STATE AGENCY ACTION REPORTCON Action Number: 9956 & 9957 Transplants (Adult) Performed July, 2001 - June 2006 For Kidney Transplants in Florida Based on Agency For Health Care Administration

STATE AGENCY ACTION REPORT

ON APPLICATION FOR CERTIFICATE OF NEED

A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number

Halifax Hospital Medical Center (CON #9956) 303 W. Clyde Morris Boulevard Daytona Beach, Florida 32115 Authorized Representative: Mr. William J. Griffin (386) 322-4771 Adventist Health System/Sunbelt Inc. (CON #9957) 601 East Rollins Street Orlando, Florida 32803 Authorized Representative: Mr. Richard E. Morrison

(407) 647-4400

2. Service District/Subdistrict Organ Transplantation Service Planning Area Three (includes District 7, District 9 excluding Palm Beach County, and includes Lake (District 3) and Volusia Counties (District 4).

B. PUBLIC HEARING

A public hearing was not held or requested. However, letters of support were submitted by the applicants proposing to establish adult pancreas transplantation programs, as discussed below.

Letters of Support Halifax Hospital Medical Center (CON #9956) included two letters of

support. One letter each was received from Tim Jankiewicz, Executive Director of TransLife Organ Procurement Organization and Dr. Sajid Latif, M.D. of Halifax Medical Center. Mr. Jankiewics states that TransLife supports the establishment of a pancreas transplant program

CON Action Number: 9956 & 9957

by Halifax Medical Center and will allocate pancreas organs to the facility in accordance with organ allocation policies as established by the Organ Procurement and Transplant Network and the United Network for Organ Sharing.

Adventist Health System/Sunbelt, Inc. (CON #9957) included seven letters of support with one letter from a transplant recipient indicating distance to be a problem. Four letters were received from TransLife Organ Procurement Organization: Robert A. Metzger, M.D., Medical Director, Michael Angelis, M.D., Surgical Transplant Director, Bobby Nibhanupudy, M.D., Transplant Surgeon, and Tim Jankiewicz, Executive Director. Also in support of Adventist Health System/Sunbelt, Inc. are Joseph W. Warren, M.D., Nephrology Associates of Central Florida, and George Burke, M.D., Professor of Surgery, University of Miami, Director, Kidney and Kidney Pancreas Transplant Programs.

C. PROJECT SUMMARY

Halifax Hospital Medical Center (CON #9956) (Halifax)proposes to establish an adult pancreas transplant program in Transplant Service Area 3. Halifax is an existing provider of tertiary services. It operates a Level II neonatal intensive care unit (NICU). It also operates an adult open heart surgical service and is a Level II state-certified trauma center. The development of a pancreas transplant program will operate in conjunction with and compliment the medical center’s CON approved kidney transplant program. The hospital projects that $150,000 will be spent in recruiting and other pre-opening costs and anticipates the program, if approved, to become operational on July 1, 2007. Recruiting costs include not only recruitment proper, but the cost of pre-opening orientation and training for existing staff and new hires. The equipment necessary to support the flushing and transport of grafts has been acquired already in connection with the implementation of the applicant’s kidney transplant program. Project costs are projected to total $207,925 and do not include any construction costs. Halifax Medical Center is a Medicaid disproportionate share hospital and has agreed to provide a minimum of five percent of its pancreas transplant procedures to uninsured patients. The applicant also agrees to condition award of the CON upon implementing programs to assist in funding immunosuppressant drugs for indigent and uninsured pancreas transplant patients. These programs will range from working with drug manufacturers to secure favorable purchase prices for such drugs to direct subsidy. The applicant further agrees to implement programs to

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support indigent patients in meeting compliance criteria for pancreas transplantation. Adventist Health System/Sunbelt, Inc. (CON #9957) (Adventist) proposes to establish an adult pancreas transplant program at the main campus, Florida Hospital - Orlando in Transplant Service Area 3. Like co-batched applicant, Halifax, the applicant is also a provider of tertiary care services. Unlike co-batched Halifax, the applicant operates a number of acute care hospitals throughout central Florida. The tertiary services offered at its main campus include: Levels II and III NICU, comprehensive medical rehabilitation, adult and pediatric kidney transplant, adult and pediatric bone marrow transplant and is approved for a pediatric liver transplant program. Florida Hospital – Orlando also provides adult open heart surgery. Unlike Halifax, Florida Hospital – Orlando is not a state certified trauma center. The proposed program will complement the existing kidney transplant program. The pancreas transplant program, if approved, is to be operational by June 1, 2007 and project costs total $106,425 and include no construction. The applicant states that because of its operational adult kidney transplant program, Florida Hospital has all of the necessary equipment for pancreas transplant at the Orlando facility. The applicant states that it does not wish to accept any conditions predicated upon award of the CON.

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 best meet the review criteria. Section 59C-1.010(2) (b), Florida Administrative Code, allows no application amendment information subsequent to the application being

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deemed complete. The burden of proof to entitlement of a certificate rests with the 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, Cheslyn Green analyzed the application in its entirety with consultation from the Economic Analyst, Ryan Fitch who evaluated the financial data as part of the application.

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; and Local Health Plans.

1. Fixed Need Pool a. 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? ss. 59C-1.008(2), Florida Administrative Code.

There is no fixed need pool publication for pancreas transplant programs. Therefore, it is the applicant's responsibility to demonstrate the need for the project, including a projection of the expected number of adult pancreatic transplants that will be performed. There are presently no operational adult pancreas transplant programs in Organ Transplant Service Area (OTSA) 3. As noted at the beginning of this review, OTSA 3 includes District 7, District 9 excluding Palm Beach County, and Lake (District 3) and Volusia Counties (District 4). Both co-batched applicants agree that some portion of the patients they expect to serve in this program will have either had a kidney transplant or need to have both a kidney and pancreas transplant. As noted earlier, both Halifax and Florida Hospital – Orlando offer adult kidney transplantation services. Data reported to the Agency for the most recent reporting period, July 1, 2005 though June 30,. 2006 show the following:

Florida Adult Kidney Transplantation Program Utilization July 2005 – June 2006

Hospital OTSA District Total Procedures

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Shands at Uof F 1 3 127 St. Luke’s 1 4 101 Shands Jacksonville 1 4 55 Tampa General 2 6 203 SW Florida RMC 2 8 38 Florida Hospital –Orlando 3 7 145 Jackson Memorial 4 11 198 TOTAL 867 Source: AHCA Utilization Data for Pediatric and Adult Organ Transplantation Programs for July 1, 2005 – June 30, 2006

Florida Adult Pancreas Transplantation Program Utilization July 2005 – June 2006

Hospital OTSA District Total Procedures Shands at Uof F 1 3 11 St. Luke’s 1 4 21 Tampa General 2 6 16 Jackson Memorial 4 11 21 TOTAL 69 Source: AHCA Utilization Data for Pediatric and Adult Organ Transplantation Programs for July 1, 2005 – June 30, 2006 Data reported to the Agency show that significantly fewer adult pancreas transplants are performed annually than adult kidney transplants. All adult pancreas transplant providers are also adult kidney transplant providers, but not all adult kidney transplant providers perform adult pancreas transplantation. Data further show that of the two co-batched applicants, Florida Hospital – Orlando is the only operational kidney transplant provider during the most recent reporting period and that it preformed among the highest number of adult transplants, with Tampa General and Jackson Memorial performing more.

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Transplants (Adult) Performed July, 2001 - June 2006

For Kidney Transplants in Florida Based on Agency For Health Care Administration (AHCA) data

As of January 5, 2007

Organ Type

July 01 June 02

July 02 June 03

July 03 June 04

July 04 June 05

July 05 June 06

Total

Kidney Shands Hospital at the University of Florida

102

96

117

112

127

554

St. Luke’s Hospital 66 72 92 83 101 414 Shands Jacksonville Medical Center

48

53

46

60

55

262

Tampa General Hospital

181 186 155 204 203 929

Southwest Florida Regional Medical Center

14

21

31

37

38

141

Bert Fish Medical Center (Terminated 7/27/05)

11

13

13

55

0

92

Florida Hospital – Orlando

127 97 117 138 145 624

Jackson Memorial Hospital

160 140 181 191 198 870

Cleveland Clinic Hospital (Terminated 12/31/04)

19

21

22

0

0

62

All Centers Total 728 699 774 880 867 3948 Source: Agency for Health Care Administration Adult Organ Transplantation Program Utilization July 2001- June 2006

Transplants Performed July, 2001 – June, 2006

For Pancreas in Florida Based on Agency For Health Care Administration Data as of February 16, 2007

Organ Type July 01 June 02

July 02 June 03

July 03 June 04

July 04 June 05

July 05 June 06

Total

Pancreas Shands Hospital at the University of Florida

24

23

30

23

11

111

St. Luke’s Hospital 9 16 18 13 21 77 Tampa General Hospital (Operational 1/29/01)

25

30

14

8

16

93

Jackson Memorial Hospital

37 36 32 23 21 149

All Centers Total 95 105 94 67 69 430 Source: Agency for Health Care Administration Adult Organ Transplantation Program Utilization July 2001- June 2006 Historic data also show that unlike kidney transplants, there are not a large number of pancreas transplants preformed in Florida. An examination of other states on the OPTN website reveals a similar pattern.

