In the last days of this year’s session, the Florida Legislature adopted a measure that puts public hospitals on the auction block. On June 20, residents of Broward County have a chance to tell officials that they want to keep Memorial Healthcare System public because there is simply no compelling reason to change its status.
For Memorial, also known as South Broward Hospital District, the law opens the door to a potential change that fixes something that’s not broken. It puts in jeopardy the status of a public hospital that consistently ranks among the nation’s best. Struggling public hospitals in Miami and other metropolitan areas would love to have Memorial’s healthy balance sheet.
According to a recent annual audit, Memorial has about $1.1 billion in cash and investments on hand and debts of some $550 million. This would allow the hospital to keep its doors open just on the basis of reserves for more than 300 days under present circumstances. Miami-Dade’s troubled Jackson system, as of mid-May, expects to have about 10 days of cash on hand for June, July and August due to chronic financial weaknesses that executives are struggling to improve.
Like other public hospitals, Memorial receives a public subsidy in the form of property taxes, about $28 million at present, or roughly 3.5 percent of the average residential tax bill within the district. Most of that funds a network of primary-care facilities for the uninsured, allowing Memorial’s larger hospitals, like the ones in Miramar and Pembroke Pines and Joe DiMaggio Children’s Hospital, to remain self-sustaining.
For Broward residents within the district, this represents a win-win. They get a hospital that has won awards for quality of service and serves uninsured residents who shun private hospitals. At the same time, it is one of the few comparable systems in the nation with excellent bond ratings from Moody’s and Standard & Poor’s.
So why put it on the auction block? Because the Legislature, in its wisdom, approved SB 711 earlier this year requiring a public hearing that obliges the boards of public hospitals to vote on whether it’s in the best interest to sell.
No one would make an offer for some public hospitals, but it’s precisely the success of Memorial and its fat balance sheet that makes it such an inviting takeover target.
In theory, privatizing the hospital would erase the need for a public subsidy. But, as usual, there’s a catch. Proceeds of the sale would go for indigent care and “healthcare economic development,” a broad and undefined term.
The private buyer would have to provide care to the indigent, but it could turn right around and bill the county for that amount — in effect, a rebate.
It’s not clear how the public benefits from a scheme that delivers a successful public hospital into private hands under these circumstances, or what happens in the future when the payment is fully rebated and armies of uninsured continue to need care.
Nor is it clear what happens to the hundreds of millions of dollars that Memorial and other public hospitals provide to the state to fulfill Florida’s obligation to pay its share of federal healthcare funding. Memorial sends $116 million to the state for that purpose. (Jackson provides the largest share, $373 million.)
This is money that supplants general revenue from the state. If Memorial and other public hospitals go private, some other source of funding would have to make up the difference to pay the feds. Or services would have to be cut.
The meeting on June 20 is the public’s chance to be heard by the board’s seven members. In addition to the absence of any clear and compelling reason to sell a successful public hospital system that does not burden the public with heavy taxes, there are reasons to question whether this is an unwarranted giveaway to private hospitals.
Having the bill signed into law by a governor who was once a private hospital entrepreneur only raises more questions and strengthens the case for a definite No Sale.