15-005549CON North Broward Hospital District, D/B/A Broward Health Medical Center vs. South Broward Hospital District, D/B/A Memorial Regional Hospital, And Agency For Health Care Administration Status: Closed Recommended Order on Wednesday, May 4, 2016.

Summary: As between two competing applicants to establish adult and pediatric kidney transplant programs in OTSA 4, Memorial's proposals are superior to those submitted by Broward Health, and should therefore be approved.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NORTH BROWARD HOSPITAL DISTRICT,

d/b/a BROWARD HEALTH MEDICAL

CENTER,

Petitioner,

vs. Case Nos. 15 - 5549CON

15 - 5550CON

SOUTH BROWARD HOSPITAL DISTRICT,

d/b/a MEMORIAL REGIONAL HOSPITAL

AND AGENCY FOR HEALTH CARE

ADMINISTRATIO N,

Respondents.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative

Hearings, by its designated Administrative Law Judge, W. David

Watkins, held a final hearing in the above - styled case on

February 15 - 19, 22 and 23, 2016, in Tallahassee, Florida.

APPEARANCES

For South Broward Hospital District , d/b/a Memorial

Regional Hospital:

F. Philip Blank, Esquire

D. Ty Jackson, Esquire

Allison G. Mawhin ney, Esquire

GrayRobinson, P.A.

301 South Bronough Street, Suite 600

Post Office Box 11189

Tallahassee, Florida 3230 2

For North Broward Hospital District , d/b/a Broward Health

Medical Center :

Seann M. Frazier, Esquire

Marc Ito, Esquire

Parker, Hudson, Rainer and Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, F lorida 32301

For the Agency for Health Care Administration:

Lorraine M arie Novak, Esquire

Kevin Michael Marker, Esquire

Agency for Health Care Administration

Ma il Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE S

Whether Certificate of Need (CON) applications 10386 and

10388 filed by South Broward Hospital District , d/b/a Memorial

Regional Hospital (Memorial) , to establish a pediatr ic kidney

transplantation program at Joe DiMaggio ChildrenÓs Hospital and

an adult kidney transplantation program at Memorial Regional

Hospital in Broward County, both of which are proposed for organ

transplantation service area (OTSA) 4, should be approve d.

Alternatively, do competing CON applications 10387 and 10389

filed by North Broward Hospital District , d/b/a Broward Health

Medical Center (Broward Health) , to establish a pediatric kidney

t ransplantation program at Chris Evert ChildrenÓs Hospital and

Broward Health Medical Center, on balance, better satisfy the

applicable statutory and rule review criteria for award of a CON

to establish a pediatric or adult kidney transplantation program

in OTSA 4?

PRELIMINARY STATEMENT

This case involves the comparat ive review of applications

filed by Broward Health and Memorial for CONs to establish

pediatric and adult kidney transplantation programs at their

respective facilities: Broward Health Medical Center (BHMC) and

Chris Evert ChildrenÓs Hospital (CECH); Memo rial Regional

Hospital (MRH) and Joe DiMaggio ChildrenÓs Hospital (JDCH). All

of these facilities are located i n Broward County, AHCA

District 10, OTSA 4.

On April 20, 2015, Memorial filed letters of intent to

establish pediatric and adult kidney transpla ntation programs,

CON Nos. 10386 and 10388. On May 5, 2014, Broward Health filed

grace period letters of intent to establish similar programs,

CON Nos. 10387 and 10389.

On August 21, 2015, AHCA issued its State Agency Action

Reports (SAARs) preliminaril y approving MemorialÓs applications

and denying Broward HealthÓs.

On September 11, 2015, Broward Health filed Petitions

challenging the AgencyÓs decisions. The Agency referred the

petitions to the Division of Administrative Hearings (DOAH) on

September 3 0, 2015. The undersigned was assigned to conduct a

formal administrative hearing and issue a recommended order.

The cases were consolidated on October 16, 2015. The final

hearing began as scheduled on Monday , February 15, 2016 , and

concluded on Tuesday , February 23, 2016.

At the final hearing, Broward Health presented the

testimony of: Robyn Farrington, c hief n ursing o fficer at BHMC;

Barbara Sverdlik, Ph.D., Director of Nursing for Adult Care and

Transplant Administrator at BHMC; Audra Hutton - Lopez, Nur se

Practitioner with the Adult Liver Transplant Program at BHMC;

Thomas Allen Davidson, a health planner with experience in

health finance; and Mark Richardson, an expert in health

planning.

Broward Health offered the video deposition and exhibits of

Andre as Tzakis, M.D. , as Broward Health Exhibit 11.

Broward Health Ós Exhibits 1, 10, 14, 18, 25, 26, 31, 34 and

41 were admitted into evidence. The following Broward Health

Exhibits were received into evidence over objection: 2 , 3, 11,

19, and 42.

Memorial presented the testimony of: Ioana Dumitru, M.D.,

an expert in organ transplantation; Alexandru Constantinescu,

M.D., an expert in pediatric nephrology and pediatric transplant

nephrology; Sherry Alvarado, T ransplant A dministrator for MRHÓs

cardiac and vas cular institute and an expert in transplant

administration and the establishment of transplant programs;

Chantal Leconte, CEO of JDCH and an expert in healthcare

administration; Zeff Ross, CEO of MRH and an expert in

healthcare administration; and Michael Carroll, an expert in

healthcare planning and finance.

Memorial offered the deposition transcript of Andreas

Tzakis, M.D., with its objections noted, as Memorial

Ex hibit 144.

Memorial Ós Exhibits 1 - 7, 9, 12, 13, 18, 34, 37, 39, 49, 51,

93, 123, 129, 133 - 1 35, 137, and 156 were admitted into evidence.

The following Memorial Exhibits were received into evidence over

objection: 14 - 17, 22 , 23, 26, 53 and 75.

AHCA presented the testimony of: Marisol Fitch, an expert

in healthcare planning and CON . AHCA Exhi bits 1 - 3 were admitted

into evidence.

Subject to hearsay objections, the partiesÓ Joint Exhibits

1 - 27 were admitted into evidence.

The T ranscript (Volumes 1 through 11) of the final hearing

was filed with DOAH on March 8, 2016. The parties were directed

to file their p roposed r ecommended o rders on or before April 7,

2016.

On April 7, 2016, the parties filed their Proposed

Recommended Orders. On the same date, the parties filed a Joint

Stipulation of Facts. To the extent relevant, those factual

stipula tions have been incorporated herein.

All citations are to the 2015 versions of the Florida

Statutes, or Florida Administrative Code, unless otherwise

noted.

FINDING S OF FACT

I. Background

1 . AHCA is the state health planning agency charged with

administ ering the CON program pursuant to the Health Facility

and Services Development Act, sections 408.031 - 408.0455, Florida

Statutes.

2 . Pursuant to Florida Administrative Code R ule 59C - 1.044,

AHCA requires applicants to obtain separate CONs for the

establishm ent of each adult or pediatric organ transplantation

program, including heart, kidney, liver, bone marrow, lung, lung

and heart, pancreas and islet cells, and intestines

transplantations. For purposes of determining the need for

organ transplantation serv ices, the State of Florida is divided,

by rule, into four service planning areas, corresponding

generally with the northern, western central, eastern central ,

and southern regions of the state.