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It is noted that unlike other hospital programs, transplant services are reliant on donors and patients are often placed on waiting lists. Utilization data, whether current or historic, is primarily an indication of the number of donors. Although wait lists are an indicator of need, without available donors, they are not by themselves a predictor of utilization.

OPTN Wait Current Florida Wait List Registrants as of January 5, 2007

Kidney Pancreas Kidney/Pancreas All Time 2,679 16 90 < 30 Days 132 2 5 30 to < 90 Days 221 3 16 90 Days to < 6 Months 355 5 22 6 Months to < 1 Year 508 0 15 1 Year to < 2 Years 659 2 12 2 Years to < 3 Years 310 2 10 3 Years to < 5 Years 272 1 7 5 or More Years 222 1 3 Source: http://www.optn.org/latestData/rptData.asp As shown in the chart above, although a large percentage of kidney transplant patients do not also need a pancreas transplant, more patients need a kidney/pancreas transplant than pancreas alone.

Florida Pancreas Donors Recovered January 1, 2001- October 31, 2006 2006 2005 2004 2003 2002 2001 All Donor Types 91 123 130 116 111 132 Deceased Donor 91 123 130 116 111 132 Living Donor 0 0 0 0 0 0

Source: http://www.optn.org/latestData/rptData.asp The most recently reported 12-month pancreas transplant data shows that a total of 69 pancreas transplants were preformed in Florida as of June 30, 2006. Donor/patient matches are also a factor in transplant services. However, it is noted that there were 123 pancreas donors in 2005 and 91 as of October 31, 2006. According to the data reported to the Agency (calendar year 2005), 84 percent of pancreas transplants performed in Florida were performed for Florida residents. OTSA 3 residents had 11 pancreas transplants, representing 13.6 percent of all pancreas transplants performed in Florida. Without a pancreas transplant provider located in OTSA 3, all pancreas transplants for OTSA 3 residents were performed either at Shands in OTSA 1 (eight patients), Jackson Memorial Hospital in OTSA 4 (two patients), or Tampa General Hospital in OTSA 2 (one patient).

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http://www.optn.org/latestData/rptData.asp

http://www.optn.org/latestData/rptData.asp


Adult Pancreas Transplants by Patient Residence Year Ended December 31, 2005

Service Area Transplants Performed Percent of Total 1 12 14.8% 2 18 22.2% 3 11 13.6% 4 27 33.3%

Out-of-State 13 16.0% Total 81 100.0%

Source: Florida Center for Health Information and Policy Analysis database, DRGs 512 and 513 Note: Nine other pancreas transplants occurred for patients who were coded to other DRGs. According to Adventist, during 2005 and 2006 at its main Florida Hospital campus, 40 patients were referred to Florida Hospital’s TransLife for kidney transplant who would have potentially benefited from a simultaneous kidney-pancreas (SPK) transplant: • Five patients received a kidney transplant only; of these patients, two

could have received a SPK transplant had a pancreas transplant program been available locally.

• Three patients left the area for a kidney and pancreas simultaneous transplant.

• Twenty-two patients are listed with UNOS and are waiting for a kidney to become available. Of these 22 patients eight would have been candidates for a SPK transplant.

• Seven patients moved away. • Three patients expired.

Out of a total of 40 patients referred for kidney transplant, 13 would have been candidates for SPK. Only three of these 13 patients actually received a SPK. Halifax Hospital Medical Center (CON #9956) is projecting five pancreas transplants in year two and three pancreas transplants in year one. In view of the limited number of pancreas transplants projected by the applicant, and the desirability of performing simultaneous kidney/pancreas transplants, the applicant's need projections appear reasonable. However, the applicant did not demonstrate that patients requiring a pancreatic transplant are experiencing difficulty in accessing this service. Adventist Health System/Sunbelt, Inc. (CON #9957) projects that it will perform 10 pancreas transplants in its second year of operation and expects to perform five in its first year. Florida Hospital based its utilization numbers on a number of factors: the absence of a pancreas transplant provider in the service area, the number of OTSA 3 residents who sought SPK (simultaneous kidney-pancreas transplants) in other areas of the state and the high-volume kidney transplant program at

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Florida Hospital1. In view of the limited number of pancreas transplants projected by the applicant, and the desirability of performing simultaneous kidney/pancreas transplants, the applicant's need projections appear reasonable.

b. Applications for the establishment of new adult pancreas and islet cell transplantation programs shall not normally be approved unless the following criteria are met: 1. The applicant is a teaching or research hospital with training

programs relevant to the type of organ transplantation program proposed to be established preceding the application deadline, and no additional program has been approved for the same service planning area. (Rule 59C-1.044(10)(a)).

Neither Halifax Hospital Medical Center (CON #9956) nor Florida Hospital (CON #9957) are teaching or research hospitals per statutory definition 408.07(45) which states a teaching hospital means any Florida hospital officially affiliated with an accredited Florida medical school which exhibits activity in the area of graduate medical education as reflected by at least seven different graduate medical education programs accredited by the Accreditation Council for Graduate Medical Education or the Council on Postdoctoral Training of American Osteopathic Association and the presence of 100 or more full-time equivalent resident physicians. There are currently six teaching hospitals throughout the state of Florida: Shands Hospital at the University of Florida in Gainesville, Shands Jacksonville Medical Center in Jacksonville, Tampa General Hospital in Tampa, Orlando Regional Medical Center in Orlando, Jackson Memorial Hospital in Miami and Mount Sinai Medical Center, also in Miami. Halifax Hospital Medical Center (CON #9956) states that it has a Family Medicine Residency Program which provides academic graduate medical education for 24 family medicine physicians, and fellowship training for one sports medicine fellow.

1 Refer to CON #9957 for additional factors, pg. 17

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According to Adventist Health System/Sunbelt, Inc. (CON #9957), Florida Hospital serves as a teaching hospital for family practice medicine, offers a minimally invasive surgery fellowship, and a rotation in kidney transplantation for surgical residents from the Orlando Regional Medical Center. Florida Hospital also plans to expand its teaching program to include a Surgical Residency Program in July 2007.

2. Applicants have established interactive programs of basic and applied research in organ failure, transplantation, immunoregulatory responses, and related biology.

Halifax Hospital Medical Center (CON #9956) does not have the above listed programs established. Its response to this criteria related entirely to cancer research, including cancer drug research. The applicant indicates that the medical center has a 20-year history of conducting cancer clinical research and is affiliated with the Easter Cooperative Oncology Group (ECOG) through the H. Lee Moffitt Cancer Center and Research Institute at the University of South Florida, Tampa and is a full membership with the National Surgical Adjuvant Breast and Bowel Project. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Florida Hospital’s TransLife is currently involved in multi-center and single-center clinical research studies, such as the following: • Open label, comparative, controlled single-center trial to assess

risks and benefits of steroid elimination versus steroid therapy after renal transplantation.

• An open label, prospective, randomized, controlled, multi-center study assessing fixed dose versus concentration controlled Cellcep regimens for patients following a single organ renal transplantation in combination with full-dose and reduced-dose calcineurin inhibitors.

• Long-term outcomes of living renal transplants induced with thymoglobulin.

• Randomized double-blind, controlled multi-center study of the efficacy and safety of valganciclovir verses oral ganciclovir for the prevention of cytomegalovirus in heart, liver and kidney allograft recipients.

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2. Agency Rule Criteria Chapter 59C-1.044, Florida Administrative Code, contains criteria and standards by which the department is to review the establishment of organ transplantation programs under the certificate of need program. Appropriate areas addressed by the rule and the applicant's responses to these criteria are as follows: a. Coordination of Services. Chapter 59C-1.044(3), Florida

Administrative Code. Applicants for transplantation programs, regardless of the type of transplantation program, shall have:

1. Staff and other resources necessary to care for the

patient's chronic illness prior to transplantation, during transplantation, and in the post-operative period. Services and facilities for inpatient and outpatient care shall be available on a 24-hour basis.

Halifax Hospital Medical Center (CON #9956) states that care for the patient in the pre-operative phase is provided by the hospital and by the patient’s physician. According to the applicant Nephrology Consultants, PA is the largest nephrology practice group in Volusia County, managing a large volume of kidney failure and pancreas failure patients, including approximately 450 dialysis patients. The applicant states that the hospital has the in-house resources to perform all of the diagnostic and laboratory procedures necessary to qualify patients as candidates for transplantation. The hospital’s social services and nursing resources in the kidney/pancreas transplant center will be available to patients and their families to assist in dealing with the personal and psychological issues that result from living with a chronic medical condition, practical issues of paying for medications, transportation and lodging, and vocational rehabilitation. Nurse coordinators will be involved in pre-transplant screening and remain involved throughout the transplant and post-transplant phases. Halifax Medical Center pledges the continuous participation of a dedicated transplant team that can provide patients and families with continuity.

