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STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED

A. 1.

PROJECT IDENTIFICATION Applicant/CON Action Numbers: Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center/CON #10029 2500 Harbor Boulevard Port Charlotte, Florida 33952 Authorized Representative: Patricia Greenberg (305) 444-5007

Fawcett Memorial Hospital, Inc./CON #10030 21298 Ocean Boulevard Port Charlotte, Florida 33949 Authorized Representative: Tom Rice (941) 629-1181

2.

Service District/Subdistrict District 8 (Charlotte, Collier, DeSoto, Glades, Hendry, Lee and Sarasota Counties)

B.

PUBLIC HEARING A public hearing was not held or requested in response to CON #10029 or CON #10030, in District 8. Letters of support and opposition are detailed below regarding both applications. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): Twenty-three unduplicated letters of support were received (CON #10029, Tab IV) with one being received directly by the Agency. Robert Farnham, Senior Vice President and Chief Financial Officer of Health Management Associates, Inc. [HMA], the parent of both Charlotte Regional Medical Center (CRMC) and Peace River Regional Medical Center (PRRMC), states that HMA authorizes the relocation of the adult open heart

CON Action Number: 10029 & 10030 surgery (OHS) program and will fund the project costs of relocation. HMA further agrees to delicense the adult OHS program at CRMC concurrent with the licensure and operation of same at PRRMC. The application (CON #10029, Tab IV) includes two letters of support from executive hospital administrators and 20 from physicians. Brad Nurkin, Chief Executive Officer (CEO) of CRMC, states that CRMC is the only provider of adult OHS in Charlotte County and has provided this service since 1986. Mr. Nurkin states that volume is sufficient to support one such program but no more. Mr. Nurkin provides three reasons to justify approval of CON #10029: increased availability of facility space; newer facilities (at the proposed PRRMC location) and a more centrally located facility within the community ­ CRMC being located in Punta Gorda and PRRMC being located in Port Charlotte. Mr. Nurkin also states that if CON #10029 is approved, OHS will be discontinued at CRMC and transferred to sister facility PRRMC. If CON #10029 is ultimately denied, CRMC agrees to continue to operate its adult open heart program in the same quality and commitment it has since inception. Melody Trimble, CEO of Venice Regional Medical Center (VRMC), cites CRMC's high quality program and states that a more central location will enhance access for the citizens of Charlotte, DeSoto and southern Sarasota Counties. It is noted that VRMC, also parented by HMA (same as the applicant) is the nearest CON approved and operational adult OHS provider to both CRMC and PRRMC. The remaining letters of support are by physicians, most identifying themselves as invasive cardiologists. The majority of these are of a form letter variety, with the following recurring themes: all the practicing cardiologists at CRMC are on staff at PRRMC so physician access is already in place; an expectation of transferring 100 percent of applicable CRMC patients to PRRMC and a greater population concentration in the Port Charlotte area (compared to Punta Gorda). Physician letters of support include those who performed a range of interventional cardiology procedures from as few as zero by Michael Malone, DO to as many as 600 by Sergio Cossu, MD. Physicians that claim a physician group affiliation total 14 and are as follows: Cardiac Surgical Associates (two physicians); Harbor Cardiology and Vascular Center (two physicians); Cardiology Associates (three physicians); Charlotte Cardiovascular Institute (three physicians) and Charlotte Heart & Vascular Institute (four physicians). Drs. Richard Gelb, David Hotehkiss, Mario Lopez and Odaiyappa Sambandam support both applicants. Bernard Roos, MD, Professor of Medicine, The Geriatrics Institute, University of Miami (UM) states there is a longstanding collaborative training program between the UM program and PRRMC, identifying PRRMC as virtually ideal as the site of the community-based rotation for the UM's Geriatrics Fellowship Program.

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CON Action Number: 10029 & 10030 Fawcett Memorial Hospital, Inc. (CON #10030) included 65 unduplicated letters of support (CON #10030, Attachment D ­ Physician and Community Letters of Support). The majority (approximately 48 of 65 or about 73.85 percent) are of a form letter variety. Letters of support include two from members of the Florida House of Representatives: the Honorable Michael Grant (District 71) and the Honorable Paige Kreegel, MD, (District 72) and four from Charlotte County Board of County Commissioners Tom D'Aprile (District 1); Adam Cummings (District 2); Thomas Moore (District 3) and Richard Loftus (District 4). Generally, recurring themes include the following: heart disease is a leading cause of death in the area; patients must currently leave Fawcett Memorial Hospital in order to receive OHS and the hospital's Cardiac Intervention Program has been carefully developed following the guidelines of the American College of Cardiology, American Heart Association and the Agency for Health Care Administration. Varying versions of these themes are repeated by the remaining support letters. Seventeen of the 24 physician letters identify themselves with Fawcett Memorial letterhead and state they practice in Charlotte County. Some of these physicians include the following: Dr. Swaroop Muepavarapu (Chairman, Department of Anesthesiology); Dr. Samuel Williams (Medical Director, Emergency Care Center) and Dr. David Hotchkiss (Medical Director, Interventional Cardiology), Dr. Mario Lopez (Charlotte Heart & Vascular Institute) [this physician also supports co-batched applicant PRRMC/CON #10029] and Dr. Brian Hummel (Managing Partner, Gulf Coast Cardiothoracic and Vascular Surgeons [GCCVS]. GCCVS is comprised of 10 surgeons (including Dr. Hummel). Richard Gelb, David Hotehkiss, Mario Lopez and Odaiyappa Sambandam, all four MDs, support both this applicant as well as co-batched applicant PRRMC (CON #10029). Some of the 35 "all other" support letters include the following: Sandra Morgan, Registered Nurse [RN] (V.P. Patient Care Services); Michael Cauger (Supervisor, Interventional Cardiology) and five nurses (Cardiac Cath Lab Team). These professionals are all Fawcett Memorial Hospital staff. The remainder of support letters are from residents of Charlotte County. Letters of Opposition Brad Nurkin, CEO of Charlotte Regional Medical Center, opposes co-batch applicant Fawcett Memorial's application. Mr. Nurkin offers four primary reasons for the opposition: insufficient volume to support two programs; only two primary open heart surgeons in the community with both being employed by CRMC who plan to shift their practices to PRRMC (upon licensure if CON #10029 is approved); dilution of quality interventional staff in the catheterization lab and an overall unnecessary duplication of costly 3

CON Action Number: 10029 & 10030 health care services by the establishment of a second adult OHS program in Charlotte County. Melody Trimble, CEO of VRMC also opposes CON #10030, stating a second OHS program would only dilute the program's volumes and jeopardize the quality of the existing program. Six physicians who support CON #10029 also expressly oppose CON #10030.

C.

PROJECT SUMMARY Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) proposes to establish an adult open heart surgery (OHS) program at Peace River Regional Medical Center (also referenced as PRRMC or Peace River), in Port Charlotte, Charlotte County, District 8 via transfer of the OHS program from Charlotte Regional Medical Center (CRMC). This is to include percutaneous coronary intervention (PCI). There are currently six operational adult OHS programs in District 8 and this proposal would not add to the number of existing OHS programs. Both CRMC and PRRMC are parented by Hospital Management Associates, Inc. (HMA). These facilities are within the same district, approximately six miles apart. PRRMC is a licensed Class I Hospital with 212 acute care and seven level II NICU beds. The application further proposes 12 new acute care beds which could be added by notification under section 408.036 (5) Florida Statutes. The applicant proposes to condition award of the CON on location at the Peace River Regional Medical Center, 2500 Harbor Boulevard, Port Charlotte, Florida 33954 and also that CRMC will delicense its adult OHS program concurrent with licensure of the adult OHS program at PRRMC. However, the program at Charlotte Regional Medical Center proposed to be transferred with this CON is conditioned (by CON #5282) to providing a minimum of 2.59 percent of its total annual open heart procedures to Medicaid patients and 1.2 percent to indigents. The applicant does not propose to condition this CON to Medicaid or charity care. Schedule 7A indicates that 3.58 percent of the project's year two patient days will be provided to Medicaid and Medicaid HMO patients. While charity care is not stated, self-pay is shown as 2.7 percent of year two patient days with an average per patient day loss of $5,157. The proposed total project cost is $16,106,106, with 20,461 gross square feet (GSF) of new construction and 3,509 GSF of renovation (total project GSF of 23,970). In addition to new construction and renovation costs (building costs), other costs include: land; equipment; project development; financing and start-up.

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CON Action Number: 10029 & 10030 Fawcett Memorial Hospital, Inc. (CON #10030) (also referenced as Fawcett, Fawcett Memorial, FM or FMH) proposes to establish a new adult open heart surgery (OHS) program at its facility, in Port Charlotte, Charlotte County, District 8. This is to include elective coronary angioplasty (also referenced as PCI). This proposal would add a seventh OHS program in the district and a second OHS program in Charlotte County, where there is currently only one such program. Fawcett Memorial Hospital is a Class I Hospital with a licensed bed compliment of 218 acute care and 20 comprehensive medical rehabilitation beds. The applicant is part of the West Florida Division of HCA. FMH acknowledges that the Agency has published a zero (0) need for adult OHS programs in the proposed district and two existing adult OHS program providers in the district performed fewer than 300 OHS's in calendar year (CY) 2007. However, the applicant presents seven "special" or "not normal" circumstances and three "other factors" that the applicant contends justify approval. The applicant proposes no conditions pursuant to award. The proposed total project cost is $7,181,940 with 1,000 gross square feet (GSF) of new construction and 5,599 GSF of renovation (total project GSF of 6,599). In addition to new construction and renovation costs (building costs), other costs include: equipment; project development; financing and start-up.

D.

REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section 408.035, Florida Statutes. These criteria form the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an applicant's capability to undertake the proposed project successfully is conducted by assessing the responses provided in the application, and independent information gathered by the reviewer. Applications are analyzed to identify strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant(s) best meets the review criteria. Section 59C-1.010(3)(b), Florida Administrative Code, allows no application amendment information subsequent to the application being deemed complete. The burden of proof to entitlement of a certificate rests with the 5

CON Action Number: 10029 & 10030 applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the certification of the applicant. As part of the fact-finding, the consultant Steve Love analyzed the application in its entirety with consultation from the financial analyst Everett "Butch" Broussard, as well as architect Scott Waltz, who evaluated the architecturals and the schematic drawings as part of the applications.

E.

CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicate the level of conformity of the proposed project with the criteria and application content requirements found in Florida Statutes, sections 408.035, and 408.037; applicable rules of the State of Florida, Chapter 59C-1 and 59C-2, Florida Administrative Code.

1. a.

Fixed Need Pool Does the project proposed respond to need as published by a fixed need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Rule 59C-1.008(2), Florida Administrative Code. In Volume 34, Number 14, dated April 4, 2008 of the Florida Administrative Weekly, a need for zero (0) additional adult open heart surgery (OHS) programs was published for District 8 for the July 2010 planning horizon. Six open heart surgery providers currently exist in this district: Charlotte Regional Medical Center; Naples Community Hospital; HealthPark Medical Center; Southwest Florida Regional Medical Center; Sarasota Memorial Hospital and Venice Regional Medical Center (this last provider, the nearest adult OHS provider to both CRMC and the proposed PRRMC site, affirmatively supports CON #10029 and opposes CON #10030). Two of these six programs1 did not meet the minimum 300 adult open heart surgery operations for the most recently reported 12-month period (January 2007 ­ December 2007). CON #10029 seeks to transfer OHS services from the existing second least utilized OHS provider in the district, whereas CON #10030 proposes to establish OHS services in an additional seventh facility.

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Charlotte Regional Medical Center performed 243 open heart surgery operations during calendar year 2007, while Southwest Florida Regional Medical Center performed 200. This data is from the April 4, 2008 edition of the Florida Need Projections for: Adult Open Heart Surgery Programs - January 1, 2007 through December 31, 2007.

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CON Action Number: 10029 & 10030 In addition to zero (0) need for an additional adult open heart program in District 8, the same is true statewide; there is no published need for an adult OHS program in any of the remaining 10 districts. The same Agency published source indicates a decline in OHS procedures statewide for the five-year period from December 31, 2003 through December 31, 20072; total OHS procedures for the period went from 28,671 to 23,903, a decline of 4,768 such procedures in 2007 compared to 2003. For the same period and again throughout the state, the number of CON approved and licensed OHS providers that experienced less than 300 OHS procedures went from 23 to 39, an increase of 16 more facilities with below the 300 minimum procedures in 2007 compared to 2003. This indicates that on a statewide basis, the number of facilities failing to meet the 300 minimum procedures is trending upward and the total number of OHS procedures performed is trending downward. Below is a map of the area showing the location of the proposed and existing adult OHS programs in District 8 (Charlotte, Collier, DeSoto, Glades, Hendry, Lee and Sarasota Counties).

