Miami-Dade’s public hospital system is counting on more patient admissions, more emergency room visits and more surgeries next year to cover a projected spending increase of about $95 million over the prior year, largely because of the hiring of additional full-time employees, the return of merit pay raises and rising prices for medical supplies and pharmaceuticals.
As the county’s public hospital network, Jackson Health System runs four hospitals, about a dozen primary-care clinics, two nursing homes and other medical facilities and services that are projected to cost $1.66 billion for the year beginning Oct. 1, according to a budget proposal released this week.
The budget will evolve, though not substantially, in the coming weeks and months as Jackson’s board of trustees and Miami-Dade commissioners, who must ratify the spending plan by Sept. 30, host workshops and public hearings.
While Jackson administrators expect the hospital system to turn a profit this year and next, they also have projected increased operating losses in that time frame — about $361 million for the year ending Sept. 30, and $400 million next year.
To offset those losses, largely because of services for which the hospital system receives no pay, such as providing healthcare to the uninsured and to Miami-Dade inmates, Jackson will receive local taxes and general revenues of about $392 million this year and nearly $400 million next year.
Balancing the books with local taxes has long been part of Jackson’s budget planning. But as competition from other hospitals increases and the Affordable Care Act’s reforms gradually take hold — emphasizing quality of care and reduced costs — Jackson administrators have focused on growing the hospital system through higher productivity and greater public investment in new buildings and infrastructure.
Key to Jackson’s growth strategy: a multiyear building plan for new facilities, renovations, infrastructure and technology financed with $830 million in bonds approved by county voters in November 2013, and another $550 million generated by Jackson and other sources.
Hospital administrators expect the expansion and improvements will help make Jackson more accessible and attractive to insured patients, while exploiting the hospital system’s lucrative lines of service, such as organ transplants, with new facilities and new surgeons to care for more patients.
A new rehabilitation hospital at Jackson’s main campus in Miami, and a pediatric outpatient facility and stand-alone emergency room in Doral, are also expected to grow patient volumes and raise more revenue for the hospital system.
Perhaps more significant — though less visible than Jackson’s building plans — is the hospital system’s $350 million investment in new computer technology to increase productivity, manage patient records and facilitate data reporting.
At a budget workshop last week, Mark Knight, chief financial officer, said Jackson’s efforts are beginning to show results.
After months of analyzing and redesigning operating room procedures and emergency room patient processing, Jackson physicians are performing more surgeries, he said.
For next year, Knight has budgeted a 3.4 percent increase in patient volume, for a projected 58,800 admissions. He also predicts a 1.1 percent rise in emergency room visits, for a total of 213,571, and 3.7 percent increase in surgeries, totaling about 21,000, for next year.
So far this year, Jackson has missed its budgeted goal for patient admissions by a small margin, about 754 admissions shy of a targeted 50,000 through May. But patient admissions are up over the same period last year, by about 1,600 admissions.
With more admissions and surgeries, and higher nurse-to-patient ratios agreed to under the collective bargaining agreement with its labor unions last year, Jackson also has hired more full-time employees — for a total of 11,007 in May, according to budget documents.
Knight told Jackson’s board of trustees that additional hiring represents about a $40 million spending increase from 2014 to 2016, and the restoration of merit pay raises represents another $25 million over the same two-year period.
“Those are big dollars,” he said, “significant growth.”
But he noted that by one measure — the percentage of total operating revenue — Jackson’s spending on salaries and benefits has remained flat and is projected to drop.
Jackson administrators project the hospital system will close the year ending Sept. 30 with an unaudited surplus of about $63 million, more than five times the $12.4 million budgeted last fall.
Budget documents show that surplus was largely because of higher-than-expected revenues from two sources, neither of which relates to Jackson’s operations: Miami-Dade’s half-penny sales tax dedicated for the public hospital system and bond-funded reimbursements for building expenses.
Together, those sources are projected to generate more than $35 million in unexpected revenues for the year ending Sept. 30.
For next year, Jackson’s bottom line forecast calls for a surplus of $14 million.