to administer its offices and direct patient care. Hospice services are typically provided through the use of an interdisciplinary team that provides, at a minimum, core services, including physician services, nursing services, nutrition services, social services, pastoral care or chaplain services, volunteer services, and bereavement services. In addition, services such as physical therapy, occupational therapy, speech therapy, home health aide services, infusion therapy, medical supplies and equipment, and homemaker services should be provided as needed. Catholic Hospice complies and provides core services as well as additional services such as radiation therapy and chemotherapy as each patient requires. Catholic Hospice has divided its current service area into four sections and provides a full spectrum of hospice services through four interdisciplinary teams that provide high quality care. Each team is responsible for one section of the county. The number of visits a patient receives from members of the interdisciplinary team is determined by the plan of care. Once a patient enters the program, they are admitted by an admissions nurse who collaborates with the physician and family to develop the plan of care. As a patient’s health declines, the patient will receive visits by the interdisciplinary team members, including nurses and physicians as needed. Catholic Hospice has no limitation or hard rules on the number of visits -– it is based on patient need. The interdisciplinary teams have regular meetings to re-evaluate patients’ plans of care. Physician Services Physician services are a strength of Catholic Hospice -– ensuring that any patient that needs to see a physician does, and promptly. Catholic Hospice has four staff physicians who work in the community making house calls and seeing patients at nursing homes and assisted living facilities. In addition, Catholic hospice has contracted physicians at hospitals within its service area to cover patients in its contract hospitals. Patient care and particularly physician services at Catholic Hospice are overseen by Dr. Brian Kiedrowski, a Certified Medical Director, board-certified in geriatric medicine and a diplomat of the American Board of Hospice and Palliative Medicine. Catholic Hospice has policies for the credentialing of its physicians to verify education and experience, ensuring the continued quality of Catholic Hospices’ physician services. A physician is assigned to each interdisciplinary team at Catholic Hospice, including Dr. Kiedrowski, the Medical Director. This has added to his credibility with the facilities in Service Area 11 and improved collaboration with community providers. At a minimum, each Catholic Hospice patient is seen by a physician within three days of coming into the program because hospice is urgent. Following that, patients are seen at least once a month, but it depends on the needs of the patient and may be more often. Nothing substitutes for a physician’s presence with the patient while performing an examination to determine appropriate treatment. For example, if a patient is short of breath, the physician needs to see the patient to determine what is happening and appropriate treatment. Catholic Hospice also has protocols for the communication among its physicians and between its physicians and attending physicians, should an attending physician want to continue to follow the patient. This improves quality of care by increasing communication and ensuring that patients are not in limbo if an attending physician cannot be reached at a time of crisis. Physicians, like other Catholic Hospice employees, participate in orientation which facilitates team-building and increases physicians’ sensitivity to the various cultures and religions in South Florida. In addition, Dr. Kiedrowski will go into the field with nurses or other staff physicians to exchange training and provide monitoring or proctoring of clinical skills. In contrast, most of Palm Coast’s clinical education is performed through standardized self-directed online training modules through its parent corporation in Dallas, Texas. Nursing Services Catholic Hospice provides high quality nursing services and has policies in place to ensure that quality continues, including such clinical details as the care of central venous access (“CVA”) devices and subcutaneous infusions. Catholic Hospice can immediately implement its comprehensive nursing policies in Broward County upon approval. Nutrition Services Catholic Hospice provides nutrition services to its patients through two pooled dieticians, one for the northern part of Service Area 11 and one for the southern portion. The dieticians perform nutritional risk assessments on all non- cancer patients and patients under eighteen who are having total parenteral nutrition -- meaning they are being fed intravenously. The dieticians are a great asset and comfort to patients and families. Catholic Hospice cares about nutrition for its patients eating. It provides patients and their families with nutrition education and prepares them for what to expect as the patient’s disease progresses. Nutrition, as with many areas within hospice services, requires particular sensitivity to cultures, including