Jackson board approves UM agreement

Jackson’s board blasted a new agreement with UM on Wednesday as a too-expensive ultimatum. On Thursday, they approved it unanimously.

05/31/2012 5:00 AM

05/31/2012 7:50 PM

Twenty-four hours after lambasting the proposal in often heated terms, the board of the Jackson Health System on Thursday unanimously approved a memorandum of understanding to forge a new relationship with the University of Miami.

The vote suspended — at least temporarily — the bitterest battle in the 60-year history of two of South Florida’s largest and oldest institutions.

Despite the vote to accept the deal, board member Joe Arriola, a former UM trustee, said “the business model [with UM] does not work” and insisted Jackson must find a way to break its ties to UM in the next few years.

Chairman Marcos Lapciuc said the board had no choice but to accept the agreement. UM provides more than 90 percent of Jackson Memorial’s doctors.

“It’s like the little kid with a lemonade stand,” Lapciuc said. The lemonade might generally cost a quarter, but “if you’re in the desert, it costs a dollar, and you pay that dollar. We’re beyond the discussion of why they’re charging that.”

The memo calls for Jackson to pay UM a base of $99.5 million for the coming year, with an additional “transitional payment” of $3.6 million each month as the entities negotiate a more complicated agreement in which Jackson would hire or lease UM doctors to run centers of excellence at Jackson for transplants, trauma and women-and-children’s services.

UM insisted they needed the memo approved by June 1 — Friday — because that’s the start of the university’s fiscal year. On Wednesday, Jackson’s board had balked at what they called an “ultimatum,” but by Thursday, Migoya and his team talked to each of the six members who voted, saying the memo was a transitional document necessary to buy time to make more substantial changes.

Migoya said the deal would lead to a “transformation” for Jackson, allowing the system to control the operations and get the revenue — unlike now, when Jackson pays UM for doctors services and UM also collects from insurers. Migoya called the UM specialists “extremely needed” to attract patients to the centers of excellence.

All board members bought his arguments, though they didn’t all endorse the details.

Board member Michael Bileca, a business leader and accountant, noted that transition is going to be more expensive, costing Jackson $2.3 million more a month than the present contract, for at least the next six months. Since Jackson is experiencing declining patient volumes, that means the public health system, which has been slashing costs elsewhere to make up for $419 million lost during the past three years, will be paying UM more for fewer services.

Bileca noted that Jackson’s surplus in April was a razor-thin $840,000 — meaning the extra UM payments would have turned a bottom-line plus to a minus. He called the added costs “very concerning.”

Arriola said: “We were all hoping that the University of Miami was willing to take a pay cut. Our employees took a pay cut. But they were not willing.”

At Wednesday’s meeting, Lapciuc had been adamant that he wouldn’t bow to UM pressure. “We can’t be put up against the wall, ‘take it or leave it.’ We’re not going to buckle under pressure.”

But shortly after Wednesday’s meeting, Migoya and his team talked to him. Lapciuc said they emphasized that perhaps 60 UM doctors that Jackson wanted for its centers were upset by the uncertainties of negotiations and were getting offers from competitors. The doctors needed an agreement to feel comfortable staying, Migoya’s team told Lapciuc.

Lapciuc said that Migoya agreed to provide more specifics to the agreement, including a timeline specifying that within 60 days there would be a formal operating agreement that could be vetted by an outside law firm. Migoya also said he’d try to get a completely new deal done within six months and report to the board monthly on his progress.

Lapciuc said UM had agreed to the timeline, but refused to budge on money. The medical school is in the midst of laying off almost 1,000 full-time and temporary workers to deal with severe financial problems. In April, Jackson laid off more than 900 workers to fix its own financial difficulties.

On Thursday, Migoya read the board a letter from Pascal Goldschmidt, dean of the medical school, saying this year’s agreement “is an important transition contract” that “allows both organizations to adapt and plan for key medical services while ensuring continuity of the highest quality, necessary medical care for our community.”

Goldschmidt acknowledged: “There is much hard work ahead for both organizations.”

In January, Jackson started to completely revamp its UM relationship from lump-sum payments to paying fair market value for specific UM services. “We can build a new Jackson with physicians for our needs,” said Donn Szaro, then Jackson’s chief strategy officer. The new arrangement would create a “completely revised, new relationship.”

Szaro, who died in March, wanted to get that deal done by June 1. Migoya said Jackson is still following Szaro’s vision, but it’s going to take more time.

Arriola, a former Miami city manager, doesn’t believe it can be done. Once a huge UM supporter, he said Wednesday, that UM no longer had any interest in Jackson. “They have said they don’t want to live with us. They have used us and they have spit us out.”

On Thursday, Arriola said that since 2007, when UM bought Cedars Medical Center, across the street from Jackson Memorial, UM has been a rival, not a partner. “They have to worry about their own hospital ... This is a bad marriage. Let’s have a happy divorce.”

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