Florida Need Projections for: Adult Open Heart Surgery Programs - January 1, 2003 through December 31, 2003 and January 1, 2007 through December 31, 2007.

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CON Action Number: 10029 & 10030

Open Heart Surgery & Applicant Facilities District 8

Source: Microsoft MapPoint 2006 *Set for OHS closure **Proposed new OHS service location

The following table illustrates distances between the proposed and existing facilities in the district. All distances shown are in miles:

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CON Action Number: 10029 & 10030

Mileage Between Existing & Proposed Heart Surgery Facilities in District 8

Source: Mapquest.com

Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) presents need in the context of relocating the adult OHS program at CRMC to PRRMC (sister facilities with HMA as the parent). The applicant proposes the defined service area as the same as the current area that exists for CRMC (with the facilities approximately six miles apart). The area includes all of Charlotte and DeSoto Counties and a portion of the North Port area (Southeastern Sarasota County). A 19 zip code service area is referenced throughout the applicant's need section. (CON #10029, page #17, PRRMC Service Area). There are three primary justifications presented to warrant the proposed relocation from CRMC (in Punta Gorda, Florida) to PRRMC (Port Charlotte, Florida): increased availability of facility space; new facilities with approximately 20,500 square feet of new construction and enhancement of geographic accessibility. Geographic access is stated as enhanced through such factors as population, market utilization, market discharges and discharge use rates. It is previously stated, a need for zero (0) additional adult open heart surgery (OHS) programs was published (by the Agency) for District 8 for the July 2010 planning horizon. Six adult OHS providers currently exist in this

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CON Action Number: 10029 & 10030 district. Two of these six programs3 did not meet the minimum 300 adult OHS operations for the most recently reported 12-month period (January 2007 ­ December 2007). Port Charlotte HMA does not propose to add an additional OHS provider in a district already determined by the Agency to have zero need and further experiencing low volume (with two for the six current OHS providers experiencing less than 300 OHS operations for the 12 months ending December 31, 2007). The applicant proposes to redistribute resources such that a larger population base (Port Charlotte) is more likely to have closer geographic access without adding an additional provider or site. b. Special or Not Normal Circumstances Fawcett Memorial Hospital, Inc. (CON #10030) proposes to add one additional OHS provider and site in a market (District 8) that the Agency has already determined has zero (0) published need. However, FMH proposes that seven "special" or "not normal" circumstances warrant approval. These circumstances are as follows: 1. Access barriers to the provision of OHS in the service area, including the need for emergent care. The applicant states that since its inception in September 2007, the emergency PCI program at Fawcett has performed a total of 40 emergency PCIs through June 22, 2008. There were 171 inpatient and emergency department OHS and PCI transfers in CY 2007, and 81 such transfers for the first five months of 2008 (CON #10030, page #15, Table 4). The applicant states co-batch applicant CRMC refused to enter into a written agreement for these transfers (Attachment B ­ CRMC Letter from Dan Buckner Documenting Transfer Denial). This situation causes FMH to seek transfer agreements with more distant OHS approved facilities. However, the facilities stated as being in written agreement as transfer providers (SW Florida Regional Medical Center and Sarasota Memorial Hospital) are stated as being within the required 60-minute travel parameter from FMH to the applicable OHS facilities.

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Charlotte Regional Medical Center performed 243 open heart surgery operations during calendar year 2007, while Southwest Florida Regional Medical Center performed 200. This data is from the April 4. 2008 edition of the Florida Need Projections for: Adult Open Heart Surgery Programs - January 1, 2007 through December 31, 2007.

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CON Action Number: 10029 & 10030 In response to the applicant's contention of access barriers, there are six open heart surgery providers and two facilities within District 8 that have an emergency PCI exemption4. Peace River Regional Medical Center also has a PCI exemption pending approval as of July 17, 2008. Further, the Agency is in the process of implementing section 408.0361, Florida Statutes, which will provide for licensure of cardiovascular services without the need for CON approval. It is currently under rule challenge and is pending Final Order. The applicant does not demonstrate that barriers to services exist. 2. The high percentage of OHS patients who out-migrate from Charlotte County, the primary service area (PSA), for care. The applicant indicates only 49.7 percent of Charlotte County residents who received OHS services received these in Charlotte County and that this is the lowest of the OHS retention rates in the counties in the district that have OHS programs (Collier, Lee and Sarasota Counties, all with reported home county OHS retention rates of 82.2 percent or better) [CON #10030, page #19, Table 12 ­ Home County Retention of OHS Cases]. However, the applicant's data shows that at least 97 percent of Charlotte County residents remain in District 8 for OHS services, though some travel out of their home county. The Agency considers OHS services on a districtwide basis, not on a subdistrict basis, such as a county-by-county configuration or otherwise smaller than a district. The applicant does not demonstrate appreciable out-migration from District 8. 3. Development of an OHS program at FMH will not affect any provider in District 8 currently operating below 300 OHS cases annually. The applicant contests that the two District 8 OHS approved facilities operating at below 300 OHS cases annually are CRMC and SW Florida Regional Medical Center. This is confirmed by Agency records5. The applicant holds these providers would not be affected if CON #10030 is approved. FMH states that if CRMC is discontinuing its OHS services its volume would drop to zero and the program inventory of OHS providers would drop by one. However, CON #10029 is clear that it plans to delicense the OHS program at CRMC only if the relocation proposal to Peace River is approved. There are

E0500002 ­ Fawcett Memorial Hospital; E0600002 ­ Physician's Regional Medical Center and E0600015 - Peace River Regional Medical Center is pending approval. 5 Charlotte Regional Medical Center performed 243 open heart surgery operations during calendar year 2007, while Southwest Florida Regional Medical Center performed 200. This data is from the April 4, 2008 edition of the Florida Need Projections for: Adult Open Heart Surgery Programs - January 1, 2007 through December 31, 2007.

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CON Action Number: 10029 & 10030 two providers already under 300 and the introduction of another would only subtract from the existing patient volume with the most likely effect being another provider under 300 procedures. Rule 59C1.033 (7) Florida Administrative Code directs that the Agency will not normally approve another open heart surgery provider if one or more existing provider is under 300. 4. The exceptionally high percentage of elderly population within the defined service area in District 8. The applicant contends the percentage of the adult population that is 65 and older in the defined service area (Charlotte and Sarasota Counties) is significantly higher than the overall distribution for other District 8 counties and the State of Florida. The applicant considers Charlotte County to be the PSA and Sarasota County the secondary service area. Fawcett states Charlotte County ranks number one for all counties within the state of Florida for the percent elderly to total population based on AHCA population estimates for January 1, 20106. The applicant also states Sarasota County ranks as number five for percent elderly of all 67 Florida counties. Fawcett finds that decreased functionality due to aging places OHS patients in Charlotte and Sarasota Counties at higher risk of injury and fatality. According to the applicant (CON #10030, page #21, Table 6 ­ District 8 Population by County), from January 1, 2007 to January 1, 2012, the Charlotte County 65 to 75 years of age population will grow from 25,770 to 28,205 or by 9.45 percent and the 75 and over population will grow from 29,872 to 33,262 or by 11.35 percent for the same period. In response to the applicant's fourth point, population data projections from July 2008 ­ July 2013 that the total population for Charlotte County is projected to increase by 10.08 percent in total population from 169,231 in July 2008 to 186,390 in July 2013, while the 65 and older population is projected to increase from 57,194 to 63,978 or by 11.86 percent in the same period. The district's total population is projected to increase by 14.92 percent from 1,640,394 persons in July 2008 to 1,885,097 in July 2013, and the 65 and over population by 19.32 percent from 427,123 to 509,660 persons during this same time frame. Charlotte County is the 4th largest county and projected to be the 5th fastest growing regarding total population. It is also the 4th largest and the 5th fastest growing (of the seven counties) regarding the 65 and older population. The district total

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CON Application #10030, page #20

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CON Action Number: 10029 & 10030 population and elderly population (65 years of age and older) are projected to grow faster than Charlotte County. Below are charts that account for total population growth and age 65 and older population growth from July 2008 through July 2013.

Five Year Growth Rates

800000 700000 Total Population 600000 500000 400000 300000 200000 100000 0 JUL'08 Years

Source: Population Estimates, as published September 2007 Figures were calculated as total resident population for 7/1/2008 to 7/1/2013.

Charlotte County Collier County DeSoto County Glades County Hendry County Lee County Sarasota County JUL'13

Five Year Growth Rates

Age 65 and Older Population 200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0 JUL'08 Years

Source: Population Estimates, as published September 2007 Figures were calculated as age 65 or older resident population for 7/1/2008 to 7/1/2013.

Charlotte County Collier County DeSoto County Glades County Hendry County Lee County Sarasota County JUL'13

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CON Action Number: 10029 & 10030 This data does not support exceptionally higher growth rate projections regarding total or elderly (65 years or older) population, neither in the applicant's primary service area (Charlotte County) nor in its secondary service area (Sarasota County). In fact, the data indicates the steep growth among the elderly (age 65 or older) in District 8, through July 2013, to be in Collier and Lee Counties, with the applicant's PSA (Charlotte County) ranking fourth in elderly population and fifth in rate of increase. 5. High use rates of OHS and PCI angioplasty within the defined service area. The applicant contends that OHS and PCI angioplasty volume in Charlotte and Sarasota Counties is the highest among the seven District 8 counties. The applicant provides tables to support its claim7. In response to this contention, the following table illustrates the open heart surgery utilization of existing District 8 OHS programs in the district and state for the last five calendar years:

Adult Open Heart Surgery Volume District 8 Facility, District & State January 2003 though December 2007

Facility Charlotte Regional Medical Center HealthPark Medical Center Southwest Florida Regional Medical Center Sarasota Memorial Hospital Naples Community Hospital Venice Regional Medical Center District Total State Total 2003 244 561 277 1,041 499 52 2,674 28,761 2004 164 560 305 1,027 499 211 2,766 27,716 2005 192 518 270 972 497 287 2,736 26,310 2006 222 520 185 959 507 347 2,740 25,314 2007 243 499 200 793 412 310 2,457 23,903

Source: AHCA's Florida Need Projections for Adult Open Heart Surgery Programs for the indicated Calendar Years.

As seen above, the annual totals of open heart surgeries performed in District 8, for the five-year period ending December 2007, do not demonstrate a growth in demand for these services. District 8 open heart surgery volume had an 8.12 percent decline in OHS procedures for the five year period ending December 31, 2007. District 8 volume peaked at 2,766 procedures in CY 2004 but has since declined by 11.17 percent from 2004 to 2,457 procedures in CY 2007. The

CON Application #10030, page #24, Table 8 ­ Projected FMH Open Heart and PCI Use Rates, Table 9 ­ Projected FMH Open Heart and PCI Volumes; page # 25, Table 10 ­ Combined Projected FMH Open Heart and PCI Volumes

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CON Action Number: 10029 & 10030 majority of programs (five out of six) experienced declines from CY 2006 to CY 2007, with the only exception being Southwest Florida Regional Medical Center. All programs, with the exception of Venice Regional Medical Center, which began operation in July 2003, have experienced an overall decline in annual volume since 2004. This does not demonstrate an increase in demand. Charlotte Regional Medical Center and Southwest Florida Regional Medical Center are currently (for the 12-month period ending December 2007) both below the benchmark in rule of a 300-operation minimum for a 12month period. The 300-operation benchmark established in Rule 59C-1.033 of the Florida Administrative Code is reflective of associations that exist between complications and lower volume programs8. These guidelines indicate that survival after cardiac artery bypass graph is negatively affected when carried out in institutions that perform less than a threshold number of cases annually. Because OHS program volumes are waning overall in the district, the approval of an additional program (as proposed in CON #10030) would likely further reduce volumes for existing providers that are already experiencing reductions. When considered on a district basis, this claim is unfounded. As stated previously in section E.1.a., the state overall has experienced a decline in OHS procedures for the five-year period from December 31, 2003 through December 31, 20079; total OHS procedures for the period went from 28,671 to 23,903, a decline of 4,768 such procedures in 2007 compared to 2003. For the same period and again throughout the state, the number of CON approved and licensed OHS providers that experienced less than 300 OHS procedures went from 23 to 39, an increase of 16 more facilities with below the 300 minimum procedures in 2007 compared to 2003. This indicates that on a statewide bases, the number of facilities failing to meet the 300 minimum procedures is trending upward and the total number of OHS procedures performed is trending downward. 6. Strong cardiology and community physician support has been documented for the development of the proposed program at FMH.