Hispanics and others. Catholic Hospice has successfully accommodated the nutritional needs of the various cultures it serves. Catholic Hospice will implement these same policies for providing nutrition services in Broward County upon approval. Social Services Social Services at Catholic Hospice are provided by a group of graduate level social workers which is a requirement of Catholic Hospice. The services are broad in scope, including everything from family counseling to coordinating for caregivers and facilitating the securing of other resource needs of the patient and family. Catholic Hospice has policies in place for the provision of these services that can be immediately implemented in Broward County. Catholic Hospice has written and received a caregiver grant in the amount of one hundred thousand dollars that is renewed annually and administered locally through Dade County. The grant targets individuals and families that are facing the choice of having to place a loved one in a nursing home to be able to hold a job or attend appointments because they cannot financially afford a private caregiver and, in part counteracts caregiver fatigue. Volunteers can provide respite for caregivers as well. Catholic Hospice will seek similar opportunities in Broward County if approved. State and local regulations require hospices have emergency management plans. These plans are submitted to the Agency and local government. The plans are required to have certain elements to ensure that patients and families will not experience interruptions in hospice service in the event of a natural disaster or other emergency. Catholic Hospice is capable of successfully developing and implementing a similarly comprehensive plan in Broward County if approved. Serving All Faiths -- Pastoral Care or Chaplain Services Catholic Hospice serves persons regardless of religion or lack thereof. Patients include those who are Catholics (as expected), Buddhists, Seventh-day Adventists, Santerians, Jewish, Baptists, and Pentecostals. The staff of Catholic Hospice reflects a diversity of religious beliefs as well. Ms. Murray, for example, the Vice President for Nursing Services is of the Jewish faith. All of the staff are comfortable, however, with the Catholic identity and mission of Catholic hospice as a faith-based organization. Catholic Hospice has six chaplains who take care of persons of all faiths or no faith according to each patient’s needs and desires. In fact, the very first patient ever cared for by Catholic Hospice was Jewish. The chaplains are not all Roman Catholic. Chaplains are required to complete Clinical Pastoral Education (“CPE”) training, which is chaplaincy training. CPE training assists clergy with providing spiritual direction to persons of all faiths, independent of that clergy member’s own religious identity or affiliation. It helps them view spirituality from a universal standpoint to provide pastoral care and spiritual direction. At Catholic Hospice, chaplains also provide a connection to patients’ own faith communities -– mobilizing those relationships for the benefit of the patient and family. Additionally, each orientation includes a component of general spiritual care training to enable employees to reach out and connect with patients and families whatever their religious beliefs may be. One of Catholic Hospice’s chaplains is a Rabbi who provides particular assistance with Catholic Hospice’s L’Chaim program. The L’Chaim Program is a Jewish Hospice program emphasizing sensitivity to Jewish beliefs, customs and holiday traditions. Developed in response to community need, the L’Chaim program has its own mission statement and brochures geared to persons of the Jewish faith. Catholic Hospice’s orientation similarly includes a segment on L’Chaim. Catholic Hospice can successfully implement its current chaplain services policies upon approval of its proposed Broward program. Volunteer Services Catholic Hospice has a comprehensive program for the recruitment and training of volunteers. Volunteers provide respite services within the home setting –- often allowing a caregiver the opportunity to go to appointments and uphold other obligations they otherwise could not do. Catholic Hospice also has an “Angel Program” of volunteers that accompany patients during their final hours of life. These volunteers provide companionship to patients without family, and comfort to patients and families who are together in those final hours. Volunteers undergo comprehensive training similar to an employee orientation. Training is 16 hours long and is provided over two consecutive Saturdays. The training provides an overview of the organizational structure, the culture of Catholic Hospice and provides a breakdown of each volunteer’s role in the interdisciplinary team to ensure a complete understanding of the volunteer’s function and the limits that each works within. Catholic Hospice has developed training manuals for volunteers and because Catholic Hospice has volunteers fluent in both English and Spanish, training can be presented in either language, including the training manuals. Catholic Hospice has volunteers in its Dade program that are residents of Broward County. A condition of participation in the