Baptist Health Systems of South Florida owns four hospitals in and around Miami. The core hospital, Baptist Hospital Miami, was founded in 1960 and sits on landscaped grounds in suburban Miami. During the mid-90s, as corporations rapidly snapped up private hospitals, Baptist Health decided it needed to expand to compete with the changing health care industry. In 1995, the hospital spent $90 million to merge with three nearby hospitals, establishing the largest not-for-profit health care organization in South Florida. Baptist also entered an alliance that year with Pan American Hospital, cutting costs by consolidating fifteen departments. Not only does Baptist Health Systems offer award-winning care to the Florida population, it is also the nation's only hospital to be included in Fortune magazine's100 Best Companies to Work for in America, making the cut in both 1998 and 1999.

No mercy

In the early 1990s, Baptist Health Systems of South Florida joined the health care consolidation craze, acquiring 28 private physician practices. Unfortunately, increased expenses for the physicians' staff and lower productivity contributed to major losses for Baptist's for-profit subsidiary, Baptist Health Enterprises. Baptist has since sold off all those primary-care groups to focus on its nonprofit hospitals. In 1998, a proposed merger with the Roman Catholic Mercy Hospital was called off because one of Baptist's hospitals performs abortions, a procedure forbidden by Mercy's Catholic administration. Mercy Hospital has not escaped the industry's merger madness, however, and has since joined Catholic Health East, one of the nation's largest consortia of Catholic-owned hospitals.

Balancing the budget

As a nonprofit hospital organization, Baptist derives part of its funds from charitable contributions. In June 1999, Baptist settled a four-year audit from the IRS, which had accused the company of misusing those charitable funds by paying too much for physician practices. The U.S. government will still take its toll on Baptist, however, since the Balanced Budget Act of 1997 includes major reductions in Medicare payments to hospitals. Because 45 percent of Baptist's revenue comes from Medicare, the hospital estimates it will lose an average of $12.2 million per year from 1997 to 2002. Florida's hospitals are bracing to lose as much as $3.9 billion in Medicare payments by 2002. Baptist Health Systems was in the red for the first time since it became the region's dominant nonprofit hospital chain in 1995. During the first six months of 1999, Baptist lost $750,000 and estimated that it would finish the year with a total loss of $4 million.