American College of Cardiology/American Heart Association Task Force on Practice Guidelines: ACC/AHA 2004 Guideline Update for Coronary Artery Bypass Graft Surgery. 9 Florida Need Projections for: Adult Open Heart Surgery Programs - January 1, 2003 through December 31, 2003 and January 1, 2007 through December 31, 2007.

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CON Action Number: 10029 & 10030

The applicant presents excerpts from letters by six physicians and one longstanding resident of the community that support this project. A full listing of all letters of support are found in the applicant (CON #10030, Attachment D ­ Physician and Community Letters of Support). Three of the six physicians stated in this section (David Hotehkiss, Mario Lopez and Odaiyappa Sambandam [all MDs]) not only support this applicant but also co-batch applicant Peace River Regional Medical Center (CON #10029). 7. Development of an open heart surgery program at FMH represents a superior alternative to the establishment of a new program at PRRMC. The applicant claims significantly higher cardiac related patient volumes than Peace River Regional Medical Center and that this places FMH as the logical choice for an OHS to replace CRMC's program10. FMH reports EMS cardiac transports at 22 percent higher than PRRMC in 2007, a 40 percent higher volume of MDC 5 cases than PRRMC and a 52 percent higher patient discharge rate of patients with a primary diagnosis of ischemic heart disease than did PRRMC, for the same period. The applicant also provides an Agency Emergency Order (CON #10030, Attachment E ­ Emergency Order from AHCA) in which it explains that due to hurricanes in 2004, FMH was granted emergency authorization by the Agency to provide temporary OHS and PCI services. There is also note of favorable community response to FMH's extraordinary efforts during this time of natural disaster (CON #10030, Attachment F ­ Sun Herald Letter to the Editor). In response to this contention, the applicant does not provide sources or references for the data stated. Further, the applicant contends that it is generally accepted that the volume of an applicant's cardiac catheterization program is an indication of likely success of an applicant's OHS program. The following graph indicates both applicants' inpatient cardiac catheterization utilization for the last five years (ending December 2007):

It is previously stated in this report that co-batched applicant CON Application #10029 intends to replace OHS service at CRMC through relocating them at PRRMC and if its proposal is ultimately denied, CRMC intends to maintain its OHS services; therefore, there is no intention to reduce the available OHS providers in District 8 from seven to six.

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CON Action Number: 10029 & 10030

Adult Inpatient Cardiac Catheterization Utilization

Adult Inpatient Cardiac Catheterizations Performed 3000 2500 Peace River RMC 2000 1500 1000 500 0 2003 2004 2005 Years

Source: AHCA's Florida Need Projections for Adult Open Heart Surgery Programs for the indicated Calendar Years.

Charlotte RMC Fawcett Memorial Hospital

2006

2007

For the period, of the three listed facilities, the lion's share of procedures have been performed at CRMC, followed by FMH and last, PRRMC. A transfer of adult OHS services from CRMC to PRRMC would likely increase the volume of catheterizations performed at PRMC to a level that would exceed FMH. Other Factors that the applicant contends support the project are: 1. A stabilization of the volume for OHS in District 8. In response to this factor, it has been previously stated that overall, OHS services have trended downward in the district over the past five years. No new trend data was presented to indicate this is likely to appreciably change for the district as a whole. Clinical evidence suggests that there may be a possible under use of coronary revascularization and that coronary artery bypass graph (CABG) continues to be associated with lower mortality rates. FMH presents journal articles to support this claim (CON# 10030, Attachment G - Articles from The New England Journal of Medicine). In summary, these articles conclude the following: substantial under use of coronary revaularization among patients who were considered appropriate candidates for those procedures and this under use was associated with adverse clinical outcomes and also for patients with multivessel disease, coronary artery bypass graph continues to be

2.

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CON Action Number: 10029 & 10030 associated with lower mortality rates than does treatment with drugeluting stents and is also associated with lower rates of death or myocardial infarction and repeat revascularization. However, conclusions reached in the journal excerpts would not be rectified by adding an additional OHS provider when the Agency has determined zero (0) need and two facilities in the district have failed to meet the minimum 300 adult open heart surgery operations for the most recently reported 12-month period (January 2007 ­ December 2007). 3. An affiliation agreement with a sister OHS provider ­ Brandon Hospital ­ to initiate high quality services and training at FMH. The applicant provides the affiliation agreement (CON #10030, Attachment H ­ FMH and Brandon Regional Hospital Letter of Agreement for Open Heart Training and Education). c. Need Provisions under Rule 59C-1.033 (7), Florida Administrative Code 1. An additional open heart surgery program shall not normally be approved in the district if any of the following conditions exist: (a) (b) There is an approved adult open heart surgery program in the district; One or more of the operational adult open heart surgery programs in the district that were operational for at least 12 months as of three months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than 300 adult open heart surgery operations during the 12 months ending three months prior to the beginning date of the quarter of the publication of the fixed need pool; or, One or more of the adult open heart surgery programs in the district that were operational for less than 12 months during the 12 months ending three months prior to the beginning date of the quarter of the publication of the fixed need pool performed less than an average of 25 adult open heart surgery operations per month. Currently there are six adult open heart surgery (OHS) programs in District 8; therefore, the condition from (a) above exists in District 8.

(c)

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CON Action Number: 10029 & 10030 Two of these existing programs, Charlotte Regional Medical Center and Southwest Florida Regional Medical Center, performed fewer than the minimum 300 adult open heart surgery operations per 12month period during the most recent calendar year (ending 2007); therefore, the condition from (b) above exists in District 8. There were no OHS programs in District 8 operational for less than 12 months during the 12 months ending three months prior to the beginning date of the quarter of the publication of the applicable fixed need pool. 2. In the event no numeric need for an additional adult Open Heart Surgery program is shown, the need for enhanced access to health care for the residents of a service district is demonstrated for an applicant in a county that meets the following criteria: (a) (b) None of the hospitals in the county has an existing or approved open heart surgery program; and Residents of the county are projected to generate at least 1200 annual hospital discharges with a principal diagnosis of ischemic heart disease, as defined by ICD-9-CM codes 410.0 through 414.9. The projected number of county residents who will be discharged with a principal diagnosis of ischemic heart disease will be determined as follows: PIHD = (CIHD/CoCPOP x CoPPOP) where: (1) PIHD = The projected 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over; CIHD = The most recent 12-month total of discharges with a principal diagnosis of ischemic heart disease for residents of the county age 15 and over, as available in the Agency's hospital discharge data base;

(2)

19

CON Action Number: 10029 & 10030

(3)

CoCPOP = The current estimated population age 15 and over for the county, included as a component of CPOP in subparagraph (7)(b)2; CoPPOP = The planning horizon estimated population age 15 and over for the county, included as a component of PPOP in subparagraph (7)(b)2. The above does not apply as there is an adult OHS program operational in Charlotte County.

(4)

3.

An additional adult open heart surgery program will not normally be approved for the district if the approval would reduce the 12-month total at an existing adult open heart surgery program in the district below 300 Open Heart Surgery operations. Two existing OHS programs in District 8 performed below 300 OHS operations annually for the most recently reported 12-month period (ending December 2007) - Charlotte Regional Medical Center and Southwest Florida Regional Medical Center. Therefore, this condition already exists without a net increase in OHS providers and sites in the district. As previously discussed, need is not shown under special/not-normal circumstances. Trend analysis reveals that the introduction of an additional OHS provider in the district (CON #10030, Fawcett Memorial Hospital) can only be met by a reduction of an already relatively low number of procedures at existing providers (overall), two of whom have recently experienced less than a minimal of 300 OHS operations in the district and OHS services trending downward over the five year period ending December 31, 2007. Alternatively, the relocation of an existing OHS provider (CON #10029, Port Charlotte, HMA) from CRMC to PRRMC would not have the impact of a net increase.

20

CON Action Number: 10029 & 10030

2. a.

Agency Rule Preferences Does the project respond to preferences stated in agency rules? See Chapter 59C-1.033 of the Florida Administrative Code. In addition to meeting the applicable review criteria in Section 408.035, Florida Statutes, all applicants are expected to meet the standards and need determination criteria for the establishment of an adult open heart surgery program as specifically set forth in Chapter 59C-1.033, Florida Administrative Code. Each co-batched applicant's consistency with these criteria is described below: 1. Service Availability Chapter 59C-1.033(3), Florida Administrative Code Applicants for adult open heart surgery programs must have the capability to provide a full-range of open heart surgery operations, including, at a minimum: 1. Repair or replacement of heart valves; 2. Repair of congenital heart defects; 3. Cardiac revascularization 4. Repair or reconstruction of intrathoracic vessels; and 5. Treatment of cardiac trauma. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states it will provide a full range of services, including the minimum indicated in rule. The applicant stresses that all resources, equipment, infrastructure, physicians, other manpower and policies are already in place at CRMC and will be transitioned to PRRMC, provided the CON is approved and PRRMC is licensed to provide this service. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states it will have the capacity of providing all of the required services, stated in rule, through a highly skilled and appropriately trained staff. The applicant further states having entered into a program affiliation and professional services agreement with Brandon Regional Hospital, a sister facility that is an existing OHS provider. These agreements are found in the application (CON #10030, Attachment H).

a.

21

CON Action Number: 10029 & 10030

b.

Each adult open heart surgery program must document its ability to implement and apply circulatory assist devices such as intra-aortic balloon assist and prolonged cardiopulmonary partial bypass. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states it will provide a full range of services, including the minimum indicated in rule. The applicant stresses that all resources, equipment, infrastructure, physicians, other manpower and policies are already in place at CRMC and will be transitioned to PRRMC, provided the CON is approved and PRRMC is licensed to provide this service. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states that intra-aortic balloon pump insertion is currently performed at FMH. Cardiopulmonary partial bypass is proposed to be provided.

c.

A health care facility with an adult open heart surgery program shall provide the following services: 1. 2. 3. 4. 5. 6. 7. Cardiology, hematology, nephrology, pulmonary medicine, and treatment of infectious diseases; Pathology, including anatomical, clinical, blood bank, and coagulation laboratory services; Anesthesiology, including respiratory therapy; Radiology, including diagnostic nuclear medicine; Neurology; Inpatient cardiac catheterization; Non-invasive cardiographics, including electrocardiography, exercise stress testing, and echocardiography; Intensive care; and Emergency care available 24 hours per day for cardiac emergencies.

8. 9.

Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center, (CON #10029): The applicant states it will provide a full range of services, including the minimum indicated in rule. The applicant stresses that all resources, equipment, infrastructure, physicians, other manpower and policies are already in place at CRMC and will be transitioned to PRRMC, provided the CON is approved and PRRMC is licensed to provide this service.

22

CON Action Number: 10029 & 10030 Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states it is accredited by the Joint Commission and recognized as a primary stroke care provider. The applicant states it already provides all the services noted in rule. 2. Service Accessibility Chapter 59C-1.033(4), Florida Administrative Code Adult open heart surgery shall be available within a maximum automobile travel time of two hours under average travel conditions for at least 90 percent of the district's population. This criterion is met. Adult open heart surgery is available within automobile travel time of two hours under average travel conditions for at least 90 percent of District 8's population. b. Hours of Operation Adult open heart surgery programs shall be available for elective open heart operations eight hours per day, five days a week. Each open heart surgery program shall possess the capability for rapid mobilization of the surgical and medical support teams for emergency cases 24 hours per day, seven days a week. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states the existing program (at CRMC) is already in conformance with this criteria and if the program is transferred to sister facility PRRMC, the applicant will continue to adhere to the criteria. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states that the OHS program would provide scheduled services eight hours a day, five days a week. Surgical and medical support would be on-call and available to provide emergency cardiac surgery and angioplasty at FMH 24 hours per day, seven days a week.

a.

