In a major turnaround, Jackson Health System finished in the black for the fiscal year that ended Sept. 30, the chief financial officer said Thursday.
After losing $419 million the previous three years, Mark Knight said year-end financial adjustments mean Jackson, the safety net hospital for Miami-Dade Countys poor and uninsured, will show a slight surplus for the year.
That cleanup, as Knight called it, gave a major last-minute bump to the systems finances. Just last month, Jacksons financial statements projected a year-end loss of $14.4 million.
Knight refused to give an exact figure for the surplus, saying the September monthly report wont be finalized until next week, but he said the financial shift represents a significant turnaround from the $81 million Jackson lost in fiscal 2011.
Mondays good news came after five years of massive struggles for the public hospital system. Last year, the situation was so dire that a Boston for-profit hospital system offered to take over Jackson to protect the county government from having to pay Jacksons bills if the hospitals couldnt meet payroll.
Commissioners flatly turned down that offer and appointed a career banker, Carlos Migoya, who took over in May 2011, vowing to turn Jackson around quickly.
The last year Jackson finished unquestionably in the black was 2006, when it showed a surplus of $57 million. In 2008, the system finished with a surplus of $25 million but a later audit showed that figure was a major miscalculation of the systems true finances, leading to adjustments that ended in an audited loss of $244 million in 2009.
Knight attributed this years change to reining in expenses and laying off 920 full-time workers last spring while hiring about 350 part-timers to create a flexible work force that could adjust to varying patient volumes.
Another major factor was a massive restructuring of the JMH Health Plan. The plan, which lost $26.5 million last year, finished with a surplus of $18.1 million, after drastic measures such as removing Jackson employees from the plan and closing down the plans Medicaid operations.
Still, Knight told the Jackson board Thursday that September ended with only 13 days of cash on hand far below the 300 days that the prosperous Memorial Healthcare System in South Broward, another public system, has in reserve.
Because of Jacksons precariously low figure, the board on Thursday approved a plan to obtain a $75 million revolving line of credit from Wells Fargo.
Chief Executive Migoya said the line of credit will allow smooth operations if there are any hiccups in cash flow and would help Jackson save money by getting discounts from some vendors for fast bill payment.
Migoya noted to the board that he had retired from Wells Fargo, after previously working for Wachovia, which Wells Fargo bought. Migoya said the deal was negotiated by his staff with Wells Fargo employees who used to work with and for me, but that Wells Fargo was the countys and Jacksons bank without any influence from him.
The funds will be available at an interest rate of 1.175 percent, Migoya said.
Board member Michael Bileca, an accountant and state legislator, said he was slightly uncomfortable with the line of credit because he was concerned it might make administrators less focused on operating Jackson efficiently.
But Bileca noted that the credit line provided Jackson with a safety net since the system was one payroll away from not being liquid.
The Wells Fargo deal must be approved by the Miami-Dade County Commission since the county will have to guarantee repayment.
While many board members congratulated Migoyas team on the turnaround, union leader Martha Baker told the board, This kumbaya stuff is very frustrating.
Baker, president of SEIU local 1991, which represents nurses and other healthcare professionals, said that Migoya had cut his way to surpluses. She noted that the number of patients keeps dropping and employees are giving more.
Thats hardly a formula for long-term success, Baker said.
She added that the system cant be in great shape if it needs a $75 million line of credit. Whats more, Baker said, part of Jacksons turnaround is due to an increase in public dollars to Jackson.
Later, Jackson spokesman Matthew Pinzur said Jacksons tax revenue had increased 2.5 percent for the year, adding about $8 million to the bottom line.Migoyas team has been working on a strategic plan to bring more community physicians to Jackson to increase revenue and is still trying to negotiate a new deal with the University of Miami medical school, which provides most of Jacksons doctors and has a competing hospital across the street from Jackson Memorial Hospital.
Tougher days could lie ahead for Jackson. Board members were told Thursday that both the states Medicaid reforms and the federal Affordable Care Act could give those who are poor or uninsured greater options to choose Jacksons competitors.