Jackson plans $830 million overhaul

06/29/2013 2:40 PM

06/29/2013 7:21 PM

From $14 million for new elevators, to $55 million for renovating patient rooms, to $129 million for computer software, Jackson Health System has unveiled an $830 million wish list of building repairs, upgrades and new equipment to be funded entirely by Miami-Dade taxpayer funds.

Jackson administrators have proposed completing a major overhaul over the next 10 years of the hospital system’s main Civic Center campus and satellite hospitals in North Miami Beach and South Dade.

On Tuesday Miami-Dade commissioners are scheduled to consider a request from Jackson’s governing board for a special election in November asking voters to raise property-tax rates to pay for the initiative.

“Jackson Health System is so important to the healthcare of South Florida,’’ Commissioner Sally Heyman said. “I think the community as a whole will embrace maintaining higher standards for Jackson.’’

Two years after a financial crisis that nearly bankrupted Miami-Dade’s public hospital system, Jackson administrators say the overhaul is necessary to bring the 95-year-old public hospital system’s facilities into the 21st century and position it to better compete against local hospitals.

“The time to have done this was long before now,’’ said Darryl Sharpton, the newly elected chairman of the Public Health Trust that governs Jackson. “It’s not that this need just popped up in 2013. This is a documented need that has been there for at least eight years, and I think 10 plus years.’’

Carlos Migoya, Jackson’s chief executive, said the projects will allow the hospital to compete in a healthcare market facing rapid change under the Affordable Care Act, which will increase the number of insured Americans and create new payment models that reward physicians and hospitals based on patient outcomes instead of fee-for-service.

“This is the most competitive time in the healthcare market in the United States,’’ Migoya said. “Nothing stands still. If we waited, while everyone else is changing and upgrading, we’ll be five years behind the eight ball.

“As it is today, we’re slightly behind the eight ball,’’ he added. “But, of course, we weren’t ready to do any of this. We’ve been turning the corner for the last two years.’’

Jackson administrators say many of the proposals are for repairs postponed for years due to lack of money, and they have pitched many of the same projects before. Now, after years of sounding alarms, members of the Public Health Trust say long-deferred facility improvements — from roofs, plumbing and electrical systems, to doctor’s offices and operating rooms, and even the decor of patient rooms and public areas — have turned away the paying customers needed to help offset the enormous amount of unpaid medical care Jackson provides.

“The only way they’re going to maintain their private patients is to have facilities that people want to be in,’’ said Irene Lipof, the newest of the Trust’s seven members.

Jackson’s plans call for $477 million in construction projects, including a new rehabilitation hospital at Jackson’s main campus; a new pavilion for pediatric outpatient services, and about a dozen urgent care centers to be located throughout Miami-Dade.

A significant portion — about $353 million — is for new equipment, everything from hospital beds and patient room furniture to CT scanners, cardiology X-ray systems and oncology radiation devices.

About $130 million is for computers and software to integrate electronic medical records, clinical information and physician decision-making tools across Jackson’s six hospitals, 12 specialty care centers, and health clinics.

Healthcare experts say Jackson certainly needs to upgrade its facilities, some of which have not been repaired or renovated since the 1970s,

But they emphasize that Jackson’s long-term success depends as much on its administrators’ ability to reverse years of declining admissions in paying patients, and to prepare for likely reductions in government funding and other still-unknown effects of federal healthcare reform.

Jackson administrators pulled the hospital system out of a financial tailspin by cutting staff, reducing operating costs, aggressively enrolling indigent patients into Medicaid and other strategies.

But if the hospital system is going to thrive, it will have to grow, said Sal Barbera, a former hospital executive who teaches at Florida International University.

“All the people that are uninsured now and will have insurance through Obamacare, and they now have a choice to where they go, are they still going to be going to Jackson’s ER? I don’t know,’’ he said. “This could be what they’re preparing for. Even though there’s more patient funding out there, they have to make sure they’re in the game with getting those patients.’’

Barbera said he is encouraged by Jackson’s plan to open new urgent care centers throughout Miami-Dade, because the hospital system’s future also will depend on its ability to expand primary care, partly to cut down on more expensive care for the uninsured in emergency rooms, partly to attract more paying customers to clinics that could feed patients into Jackson’s hospitals.

Indeed, many hospital chains are aggressively buying physician practices, preparing to form accountable care organizations that are emphasized in the Affordable Care Act.

Jackson’s plan to renovate doctor’s offices and facilities will attract more physicians who will refer patients for hospitalization and medical services to the public hospital system, Migoya said.

But Jackson will still have to treat the uninsured and carry out its broad mission to help the community — a mission that administrators say costs far more than the government support it receives.

Jackson not only cares for every patient that enters the emergency room, as required by federal law. It also runs two nursing homes, operates clinics and provides healthcare to Miami-Dade inmates.

In 2012, Jackson spent $565 million on these community benefits but received only $425.8 million in government support — a gap of $139.2 million, according to an independent valuation of the hospital system.