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Adventist Health System/Sunbelt, Inc. (CON #9957) asserts that Florida Hospital has a significant number of staff and facilities capable of providing the resources necessary to care for the patient’s chronic illness prior to transplantation, during transplantation, and in the post-operative period. Services and facilities for inpatient and outpatient care are currently available to meet these needs on a 24-hour basis for the kidney transplant program and will continue to serve these needs in the future. Florida Hospital also states that the pancreas transplant program will be integrated with the existing kidney transplant program. Both pre-transplant and post-transplant services will be provided in the operating rooms, recovery, surgical ICU, and 38-bed transplant unit. The pancreas transplant program will have the 24-hour availability of transplant nurses and physicians currently available to the kidney transplant program.

2. If cadaveric transplantation will be part of the transplantation program, a written agreement with an organ acquisition center for organ procurement is required. A system by which 24-hour call can be maintained for assessment, management and retrieval of all referred donors, cadaver donors or organs shared by other transplant or organ procurement agencies is mandatory.

Halifax Hospital Medical Center (CON #9956) states it currently partners with Translife for their organ donation services, and proposes to continue to do so for its kidney transplant service. A 24-hour call system is already in place and Halifax Medical Center states that it has provided Translife with many patients for organ donation in the past; Translife also has arrangements with physician groups that come to Halifax for organ harvesting. The applicant has provided a copy of the contract with Translife in Appendix H of the CON application. Adventist Health System/Sunbelt, Inc. (CON #9957), Florida Hospital, has a written agreement with the organ acquisition center for organ procurement, which was provided with the application. As specified in the agreement, Florida Hospital’s TransLife (the OPO) is a department of Florida Hospital and will respond to calls from hospital personnel within 20 minutes of notification. A 24-hour call

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system is currently in place for the assessment, management, and retrieval of all referred donors, cadaver donors, or organs shared by other transplant programs or organ procurement agencies. The OPO operates in conformance with the requirements of the Organ Procurement and Transplantation Network and the Joint Commission on Accreditation of Health Care Organizations. Florida Hospital is currently authorized for kidney, bone marrow, and liver transplantation.

3. An age-appropriate (adult or pediatric) intensive care unit which includes facilities for prolonged reverse isolation when required.

Halifax Hospital Medical Center (CON #9956) states there are currently two adult intensive care units: intensive medical care with 32 beds, many of which are private; and intensive surgical care with 32 beds, many of which are also private. The intensive medical care unit has four private rooms that have Laminar Flow. These rooms will be available to kidney/pancreas transplant patients to minimize infection risk. Adventist Health System/Sunbelt, Inc. (CON #9957) states that following transplantation patients will be transferred to the adult surgical intensive care unit, which is the same unit currently utilized by patients in the kidney transplant program. The surgical ICU currently has the ability to offer prolonged reverse isolation, if needed.

4. A clinical review committee for evaluation and decision-

making regarding the suitability of a transplant candidate.

Halifax Hospital Medical Center (CON #9956) states it will impanel a clinical review committee for evaluation and decision-making regarding the suitability of a transplant candidate. The committee will include the transplant surgeon, nephrologist, laboratory, and nursing staff. The function will be to review patient histories and test results to verify that the candidate is suitable for transplant.

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Adventist Health System/Sunbelt Inc. (CON #9957) states after thorough evaluation, adult pancreas transplant candidates will be reviewed at the weekly Patient Review Committee which will include transplant surgeons, nephrologists, a social worker, a financial coordinator, clinical transplant coordinators, and a nurse practitioner. Once approved by the committee, they will be placed on the waiting list, registered with the local OPO. Florida Hospital’s pre-transplant coordinators will update medical information on all listed candidates periodically, and the program will re-evaluate listed patients based on OPTN guidelines and the severity of illness.

5. Written protocols for patient care for each type of organ

transplantation program including, at a minimum, patient selection criteria for patient management and evaluation during the pre-hospital, in-hospital, and immediate post-discharge phases of the program.

Halifax Hospital Medical Center (CON #9956) provided information regarding written protocols for organ transplantation. These protocols included evaluation process policy and procedure, pre-surgery preparation policy, post-surgery hospitalization management policy, and post-transplant care policy. Adventist Health System/Sunbelt, Inc. (CON #9957) provided a draft protocol for patient care for the Pancreas Transplant Guide. This protocol was modeled after similar protocols developed and utilized by Florida Hospital transplant surgeons while performing pancreas transplants in other institutions. Protocols include identification of patient selection criteria for patient management and evaluation during pre-hospital, in-hospital, and immediate post-discharge phases of the program.

6. Detailed therapeutic and evaluative procedures for the

acute and long-term management of each transplant program patient, including the management of commonly encountered complications.

Halifax Hospital Medical Center (CON #9956) states it will develop the above mentioned procedures in its kidney/pancreas transplant program. The medical center will hire an experienced clinical nurse specialist/renal transplant coordinator to manage the kidney/pancreas

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transplant program. The kidney/pancreas transplant center will offer a multi-disciplinary approach to patient care during the qualification, waiting period, inpatient episode and post-transplant phases of care. Adventist Health System/Sunbelt, Inc. (CON #9957) has included in its application, the draft Pancreas Transplant Guide which provides therapeutic and evaluative procedures for the acute and long-term management of each adult pancreas transplant program patient including the management of commonly encountered complications. Also for patients who may require specialized acute or post-acute facilities, either while they wait for their transplant or post-transplant, Florida Hospital has an inpatient rehabilitation unit and a long-term care hospital. Adventist Health System has a nursing home division that has skilled and long-term care nursing facilities accessible to Florida Hospital.

7. Equipment for cooling, flushing, and transporting

organs. If cadaveric transplants are performed, equipment for organ preservation through mechanical perfusion is necessary. This requirement may be met through an agreement with an organ procurement agency.

Halifax Hospital Medical Center (CON #9956) states that it will equip its program with all equipment necessary to transport and preserve cadaveric organs. It will also hire and/or train staff in the proper use of such equipment. Translife will be used for the procurement of cadaveric organs. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Florida Hospital’s organ procurement organization, Florida Hospital’s Translife, provides the necessary equipment and personnel to recover solid organs for transplantation.

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8. An on-site tissue-typing laboratory or a contractual arrangement with an outside laboratory within the State of Florida, which meets the requirements of the American Society of Histocompatibility.

Halifax Hospital Medical Center (CON #9956) states Translife currently uses Florida Hospital in Orlando for tissue typing and cross matching. Florida Hospital’s laboratory is ASHI certified. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Florida Hospital has a tissue-typing laboratory which meets the requirements of the American Society for Histocompatibility. State of Florida AHCA licensure and evidence of CAP accreditation are provided in the application.

9. Pathology services with the capability of studying and

promptly reporting the patient's response to the organ transplantation surgery, and analyzing appropriate biopsy material.

Halifax Hospital Medical Center (CON #9956) states that it has a full-service pathology service headed by Dr. Lora Shehi and Dr. William Douglass. The department has five full-time anatomical and clinical pathologists all with specialty training. Adventist Health System/Sunbelt, Inc. (CON #9957) Florida Hospital’s pathology department asserts that it is fully qualified to meet the needs of the pancreas transplant programs and specifically in the analysis of biopsy materials. The department works closely with the kidney transplant program.

10. Blood banking facilities.

Halifax Hospital Medical Center (CON #9956) states that its blood bank offers a full-range of services. The laboratory is supervised by a certified specialist in blood banking and is directed by Dr. Lora Shehi. The applicant has included a copy of the medical center’s blood and blood components supply agreement with Central Florida Blood Bank.

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Adventist Health System/Sunbelt (CON #9957) indicates that Florida Hospital currently has a working relationship with Florida’s Blood Center.

11. A program for the education and training of staff regarding the special care of transplantation patients.

Halifax Hospital Medical Center (CON #9956) states that it intends to hire an experienced clinical nurse specialist to manage the kidney/pancreas transplant program. This manager will be responsible for training and hiring of nursing and technical staff trained in transplant surgical issues as well as the post-operative care of transplant patients. Halifax Medical Center plans to institute a multi-disciplinary team approach to the care and management of its transplant patients. This approach will involve participation from representatives of not only surgical and nursing disciplines, but psychiatry, pharmacy, social services, and nutritional services. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Florida Hospital’s Translife offers extensive ongoing continuing education training for both new staff and existing staff working in all phases of the transplant program. In the pancreas transplant program, the clinical transplant coordinators will be responsible for providing continuing education to the nurses on the transplant unit. All of the transplant coordinators are certified clinical transplant coordinators (CCTCs).

