December 13, 2017
Florida Health Market Review 2017 finds:
HMOs return to profitability and reach record enrollment numbers;
Florida hospitals continue expansion strategies and enjoy strong profits
Consolidation and increased insurance coverage helped boost profits for Florida hospital systems. After incurring large losses on Medicaid plans in 2014, profits for Florida HMOs and insurers increased by 60% in 2016.
These and other findings are presented in Florida Health Market Review 2017, Allan Baumgarten’s 14th report analyzing Florida health care payer and provider organizations and their trends and strategies. Baumgarten, an independent analyst based in Minnesota analyzes health market trends and competition in Florida and seven other states: Colorado, Illinois, Michigan, Minnesota, Ohio, Texas and Wisconsin. 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:
• South Florida hospitals recorded combined profits above $1 billion for the third straight year in 2016. Using financial and utilization data from the state’s annual survey of hospitals, the report finds that hospitals in South Florida earned net income of $1.054 billion in 2016, or 7.5% of $14 billion in net patient revenues. That is less than 2014 net income of $1.154 billion, which was 8.8% of patient care revenues. The hospitals made $641 million on their operations and also benefited from $608 million in other revenues, including investments, government grants and philanthropy. The HCA and Memorial systems posted the strongest profits. Almost all hospitals in the Tampa-St. Petersburg region are now in three large systems – HCA, Bayfront/Community Health Systems and Florida Hospital - and they had net income of $938.6 million and average margins of 11.5%.
• The largest hospital systems continue to grow through acquisitions and new construction. The HCA Healthcare and Florida Hospital systems have added new inpatient and outpatient facilities and moving toward a network covering much of the state. Even though Florida regulates construction of new hospitals and other health facilities, a huge amount of capital investment is taking place, as the major systems seek to be first to establish a presence in growing areas.
• After decreasing for five straight years, the number of inpatient days of care provided by these hospitals increased a little in 2015, but was flat again in 2016. With the expansion of coverage, the number of inpatient days for uninsured patients has decreased, while commercial insurance and Medicaid are covering more days.
• There are now more than 40 Medicare Shared Savings Accountable Care Organizations in Florida, and 26 of them earned shared savings in 2016. Florida providers have been enthusiastic about forming ACOs for Medicare, though few of them take a significant amount of risk for their employer group patients.
• After seeing their profits drop sharply in 2014, Florida HMOs regained their strong profitability in 2016. Net income for Florida HMOs increased by 60% in 2016, from $555.5 million in 2015 to $885.3 million. The Humana HMOs had the highest profits, mostly from their Medicare Advantage plans. The HMOs of Blue Cross Blue Shield of Florida and UnitedHealthcare were also strongly profitable. Florida HMOs had losses of $475 million on their Medicaid plans in 2014 but underwriting income of $424.2 million on Medicaid in 2016.
• Overall HMO enrollment grew again in 2016, reaching 6.7 million. Enrollment in HMO and Blue Cross Blue Shield individual plans grew in 2015 and 2016, but was flat in 2017. In the first half of 2017, enrollment in individual plans was 1.5 million, more than twice as much as in 2014. Blue Cross Blue Shield’s PPO and HMO plans had the strongest growth and the most profitable plans. Other insurers, like Humana, Aetna and UnitedHealthcare, lost money on individual plans and stopped selling on the Healthcare.gov exchange.
• In the past two years, national insurers have acquired several Medicare Advantage plans in Florida. HMO Medicare plans in Florida had operating income of $800.2 million in2016 and are seen as a strong business opportunity.
Excerpts from the report, including the popular “Florida HMOs at a Glance” exhibit can be viewed in the State Reports section of http://www.allanbaumgarten.com.
Agency for Health Care Administration
Baptist Health Systems of South Florida
Blue Cross Blue Shield of Florida
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 Legislature, Office of Economic and Demographic Research
Morton Plant Mease Health 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?"