06-001273CON Hospice Of The Palm Coast, Inc. vs. Agency For Health Care Administration Status: Closed Recommended Order on Thursday, August 21, 2008.

Summary: Petitioner did not prove the entitlement to a CON based on special circumstances in the absence of a numeric need.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOSPICE OF THE PALM COAST, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 06-1273CON

)

AGENCY FOR HEALTH CARE ADMINISTRATION, )

)

)

Respondent, )

)

and )

)

HOSPICE OF MARION COUNTY, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

A final hearing was conducted in this case on December 4-7

and 11-14, 2006, and January 31, 2007, in Tallahassee, Florida,

before Suzanne F. Hood, Administrative Law Judge with the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mark Emanuele, Esquire

Panza, Maurer, & Maynard, P.A.

Bank of America Building, Third Floor

3600 North Federal Highway

Fort Lauderdale, Florida 33308

For Respondent: Karin M. Byrne, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3

Mail Station 3

Tallahassee, Florida 32308

For Intervenor: John F. Gilroy, III, Esquire

John F. Gilroy, III, P.A.

1435 East Piedmont Drive, Suite 100

Tallahassee, Florida 32308

STATEMENT OF 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.

PRELIMINARY STATEMENT

On or about October 7, 2005, Respondent Agency for Health

Care Administration (AHCA) established a fixed need pool (FNP)

of one (1) for a new hospice program in AHCA's Service Area 3B

(Marion County). AHCA published the established need in

Volume 31, Number 40, of the Florida Administrative Weekly .

AHCA subsequently amended its finding of need for one

additional hospice program in Marion County. On October 21,

2005, AHCA published a FNP of zero for Marion County in Volume

31, Number 42, of the Florida Administrative Weekly .

On or about October 24, 2005, Petitioner Hospice of the

Palm Coast, Inc. (Palm Coast) filed a Letter of Intent (LOI) for

the establishment of a new hospice program in Marion County. In

the absence of a numeric need, Palm Coast’s application

attempted to demonstrate the existence of special circumstances

to justify the approval of a new hospice program.

On February 24, 2006, AHCA preliminarily denied Palm

Coast’s CON Application No. 9896 for the establishment of a

hospice program in Marion County.

On April 12, 2006, Palm Coast filed a Petition for Formal

Administrative Hearing with AHCA. The petition challenged

AHCA’s preliminary denial of CON Application No. 9896. AHCA

referred the petition to the Division of Administrative Hearings

on April 12, 2006.

On April 14, 2006, Intervenor Hospice of Marion County,

Inc. (HMC) filed a Petition to Intervene in the proceeding. On

April 27, 2006, Administrative Law Judge David M. Maloney issued

an Order Granting Intervention.

On May 18, 2006, Judge Maloney issued a Notice of Hearing.

The notice scheduled the hearing for December 4-8 and 11-15,

2006.

Before the hearing commenced, the Division of

Administrative Hearings transferred the case to the undersigned.

Palm Coast presented the testimony of seven witnesses, six

of which were accepted as experts. Palm Coast offered

Petitioner’s Exhibit Nos. P1-P35. All of Petitioner’s exhibits

were accepted as evidence except for Petitioner's Exhibit Nos.

P33 and P34. During the hearing, the undersigned reserved

ruling on the admissibility of Petitioner's Exhibit Nos. P33 and

P34. Upon further consideration, Petitioner's Exhibit Nos. P33

and P34 are hereby admitted as evidence.

AHCA presented the testimony of one witness. AHCA’s only

exhibit, R1, was accepted as evidence.

HMC presented the testimony of seven witnesses, all of

which were accepted as experts. HMC offered 19 exhibits that

were accepted as evidence.

The record consists of 14 volumes of the transcript. The

court reporter filed the fourteenth volume of the transcript on

February 26, 2007.

On May 16, 2008, Palm Coast filed a Motion and Request for

Judicial Notice. The motion seeks to have the undersigned take

official recognition of AHCA's hospice need projection for one

additional hospice program in Marion County planned for

July 2009.

On May 29, 2008, the undersigned issued two orders. The

first order denied Palm Coast's Motion to Reopen Proceedings or

Alternatively Allow Amended Proposed Recommended Order. The

second order granted an Agreed Motion for Extension of Time to

File Response to Petitioner's Motion and Request for Judicial

Notice.