3 . ÐTransplantationÑ is Ðthe surgical grafting or

implanting in its entirety or in part one or more tissues or

organs taken from another person.Ñ Fla. Admin. Code R. 59A -

3.065.

4 . ÐKidney transplantationÑ is defined by r ule 59C -

1.002(41) as a Ðtertiary health service, Ða health service

which, due to its high level of intensity, complexity,

specialized or limited applicability, and cost, should be

limited to, and concentrated in, a limited number of hospitals

to ensure the quality, availability, and cost effectiveness of

such service.Ñ

5 . For purposes of kidney t ransplantation, a Ðpediatric

patientÑ is Ða patient under the age of 15 years.Ñ Fla. Admin.

Code R. 59C - 1.044(2)(c).

A. The Applicants

6 . The North Broward Hospital District and South Broward

Hospital District are special, independent taxing districts

established by the Legislature to ensure access to needed

medical services to the residents of Broward County. Both

districts are governed by respective boards appointed by the

Governor.

7 . BHMC has a strong and diverse medical staff, including

a b road mix of pediatric and adult specialists and

subspecialists who provide high quality care to all segments of

the community. More than 350 physicians are on BHMC's active

medical staff, with the comprehensive medical staff totaling

more than 900 profess ionals. BHMC is a statutory teaching

hospital and the flagship hospital of the North Broward Hospital

District.

8 . CECH is located within BHMC and offers pediatric

specialists and subspecialists, including physicians in the

areas of pediatric card iology, pediatric critical care medicine,

pediatric emergency medicine, pediatric endocrinology, pediatric

gastroenterology, pediatric genetics, pediatric hematology -

oncology, pediatric infectious disease, pediatric intensivist,

pediatric nephrology, pedia tric ophthalmology, pediatric

pulmonary, pediatric rheumatology, pediatric surgery, and

pediatric urology.

9 . The South Broward Hospital District operates MRH,

Memorial Regional Hospital South, JDCH, Memorial Hospital West,

Memorial Hospital Miramar, and Memorial Hospital Pembroke.

10 . MRH is a 777 - bed acute care tertiary hospital. It is

the flagship facility of t he South Broward Hospital District and

is one of the largest hospitals in Florida. MRH offers

extensive and diverse health care services, incl uding the

Memorial Cardiac and Vascular Institute , which features renowned

surgeons and an adult heart transplantation program. MRH also

includes the Memorial Cancer Institute , which treats more

inpatients than any other in AHCA District 10, and Memorial

Neuroscience Center , which provides innovative technology and

world - class physicians.

11 . JDCH is a dedicated pediatric hospital physically

connected to MRH.

12 . The leadership of both the North Broward and South

Broward Hospital Districts were in th e midst of transition at

the time of the final hearing. Although there was an attempt to

suggest that such transitions should be a factor in this CON

proceeding, both Districts are stable, well - established

providers. Personnel changes, including the repl acement of

chief executive officers at both Districts, were not an

influential factor in this proceeding.

B. The ApplicantsÓ Experience with Transplant Services

13 . Broward Health has provided liver transplantation

since 2004. Broward Health's liver tr ansplantation program has

had higher annual volumes in the past, but is currently offering

approximately 12 liver transplantations per year. In total,

Broward Health has performed more than 200 liver

transplantations since beginning its program.

14 . On or about June 23, 2010, Broward Health entered into

a five - year contract with the University of Miami (UM) under

which UM agreed to provide Broward Health with surgical coverage

for Broward HealthÓs liver transplantation program.

15 . Throughout its hist ory, Broward Health's liver

transplantation program has offered high quality. During the

two most recent surveys, in 2009 and 2012, i nspectors with the

Centers for Medicare and Medicaid Services (CMS) found that

Broward Health's liver transplant program h ad no deficiencies.

Broward HealthÓs liver program complies with all CMS and United

Network for Organ Sharing (UNOS) standards.

16 . Broward HealthÓ s liver transplant program exceeds

national standards. As of June 2014, 63.3 percent of Broward

HealthÓ s transplant patients received a liver transplant within

six months of being placed on the waitlist. This is less than

half of the national average of 15.3 months. Additionally,

Broward Health's mortality rate for liver transplantation is far

better than n ational standards.

17 . Memorial established a pediatric heart transplant

program in 2011 and an adult heart transplant program in 2014.

Memorial's adult and pediatric heart transplant volumes have

been relatively low. Memorial has performed a total of 1 4

pediatric heart transplants over the past five years.

18 . In 2012, Cleveland Clinic Hospital (CCH) filed a

letter of intent (LOI) and application to establish an adult

kidney transplant program. Broward Health submitted a grace

period LOI and competin g application, No. 10152.

19 . Both applications were initially approved and neither

was challenged. Accordingly, both programs received final

approval by AHCA.

20 . After receiving the adult kidney transplant program

approval, Broward Health attempted t o amend or supplement its

liver transplantation agreement with UM to include UM surgical

and medical support for Broward HealthÓs adult kidney

transplantation program.

21 . Broward Health also applied to UNOS for approval of

the adult kidney transplantatio n program, and identified the UM

physicians as those who would provide the necessary surgical

support for the program.

22 . However, Broward Health never reached an agreement

with UM to use its kidney transplant surgeons and did not

otherwise recruit the necessary physicians. Broward Health's

CEO at that time, Mr. Frank Nask, found UM's proposal to support

the kidney transplantation program to be cost prohibitive and

decided not to execute the contract amendment with UM. He then

instruc ted staff to dism antle the UNOS - approved kidney

transplant program they had already created.

23 . Despite the inability to negotiate kidney coverage

with UM in 2012, Broward Health continued to offer its adult

liver transplantation program using UM s urgeons.

24 . Had UNOS known that the UM doctors were not available

to perform kidney transplants, it would not have approved

Broward HealthÓs adult kidney transplantation program.

25 . In March 2014, Broward Health notified CMS, UNOS, and

its patients that it was Ðinactivatin gÑ its adult kidney

transplantation program. Inexplicably, Broward Health never

notified AHCA of this decision.

26 . On January 14, 2015, AHCA advised Broward Health that

CON No. 10152 had expired and requested that Broward Health

return the CON. There is no dispute that CON 10152 has been

terminated.

27 . Two batching cycles passed from the time Broward

Health closed its adult kidney transplantation program until the

cycle at issue in these proceedings.

28 . In its application for CON No. 10152, Browar d Health

recognized that an applicantÓs prior failure to implement a CON

is a proper consideration in the award of future CONs. The

application touted Broward HealthÓs Ðhistory of providing

transplantation services compared to that of CCH. CCH had an

adu lt kidney transplant program . . . but elected to abandon

[it] . . . . Ñ (Memorial Ex. 23, pp. MHS15031 - 32) .

29 . Memorial was awarded a CON to establish an adult heart

transplantation program at the same time Broward Health was

awarded CON No. 10152. Mem orial successfully recruited the

necessary physicians and staff and implemented that program.

30 . The nature of the tertiary services and the two - year

planning horizon in this proceeding underscore the importance of

applicants being positioned to success fully implement the

programs with as little delay as possible.