Medicare program for hospices requires that volunteer service match at least five percent of the overall care hours provided by hospice employees. Catholic Hospice surpassed that last fiscal year as ten percent of direct care hours were matched by volunteer hours. Catholic Hospice can adopt the same strategy and policies to successfully implement its volunteer program in Broward County. Bereavement Services Medicare guidelines require that some form of contact be maintained with families of hospice patients for up to 13 months following the death of their loved one. Catholic Hospice far surpasses that minimum. Catholic Hospice has a corps of graduate level clinicians specializing in grief work and each is assigned to a team. All of Catholic Hospice’s bereavement counselors are affiliated with the Association of Death Education and Counseling. Bereavement counselors preside over all bereavement activities and all family members are invited to establish a clinical relationship with that counselor to address his or her grief. Many hospice families experience what is called “complicated grief” -- grief that is particularly emotionally or spiritually complex due to the relationship with the patient, and much of the counseling work addresses those issues so that a survivor is not carrying regrets or guilt. Often a family member experiencing complicated grief will continue to work with the clinician over the course of several months. Catholic Hospice also provides bereavement services and support groups to the community. Such support groups are in parishes, nursing homes, and various community and institutional settings. The groups are open to members of the community as well as family members of patients and meet for a set period of time, usually 10 to 12 weeks. This allows Catholic Hospice to spread its resources throughout the community for maximum accessibility and responsiveness. On other occasions, bereavement counselors have visited local schools following student suicide. There the counselors not only intervened with the children trying to understand that loss, but provided education to school staff on responding to the children’s needs. A memorable example involved a group of accountants at the Loews Hotel in Miami Beach who were attending a workshop during the 911 attacks and lost many of their colleagues. Counselors were rotated to provide blocks of time over a two-day period to help those accountants with their grief. Catholic Hospice has conditioned its CON on providing community bereavement support groups at senior housing facilities in Broward county and is prepared to successfully provide those programs. CHS and Holy Cross have already volunteered its facilities for such programs. Catholic Hospice provides “Camp Hope” an annual bereavement camp for children who have experienced the loss of a family member, usually a parent. Camp Hope is volunteer-driven and provided free of charge to children throughout the community, not just children of hospice patients. The camp receives many referrals through the Dade County School system. The children are taken to a local camping facility and are provided a variety of therapeutic activities and recreation –- all presided over by professionals in their respective specialization. In the past, people from Broward have participated in the camp as a result of requests from within the community. Catholic Hospice has bereavement services policies that can be implemented in Broward County upon approval. Education Education is a strength of Catholic Hospice, including education of its own employees, its contract facilities, physicians and other health care providers, as well as the community at large. Catholic Hospice has a full-time nurse educator who is certified in hospice and palliative care nursing. Each employee participates in a week-long orientation familiarizing himself or herself with Catholic Hospice and the diverse ethnic and religious community he or she is about to serve. Clinical staff may be oriented for an additional week or more. Following orientation, there is a new employee follow-up and periodic additional training. As part of the orientation process and thereafter in continuing education presentations, the employees demonstrate competency with various skills. The competency packet also contains a post-test and, if an individual has a particularly low post-test score, a copy is sent to that person’s supervisor for follow-up. The goal is for employees to feel comfortable training patients and families about hospice. During the orientation, employees are trained on how to perform a cultural assessment for any patient who chooses Catholic Hospice’s Services. This includes general information on tendencies within certain ethnic groups and leaving one’s assumptions and beliefs “at the door” so that each individual patient may express his or her beliefs. The goal of Catholic Hospice is for each employee to be able to engage in active listening to help differentiate the needs of individuals within the Hispanic population or any other population. The education manager is also responsible for two hours of continuing education for the interdisciplinary staff every month. The education manager holds a provider number issued