Florida

CONTACT: Allan Baumgarten, 952/925-9121 Cellular: 952/212-8589

Florida Health Market Review 2019 finds: Florida hospitals continue expansion strategies and enjoy stronger profits; Consolidated HMOs report improved profitability but fewer members.

Continued consolidation by health insurers and hospitals systems combined with coverage expansion has improved profits for both. Profits for Florida HMOs increased by 12% in 2018, and South Florida hospitals reported average profit margins of 8%, their highest in recent years.

These and other findings are presented in Florida Health Market Review 2019, Allan Baumgarten’s 15th report analyzing the performance and competitive strategies of Florida’s health care payer and provider organizations. Baumgarten, an independent analyst based in Minnesota, analyzes health market trends and competition in Florida and five other states: Colorado, Michigan, Minnesota, Ohio and Texas. He is also the author of reports published by the Robert Wood Johnson Foundation analyzing new provider-sponsored health plans and provider system strategies in New Jersey. PDFs or excerpts from his market reports can be downloaded at www.AllanBaumgarten.com

The new Florida analysis shows: ª Hospital systems have grown through new construction and acquisitions. The largest hospital systems in the state-HCA and Advent Health-reported very strong profit margins in 2018: 15.3% and 10.8%, respectively. Both acquired hospitals from Community Health Systems, once the seventh largest system in the state. Both systems have a presence in much of the state, giving them significant market power in dealing with employers and health plans. New hospitals, health centers and free-standing emergency departments have been constructed in many parts of the state, and that investment is likely to increase with the repeal of most of the state’s Certificate of Need program.

• South Florida hospitals recorded combined profits of $1.279 billion in 2018 and have posted combined profits above $1 billion for four of the past five years. Based on financial and utilization data from the state’s annual survey of hospitals, the report finds that hospitals in South Florida posted average margins of 8% of net patient service revenues in 2018, up from 5.9% in 2017 and 7.5% in 2016. They had operating income of $713.3 million and other revenues of $709.1 million, including investments, philanthropy and government grants. HCA was the most profitable, with net income of $363.6 million, or 14.4% of net patient revenues. Baptist Health, the largest system in the region, had net income of $142.8 million, while the Memorial system in Broward County had net income of $158.6 million.

• Hospitals in the Orlando area had average margins of 12.9% in 2018, up from 11.6% in 2016. Orlando Health, the second largest system there, posted net income of $531.4 million and a margin of 20%, while AdventHealth, the largest system, had net income of $539.3 million and a 13.4% margin. Even so, inpatient days and occupancy dropped in the region. In the Tampa-St. Petersburg area, hospitals had net income of $934.1 million and average margins of 8.8%. HCA and BayCare reported the best financial results, while Bayfront Health/Community Health Systems reported a loss of $116.8 million. Hospitals in the Jacksonville area had higher average margins than the other three regions: 13.1% of patient services revenues, with the Baptist hospitals and Mayo Clinicc reporting the highest net income.

• The health insurance market has grown significantly more concentrated in the last three years, as companies like Anthem and Blue Cross Blue Shield have acquired a number of HMOs. In 2018, the four largest HMO companies- the five Blue Cross Blue Shield HMOs, Humana, UnitedHealthcare’s HMOs and WellCare-had 64.2% of the market, compared to 51.5% two years earlier.

• As a result of their market power and favorable claims experience, HMOs enjoyed strong profits in 2018, particularly on their individual and Medicare Advantage plans. Florida HMOs had net income of just under $1 billion in 2018, or 2.2% of premium revenues. That compares to combined net income of $891.1 million in 2017. Molina, Humana and WellCare had the highest margins. In addition, Blue Cross Blue Shield had net income of $694.6 million on its PPO plans.

• Medicare Advantage plans had underwriting income of $724.9 million down from $800 million in 2016, but still very strong. Underwriting income for commercial (individual and group) plans increased from $172 million in 2016 to $725.3 million in 2018. Blue Cross Blue Shield has been very successful in the individual market and had $936.8 million in underwriting profit on its group and individual plans. New competitors – Oscar and Bright Health - have entered the individual market in much of the state – and premium rates have dropped for most plans.

