Amid growing revenues, South Florida hospitals buzz with capital improvements

Dec. 31--A strong economy and steady growth in health insurance enrollment have contributed to growing revenues among South Florida's public and private hospitals in recent years.

In the 2015 fiscal year, net income of hospitals in the tricounty region increased 11.7 percent -- to $1.29 billion compared to $1.16 billion in 2014, according to data compiled by the Florida Agency for Health Care Administration. That followed an increase of 40 percent compared to 2013.

Flush with revenue, South Florida's hospitals are buzzing with expansions, additions and renovations. Similar capital improvements are under way in large markets across the country, said Allan Baumgarten, an independent health market analyst, partly in response to moves by the federal government to tie Medicare reimbursements to patient satisfaction and "avoidance of hospital-acquired conditions" such as deadly infections.

"We see hospitals looking to convert semi-private rooms into private rooms, and making maternity suites more spa-like," he said. Such improvements make patients happier while cutting down on transmission of infections that are spread from shared bathrooms or shared hospital rooms, he said.

South Florida's hospital industry, which depends on Medicare patients for a high percentage of revenue, naturally wants to "pay close attention to incentives Medicare is introducing," Baumgarten said. And it makes sense, as private insurers and Medicaid often adopt mimic Medicare-inspired innovations later on.

Baumgarten expects 2016 will show further revenue growth when that data is compiled late in 2017. But with Donald Trump and the Republican-led Congress poised to slash federal spending on health insurance entitlements after Trump's inauguration, hospitals could begin to see revenue growth slow, he said.

Trump has promised to repeal the Affordable Care Act, while House Speaker Paul Ryan and the Republicans are talking about turning Medicare into a voucher program and limiting Medicaid funding by forcing states to figure out how to divvy up block grants, Baumgarten said.

"With health plans trying to reduce utilizations of health care and reduce payments to providers, that could significantly reduce payment flows to these hospitals," he said.

Mark Cherry, principal analyst with health care research and data provider Decision Resources Group, predicts that hospital systems in South Florida will continue to push out of their traditional service areas and onto competitors' turfs in 2017. The competition should reduce costs for consumers, he said.

"For a long time, Baptist [Health], Memorial [Healthcare], Broward Health, Jackson [Health System], etc., have been mostly contained within their respective service areas," Cherry said in an email Friday. "But you already see HCA [East Florida] invading into Memorial's South Broward County turf with [HCA's planned hospital at Nova Southeastern University in Davie.] Jackson is going into Miami's west side to compete against HCA.

"Baptist Health South Florida is expanding into Palm Beach County with the planned merger with Bethesda in fall 2017, creating a panregional nonprofit counterweight to HCA."

Cherry foresees hospital systems continuing to work with insurers to create narrow networks "so a patient can get nearly all their healthcare services without going outside the system." Narrow networks keep insurance premiums affordable and pave the way for hospital systems to create their own insurance companies, like several are doing in Central Florida, he said.

Meanwhile, Cherry expects more partnerships such as the University of Miami Health System's recently announced takeover of 17 urgent care clinics at tricounty Walgreens stores "to keep patients contained within the ecosystem."

Here are major projects and initiatives coming in 2017 from South Florida's major hospital companies:

Memorial Healthcare -- Building $14.4 million, 31,000 square-foot facility to house new Graduate Medical Education program at Memorial Hospital West in Pembroke Pines. The building will include large classrooms, an auditorium, faculty and resident work spaces and faculty offices. The system will offer residency programs in Physical Medicine and Rehabilitation, Internal Medicine and Pediatrics. Program is intended to address expected shortage of physicians in the areas of primary care, medical and surgical specialties. The inaugural program is expected to begin in 2017.

Also, Memorial will open a $42 million parking garage at Memorial Regional Hospital in Hollywood. The project will add 1,302 spaces to the existing 2,682 spaces, will total 570,330 square feet and include a courtyard, auditorium and offices.

Jackson Health System -- Breaking ground on Jackson West, a new campus in Doral that will include a 100-bed acute care hospital, an adult and pediatric emergency room, a children's ambulatory pavilion and a medical mall offering diagnostic services, chemotherapy and same-day surgeries.

At the Jackson Memorial Medical Center campus, the company plans to break ground on The Christine E. Lynn Rehabilitation Center for The Miami Project to Cure Paralysis at University of Miami/Jackson Memorial.

