South Florida Hospital News
Tuesday February 25, 2020
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September 2007 - Volume 4 - Issue 3

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Spotlight on the Florida Hospital Market

248 hospitals. $81 billion in total charges. 2.5 million inpatients. 1.5 million outpatients. That was the size of the hospital market in the State of Florida for the year 2005 using the latest calendar year data available from the Agency for Healthcare Administration. $70.6 billion of these charges relate to inpatient care. Only $10.4 billion, 12.8% of the total, relate to hospital outpatient services. This is not far from the 5% to 6% outpatient services that hospitals provided 20 years ago – a very clear indicator that hospitals have not (on average) significantly diversified their business (by design or frustration) to capture the growing outpatient market within or outside the walls of their licensed hospitals – and that their general fortunes will continue to rise and fall as a function of their inpatient business.

A striking statistic, central to any policy debate about the overall future of our healthcare system, is that 67.6% of all hospital inpatient charges relate to federal, state and/or local governmental programs, with 52.3% of the total coming from the Feds alone. 48.1% of all hospital outpatient charges come from government programs with almost 36% from the Feds. When government pays about two-thirds of the healthcare bill as it does in key states like Florida, it may become increasingly difficult to maintain our private healthcare system (or portion thereof) in its present form. The debate on this issue can only intensify.

Payment disparities among payors in the hospital market have also sparked debate. The average hospital charges for inpatient and outpatient care are $27,852 and $7,008, respectively, but the disparity by financial class is significant. The average charges for a Medicaid HMO inpatient are $18,841, but are $38,828 for a Workers’ Comp inpatient. Hospital outpatient average charges tell a similar story with the highest average charges being for the Workers’ Comp payor group of $8,842 and the lowest being for the Charity Care payor group of $4,738. Since Workers’ Comp is the last and only governmental payor that still reimburses hospitals in Florida based on a percentage of charges, it should surprise no one that the average charges per case for both inpatient and outpatient are the highest of any payor group. But the impact of the disparity might be surprising. If Workers’ Comp inpatient charges were equal to the average (excluding the Workers’ Comp cases), Florida Workers’ Comp carriers would see a reduction in inpatient charges of $140 million and a reduction of outpatient charges of another $44 million.

On one hand, this apparent Workers’ Comp arbitrage is small relative to the total hospital market. At $494 million in inpatient charges, Workers’ Comp charges represent a surprisingly small 0.7% of the total hospital inpatient charges of $70.6 billion. And at $208 million, it represents only 2.0% of the total hospital outpatient market of $10.4 billion. On the other hand, if this activity is concentrated in few hospitals that have cultivated this market segment (to be explored in a future article), appreciable rewards from those efforts are likely being realized.

More than 10% of the all inpatient cases continue to be driven by just two DRG’s – normal newborns (DRG 391) and vaginal deliveries w/o complicating diagnoses (DRG 373). But four different DRG’s (tracheostomy w/ mech vent, DRG 541; major joints/limbs, DRG 209; heart failure/shock, DRG 127; and percutaneous cardiovascular proc, DRG 527) account for 10% of all inpatient charges. Not known by many is that the third ranked inpatient DRG by overall number of cases (more than 90 thousand) is psychoses, DRG 430.

On the outpatient side, more than 10% of all cases by volume are colonoscopy and/or endoscopy related, but CPT 36415, collection of venous blood by venipuncture, was the #1 volume driver. Heart catheterization was the #1 charge driver (CPT 93510). This procedure singularly generates more than $394 million in charges and represents 3.8% of all outpatient hospital charges.

Jackson Memorial Hospital, Florida Hospital and St. Joseph’s Hospital were the top inpatient volume leaders, respectively. In comparison, Baptist Hospital of South Florida, Broward General Hospital and JFK Hospitals ranked 7th, 21st and 23rd as to inpatient volumes. The top inpatient leaders by total charges were the same except that Tampa General Hospital (TGH) takes the #3 spot here. This is because TGH’s average charges per discharge were $46,312 vs. $23,653 for St. Joseph’s, a 96% difference. Kindred Hospital’s (Bay Area/St. Petersburg) average inpatient charges per case, the highest in the state in 2005, were $300,521 (relating to inpatient ventilator and other complex, long-term care). Circles of Life Hospital’s (Melbourne) average inpatient charges per case, the lowest in the state in 2005, were $3,314 (relating to inpatient psychiatric care).

Probably unknown but to a limited few healthcare experts in Florida was that 142 of the state’s 248 hospitals handled 90% of all inpatient cases. Conversely, 102 Florida hospitals (43%) served only 10% of all inpatient cases.

Geographically, the hospital market is more than 50% concentrated in only seven of Florida’s 67 counties (Miami-Dade, Broward, Palm Beach, Hillsborough, Pinellas, Orange and Duvall). Miami-Dade alone had 13.4% and 12.4% of the inpatient and outpatient hospital market. The average charges per case in all of these highly populated counties were higher than the statewide average ($27,852 for inpatient, $7,008 for outpatient) except Orange, Duvall and Miami-Dade. The average charges per case in these counties were lower than the statewide average as to Orange and Duvall for inpatient charges and as to Miami-Dade for outpatient charges. But they are the small counties of Hernando, Union and Charlotte that have the highest average inpatient charges per case of $37,136, $36,820 and $34,295, respectively. And again, Hernando and Union Counties, plus Okaloosa County, are those with the highest average outpatient charges per case of $10,594, $9,988 and $10,880, respectively.

Hamilton, Jackson and Holmes Counties experienced the lowest average inpatient charges per case at $14,960, $17,186 and $17,281, respectively. Holmes, Madison and Washington Counties experienced the lowest average outpatient charges per case at $1,670, $3,636 and $4,287, respectively.

Florida’s unofficial "68th" county represents patients from other states or countries that are cared for in Florida hospitals. These 87 thousand inpatients and 36 thousand outpatients accounted for almost $3.1 billion in charges. If this business were ranked in comparison to actual Florida counties, its $2.8 billion in inpatient charges would make it the 7th largest for overall inpatient services and its almost $300 million in outpatient charges would make it the 12th largest for overall outpatient services – a highlight of interstate and international trade by Florida hospitals.

It is also noteworthy that the hospital market provided $1.5 billion in charity care that helped more than 80 thousand people in need. Which hospitals provided the most of this charity care, and which provided the least, will also be the subject of a future article.

John W. Beebe, CEO, Spectrum Infometrics, can be reached at (954) 946-3603 or jbeebe@spectruminfometrics.com.
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