C. The ApplicantsÓ Proposals

Broward Health

31 . Broward HealthÓs proposal relies on the experience it

gained through its substantial implementation of its kidney

transplantation program in 20 12, as well as existing experience

and resources related to their adult liver transplantation

program. Broward Health acquired significant experience in

establishing an adult kidney transplantation program by applying

for , and receiving , UNOS approval in 2012.

32 . Broward Health's application proposed to hire two

abdominal transplant surgeons, Dr. El Gazzaz and Dr. Misawa.

The offer to Dr. Misawa, however, has since been withdrawn.

Broward Health expects to hire Dr. El Gazzaz. Since the filing

of its CON application, Broward Health decided to supplement its

surgical coverage by expanding its existing contract with the

Cleveland Clinic for liver transplant surgical coverage to

include kidney transplantation services should the kidney

program receive ap proval .

33 . Broward Health conditioned acceptance of a pediatric

kidney transplantation CON on also receiving approval of the

adult kidney transplantation CON. Broward Health prepared its

financial schedules under the assumption that the adult and

pediat ric programs were linked, and that both would receive

approval.

34 . Since livers and kidneys are both abdominal organs,

there is substantial overlap in the type of care that is

required for transplant patients for each organ. Sometimes both

kidneys and l ivers are transplanted at the same time.

Historically, Broward Health has referred out 10 to 15 percent

of its liver transplant patients to other providers because it

could not offer combined kidney/liver transplantation.

35 . Broward Health has accumulat ed experienced personnel

for abdominal transplants. Broward Health's existing nurses

care for liver transplant patients and are therefore already

prepared to care for kidney transplant patients. Broward

Health's team also includes a transplant social wor ker,

transplant psychologist, financial counselors, and quality

coordinators.

36 . Broward Health plans to hire an additional financial

specialist and two Registered nurses ( RNs ) , as well as

additional full - time equivalents ( FTEs ) for a data analyst,

phar macist , and dietician.

37 . Broward Health proposes to use the same clinical and

ancillary staff for both adult and pediatric kidney

transplantation.

38 . Unlike Memorial, Broward Health does not intend to

perform kidney transplants using live donor organs . Rather,

cadaveric organs will be used exclusively.

39 . N either of Broward HealthÓs applications includes the

expense of hiring or contracting for the surgeons needed for its

proposed programs. Indeed, t here was no evidence that Broward

HealthÓs existi ng liver transplant surgeons would be willing to

perform kidney transplants such that their presence at BHMC or

CECH would give Broward Health an advantage in terms of the

degree to which its existing services would support its proposed

programs.

40 . Br oward Health has previously developed kidney

transplantation policies and procedures related to its 2012

kidney program. These policies and procedures will only require

minor updates relative to its later application.

Memorial

41 . The Memorial adult prog ram would be located at its

flagship hospital, MRH. Memorial asserts that it has the

requisite staff and resources currently in place to provide

expert care to adult patients with chronic end - stage renal

disease (ESRD) . Memorial points out that staff on the general

nursing units and critical care units have extensive experience

in the care of patients with chronic kidney disease.

42 . Memorial asserts a full range of appropriate inpatient

and outpatient services for this patient population on a 24 - hour

ba sis including, but not limited to , continuous renal

replacement therapy , hemodialysis , and cyclic peritoneal

dialysis.

43 . Memorial points out that it developed a program to

educate staff regarding specific issues related to transplant

care (as part of th e development of its cardiac transplant

program) and that much of this education is relevant to the

kidney transplant population.

44 . Memorial plans to recruit an experienced transplant

surgical director, transplant surgeons, transplant nephrologists

and surgical team, and all necessary staff as required.

45 . As to MemorialÓs proposed pediatric program, the

program would be located at JDCH, which is on the campus of, and

physically connected to, MRH . JDCH has operated a pediatric

nephrology and hypertens ion program , offering advanced care for

children with acute or chronic kidney disorders since 2003. The

program is headed by Dr. Alexandru Constantinescu, a board

certified pediatric nephrologist. JDCH operates the only

pediatric outpatient dialysis unit in Broward County. Dialysis

is necessary to sustain the life of a patient with ESRD.

46 . With the exception of the actual surgical procedure,

JDCH currently provides all the medical care and ancillary

services required by pediatric kidney transplant pat ients,

including pre - transplant care, transplant follow - up, and long -

term post - transplant care.

47 . The only additional personnel JDCH needs in order to

implement a pediatric kidney transplantation program is a

transplant surgeon and a transplant coordina tor , and both are

identified in JDCHÓs application.

48 . JDCH currently refers children who need kidney

transplants to other facilities to receive the actual transplant

surgery. After transplantation, the patients return to JDCH for

their ongoing follow - up care.

4 9 . JDCHÓs program also includes a cutting - edge component

to transition pediatric transplant patients into the adult

clinical setting. Because a transplant patient never ceases to

be followed by his or her medical providers, JDCHÓs program

allo ws patients to stay within the same institution and to

interact with the adult providers during the transition and

adjustment period from child to adult. This existing program

gives Memorial an advantage over Broward Health with respect to

its pediatric a nd adult applications.

50 . In 2006, JDCH became one of five centers that compose

the FloridaÓs Comprehensive ChildrenÓs Kidney Failure Center

(ÐCCKFCÑ) program. JDCH is the only non - academic center

approved to provide nephrology care for children with chronic

kidney disease who are enrolled in the Department of Health

ChildrenÓs Medical Services network.

51 . In addition, JDCH and Memorial have provided pediatric

and adult heart transplantation services since 2010 and 2014,

respectively.

52 . JDCHÓs pe diatric heart transplantation program was

certified by the CMS in 2011 and was recertified in 2015. CMS

certified MemorialÓs adult heart transplantation program in

November 2015.

53 . Memorial has committed to the development and

implementation of its ped iatric kidney transplant program,

regardless of whether its adult program is also approved.

II. The Review Criteria

54 . The statutory criterion for the evaluation of CON

applications, including applications for organ transplantation

programs, is se t forth at section 408.035.

55 . In addition, AHCA has promulgated a transplantation

rule, r ule 59C - 1.044, which governs the approval of new

programs. However, the rule does not contain a methodology that

predicts the future need for transplant programs. Instead, the

rule sets forth a minimum volume of annual transplants for

existing programs that must be met before a new program will

normally be approved.

56 . The parties agree that the availability, quality of

care, accessibility, and extent of utilizat ion of existing

health care facilities and health services in OTSA 4 under

section 408.035(1)(a), immediate financial feasibility under

section 408.035(1)(f), and costs and methods of construction

under section 408.035(1)(i) are not at issue.

A. Section 408.035(1)(a) and Rule 59C - 1.044(8)(d) : The need

for the health care facilities and health services being

proposed

57 . All parties are in agreement that there is a need for

at least one new adult kidney transplant program and one new

pediatric kidney t ransplant program in OTSA 4. However, Broward

Health argues that two additional adult kidney transplantation

programs could be supported in OTSA 4. Memorial disagrees with

this contention.

58 . Neither applicantÓs need or utilization projections,

nor the AgencyÓs SAARs, considered simultaneous approval of two

new adult kidney transplant programs.