12. Education programs for patients, their families and the

patient's primary care physician regarding after-care for transplantation patients.

Halifax Hospital Medical Center (CON #9956) states it will recruit a clinical specialist with experience in renal/pancreas transplantation who will serve as the initial renal/pancreas transplant coordinator. Halifax Medical also plans to establish a renal/pancreas transplant clinic for patients to be followed both pre and post-transplant. The clinic will provide extensive educational programming for both the pre and post-transplant episodes of care.

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According to Adventist Health System/Sunbelt, Inc. (CON #9957), Florida Hospital, all candidates for transplant and their families are provided written materials, on-site education, assigned to a clinical pre-transplant coordinator, and encouraged throughout the pre and post-transplant process to continue to learn and ask questions about the pre and post-transplant care. The patients’ education about “after-transplant care” begins at their first visit as a potential candidate for a pancreas transplant and continues for a lifetime.

b. Staffing Requirements. Applicants for transplantation programs, regardless of the type of transplantation program, shall meet the following staffing requirements. Chapter 59C-1.044(4), Florida Administrative Code.

1. A staff of physicians with expertise in caring for patients

with end-stage disease requiring transplantation. The staff shall have medical specialties or sub-specialties appropriate for the type of transplantation program to be established. The program shall employ a transplant physician, and a transplant surgeon, if applicable, as defined by the United Network for Organ Sharing (UNOS) June 1994. A physician with one-year experience in the management of infectious diseases in the transplant patient shall be a member of the transplant team. Halifax Hospital Medical Center (CON #9956) states it will be compliant with this Rule criterion. Adventist Health System/Sunbelt, Inc. (CON #9957) provides detail, stating Florida Hospital currently has two transplant surgeons on its medical staff. Dr. Michael Angelis and Dr. Bobby Nibhanupudy are both ASTS multi-organ trained transplant surgeons. Dr. Angelis and Dr. Nibhanupudy previously met the OPTN/UNOS criteria for pancreas transplant program directors. Their curriculum vitae were provided in the application. Dr. Angelis has performed over 30 pancreas transplants. Dr. Angelis also completed a two-year fellowship in multi-organ transplants (small bowel, kidney, liver, and pancreas) between 1998 and 2000 at the University of Miami/Jackson Memorial Hospital, the pancreas transplant program in OTSA 4. In addition, Dr. Tom Chin, who is the liver transplant director at Florida Hospital, is an abdominal transplant surgeon, including pancreas, kidney, and liver. Dr. Chin meets current

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OPTN/UNOS criteria and will be the pancreas transplant program surgical director. A curriculum vitae for Dr. Chin was also provided in the application. Dr. U. Desai, a nephrologist, meets current OPTN/UNOS criteria and will serve as the pancreas transplant medical director.

2. A program director who shall have a minimum one year formal training and one year of experience at a transplantation program for the same type of organ transplantation program proposed. Halifax Hospital Medical Center (CON #9956) states that it is in the process of recruiting a transplant surgeon for its kidney transplant program. Upon approval, the transplant surgeon will serve as the medical director of the pancreas transplant program. The applicant states that the transplant surgeon will have at least one year of formal training and one year of experience at a pancreas transplantation program. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Dr. Tom Chin, who is the liver transplant director at Florida Hospital and who is an abdominal transplant surgeon will serve as the surgical director for the pancreas transplant program.

3. A staff with experience in the special needs of children if

pediatric transplantations are performed.

This criterion is not applicable for both applicants. The current applications are for adult pancreas transplant programs.

4. A staff of nurses, and nurse practitioners with

experience in the care of chronically ill patients and their families.

Halifax Hospital Medical Center (CON #9956) states it will hire an experienced RN renal/pancreas transplant coordinator with experience in patient care and education.

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The medical center currently provides dialysis services through a contractual arrangement with Gambro Healthcare and is implementing in-house capabilities. The hospital currently has a staff of nurses and nurse practitioners with experience in the care and treatment of chronically and acutely ill patients. Adventist Health System/Sunbelt, Inc. (CON #9957), Florida Hospital, states that the transplantation program will have access to nurses and nurse practitioners with experience in the care of chronically ill patients and the support of their families.

5. Contractual agreements with consultants who have

expertise in blood banking and are capable of meeting the unique needs of transplant patients on a long-term basis.

Halifax Hospital Medical Center (CON #9956): The applicant’s blood bank is affiliated with Central Florida Blood Bank and can provide a full compliment of products and components as related to transplant. The department also has an on-site blood irradiator for blood and component irradiation for immunocompromised transfusion recipients. Adventist Health System/Sunbelt, Inc. (CON #9957) states that Florida’s Blood Center currently has an ongoing relationship with Florida Hospital. Florida Hospital’s Translife has an excellent working relationship with Florida’s Blood Center, including working together to determine blood need for the liver transplant program. Florida Hospital states it has the ability to meet the need for blood products by the proposed program.

6. Nutritionists with expertise in the nutritional needs of

transplant patients.

Halifax Hospital Medical Center (CON #9956) states that nutritional services assessments will be performed by a dietician registered with the American Dietetic Association and licensed by and in the State of Florida with at least one year of hands-on experience in renal dietetics. Adventist Health system/Sunbelt, Inc. (CON #9957) states that Florida Hospital will not need to expand its nutrition department in order to provide this program.

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7. Respiratory therapists with expertise in the needs of

transplant patients.

Halifax Hospital Medical Center (CON #9956) indicates that it has a large respiratory therapy department. Staff members with experience in the care of transplant patients currently serve on the medical center’s staff. Adventist Health System/Sunbelt, Inc. (CON #9957) states that respiratory therapists at Florida Hospital have experience in the current transplant programs. The respiratory therapists are primarily involved with the needs of transplant patients during their inpatient stay. The respiratory therapists presently provide care to immunosuppressed transplanted patients.

8. Social workers, psychologists, psychiatrists, and other

individuals skilled in performing comprehensive psychological assessments, counseling patients, and families of patients, providing assistance with financial arrangements, and making arrangements for use of community resources.

Halifax Hospital Medical Center (CON #9956) commits to providing an extensive and qualified staff of social workers, psychologists, and psychiatrists trained and competent to provide the services referenced in this rule criterion. Halifax also provides a comprehensive array of medical services, including inpatient psychiatric services. Halifax Medical Center is chartered to provide medical care and services to indigent populations in its service area. The applicant also states it commitment to providing funding or sources of funding for the cost of immunosuppressant drugs for its patients. Adventist Health System/Sunbelt, Inc. (CON #9957) states that social workers, psychologists, and psychiatrists are available to provide support and assessments to patients and their families who are seeking transplantation. All potential transplantation patients are assessed by social workers. Services of psychologists, psychiatrists, and others such as addition specialists are available as deemed appropriate by the patient, their family, or the transplant team. Although financial evaluation will be completed as part of the pre-assessment process for pancreas transplant

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patient. Social workers and financial counselors will work closely with the patient and their family prior to transplantation, during their inpatient stay, and also during the post-transplant follow-up care.

Neither of the applicants discussed the availability of patient/family housing during the time period the patient/family is waiting for a transplant or waiting for return to home. There is no indication that either hospital provides leased apartments within close proximity to the transplant center.

c. Data Reporting Requirements. Facilities with organ

transplantation programs shall submit data regarding each transplantation program to the agency or its designee twice a year. The first submission shall be by August 1 of each year, and shall cover the period between January 1 through June 30 of the same calendar year. The second submission shall be by February 1 of each year, and shall cover the period between July 1 through December 31 of the preceding year. The following data shall be provided for each type of organ transplanted.

1. The number of patients by county origin and zip code 2. The average gross revenue per admission. 3. The average length of stay.

Halifax Hospital Medical Center (CON #9956) states it will comply with all reporting requirements.

Adventist Health System/Sunbelt, Inc. (CON #9957) states that as an existing transplant provider Florida Hospital currently complies with the organ transplant data reporting requirements and will continue to do so in both existing transplant programs and the proposed adult pancreas transplant program.

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3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care,

efficiency, accessibility and extent of utilization of existing health care facilities and health services in the applicant's service area? ss. 408.035(1), (2), (5), and (7), Florida Statutes.

Access There is currently no adult pancreas transplant service provider in Organ Transplant Area 3 (OTSA) which is comprised of 10 counties: Volusia, Lake, Seminole, Orange, Osceola, Brevard, Indian River, Okeechobee, St. Lucie, and Martin. The four existing Florida pancreas transplant providers are located in OTSA 1 (St. Luke’s and Shands at UF), OTSA 2 (Tampa General), and OTSA 4 (Jackson Memorial Hospital).

According to the AHCA inpatient data base (calendar year 2005), 84 percent of pancreas transplants performed in Florida were performed for Florida residents. OTSA 3 residents had 11 pancreas transplants, representing 13.6 percent of all pancreas transplants performed in

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Florida. Without a pancreas transplant provider located in OTSA 3, all pancreas transplants for OTSA 3 residents were performed either at Shands in OTSA 1 (eight patients), Jackson Memorial Hospital in OTSA 4 (two patients), or Tampa General Hospital in OTSA 2 (one patient).