After requesting and receiving several extensions of time,

the parties filed their Proposed Recommended Orders in the

following order: (a) HMC on June 4, 2007; (b) AHCA on June 4,

2007; and (c) Palm Coast on June 5, 2007.

On June 11 and 12, 2008, respectively, AHCA and HMC filed

their responses in opposition to Palm Coast's Motion and Request

for Judicial Notice. On June 17, 2008, Palm Coast filed a

Motion to Strike one paragraph of AHCA's response. After

reviewing the motions and responses thereto, Palm Coast's Motion

and Request for Judicial Notice is hereby denied and its Motion

to Strike is hereby granted.

FINDINGS OF FACT

Hospice Generally

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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

7. 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.

8. 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.

9. 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.

10. 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.

11. 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);

(b) identifying and treating traditional cancer patients;

(c) providing services within three hours of a physician order;

(d) 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.

12. 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

13. The parties have stipulated to the following facts:

a. 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;

b. Sections 408.035(8) and 408.035(10), Florida Statutes

(2005), are not applicable or at issue in this matter;

c. Florida Administrative Code Rule 59C-1.0355,

or not at issue in this matter;

d. Palm Coast timely filed its Letter of Intent (LOI);

e. 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;

f. 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;

g. 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

14. 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."

15. 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.

16. 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

17. 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:

1. That a specific terminally ill

population is not being served.

2. That a county or counties within

the service area of a licensed hospice

program are not being served.

3. 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/]

18. 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

19. 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.

20. 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.

21. 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

22. 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.

23. 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.

24. 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.

25. 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.

26. 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

27. 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.

28. 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.

29. 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.

30. 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.

31. 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.

32. 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.

33. 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.

34. 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.

35. 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.

36. 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.

37. 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.

38. 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.

39. 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.

40. 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.

41. 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.

42. 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.

43. 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

44. 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.

45. 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.

46. 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.

47. 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.

48. 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

49. 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.

50. 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.

51. 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.

52. 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).

53. 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.

54. 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.

55. 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.

56. 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.

57. 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.

58. 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.

59. 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.

60. 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.

61. 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.

62. 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.

63. 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

64. 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.

65. 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.

66. 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.

67. 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.

68. 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.

69. 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.

70. 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

71. 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.

72. 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.

73. Regarding Section 408.035, Florida Statutes, Palm

Coast established the following: (a) the availability of

resources for project accomplishment and operation;

(b) immediate and long-term financial feasibility; and (c) its

past and proposed provision of health care services to the

medically indigent.

74. 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.

75. 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;

(c) 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.

76. 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.

77. 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.

78. 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.

79. 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.

80. 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.

81. 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.

82. 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.

CONCLUSIONS OF LAW

83. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding pursuant to Sections 120.569, 120.57(1), and

408.039(5), Florida Statutes (2005).

84. As the applicant, Palm Coast has the burden of

demonstrating its entitlement to a CON. See Boca Raton

Artificial Kidney Center, Inc. v. Department of Health and

Rehabilitative Services , 475 So. 2d 260 (Fla. 1st DCA 1985). A

balanced consideration of applicable statutory and rule criteria

must be made. See Humana, Inc. v. Department of Health and

Rehabilitative Services , 469 So. 2d 889 (Fla. 1st DCA 1985).

Such consideration requires that varying weight be accorded each

criterion depending on the facts of the case. See Collier

Medical Center, Inc. v. Department of Health and Rehabilitative

Services , 462 So. 2d 83 (Fla. 1st DCA 1985).

85. Statutory review criteria are set forth in Section

408.035(1)-(10), Florida Statutes (2006). As stated in the

Findings of Fact, there is nothing in Palm Coast's application

that would be fatal to an award of a CON except its failure to

show special circumstances that outweigh the lack of numeric

need.

86. Section 408.043(2), Florida Statutes, discusses the

need for hospice services as follows:

(2) HOSPICES. When an application is

made for a certificate of need to establish

or to expand a hospice, the need for such

hospice shall be determined on the basis of

the need for and availability of hospice

services in the community. The formula on

which the certificate of need is based shall

discourage regional monopolies and promote

competition. The inpatient hospice care

component of a hospice, which is a

freestanding facility, or a part of a

facility, which is primarily engaged in

providing inpatient care and related

services and is not licensed as a health

care facility shall also be required to

obtain a certificate of need. Provision of

hospice care by any current provider of

health care is a significant change in

service and therefore requires a certificate

of need for such services.