23

CON Action Number: 10029 & 10030 c. Open Heart Surgery Team Mobilization Adult open heart surgery shall be available for emergency openheart surgery operations within a maximum waiting period of two hours. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states the existing program at CRMC is already in conformance with this criteria and if the program is transferred to sister facility PRRMC, the applicant will continue to adhere to the criteria. No additional detail is provided. Fawcett Memorial Hospital, Inc. (CON #10030): An on-call surgical team is stated to be available at FMH for rapid mobilization within a maximum waiting time of two hours to ensure emergency cases may be treated in a timely manner. No additional detail is provided. d. Underserved Population Groups Adult open heart surgery shall be available to all persons in need. A patient's eligibility for open heart surgery shall be independent of his or her ability to pay. Adult open heart surgery shall be available in each district to Medicare, Medicaid and indigent patients. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states the existing program at CRMC is already in conformance with this criteria and if the program is transferred, the applicant will continue to adhere to the criteria. Port Charlotte HMA also states it serves a relatively high percentage of DeSoto County residents, a relatively underserved, underinsured and low income county. DeSoto County is classified by the U.S. Department of Health and Human Services, Health Resources and Services Administration's Bureau of Health Professions (DHHS/HRSA/BHP) as a Medically Underserved Area (MUA)/ Medically Underserved Population (MUP)11, based on a low income/migrant farmer worker criteria, in addition to being a designated Health Professional Shortage Area (HPSA)12 for primary care, also based on low income/migrant farm worker criteria.

11http://muafind.hrsa.gov/index.aspx 12http://hpsafind.hrsa.gov/HPSASearch.aspx

24

CON Action Number: 10029 & 10030 The applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award. However, Charlotte Regional Medical Center's program is conditioned to providing a minimum of 2.59 percent of its total annual open heart procedures to Medicaid patients and a minimum of 1.2 percent to indigents. Schedule 7A indicates that 3.58 percent of the project's year two patient days will be provided to Medicaid and Medicaid HMO patients. While charity care is not stated, self-pay is shown as 2.7 percent of year two patient days with an average per patient day loss of $5,157. Therefore, the applicant's projections indicate that it should continue to provide about the same level of Medicaid and charity care at Peace River. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states it has a history of service to the Medicare and Medicaid populations and the medically indigent. Notes to the applicant's Schedule 7A , indicate that charity care will account for 0.56 percent and Medicaid/Medicaid HMO 1.12 percent of the program's total OHS procedures excluding angioplasty and stents in year two. Medicaid is projected to be 1.25 percent and charity 0.67 percent of year two total including angioplasty, stents and OHS (DRGs) procedures. However, the applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award. 3. Service Quality Chapter 59C-1.033(5), Florida Administrative Code Availability of Health Personnel Any applicant proposing to establish an adult open heart surgery program must document that adequate numbers of properly trained personnel will be available to perform in the following capacities during open heart surgery: 1. A cardiovascular surgeon, board-certified by the American Board of Thoracic Surgery, or board-eligible; 2. A physician to assist the operating surgeon; 3. A board-certified or board-eligible anesthesiologist trained in open heart surgery; 4. A registered nurse or certified operating room technician trained to serve in open heart surgery operations and perform circulating duties; and

a.

25

CON Action Number: 10029 & 10030 5. A perfusionist to perform extracorporeal perfusion, or a physician or a specially trained nurse, technician or physician assistant under the supervision of the operating surgeon to operate the heart-lung machine.

Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states the existing program (at CRMC) is already in conformance with this criteria and if the program is transferred to sister facility PRRMC, the applicant will continue to adhere to the criteria. The applicant indicates CRMC employs two of the three cardiovascular surgeons in the Charlotte County area and that the third has agreed to transfer 100 percent of his applicable CRMC patients to PRRMC. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states that it will meet or exceed all staffing provisions. Dr. Brian Hummel, a physician board-certified by the American Board of Thoracic Surgery (currently who practices at Lee Memorial Health System) will serve as medical director of the proposed FMH program. The applicant identifies this physician's support in the application by referencing CON #10030, Attachment B. However, the reference is inaccurate. Attachment B is a letter of transfer denial from the CEO of CRMC, Dan Bunker. Dr. Hummel's letter of support is found in Attachment D ­ Physician and Community Letters of Support. FMH also indicates that anesthesiologists, physician assistants and perfusionist services will be available (CON #10030, Attachment L ­ Perfusionist Letter of Interest). b. Follow-up Care Following an open heart surgery operation, patients shall be cared for in an intensive care unit that provides 24-hour nursing coverage with at least one registered nurse for every two patients during the first hours of post-operative care for adult cases. There shall be at least two cardiac surgeons on the staff of a hospital with an adult open heart surgery program, at least one of whom is board-certified and the other at least boardeligible. One of these surgeons must be on call at all times. A clinical cardiologist must be available for consultation to the surgical team and responsible for the medical management of patients as well as the selection of suitable candidates for surgery along with the cardiovascular surgical team. Back-up personnel in cardiology, anesthesiology, pathology, thoracic surgery and radiology shall be on call in case of an emergency.

26

CON Action Number: 10029 & 10030 Twenty-four hour per day coverage must be arranged for the operation of the cardiopulmonary bypass pump. All members of the team caring for cardiovascular surgical patients must be proficient in cardiopulmonary resuscitation (CPR). Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states that the project will be in conformance with the requirements. The project includes the establishment of a 12-bed CVICU. Applicable patients will be reportedly located at the CVICU where they will remain for up to 48 hours, depending on physician's orders and treatment plan. The CVICU will reportedly meet or exceed minimum standards of one registered nurse (RN) for every two patients. After CVICU, the patient will be admitted to a telemetry bed to be monitored. The applicant assures at least two cardiovascular surgeons for the program (at least one being board-certified and the other board-eligible). There will be back-up surgeons and assistants during the time the primary team is occupied. The back-up team will include nursing and technical personnel in cardiology, anesthesiology, pathology, thoracic surgery and radiology and will be on-call for emergencies. This applicant, unlike co-batched applicant FMH, assures that a standby heart-lung machine will be provided to cover surgical emergencies or a primary pump failure. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states it will comply with all of the provisions for follow-up care. Immediately following open heart surgery, patients will be admitted to the six-bed CVICU, with at least one registered nurse (RN) for every two patients during the first hours of post-operative care (exact hours not stated). After the ICU stay, patients will be transferred to the PCU, where staff will be in excess of minimum requirements. The applicant does not affirmatively identify the hours of direct nursing care per patient day. The applicant states that at least two cardiovascular surgeons will be on staff at FMH, at least one of whom will be board-certified. Unlike co-batched applicant Port Charlotte HMA, this applicant does not assure that a standby heart-lung machine will be provided to cover surgical emergencies or a primary pump failure.

27

CON Action Number: 10029 & 10030

4.

Patient Charges Chapter 59C-1.033(6), Florida Administrative Code Charges for open heart surgery operations in a hospital shall be comparable with the charges established by similar institutions in the service area, when patient mix, reimbursement methods, cost-accounting methods, labor market differences and other extenuating factors are taken into account. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant states that charges would be similar if not identical to those already established at CRMC, based on patient mix and intensity of resources required by the patients. Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states FMH charges will be appropriate to patient needs and resources consumed and will be comparable to charges for service area patients at existing OHS providers in the area are being charged.

3. a.

Statutory Review Criteria Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant's service area? ss. 408.035 (1), (2) and (5) Florida Statutes As discussed in the section E.1., there are currently six OHS programs in the district, two of which are performing below minimum quantity levels established in 59C-1.033, Florida Administrative Code. As noted previously, ACC/AHA 2004 practice guidelines for the industry indicate associations between complications and low volume programs. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) proposes to relocate the existing OHS service at CRMC (Punta Gorda, Florida) to sister facility PRRMC (Port Charlotte, Florida). Upon approval, the applicant proposes to terminate OHS services at CRMC, at least in part due to the aging of the facility and the need to absorb existing space into other existing hospital programs at CRMC. This maintains the same number of OHS service providers and the same number of OHS sites districtwide. The relocation is approximately six miles to the Northwest of the existing OHS site at CRMC. The applicant states it will improve geographic access to the Port Charlotte, North Port (extreme Southeast Sarasota County) and Arcadia (DeSoto County). The Agency

28

CON Action Number: 10029 & 10030 recognizes DeSoto County as a relatively underserved, underinsured and low income county, as evidenced by the fact the entirety of DeSoto County is classified by the U.S. Department of Health and Human Services, Health Resources and Services Administration's Bureau of Health Professions (DHHS/HRSA/BHP) as a Medically Underserved Area (MUA)/Medically Underserved Population (MUP)13, based on a low income/migrant farmer worker criteria, in addition to being a designated Health Professional Shortage Area (HPSA)14 for primary care, also based on low income/migrant farm worker criteria. PRRMC is reported as a newer facility, more capable of better accommodating an OHS program than CRMC. This would also free some space at CRMC for other programs. The applicant reports, for the 12 months ending September 30, 2007, 473 OHS's in District 8, with 202 performed at CRMC. It also reports 1,215 PCIs at CRMC for the same period. If approved, these services, along with inpatient and outpatient diagnostic caths, would be transferred to PRRMC, without adding an additional provider or site to district that the Agency has already determined to be at zero (0) need for adult OHS services. The applicant projects the following procedures for its proposed program:

Peace River Regional Medical Center Forecast Summary as Projected by the Applicant

Open Heart Surgery Cases PTCA Cases Total Year One 2011 298 1,281 1,579 Year Two 2012 325 1,332 1,657 Year Three 2013 353 1,378 1,731

Source: CON application #10029, page 29. Note: Projections based on DRGs 104 -108 and 547-550 for open heart surgery and DRGs 518 and 555 ­ 558 for PTCA volumes for each year.

Charlotte Regional reported 243 open heart surgery procedures in 2007, 222 in 2006, 192 in CY 2005, 164 in CY 2004 and 244 in CY 2003. While the facility has been trending upward since 2004's low of 164 procedures, volume is not the issue with this CON as the project involves the transfer of an existing program. Trend data indicates that on a districtwide basis, volume in adult OHS services has declined over the five-year period ending December 31, 2007. All other things being equal, a relocation from an existing OHS provider site to another site within approximately a six mile distance in the same county and district would not contribute to greater reduced volume. The proposal does not further jeopardize the two existing facilities that have recently experienced less than 300 OHS procedures, as of December 31, 2007.

13http://muafind.hrsa.gov/index.aspx 14http://hpsafind.hrsa.gov/HPSASearch.aspx

29

CON Action Number: 10029 & 10030 Need for the proposed program is justified based on improved space availability and newer physical plant, a more centrally located facility with a higher population concentration in Port Charlotte (Charlotte County), possibly greater geographic access for North Port (extreme Southeast Sarasota County), residents of Arcadia (DeSoto County), already licensed and operational OHS services at CRMC that will transfer to the new location and improved access for lower income, underserved and underinsured DeSoto County residents. Fawcett Memorial Hospital, Inc. (CON #10030): FMH states there have been several precedents in which the Agency has approved applications for new OHS programs under "not normal", "no need" circumstances, when it could determine that the proposed program would not have a fatal impact upon low-volume or any other existing programs (CON #10030, page #40). However, FMH presents no specific CONs to support its claim. The applicant projects the following procedures for its proposed program:

Fawcett Memorial Hospital Forecast Summary as Projected by the Applicant

Open Heart Surgery Cases PTCA Cases Total Year One 2011 140 366 506 Year Two 2012 178 460 638 Year Three 2013 221 569 790

Source: CON application #10030, notes to Schedule 7A. Note: Projections based on DRGs 104, 105, 106, 108, 547, 548, 549 & 550 for open heart and DRGs 518, 555 ­ 558 for PTCA volumes for the period ending June 30 of each year.

As seen above, volume projections provided by the applicant indicate the proposed program would largely function to provide PCI (including angioplasty). The applicant received approval on September 7, 2006 to provide PCI for patients presenting with emergency myocardial infarctions in a hospital without an approved open heart surgery program. Since the applicant already performs emergency PCI without onsite cardiac surgery, the above PCI projections must then be for both emergency and nonemergency PCI in conjunction with the proposed OHS program. The ACC/AHA/SCAI15 practice guidelines indicate that the "development of small cardiovascular surgical programs to support angioplasty is a poor use of resources that will likely lead to suboptimal results," and that "the proliferation of small angioplasty or small surgical programs to support such angioplasty programs is not needed to improve patient access to PCI services and would appear not to be in the interest of fostering optimal quality; thus, it should be discouraged."

15

American College of Cardiology, the American Heart Association, Inc. and the Society for Cardiovascular Angiography and Interventions. Guidelines quoted are 2005 Guideline Update for Percutaneous Coronary Intervention.

