More patients, more surgeries and more baby deliveries.
Jackson Health System is counting on growth in its core operations — plus an estimated $442 million from Miami-Dade taxpayers — to break even on a proposed $1.9 billion spending plan for 2018 approved by hospital trustees on Tuesday.
Salaries and benefits for Jackson’s 12,000 full-time employees, who will receive an average 2 percent pay raise next year, tops the hospital system’s list of expenses for next year at about $1.1 billion or 59 percent of the total.
After personnel costs, purchased services, including the use of doctors from the University of Miami Health System, and medical supplies make up the bulk of Jackson’s projected operating expenses for 2018.
To cover those costs, Jackson Health expects to see 68,000 patients next year — up from an estimated 66,000 for the year ending September 30 — while surgeries are projected to increase from 22,500 in 2017 to 23,300 in 2018.
Patient visits to Jackson Health’s three urgent care centers, which opened this year, also are expected to rise in 2018 with the planned opening of two additional facilities. Budget projections call for 28,200 patients to visit the urgent care centers in 2018 compared to about 10,000 for part of the current year.
Still, hospital operations alone are not enough for Jackson Health to break even or turn a profit. The county-owned hospital system expects to receive about $442 million in Miami-Dade sales and property taxes in 2018.
Jackson Health trustees also approved a capital budget, which calls for spending $260 million in 2018 as part of a 10-year campaign to expand and renovate the hospital system. Plans include a network of urgent care centers and building new medical facilities, including a new hospital in Doral.
Overall, Jackson Health plans to spend $1.63 billion on the 10-year building plan, which is funded in part with $830 million in local taxpayer funds approved by Miami-Dade voters in 2013. The remainder will be funded through Jackson's financial reserves.
Jackson Health System provided medical care to inmates of Miami-Dade County’s jails at a cost of about $41 million in 2016 but recorded no revenues from those efforts, which are funded by local taxpayers.
But Jackson Health’s operating budget is only as good as the accuracy of its cost projections, which can change due to medical inflation or future legislation affecting the Affordable Care Act and Medicaid.
This year, for instance, the cost of pharmaceuticals exceeded the prior year’s budget projections by about 11 percent, and they’re expected to rise by an additional seven percent in 2018, said Mark Knight, Jackson’s chief financial officer. He attributed the increase to the advent of new medications and higher-than-expected patient volumes.
Other factors can also affect Jackson’s cost projections, said Don Steigman, Jackson’s chief operating officer.
“It’s the type of cases that we get in the door,” he said, adding that Jackson’s solid organ transplant program has been seeing more patients.
“Those have higher costs per admission,” he said. An increase in trauma cases also raises labor costs because those patients require more intensive care.
Jackson Health administrators also have reason to expect that expenses will be manageable in 2018, though. More employees, and more efficient use of operating rooms and other resources, means the hospital system has spent less on overtime and temporary agency staff, Knight said.
Perhaps the biggest unknown for Jackson Health is the future of the Affordable Care Act and Medicaid funding after the U.S. Senate’s vote on Tuesday to proceed with debate on a bill to repeal and possibly replace the health law known as Obamacare.
“The worst part about this is the insecurity of not knowing,” said Joe Arriola, chairman of the Public Health Trust that governs Jackson.
The worst part about this is the insecurity of not knowing.
Joe Arriola, Public Health Trust chairman, on future of Afforable Care Act
But Arriola said he wasn’t worried about federal legislation at the moment because any changes are likely to be delayed until 2019 or later.
“We can have that conversation next year,” he said. “We live year to year.”
A repeal of the health law or any dramatic change that leads to more uninsured Floridians could spell trouble for Jackson.
More than 1.5 million Floridians signed up for an ACA plan in 2017, including an estimated 635,000 people in Miami and Fort Lauderdale, according to federal estimates. Knight said Jackson Health earned about $62 million from patients with ACA coverage in 2016.
The bigger risk for Jackson Health will be rollbacks in funding for Medicaid, the public health insurance program for poor and disabled Americans, which has been targeted for steep cuts under proposals from Congress.
Knight said Jackson Health expects to receive an increase in one source of Medicaid funding that pays hospitals for treating uninsured patients, called the Low Income Pool. Jackson netted about $90 million in LIP funding last year, Knight said, and the hospital system expects to receive a bump to about $106 million in 2018.
Jackson Health’s 2018 budget still needs final approval from Miami-Dade commissioners, who are likely to vote on the spending plan in September.
Also Tuesday, Jackson trustees approved changes to the hospital system’s 1.5 billion building plans, which will be funded with $830 million in Miami-Dade voter approved debt bonds and the health system's financial reserves.
Among the changes: canceling the South Beach urgent care center and transferring the budgeted $1.5 million construction costs to other projects and redirecting $1 million from a planned expansion of the behavioral health crisis unit to Jackson Memorial renovations.