Late last year, University of South Florida physicians opened a medical clinic at the Villages, near Ocala, to offer such specialty care as gynecology, cardiology and orthopedics. It was a key piece of the Tampa university's ambitious experiment to turn the retirement mecca into "America's Healthiest Hometown."
"We're excited to see USF Health extending the benefits of an academic health center … to serve residents in a new region of Florida," USF president Judy Genshaft said at an official opening ceremony in January.
But less than six months later, USF quietly got out of that business, walking away from a $4 million investment by its doctors group before the losses grew even greater.
The center remains open to patients, but USF in June turned its operation over to for-profit partner Villages Health, which already owned the property on which it sits.
Within months of opening, USF officials decided they couldn't make enough income for the center to succeed, said Dr. Jeff Lowenkron, CEO of the USF Physicians Group, the medical school faculty's practice.
One of the main reasons: lower-than-expected sales of a Medicare managed care plan at the heart of USF's revenue projections.
The center was on track to run a $2 million operating deficit this year, he said, and the gap showed no sign of closing soon.
"We just made a conscious business decision that we couldn't afford the ongoing investment," said Lowenkron.
University officials insist they are still committed to the Villages. Public health research, which was the first piece of the project, continues. The medical school has sent its first resident to the area to train with Villages physicians. A USF neurologist plans to run a monthly clinic for multiple sclerosis patients.
Still, the decision to pull out of the clinical side comes as an expensive setback for the Villages project, the brainchild of Dr. Stephen Klasko. USF's former medical school dean, Klasko is credited with — and sometimes blamed for — taking its mission far afield of the Tampa campus and its primary teaching partner, Tampa General Hospital.
Lowenkron acknowledged the USF practice won't likely recoup the $4 million it spent on building and equipping the center. That money came not from state funds but from the USF practice's patient revenue.
"Due diligence could obviously have been better. But I don't know what it could've been, because you have to make assumptions," he said.
Jay Wolfson, a USF public health professor involved with the Villages project from the start, said it is an experiment that involves risk. "It's cutting your losses, and there are sunk losses in business," he said. "We tried something in good faith."
USF's collaboration with the Villages, an upscale retirement community of 80,000 residents, began in spring 2011. Researchers performed a massive survey of residents' health needs, as well as a series of educational seminars and screenings.
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A new system of primary care centers run by Villages Health came first, but residents also indicated they needed more specialty care in the area.
Lowenkron said the USF group needed about 230 patients a day to make the finances work. When USF pulled out in June, the practice was drawing fewer than 100 patients a day, he said.
Further, the business model relied on getting enough patients to enroll in a United Healthcare Medicare Advantage plan created specially for the Villages. Only about 6,000 Villages residents enrolled in the United plan in its first year. About 20,000 would have been needed for the math to have worked out favorably, Lowenkron said.
He and Wolfson blame some of the controversy surrounding cuts to Medicare Advantage plans, as well as news that United was dropping popular hospitals, including Moffitt Cancer Center, from its networks.
Another hurdle USF faced was recruiting specialists at salaries it was willing to pay, said Lowenkron.
Dr. Elliot Sussman, chairman of Villages Health, said he's optimistic his group can attract new specialists. He said it plans to add three new specialists in coming weeks.
"The relationship with USF remains robust," said Sussman, himself a member of the USF medical school faculty. "It really focuses on what universities do uniquely, which is discover new knowledge and teach."
Asked if he was disappointed about USF's decision, he said, "I would say we've moved on past that."
Contact Jodie Tillman at email@example.com or (813) 226-3374. Follow @JTillmanTimes.