• After years of steady growth, enrollment in Florida HMOs fell by 2.2% in 2018. Enrollment in Medicaid and commercial plans fell. UnitedHealthcare’s HMOs, WellCare and Blue Cross Blue Shield’s PPOs added the most new enrollees. ###

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Exhibit 1Click to View

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Florida data set info

Agency for Health Care Administration

AvMed On-Line

Baptist Health Systems of South Florida

Bay Care Health Network

Blue Cross Blue Shield of Florida

Capital Health Plan

Celebration Health

Florida Association of Health Plans

Florida Department of Children and Families

Florida Office of Insurance Regulation

Florida Hospital Association (FHA)

Florida Healthy Kids Corporation

Florida Hospital

Florida Legislature, Office of Economic and Demographic Research

Florida Medical Association

Memorial Healthcare System

Morton Plant Mease Health Center

Mount Sinai Medical Center -Greater Miami

Orlando Health

Shands Healthcare

University of Florida Health Science Center 

Introduction........................................................................................................ 3

Market Structure................................................................................................ 4

Health Plans    ...........................................................................................................................   4

Provider Systems  ....................................................................................................................    9

Trend Analysis....................................................................................................................... 14

Enrollment ............................................................................................................................... 14

Medicare HMOs   ...................................................................................................................... 16

Medicaid Managed Care     .....................................................................................................   18

Enrollment by Region    ..........................................................................................................   20

HMO Profitability    ................................................................................................................   21

Financial Metrics    .................................................................................................................   22

Provider Payments   ...............................................................................................................   26

Administrative Expense   .......................................................................................................   28

HMO Net Worth and Capital    ................................................................................................ 28

Hospital Systems and Regional Submarkets    ................................................. 29

South Florida    ........................................................................................................................ 30
ampa-St. Petersburg     ...........................................................................................................  36

Jacksonville-Gainesville   ........................................................................................................  39

Orlando     ................................................................................................................................  41

A Look Ahead      .............................................................................................. 44

Florida Health Market Review 2017 was released December 13: "HMOs return to profitability and reach record enrollment numbers; Florida hospitals continue expansion strategies and enjoy strong profits" 

• Sammy Mack reported on WLRN Public Radio: "From Patients to Hospitals, Affordable Care Act Shapes Florida Health Care Market, Analyst Says." Click here to listen
• Charles Elmore quotes the new report in the Palm Beach Post: "Hurricane Irma, political storms roil finish of sign-up season." Click here to read
• Ron Hurtibise reported in the Sun Sentinel: "Profits for Broward's two public hospital systems going opposite ways." Click here to read
• Margie Manning wrote in the Tampa Bay Business Journal: "Here are the most profitable systems in Tampa Bay." Click here to read

Florida Health Market Review 2015 was released November 18: "Hospital systems expand and consolidate, report improved profits; HMO Medicaid and individual enrollment surges, but profits drop" 

• Sammy Mack reported in Health News Florida: "Negotiating Power Shifts as Hospitals Consolidate" Click here to listen and read
• Charles Elmore wrote in the Palm Beach Post: "Florida HMO Enrollment Jumps 44% to biggest ever, report says" Click here to read
• Nina Lincoff wrote in the South Florida Business Journal: "Hospital network and health plan consolidation expected to continue in Florida" Click here to read
• Margie Manning wrote in the Tampa Bay Business Journal: "Humana leads, WellCare lags among Florida HMOs" Click here to read. She also wrote: "Here's a Peek at the Hospital of the Future." Click here to read.
• Ron Hurtibise wrote in the SunSentinel: "Hospital profits jump nearly 40%" Click here to read
• Naseem Miller reported in the Orlando Sentinel: "Report reveals most profitable hospital in central Florida." Click here to read
• Daniel Chang wrote in the Miami Heralnd: "How Baptist Health benefits from tax exemption." Click here to read

Florida Health Market Review 2013 was released September 13: "Consolidated hospital systems see profits despite declining utilization; HMO Medicare and commercial plans are strongly profitable"

• Abraham Aboraya wrote in the Orlando Business Journal: "Florida's most, and least profitable health plans"
• Brian Bandell wrote in the South Florida Business Journal: "Local hospital profits surge $51 million" and "Commercial HMOs report healthy profit margins"
• Allan Baumgarten presented at the annual conference of the South Florida Hospital and Healthcare Association on June 10, 2011. Click here to download his presentation on: "Managed Care: Can It Be Managed?"