- Language: English
- 320 Pages
- Published: June 2013
- Region: Global
Florida Health Market Review 2013
- Published: September 2013
- Region: United States
- Allan Baumgarten
Consolidated hospital systems see profits despite declining utilization
HMO Medicare and commercial plans are strongly profitable
Hospitals in the state are going through a new wave of consolidation, leaving fewer independent hospitals. While their profits are also strong and they continue to make significant capital investments, they are seeing inpatient utilization decrease. Florida HMOs, especially Humana, earned very strong profits on their Medicare Advantage plans and added new Medicaid and Medicare members.
These and other findings are presented in Florida Health Market Review 2013, Allan Baumgarten’s twelfth report analyzing health care payer and provider organizations and trends in Florida. Baumgarten is an independent analyst based in Minnesota who has published reports examining health market trends and competition in ten other states.
Among the report’s findings:
-Hospital systems in the state enjoyed strong profits in 2012. Based on financial and utilization data from the state’s annual survey of hospitals, hospitals in South Florida reported net income of $590.3 million, or 5% of $11.8 billion in net patient revenues. Most hospitals made money on operations and also benefited from other revenues, such as investments, government grants and philanthropy. That is similar to their 2011 results but much higher than 2008, when they reported net income of $160.5 million or 1.7% of patient revenues. In the Tampa-St. Petersburg region, where virtually all hospitals are now part of a larger system, the average profit margin in 2012 was 8.1%.
- Investor-owned hospitals system like HCA and Tenet continue to dominate some regions of the state. Community Health Systems of Tennessee will acquire Health Management Associates of Naples, giving it dozens of hospitals and clinics in the state, including the Bayfront system in St. Petersburg.
- While ambitious capital programs have added inpatient capacity, the number of inpatient days in South Florida dropped 11.3% between 2007 and 2012. Fewer people have comprehensive benefits so they may be putting off elective procedures. Expansion of coverage under the Affordable Care Act will likely result in some increase in care utilization.
- Florida physicians have formed more than 20 Medicare Shared Savings Accountable Care Organizations. The single Pioneer ACO in Florida is dropping out of that program. Physicians formed all but one of the Shared Savings ACO, some working with partners like Universal American Insurance and Walgreens.
- Florida HMOs were strongly profitable in 2012, with Medicare the most lucrative line of business. As a group they had net income of $939 million in 2012 or 4.3% of premium revenues. Medicare was especially profitable; these companies had operating income, before taxes or investment revenue, of $982 million on their Medicare plans. Humana alone accounted for $804 million. The average medical loss ratio for those plans was only 80.8%.
- Employer group plans were also profitable, particularly UnitedHealthcare and Aetna. On average, commercial HMOs collected $343 per member per month and paid $288 in medical expenses, for a loss ratio of 84.1%. Several Florida HMOs were required to pay rebates to policyholders because their loss ratio were below the standard.
- Medicaid enrollment increased by 13% in 2012 to 1.3 million, and now comprises 25% of all HMO enrollment. Medicaid HMOs were generally profitable; WellCare alone had operating income of $82.6 million.
- After a series of acquisitions, four companies control half of HMO enrollment in the state. United Healthcare, Humana and WellCare each have about 14% of the 3.7 million Floridians enrolled in HMOs. UnitedHealthcare completed four acquisitions in 2012 and 2011. Humana has 338,000 seniors in its three Florida HMOs, the most of any company. It also enrolls 65,000 more seniors in Medicare PPO plans in the state. SHOW LESS READ MORE >