Longer patient stays drive up costs, hurt profits at Jackson

Patients at Miami-Dade’s safety net public hospitals are staying longer on average than they were a year ago, driving up labor costs and dragging down profits, according to Jackson Health System administrators addressing Thursday’s meeting of the Public Health Trust that oversees the system.

“A higher length of stay drives a higher cost per case,’’ said Mark Knight, chief financial officer of Jackson Health System. “Longer length of stay equals less profit.’’

As patients stay longer and profits dwindle, Knight said, staffing levels and employee overtime have increased.

“That is creating a negative effect on our bottom line because we are not realizing incremental net revenue to cover those incremental costs.’’

The higher costs and lower profits are draining resources from the financially struggling system, which seems headed toward a financial recovery after losing more than $300 million over a three-year period, and nearly going bankrupt about a year ago.

Jackson administrators said they will reconvene a task force of physicians, nurses and hospital executives to find ways to reduce patient stays.

Hospital administrators also intend to lower labor costs by reducing employee overtime, shifting nurses and physicians to areas of greater need, and “flexing down’’ the hours of part-time employees, said Carlos Migoya, chief executive.

In a memo to Trust members issued Monday, Migoya reported that Jackson has had modest budget surpluses for the first half of the year compared to the same period last year.

But he warned that long patient stays remain a challenge, and he hinted at staff reductions, stating that certain divisions within the hospital are “staffed above our productivity standards.’’

Jackson administrators cut the equivalent of 1,100 full time positions about a year ago, but Migoya emphasized that the newest cost-reduction strategy would not include significant layoffs.

“These are staffing changes,’’ he said, “not necessarily reductions.’’

Migoya said he shifted a group of nurses from the pediatric unit to other divisions within the main hospital because pediatrics was not as busy. The hospital also has hired a new director of labor productivity, Knight told the board.

Another issue dragging down hospital revenues is that many long-term patients on Medicaid have exceeded their annual fixed benefit for inpatient stays, which is 45 days.

In fiscal 2012, Knight said, Jackson saw $25 million in exhausted benefit denials from Medicaid.

But many of these financial challenges can be traced back to lengthy patient stays.

Jackson patients are staying an average of seven days at the hospital, compared to an average of four days per patient at other local community hospitals, Knight said.

The number of patients staying longer than 30 days has increased by 50 percent over last year, Knight told the board, and the number of patients staying longer than 120 days has doubled. He did not provide raw numbers.

Knight said many patients are staying longer than necessary because the hospital cannot discharge them safely to a nursing home or family members.

Nursing homes are full, he said, and some patients have felony criminal records and cannot be placed in group settings.

Still others are undocumented immigrants with no means of returning to their country of origin, he said.

Jackson offers to pay airfare for patients who are undocumented immigrants, Knight said. But hospital administrators also are working with embassies to locate patients’ family members in their home countries and expedite their return.

Another part of the reason patients are staying longer at Jackson is due to the nature of the hospital’s services, said Marcos Lapciuc, chairman of the Trust.

Jackson’s trauma center, burn unit and transplant services all provide care that leans toward long-term stays.

“If we take a look at the business lines that we do, we are almost by definition trauma and transplant heavily skewed,’’ Lapciuc said. “We are going to continue to see longer lengths of stay. We are going to continue to see inefficiencies... because of the nature of our business.’’

Joe Arriola, a Trust member, echoed Lapciuc’s concerns, and said that Jackson has been unable to plan long term for the types of services that patients demand — cardiology, pulmonology — because of the hospital’s financial struggles.

“If we don’t change, if we don’t start selling what people want to buy, we are going to be stuck with what we don’t want, which is this long-term care, the very complex cases and all that,’’ Arriola said. “Long term care, we can’t survive with that. On the contrary, we will sink quickly.’’

In other business, Trust members attended a meeting of the Miami-Dade County Commission, which was considering a request from Jackson to build a helipad at its satellite hospital in South Miami-Dade. Commissioners approved the helipad unanimously. Jackson officials applied for the helipad in anticipation of opening a trauma center at Jackson South should state legislators allow more trauma centers in the state.

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