through the Board of Health, Division of Medical Quality Assurance for providing education for nurses, social workers and mental health workers; accordingly, all presentations at Catholic Hospice are geared toward allowing professional staff to accumulate medical education credit. Medical education is likewise offered to contract and non-contract facilities in the community for their staff. The nurse educator oversees university students who come to Catholic Hospice as part of their medical education training. Catholic Hospice has enjoyed long-standing relationships with various universities, including the University of Miami, Florida International University, and Barry University. Catholic Hospice has contracts with each university for nursing students and other health and counseling program interns for rotations with Catholic Hospice as part of the students’ community experience and training in end-of-life care. Working with the students provides Catholic Hospice valuable information on how it is perceived within the community it serves. Outreach Catholic Hospice recognizes that cultural factors can prevent access to hospice care and is organizationally sensitive to those factors providing employee education to counteract them -– such as the cultural assessments described earlier, through facility education with its contracted facilities and insurance providers, and through community outreach to the general population. Catholic Hospice’s goal is to reduce barriers to hospice care overall. For example, Catholic Hospice is part of a pilot program, “Partners in Care,” to provide palliative care services for children with life-limiting illnesses. Catholic Hospice has two community liaisons who conduct community outreach with hospitals, nursing homes, physicians and various civic organizations to provide presentations on hospice. As a condition to its CON, Catholic Hospice has agreed to provide outreach to Hispanics and persons under 65 and to provide bereavement support groups and has a proven ability to do so. Much of Catholic Hospice’s outreach includes persons under 65 years old and Hispanics. The composition of participants in facility education, insurance provider in- services, caregiver education initiatives, support groups, community health fairs, parish and community bereavement groups are attended by persons under 65. Catholic Hospice has also provided care outreach and training for lay ministers within the parishes to increase sensitivity to specific needs of patients facing illness. Brochures and other materials are available in English and Spanish. Providing outreach in existing community facilities increases Catholic Hospice’s visibility in the community. Most of Catholic Hospice’s patients are Hispanic and the majority of those persons are Roman Catholic. As an organization of the Archdiocese, the individual parishes throughout Dade County have been opened for Catholic Hospice to visit Mass or smaller groups to provide education on end of life care and hospice. Catholic Hospice has a radio show on Radio Paz, the Archdiocese’ radio station. Called “Caminando Contigo” or “Walking with You,” the show is presented in Spanish each Monday from 2:30 p.m. to 3:00 p.m. The program is an educational presentation on hospice services broadcast throughout Miami-Dade and Broward County into West Palm Beach. In addition, Catholic Hospice’s community relations manager regularly appears on public television shows to speak about hospice services. Catholic Hospice engages in modest fundraising to supplement its mission of caring for all those in need. Catholic Hospice’s two main fundraisers are an annual golf tournament and the Tree of Hope where people contribute by purchasing or sponsoring memorial holiday ornaments. Catholic Hospice can successfully duplicate its outreach and fundraising programs in Broward County upon approval. Different Orientations Catholic Hospice's organization is "faith based." “Faith based” is not just providing chaplain services. All hospices are required to do so. Rather, "faith based" is the spirit of mission that drives every decision at Catholic Hospice from the top of the organization down. Catholic Hospice’s stakeholders are the community it serves and its employees. Palm Coast's affiliation with Odyssey gives it different orientation from Catholic Hospice's. A for-profit company such as Odyssey Health Care has a fiduciary duty to increase profits for its shareholders and will be motivated by that fiduciary duty or “mission” of profitability. Although organized as a not-for-profit, Palm Coast nevertheless shares that mission of profitability acting like a for-profit company. For example, Palm Coast offers stock options to its employees. Palm Coast’s billing and banking are done at the Dallas headquarters, consolidated with the ledger for Odyssey Healthcare. Palm Coast pays a management fee to Odyssey because that is the only way for the cash to flow upstream under Florida law and Palm Coast’s assets, along with those of other Odyssey programs, secures a 20-million dollar line of credit for Odyssey. Odyssey assesses a management fee of seven percent of net revenue monthly therefore the higher net revenue to Palm Coast the greater the contribution to