30

CON Action Number: 10029 & 10030

As previously discussed, need is not shown under special/not-normal circumstances. Trend analysis reveals that the applicant's projections can only be met by a reduction in the number of procedures at existing providers, two of whom (CRMC over the last five years and SW Florida Regional over the last three years) that are consistently performing under 300 open heart surgery procedures annually. Further, the applicant fails to note that the nearest OHS program in Charlotte County (Charlotte Regional Medical Center, HMA) is one of the two OHS programs in the district currently experiencing a lower than 300 OHS count for the most recent 12-month period for which data is available (ending December 31, 2007). The co-batched applicant states HMA's intention of maintaining an OHS presence, either through relocation to PRRMC or maintaining the program at CRMC. Therefore additional supply in an already relatively low demand (and trending down) district would be created by approval of this project. The applicant rests part of its need argument based on availability, quality of care, accessibility and extent of utilization of existing health care facilities on a presumption that cobatched applicant Charlotte HMA's CRMC will terminate its OHS program. However, the co-batched applicant has clearly stated intention of terminating the CRMC OHS program only if its application (CON #10029) is approved. The co-batched applicant has further stated the if ultimately denied, the CRMC OHS program will be continued. Therefore, FMH's claim that it will not contribute to an increased number of OHS providers in the area is flawed. The applicant presents seven "special" or "not-normal" circumstances to warrant need. However, two of the six operational adult OHS programs in the district are experiencing less than 300 OHS procedures (January to December 2007). If the applicant's projected number of procedures is reached, trend analysis indicates it will be through the decline of already declining procedures at existing District 8 hospitals with adult OHS programs. With declining volume, the impact of any new provider is expected to be negative. Trend data indicates that on a districtwide basis, volume in adult OHS services has declined over the five-year period ending December 31, 2007. All other things being equal, the addition of another provider and location in the same county and district would contribute to greater reduced volume that would be expected to significantly and negatively impact availability, quality, efficiency and extent of utilization. The proposal further jeopardizes the two existing facilities that have recently experienced less than 300 OHS procedures, as of December 31, 2007.

31

CON Action Number: 10029 & 10030 Need for the proposed program is not evidenced by availability, quality of care, accessibility or extent of utilization of existing providers in District 8. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? ss. 408.035 (3) Florida Statutes. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The applicant provides active Agency licensure and Joint Commission on Accreditation for Healthcare Organizations (JCAHO) certification for PRRMC [CON #10029, Tab 7]. There are also numerous HealthGrades awards at both CRMC and PRRMC (CON #10029, Tab 4). The applicant reports these HealthGrade awards as: For PRRMC (1) (2) Distinguished Hospital Award ­ Clinical Excellence (2005 -2007) Gastrointestinal Care Excellence Award (2005-2007) and

For CRMC (3) (4) (5) Distinguished Hospital Award ­ Clinical Excellence (2005 -2008) Cardiac Care Excellence Award (2006-2008) Cardiac Surgery Excellence Award (2007-2008)

A copy of the awards is not provided in the application for Agency review. In Tab 6, the applicant provides PRRMC's Infection Control Program, in Tab 8 its Organizational Ethics Statement, in Tab 9 the Organizational Plan for the Provision of Patient Care and in Tab 10, the 2008 Performance Improvement Plan. PRMC reports a "plan-do-check-act" model regarding performance improvement. In addition to the awards it notes, the applicant highlights several factors in its quality efforts, these include: patient safety; philosophy of patient care services; leadership responsibilities; team process and cardiac cath lab protocol.

32

CON Action Number: 10029 & 10030 For the three-year period ending June 11, 2008, Agency records indicate three confirmed complaints and five confirmed without deficiency. The verified complaint history is charted below.

Hospital Confirmed and Confirmed Without Deficiency Compliant Totals Peace River Regional Medical Center June 11, 2005 through June 11, 2008

Peace River Regional Medical Center Complaint Category Dietary Infection Control Lack of Assessment Medical Records/ Charting Patient Abuse/Neglect Patient Care Physical Plant

AHCA Complaint Review Records

Peace River Regional Medical Center Confirmed W/O Deficiency Total = 5 1 1 1 1 1 0 0

Confirmed Total = 3 0 0 0 0 0 2 1

Fawcett Memorial Hospital, Inc. (CON #10030): The applicant questions the quality of care of co-batched applicant Port Charlotte HMA's CRMC OHS program. This is in part due to a relatively low OHS retention rate at CRMC compared to other OHS program providers in the district. Also, FMH notes negative publicity surrounding an alleged former cardiac surgeon at CRMC (CON #10030, Attachment I ­ Article from The Charlotte Sun Regarding Physician Drug Arrest). A review of the article in the attachment does not identify the noted physician, Dr. Raymond Waters, as having a direct affiliation or employment relationship with CRMC and provides no other documentation to associate this physician with the cobatched applicant. The applicant presents current Agency licensure and Joint Commission certification (CON #10030, Attachment J ­ Hospital Licensure and Joint Commission Accreditation). It also identifies quality initiatives and quality improvement measures (CON #10030, Attachment K ­ HCA Quality Initiatives). Quality initiatives are identified as follows: electronic medical records administration (eMar); deep vein thrombosis awareness and MRSA prevention and education initiatives. FMH reports the following awards:

33

CON Action Number: 10029 & 10030

(1) (2) (3) (4) (5) (6)

Distinguished Hospital Award ­ Clinical Excellence (2006, 2007 and 2008) Gastrointestinal Care Excellence Award (2006 and 2008) Gastrointestinal Surgery Excellence Award (2008) General Surgery Excellence Award (2006) Pulmonary Care Excellence Award ((2008), and St. Stroke Care Excellence Award (2006).

The applicant reports six awards were issued by HealthGrades. However, a copy of the awards is not provided in the application for Agency review. FMH also reports three awards issued to HCA; however, again, similar to the six it reports for its own operations, the applicant does not provide a copy of the awards for Agency review. For the three-year period ending June 11, 2008, Agency records indicate no confirmed complaints and one complaint confirmed without deficiency (infection control). c. What resources, including health manpower, management personnel and funds for capital and operating expenditures are available for project accomplishment and operation? ss. 408.035 (4) Florida Statutes Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The financial impact of the project will include the project cost of $16,106,106 and year two incremental operating costs of $28,703,176. The audited financial statements of the applicant for the period ending December 31, 2006 and 2007 were analyzed for the purpose of evaluating the applicant's ability to provide the capital and operational funding necessary to implement the project. In addition, Schedule 3 of the application indicates that Health Management Associates, Inc. (HMA, or Parent) will provide funding for this project. The applicant is an indirect wholly owned subsidiary of HMA, Inc. Therefore, the audited financial statements of the parent for the period ending December 31, 2006 and 2007 were also analyzed for the purpose of evaluating the parent's ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: Applicant: The applicant's current ratio of 3.2 is well above average and indicates current assets are just over three times current liabilities, a strong position. The ratio of cash flows to current liabilities of 1.3 is well 34

CON Action Number: 10029 & 10030 above average, a strong position. The working capital (current assets less current liabilities) of $12.4 million is a measure of excess liquidity that could be used to fund capital projects. Overall, the applicant has a strong short-term position. (See Table below). Parent: The parent's current ratio of 1.8 is below average and indicates current assets are slightly less than two times current liabilities, an adequate position. The ratio of cash flows to current liabilities of 0.5 is also below average and a moderately weak position. The working capital (current assets less current liabilities) of $468.5 million is a measure of excess liquidity that could be used to fund capital projects. Overall, the parent has an adequate short-term position. (See Table below). Long-Term Position: Applicant: The ratio of long-term debt to net assets of 0.1 indicates that the applicant has relatively little long-term debt compared to equity. This is well below average and indicates the applicant has sufficient equity to acquire further debt financing if necessary ­ a good position. The ratio of cash flow to assets of 7.0 percent is below average and an adequate position. The most recent year had an operating loss of $34,727. Overall, the applicant has a slightly weak, but adequate long-term position. (See Table below). Parent: The long-term debt to equity ratio of 48.9 indicates that the parent has negative equity, a weak position. This indicates that the parent is highly leveraged and may have difficulty obtaining further debt financing. In addition, the parent's total long-term debt increased by approximately 2.4 billion from the prior year due to a recapitalization plan. The cash flow to assets ratio of 6.9 percent is slightly below average and an adequate position. The most recent year had excess revenues over expenses of $117.9 million, which resulted in a margin of 2.7 percent. Overall, the parent has a moderately weak long-term operating position. (See Table below).

35

CON Action Number: 10029 & 10030 Capital Requirements: Schedule 2 indicates the applicant has a total of $25,106,106 million in capital projects applied for, pending approval, or planned, which includes the subject project. Available Capital: The applicant indicates that funding for this project will be provided by Health Management Associates (HMA). The audited financial statements of the parent for the most recent year show a cash and current investment balance of $123.9 million and $468.5 million in working capital with a current ratio of 1.8. The audit also indicated that operating cash flow was $322.5 million with revenues in excess of expenses of $4.4 billion with a margin of 2.7 percent. It appears that HMA has current funds available to cover the proposed project. Staffing: In Schedule 6A (and notes to Schedule 6A), the applicant proposes incremental FTEs to support this project as follows (for year one ending December 2011): 15.2 FTEs (administration); 33.7 FTEs, registered nurses (RNs); 6.7 licensed practical nurses (LPNs); 10.3 FTEs nurses aides and 10.6 FTEs as "other" in the nursing category; 19.9 FTEs (ancillary); 4.8 FTEs (dietary); 3.9 FTEs (housekeeping) and 1.8 FTEs (plant maintenance). The total incremental FTE count is 106.9 not the applicant's stated FTE count of 107.2. The incremental FTEs to support this project for year two (ending December 2012) are as follows: 16.4 FTEs (administration); 35.5 FTEs, registered nurses (RNs); 7.1 licensed practical nurses (LPNs); 10.9 FTEs nurses aides and 11.2 FTEs as "other" in the nursing category; 21.1 FTEs (ancillary); 5.0 FTEs (dietary); 4.1 FTEs (housekeeping) and 2.1 FTEs (plant maintenance). The total incremental FTE count is 113.4, as stated by the applicant. There is an increase in each category from year one to year two. In the notes to this schedule, the applicant states it bases its FTE estimates on its experience at the CRMC OHS program and anticipated program volume for the two projected years. Perfusion services are not addressed in this schedule, unlike co-batched applicant FMH which states perfusion is provided under contract. Conclusion: With the support of its parent company, the applicant appears to have the financial resources necessary to fund this project and all capital projects.

36

CON Action Number: 10029 & 10030

CON #10029 -- December 31, 2007 Audited Financial Statements Applicant Current Assets Cash and Current Investment Assets Limited as to Use Total Assets Current Liabilities Total Liabilities Net Assets Total Revenues Interest Expense Excess of Revenues Over Expenses Cash Flow from Operations Working Capital $18,119,616 $108,093 $0 $110,300,554 $5,750,759 $13,656,690 $96,643,864 $102,726,856 $681,173 ($34,727) $7,755,298 $12,368,857 Parent $1,066,107,000 $123,987,000 $0 $4,643,919,000 $597,646,000 $4,562,891,000 $81,028,000 $4,392,086,000 $221,960,000 $117,909,000 $322,455,000 $468,461,000

FINANCIAL RATIOS Applicant Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (NPO+Int/Int) Net Assets to Total Assets (TE/TA) Operating Margin (ER/TR) Return on Assets (ER/TA) Operating Cash Flow to Assets (CFO/TA) 3.2 1.3 0.1 1.0 87.6% 0.0% 0.0% 7.0% Parent 1.8 0.5 48.9 1.5 1.7% 2.7% 2.5% 6.9%

Fawcett Memorial Hospital, Inc. (CON #10030): The financial impact of the project will include the project cost of $7,181,940 and year two incremental operating costs of $13,139,919. The audited financial statements of the applicant for the period ending December 31, 2006 and 2007 were analyzed for the purpose of evaluating the applicant's ability to provide the capital and operational funding necessary to implement the project. In addition, the applicant indicated on Schedule 3 of the application that its parent corporation, HCA, Inc. (Parent), will provide funding for this project. The applicant provided the Parent company's unaudited Securities and Exchange Commission (SEC) form 10-Q for the first quarter, 2008, which includes only unaudited, quarterly results. We obtained a copy of HCA, Inc.'s SEC form 10-K from the SEC's website for the period ended 37