Adult Pancreas Transplants by Patient Residence Year Ended December 31, 2005

Service Area Transplants Performed Percent of Total 1 12 14.8% 2 18 22.2% 3 11 13.6% 4 27 33.3%

Out-of-State 13 16.0% Total 81 100.0%

Source: Florida Center for Health Information and Policy Analysis database, DRGs 512 and 513 Note: Nine other pancreas transplants occurred for patients who were coded to other DRGs. Halifax is projecting five procedures in year two and Florida Hospital is projecting 10 procedures by year two. Pancreas transplants per facility over the past five years have varied. Both Halifax and Adventist’s projections indicate they expect to operate small programs, with Halifax being the smaller of the two. Although neither applicant demonstrated that patients needing this service were unable to obtain it, the establishment of an adult pancreas transplant program in connection with an existing kidney transplant program in OTSA 3 will improve access to these services, including geographic access. As shown above several patients received a pancreas transplant in OTSA 4, at Jackson Memorial Hospital in Miami, Florida. Unlike its co-batched applicant Adventist, Halifax has agreed to ensure care is provided to the medically indigent. Access to care for the medically needy will be improved with the implementation of a program at Halifax. If approved, Halifax will be awarded the CON with the following conditions: 1. A minimum of five percent of its pancreas transplant procedures to

uninsured patients. 2. Implementation of programs to assist in funding

immunosuppressant drugs for indigent and uninsured pancreas transplant patients ranging from working with drug manufacturers to secure favorable purchase prices for such drugs to direct subsidy. The applicant will annually provide evidence, including dollar amounts and a list of manufacturers it has worked with, of its assistance in funding this program.

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3. Implementation of programs to support indigent patients in meeting compliance criteria for pancreas transplantation. The applicant will provide evidence that these programs have been implemented and report of indigent patients it has successfully helped to meet compliance criteria for pancreas transplantation annually.

Quality of Care Both applicants are approved to operate adult kidney transplant programs. Kidney and pancreas transplant surgery is often done simultaneously. The ability of a kidney transplant provider to also provide pancreas transplants is expected to improve care provided to the patient. Need for the project is evidenced by the availability, quality of care, efficiency, accessibility and extent of utilization of existing health care facilities and health services in the applicant's service area.

b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability to provide quality care? Is the applicant a Gold Seal Program nursing facility that is proposing to add beds to and existing nursing home? ss. 408.035(3), 408.035(10), Florida Statutes.

Florida Hospital has had 27 confirmed complaints. Halifax has had one confirmed complaint and two confirmed complaints without deficiency. Halifax Hospital Medical Center (CON #9956) is accredited by the Joint Commission of Accreditation of Health Care Organizations (JCAHO) and has received the following awards and recognitions for its services: • Distinguished Hospital Award for Clinical Excellence in January of

2004 for the second consecutive year placing Halifax in the top 3.4 percent of all acute care hospitals in the country in terms of overall excellence across a broad array of services.

• Solucient 100 Top Hospitals: National Benchmarks for Success, study in the teaching hospital category. Solucient recognizes hospitals that have achieved excellence in quality of care, operational efficiency, financial performance and adaptation to environmental change.

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• Leading Consumer Choice Hospital: Selection as a pilot site for the Joint Commission on Accreditation of Healthcare Organization project to develop Technical Implementation Guide for the 15 voluntary consensus standards for nursing-sensitive care performance measures.

The medical center also has an active and successful performance improvement program in place that is designed to produce measurable improvements in quality of services and consumer satisfaction. Adventist Health System/Sunbelt, Inc. (CON #9957) states that it received the U.S. Department of Health and Human Services (HHS) Medal of Honor for Organ Donation. Florida Hospital has also received accreditation from the Joint Commission on Accreditation of Healthcare Organization and College of American Pathology Accreditation. In addition, Adventist Health System/Sunbelt, Inc. has received numerous awards recognizing its high quality of care. Examples are as follows: • One of America’s Best Hospitals. Florida Hospital has been recognized

eight years in a row (1999-2006) by U.S. News and World Report as “One of America’s best Hospitals” for clinical specialties.

• Medicare Leader: Florida Hospital is the largest provider of Medicare services in the nation. (2004)

• Hospital of the Future: The Wall Street Journal named Florida Hospital the “Hospital of the Future” (1999)

• Hospital of the 21st Century: Florida Hospital Celebration Health received the Premier Patient Services Innovator Award as “The Model for Healthcare Delivery in the 21st century.

• Top Cardiac Center: Modern Healthcare named Florida Hospital one of the “Top 100 Hospitals for Cardiac Care” (2002)

c. What resources, including health manpower, management personnel, and funds for capital and operating expenditures, are available for project accomplishment and operation Halifax Hospital Medical Center (CON #9956) is applying to establish an adult pancreas transplant center in Organ Transplant Service Area 3. The financial impact of the project will include the project cost of $207,925 and year two incremental operating costs of $432,838. The audited financial statements of the applicant for the periods ending September 30, 2004 and 2005 were analyzed for the purpose of

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evaluating the applicant’s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant’s current ratio of 1.5 is below average and indicates current assets are one and a half times current liabilities, a moderately weak but adequate position. The ratio of cash flows to current liabilities of 0.3 is well below average, a weak position. The working capital (current assets less current liabilities) of $56.2 million is a measure of excess liquidity that could be used to fund capital projects. Overall, the applicant has a moderately weak but adequate short-term position. (See table below). Long-Term Position: The ratio of long-term debt to net assets of 0.8 indicates the applicant has a moderately high level of long-term debt. As a group, the teaching hospitals tend to be highly leveraged; in this case, the long-term debt to net asset ratio is below the teaching group average, an adequate position. The ratio of cash flow to assets of 8.1 percent is slightly below average and an adequate position. The most recent year had operating revenues in excess of expenses of $43.4 million, which resulted in an operating margin of 6.0 percent. Overall, the applicant has an adequate long-term position. (See table below). Capital Requirements: Schedule 2 indicates the applicant has capital projects and long-term debt totaling $215 million, which includes $200 million for an emergency department and patient tower. Available Capital: Funding for this project will come from income from operations and cash on hand. It should be noted that the applicant is made up of the medical center and several discrete component units including a hospice and HMO. Based on the audit, it appears that approximately half of the operating revenue and a majority of the cash flow is generated by the discrete component units. Operating cash flows for the most recent year was $34.4 million. As discussed above working capital is $56.2 million. The applicant indicated that the entire capital budget would be funded by a combination of cash on hand and additional financing acquired during fiscal year 2006 to retire old debt and fund capital projects. The notes to the financial projections indicate that $150 million is available

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from the financing to fund the capital budget. The applicant did not provide documentation supporting the financing discussed in the narrative.

Staffing: Halifax Hospital Medical Center does not anticipate encountering significant difficulties in recruiting the staff that will be required to operate the planned unit. The applicant does not expect that the staffing needs of its proposed pancreas transplant program will result in significant incremental burdens on the health care professional education resources of the service area or district. Conclusion: The capital requirements for this project are minor in relation to the entire capital budget and funding should be available as needed. Funding for the entire capital budget is dependant on the financing described in the application. If the financing described in the application is accurate, funding for the entire capital budget should be available as needed.