Palm Coast presented no evidence that HMC, as the only existing

hospice provider in Marion County, was a regional monopoly.

Additionally, the greater weight of the evidence indicates that

approval of the CON will not promote competition.

87. Regarding the statutory and rule criteria, Florida

Administrative Code Rule 59C-1.0355(3)(b) provides as follows:

(b) Conformance with Statutory Review

Criteria. A certificate of need for the

establishment of a new hospice program,

construction of a freestanding inpatient

hospice facility, or change in licensed bed

capacity 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. Application to establish a new

hospice program shall not be approved in the

absence of a numeric need indicated by the

formula in paragraph (4)(a) of this rule,

unless other criteria in this rule and in

Sections 408.035 and 408.043(2), F.S.,

outweigh the lack of a numeric need.

88. Because there is a zero numeric need here, Palm Coast

must establish the existence of special circumstances, which are

addressed in Florida Administrative Code Rule 59C-1.0355(4)(d)

as follows in relevant part:

(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:

1. That a specific terminally ill

population is not being served.

* * *

3. 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.

89. The most persuasive evidence shows that Marion County

does not have a specific terminally ill population that is not

being served or that is underserved. HMC is providing adequate

services to all persons regardless of their ages or types of

terminal illnesses.

90. The next question is whether Palm Coast has met the

requirement to show a specific number of persons who are not

being admitted to hospice services within 48 hours of referral.

In order to address that issue, it first must be determined

whether presentation of such evidence at hearing is a

permissible amendment to its application.

91. Palm Coast's application makes no specific claim that

any patients in Marion County are not being admitted within 48

hours of referral. Under Florida Administrative Code Rule 59C-

1.010(3)(b), once an application is deemed complete, no

amendment is permitted.

92. When a CON becomes the subject of a formal

administrative hearing, administrative law judges are frequently

faced with the balance between Florida Administrative Code Rule

59C-1.010(3)(b) and the attributes of a de novo hearing. For

example, it is well-settled that a CON applicant may not make

material changes to its application at hearing on matters within

the applicant's control that could have been included when the

application was filed. See Manor Care Inc. v. Department of

Health and Rehabilitative Services , 558 So. 2d 26, 28 (Fla. 1st

DCA 1989).

93. Amendments to applications are permissible when the

change in circumstances is beyond the applicant's control and

the applicant had no knowledge of the information at the time of

filing the original application. See Vitas Healthcare Corp. of

Fla. v. Agency for Health Care Administration , Case Nos. 04-

3856CON and 04-3886CON, 2006 Fla. Div. Adm. Hear. LEXIS 498,

*91-93 (DOAH Oct. 18, 2006; AHCA Dec. 13, 2006).

94. The concept of control was defined in Charter Medical-

Orange County, Inc. v. DHRS , Case No. 87-4748 (DOAH Nov. 28,

2988; AHCA Feb. 2, 1989), indicating that new information can

only be considered if the applicant could not have reasonably

known about the information at the time of the application.

95. In Big Bend Hospice, Inc. v. Agency for Health Care

Administration , Case Nos. 02-0455CON and 02-0880CON, 2002 Fla.

Div. Adm. Hear. LEXIS 1314, *76-78 (DOAH Nov. 7, 2002; AHCA

Mar. 18, 2003), aff'd , 904 So. 2d 610 (Fla. 1st DCA 2005), an

applicant made a special circumstances argument at final hearing

even though there was a fixed-need pool. In that case, a motion

to exclude evidence supporting the argument was denied.

According to Big Bend , the special circumstances rule requires

the applicant to demonstrate at least one of the three criteria;

however, it does not prohibit applicants from showing that other

"not normal circumstances" exist. In Big Bend at *77-78, the

following four-part test was set forth:

Rule 59C-1.010(3)(b), Florida Administrative

Code, does not prevent an applicant from

presenting evidence not specifically set

forth in the application when the evidence:

(a) is relevant to rule and statutory

requirements;

(b) is revealed for the first time

during discovery;

(c) is not a significant or material

change to an application or is not a change

to the proposed program; and

(d) is the type of evidence routinely

presented to compare an applicant to an

existing provider.