Odyssey's profitability. Currently, the profits from Palm Coast are used to develop additional hospices in Florida. In contrast, Catholic Hospice is likely to spend more on patient care and provide the choice of faith-based hospice services that currently do not exist in Service Area 10. Palm Coast's Community and Employee Education When entering a community, Palm Coast hires a team of community education representatives ("CERs"), along with the program's general manager, their function is to primarily provide day-to-day education to the community at large. It is not unusual to find people in the community who are completely unfamiliar with hospice and its benefits. The CERs concentrate on educating referral sources, not just on the availability of hospice services, but also patient eligibility and provide information not only on cancer but the numerous non-cancer terminal diseases for which hospice care is potentially appropriate. The Palm Coast CERs seek to educate the members of the medical profession at hospitals, nursing homes, and assisted living facilities, doctors offices, professional buildings, as well as educating those within the community, by speaking at churches, community organizations, Kiwanis clubs, rotary clubs, Chambers of Commerce and other community activities. The CERs utilize any opportunity to educate about hospice in general (not necessarily regarding Odyssey or Palm Coast), because as evidenced by the increasing number of patients accessing hospice care and current penetration rates, the service is still underutilized and to some degree misunderstood. Palm Coast - Broward plans to initially hire a minimum of three CERs to concentrate its efforts on community education in Broward before it serves its first patient. The CERs travel throughout the community and evaluate the areas in which the existing providers are providing sufficient hospice education, and where they may be lacking, seeking to find the holes in the system or gaps in the network, in which to offer their services. Palm Coast provides education to employees of nursing homes, hospitals, and assisted living those facilities, many of whom require bereavement counseling following the death of patients. The CERs have also proven to be a resource to grief stricken individuals seeking hospice care; if a patient or family calls and inquiries, the CERs help walk them through the process of how one is admitted to hospice care. The Palm Coast educational team is comprised of an array of individuals, including the receptionist, nurse, social worker, chaplain, home health aides, and volunteers, along with the CERs; everybody involved talks about hospice and educates those in the community. With respect to Palm Coast's interdisciplinary team members, there is ongoing follow-up training in each office by the Quality Improvement Manager, in addition to monthly educational sessions company-wide. As one educational tool, Odyssey and Palm Coast have developed pocket-sized "Slim Jims," which are clinical indicators or educational reference material that detail various disease processes and the criteria that would make an individual hospice appropriate. The front of each individual "Slim Jim" details the clinical indicators for each terminal disease, and the flip slide illustrates the benefits hospice care through Odyssey or Palm Coast could provide. These clinical indicators, incorporating CMS guidelines, have been successful in determining when hospice is appropriate for patients. The clinical indicators are regularly updated, along with any new guidelines published through CMS. Palm Coast in Miami has used the "Slip Jims" in helping to educate families on disease progression, what to expect, and the general characteristics of hospice care. In order to meet the cultural needs of the community, the laminated cards are currently being translated into Spanish, for use with Hispanic patients and families in Miami-Dade, Broward, and any other Palm Coast or Odyssey location with a significant Hispanic population. All hospice disciplines, including the members of the interdisciplinary team and the CERs utilize the "Slim Jims" to educate the community on various levels. As an educational tool to assist in the orientation and continual education of its employees, Palm Coast has access to "Odyssey University," as online program created by Odyssey that allows employees to participate in various educational courses and nursing modules, specifically tailored to each individual hospice professional (i.e., nursing manager, chaplain, social worker, etc.). There are a multitude of different modules, spanning the realm of topics from clinical to management. Palm Coast's Affiliation with Nova Southeastern University Palm Coast has executed a memorandum of understanding with Nova Southeastern University ("NSU"), by which it will be a partner with NSU's college of osteopathic medicine, geriatric program, dental program, and law program. The purpose of the partnership will be to develop ways for NSU's students to rotate through or to work with Palm Coast's patients and families. As the largest independent institution of higher education in Florida, and the seventh largest nationally, NSU educates its students using non-traditional