The Community Snapshots Project

Capturing Health System Change

North Centeral Florida
1995

Overview

orth central Florida, a 16-county area that includes the city of Gainesville, is a diverse rural health care market in the process of slow but steady change. The health care system shares some characteristics of other rural communities, including small struggling hospitals, a shortage of health care professionals, low commercial HMO penetration, and inadequate transportation systems. However, these disadvantages are mostly offset by the presence of large regional hospitals in Gainesville itself, notably Shands Hospital at the University of Florida, Alachua General Hospital, and North Florida Regional Medical Center, which dominate the region’s health care system. The university is not only a major employer but draws significant resources and population to the area as a teaching and research institution. As a more urban center, Gainesville also has more managed care enrollment than other parts of the region.

The pace of change in the health care market in north central Florida has accelerated in the past year. In this period, competitive market pressures have increased. Purchasers and consumers have become more aware that health care prices in the region are above average for the state and have become more aggressive in driving hard bargains with insurers (and in a few cases with providers directly) to secure lower premium rates. As a result, insurers are competing more intensely to offer lower-cost products in all markets; commercial, Medicare, and Medicaid, and develop managed care products. A year ago, enrollment in health maintenance organizations (HMOs) and preferred provider organizations (PPOs) represented only about 10 percent of the total population. By this measure, interviewees familiar with other markets put north central Florida 6 to 7 years behind south Florida and 10 years behind Minneapolis/St. Paul. However, the near doubling of managed care enrollees in this area in the past year (current estimates put the managed care market share at 20 to 25 percent) indicates that change is occurring very quickly.

In response to these changes, hospitals, physicians, and other providers are under greater pressure to conform to managed care practices. They are trying to maintain or attract market share through consolidation and creating networks across levels of care. Competition among delivery systems for market share is, in turn, driving a trend toward mergers and strategic alliances between rural hospitals and regional centers in Gainesville. Unlike other rural areas, the rural hospitals in north central Florida have escaped severe financial stress or closure, largely due to a constant influx of low-income elderly retirees, which maintains hospitals’ occupancy levels.

Although it is too soon to tell how these changes are affecting access to and quality of care, consumers recognize the trade-offs involved in the transformation from a predominantly fee-for-service system into one with more managed care (albeit mostly in PPOs). Those with insurance notice a marked improvement in the year-to-year stability of premiums and better access to primary care providers. Those who converted to managed care plans were drawn by the lower out-of-pocket costs, but some are reportedly unhappy with a more limited choice of providers, especially when they have special needs or health care problems.

Meanwhile, in an area characterized by high poverty rates, both the number of uninsured people and concerns about their access to care are growing. State insurance market reforms aimed at improving coverage rates among small groups, primarily via community health purchasing alliances (CHPAs) have not afforded coverage to many uninsured people working for small firms in this area. Private physicians may be seeing more Medicaid patients due to the introduction of Medicaid managed care. But publicly supported providers say they still see the majority of Medicaid and uninsured patients. Community health centers and the university hospital are increasingly caught in a crunch between rate reductions for their insured populations and their obligation to serve the uninsured. These trends, in addition to the potential loss of funds under federal Medicaid block grants and reductions in other state and federal funds, are making many uneasy about the future.