CON Action Number: 10029 & 10030 December 31, 2007, which included audited financial statements for 2007 and 2006 to conduct the analysis. We analyzed the audited financial statements of the parent for the period ending December 31, 2006 and 2007 to evaluate HCA, Inc.'s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: Applicant: The applicant's current ratio of 2.0 is average and indicates current assets are two times current liabilities, a good position. The ratio of cash flows to current liabilities of 0.8 is well above average, a strong position. The applicant's working capital (current assets less current liabilities) of approximately $9 million is a measure of excess liquidity that could be used to fund capital projects. Overall, the applicant has a good short-term position. (See Table below). Parent: The parent's current ratio of 1.6 is below average and indicates current assets are slightly less than two times current liabilities, an adequate position. The ratio of cash flows to current liabilities of 0.4 is also below average and a moderately weak position. The working capital (current assets less current liabilities) of $2.4 billion is a measure of excess liquidity that could be used to fund capital projects. Overall, the parent has an adequate short-term position. (See Table below). Long-Term Position: Applicant: The ratio of long-term debt to net assets of 0.02 indicates that the applicant has relatively little long-term debt compared to equity. This is well below average and indicates the applicant has sufficient equity to acquire further debt financing if necessary ­ a good position. The ratio of cash flow to assets of 8.0 percent is slightly below average and an adequate position. The most recent year had a net operating loss of $1.2 million. It should be noted that the applicant had non-operating gains in excess of operating losses resulting in income before taxes of $758,107. Overall, the applicant has an adequate long-term position. (See Table below). Parent: The long-term debt to equity ratio of negative 2.9 indicates that the parent has negative equity, a weak position. This indicates that the parent is highly leveraged and may have difficulty obtaining further debt financing. A large portion of this debt is directly tied to HCA, Inc.'s merger and recapitalization in which HCA is now privately held and no longer traded on a national securities exchange. The cash flow to assets ratio of 5.8 percent is below average and a slightly weak position. The most recent year had excess revenues over expenses of $1.4 billion, which resulted in a margin of 5.2 percent. Overall, the parent has a moderately weak long-term operating position. (See Table below).

38

CON Action Number: 10029 & 10030 Capital Requirements: Schedule 2 indicates the applicant has a total of approximately $25 million in capital projects applied for, pending approval, or planned, which includes the subject project. We also note that the architectural review has determined that the cost estimate for construction appears to be reasonable, as designed; however, it is likely that required modifications would have a significant impact on the construction costs. Available Capital: The applicant indicates that HCA, Inc. will provide funding for this project. The audited financial statements of the parent for the most recent year show a cash and current investment balance of $393 million and $2.4 billion in working capital with a current ratio of 1.6. The audit also indicated that operating cash flow was $1.4 billion with revenues in excess of expenses of $1.4 billion with a margin of 5.2 percent. This project represents 0.3 percent of HCA's working capital and 0.5 percent of operating cash flow. As a result, the project would likely have no material impact on HCA and any additional construction costs will likely not have a negative impact on HCA's ability to fund the project. Staffing: In Schedule 6A (and notes to Schedule 6A), the applicant proposes FTEs to support its proposed new product line (adult OHS program) as follows (for year one ending June 30, 2011): 11.0 FTEs (surgical services category); 10.5 FTEs (CVICU category); 12.08 FTEs (medical/surgical telemetry); 1.4 FTEs (cardiac rehab); 1.5 FTEs (other ancillary) and 4.0 FTEs (cardiac cath lab). Nurses (23.3 RN FTEs) are dispersed among all categories listed above except for cardiac rehab. The total FTE count for the first year is 40.48. FTEs to support the project for year two ending June 30, 2012 remain the same as for the first year with the exception of medical/surgical telemetry which increases to 12.84 FTEs. As in the case of year one, nurses (23.36 RN FTEs) are dispersed among all categories listed for year two except for cardiac rehab. The total FTE count for the second year is 41.24. In the notes to this schedule, the applicant states its estimates in consideration of admissions and patient days projected. Perfusion services are stated to be provided under contract, unlike co-batch applicant Port Charlotte HMA which does not address perfusion in this schedule or in the schedule notes. Conclusion: With the support of its parent company, the applicant appears to have the financial resources necessary to fund this project and all capital projects listed on Schedule 2.

39

CON Action Number: 10029 & 10030

CON #10030 -- December 31, 2007 Audited Financial Statements Applicant Current Assets Cash and Current Investment Due from Parent Total Assets Current Liabilities Total Liabilities Net Assets Total Revenues Interest Expense Excess of Revenues Over Expenses Cash Flow from Operations Working Capital $18,074,955 $7,193 $15,644,802 $89,114,775 $9,036,116 $10,972,142 $78,142,633 $119,224,190 $107,169 ($1,165,368) $7,114,178 $9,038,839 Parent $6,205,000,000 $393,000,000 $0 $24,025,000,000 $3,849,000,000 $34,563,000,000 ($10,538,000,000) $26,858,000,000 $2,215,000,000 $1,398,000,000 $1,396,000,000 $2,356,000,000

FINANCIAL RATIOS Applicant Current Ratio (CA/CL) Cash Flow to Current Liabilities (CFO/CL) Long-Term Debt to Net Assets (TL-CL/NA) Times Interest Earned (NPO+Int/Int) Net Assets to Total Assets (TE/TA) Operating Margin (ER/TR) Return on Assets (ER/TA) Operating Cash Flow to Assets (CFO/TA) 2.0 0.8 0.02 -9.9 87.7% -1.0% -1.3% 8.0% Parent 1.6 0.4 -2.9 1.6 -43.9% 5.2% 5.8% 5.8%

d.

What is the immediate and long-term financial feasibility of the proposal? ss. 408.035(6), Florida Statutes. A comparison of the applicant's estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions contained in Schedules 7 and 8), and efficiency, (the degree of economies achievable through the management skills of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to achieve the desired outcome. Conversely, as estimates approach the lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired outcome. These 40

CON Action Number: 10029 & 10030 relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may go either beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. Comparative data were derived from hospitals in peer groups that reported data in 2006; the applicant will be compared to the hospitals in Peer Group 3. The Agency also evaluated the projected cost of the open heart surgery program on a stand-alone basis. Comparative data for the open heart surgery program on a stand-alone basis were derived from hospitals with approved open heart surgery programs in 2006. Per Diem rates are projected to increase by an average of 3.3 percent per year. Inflation adjustments were based on the new CMS Market Basket, 1st Quarter, 2008. Gross revenues, net revenues, and costs were obtained from Schedules 7 and 8 in the financial portion of the application. These were compared to the control group as a calculated amount per adjusted patient day. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): Projected net revenue per adjusted patient day (NRAPD) of $1,752 in year one and $1,816 in year two is between the control group median and highest values of $1,618 and $2,606 in year one and $1662 and $2,676 in year two. With net revenues per adjusted patient day falling between the median and highest values, the facility is expected to consume health care resources in proportion to the services provided. (See Table below). The applicant's NRAPD in fiscal year 2006 was reported as $1,332. The difference in the NRAPD reported in 2006 and the year two projected NRAPD of $1,816 results in an average compound annual increase of approximately 5.2 percent. This level of increase is well above the inflation percentage outlined in the CMS Market Basket, 1st Quarter, 2008 index. This suggests that the applicant is assuming a significant increase in revenue generated by this project. Net revenues appear to be overstated. Projected cost per adjusted patient day (CAPD) of $1,598 in year one and $1,640 in year two fall between the control group median and lowest values of $1,645 and $1,340 in year one and $1,689 and $1,376 in year two. With anticipated cost between the median and lowest value, the year two costs are efficient compared to the control group. (See Table below).

41

CON Action Number: 10029 & 10030 The applicant's CAPD in calendar year 2006 was reported as $1,340. The difference in the CAPD reported in 2006 and the year two projected CAPD of $1,640 results in an average compound annual increase of approximately 3.5 percent. This level of increase is slightly above the inflation percentage outlined in the CMS Market Basket, 1st Quarter, 2008 index. Overall CAPD appear reasonable. The year-two projected incremental cost per patient day (CPD) for open heart patients is $4,237. The incremental CPD falls between the control group median and highest values of $3,550 and $5,294. The cost of the open heart program appears reasonable when compared to the control group. The projected year two operating profit for the hospital of $13.9 million computes to an operating margin per adjusted patient day of $177 that falls between the peer group median and highest values of $25 and $397. The projected profit is likely overstated considering the apparent overstatement of revenue discussed above and that the applicant reported a $7 loss per patient day in 2006. Conclusion: This project appears to be financially feasible.

42

CON Action Number: 10029 & 10030

Port Charlotte, HMA, Inc. CON #10029 2006 DATA Peer Group 3 ROUTINE SERVICES INPATIENT AMBULATORY INPATIENT SURGERY INPATIENT ANCILLARY SERVICES OUTPATIENT SERVICES TOTAL PATIENT SERVICES REV. OTHER OPERATING REVENUE TOTAL REVENUE DEDUCTIONS FROM REVENUE NET REVENUES EXPENSES ROUTINE ANCILLARY AMBULATORY TOTAL PATIENT CARE COST ADMIN. AND OVERHEAD PROPERTY TOTAL OVERHEAD EXPENSE OTHER OPERATING EXPENSE TOTAL EXPENSES OPERATING INCOME PATIENT DAYS ADJUSTED PATIENT DAYS TOTAL BED DAYS AVAILABLE ADJ. FACTOR TOTAL NUMBER OF BEDS PERCENT OCCUPANCY Dec-12 YEAR 2 ACTIVITY 68,582,171 336,347,457 0 0 225,688,934 630,618,562 357,412 630,975,974 YEAR 2 ACTIVITY PER DAY 870 4,268 0 0 2,864 8,003 5 8,007 VALUES ADJUSTED FOR INFLATION Highest 1,116 417 0 6,165 6,832 13,907 75 13,931

Median 598 146 0 2,968 2,734 6,821 11 6,828

Lowest 291 61 0 1,321 1,574 4,187 1 4,197

487,847,537 143,128,437

6,191 1,816

0 2,676

0 1,662

0 1,404

23,099,140 43,004,015 7,158,925 73,262,080 37,732,127 16,331,261 54,063,388 1,886,875 129,212,343 13,916,094 50,570 78,800 84,315 0.6418 231 59.98% PATIENT DAYS 2,487 4,144 155 27,763 4,157 9,494 1,487 883 50,570

293 546 91 930 479 207 686 24 1,640 177 9.7%

356 925 0 0 0 0 1,338 0 2,607 397

248 566 0 0 0 0 769 0 1,689 25

196 414 0 0 0 0 572 0 1,376 -244

VALUES NOT ADJUSTED FOR INFLATION Highest 100.0%

Median 60.8%

Lowest 31.8%

PAYER TYPE SELF PAY MEDICAID MEDICAID HMO MEDICARE MEDICARE HMO INSURANCE HMO/PPO OTHER TOTAL

% TOTAL 4.9% 8.2% 0.3% 54.9% 8.2% 18.8% 2.9% 1.7% 100%

20.9% 80.7%

6.9% 57.7%

1.3% 44.2%

36.7%

24.2%

8.4%

43

CON Action Number: 10029 & 10030

Fawcett Memorial Hospital, Inc. (CON #10030): The applicant did not separate analysis of hospital only, project only, and combined hospital plus project projections for Schedule 7 (detailed analysis of projected revenue). Schedule 7 projects only project components separately and combined projects. Combined project revenues (hospital plus project) are only listed in summary on Schedule 8, but are not separated as to inpatient and outpatient. Patient days by payer type are similarly projected, and are only listed as projected totals (hospital plus project) on Schedule 8. Because the applicant did not categorize projected revenues and patient days for either combined hospital or without project, the Agency is not able to calculate the Patient Day Adjustment Factor for projected 2011, 2012. Instead, the Agency used the applicant's 2006 factor of 0.6537 in calculating Per Adjusted Patient Day results discussed in the following analysis. Projected net revenue per adjusted patient day (NRAPD) of $1,577 in year one and $1,601 in year two is between the control group median and lowest values of $1,827 and $1,414 in year one and $1,876 and $1,452 in year two. With net revenue falling between the median and lowest value, the facility is expected to consume health care resources in proportion to costs. (See Table below). The applicant's NRAPD in fiscal year 2006 was reported as $1,531. The difference in the NRAPD reported in 2006 and the year two projected NRAPD of $1,601 results in an average compound annual increase of approximately 0.8 percent. This level of increase is well below the inflation percentage outlined in the CMS Market Basket, 1st Quarter, 2008 index. To determine if the cause of this apparent understatement of revenue was an effect of results of the proposed new project, staff recalculated the effective growth rate excluding projected revenues and patient days from the open heart project. This resulted in a projected NRAPD of $1,547 resulting in an annual increase of approximately 0.2 percent ­ a rate that is still well below the CMS Market Basket rate of 3.3 percent. This suggests that the applicant is understating revenue at the base level. Understating revenues is considered a conservative assumption and therefore reasonable. Projected cost per adjusted patient day (CAPD) of $1,532 in year one falls between the median and lowest control group values of $1,781 and $1,529, while year two's projection of $1,552 falls below the control group's lowest value of $1,571. With anticipated cost approaching the lowest group value in year one, and falling below the lowest value in year two, projected costs appear to be understated. (See Table below).