59 . Broward HealthÓs applications make no mention of a

need for two adult kidney transplantation programs, and do not

include any analysis of the impact of appr oving two programs.

Broward HealthÓs health planning expert, Mark Richardson,

acknowledged that Ðthe application basically was put forth to

show there was a need for the Broward program. It was silent on

whether there is a need for a second or not.Ñ

60 . Nothing in Broward HealthÓs applications address the

impact Memorial and Broward HealthÓs proposed adult kidney

transplantation programs would have upon each other or upon

existing providers if both were approved.

61 . The notion of approving both adult applications would

have impacted AHCAÓs analysis with respect to a number of review

criteria, including utilization of existing programs,

availability of resources such as health personnel, extent to

which the proposed services will enhance access and comp etition,

and the impact on existing providers. Stated differently,

Broward HealthÓs position at hearing that two adult kidney

transplantation programs should be approved would have altered

the nature and scope of Broward HealthÓs adult application, as

wel l as the AgencyÓs review of both the Memorial and Broward

Health adult applications.

62 . MemorialÓs health care planning and financial expert,

Michael Carroll, assessed the applicantsÓ need projections as

well as population growth, the incidence of ESRD i n OTSA 4,

volumes of existing kidney transplant providers in Florida, and

availability of organs.

63 . Memorial projects th at its programs will perform

30 adult kidney transplants and five pediatric kidney

transplants. Mr. Carroll found the projections re asonable based

on the number of kidney transplants being performed in OTSA 4,

and the recent growth in procedures. No contrary evidence was

presented.

64 . Mr. CarrollÓs analysis confirms the need for one

additional adult kidney transplantation program i n OTSA 4. In

part because kidney transplantation is constrained by the

availability of organs, Mr. Carroll opined that only one adult

program should be established at this time.

65 . Broward HealthÓs planning expert, Mark Richardson,

also reviewed existin g volumes, population and discharge data,

and information gathered from meetings with Broward Health

representatives. He opined at final hearing that OTSA 4 could

sustain two additional adult kidney transplantation programs.

66 . Mr. RichardsonÓs opinion is based on the fact that

each applicant forecasted 30 adult kidney transplants by the end

of year two for what he interpreted as a total of 60 cases.

Mr. Richardson argued that, even if two new programs were

approved, these figures would satisfy the requ irement in rule

59C - 1.044(8)(d), that each applicant project a minimum of

15 adult kidney transplants per year by the end of year two.

67 . Mr. RichardsonÓs opinions assume that Broward Health

will capture approximately 29 percent of Broward County kidney

transplant patients, its current market share of patients

discharged with certain renal failure diagnostic codes. In

2013, 97 Broward County residents received kidney transplants

somewhere in Florida. Mr. Richardson assumed that if Broward

Health captur ed 29 percent of those patients, they would account

for 80 percent of Broward HealthÓs projected kidney transplant

volume , with the other 20 percent resulting from in - migration,

for a total of 35 kidney transplants. Mr. Richardson assumed

that 30 of those patients would be adults, and five pediatric.

68 . The 97 patients in Mr. RichardsonÓs analysis received

both cadaveric and living donor transplants. Broward Health

will not use living donor organs at least for the first four

years of its programs.

69 . Living donor transplants account for 20 to as much as

40 percent of kidney transplants. Mr. RichardsonÓs methodology

therefore cannot be applied to a program like Broward HealthÓs,

which would be restricted to cadaveric donors.

70 . The credible eviden ce of record established that there

is a need for one additional pediatric kidney transplantation

program and one, not two, additional adult kidney

transplantation program in OTSA 4.

B. Section 408.035(1)(c) : The ability of the applicant to

provide qua lity of care and the applicantÓs record of providing

quality of care; Section 408.035(1)(d) : The availability of

resources, including health personnel, management personnel, and

funds for capital and operating expenditures, for project

accomplishment and operation; and Rules 59C - 1.044(3 - 4) and 59C -

1.044(8)(a - c)

71 . The partiesÓ disagreement concerning which

applications best satisfy the above criteria centered on:

(1) which applicantÓs existing programs provide a greater degree

of support for the prop osed programs; (2) the applicantsÓ

ability to recruit the necessary physicians to implement the

programs, taking into consideration Broward HealthÓs failure to

implement the adult kidney transplantation program awarded by

CON No. 10152; (3) the use of empl oyed versus contracted

physicians; (4) the use of living donor organs ; (5) the Ðco -

locationÑ of the proposed adult and pediatric programs ; and

(6) the results of a May 2015 CMS survey of MemorialÓs pediatric

heart transplantation program.

(1) Which appli cantÓs existing programs provide a greater

potential degree of support

72 . Broward Health relies heavily on its existing adult

liver transplantation program, and the prior approval by UNOS of

its now - terminated adult kidney transplantation program, to

ar gue that it is best - suited to operate the adult and pediatric

kidney transplantations programs at issue in this proceeding.

73 . However, there was no evidence that Broward HealthÓs

existing liver transplant surgeons will perform kidney

transplants such that their presence at BHMC or CECH could give

Broward Health an advantage in terms of the degree to which its

existing services would support its proposed programs.

Moreover, liver transplant volume at Broward Health has steadily

declined since 2007. Th e program has never been profitable, and

Broward Health has considered discontinuing it.

74 . Broward Health also asserts that its experience

transplanting livers, which, like kidneys, is an abdominal

organ, should be weighed more heavily than MemorialÓs e xperience

with heart transplants. According to Broward Health, many staff

members from Broward's liver transplant program can

simultaneously work with the kidney transplant program, because

the two abdominal transplant programs require a similar skill

set that is transferrable from one to the other. However,

again, given the uncertainty as to the identity of the surgeons

who will be performing the kidney transplants for Broward

Health, this argument is unpersuasive.

75 . Given the history, size, and resou rces of both

hospital systems, the undersigned concludes that the proposed

adult kidney transplantation programs are on equal footing as to

the support offered by their existing programs.

76 . However, given MemorialÓs experience with pediatric

heart tran splant patients, Memorial has an advantage over

Broward Health with respect to the pediatric kidney program. As

noted by several witnesses at hearing, children are not Ðlittle

adults , Ñ and therefore a track record of working with children

is crucial.

(2) The applicantsÓ ability to recruit the necessary

physicians to implement the programs ; and

(3) The use of employed versus contracted physicians

77 . Rule 59C - 1.044(4) requires that applicants meet

certain staffing requirements, including: ÑThe progra m shall

employ a transplant physician, and a transplant surgeon, if

applicable, as defined by the United Network for Organ Sharing

(UNOS) June 1994.Ñ

78 . Absent evidence that either applicant had secured the

necessary physicians to support its programs, A HCA properly

reviewed each applicantÓs history of recruitment and

establishing transplant programs.

79 . Memorial has already successfully recruited physicians

and other health care professionals needed to care for ESRD and

kidney transplant patients. Its existing transplant programs

are operated under the direction of physicians who are employed

by MRH .

80 . In contrast, for whatever reason , Broward Health was

not able to reach an agreement with UM to provide the required

surgical and medical support for its previously approved kidney

transplantation program, resulting in the abandonment of the

program.

