Updated 4 yearss ago
Nationally, about 30 hospitals a year have been closing, mostly in rural areas. In Florida, in 2018, the 25- bed Campbellton-Graceville Hospital in Northwest Florida closed after a Chapter 11 bankruptcy filing a year earlier. Some have predicted the nation’s 5,000 hospitals will shrink by between 500 to 1,000 over the next five years.
Hospitals in Florida have performed better financially in recent years. In 2012, they cumulatively had a 5.4% operating margin, and 44 operated at a loss, nearly a quarter of the state’s total. Three years later — the most recent data available from the Florida Hospital Association — the operating margin was up to 9.2% and the number operating at a loss had fallen to 32, 17.6% of the state total. One notable change over that time span: The cost of “uncompensated care” fell by $400 million.
According to Allan Baumgarten’s Florida Health Market Review, South Florida hospitals recorded combined profits above $1 billion — 7.5% on $14 billion in net patient revenue — in 2016, the third straight year of more than $1 billion in profits. The HCA and Memorial systems posted the strongest profits, according to the FHMR report. “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 profits totaling $938.6 million, with average margins of 11.5%.”
In his report, Baumgarten wrote that “more than half” of Florida’s hospitals have “joined together in a variety of loosely integrated networks and more tightly controlled systems” — by buying or building new hospitals and by acquiring physician practices and adding skilled nursing facilities and convenient care sites. Strategic partnerships, he wrote, “are becoming increasingly important as a strategy for growth.”
“The HCA Healthcare and Florida Hospital systems have added new inpatient and outpatient facilities and are 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.”
Among the purchases: Altamonte Springs-based AdventHealth last year bought two hospitals — one in Ocala, the other in Dade City in Pasco County — from Community Health Systems, a national, for-profit chain that has been shedding locations and laying off workers in recent years to boost its bottom line. Financial terms were not disclosed.
Formerly Florida Hospital, Advent- Health now operates 28 hospitals in 12 Florida counties and a total of 47 hospitals in nine states and hundreds of outpatient sites.
Chief Strategy Officer David Banks says the recent acquisitions are part of a broader goal to increase patient convenience and connectivity. The moves, he says, also make sense financially. “The scale and efficiencies we have allow us to go into communities that maybe others haven’t been successful in,” he says.
Says Baumgarten: “The central goal for these systems has been growth — across wider geographic areas and gaining more patients, so that investments in electronic medical records and medical technology and facilities can be spread across a broader base of patients.” The primary incentive for most systems, Baumgarten wrote, “continues to be increasing volume of inpatient days, procedures, lab tests and imaging in order to increase revenues.”
Read more in our April issue.
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