44

CON Action Number: 10029 & 10030 The applicant's CAPD in calendar year 2006 was reported as $1,486. The difference in the CAPD reported in 2006 and the year two projected CAPD of $1,552 results in an average compound annual increase of approximately 0.8 percent. This level of increase is well below the inflation percentage outlined in the CMS Market Basket, 1st Quarter, 2008 index of 3.3 percent. To determine if the cause of this apparent understatement of costs was an effect of the proposed new project, staff recalculated the effective growth rate excluding projected project-specific revenues and patient days from the project. This resulted in a projected CAPD of $1,509 resulting in an annual increase of approximately 0.3 percent ­ a rate that is still well below the CMS Market Basket rate of 3.3 percent. This suggests that the applicant is understating costs at the base level. Understating projected expenses is in opposition to the conservative approach of overstating expense. The year two projected incremental cost per patient day (CPD) for open heart patients is $3,979. The incremental CPD falls between the control group median and highest values of $3,471 and $5,177. The cost of the open heart program appears reasonable when compared to the control group. The projected year two operating profit for the hospital of approximately $4 million computes to an operating margin per adjusted patient day of $49 and falls between the peer group median and highest values of $10 and $436. The projected profit compares favorably to reported 2006 results of $46 per patient day in 2006. It should be noted that while the applicant understated both revenue and expense, the understatement was proportional. Conclusion: This project appears to be financially feasible.

45

CON Action Number: 10029 & 10030

Fawcett Memorial Hospital CON #10030 2006 DATA Peer Group 6 ROUTINE SERVICES INPATIENT AMBULATORY INPATIENT SURGERY INPATIENT ANCILLARY SERVICES OUTPATIENT SERVICES TOTAL PATIENT SERVICES REV. OTHER OPERATING REVENUE TOTAL REVENUE DEDUCTIONS FROM REVENUE NET REVENUES EXPENSES ROUTINE ANCILLARY AMBULATORY TOTAL PATIENT CARE COST ADMIN. AND OVERHEAD PROPERTY TOTAL OVERHEAD EXPENSE OTHER OPERATING EXPENSE TOTAL EXPENSES OPERATING INCOME PATIENT DAYS ADJUSTED PATIENT DAYS TOTAL BED DAYS AVAILABLE ADJ. FACTOR TOTAL NUMBER OF BEDS PERCENT OCCUPANCY PAYER TYPE SELF PAY MEDICAID MEDICAID HMO MEDICARE MEDICARE HMO INSURANCE HMO/PPO OTHER TOTAL Jun-12 YEAR 2 ACTIVITY 0 0 0 0 0 0 0 0 0 130,983,924 YEAR 2 ACTIVITY PER DAY 0 0 0 0 0 0 0 0 0 1,601 VALUES ADJUSTED FOR INFLATION Highest 1,571 319 0 7,180 3,623 11,819 133 11,825 0 2,636

Median 850 140 0 3,822 2,472 7,201 16 7,239 0 1,876

Lowest 535 41 0 2,120 1,531 4,242 0 4,269 0 1,452

2,498,799 62,721,311 12,759,558 77,979,668 42,972,242 5,995,788 48,968,030 0 126,947,698 4,036,226 53,483 81,816 86,870 0.6537 238 61.57% PATIENT DAYS 0 0 0 0 0 0 0 53,483 53,483

31 767 156 953 525 73 599 0 1,552 49 3.1%

399 989 0 0 0 0 1,198 0 2,495 436

296 650 0 0 0 0 762 0 1,829 10

184 464 0 0 0 0 557 0 1,571 -122

VALUES NOT ADJUSTED FOR INFLATION Highest 85.1% % TOTAL 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 100%

Median 59.5%

Lowest 30.2%

33.7% 77.1%

8.2% 55.3%

2.4% 13.8%

48.2%

27.6%

5.6%

46

CON Action Number: 10029 & 10030

e.

Will the proposed project foster competition to promote quality and cost-effectiveness? ss. 408.035(7), Florida Statutes. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): This project is a transfer of an existing open heart program from an existing related facility ­ Charlotte Regional Medical Center (CRMC) ­ located only approximately six miles from the applicant within the same county in District 8. Since HMA is already competing in the area via the related facility, this proposed project is not expected to materially add to the competition that already exists within the district. Conclusion: This project will not likely foster the type competition generally expected to promote quality and cost-effectiveness. Fawcett Memorial Hospital (CON# 10030): General economic theory indicates that competition ultimately leads to lower costs and better quality. However, in the health care industry there are several significant barriers to competition: Price-Based Competition is Limited - Medicare and Medicaid account for almost 60 percent of hospital charges in Florida, while HMO/PPOs account for approximately 30 percent of charges. While HMO/PPOs negotiate prices, fixed price government payers like Medicare and Medicaid do not. Therefore price-based competition is limited to non-government fixed price payers. Price-based competition is further restricted as Medicare reimbursement in many cases is seen as the starting point for price negotiation among non-government payers. In this case, the applicant is projecting 80.8 percent of its open heart program patient days are expected to come from fixed price government payers (Medicare and Medicaid). The User and Purchaser of Health Care are Often Different ­ Roughly 90 percent of hospital charges in Florida are from Medicare, Medicaid, and HMO/PPOs. The individuals covered by these payers pay little to none of the costs for the services received. Since the user is not paying the full cost directly for service, there is no incentive to shop around for the best deal. In addition, users are restricted only to the choices included in the insurance plan. This further makes price based competition irrelevant. Information Gap for Consumers ­ Price is not the only way to compete for patients, quality of care is another area in which hospitals can compete. However, there is a lack of information for consumers and a lack of consensus when it comes to quality measures. In recent years there have been new tools made available to consumers to close this gap. However, 47

CON Action Number: 10029 & 10030 transparency alone will not be sufficient to shrink the information gap. The consumer information must be presented in a manner that the consumer can easily interpret and understand. The beneficial effects of economic competition are the result of informed choices by consumers. In addition to the above barriers to competition, a recent study presented in The Dartmouth Atlas of Health Care 2008 suggests that the primary cost driver in Medicare payments is availability of medical resources. The study found that excess supply of medical resources (beds, doctors, equipment, specialist, etc.) was highly correlated with higher cost per patient. Despite the higher costs, the study also found slightly lower quality outcomes. This is contrary to the economic theory of supply and demand in which excess supply leads to lower price in a competitive market. The study illustrates the weakness in the link between supply and demand and suggests that more choices lead to higher utilization in the health care industry as consumers explore all alternatives without regard to the overall cost per treatment or the quality of outcomes. Conclusion: Due to the health care industry's existing barriers in consumer-based competition, this project will not likely foster the type competition generally expected to promote quality and cost-effectiveness. f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss. 408.035(8), Florida Statutes Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) proposes to establish a new open heart surgery program for adults at Peace River Regional Medical Center. The new program would replace an open heart surgery program currently being operated at Charlotte Regional Medical Center. The hospitals are six miles apart and both are owned by Health Management Associates, Inc. (HMA). According to the applicant, the change will benefit both facilities by allowing the older Charlotte Regional Medical Center to expand non-cardiac related service through interior renovation. The new program would be located in a new single story expansion adjacent to the existing surgical suite. The proposed expansion would allow most of the construction activities to take place beyond the buildings existing envelope. This is particularly important when construction occurs near areas as sensitive as surgical suites. The plan should minimize disruption to the existing surgical services and reduce the risk of construction related infections. The location of the new cardiac center also appears to accommodate future expansion as the program grows. 48

CON Action Number: 10029 & 10030

The expansion would add two electrophysiology (EP) labs, two cardiac catheterization (Cath) labs, two cardiac operating rooms (OR) and support spaces, a 12 bed cardiac intensive care unit (CICU) and support spaces. The new EP labs, Cath labs, and ORs are generously sized exceeding the minimum code requirements. The new cardiac care suite and CICU are well laid out and have all support space required by code. The project narrative indicated that the design and construction will meet all applicable codes. A complete listing of applicable codes and dates of the codes will be required for future submissions. The plans did not indicate a construction type for either the new or existing areas. This information will be required as the project is developed. Also the expansion will be required to meet the disaster preparedness standards of the Florida Building Code. The cost estimate for construction appears to be reasonable. The schedule for construction from the time of building permit to final inspection is reasonable. The design is well done and nicely integrates the new cardiac care unit with the existing surgical services. The close proximity of the CICU to the cardiac care suite and other surgical services should enhance patient safety by reducing travel distances. While some minor modifications may be required as the project is developed the designers are off to a very good start. The architectural review of the application shall not be construed as an indepth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner. Fawcett Memorial Hospital, Inc. (CON #10030) proposes to establish a new open heart surgery program for adults at Fawcett Memorial Hospital. Two new cardiovascular operating rooms (CVORs) would be located in the hospitals existing second floor operative suite and would share existing support spaces with other ORs. The operating room designated as the primary CVOR would adjoin a pump room as required. Due to the small scale of the schematic drawings it is not possible to accurately determine the size of the new CVORs. It appears that the primary CVOR is a little over the required size and the backup CVOR is a little under it. All cardiovascular operating rooms must be at least 600 square feet, unless being renovated as an existing CVOR. 49

CON Action Number: 10029 & 10030

The applicant also proposes to renovate a second floor wing currently used as offices to create a cardiovascular intensive care unit (CVICU). The application states that the open heart surgical patients would be transferred directly from the operating room to the CVICU. In order to receive patients directly from the CVORs, the CVICU must meet the same requirements as a post anesthesia care unit (PACU). While the proposed new CVICU appears to have all the functional spaces required for a CVICU and PACU, its distant proximity to surgical suite would preclude the unit from serving as a PACU. The AIA Guidelines for Design and Construction of Health Care Facilities requires the PACU to have direct access to the surgical suite. The schematic plans provide a partial list of applicable codes including National Fire Protection Association (NFPA) Life Safety Code and the Florida Building code. Given the timeline it is likely that the project would be reviewed under a more recent addition of many of the codes. A complete listing of applicable codes and dates of the codes will be required for future submissions. The schedule for construction from the time of building permit to final inspection is reasonable. The cost estimate for construction appears to be reasonable, as designed; however, as explained below, it is likely that required modifications would have a significant impact on the construction costs. The design provides all of the functional spaces required for the patients and staff. If the facility intends to use the new CVICU as both an intensive care and a post-anesthesia care unit, the unit must be relocated to provide direct access to surgical suite without crossing public corridors. It also appears that some additional space may be required in the backup CVOR. As stated previously, it is likely that required modifications would have a significant impact on the construction costs. The architectural review of the application shall not be construed as an indepth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner. g. Does the applicant have a history of providing health services to Medicaid patients and the medically indigent? Does the applicant propose to provide health services to Medicaid patients and the medically indigent? ss. 408.035(9), Florida Statutes

50

CON Action Number: 10029 & 10030 The following table provides an indication of the applicants' commitment to Medicaid and charity care, with comparison to the district, based on Fiscal Year (FY) 2006 Actual Data prepared by AHCA:

Medicaid and Charity Care of the Applicant Compared to the District for FY 2006

Medicaid & Medicaid HMO Days 4.2% 3.1% 9.7% 12.6% Gross Charity Percentage of Charges 2.4% 0.5% 2.1% 3.0% Combined Medicaid & Charity Care 6.7% 3.7% 11.8% 15.6%

Applicant Charlotte Regional Medical Center Fawcett Memorial Hospital Peace River Regional Medical Center District 8 Average

Source: Fiscal Year 2006 AHCA Actual Hospital Budget Data.

