Florida hospitals made $6.3 billion in 2020. Could they see cuts?

Hospital executives say they’re still navigating challenging times.
Members of the Florida House of Representatives work during a legislative session, Friday, April 30, 2021, at the Capitol in Tallahassee, Fla. (AP Photo/Wilfredo Lee)
Members of the Florida House of Representatives work during a legislative session, Friday, April 30, 2021, at the Capitol in Tallahassee, Fla. (AP Photo/Wilfredo Lee) [ WILFREDO LEE | AP ]
Published Dec. 3, 2021|Updated Dec. 3, 2021

TALLAHASSEE — Florida hospital executives said 2020 would be a challenging year.

According to a state agency, it wasn’t so challenging for their bottom line.

This week, lawmakers from both parties grilled top health care executives over hundreds of millions of dollars in taxpayer-funded services at their facilities. While the lawmakers asked their questions, they broadcast an image of a graphic produced by the Agency for Health Care Administration that showed Florida hospitals made nearly $6.3 billion in 2020 — amid the coronavirus pandemic.

One top Republican said it was time for hospitals to acknowledge that their institutions are overwhelmingly profitable.

“This is a partnership between the hospitals, the nursing homes and the state of Florida. In a partnership, it can’t be one-sided,” said Rep. Bryan Avila, R-Hialeah. “When you have one entity or multiple entities constantly saying that this is going to be the year where they shut the doors, or a budget proposal is a gut-punch, those things are not helpful to the process.”

Avila addressed his comments to Mary Mayhew, president and CEO of the Florida Hospital Association; Justin Senior, CEO of the Safety Net Hospital Alliance of Florida, Emmett Reed, CEO of the Florida Health Care Association and Steve Bahmer, president and CEO of LeadingAge Florida. Hospitals and long-term care facilities, which those entities represent, are some of the largest and most powerful industries in Florida.

When lawmakers negotiated the 2021 budget earlier this year, House leaders proposed $514 million in hospital reimbursement cuts for Medicaid — the federal and state program that covers millions of children, working poor, elderly and disabled Floridians. Although the cuts did not make the final budget, Tuesday’s meeting was a sign that House Republicans are serious about proposing similar tightening measures next year.

Related: Florida proposal to help new moms is a sticking point in budget negotiations

Avila, the chair of a committee that forms the House health care budget, noted in an interview that Medicaid reimbursement money could be spent on other health care services. For example, Florida’s Agency for Persons with Disabilities currently has a wait list of people hoping to get at-home or community-based care that’s some 22,000 people long.

A ‘catastrophic’ year?

During a similar meeting in March, the committee asked some of those same health care executives about how the pandemic was affecting their industries. For example, Avila asked Mayhew whether 2020 would be a “catastrophic” year for hospitals financially.

“It’s difficult for me to comment on the definition of ‘catastrophic,’” Mayhew answered, noting that she would have to compare anticipated revenue with the final numbers, which had not been tallied yet.

Mayhew, a former top health official under Gov. Ron DeSantis, noted at the time that about $4 billion of federal emergency funding for hospitals from the Coronavirus Aid, Relief, and Economic Security (CARES) Act had not fully covered the lost revenues brought on by the pandemic.

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In an interview this week, Avila said the message he got from that meeting was that hospitals were in dire straits.

“I think that it’s not productive to always come to the Legislature and say, ‘We need more, we need more, we need more,’ when in reality, the numbers suggest that you don’t need more,” he said.

Avila’s messaging is in keeping with years of skepticism from House leaders of hospitals and their reliance on state funding. José Oliva, the House speaker during the 2019 and 2020 legislative sessions, often blamed the “hospital-industrial complex” for the cost of health care in Florida.

But Mayhew said she never indicated her organization’s members would be operating in the red last year. And Senior, whose organization represents the hospitals that provide much of the Medicaid-funded services in the state, argued that it was misguided to focus on a hospital’s margins when contemplating Medicaid cuts. The most profitable hospitals are often those that care for relatively few Medicaid patients, he noted.

“They seem on the House side to be very wrapped around margins,” Senior said. “But Medicaid services don’t build those margins.”

On Friday, after this story published, Sen. Aaron Bean, R-Fernandina Beach, Avila’s counterpart in the Senate, wrote in a text message that “Medicaid rate cuts are not on my radar at all at this time.”

An unclear budget picture

Florida avoided Medicaid rate cuts in 2021 in large part because of hundreds of millions in additional federal funding that’s been available since the start of the pandemic. But as lawmakers contemplate a budget for 2022, it’s unclear to what extent that money, which is unlocked with each extension of the federal coronavirus health emergency, will be available. Currently, the emergency is set to expire Jan. 16.

There are signs lawmakers are looking to play nice with health care businesses. Earlier this week, a Senate panel advanced a proposal to extend COVID-19 liability protections for health care facilities.

Both lawmakers and health care executives acknowledge that the state will have to work with businesses to address the nurse staffing shortage.

Related: Florida will be short nearly 60,000 nurses, report says

But even on that effort, Avila seemed to expect more from the health care industry than executives were willing to give. When the Republican asked whether hospitals would be willing to put financial “skin in the game” to help solve the nursing issue — i.e., potentially absorb some budget cuts so the state could fund other programs — Senior and Mayhew objected. They noted hospitals are already working to address the nursing shortage in a number of ways.

“I don’t think a cut in reimbursement rates is really constructive at this point,” Senior said.

Editor’s note: This story was updated Dec. 3 to include comments from Sen. Aaron Bean, R-Fernandina Beach.

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