The Miami Herald: “Should government hospitals be sold?”

The Miami Herald
By John Dorschner

The debate over the future of Florida’s government-owned hospitals will play out Wednesday in Hollywood Memorial as hospital leaders hold a legislatively mandated public meeting to discuss the “possible benefits” of the sale of the $1 billion Memorial Healthcare System.All Florida public hospitals — including Jackson Health System and the North Broward Hospital District, which operates under the name Broward Health — must go through the same process: holding public meetings, hiring a company to assess the hospitals’ value and comparing their clinical performances against other hospitals. Then each board can determine whether to sell the hospitals.The Legislature set the new requirements when it passed House Bill 711 this spring, the latest onslaught against government hospitals by conservative Republicans since Gov. Rick Scott won the 2010 election.

The biggest potential impact may be on the two Broward hospital districts, where Scott will have appointed all seven members on each board before his term is done. Jackson is owned by Miami-Dade County and county commissioners have made it clear they oppose selling the public system, though it has lost $419 million the past three years.

Opposition to Florida’s government hospitals started in late 2010, when the transition of team of Scott, former chief executive of the national for-profit HCA hospital chain, recommended an investigation into whether the state needed government-owned hospitals. In March 2011, Scott appointed a task force to study whether government hospitals should continue to exist under the theory that private hospitals can be more efficient and all hospitals should receive tax dollars for caring for the uninsured. The group’s report, issued in January, recommended that hospital taxing districts — including North and South Broward — should be reapproved by voters every eight or 12 years or be shut down.

The Legislature did not deal directly with that report, but instead ordered evaluations to weigh the pluses and minuses of selling the government facilities.

Though the legislation doesn’t require government hospitals to start the process until Dec. 31, the Memorial system, also known as the South Broward Hospital District, has raced ahead and is close to finishing the process. North Broward is getting started, studying bids to select a third-party evaluator. Jackson has yet to get started.

Each is in a slightly different political position. Memorial’s board has two seats for which Scott can make appointments at any time. At Broward Health, Scott has already made two appointments and can appoint another member immediately if he chooses. In Jackson’s case, the shape of its governing body could change this fall as the mayor and some commissioners face re-election.

The governor’s office said Tuesday he plans to appoint the “most qualified” board candidates but wouldn’t say whether he would select those who favor the sale of public hospitals. “It is certainly a priority to fill the vacancies” but there is no timeframe, said the governor’s spokeswoman, Jackie Schutz.

David Di Pietro, a Fort Lauderdale lawyer Scott appointed to the Broward Health board, called selling the hospitals “a very complicated process.” He favors careful consideration of the facts but “in the long run, I’m definitely in favor of looking at selling” the system.Memorial Chief Executive Frank Sacco said Memorial’s push to fulfill the requirements of the new law has nothing to do the governor’s appointments. He said the board was already engaged in strategic planning when the law passed and the board felt it was best to deal quickly with the Legislature’s requirements, “to get this behind us one way or the other.”

Sacco said the law is costing Memorial about $50,000 to hire Ponder & Co., an Illinois healthcare financing firm, to do the outside evaluation, plus “countless” staff hours to gather data. Sacco said Ponder has come up with a fair market value range of $1.1 billion to $1.5 billion for the Memorial system, but that doesn’t take into consideration the $540 million in debt or the $1.1 billion in cash it has on hand.

Memorial is a prosperous system. It has cash to pay its bills for the next 300 days, while Jackson has 10 days of cash. Memorial’s budget calls for collecting $23 million in property taxes this year, while the struggling Jackson collects about $325 million annually from sales and property tax.

Memorial says it also has provided $1.4 billion in charity care and other benefits to the community over the past decade. Another benefit: Through a complex system of intergovernmental transfers, Memorial sends about $116 million annually to Tallahassee in order to “draw down” an additional $158 million in federal funds from the Lower Income Pool. Of those federal funds, $90 million goes to for-profit and nonprofit hospitals in the state that provide charity care, Sacco said.

All of these figures, Sacco said, will be presented during the 5:30 p.m. Wednesday meeting in the auditorium of Hollywood Memorial.

In North Broward, the board started exploring a change to a nonprofit status in 2010, a move that sparked considerable local opposition. Broward Health Chief Executive Frank Nask said the board didn’t get far in the process before Scott appointed his task force, and the board figured it would be better to see how the state initiatives played out.

“I think it’s a good idea,” Nask said of the mandated evaluation. “At the end of the day, you make the information available to the public and the board gets to vote.”

In Miami-Dade, a hospital task force recommended last year that Jackson be changed to nonprofit status, without a sale of assets, to remove political meddling. The County Commission never acted on the recommendation.

In February 2011, when Steward Health Care Systems of Boston offered to take over Jackson, Commissioner Sally Heyman asked Jackson executives how much the system’s property and equipment was worth. “I’m still waiting,” she said Tuesday. Heyman said she opposed selling Jackson, “but wouldn’t you think it would be prudent to know what you had?”

© 2012 Miami Herald Media Company. All Rights Reserved.

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