methods, including, but not limited to utilizing external clinical settings to supplement what is taught in the classroom with real life settings and situations. The affiliation will create clinical settings for NSU's students that will afford benefits to Palm Coast, NSU, and the community at large. The program will offer the College of Osteopathic Medicine student clinical rotations with Palm Coast's patients; it will offer a Mental Health Counseling Program with NSU's Center for Psychological Studies; it will provide College of Pharmacy students experience with elderly patients; it will provide College of Dental Medicine with the opportunity to ease oral pain of a patient exacerbated by tooth decay, gum disease, or other "ortho-ailments;" and it will allow the Shepard Broad Law Center student to work with Palm Coast patients, reviewing forms and policies for legal sufficiency and accuracy. Patient benefits from the affiliation between Palm Coast and NSU include, but are not limited to: relief of symptom distress, understanding of the plan of care, assistance in coordination and control of care options, simultaneous palliation of suffering along with continued disease modifying treatments, ease of transition to hospice, and providing practical and emotional support for exhausted family caregivers. Odyssey, and specifically Ms. Toole, Odyssey Regional Vice President of the Southeastern Region, has established similar beneficial relationships with universities such as University of Alabama Birmingham, working together and involving them in certain aspects of the patient's care; a similar arrangement will be developed in Broward County upon approval. Ms. Toole, the expert witness in the fields of hospice operations and hospice administration, has observed a significant benefit to not just the hospice program, but to the students as well, providing an experience of dealing with patients with terminal illness and dying in the hospice setting. Odyssey and Palm Coast Charity Funds and Foundations As hospice staff cares for their patients, non- hospice needs are frequently identified; Odyssey has established the "Special Needs Fund" to assist their patients or families with extraordinary requests and needs. As an affiliate of Odyssey, Palm Coast has access to Odyssey's Special Needs Fund, from which it can request money for use to benefit patients in each local program. The fund is designed to provide assistance situations, for example, when it is cold and a patient is unable to pay his/her heating bill, or when the patient has no money available to purchase groceries. In those situations, Palm Coast request funds from the company, along with the justification, and that money will be provided, as needed. In 2005, over $60,000 in Special Needs Funding was use to meet the needs of 278 families. Palm Coast Bereavement Groups The Palm Coast team continues to care for the family even after the patient's death. In actuality, this program begins with an assessment upon admission of the patients into hospice. During the initial assessment, the registered nurse assess the grief of the family, and provides anticipatory "pre- bereavement" services based on need. Palm Coast seeks to identify people early on who are likely going to have a more difficult time in grieving the inevitable loss, so a plan for the family unit is initiated and included in the patient's plan of care. A bereavement plan of care is initiated within 72 hours of a patient's death. The bereavement coordinators offer support groups and memorial services for those who have had a loss, regardless of whether their loved ones were on hospice with Palm Coast, or never admitted to hospice at all. Support groups and memorial services offered by Palm Coast are held in nursing homes and ALFs, both for the facility as a whole and anyone who has had a loss, including staff members or residents, regardless of whether they were on hospice; it is not only those involved in hospice but for people in the community as a whole who may benefit from bereavement. Odyssey operates, "SKY Camp," a weekend camp in Amarillo for children who have experienced a loss, and is open to families of all Odyssey patients, as well as any other individuals who may inquire. Funded by the Odyssey Healthcare Foundation, SKY Camp is a free weekend camp for children ages seven to seventeen grieving the death of a loved one. The camp provides the children an opportunity to feel safe, nurtured, and most importantly, not alone, as many do in their time of grieving. Three Offices vs. One CHS will contract with Catholic Hospice for office space in Broward County at a fair market rate allowing Catholic Hospice to rapidly and efficiently establish an office centrally located within Broward County. This contrasts with Palm Coast’s plans for three offices. "[H]ospice care is primarily a home-based service, so the number of offices is not of particular importance[;] . . . [the number of] offices can be as many or as few as the provider would like . . . as long as they have at least one." Tr. 1409. The number of offices may play a part in rural areas in a multi- county service area. But Broward County is densely populated making more than one office an insignificant