Health System Change in Miami, Florida

Round One Site Visit

Case Study
June 1997
Susanna Ginsburg, Linda T. Kohn, Jennifer Kates, Monica D. Williams

he Miami health care market is characterized by intense competition and deal making that revolve around frequent buying and selling of health plans and hospitals and financial positioning across both sectors. Yet no one sector is dominating the market. For-profit national companies, having long played an active role in the area, are making decisions affecting the local level that are played out within the regional strategies of these organizations. At the same time, locally based hospitals and health plans are positioning to achieve market power and maintain relationships with historical constituencies. New organizations that align hospitals and physicians are also forming. The pressure of considerable overcapacity in hospital beds and physicians and the presence of a large number of health plans have created expectations and opportunities for closures and consolidations.

The Miami area is culturally and politically complex. The majority Hispanic population is composed of people originating from many different countries. In addition, the area has a large African American community and large groups of new and established immigrants, many of whom are poor. It is a mix of cities, suburbs, ethnic neighborhoods and rural areas. Leadership emerges primarily from these ethnic areas and from broader ethnic constituencies, but with no dominant or controlling player.

The political dynamics in the Miami area are characterized by colorful and sometimes conflicting interaction among many diverse interest groups and varying but only sometimes successful efforts to address local problems. Moreover, corruption in the city of Miami and incorporation of the largely unincorporated areas of the county have contributed to recent changes in municipal and county government that may have significant implications for financing care for the poor, who have long depended on local taxes for services. Care for the poor has historically been concentrated in the large public hospital in Miami and ethnically oriented community health centers in the neighborhoods.

On the private sector front, the Miami business community is made up primarily of small businesses with a few large employers that do not play an active role in the health care market. Commercial premiums have decreased, lessening the motivation for business to organize purchasing power. Health plans have historically been attracted to the market by high Medicare rates and relatively generous Medicaid rates, so public purchasers have had a major role in shaping competition. For example, the state has recently taken a more active purchasing role through its efforts to move more of the Medicaid population into managed care arrangements. Final awards resulting from the recent competitive bidding for Medicaid contracts may shake up existing arrangements in ways that cannot yet be determined.

Miami-area physicians have historically practiced independently in solo and small practices. Increasingly, physicians are considering physician-hospital organizations (PHOs) and independent practice associations (IPAs) to help them compete for patients. Little exclusivity is evident as yet, except where physicians are salaried. Similarly, few efforts to introduce global capitation or care management are evident, though some groups are actively preparing to take on risk and manage care.