HALIFAX HOSPITAL MEDICAL CENTER

9/30/2005 9/30/2004 Current Assets $163,223,000 $136,191,000

Cash and Current Investment $100,143,000 $78,516,000

Assets Limited as to Use $80,374,000 $64,566,000

Total Assets $423,426,000 $371,460,000

Current Liabilities $107,067,000 $93,955,000

Total Liabilities $247,447,000 $241,455,000

Net Assets $175,979,000 $130,005,000

Total Revenues $718,673,000 $656,021,000

Interest Expense $7,141,000 $6,801,000

Excess of Revenues Over Expenses $43,419,000 $26,065,000

Cash Flow from Operations $34,271,000 $27,337,000

Working Capital $56,156,000 $42,236,000

FINANCIAL RATIOS 9/30/2005 9/30/2004 Current Ratio (CA/CL) 1.5 1.4

Cash Flow to Current Liabilities (CFO/CL) 0.3 0.3

Long-Term Debt to Net Assets (TL-CL/NA) 0.8 1.1

Times Interest Earned (NPO+Int/Int) 7.1 4.8

Net Assets to Total Assets (TE/TA) 41.6% 35.0%

Operating Margin (ER/TR) 6.0% 4.0%

Return on Assets (ER/TA) 10.3% 7.0%

Operating Cash Flow to Assets (CFO/TA) 8.1% 7.4%

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Adventist Health System/Sunbelt, Inc. (CON #9957) applying to establish an adult pancreas transplant center in Organ Transplant Service Area 3. The financial impact of the project will include the project cost of $106,425 and year two incremental operating costs of $803,025. The audited financial statements of the applicant, for the periods ending December 31, 2004 and 2005 were analyzed for the purpose of evaluating the applicant’s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant’s current ratio of 3.1 is well above average and indicates current assets are over three times current liabilities, a good position. The ratio of cash flows to current liabilities of 0.8 is above average, a good position. The working capital (current assets less current liabilities) of $1.4 billion 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). Long-Term Position: The ratio of long-term debt to net assets of 1.3 indicates long-term debt is greater than equity. Although the teaching hospital group is highly leveraged, this is well above average and a weak position. The ratio of cash flow to assets of 11.2 percent is above average and a good position. The most recent year had revenue in excess of expenses of $185.3 million, which resulted in an operating margin of 5.3 percent. Overall, the applicant has a slightly weak but adequate long-term position. (See table below). Capital Requirements: Schedule 2 indicates the applicant has $937.7 million in capital projects. Available Capital: The applicant indicates that funding for this project and the entire capital budget will come from a combination of cash on hand, cash from operations, proceeds from prior bond issues, and other financing methods such as tax-exempt bond issues. Operating cash flows for the most recent year was $495.7 million. As discussed above working capital is $1.4 billion. In addition, of the $375.8 million of assets limited as to use (see table below) $278.8 million is designated as construction and capital replacement funds. The applicant also has access to a $1.9 billion revolving note which is used in part to secure variable rate hospital revenue bonds ($1.3 billion of the note was available as of December 31, 2005). Finally, subsequent to the audit of the December

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31, 2005 financial statements, the applicant refinanced $165.2 million in long-term debt. Staffing: Adventist Health Systems does not anticipate encountering significant difficulties in recruiting the staff that will be required to operate the planned unit. The applicant does not expect that the staffing needs of its proposed pancreas transplant program will result in significant incremental burdens on the health care professional education resources of the service area or district. Conclusion: The applicant appears to have the financial resources necessary to fund this project and all capital projects listed on Schedule 2.

ADVENTIST HEALTH SYSTEM/ SUNBELT, INC.

12/31/2005 12/31/2004 Current Assets $2,016,786,000 $1,875,410,000

Cash and Current Investment $1,635,240,000 $1,513,685,000

Assets Limited as to Use $375,785,000 $345,641,000

Total Assets $4,407,568,000 $4,054,033,000

Current Liabilities $648,275,000 $552,726,000

Total Liabilities $2,763,456,000 $2,573,926,000

Net Assets $1,644,112,000 $1,480,107,000

Total Revenues $3,485,889,000 $3,367,322,000

Interest Expense $98,752,000 $105,500,000

Excess of Revenues Over Expenses $185,259,000 $195,639,000

Cash Flow from Operations $495,726,000 $397,665,000

Working Capital $1,368,511,000 $1,322,684,000

FINANCIAL RATIOS 12/31/2005 12/31/2004 Current Ratio (CA/CL) 3.1 3.4

Cash Flow to Current Liabilities (CFO/CL) 0.8 0.7

Long-Term Debt to Net Assets (TL-CL/NA) 1.3 1.4

Times Interest Earned (NPO+Int/Int) 2.9 2.9

Net Assets to Total Assets (TE/TA) 37.3% 36.5%

Operating Margin (ER/TR) 5.3% 5.8%

Return on Assets (ER/TA) 4.2% 4.8%

Operating Cash Flow to Assets (CFO/TA) 11.2% 9.8%

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d. What is the immediate and long-term financial feasibility of the

proposal? ss. 408.035(6), Florida Statutes. A comparison of the applicants’ 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 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, either go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. Halifax Hospital Medical Center (CON # 9956): Comparative data were derived from hospitals in peer groups that reported data in 2005; the applicant will be compared to the hospitals in peer group 9 (Family Practice Teaching Hospital Group). Projected cost of the pancreas transplant program were also evaluated on a stand-alone basis. Comparative data for the pancreas transplant program on a stand-alone basis were derived from hospitals with approved and operational pancreas transplant programs in 2005. Peer group 9 has a total of five facilities including the applicant. Per diem rates are projected to increase by an average of 3.8 percent per year. Inflation adjustments were based on the new CMS Market Basket, 3rd Quarter, 2006. 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. The applicant included $68.8 million and $71.7 million in other operating revenue in years one and two respectively. This amount represents approximately 15.7 percent of net patient service revenues reported on Schedule 7. The applicant is a special taxing district and receives revenues through ad valorem taxes. The applicant included $37.6 million in unrestricted tax revenue and $44.7 million in total non-operating revenue in its 2005 financial filing. However, the applicant only included $3.95 million in non-operating revenue in the year two

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projection on Schedule 8. Other operating revenue was reported as $16.1 million in 2005. It appears that the applicant included the tax revenue in other operating revenues rather than in the non-operating revenue on Schedule 8 and as reported in its 2005 financial filing. The notes to the projections do not indicate the source of the other operating revenue and indicate that non-operating revenue consists of interest income. Overstating other operating revenue increases net operating revenue and adjusted patient days both of which improves the applicants per patient day net revenues and costs. Therefore, we have reclassified $37.6 million (the 2005 amount of tax revenue) in projected year one and two, adjusted for inflation, from other operating revenue to non-operating revenue to reclassify unrestricted tax revenue. Projected net revenue per adjusted patient day (NRAPD) of $1,816 in year one and $1,885 in year two is between the control group median and highest values of $1,758 and $2,029 in year one and $1,811 and $2,090 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 2005 was reported as $1,642. The difference in the NRAPD reported in 2005 and the year two projected NRAPD of $1,885 results in an average compound annual increase of approximately 4.03 percent. This level of increase is slightly above the inflation percentage outlined in the CMS Market Basket, 3rd Quarter, 2006, index. Based on the above, projected revenues appear reasonable. Projected cost per adjusted patient day of $1,814 in year one and $1,854 in year two is between the control group median and highest values of $1,712 and $1,912 in year one and $1,763 and $1,970 in year two. The highest level is generally viewed as the practical upper limit on efficiency. With anticipated cost between the median and highest value in the control group, the year two cost appear feasible. (See table below). The applicant’s CAPD in calendar year 2005 was reported as $1,661. The difference in the CAPD reported in 2005 and the year two projected CAPD of $1,854 results in an average compound annual increase of approximately 3.2 percent. This level of increase is below the inflation percentage outlined in the CMS Market Basket, 3rd Quarter, 2006, index. Organ transplant programs are expensive and it would be expected that the overall level of expense would increase beyond the rate of inflation when adding an adult pancreas and adult kidney transplant program.

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Although, the number of patient days added by this project (including the days added by the kidney transplant program as described in CON #9897) is projected to be less than one tenth of one percent of the total patient days, it would not be expected that the increase in cost would be less than the level of inflation. It appears that CAPD may be understated. The year two projected cost per patient day (CPD) for the pancreas transplant patients of $5,279 is below the control group minimum value of $6,154. The projected pancreas transplant costs appear to include only the incremental cost of the program. If the overhead and property cost (approximately $900 per patient day) were included with the incremental cost, the projected cost of the program would approximate the minimum control group value. This would indicate a highly efficient program compared to the control. As discussed above projected cost appear to be understated. The applicant is projecting a decrease in the transplant program between year one and year two of approximately 22.7 percent. It should be noted that this application is a new transplant program. The first year of operation has a projected utilization rate that is half the year two utilization rate. As the utilization rate increases, CPD would be expected to decrease. The year two operating profit for the hospital of $6.7 million computes to an operating margin per adjusted patient day of $31 which is between the peer group median and highest value of $24 and $112. The operating margin computes to 1.6 percent. As discussed above, the applicant is a special taxing district and receives revenues through ad valorem taxes. The projected total margin for the applicant is $47.4 million or 11.46 percent. The 2005 total margin was $29.8 million or 8.9 percent. The notes to the projections indicate the applicant used an inflation rate of three percent to increase cost and 4.5 percent to increase revenues. Increasing revenues at a greater rate than cost without a material shift in occupancy is not considered a conservative assumption for the purposes of financial projections. Therefore, the operating and total margins are likely overstated. However, since the applicant was profitable in 2005, and this project (including the kidney transplant program which was not operational in 2005) is not material to the overall operations of the applicant, the project appears financially feasible.