factor. Furthermore, because hospice services are provided in the home and hospice education can occur in any community facility, additional offices are not only not necessarily beneficial, they may be inefficient. For example, Palm Coast proposes to spend substantially more on rent and administrative costs than on patient care, whereas Catholic hospice spends on patient care and has low rent and administrative costs –- providing more benefit to the community consistent with its mission. Access: A Difference in Emphasis Catholic Hospice fulfills its mission to all patients regardless of age, sex, ethnicity, religious belief or lack of belief, ability to pay or level of need for care. While Catholic Hospice has an undeniable appeal to the Hispanic population that is predominantly Roman Catholic and an appeal to other Roman Catholics eligible for hospice services in Service Area 10, on the bases of age and diagnosis, Catholic Hospice does not emphasize service to "65 and over non-cancer" patients as does Palm Coast. In contrast to Palm Coast, Catholic Hospice outreach efforts are directed at persons under 65 and Hispanics. Consistent with conditions of Medicare participation that require hospice providers to accept all patients who meet eligibility requirements regardless of disease or ability to pay, Palm Coast also treats all patients. But Palm Coast emphasizes serving non-cancer patients 65 and older and seeks to emphasize penetration of the market segment represented by the population seeing it as underserved. Many non-cancer patients 65 and older in need of hospice service are recipients of care in long-term care settings such as assisted living facilities, supportive housing type programs and nursing homes. Odyssey has had great success in developing these programs. Such development as a goal for Palm Coast is consistent with Palm Coast's belief that non- cancer patients 65 and older are underserved. Yet, patients in Broward who are non-cancer patients 65 and older appear to be served as well as patients in other hospice-typical groups based on age and diagnosis. It is apparent that Vitas Healthcare-Broward, an existing hospice provider in Broward County, for example, already places an emphasis on serving the "65 and over non-cancer" patient that Palm Coast targets as underserved. Furthermore, Vitas has had greater success in serving this population relative to other hospice-typical groups than the three other existing providers in Broward County. This is illustrated by the chart at page 37 (Bate-stamped 00038) of Catholic's application proved up by the testimony at hearing of Mr. Cushman. The 2005 data on the chart shows Vitas Healthcare- Broward, a for-profit hospice organization like Palm Coast's parent, to be the dominant hospice provider in Service Area 10. Its market share for calendar year 2005 is 74 percent, dwarfing the market shares of the three other providers led by Hospice by the Sea at 13 percent with less than one-fifth of total market share enjoyed by Vitas. Dividing market share by age ("Under 65" and "65 and Over") and diagnosis (Cancer and Non-cancer), as is done by the Hospice Programs Rule, the highest market share for Vitas is in the "Non-cancer 65 and Over" category" at 77 percent. As Mr. Cushman explained: [Market share]'s nine percentage points less for those who have diagnoses other than cancer who are under 65; it's seven percentage points less for cancer diagnosis for elderly patients; and again, nine percentage points less for the patients with cancer under 65. . . . [T]he significance … is that the patients who are … the least costly to care for are the noncancer patients who are elderly. And that is the area where the for-profit program in Broward County [Vitas] Tr. 647. has sought and obtained the highest market share. Palm Coast's Claim of Special Circumstances Palm Coast claims that the "65 and Over Non-cancer" population in Service Area 10 is underserved. With regard to Special Circumstances to support approval of hospices, AHCA's rule provides: (4) Criteria for Determination of Need for a New Hospice Program. * * * (d) Approval Under Special Circumstances. In the absences of numeric need identified in paragraph (4)(a), the applicant must demonstrate that circumstances exist to justify approval of a new hospice. Evidence submitted by the applicant must document one or more of the following: 1. That a specific terminally ill population is not being served. Fla. Admin. Code R. 59C-1.0355. Palm Coast did not demonstrate that the "65 and Over Non-cancer" population in Service Area 10 is not being served. To the contrary, Catholic Hospice showed that it is being served by existing providers. Palm Coast's Affiliation with a For-profit Parent Palm Coast's emphasis on the "65 and Over Non-cancer" population in Broward County is consistent with the nature of its affiliation with its for-profit parent, Odyssey. If a hospice can spend less per patient day on patient care, it can be more profitable. Non-cancer patients tend to be less costly. Further, hospice care is generally more expensive at the beginning of care -– when the patient is being set up on a plan of care including medications, equipment and the like, and at the end of care when the patient and