Jackson trustees adopt $1.5 billion budget for 2014

Jackson Health Systems in Miami
Jackson Health Systems in Miami

After two years of struggling to contain a financial crisis, leaders of Miami-Dade’s public hospital system adopted a budget for 2014 on Friday that invests in hiring more physicians and nurses, upgrading electronic health records and improving patient outcomes — all helping to position Jackson Health System for epic changes coming with federal healthcare reform next year.

The Public Health Trust that runs Jackson Health System ratified the $1.5 billion budget, which now must receive approval from Miami-Dade commissioners by Sept. 30, the close of the fiscal year.

“The bleeding has stopped,” said Irene Lipof, a trustee. “Now we’re looking to improve quality.”

Calling the 2014 budget “radically different from its predecessors,” Chief Executive Carlos Migoya said Jackson’s strategy for the future “is tactical growth — adding programs, growing volumes and expanding our footprint in Miami-Dade County.”

Beginning Oct. 1, when a key component of healthcare reform — the online health insurance exchanges offering subsidized plans to millions of Americans — opens for business, Jackson will embark on an uncertain voyage.

While more people will have health insurance, Jackson administrators do not know if the increase in coverage will translate to more revenue.

Federal grants and Medicare reimbursements for hospitals are expected to change under the Affordable Care Act, and Florida’s shift of nearly 3 million Medicaid beneficiaries into managed care likely will lead to a reduction in reimbursements, said Mark Knight, Jackson’s chief financial officer.

The hospital system’s budget assumes that Medicare payments next year will drop by $4 million due to federal budget cuts called sequestration starting in January, and that Florida’s Medicaid reform will reduce Jackson’s reimbursements by $6 million next year.

And depending on Jackson’s success at reducing patient readmissions and cutting costs in programs under Medicare, the hospital may increase its reimbursements or pay penalties that will lower them.

“While we may see more patients covered,” Knight said, “there may not be true increases in dollars.”

Jackson’s budget projects an increase in patient admissions of .7 percent above 2013, or an increase of about 408 patients over the estimated 57,698 patients the hospital system will have admitted through Sept. 30.

Migoya said patient admissions rose in 2013 over the prior year, indicating that renovations to patient rooms and other improvements have begun to produce results.

In November, Miami-Dade voters will decide whether to increase their property taxes to fund $830 million in bonds for new buildings, equipment and other upgrades of Jackson’s aging facilities.

“More patients are choosing Jackson,’’ Migoya said. “That reflects the improvements we’ve made already, and primes our pump to continue moving forward.”

Darryl Sharpton, chairman of the trust, said Jackson is investing in growth for the first time in two years, in part by improving facilities but also by recruiting more physicians for certain programs, such as transplants, offering better training programs for current physicians and doing a better job of recruiting residents once they’ve graduated.

For next year, Jackson administrators expect their annual revenues to drop to $1.14 billion compared to $1.17 billion in 2013.

But the system’s total operating expenses for 2014 also are expected to decrease by about $12 million, from $1.5 billion in 2013 to $1.49 billion in 2014.

Jackson’s annual funding from the county’s half-penny sales tax and property taxes will close the gap left by expenses that exceed revenues. That annual county funding is projected to increase by about $12 million over this year’s amount to a total of about $350 million in 2014.

Jackson’s other revenues will come from patient services and admissions, which are projected at $1 billion net; the hospital system health plan, which is expected to produce a profit of $660,000; federal grants and reimbursements from government healthcare programs.

Among the hospital’s key investments for 2014 are $10 million in information technology to help convert paper medical records into electronic health data that will reduce errors and improve billing.

Jackson’s capital plan calls for a $100 million investment through 2024 in upgrades to the hospital system’s information technology systems.

“There’s no question that’s the right kind of spend for Jackson to make at this juncture,” Migoya said.

Another key investment is the hiring of 150 additional full-time staff, primarily bedside nurses and community physicians who are expected to refer patients to Jackson for hospitalization when necessary.

While Jackson invests in the future, though, the hospital system estimated 10,000 full-time employees will enter their third year without a merit increase or pay raise. Employees also will continue to pay 5 percent of their salaries toward health insurance and 3.2 percent toward their pension plan in the Florida Retirement System.

The budget assumes no reductions in service, though the geriatric psychiatric program at Jackson North is scheduled to close and its estimated 600 patients a year will receive treatment at Jackson Memorial’s main campus.

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