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TABLE HALIFAX HOSPITAL MEDICAL CENTER CON #9956 Jun-09 YEAR 2 VALUES ADJUSTED 2005 DATA Peer Group 9 YEAR 2 ACTIVITY FOR INFLATION

ACTIVITY PER DAY Highest MedianLowes

tROUTINE SERVICES 834,496,924 3,797 1,128 835 374 INPATIENT AMBULATORY 0 0 230 145 51 INPATIENT SURGERY 0 0 0 0 0 INPATIENT ANCILLARY SERVICES 0 0 3,293 3,049 2,060 OUTPATIENT SERVICES 326,215,043 1,484 1,899 1,533 1,415 TOTAL PATIENT SERVICES REV. 1,160,711,967 5,281 6,349 5,321 4,611 OTHER OPERATING REVENUE 29,142,843 133 91 22 15 TOTAL REVENUE 1,189,854,810 5,414 6,370 5,344 4,626

DEDUCTIONS FROM REVENUE 775,603,794 3,529 0 0 0 NET REVENUES 414,251,016 1,885 2,090 1,811 1,564

EXPENSES ROUTINE 76,085,713 346 360 274 199 ANCILLARY 159,488,016 726 694 629 540 AMBULATORY 29,014,029 132 0 0 0 TOTAL PATIENT CARE COST 264,587,758 1,204 0 0 0 ADMIN. AND OVERHEAD 126,956,130 578 0 0 0 PROPERTY 16,000,924 73 0 0 0 TOTAL OVERHEAD EXPENSE 142,957,054 650 860 766 621 OTHER OPERATING EXPENSE 0 0 0 0 0 TOTAL EXPENSES 407,544,812 1,854 1,970 1,763 1,541

OPERATING INCOME 6,706,204 31 112 24 -19 1.6% PATIENT DAYS 154,146 ADJUSTED PATIENT DAYS 219,787 TOTAL BED DAYS AVAILABLE 278,860 VALUES NOT ADJUSTED ADJ. FACTOR 0.7013 FOR INFLATION

TOTAL NUMBER OF BEDS 764 Highest MedianLowes

tPERCENT OCCUPANCY 55.28% 76.3% 54.0% 46.9% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 14,700 9.5% MEDICAID 19,967 13.0% 13.9% 13.0% 7.4% MEDICAID HMO 5,208 3.4% MEDICARE 55,757 36.2% 56.0% 36.2% 30.9% MEDICARE HMO 19,262 12.5% INSURANCE 10 0.0% HMO/PPO 37,479 24.3% 43.3% 30.3% 24.7% OTHER 1,763 1.1% TOTAL 154,146 100%

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Adventist Health System/Sunbelt, Inc. (CON #9957): Comparative data were derived from hospitals in peer groups that reported data in 2005; the applicant will be compared to the hospitals in peer group 9 (Family Practice Teaching Hospital Group). The pancreas transplant program was also evaluated on a stand-alone basis. Comparative data for the pancreas transplant program on a stand-alone basis were derived from hospitals with approved and operational pancreas transplant programs in 2005. Peer group 9 has a total of five facilities including the applicant. Per diem rates are projected to increase by an average of 3.8 percent per year. Inflation adjustments were based on the new CMS Market Basket, 3rd Quarter, 2006. 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. Projected net revenue per adjusted patient day (NRAPD) of $1,980 in year one and $2,044 in year two is between the control group median and highest values of $1,865 and $2,153 in year one and $1,921 and $2,217 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 2005 was reported as $1,956, which was the highest in the control group. The difference in the NRAPD reported in 2005 and the year two projected NRAPD of $2,044 results in an average compound annual increase of approximately 1.27 percent. This level of increase is well below both the three percent rate indicated in the notes to the projections and the inflation percentage outlined in the CMS Market Basket, 3rd Quarter, 2006, index. It appears that the applicant used the same 1.27 percent rate of inflation for cost. Had the applicant used the rate indicated in the notes of three percent (a reasonable rate) then the applicant would have fallen closer to the highest level in the peer group. This would be expected since the applicant reported the highest level of NRAPD in the peer group for 2005. Net revenues appear to be understated. Projected cost per adjusted patient day of $1,869 in year one and $1,926 in year two is between the control group median and highest values of $1,816 and $2,029 in year one and $1,871 and $2,090 in year two. The highest level is generally viewed as the practical upper limit on efficiency. With anticipated cost between the median and highest value in the control group, the year two cost appear feasible. (See table below). The applicant’s CAPD in calendar year 2005 was reported as $1,843. The difference in the CAPD reported in 2005 and the year two projected CAPD of $1,926 results in an average compound annual increase of

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approximately 1.27 percent. This level of increase is well below both the three percent rate indicated in the notes to the projections and the inflation percentage outlined in the CMS Market Basket, 3rd Quarter, 2006, index. It appears that the applicant used the same 1.27 percent rate of inflation for net revenues. Had the applicant used the rate indicated in the notes of three percent (a reasonable rate) then the applicant would have fallen closer to the highest level in the peer group. This would be expected since the applicant reported the highest level of CAPD in the peer group for 2005. CAPD appear to be understated. The projections for the transplant program include only the incremental cost of the program. The year two projected incremental cost per patient day (CPD) for the pancreas transplant patients is $6,692. The incremental costs do not included shared fixed cost like overhead and property. Therefore we have added $1,246 per patient (from Schedule 8) day for overhead and property cost to estimate the fully allocated CPD of approximately $7,938 in year two for the transplant program. The estimated fully allocated CPD fall between the control group median and highest values of $7,293 and $10,944. The cost appears reasonable when compared to the control group; however, the cost is likely understated based on the discussion above regarding the inflation rate used by the applicant for costs. The year two operating profit for the hospital of $85.7 million computes to an operating margin per adjusted patient day of $118 which is above the peer group highest value of $112. Compared to the peer group the applicant reported by far the largest operating margin per adjusted patient day in 2005; therefore it is not unexpected that the applicant’s projected margin would approximate or exceed the peer group highest margin. Although we discuss above the apparent understatement of net revenues and costs, the understatements were proportional and the projected operating margin of 5.8 percent is consistent with the operating margin reported in 2005. This project is immaterial to the overall operations to the applicant and will not likely have a material financial impact on the applicant’s existing operations.

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TABLE

ADVENTIST HEALTH SYSTEM/ SUNBELT, INC. CON #9957 Jun-09 YEAR 2 VALUES ADJUSTED 2005 DATA Peer Group 9 YEAR 2 ACTIVITY FOR INFLATION ACTIVITY PER DAY Highest Median LowestROUTINE SERVICES 3,107,845,747 4,275 1,197 886 397 INPATIENT AMBULATORY 0 0 244 154 54 INPATIENT SURGERY 0 0 0 0 0 INPATIENT ANCILLARY SERVICES 0 0 3,494 3,235 2,186 OUTPATIENT SERVICES 1,313,795,398 1,807 2,015 1,626 1,501 TOTAL PATIENT SERVICES REV. 4,421,641,145 6,083 6,737 5,646 4,893 OTHER OPERATING REVENUE 16,733,308 23 96 23 16 TOTAL REVENUE 4,438,374,453 6,106 6,759 5,670 4,909

DEDUCTIONS FROM REVENUE 2,952,361,111 4,061 0 0 0 NET REVENUES 1,486,013,342 2,044 2,217 1,921 1,660

EXPENSES ROUTINE 244,050,442 336 382 291 211 ANCILLARY 451,368,918 621 736 667 573 AMBULATORY 69,780,150 96 0 0 0 TOTAL PATIENT CARE COST 765,199,510 1,053 0 0 0 ADMIN. AND OVERHEAD 482,335,582 664 0 0 0 PROPERTY 151,699,994 209 0 0 0 TOTAL OVERHEAD EXPENSE 634,035,576 872 913 812 659 OTHER OPERATING EXPENSE 1,085,632 1 0 0 0 TOTAL EXPENSES 1,400,320,718 1,926 2,090 1,871 1,635

OPERATING INCOME 85,692,624 118 112 24 -19 5.8% PATIENT DAYS 509,022 ADJUSTED PATIENT DAYS 726,944 TOTAL BED DAYS AVAILABLE 661,745 VALUES NOT ADJUSTED ADJ. FACTOR 0.7002 FOR INFLATION TOTAL NUMBER OF BEDS 1,813 Highest Median LowestPERCENT OCCUPANCY 76.92% 76.3% 54.0% 46.9%

PAYER TYPE PATIENT

DAYS % TOTAL SELF PAY 27,346 5.4% MEDICAID 62,228 12.2% 13.9% 13.0% 7.4% MEDICAID HMO 11,880 2.3% MEDICARE 243,600 47.9% 56.0% 36.2% 30.9% MEDICARE HMO 7,514 1.5% INSURANCE 0 0.0% HMO/PPO 144,882 28.5% 43.3% 30.3% 24.7% OTHER 11,572 2.3% TOTAL 509,022 100%

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d. Will the proposed project foster competition to promote quality and cost-effectiveness? ss. 408.035(7), Florida Statutes. Competition to promote quality and cost-effectiveness is driven primarily by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/cost in order to remain viable in the market.