family may require additional visits and medications. Therefore, a hospice can increase its profits by increasing the number of patients with longer lengths of stay. Non-cancer patients over 65 tend to have longer lengths of stay. Thus, by heavily marketing to non-cancer patients over 65, Palm Coast can maximize its profitability. It will do so, however, to the detriment of other providers in its service area at the same time that the dominant provider in the service area is already doing so. Since Medicare reimbursement for hospice services is based on the assumption that all hospices will accept all patients, hospice programs will be able to redistribute costs from costly patients by having a balance between the more costly and less costly patients. When a hospice takes a disproportionate number of profitable patients, however, it leaves only the more costly patients for other providers who are not able to distribute costs over a full spectrum of expensive and less expensive patients. The effect is magnified because for-profits tend to be larger than not for profits. Indeed, Palm Coast’s new Dade program has ramped up quickly and doubled its budget projections. Palm Coast’s focus on profitability will negatively impact existing providers within the service areas it operates. Catholic Hospice, on the other hand, is likely to serve populations in the four categories of "under 65 non- cancer," "under 65 cancer," "65 and over non-cancer," and "65 and over cancer" without an emphasis on the more profitable "65 and over non-cancer" population segment, the group that Palm Coast will emphasize serving in order to maximize profits for its parent, a for-profit organization. Community Support for Catholic Hospice Letters of support demonstrates deep support for Catholic Hospice' application. One hundred twenty-five of them were received, a "high number . . . for a hospice program." Tr. 1406. Five were from physicians who indicated a willingness to refer patients to Catholic Hospice; two were from hospitals and one from a skilled nursing facility. In addition, Vitas recommended that if an additional hospice program for Broward County were to be approved that it should be Catholic Hospice, an "unusual" letter of support in Mr. Gregg's view. See id. CHS, itself, has received numerous requests for Catholic Hospice in its Broward facilities and has had to make other arrangements for those in its nursing homes, ALFs, and other facilities in Broward County since Catholic Hospice is not available in Broward County. Due to this recognized need, CHS has openly supported Catholic Hospice’s application and, through administrators of its various Broward health and elder care facilities, has provided letters of support, including letters from the administrator of St. John’s Nursing Center, the administrator of St. Joseph’s Residence, an ALF, the administrator of St. Anthony’s Rehabilitation Hospital, and an administrator at the HUD elderly housing facilities for CHS, including the five in Broward County. Similarly, Holy Cross Hospital is highly supportive of Catholic Hospice’s application and the need for a faith-based option for hospice in Broward County. Like CHS, Holy Cross intends to contract with Catholic hospice for inpatient hospice beds if Catholic Hospice’s Broward program is approved. Holy Cross has the capacity to provide more hospice inpatient beds without having to disrupt contracts and relationships it currently has for hospice beds; thus, relationships with existing providers will not be impacted. Physicians at Holy Cross support Catholic Hospice’s application, noting in particular Catholic Hospice’s sensitivity to the needs of Hispanic patients,--a growing segment of the population in Broward County-- and will refer patients to Catholic Hospice if it is approved. Memorial Healthcare System, a group of five hospitals that comprise the South Broward Hospital District, supports Catholic Hospice’s application noting that it will provide patients with a choice for a faith-based provider and emphasizing Catholic Hospice’s sensitivity to the needs of the Hispanic community and the growing Hispanic population in southern Broward County. Of the existing hospice providers in Broward County, one supports Catholic Hospice’s application and two others prefer Catholic Hospice if a new program is approved. In sum, Catholic Hospice is a diverse, long-term provider with a proven record of quality services and community responsiveness that fits within a continuum of care offered through the Archdiocese. Accordingly, Catholic Hospice can quickly move into Broward County with outstanding community support and improve the situation for residents of Service Area 10 with minimal impact to existing providers.
Recommendation Based on the foregoing Findings of Fact and Conclusion of Law it is RECOMMENDED that the Agency for Health Care Administration issue a final order that approves Catholic Hospice's CON application for a new hospice program in Service Area 10 and denies Palm Coast's CON application for a new hospice program in Service Area 10. DONE AND ENTERED this 26th day of October, 2007, in Tallahassee, Leon County, Florida. S DAVID M. MALONEY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 2007.