81 . MemorialÓs record of recruiting for , and implementing

organ transplantation programs , compared to Broward HealthÓs

record , gives Memorial an advant age in terms of the applicantsÓ

history of providing , and ability to provide , quality of care in

organ transplantation.

82 . Employed, as opposed to contracted physicians, are

more invested in their transplant programs, and provide the

hospital with more c ontrol in ensuring that the service is

implemented and operational. Employing physicians also improves

patient safety and outcomes. Unlike Memorial, Broward HealthÓs

existing transplantation program is directed by contracted

physicians.

83 . Broward Heal thÓs applications state that Ðtwo kidney

transplant surgeons [are] currently committed to support the

proposed new adult and pediatric programs and a third surgeon

[is] currently being recruited .Ñ

84 . The Ðtwo kidney transplant surgeonsÑ are identified i n

letters of intent , accepted into evidence over a hearsay

objection. Neither of the physicians who purportedly signed the

letters testified at the hearing.

85 . The letters of intent are not binding. Indeed, one of

the letters was revoked at the instr uction of Dr. Tzakis, the

Cleveland Clinic surgeon who serves as medical director for

Broward HealthÓs liver program. The second physician was being

recruited for Broward HealthÓs liver transplantation program;

his letter of intent did not address kidney transplantation.

86 . It became apparent at hearing that Broward HealthÓs

Ðplan AÑ has now become to contract with the Cleveland Clinic to

provide professional services, including surgical coverage for

the proposed kidney transplantation programs.

87 . Mem orialÓs plan to employ physicians , rather than

contract for their services , gives Memorial and JDCH an

additional advantage over BHMC and CECH.

(4) The use of living donor organs

88 . Unlike Broward Health, Memorial will use living donor

organs, as well as deceased or ÐcadavericÑ donor organs , in its

proposed programs , and its applications include the related

costs associated with establishing a live donor program.

89 . There are significant benefits to use of living donor

organs, including reduction or elimination of a patientÓs time

on the waiting list, improved recovery times, better patient

outcomes, increased organ life, and the possibility of avoiding

dialysis, which carries an increased risk of mortality for

children.

90 . As acknowledged by Browar d Health in its application

for CON No. 10152, living donor kidney transplantation also has

the following Ðdistinct advantages:Ñ

instead of occurring on an emergency

schedule based upon the availability of a

suitable organ, the procedure can be

scheduled so as to best accommodate the

needs of both recipient and donor, and to

minimize organ preservation time. In many

instances, the total time from removal of

the organ to restoration of blood flow in

the recipient can be less than one hour.

For these and o ther reasons, live donor

transplants typically result in better

quality of life and longer survival rates

for recipients. ( Memorial Ex. 23,

p. MHS15056) .

91 . MemorialÓs plan to use living donor organs gives it an

advantage over Broward Health in terms o f its ability to provide

quality of care in pediatric and adult kidney transplantation.

(5) The Ðco - locationÑ of the proposed adult and pediatric

programs

92 . Especially for pediatric patients nearing the

transition to adult care, there are significan t benefits in Ðco -

locatingÑ adult and pediatric transplant programs, i.e. , one

provider operating both programs. For example, co - location

allows pediatric patients to transition into the adult setting

with providers they trust, reduces the patient and fam ilyÓs

stress, and improves quality of care.

93 . In addition, some resources from adult and pediatric

kidney transplantation programs can be shared if they are co -

located, which improves the programsÓ financial feasibility.

94 . These factors weigh in favo r of granting both

pediatric and adult programs to one provider , if appropriate.

(6) The May 2015 CMS survey of MemorialÓs pediatric heart

transplantation program

95 . Broward HealthÓs primary attack against Memorial with

respect to sections 408.035( 1) (c) and ( d), centered on the

results of a May 2015 CMS survey of MemorialÓs pediatric heart

transplantation program. The survey found numerous

deficiencies, including deficiencies related to patient safety.

CMS notified Memorial that the deficiencies we re substantial

enough to warrant terminating the program if not immediately

corrected. CMS notified Memorial that the program would be

terminated unless the deficiencies were cured within 45 days.

96 . In response to the survey, Memorial hired an outside

consultant, Transplant Solutions. Transplant Solutions

conducted its own survey and identified the same deficiencies

noted in the CMS survey.

97 . Even after Memorial implemented its corrective action

plan, CMS found additional deficiencies, though the ne w

deficiencies were not sufficient to warrant termination of the

program.

98 . Barbara Sverdlik, Director of Nursing and Transplant

Administrator at BHMC, compared the lack of deficiencies in the

2012 survey of Broward HealthÓs adult liver transplantation

program with the results of the May 2015 survey of JDCHÓs

pediatric heart transplantation program.

99 . As Ms. Sverdlik acknowledged, JDCH ultimately passed

its 2015 survey and, in spite of the results of the initial

survey, Ð[JDCH] could offer a good qua lity [pediatric kidney

transplantation] program.Ñ

100 . Although concerning, it is not entirely surprising

that numerous deficiencies were found in MemorialÓs relatively

new pediatric heart transplant program. However, it is more

significant to the unde rsigned that Memorial took immediate

action to correct those deficiencies in order to ensure that the

program continued without interruption.

101 . JDCHÓs May 2015 Survey therefore does not give

Broward Health any advantage or Memorial any disadvantage und er

the review criteria.

C. Section 408.035(1)(e) : The extent to which the proposed

services will enhance access to health care for residents of the

service district

102 . Three primary considerations were identified at final

hearing relevant to which ap plicantÓs proposed programs are more

likely to enhance access: the commitment of each applicant to

the proposed programs; the availability of donor organs at each

facility; and the availability of services at each facility.

103 . Access is significantly e nhanced by the use of living

donor organs, not only for the living donor recipient, but also

for other potential transplant recipients on the wait list.

104 . The 20 to 40 percent of kidney transplant patients

who could receive a living donor transplant wo uld not have

access to kidney transplantation at Broward Health for at least

the first four years of its programs, whereas those same

patients would have immediate access to the needed services at

Memorial.

105 . In this regard, and as acknowledged by wi tnesses for

the Agency and Broward Health, MemorialÓs programs would enhance

access to needed kidney transplantation services to a

significantly greater extent than Broward HealthÓs.

106 . In its applications and at final hearing, Broward

Health touted its existing adult liver program as providing a

foundation for its proposed kidney transplantation programs.

However, just five percent of liver transplant recipients

require a simultaneous liver and kidney transplant. Any access

advantage Broward Health mi ght claim to patients requiring dual

transplantations is outweighed by MemorialÓs use of living donor

organs which impacts a much larger percentage of transplant

patients.

107 . It is uncontroverted that Broward Health abandoned

its prior adult kidney tran splantation program, thereby

exacerbating the access challenges that exist in OTSA 4 with

regard to kidney transplant services .

108 . Also, despite a recognized need for a pediatric

program, Broward HealthÓs pediatric application was conditioned

on the awa rd of the adult program; it Ðwill not be developed as

a stand - alone pediatric kidney t ransplant program.Ñ (JE 12,

p. BH83) . The adult program is really Broward HealthÓs focus ,

and this is evident even in Broward HealthÓs financial and

staffing projection s.

