Hospitals in good health

Competition will continue

Growth is expected to continue in 2017.

A strong economy and steady growth in health insurance enrollment have contributed to growing revenues among South Florida’s public and private hospitals in recent years.

In the 2015 fiscal year, net income of hospitals in the tricounty region increased 11.7 percent — to $1.29 billion compared to $1.16 billion in 2014, according to data compiled by the Florida Agency for Health Care Administration. That followed an increase of 40 percent compared to 2013.

Flush with revenue, South Florida’s hospitals are buzzing with expansions, additions and renovations. Similar capital improvements are under way in large markets across the country, said Allan Baumgarten, an independent health market analyst, partly in response to moves by the federal government to tie Medicare reimbursements to patient satisfaction and “avoidance of hospitalacquired conditions” such as deadly infections.

“We see hospitals looking to convert semi-private rooms into private rooms, and making maternity suites more spa-like,” he said.

Baumgarten expects 2016 will show further revenue growth when that data is compiled late in 2017. But with Donald Trump and the Republican-led Congress poised to slash federal spending on health insurance entitlements, hospitals could begin to see revenue growth slow, he said.

Trump has promised to repeal the Affordable Care Act, while House Speaker Paul Ryan and the Republicans are talking about turning Medicare into a voucher program and limiting Medicaid funding by forcing states to figure out how to divvy up block grants, Baumgarten said.

“With health plans trying to reduce utilizations of health care and reduce payments to providers, that could significantly reduce payment flows to these hospitals,” he said.

Mark Cherry, principal analyst with health care research and data provider Decision Resources Group, predicts that hospital systems in South Florida will continue to push out of their traditional service areas and onto competitors’ turfs in 2017.

“For a long time, Baptist [Health], Memorial [Healthcare], Broward Health, Jackson [Health System], etc., have been mostly contained within their respective service areas,” Cherry said. “But you already see HCA [East Florida] invading into Memorial’s South Broward County turf with [HCA’s planned hospital at Nova Southeastern University in Davie.] Jackson is going into Miami’s west side to compete against HCA.”

Cherry foresees hospital systems continuing to work with insurers to create narrow networks “so a patient can get nearly all their healthcare services without going outside the system.” Narrow networks keep insurance premiums affordable and pave the way for hospital systems to create their own insurance companies, he said.

Cherry expects more partnerships such as the University of Miami Health System’s recently announced takeover of 17 urgent care clinics at tricounty Walgreens stores “to keep patients contained within the ecosystem.”

Major projects and initiatives are planned for 10 of South Florida’s major hospital companies next year.