For the third consecutive year, Jackson Health System closed its books with a positive bottom line that suggests Miami-Dade’s taxpayer-supported hospital network continues to recover from past financial crises but has yet to turn the corner as new challenges emerge, including fewer patient admissions and dwindling dollars for the uninsured.
With most financial indicators for the year ending Sept. 30 showing improvement over the prior year, Jackson administrators on Wednesday reported a surplus of nearly $51million — more than four times the budgeted amount of $11.6million — even with significant investments in a new labor contract, technology upgrades and infrastructure improvements.
Jackson also closed 2014 with more than 41 days of cash on hand — a basic measurement of money in the bank — an improvement of nearly 14 days over the prior year, but still well below the 175 days of cash that executives want to have to ensure smooth operations.
Until this year, Jackson’s turn-around had been funded primarily through cost-cutting and one-time revenues, such as charitable donations or bond-funded reimbursements for building expenses.
Never miss a local story.
For 2014, though, more than $31.4million of the surplus came directly from operations, although that figure also includes nearly $15.2million due to better-than-expected Miami-Dade sales tax revenues dedicated to Jackson.
Miami-Dade taxpayers will contribute about $370million in property and sales taxes for the public hospital system’s operations in the coming year, according to Jackson’s latest budget.
Still, Jackson administrators used some cost-cutting to achieve a positive bottom line, reducing spending on contracts and purchased services by about $4.1million less than the prior year.
But Jackson continues to struggle with declining patient admissions, serving fewer total patients in 2014 than 2013.
Overnight patient admissions fell by more than 2,700 cases, and surgical volume declined 3.2 percent.
Mojdeh L. Khaghan, treasurer of the Public Health Trust that runs Jackson, expressed concern about the decline in patient volumes during a Wednesday meeting of the trustees.
“It’s wonderful to show a bottom line that’s strong and in the black,” Khaghan said, “but we should do it from serving patients and as many patients as possible.”
Chief Executive Carlos Migoya described the drop in patient volumes as “a dip in the market” that has particularly affected Jackson’s Medicaid patients, most of whom transitioned to private, managed care plans this summer under a statewide reform initiative.
Migoya said Medicaid managed care companies have been driving beneficiaries to preferred outpatient clinics that are not affiliated with Jackson, causing Jackson’s outpatient business from Medicaid to “completely dwindle.”
But Migoya said he’s confident Jackson will recapture some of those patients.
“We believe we’re going to be able to pick up some of that business again,” Migoya said, “as we’ve gone to every one of the managed care companies and they have all told us we’re going to be the hospital of choice from their perspective.”
Chief Operating Officer Don Steigman noted that Jackson already has agreements with some Medicaid managed care companies that want to drive members to the county hospital system — but some patients appear to be choosing other hospitals and facilities.
“We need to get these people that were assigned to Jackson to use Jackson,” he said.
Indeed, as Florida health officials transitioned most of the state’s estimated 3.5million Medicaid beneficiaries to managed care plans run by private insurance companies, Jackson has braced for lower payments for its services and more denials from those insurers.
“There’s going to be a rate drop,” Steigman said, “because that’s what managed care companies do.”
But Jackson also is running out of time for Florida to find an alternative source of funding for hundreds of millions of dollars in federal financial aid that helps the safety net hospital pay for care to the uninsured.
According to a report from Florida Legal Services, a nonprofit legal advocate for the poor, Jackson stands to lose more than $570million a year after June 30.
The anticipated funding cuts derive from a series of agreements between Florida and the federal government, and the intent of President Barack Obama’s healthcare reform law, which had anticipated that more Americans would have access to insurance under the ACA, reducing the amount of uncompensated care delivered by hospitals.
The healthcare law calls for gradual reductions in certain payments known as Disproportionate Share Hospital (DSH) program funds. In 2014, Florida hospitals will receive almost $240million in DSH funding, which the state then distributes according to a formula.
But the biggest loss stems from a July 2014 agreement between Florida and the Centers for Medicare and Medicaid Services, which administers the healthcare programs on the federal level. That agreement calls for the elimination of about $1.8billion a year in statewide funding through the Low Income Pool program (LIP) starting on June 30.
But if state legislators were to accept the federal government’s offer to spend about $5billion a year to expand Medicaid to an estimated 760,000 more Floridians, the new revenue would more than offset the anticipated loss of federal funding for hospitals that treat many uninsured patients, according to Florida Legal.
Migoya has called Medicaid expansion “one of our very top priorities, though he also has said that Jackson will explore “other funding opportunities” to pay for care of the uninsured if the DSH and LIP programs end.
Jackson administrators also are counting on $830million in taxpayer funds approved by voters in November 2013 for upgrades and new facilities that, Migoya said, will make the public hospital system more accessible and attractive to insured patients.
Next year, construction will begin on the first phase of work funded by the voter-approved bonds: a new rehabilitation hospital that Jackson administrators expect will become “an international destination,’’ according to Migoya’s memo.
Other upgrades include a new building for the Miami Transplant Institute, which is expected to increase the number of organ transplants performed each year; extensive renovations to the Women’s Hospital at Jackson Memorial and to Holtz Children’s, which is designed to boost patient volumes for maternity and pediatric services; and improvements at Jackson South Community Hospital and Jackson North Medical Center.