109 . As established through the final hearing testimony of

their CEOs, MRH and JDCH are steadfastly committed to

establishing pediatric and adult kidney transplantation

programs.

110 . It is also noteworthy that JDCH operates the only

pediatric outpati ent dialysis program in Broward County, again

highlighting its commitment to the pediatric population

suffering from kidney disease. In contrast, the proposed

Broward Health program would rely on a third party, DaVita, to

provide pediatric outpatient dial ysis.

111 . As the applicant which is more committed to provide

the needed services to both the pediatric and adult populations,

and which has an unblemished track record of implementing

programs, Memorial would enhance access to pediatric and adult

kidne y transplantation services in OTSA 4 to a greater extent

than Broward Health.

112 . At hearing, Marisol Fitch, the Agency representative,

explained why AHCA concluded that as between the two applicants,

Memorial would be most likely to enhance access to th is needed

service:

Q So as between these two applicants, one

telling you that if you donÓt give them a

CON for an adult program, they are not going

to implement a CON for the childrenÓs

program, versus the other one, which of

these two applicants would be st ensure and

enhance access for residents of this are a of

the state ?

A If you are talking about all residents,

including the pediatric population, then it

would be the applicant that was going to do

both.

Q ThatÓs Memorial; isnÓt that right?

A They did not condition their application

on Î they would do the pediatric without the

adult.

Q Now I will ask you the same question

regarding the issue of the live donor

program. One applicant is indicating they

will not establish and operate a live donor

pr ogram, the other one will.

Of the two applicants, which would enhance

access to the residents of the district that

we are dealing with here ?

A The applicant that used live donor since

a large chunk of donors for kidneys are live

donors.

Q That would me an Memorial; isnÓt that

right ?

A That is correct.

D. Section 408.035(1)(f) : The immediate and long - term

financial feasibility of the proposal

113 . The par ties have stipulated that short - term financial

feasibility, the ability to fund and open the pr ojects, is not

at issue. However, the parties contested the long - term

financial feasibility of each proposal.

114 . The AgencyÓs application review concluded that the

proposed programs were financially feasible in the long - term.

That conclusion presumed that the assumptions underlying the

applicantsÓ financial figures were appropriate.

115 . In Schedule 8A of its pediatric application, Memorial

projected a net loss of $1,129,885 in its second year, while

Broward Health projected a net excess of revenue o ver expenses

of $200,717 at the end of year two.

116 . In Schedule 8A of its adult application, Memorial

projected a net loss of $589,691 in its second year, and Broward

Health projected a net excess of revenue over expenses of

$560,709 at the end of year two.

117 . According to Broward HealthÓs financial consultant,

Tom Davidson, the primary reason Broward HealthÓs financial

projections appear more favorable than MemorialÓs is because

MemorialÓs applications include the costs of required transplant

physi cians, while Broward HealthÓs do not. As Mr. Davidson

testified at hearing:

Q How can you explain that difference?

Have you analyzed the two pro formas to

figure out why Broward Health projects it

can make money at a lower volume than what

you think Mem orial Health would do to break

even ?

A Yes, I mean itÓs entirely Î not only in

the pro formas, but actually in the real

world, it is a function of the physician

expense. This is kind of an interesting

case from a financial feasibility point of

view beca use there is really only one issue

that needs to be analyzed. You have two

applicants in the same county, both tax -

supported programs that provide a lot of

charity care. They both want the same

service, they are both projecting the same

volume.

Every li ne item in the real world, forget

about whatÓs in the pro formas, but when the

real world comes around, whatever goes on in

terms of payer mix, gross charges, and in

particular net revenues with Medicare and

Medicaid and commercial insurers, all those

numb ers are just going to be what they are.

They are going to have to spend the same

money to take care of the transplant

patient. There is nothing really that a

sensible human being could bring up that

would distinguish the two in terms of

financial feasibi lity except for this one

issue.

Does one hospital have to hire a bunch of

new doctors to get into business or do both?

Broward Health represented to me and I

represented in the financial projections

that I prepared that they would not.

Memorial represe nted in their forecasts that

they would.

And thatÓs the entire difference. And itÓs

really the only difference that there can be

between these two applications. Because

otherwise, if you just think about it

logically Î you donÓt have to be a finance

per son Î thereÓs no Î you canÓt slip a piece

of paper between these two programs in terms

of revenues , expenses, and other expenses,

because youÓve got to take care of patients.

You have to give them lab tests and things

cost what they cost.

So without gett ing into some really kind of

bazaar attempts to distinguish these two,

thatÓs the question. And I think as a

health planner it is my firm opinion that

that is the only thing on the financial side

that Your Honor has to consider, whether or

not Broward He alth has to hire doctors.

118 . Originally, Mr. Davidson included approximately

$900,000 in his expense projections for the cost of adding two

physicians. He later eliminated those expenses by assuming that

the surgeons currently performing adult liver t ransplants would

also perform Broward HealthÓs adult and pediatric kidney

transplants at no additional cost.

119 . Broward HealthÓs applications do not include any

costs associated with employing or contracting for physicians

needed to operate its programs and Broward Health does not know

what the financial terms of either arrangement might be.

120 . As acknowledged by Robyn Farrington, Chief Nursing

Officer at BHMC, Broward Health will need additional physicians

beyond those who are already either employed or contracted by

Broward Health in order to operate adult and pediatric kidney

transplant programs.

121 . As Michael Carroll credibly testified, even assuming

the surgeons performing liver transplants at BHMC also performed

kidney transplants at no additi onal cost, it is improper to

exclude the costs for those physicians from a financial

assessment of the kidney program: Ðwhatever time that liver

transplant surgeon spends [performing kidney transplants] should

be allocated to the kidney transplant program .Ñ

122 . Broward HealthÓs pediatric application also failed to

include any additional staff for the proposed project. This is

because, unlike Memorial, the financial and staffing projections

in Broward HealthÓs applications are interdependent: the

staff ing and expenses in Broward HealthÓs pediatric application

assume that Broward Health is awarded the CON for an adult

program and that, in large part , the adult program would support

the pediatric program without the need for additional resources.

A ccordi ngly, no expenses associated with adding staff is

reflected on Schedule 8A of Broward HealthÓs pediatric

application. However, since children are not simply small

adults, additional staff would, in fact, be required for Broward

HealthÓs pediatric program.

123 . If its pediatric application is approved, Broward

Health will then evaluate what additional staffing it might need

for its program. However, as of now there is no way to

determine from its applications what staff Broward Health will

need for its p ediatric program or what the additional cost of

that staff will be.

124 . In short, there is no way to forecast the cost of

either of Broward HealthÓs proposed programs.

125 . The uncertainty regarding the ultimate cost of the

Broward Health programs contr asts with MemorialÓs applications,

which were presented as Ðstand - aloneÑ projects with regard to

projected costs. All resources necessary to operate the adult

and pediatric kidney transplantation programs are included in

each application. Notwithstanding the stand alone financial

presentations, it is reasonable to assume that some resources

will be shared if Memorial receives final approvals for both

programs.

126 . As pointed out by Broward Health, MemorialÓs

applications contained four mathematical erro rs that impacted

its financial projections. Specifically, Memorial included an

incorrect number of adult transplants to be performed prior to

CMS certification, improperly calculated Medicare

reimbursements, overstated organ procurement costs, and include d

too many post - transplant follow up appointments.