96. The evidence in question is a permissible amendment

and is, therefore, admissible for the following reasons:

(a) it is relevant to statutory and rule criteria apart from

showing a special circumstance, i.e. Sections 408.035(2),

409.035(3), and 408.035(7), Florida Statutes; (b) the evidence

was revealed for the first time during discovery; (c) the

evidence was not a change to the proposed program; and (d) the

evidence is the type that, once discovered, would be routinely

presented to compare an applicant to an existing provider.

97. Because of the lack of specific numbers of delayed

admissions that are available from anecdotal evidence, Palm

Coast could not have known that hundreds of HMC's patients each

year were not being admitted within 48 hours of an initial

contact. Health care facilities were not, and still are not,

required by statute or rule to admit patients within 48 hours of

an initial contact or a complete referral or to tract or report

such data.

98. The final question is whether HMC was failing to admit

patients within 48 hours of referral. An admission consists of

several components: (a) a physician's diagnosis and prognosis

of a terminal illness; (b) a patient's or his or her authorized

representative's expressed request for hospice care; (c) the

informed consent of the patient or his or her authorized

representative; (d) the provision of information regarding

advance directives to the patient or his or her authorized

representative; and (e) performance of an initial professional

assessment of the patient. See Big Bend Hospice, Inc. v. Agency

for Health Care Administration , Case No. 01-4415CON, 2002 Fla.

Div. Adm. Hear. LEXIS 1584, *26-28 (DOAH Nov. 7, 2002; AHCA

Apr. 8, 2003), aff'd , 904 So. 2d 610 (Fla. 1st DCA 2005).

99. At the time of the final hearing, there was no

definition of a referral as used in Florida Administrative Code

Rule 59C-1.0355(4)(d)3. Since that time, a referral has been

defined as follows: (a) a request for hospice services by a

terminally ill patient and/or his or her legal guardian or other

person acting in a representative capacity; and (b) a written or

verbal determination by a physician that the person is

terminally ill. See The Hospice of the Florida Suncoast, Inc. ,

et al v. Agency for Health Care Administration and Hospice of

the Palm Coast, Inc. , Case No. 07-2906RX, at 44-46 (DOAH May 14,

2008)(See Endnote).

100. Applying the above-referenced definitions of a

referral and an admission to the evidence here, it is clear that

HMC provides services in a timely manner. HMC's self-imposed

standard is to admit a patient within 24 hours of an initial

contact. An initial contact is not the same as referral which

requires a request from a patient, family members, or anyone

else with authority to speak on behalf of the patient and a

written or verbal doctor's order.

101. Out of 460 delayed admissions from January to

November 2006, HMC was at fault for only four due to staffing

problems. As to the other delayed admissions, HMC had no

control over the time between an initial contact and a completed

referral. There is no evidence that HMC failed to admit the

remaining 456 patients on the same day that it received the

completed referrals.

102. In this case, Palm Coast has not met its burden of

proving that it is entitled to an award of the CON. There are

no special circumstances that justify approving the application

in the absence of numeric need.

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

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of August, 2008.

ENDNOTE

1/ In The Hospice of the Florida Suncoast, Inc., et al v. Agency

for Health Care Administration and Hospice of the Palm Coast,

Inc. , Case Nos. 07-2906RX and 073021RX (DOAH May 14, 2008), it

was determined that Florida Administrative Code Rule 59C-

1.0355(4)(d)3. was invalid as to the parenthetical language,

i.e. , "(excluding cases where a later admission date has been

requested)" and valid as to the remaining portions of the 48-

hour rule, i.e. , "[t]hat there are persons referred to hospice

programs who are not being admitted within 48 hours. The

applicant shall indicate the number of such persons."

COPIES FURNISHED :

Karin M. Byrne, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Building 3

Mail Station 3

Tallahassee, Florida 32308

Mark A. Emanuele, Esquire

Panza, Maurer, & Maynard, P.A.

Bank of America Building, Third Floor

3600 North Federal Highway

Fort Lauderdale, Florida 33308

John F. Gilroy, III, Esquire

John F. Gilroy, III, P.A.

1435 East Piedmont Drive, Suite 215

Tallahassee, Florida 32308

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Station 3

Tallahassee, Florida 32308

Holly Benson, Secretary

Agency for Health Care Administration

Fort Knox Building, Suite 3116

2727 Mahan Drive

Tallahassee, Florida 32308

Craig H. Smith, General Counsel

Agency for Health Care Administration

Fort Knox Building, Suite 3431

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.