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The backroom bargaining between Nemours Foundation officials and the leaders of both Orlando Regional Healthcare and Florida Hospital finally became public in February when state regulators announced they had approved a deal to officially pave the way for a new Nemours Children’s Hospital in Lake Nona.

After six months of on-again, off-again negotiations — and nearly three years since Nemours first submitted an application to the state — the hospital goliaths had reached an agreement.

The 95-bed, $400 million Nemours hospital is expected to open in 2012 and will work in collaboration with the nearby University of Central Florida’s college of medicine, the Burnham Institute for Medical Research, and a new Veterans Administration Hospital, also to open in 2012. Groundbreaking on the Nemours hospital must begin within 18 months.

There will be no more squabbling about the Certificate of Need (CON) state regulators granted last year, which seemed to recognize the proposed innovation Nemours offered more than an actual need based on population. Florida Children’s Hospital, ownead by Florida Hospital, and Orlando Regional’s Arnold Palmer Hospital for Children each agreed to drop any appeals.

The agreement brought to conclusion a lengthy process that involved two separate sites and three CON applications by Nemours. As a top-tiered children’s hospital, Nemours will provide services currently unavailable or insufficient in the community, said Jarrod Cady, Nemours spokesman. On the top of that list are the behavioral and substance abuse centers planned for the facility.

“This agreement definitely serves the best interests of helping the children and helping the community,” Cady said. “The faster we can build a hospital, the faster we can provide the services. What we’ve always said all along is we need to provide services that are not readily available.”

Asked whether agreeing to provide roughly $4.5 million to three local healthcare programs was worth it, Cady said, “It’s better than spending it on working through an appeal process. The money can be spent on the services that are needed.”

Cady declined to say how much Nemours may have spent supporting its CON applications since mid-2005.

Rich Morrison, vice president of Florida Hospital, agreed the settlement allowed each hospital to save money that would otherwise have been spent in appealing a CON.

“It’s not unusual that you could spend $750,000 to $1 million on a complex CON struggle, particularly if you have an opponent,” Morrison said. “If you’re only at the point of negotiating, you can keep your expenditures down.” Morrison, too, wouldn’t say how much
Florida Hospital had spent.

Morrison credited the involvement of state Rep. Dean Cannon (R-Winter Park) and Sen. Daniel Webster (R-Orlando) for getting the ball rolling again when it seemed negotiations had stalled. “We were looking at the prospects of potential legislation that would essentially have created the settlement,” Morrison said. “And no one would have liked that.”

In addition, having a protracted CON battle wouldn’t look good while Gov. Charlie Crist is working to abolish the CON requirement completely in the state. Florida hospitals predominantly support the CON law.

“The reality that was pointed out was that if we’re involved in a CON fight, we really couldn’t afford to have this hanging out there,” Morrison said. “CON works extremely well in Florida. Where we get bogged down is in the administrative appeals process.”

Much of what the hospitals agreed to was already spelled out in the Nemours’ CON application. As part of the settlement, Nemours agreed to the following:

• Nemours must provide roughly 54 percent of its patient days to those qualifying for Medicaid or charity care.
• It must apply for a CON for a pediatric rehabilitation program to include a dedicated inpatient unit and a child and adolescent behavioral health program to include a dedicated child and adolescent psychiatric and substance abuse unit.
• Nemours will contribute $350,000 a year for 10 years to either the Orange County Federally Qaualified Health Center or the Primary Care Access Network to support pediatric primary care.
• Nemours will uphold its current business plan that does not include high-level tertiary care services such as organ transplants, bone marrow transplants, open-heart surgery and angioplasty during the first two years of operation.
• Nemours will contribute $150,000 a year for five years to the Howard Phillips Center and $105,000 a year to the Hug Me Program for two years.

Caption
(L-R): James Paul, Nemours advocate; Dr. David Bailey, Nemours president and CEO; Pete Regules, 4C chairman; Michael Poole, PCE Investment Bankers president and Nemours Council chairman; David Odahowski, Edyth Bush Charitable Foundation President and Nemours Council member; Phoebe Carpenter, 4C founder/former president and Nemours Council member, along with children from Nemours.



April 2008

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