127 . Memorial prepared corrected financial schedules to

account for these errors. Revised Schedule 8A for MemorialÓs

adult application showed a net excess of revenue over expenses

of $745,434 at the end of year two. Revised Schedule 8A for

MemorialÓs proposed pediatric program showed a net loss of

$1,026,422 at the end of year two. The combined net loss at the

end of year two for both programs totals $280,988.

128 . The errors did not affect MemorialÓs volume

projections, the programsÓ scope, orientation, philosophy,

accessibility, or need assessment.

129 . Memorial has the financial ability to absorb the

losses for its proposed pediatric program, even if operated as a

stand - alone program.

130 . If Mem orialÓs adult and pediatric programs are co -

located, some resources will be shared, and the combined

programs will approach break even by the end of year two.

131 . In this case, long - term financial feasibility is not

accorded as much weight as it might b e in other CON

determinations, because there is an established need for these

tertiary services, and both applicant organizations have the

ability, if they so choose, to subsidize operational losses in

order to maintain the programs. Stated differently, t he

projected long - term financial feasibility of both applicantsÓ

proposals is not a basis for distinguishing between them.

Rather, the commitment of the applicants to their proposals, as

addressed above, is the more critical consideration.

E. Section 4 08.035(1)(g) : The extent to which the proposal

will foster competition that promotes quality and cost -

effectiveness

132 . The Cleveland Clinic is an existing provider of adult

kidney transplantation services in OTSA 4. If Broward HealthÓs

Ðplan AÑ is i mplemented, a contract with the Cleveland Clinic

for surgeons to operate an adult kidney transplantation program

in the same county and OTSA is less likely to foster competition

that promotes quality and cost - effectiveness than approval of

MemorialÓs indep endent programs.

133 . Broward HealthÓs proposals will not foster

competition for pediatric or adult living donor transplants.

134 . These considerations weigh in favor of Memorial with

respect to the ability of both its proposed adult and pediatric

k idney transplantation programs to foster competition pursuant

to section 408.035(1)(g).

F. Section 408.035(1)(i) : The applicantsÓ past and proposed

provision of health care services to Medicaid patients and the

medically indigent

135 . Consistent wi th their missions, both applicants

provide substantial services to Medicaid patients and the

medically indigent.

136 . Mr. Richardson was critical of MemorialÓs

applications because they do not include Medicaid in their

projected payor mix. However, Mr. R ichardsonÓs data showed a

miniscule percentage of Broward County residents who received a

kidney transplant and are Medicaid - eligible. And although

Medicare makes up a far larger portion of the payor mix, Broward

HealthÓs pediatric application included no Medicare in its payor

mix assumptions.

137 . As Mr. Davidson testified, it is improper to draw any

conclusions from an applicant excluding Medicaid as a payor

source or from the fact that Broward Health did not include any

bad debt or charity care in its applications.

138 . As Mr. Richardson agreed, Memorial provides a large

volume of Medicaid care and the pediatric applications are on

equal footing on this criterion. Mr. Richardson also correctly

agreed that the applicants are the same in terms of thei r

history of serving Medicaid and medically - indigent adult

patients.

139 . There is no evidence that either applicant has a

greater commitment to providing kidney transplantation services

to Medicaid patients and the medically indigent than the other.

Ac cordingly, neither applicant is entitled to preference under

this criterion.

CONCLUSIONS OF LAW

I. Jurisdiction

140. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. §§ 120.569, 120. 57, and 408.039(5), Fla. Stat.

II. Burden of Proof and Balancing

141. Each of the applicants has the burden of proving that

its applications should be approved. Mem Ó l Healthcare Group,

Inc., d/b/a Mem Ó l Hosp . Jacksonville v. AHCA and St. VincentÓs

Med . Ctr . , Inc., et al. , Case No. 02 - 0447CON, RO at ¶ 442 (Fla.

DOAH Feb . 5, 2003 at ¶422) (Fla. AHCA Apr . 8, 2003) (citing Boca

Raton Artificial Kidney Ctr . v. Dep Ó t of HRS , 475 So. 2d 260

(Fla. 1st DCA 1985)).

142. The award of a CON must be based on a balan ced

consideration of all applicable statutory and rule criteria.

Balsam v. DepÓt of HRS, 486 So. 2d 1341 (Fla. 1st DCA 1986).

Ð[T]he appropriate weight to be given to each individual

criterion is not fixed, but rather must vary on a case - by - case

basis, d epending upon the facts of each case.Ñ Collier Med .

Ctr . , Inc. v. DepÓt of HRS, 462 So. 2d 83, 84 (Fla. 1st DCA

1985).

III. Review Criteria

143 . Need for kidney transplantation programs is

established by demonstrating compliance with section

408.035(1)( a) and r ule 59C - 1.044(8)(d). See Methodist Med .

Ctr ., Inc. v. St. LukeÓs Hosp . Assoc. and AHCA, C ase No. 99 -

0724 , RO at ¶ 15 (Fla. DOAH Feb. 17, 2000 ; Fla. AHCA Apr. 13,

2000).

144 . Rule 59C - 1.044(8)(d) does not establish a numeric

need methodology. It states that a new program shall not

normally be approved unless existing providers meet certain

utilization thresholds and the applicant reasonably projects

certain minimum procedure volumes within two years of operation.

145 . Broward HealthÓs attempt t o establish a need for two

adult kidney transplant programs is a departure from its

applications and would require a very different review by the

Agency than was conducted. The dual - approvals theory is so

material a change from Broward HealthÓs applicatio ns that it

constitutes an impermissible amendment. Cmt y. Hospice of N .E .

Fla . v. AHCA, United Hosp . of Fla ., Inc., et al., Case Nos. 10 -

1865CON, RO at ¶ 148 - 149 (Fla. DOAH Mar . 22, 2011 ; Fla. AHCA

May 2, 2011) (finding that when a CON application proposed

approval of one program, the applicant could not argue for

approval of two at final hearing).

146 . On balance, MemorialÓs applications better satisfy

the established need for one pediatric and one adult kidney

transplantation program in OTSA 4 than Browa rd HealthÓs.

147 . AHCA properly considered MemorialÓs recent success

and Broward HealthÓs recent failure in implementing CONs for

organ transplantation programs in assessing the applicantsÓ

ability to provide quality of care and record of providing

quali ty of care under section 408.035(1)(c), and the

availability of resources including health and management

personnel for project accomplishment under section

408.035(1)(d).

148 . MemorialÓs plans to use employed physicians and

living donors also give its adult and pediatric programs

significant advantages over Broward Health in terms of the

applicantsÓ ability to provide quality of care.

149 . A preponderance of the evidence weighed in favor of

Memorial with respect to providin g quality of care under

secti on 408.035(1)(c), and the availability of resources

including health personnel required by section 408.035(1)(d),

and staffing and services required by r ules 59C - 1.044(3 - 4) and

59C - 1.044(8)(a - c).

150 . MemorialÓs proposed programs also will enhance acces s

to both adult and pediatric kidney transplantation services in

OTSA 4 to a greater extent than Broward HealthÓs proposed

programs, and therefore will better satisfy section

408.035(2)(e).

