he Miami Herald depicted 1996 as "a feeding frenzy for health care firms in the state."²² In Dade County this "frenzy" took the form of hospital chains aggressively purchasing hospitals to gain market share and lower costs, and ownership changes among the health plans including new entrants and departures. Events during the first part of 1997 suggest that this trend appears to be continuing as new deals are announced on a regular basis and consolidation of health plans may be taking off.

Considerable change in a highly competitive market was predicted by a study conducted 18 months prior to this site visit.²³ While consolidation of independent hospitals into existing systems was anticipated, neither the merger of Tenet/OrNda nor the rapid growth of the new Baptist Health Systems was envisioned. With the new systems emerging and potential cooperative strategies among them surfacing, the previously powerful position of Columbia/HCA may erode. Change of ownership among health plans and entry of new plans continues, but the anticipated consolidation and potential emergence of dominant plans has not yet occurred. Humana’s planned purchase of PCA to expand into the Medicaid market may signal some greater movement toward consolidation. Among physicians, change is continuing at a fairly slow pace while the vulnerability of safety net providers is reportedly increasing as Medicaid patients shift to the private sector under expanding managed care arrangements. With premiums in the commercial market continuing to be held down due to competition among health plans, no new purchaser activities are emerging.

The future shape and direction of the Miami health care system is not clear. How organizational changes and relationships will affect access, quality and costs of care are matters of some concern, but specific impact is not obvious. If commercial rates begin to rise, organized purchaser activity may be stimulated. On the other hand, an increase in the power of health systems may resist further erosion in payment levels. Potential alliances among any of the three health systems to compete against the other may encourage increased alignments among other providers, particularly if the allied systems have adequate geographic coverage to successfully contract with health plans. Could such strategies lock one health system out of some plans? What will happen to the remaining independent hospitals, particularly Mount Sinai, Jackson Memorial and Pan American? Will the slow-moving organization of physicians accelerate?

The impact of changes in provider organizations on health plans should be watched carefully. Consolidation of health plans and increased cost pressures could lead to more direction of volume and efforts to influence and align physicians with plans. Increased alignment of health systems could lead to new provider relationships with plans, particularly to increased opportunities to add exclusivity into arrangements and obtain greater volume. Will providers assume more risk? If direction of volume increases, will health plans have more influence over physician practice and will they increase care management activity and monitoring?

The vulnerable system of care for the poor should be watched. Increased managed care in the Medicaid program may improve access to care for Medicaid beneficiaries, but erode the financial base for traditional providers of care to Medicaid and indigent patients. Will the strategies initiated by these providers be effective in strengthening their viability? Changes not yet implemented by Medicaid are expected to speed up managed care enrollment and reduce payment rates. Medicaid contracting will also affect the balance of business among health plans, potentially strengthening some and adding others to the mix. How will actions by local jurisdictions to incorporate affect funding for indigent care, and will the new county mayor assert leadership to protect this resource? As welfare reform unfolds, demand for indigent care is expected to increase and exacerbate the current fragility of the public hospital and clinics and the federally funded network of community health centers. Given the size of the Medicaid and uninsured population in the Miami area, continuing erosion of the safety net may have effects on the overall health system.