Both providers have a history of providing care to Medicaid and charity care patients. Peace River has the most prominent, with Fawcett Memorial having the most modest. Applicants fall below the district average for all three categories listed, with Peace River most closely approaching the district average. Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) states it provides a wide array of health care services regardless of ability to pay (and excluding other non-financial factors).

Peace River Regional Medical Center Percent of Net Revenues

Medicaid/Medicaid HMO Charity Total Medicaid & Charity

Source: CON Application #10029, page #63.

2006 9.1% 7.3% 16.4%

2007 7.9% 3.2% 11.1%

Schedule 7A indicates that 3.58 percent of the project's year two patient days will be provided to Medicaid & Medicaid HMO patients. While charity care is not stated, self-pay is shown as 2.7 percent of year two patient days with an average per patient day loss of $5,157. The applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award. CRMC is currently conditioned to providing a minimum of 2.59 percent of its total annual open heart procedures to Medicaid patients and 1.2 percent to indigents. According to Agency records, CRMC has not reported this condition for CY 2007. The existing program has a history of complying with the overall Medicaid and charity care conditions.

51

CON Action Number: 10029 & 10030 Fawcett Memorial Hospital, Inc. (CON #10030): The applicant states it will provide OHS services to all patients regardless of ability to pay. The applicant reports Medicare as its largest payer due to the what it reports as a high percentage of elderly in Charlotte County. For CY 2007, the applicant states a Medicaid percentage of 3.3, with no obstetric and pediatric services, traditionally high Medicaid draws. The applicant states this accounts for lower Medicaid revenues. The applicant states it contributed $40,000 to a new volunteer medical clinic in the area ­ St Vincent DePaul Community Health Clinic. This is expected to deflect some Medicaid expenses from the Charlotte County Health Department (CON #10030, Attachment O ­ Sun-Herald Article ­ St. Vincent DePaul Community Health Clinic). According to the article, the applicant, as well as co-batched applicant facilities CRMC and PRRMC have been enthusiastic backers of the volunteer medical clinic. Notes to the applicant's Schedule 7A, indicate that charity care will account for 0.67 percent and Medicaid will account for 1.25 percent of the program's OHS procedures including angioplasty and stents in year two. The applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award.

F.

SUMMARY Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029) proposes to establish an adult open heart surgery (OHS) program at Peace River Regional Medical Center (PRRMC), in Port Charlotte, Charlotte County, District 8 via transfer of the OHS program from Charlotte Regional Medical Center (CRMC). This is to include percutaneous coronary intervention (PCI). The applicant states that if the project is ultimately denied, CRMC will maintain adult OHS services. There are currently six operational adult OHS programs in District 8 and this proposal would not add to the number of existing OHS programs in the district. PRRMC is a licensed Class I Hospital with 212 acute care and seven level II NICU beds. The applicant proposes to condition award of the CON on location at the Peace River Regional Medical Center, 2500 Harbor Boulevard, Port Charlotte, Florida 33954 and also that CRMC will delicense its adult OHS program concurrent with licensure of the adult OHS program at PRRMC.

52

CON Action Number: 10029 & 10030 The applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award. However, the Charlotte Regional's program is conditioned to providing a minimum of 2.59 percent of its total annual open heart procedures for Medicaid patients and a minimum of 1.2 percent to indigents. The applicant's Schedule 7A indicates that its program should be able to comply with 3.79 percent of total procedures being provided to Medicaid and charity care patients. The proposed total project cost is $16,106,106, with 20,461 gross square feet (GSF) of new construction and 3,509 GSF of renovation (total project GSF of 23,970). In addition to new construction and renovation costs (building costs), other costs include: land; equipment; project development; financing and start-up. Fawcett Memorial Hospital, Inc. (CON #10030) proposes to establish an adult open heart surgery (OHS) program - at its facility, in Port Charlotte, Charlotte County, District 8. This would add a seventh OHS program in the district and a second OHS program in Charlotte County. Fawcett Memorial Hospital is a Class I Hospital with 238 beds licensed as follows: 218 beds are for acute care and 20 beds are for rehabilitation. The applicant proposes no conditions, pursuant to award. The proposed total project cost is $7,181,940 with 1,000 gross square feet (GSF) of new construction and 5,599 GSF of renovation (total project GSF of 6,599). In addition to new construction and renovation costs (building costs), other costs include: equipment; project development; financing and start-up. After weighing and balancing all applicable review criteria, the following relevant factors are listed with regard to the establishment of an adult Open Heart Surgery Program in District 8: Fixed Need Pool In Volume 34, Number 14, dated April 4, 2008 of the Florida Administrative Weekly, a need for zero (0) additional adult open heart surgery (OHS) programs was published for District 8 for the July 2010 planning horizon. Six adult OHS providers currently exist in this district and two of the six failed to meet the minimum 300 adult OHS operations for the most recently reported 12-month period (January 2007 ­ December 2007).

53

CON Action Number: 10029 & 10030 Need and "Special" or "Not Normal" Circumstances Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): · Need is presented in the context of relocating a current adult OHS service site (CRMC, Charlotte County) to another site (PRRMC, Charlotte County) with concurrent delicensure of OHS services at CRMC. This proposal does not add to the existing number of adult OHS service providers or sites in the district. The proposed primary service area (PSA) is unchanged from that of existing adult OHS site CRMC and relocates approximately six miles to the Northwest (from Punta Gorda to Port Charlotte, Charlotte County). Greater facility space is available at PRRMC, which is a newer facility, more centrally located in Charlotte County with a greater population (Port Charlotte as opposed to Punta Gorda). Two existing OHS programs in the district (one being CRMC) performed fewer than the minimum threshold (300 procedures) established in Rule 59C-1.033 of the Florida Administrative Code. It is not demonstrated that need for OHS services is growing beyond the capabilities of existing providers.

· ·

·

·

·

Fawcett Memorial Hospital, Inc. (CON #10030): · The applicant proposes seven "special" or "not normal" circumstances, which include the following: access barriers to the provision of OHS, including the need for emergent care; a higher percentage of OHS patients who out-migrate from Charlotte County; FMH will not affect any provider in District 8 currently operating below 300 OHS cases annually; an exceptionally high percentage of elderly population (Charlotte and Sarasota Counties); high use rates of OHS and PCI angioplasty within the applicant's defined service area; strong cardiology and community physician support and FMH OHS services being a superior alternative to the establishment of OHS services at co-batched applicant's PRRMC. This proposal adds one adult OHS service provider and site (from the current six to a proposed seven) in the district. The proposed primary service area (PSA) is Charlotte County and secondarily Sarasota County. Two existing OHS programs in the district (one being co-batched applicant's CRMC) performed fewer than the minimum threshold (300 procedures) established in Rule 59C-1.033 of the Florida Administrative Code. It is not demonstrated that need for OHS services is growing beyond the capabilities of existing providers.

· · ·

·

54

CON Action Number: 10029 & 10030 · The 300 operation benchmark established in Rule 59C-1.033, Florida Administrative Code, is reflective of industry practice guidelines (of the ACC/AHA) indicating that associations exist between complications and lower program volumes. Because OHS program volumes are waning in the district and statewide, the approval of an additional program would likely further reduce volumes for existing providers. Reductions in volume are associated with complications, thereby affecting quality of care.

Quality of Care Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): · · Demonstrates the ability to provide quality care. For the three-year period ending June 11, 2008, Agency records indicate three confirmed complaints and five confirmed complaints without deficiency against Peace River Regional Medical Center. For confirmed complaints, two were for patient care and one was for physical plant. For confirmed without deficiency complaints, there was one each for the following: dietary; infection control; lack of assessment; medical records/charting and patient abuse/neglect.

Fawcett Memorial Hospital, Inc. (CON #10030): · Demonstrates the ability to provide quality care. Because OHS program volumes are waning in the district (an 8.12 percent decline in OHS procedures for the five-year period ending December 31, 2007) and statewide (a 16.63 percent decline for the same period), the approval of an additional program would likely further reduce volumes for existing providers. Reductions in volume are associated with complications, which may result in adverse quality of care. For the three-year period ending June 11, 2008, Agency records indicate no confirmed complaints and one confirmed complaint without deficiency against Fawcett Memorial Hospital. The sole confirmed without deficiency compliant was for infection control.

·

Cost/Financial Analysis Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): · Overall, the applicant (PRRMC) has a strong short-term position and a slightly weak but adequate long-term position, while the parent (HMA) has an adequate short-term and moderately weak long-term position. 55

CON Action Number: 10029 & 10030 · · · In total, with support of the parent, the applicant appears to have the financial resources necessary to fund the project. If the applicant is able to meet its planned patient days and payer mix, the project appears to be financially feasible. The project will not likely foster competition to promote quality and costeffectiveness due to the fact HMA is already competing in the district.

Fawcett Memorial Hospital, Inc. (CON #10030): · Overall, the applicant has a good short-term position and an adequate long-term position, while the parent (HCA) has an adequate short-term and moderately weak long-term position. In total, with support of the parent, the applicant appears to have the financial resources necessary to fund the project. If the applicant is able to meet planned patient days and payer mix, the project appears to be financially feasible. Due to the health care industry's existing barriers in consumer based competition, this project will not likely foster the type of competition generally expected to promote quality and cost-effectiveness.

· · ·

Medicaid/Indigent Care Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center, (CON #10029): · · The applicant states it will provide services regardless of ability to pay (and also excludes other non-financial factors). Schedule 7A indicates that 3.58 percent of the project's year two patient days will be provided to Medicaid and Medicaid HMO patients. While charity care is not stated, self-pay is shown as 2.7 percent of year two patient days with an average per patient day loss of $5,157. The applicant proposes no Medicaid, charity care or medically indigent care related condition, pursuant to award. However, CRMC is currently conditioned to providing a minimum of 2.59 percent of its total annual open heart procedures for Medicaid patients and a minimum of 1.2 percent to indigents.

·

Fawcett Memorial Hospital, Inc. (CON #10030): · The applicant states it will provide OHS services to all patients regardless of ability to pay.

56

CON Action Number: 10029 & 10030 · Notes to Schedule 7A indicate that charity care will account for 0.67 percent and Medicaid/Medicaid HMO 1.25 percent of the program's total OHS procedures including angioplasty/stents and in year two. The applicant proposes no Medicaid, charity care or medically indigent care condition.

·

Architectural Analysis Port Charlotte HMA, Inc. d/b/a Peace River Regional Medical Center (CON #10029): The design is well done and nicely integrates the new cardiac care unit with the existing surgical services. The close proximity of the CICU to the cardiac care suite and other surgical services should enhance patient safety by reducing travel distances. While some minor modifications may be required as the project is developed the designers are off to a very good start. The cost estimate for construction appears to be reasonable. The schedule for construction from the time of building permit to final inspection is reasonable. Fawcett Memorial Hospital, Inc. (CON #10030): The design provides all of the functional spaces required for the patients and staff. If the facility intends to use the new CVICU as both an insensitive care and a post anesthesia care unit, the unit must be relocated to provide direct access to surgical suite without crossing public corridors. It also appears that some additional space may be required in the backup CVOR. It is likely that required modifications would have a significant impact on the construction costs. The schedule for construction from the time of building permit to final inspection is reasonable. The cost estimate for construction appears to be reasonable, as designed; however, it is likely that required modifications would have a significant impact on the construction costs.

57

CON Action Number: 10029 & 10030 G. RECOMMENDATION Approve CON #10029 to establish an adult open heart surgery program at Peace River Regional Medical Center, in Port Charlotte, Charlotte County, District 8 via transfer of the OHS program from Charlotte Regional Medical Center. The proposed total project cost is $16,106,106, with 20,461 gross square feet (GSF) of new construction and 3,509 GSF of renovation. CONDITIONS: (1) The project will be located at Peace River Regional Medical Center, 2500 Harbor Boulevard, Port Charlotte, Florida 33954. Charlotte Regional Medical Center will delicense its adult OHS program concurrent with licensure of the adult OHS program at PRRMC. The applicant will provide a minimum of 3.79 percent of its total annual open heart procedures to Medicaid patients and charity care patients combined.

(2)

(3)

Deny CON #10030.

58

CON Action Number: 10029 & 10030 AUTHORIZATION FOR AGENCY ACTION

Authorized representatives of the Agency for Health Care Administration adopted the recommendation contained herein and released the State Agency Action Report.

DATE:

James B. McLemore Health Services and Facilities Consultant Supervisor Certificate of Need

Jeffrey N. Gregg Chief, Bureau of Health Facility Regulation

59

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