Halifax Hospital Medical Center (CON #9956): Organ transplant programs are unique to most other hospital procedures in that the demand for organ transplants exceeds the supply in available organs as demonstrated by the wait list. A transplant program would need to maintain a minimum level of procedures to remain proficient and ensure quality of outcomes. Cost-effectiveness (as a result of competition) for organ transplant programs is limited on two fronts. First, from the payment perspective, the impact of competition on the price of services is limited to the payer type. Most consumers do not pay directly for hospital services rather they are covered by a third-party payer. The impact of price competition would be limited to third-party payers that negotiate price for services, namely managed care organizations. Therefore, price competition is limited to the share of patient days that are under managed care plans. In 2005, 31.5 percent of the transplant recipients were under managed care plans. From the facility’s perspective, incentive for cost-effectiveness is driven by the reimbursement rate. Currently, the fixed price payers’ (the majority payer) reimbursement does not cover the cost of providing the service. The difference is material and ensures that only large facilities with sufficient resources and economies of scale are able to absorb the losses generated by a transplant program over the long-term. Therefore, from the facility perspective, although cost effectiveness may be impacted by this project, it is more likely to be driven by the facility’s need to reduce the gap between cost of service and the reimbursement rates rather than by competition. Adventist Health System/Sunbelt, Inc. (CON #9957): Organ transplant programs are unique to most other hospital procedures in that the demand for organ transplants exceeds the supply in available organs as demonstrated by the wait list. A transplant program would need to maintain a minimum level of procedures to remain proficient and ensure quality of outcomes. Cost-effectiveness (as a result of competition) for organ transplant programs is limited on two fronts. First, from the payment perspective, the impact of competition on the price of services is limited to the payer type. Most consumers do not pay directly for hospital services rather

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they are covered by a third-party payer. The impact of price competition would be limited to third-party payers that negotiate price for services, namely managed care organizations. Therefore, price competition is limited to the share of patient days that are under managed care plans. In 2005, 31.5 percent of the transplant recipients were under managed care plans. From the facility’s perspective, incentive for cost-effectiveness is driven by the reimbursement rate. Currently, the fixed price payers’ (the majority payer) reimbursement does not cover the cost of providing the service. The difference is material and ensures that only large facilities with sufficient resources and economies of scale are able to absorb the losses generated by a transplant program over the long-term. Therefore, from the facility perspective, although cost effectiveness may be impacted by this project, it is more likely to be driven by the facility’s need to reduce the gap between cost of service and the reimbursement rates rather than by competition.

f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements?

Neither of the proposed projects involve any construction nor renovation to add the pancreas transplant program.

g. Does the applicant have a history of and propose the provision of health services to Medicaid patients and the medically indigent?

ss. 408.035(11), Florida Statutes. Halifax Hospital Medical Center (CON #9956) has a record of services to Medicaid, the medically indigent, and to other medically underserved populations. Halifax Hospital Medical Center indicates that it is a tax-supported facility with an explicit charter to provide care to indigent populations. The medical center has conditioned its application on the provision of five percent of its pancreas transplant case-load to Medicaid or uninsured patients, pending clinical qualification. The medical center will implement programs to assist low-income patients to become qualified as transplant candidates and to maintain compliance with transplant wait list requirements. In addition, the medical center will establish funding to pay for immunosuppressant drugs for any uninsured patient unable to afford them. Halifax Medical Center is a Medicaid disproportionate share hospital. The applicant states that in 2003, Halifax provided 51 percent of all bad debt and charity care and 58 percent of all Medicaid care for Volusia and Flagler Counties. Adventist Health System/Sunbelt, Inc. (CON# 9957) indicates that it has a consistent history of serving the needs of the Medicaid population

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and the medically indigent. The applicant states that total gross inpatient and outpatient revenues to Medicaid patients amounted to 11.2 percent in 2005. During this same period Florida Hospital provided 6.2 percent charity care. As noted earlier, unlike co-batched applicant Halifax, the applicant has not agreed to condition award of the CON upon providing a certain percentage of services to the medically indigent

F. SUMMARY

Halifax Hospital Medical Center (CON #9956) proposes the establishment of an adult pancreas transplant program in Transplant Service Area 3. Total project costs are estimated to be $207,925 and do not include any construction costs. Adventist Health System/Sunbelt, Inc. (CON #9957) proposes the establishment of an adult pancreas transplant program in Transplant Service Area 3 and is projected to have capital costs of $106,425 that do not include construction costs. In weighing and balancing the review criteria, the following relevant factors are noted: Fixed Need Pool There is no fixed need pool publication for adult pancreas transplantation programs. It is the applicant's responsibility to demonstrate the need for the project. There are presently no operational adult pancreas transplant programs in Organ Transplant Service Area (OTSA) 3. Both co-batched applicants agree that some portion of the patients they expect to serve in this program will have either had a kidney transplant or need to have both a kidney and pancreas transplant. As noted earlier, both Halifax and Florida Hospital – Orlando operate adult kidney transplantation programs. Unlike other hospital programs, transplant services are reliant on donors and patients are often placed on waiting lists. Utilization data whether current or historic is primarily an indication of the number of donors. Although wait lists are an indicator of need, without available donors, they are not by themselves a predictor of utilization. Outmigration

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Need Halifax Hospital Medical Center’s (CON #9956) projected pancreas transplants for Transplant Service Area 3 in year one is 3.05 and in year two 5.12. The applicant is a disproportionate share facility and a trauma center and has agreed to condition award of the CON upon ensuring access to the medically needy. Adventist Health System/Sunbelt, Inc. (CON #9957): Florida Hospital believes that by the second year of operation the program will complete 10 pancreas transplants. In year one the program is expected to complete five pancreas transplants. Florida Hospital performs a relatively high number of kidney transplantation procedures and provided evidence that it transferred patients from its facility that needed a pancreas transplant. Out-migration suggests that approval both programs can be supported. Quality of Care Both applicants have reasonably demonstrated that they meet the rule requirements per Chapter 59C-1.044, Florida Administrative Code, with regard to the provision of quality of care for transplant programs. Both applicants reasonably demonstrated that quality of care measures and appropriate policies and protocols are in place to accommodate the proposed project. Cost/Financial Analysis Halifax Hospital Medical Center (CON #9956): The capital requirements for this project are minor in relation to the entire capital budget and funding should be available as needed. Funding for the entire capital budget is dependant on the financing described in the application. If the financing described in the application is accurate, funding for the entire capital budget should be available as needed. The project is not likely to have a material impact on the existing operations of the applicant; therefore, this project appears to be financially feasible.

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Adventist Health System/Sunbelt, Inc. (CON #9957): The applicant appears to have the financial resources necessary to fund this project and all capital projects listed on Schedule 2. This project appears to be financially feasible and is not likely to have a material impact on the existing operations of the applicant. Medicaid/Charity Care Commitment Halifax Hospital Medical Center (CON #9956) is a tax-supported facility with an explicit charter to provide care to indigent populations. The medical center has conditioned its application on the provision of five percent of its pancreas transplant caseload to Medicaid or uninsured patients, pending clinical qualification. In addition, the medical center will establish funding to pay for immunosuppressant drugs for any uninsured patient unable to afford them. Within the last three years, Halifax Hospital has received one confirmed complaint and two confirmed complaints without deficiency. Adventist Health System/Sunbelt, Inc. (CON #9957) has a consistent history of serving the needs of the Medicaid population and medically indigent. Adventist Health System/Sunbelt, Inc. did not mention what percentage of its pancreas transplant caseload would be comprised of Medicaid or uninsured patients. Florida Hospital has received 27 confirmed complaints within the last three years. Architectural Analysis Neither Halifax Medical Center nor Adventist Health System/Sunbelt, Inc. have projects that involve construction or renovation.

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G. RECOMMENDATION

Approve CON #9956 for the establishment of an adult pancreas transplantation program in Organ Transplantation Service Area 3. The total cost of the project is $207,925 that does not include construction costs. CONDITIONS: 1. A minimum of five percent of its pancreas transplant procedures to

uninsured patients. 2. Implementation of programs to assist in funding

immunosuppressant drugs for indigent and uninsured pancreas transplant patients ranging from working with drug manufacturers to secure favorable purchase prices for such drugs to direct subsidy. The applicant will annually provide evidence, including dollar amounts and a list of manufacturers it has worked with, of its assistance in funding this program.

3. Implementation of programs to support indigent patients in meeting compliance criteria for pancreas transplantation. The applicant will provide evidence that these programs have been implemented and report of indigent patients it has successfully helped to meet compliance criteria for pancreas transplantation annually.

Approve CON #9957 for the establishment of an adult pancreas transplantation program in Organ Transplantation Service Area 3. The total cost of the project is $106,425 that does not include construction costs.

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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: Karen Rivera Health Services and Facilities Consultant Supervisor Certificate of Need Jeffery N. Gregg

Chief, Bureau of Health Facility Regulation

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Documents

STATE AGENCY ACTION REPORTCON Action Number: 9956 & 9957 Transplants (Adult) Performed July, 2001 - June 2006 For Kidney Transplants in Florida Based on Agency For Health Care Administration