That government support included about $202.5 million from a half-penny sales tax approved in 1991 for Jackson support; $133.3 million in Miami-Dade property taxes; and $90 million in federal and state funding.

Many believe that Jackson’s main problem is reversing the trend of declining admissions. In the past four years, in-patient admissions have dropped 21 percent. But Migoya counters that while in-patient admissions are down, the system’s outpatient services are exceeding expectations.

Still, Jackson’s patient numbers have been steadily declining since 2007, the year that UM bought Cedars Medical Center. Since UM doctors represent nearly 90 percent of the staff at Jackson Memorial, some believe that the timing of Jackson’s patient decline and UM’s purchase of Cedars was not coincidental.

“They’re a competing hospital,’’ Marcos Lapciuc, the immediate past chairman of the board that governs Jackson, said of UM. Lapciuc said that among Jackson’s biggest challenges is “UM’s hospital raiding us” for paying patients.

Another challenge for Jackson is improving its image in the community, so it is no longer considered just the hospital for the poor but the region’s leader in trauma services, transplants and specialty services.

“The Jackson story is not out there,’’ said Sharpton, the board chairman.

Jackson’s main hospital is Florida’s largest, with 1,500 beds, and it has long served as the backbone of Miami-Dade’s public healthcare. It serves hundreds of thousands of patients a year, and its Ryder Trauma Center is one of the first and considered among the best free-standing trauma hospitals in the nation.

Jackson is also, by far, the largest provider of indigent care, charity care and Medicaid services in Miami Dade, and is the single largest operator of Medicaid programs in the state.

But like a number of safety-net hospitals nationwide that provide charity care to uninsured patients, Jackson faces an uncertain future in light of Florida’s refusal to expand its Medicaid program under federal healthcare reform.

As part of the Affordable Care Act passed by Congress in 2010, federal government payments for hospitals that treat a disproportionate share of uninsured patients were supposed to be reduced by an estimated $17 billion between 2014 and 2020.

Migoya sees a bigger challenge ahead: Florida’s Medicaid reform, which is scheduled to take effect in 2014 and will move Medicaid beneficiaries into a managed care program that will allow insurers to compete for their clientele, forcing hospitals to negotiate lower reimbursements rates. He expects Jackson will lose about $100 million a year — another reason, he said, the hospital system cannot afford to delay the proposed projects.

Currently Jackson treats more patients on Medicaid — which reimburses hospitals at less than the cost of services —than any other plan.

In fiscal 2011, Medicaid accounted for 40 percent of all payments to Jackson for discharged patients, according to an independent valuation of the hospital system. Another 22 percent of patients were uninsured. About 21 percent were paid for by Medicare, and only 13.7 percent of discharged patients carried commercial insurance.

By comparison, only about 18 percent of patients discharged from Baptist Hospital of Miami were paid for by Medicaid, and 5 percent were uninsured. About 33 percent of patients discharged from Baptist Hospital were covered by commercial insurance, and an estimated 43 percent were on Medicare.

Jackson leaders believe that payer mix can change with the major capital investment they have proposed.

On Tuesday, Miami-Dade commissioners must decide whether to schedule the special referendum to hike the property-tax rate hike to finance the upgrades.

Over the course of the life of the bonds — about 30 to 40 years — the debt tax-rate hike would fluctuate depending on the annual level of borrowing.

According to county projections, that could amount to a peak rate of an additional $48.80 in year 10 for a homeowner with a taxable property value of $200,000 in an unincorporated neighborhood such as Kendall. In the first year, the hike would be closer to $9.80.

The proposal will go directly to commissioners without making a preliminary committee stop, where items are usually opened to public comments. Jackson is said to be seeking board approval before the commission takes its annual summer break in August. The health system also needs a commission vote before it can open a fundraising account to back a political campaign.

No public hearing on the matter is scheduled for Tuesday, though Chairwoman Rebeca Sosa hinted to Herald that she might allow some speakers to address the commission.

“I would like to hear feedback from the public,’’ she said.

Jackson’s proposal would be the first county bond since the $2.9 billion Building Better Communities funding was approved in 2004. Last year, Miami-Dade voters approved a $1.2 billion bond for public school improvements, which may have bolstered Jackson’s hopes.

A special countywide election in the fall would cost between $2.6 million and $4 million, according to the Miami-Dade elections department, which requests a minimum 60-day notice to organize a referendum. The county, not Jackson, would have to pay for the election, under state law. Only a handful of cities, including Miami, Miami Beach and Hialeah, are scheduled to hold municipal elections this year.

Seven of the 13 commissioners spoke to the Herald and emphasized that they still have many questions to ask Jackson’s chiefs. But most sounded generally warm to the bond idea.

"I’m not sure if there’s ever a good time to raise [the property-tax rate], not with the unemployment level we have in this county," said Commssioner Estevan “Steve” Bovo, who will be absent from Tuesday’s meeting. But having Migoya at the helm of the health system gives commissioners confidence, Bovo added.

“I don’t see any reason to stop it from going on the ballot. Jackson cannot afford to stay behind.”

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