HCA East Florida -- Commencing with several major construction and expansion projects, including new $219 million hospital on campus of Nova Southeastern University in Davie, where company currently operates a free-standing emergency room.

Other projects include $56 million expansion of Westside Regional Medical Center in Plantation [adding patient beds and private rooms], $66 million expansion of Northwest Medical Center in Margate [adding two new floors to increase patient beds and ICU capacity, plus adding six-level 322-space parking garage], and $108 million project at JFK Medical Center in Atlantis [three-story addition for patient rooms, renovations of existing units, and parking facility upgrades].

Holy Cross -- Raising funds to establish the Phil Smith ALS Movement Disorders Clinic, a state-of-the-art neurological care facility, at the Phil Smith Neuroscience Institute at Holy Cross in Fort Lauderdale. Before his death in mid-December, Smith, a prominent local auto dealer, donated $7 million to expand neurological care at the hospital.

He dedicated $2 million of the gift in matching funds as a challenge to the community to raise additional money for the project. Smith was diagnosed with ALS [often called Lou Gehrig's disease] two years before his death and received treatment at Massachusetts General Hospital in Boston. Smith's donation will also help expand a relationship between that hospital, the largest teaching hospital of Harvard Medical School, and Holy Cross.

Cleveland Clinic Florida -- Breaking ground in the spring on a new 65,000 square-foot outpatient facility at 5701 N. University Dr. in Coral Springs that's expected to open in 2018. Part of the clinic's previously announced $302 million expansion, the Coral Springs facility will house up to 40 examination rooms and an ambulatory surgery center with several operating suites. It will also have procedure rooms and serve as a family health center for neighboring facilities. Work will continue on a 180,000-square-foot tower at the hospital's main campus in Weston.

Tenet Healthcare -- Planning to open a new $79 million, 120,000-square-foot patient tower at Delray Medical Center early in the year. The project will include 96 new private patient rooms, a comprehensive cardiovascular clinic, expanded endoscopy suites, a helipad and direct elevator access to the emergency room to expedite care for incoming trauma patients. Meanwhile, a $9.9 million project to expand and modernize operating rooms at West Boca Medical Center is scheduled to begin in 2017. A new operating room will be added and three existing operating rooms will be renovated and expanded. Also, the number of beds in the post-anesthesia care unit will be increased from six to 14.

Broward Health -- Finishing renovations of two pediatric care floors of the newly named Salah Foundation Children's Hospital in Fort Lauderdale, with opening of those floors expected in mid-year. They will house 20 new private rooms for pediatric patients, including 10 medical-surgical private rooms. Plus, the hospital's second floor will house a new one-stop pediatric outpatient clinic. Named in honor of the Salah Foundation's successful $10 million challenge grant, the 125-bed acute-care hospital will sport 67 new private rooms for neonatal patients, as well as physicians' offices, centers for families and on-call rooms when the $52 million project is finished in 2019.

Baptist Health -- Opening $430 million Miami Cancer Institute in January adjacent to Baptist Hospital of Miami at 8900 N. Kendall Drive. Equipped with a 220-ton proton therapy cyclotron, the institute will join fewer than two dozen hospitals in the United States -- and become the only hospital in South Florida -- to offer proton therapy treatment. Proton therapy destroys cancer cells with highly targeted doses of radiation while avoiding healthy tissue and minimizing side effects, making it particularly effective in treating childhood cancers and adult cancers of the brain, liver and lung, as well as certain left-sided breast cancers and prostate cancers.

Wellington Regional -- Adding catheterization laboratory, a 13-bed specialty unit, a Comprehensive Lung Program and Comprehensive Hepatobiliary [liver cells, the ducts of the biliary system and the gallbladder] Service, and an urgent care center "in the heart of the equestrian community," according to a spokeswoman. Also, the hospital plans to add a 2,300-square-foot Weight Management Center, where patients can receive physician-supervised weight and wellness treatment.

University of Miami Health System -- Taking over urgent care clinics in 17 Walgreens stores in the tri-county region, part of the system's strategy to expand north of Miami-Dade County. Also expecting in June to open a new Comprehensive Diabetes Center at the just-opened Lennar Foundation Medical Center at the university campus in Coral Gables. A public grand opening and "community welcoming event" will be held at the new medical center on Jan. 29, a health system spokeswoman said. The center is also home to the system's Sports Medicine Institute and experts in shoulders, knees, feet and ankles, hips, concussions and neurology.

rhurtibise@sun-sentinel.com, 954-356-4071

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