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Florida Health Market Review 2019

  • ID: 4969185
  • Report
  • February 2020
  • Region: United States
  • Allan Baumgarten
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South Florida Hospitals Recorded Combined Profits of $1.279 Billion in 2018

FEATURED COMPANIES

  • AdventHealth
  • Baptist Health
  • Blue Cross Blue Shield
  • HCA
  • Mayo Clinic
  • Molina
  • MORE

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.

The new Florida analysis shows:

  • 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 an 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 a net income of $363.6 million, or 14.4% of net patient revenues. Baptist Health, the largest system in the region, had a net income of $142.8 million, while the Memorial system in Broward County had a 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 a 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 a 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 Clinic 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 the combined net income of $891.1 million in 2017. Molina, Humana, and WellCare had the highest margins. In addition, Blue Cross Blue Shield had a 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 newest enrollees.
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FEATURED COMPANIES

  • AdventHealth
  • Baptist Health
  • Blue Cross Blue Shield
  • HCA
  • Mayo Clinic
  • Molina
  • MORE

1. Introduction

2. Market Structure

  • Health Plans
  • Provider Systems

3. Trend Analysis

  • Enrollment
  • Medicare HMOs
  • Medicaid Managed Care  
  • Enrollment by Region
  • HMO Profitability
  • Financial Metrics   
  • Provider Payments
  • Administrative Expense
  • HMO Net Worth and Capital

4. Hospital Systems and Regional Submarkets

  • South Florida
  • St. Petersburg
  • Jacksonville - Gainesville
  • Orlando

5. A Look Ahead

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  • AdventHealth
  • Anthem
  • Baptist Health
  • Bayfront Health
  • Blue Cross Blue Shield
  • Community Health Systems
  • HCA
  • Humana
  • Mayo Clinic
  • Memorial System
  • Molina
  • Orlando Health
  • Oscar and Bright Health
  • UnitedHealthcare
  • WellCare
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