The Miami Herald: Jackson Health System projects a financial surplus for 2013, approves UM deal

The Miami Herald

Jackson Health System, long in the red, is projecting a net surplus next fiscal year of $35 million — money the public hospitals badly need to pay off bills and start making facility improvements.Altogether, with the help of county bond money, Jackson leaders hope to plow $63 million into capital improvements in the fiscal year that starts Oct. 1. That would be a major change after years of delaying maintenance and upgrades because the system was losing money.“That $35 million surplus is the biggest headline,” Chief Executive Carlos Migoya said Thursday. “We haven’t had a surplus since 2008.”

Migoya’s team is basing the proposed budget on projections that the system will receive about the same amount of patient revenue next year as it did this year, reversing several years of declining revenue.

“We’re also looking at significant improvements in productivity,” said Chief Financial Officer Mark Knight. The proposed budget, which must be approved by the County Commission next month, projects cuts of $110 million in expenses, including $95 million in salaries and benefits as the system increases use of a flexible-staffing system of part-time workers. The flexible system was put in place after layoffs at Jackson in May.

Martha Baker, head of SEIU Local 1991 representing nurses and other healthcare professionals, said a union efficiency task force has identified at least $15 million in efficiencies which, if accepted by Jackson management, would trigger more compensation for workers. Migoya said his team was analyzing the union’s proposals.

At its monthly committee day Thursday, Jackson’s board also heard that the system finished July with a surplus of $550,000, the fifth straight month of positive results. The surplus consisted almost entirely of a one-time payment of $466,000 from the county in bond proceeds. Jackson finished the month with 13 days of cash on hand.

Migoya said the system continued to improve in payments to vendors, reducing accounts payable in July by $18 million to $162 million, the lowest level in at least two years.

In other business, the board unanimously approved an annual operating agreement with the University of Miami. Terms of the agreement, which had generated heated public discussion in the past, were accepted with little public discussion on Thursday, after board members were briefed individually in private sessions with Chief Strategy Officer Jeffrey Crudele.

The agreement uses the same numbers that were set out in a “memorandum of understanding” in late May: A base payment of $99.5 million to UM, plus monthly “transition payments” of $3.6 million through at least November.

Crudele called the 53-page agreement “a roadmap for change.” The agreement does not deal with Jackson’s main objectives for a new relationship with UM: paying for services at market-based rates and hiring or leasing UM doctors. Those are still being negotiated. The previous agreement had consisted of a lump sum payment from Jackson to UM to pay for doctors and other services.

Steven Falcone, the UM physician leading the negotiations, said in a prepared statement that UM was “pleased and honored … to strengthen our longstanding relationship with Jackson. … We still have work to do — including identifying ways to deliver care as efficiently as possible while maintaining the highest quality — but all good relationships take work.”

The board also approved by a 5-1 vote a $1.15 million contract with the Weinbach Group for three years of marketing and advertising, despite several board members saying the group had presented a poor proposal for an advertising campaign.

The lone no vote came from Michael Bileca, who decried the selection process, which he thought limited the firms that bid for the contract.

“We fish in a very small pond,” he said for a marketing campaign that was of “critical importance” to rebranding Jackson, which has lost $419 million the past three fiscal years.

© 2012 Miami Herald Media Company. All Rights Reserved.

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