Published: 30 May 2000
Analyst(s): Jonathan Edwards
Management Summary The healthcare market in Jacksonville, which is also known as Florida's First Coast, continues to adapt to the financial pressures of managed care. Healthcare providers are cutting costs, consolidating services and creating new affiliations in response to reductions in Medicare reimbursement. While Baptist St. Vincent's Health System, the region's largest integrated delivery system (IDS), is breaking up, University Medical Center and Methodist Medical Center have agreed to merge under the management of Gainesville-based Shands HealthCare. HMO medical costs in Jacksonville, and in Florida generally, are rising faster than premium revenue, putting intense strain on HMO finances. Florida's HMOs lost $147 million in 1999, their worst year in history. In February 2000, SunStar Health Plan became the sixth HMO in three years to be liquidated by the Florida Department of Insurance (DOI). The next month, Philadelphia-based AmeriHealth announced it would leave the Florida market due to heavy losses. As HMOs try to force down their medical costs by imposing restrictive reimbursement practices, they are increasingly coming into conflict with physicians and state authorities. Two prominent examples during 1999 were Humana Medical Plan and UnitedHealthcare of Florida. Jacksonville's hospitals, like their counterparts in other metropolitan areas of the United States, are facing mounting financial pressures. Medicare funding continues to decline as a result of the Balanced Budget Act of 1997. The cost of pharmaceuticals is rising rapidly. The cost of labor is also rising as hospitals deal with shortages of nurses, radiologists, pharmacists and home healthcare professionals by offering signing bonuses and improved benefits. Managed care organizations (MCOs) are forcing ever-lower reimbursement rates and denying more claims than previously. Many hospitals suffer from low occupancy rates because patients have been moved from inpatient treatment to less...
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