151 . MemorialÓs commitment to these programs is

demonstrated by i ts thoughtfully - developed, comprehensive

pediatric nephrology program, its program for transitioning

pediatric transplant patients to the adult clinical setting, and

its willingness, unlike Broward Health, to proceed with either

program on a stand - alone ba sis.

152 . Unlike Broward Health, MemorialÓs proposed pediatric

and adult kidney transplantation programs also will provide

access to these needed services to the substantial number of

transplant patients who receive living donor organs. This fact

weigh s heavily in favor of Memorial, and places MemorialÓs

applications well - ahead of Browa rd HealthÓs in terms of

section 408.035(2)(e).

153 . Pursuant to section 408.035(1)(f) , the applicants

were required to demonstrate the long - term financial feasibility

o f their proposals. While MemorialÓs applications revealed net

losses at the conclusion of year two, corrections to

mathematical errors significantly reduced those losses. If co -

located, MemorialÓs programs would be financially feasible.

154 . Memoria lÓs proposed kidney transplantation programs

will foster competition that promotes quality and cost -

effectiveness (section 408.035(12)(g) ) , to a greater extent than

Broward HealthÓs.

155 . The applicants are significant providers of Medicare,

Medicaid, and medically - indigent care. They are on equal

footing in terms of the related review criterion, section

408.035(1)(i).

156 . Evaluating Broward HealthÓs and MemorialÓs adult and

pediatric applications under the applicable statutory and rule

criteria comp els the conclusion that both the adult and

pediatric kidney transplant program applications submitted by

Memorial are superior to the competing applications submitted by

Broward Health. The facts mitigating most heavily in favor of

Memorial are its unequi vocal commitment to the pediatric

population, its history of implementing CON - approved programs,

and the offering of living - donor transplants. Broward HealthÓs

failure to succes sfully implement its previously - approved adult

kidney transplant program weigh s heavily against approval of a

second CON, especially at the expense of Memorial.

IV. Ruling on Broward HealthÓs Motion in Limine

157 . In its ÐMotion in Limine to Exclude Prohibited

Application Amendment,Ñ Broward Health argued that MemorialÓs

revised f inancial projections should be excluded from evidence

as substantial amendments to the applications.

158 . Impermissible amendments have been found where they

alter the purpose, nature, or scope of an application. See e.g.

Manor Care, Inc., and Health Q uest Corp . v. Dep Ó t . of HRS ,

558 So. 2d 26 (Fla. 1st DCA 1989) (finding an impermissible,

substantial change when an applicant for community nursing home

beds ÐupdatedÑ its application to present a different facility

design, sought to increase the facility Ós square footage, and

altered its Medicaid commitment, seemingly to overcome criticism

from the Agency); Hillsborough Cnty . Hosp . Auth . d/b/a Tampa

Gen . Hosp . v. Dep Ó t . of HRS, et al. , Case No. 89 - 1286, RO at

¶¶ 58 - 59 (Fla. DOAH Dec . 7, 1989 ; Fla. HRS Jan . 23, 1990)

(rejecting HillsboroughÓs revised financial schedules which

included changes to staffing and equipment plans, as well as the

plan for whether the provider would hire certain personnel or

use personnel from another facility).

159 . Calculation c orrections like those reflected in

MemorialÓs revised financial schedules, however, are permissible

and even encouraged. HCA Health Servs . of Fla . , Inc., d/b/a Oak

Hill Hosp . v. Hernando HMA Inc., d/b/a Brooksville Reg Ó l Hosp . ,

Case No. 02 - 0454 RO at ¶ 79 (Fla. DOAH Feb . 19, 2003; Fla. AHCA

Feb . 19, 2003)(concluding that corrections to schedules 7A and

8A which resulted in additional revenues of approximately

$5.6 million were Ðnot an impermissible amendment to the CONÑ);

Vitas Healthcare Corp . of Fla . v. Heartland Servs . of Fla . ,

et al. , Case No. 04 - 3856CON RO at ¶ 215 (Fla. DOAH Dec , 13,

2006 ; Fla. AHCA Dec . 15, 2006) (Ð[i]f information in an

application is incorrect, it must be corrected even if the

correction is made after the application is deemed comp lete.

The correction will be allowed so long as the information does

not change the nature and scope of the application.Ñ); Community

Hospice, Case No. 10 - 1865CON (DOAH Mar . 22, 2011 ; Fla. AHCA

May 2, 2011) (finding that an expertÓs Ðbreak even analysisÑ

prepared in response to an attack on the applicantÓs financial

feasibility was not an impermissible amendment since the

applicant did not change its utilization projections or

assumptions).

160 . MemorialÓs revisions do not alter the purpose,

nature, or scope of its applications and therefore do not

constitute prohibited substantial amendments to MemorialÓs

applications under r ule 59C - 1.010(3)(b) . Accordingly, Broward

HealthÓs Motion in Limine is denied. 1/

RECOMMENDATION

Based on the foregoing Findings o f Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered approving

CON Application Nos. 10386 and 10388 filed by the South Broward

Hospital District , d/b/a Memorial Regional Hospital, subject to

the conditions contained in the applica tions, and denying CON

Application Nos. 10387 and 10389 filed by the North Broward

Hospital District , d/b/a Broward Health Medical Center.

DONE AND ENTERED this 4th day of May , 2016 , in Tallahassee,

Leon County, Florida.

S

W. DAVID WATKINS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of May , 2016 .

ENDNOTE

1/ Even if the revisions to the Memorial financial projections

were determined to be impermissible, the evidence at final

hearing established that both the Broward Health and Memorial

applic ations are f inancially feasible in the long - term.

COPIES FURNISHED:

Lorraine Marie Novak, Esquire

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

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Marc Ito, Esquire

Park er, Hudson, Rainer and Dobbs, LLP

Suite 750

215 South Monroe Street

Tallahassee, Florida 32301

(eServed)

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Parker, Hudson, Rainer

and Dobbs, LLC

Suite 3600

303 Peachtree Street Northeast

Atlanta, Georgia 30308

(eServed)

F. Phil ip Blank, Esquire

GrayRobinson, P.A.

301 South Bronough Street, Suite 600

Post Office Box 11189

Tallahassee, Florida 32302

(eServed)

D. Ty Jackson, Esquire

GrayRobinson, P.A.

301 South Bronough Street, Suite 600

PO Box 11189

Tallahassee, Florida 3230 2

(eServed)

Allison G. Mawhinney, Esquire

GrayRobinson, P.A.

Post Office Box 11189

Tallahassee, Florida 32302

(eServed)

Richard Joseph Saliba, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServe d)

Kevin Michael Marker, Esquire

Agency for Health Care Administration

Mail Stop 3

2727 Mahan Drive

Tallahassee, Florida 32308

(eServed)

Richard J. Shoop, Agency Clerk

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Flo rida 32308

(eServed)

Elizabeth Dudek, Secretary

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 1

Tallahassee, Florida 32308

(eServed)

Stuart Williams, General Counsel

Agency for Health Care Administration

2727 Mahan Drive, Mail Stop 3

Tallahassee, Florida 32308

(eServed)

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.