A struggle between Northeast Florida’s largest health care system and its largest health insurance provider has left tens of thousands of people with uncertainty about their future health care.
The three-year hospital-insurer agreement between Baptist Health and Florida Blue will expire Sept. 30. If the two do not come to a new agreement, as many as 50,000 people will be forced to find new medical solutions or pay for out-of-network costs to use certain Baptist facilities, physicians or services.
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Executives from both nonprofits tell Jacksonville Today they want to end the impasse. Both express hope that it will be done by the end of September.
Nevertheless, that did not stop Baptist from accusing Florida Blue of making false accusations in a message to patients Saturday. Nor has it prevented Florida Blue leaders from accusing Baptist of not negotiating in good faith.
Further, Baptist has a landing page on its website detailing the negotiations from its perspective. Florida Blue also established a landing page and has sent direct mail to its membership outlining what may happen Oct. 1 as its required to do by Florida law.
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(Editor’s note: Florida Blue and Baptist Health are both financial supporters of WJCT Public Media, the parent company of Jacksonville Today.)
What’s at issue
Hospital-insurer contracts determine the prices insurers pay hospitals for in-network services. Neither organization was comfortable sharing specifics of what they would like to see in a new agreement.
Baptist leadership says one sticking point has been the length of the contract. The hospital would like a five-year contract so it can have financial certainty. It claims Florida Blue would — as of mid-August — prefer a one-year deal.
“Post-pandemic, there was a pent-up demand for services,” says Michael Mayo, president and chief executive for Baptist Health. “That has exacerbated the pressures on the health system to provide those services. In the meantime, the inflationary costs of (prescription) drugs and supplies continue to go up. … It may lessen a little over time, but it’s going to continue to rise over time.”
Florida Blue executives say the increase in the costs over the terms of the contract are higher than they have encountered with health care systems anywhere else in the state.
Florida Blue’s market president for Orlando and Jacksonville, Tony Jenkins, says his organization anticipated a “high single-digit” increase in costs year-over-year but received a request that is nearly two times that.
“We want to work out an agreement that both parties can go to market with,” Jenkins says. “We both feel it would be beneficial to have contracts with our members, community members and patients. And, we can do this. We shouldn’t let this negotiation play out in the public space. That’s not fair for anyone.”
An analysis in July from health care consulting firm Kaufman Hall found that labor and non-labor costs for hospitals across the country have increased 19% since 2021. Prescription drugs and supplies have increased 21% and 22% respectively since 2021.
PricewaterhouseCoopers’ Health Research Institute reported medical costs will grow to their highest level in 13 years in 2025. Its report projected an 8% increase in medical prices next year for group insurance, like Florida Blue.
“The same inflationary pressure the health care industry has felt since 2022 is expected to persist into 2025, as providers look for margin growth and work to recoup rising operating expense through health plan contracts,” the PwC analysis found.
Who's affected
Adding to the pressure is the reality that for most people and families on employer-provided health insurance, open enrollment periods for 2025 begin as early as September.
JEA, Duval County Public Schools and Clay County municipal employees are among the organizations that provide Florida Blue insurance.
Duval Teachers United President Tammy Brooks Evans says both organizations must “come up with real solutions to take care of the people in this community who take care of them.”
Duval Teachers United is one of Northeast Florida’s largest unions. It has more than 5,000 members and represents an estimated 7,000 people.
Brooks Evans recalls similar hardline negotiations between Florida Blue and Memorial Healthcare System in 2020. At that time, there was a sense an agreement would be reached before the contract expired Aug. 31, 2020. That hospital-insurer contract was completed in early October 2020.
This negotiation appears different, she says.
“This seems so far apart that I don’t know if we will have the quick turnaround,” Brooks Evans says.
The union leader knows what is at stake. She has used the same primary care physician through Baptist since she was an undergraduate.
“When you talk about services outside of network the price is astronomical,” Brooks Evans says. “People want to go to the facilities they want, with the doctors they want and the nurses they want. This is up in the air as big business decides who is going to blink first.”
Jacksonville giants
Baptist and Florida Blue both wield significant influence within Northeast Florida’s business sector. The two have served Jacksonville and Northeast Florida for a combined 149 years.
Jenkins says Florida Blue relies on Baptist to provide high quality care. Jenkins notes the two organizations have been partners for many years.
Baptist employs nearly 15,000 people in the region, operates 17 urgent care centers here and conducts 800,000 primary care visits annually. Meanwhile, Florida Blue, the region’s largest health insurance firm, has funded grants to study and eradicate health disparities in Jacksonville and invested in preventative care.
Jenkins serves as the market president for both Orlando and his hometown because Florida Blue’s Northeast Florida Market president, Darnell Smith, is on loan to Jacksonville City Hall. Smith serves as chief of staff for Jacksonville Mayor Donna Deegan.
Both Jenkins as well as Mayo and Baptist Chief Medical Officer Dr. Timothy Groover say Smith’s stint at City Hall has played no role in negotiations. Both organizations have negotiation teams that have constantly been in conversation.
Mayo says the most recent negotiation took place in the first week of August.
“I think it presses the imperative about reaching a solution so that people are in a good state,” Mayo says. “If they are comfortable with and want their care coverage through Florida Blue, then having Baptist Health and Wolfson Children’s Services as part of their network is going to be very important.”
Negotiation details
Jenkins says a sticking point for Florida Blue is a demand for “excessive increases.” He acknowledges that Florida Blue has negotiated increases with other hospital systems in the state to account for annual inflation as well as increased labor expenses.
“If we agree to that contract, those increases would bring more than 70% increases over the next four years, which would add over a billion in increased community health cost,” Jenkins says.
Baptist disputes Jenkins’ perspective that it plans to ask the health insurance provider to raise costs by that much over the terms of a multiyear agreement. Both organizations decline to state specifically how much the hospital-insurer increase would be over the agreement signed in 2021.
Groover says research and development always come at a cost. "When you think about the new drugs that are available now -- for weight loss and etcetera -- all those things add costs to health care," he says. "We anticipate that’s only going to increase. It’s not going to get lower.”
Groover adds that since March 2020, preventative services across the system -- and at health care systems nationwide -- decreased.
“What comes along with a lack of preventative care is that now critical care becomes more of a need," he says. "Once the lockdowns were released people have started to come back to the hospital. We’ve seen demand go up. But, these patients are sicker because we are catching them later in the disease stages.”
