Miami-Dade County

Jackson Health System upgrade plan goes to Miami-Dade voters

In the three months since Jackson Health System first proposed asking Miami-Dade voters to approve $830 million in upgrades to be paid entirely with taxpayer funds, proponents of the project have emphasized the public hospital network’s need to update its aging facilities and become more competitive with private and nonprofit hospitals in South Florida.

Jackson officials say the overhaul is necessary in a healthcare market facing rapid change under the Affordable Care Act, which will increase the number of Americans with health insurance and give them a choice of where to seek medical care.

Increasingly, Jackson officials say, insured patients have been choosing other hospitals with more modern facilities and medical equipment.

“Right now, there are still many people out there that say, ‘Jackson is an old hospital. It’s a public hospital. I don’t want to go there’,’’ said Carlos Migoya, chief executive. “We don’t have to look like the Taj Mahal, but we need to look like the academic center that we are.’’

Jackson is in a unique position among local teaching hospitals. Through its partnership with the University of Miami’s Miller School of Medicine, Jackson offers South Florida patients the widest array of highly specialized services — excelling in organ and bone marrow transplants, spinal and neurosurgery, neonatal intensive care, trauma medicine and other services.

But the hospital system needs more than a highly-regarded medical reputation to thrive. Jackson also needs to attract more patients seeking elective surgeries, such as a knee replacement, or other traditional services in order to offset the high cost of its mission to provide care to all county residents, particularly the uninsured.

To do that, Migoya says, Jackson’s taxpayer owners must invest $830 million to remodel patient and operating rooms, purchase state-of-the-art medical equipment, update information technology, and build new urgent care centers in the community, a new rehabilitation hospital, and a new pediatric outpatient center.

The overhaul would be funded through an increase in Miami-Dade’s property taxes, a question that voters will decide during a countywide special election scheduled for Nov. 5, though early voting begins Monday and runs through Nov. 3.

It’s a big bet, say critics of the plan, and one that county taxpayers cannot afford to lose.

“Miami-Dade taxpayers have been here before when they approved a half-penny sales tax for indigent care and a long list of other projects only to see the funds deposited in Jackson’s general fund — with no accounting to the public,’’ said Steven Marcus, president of the Health Foundation of South Florida, a nonprofit group that awards grants to local community healthcare organizations.

Proponents of the bond say Jackson cannot afford inaction, or the hospital system might risk reducing its large array of medical services, potentially jeopardizing its physician residency and training programs and its standing as an academic center.

“It is a required investment in maintaining Jackson’s clinical excellence, operational improvement and most important its mission of delivering the same high standard of care to every resident,’’ said Darryl Sharpton, chairman of the Public Health Trust that governs Jackson.

If voters approve the referendum, bonds will be issued in staggered amounts each year through 2023, with the total cost to repay the $830 million in bonds projected at about $1.4 billion, according to an estimate by the Miami-Dade County Finance Department.

Frank Hinton, county director of bond administration, cautioned that the $1.4 billion cost of repayment is based on “a conservative interest rate,” and he noted that many variables could change, such as project expenses, and affect the final price tag.

“It is doubtful,’’ he said, “that it will materialize exactly as projected.’’

Jackson’s wish list is extensive — from $70 million for a new rehabilitation hospital, to $14 million for new elevators, to $156.6 million for new computers and software to integrate electronic medical records. The proposed improvements would be at Jackson’s main campus in Miami’s Civic Center, and at its satellite hospitals in North Miami Beach and South Miami-Dade.

Along with the upgrades and new facilities will come additional operating expenses for physicians and nurses and other staff, as well as utilities, maintenance and security costs — expenses that Migoya said his executive team has yet to calculate.

“We have not done that piece,’’ he said.

Still, Migoya expressed confidence that the hospital system would run at a profit “almost from day one” because more insured patients will choose Jackson for their medical care.

The cost to run Jackson is budgeted at $1.5 billion for the year ending Sept. 30, 2014. Because Jackson’s mission includes serving the uninsured, as well as providing medical services to all Miami-Dade inmates and operating county nursing homes, the hospital system receives about $350 million a year in local taxpayer funds derived from a half-penny sales tax and property taxes.

Because of Jackson’s mission and its central role in South Florida’s public health system, the bond issue has attracted broad support.

Citizens for a Healthy Miami-Dade, the political action committee pushing for voter approval of the bond, raised $1.3 million during the three months ending Sept. 30, attracting donations from well-known South Florida philanthropists, such as billionaire car dealer Norman Braman, who gave $25,000.

But some disagree on the amount of funding needed and the best ways to make the hospital competitive.

Marcus of the Health Foundation said one of his primary concerns is ensuring that the bond money will be spent in the ways that have been promised.

Miami-Dade Commissioner Audrey Edmonson, who has campaigned to approve the bond, repeatedly has said in public meetings that she will seek to create an independent oversight committee to ensure the bonds are spent on Jackson projects if the referendum passes.

But there is no mention of an oversight committee in the ballot language, and Edmonson said at an Oct. 3 meeting of the commission that it was “premature” to go into details about the make up or responsibilities of such a panel.

Marcus disagrees, and said he believes that a written commitment to an oversight committee would give voters confidence.

Others have questioned the viability of some of the proposed projects, such as building a new rehabilitation hospital.

Migoya said the rehabilitation hospital has been losing insured patients each year because “it’s an old facility and they’d rather go to a new facility.’’

“If we have a brand new, world-class facility,’’ he said, “guess what: We’ll continue to have the uninsured to come there. But we’re going to have a better mix.’’

Sal Barbera, a former hospital executive who teaches healthcare administration at Florida International University, said he’s not so sure about that. Barbera is skeptical that upgrades alone will persuade insured rehabilitation patients to choose Jackson in the future.

Patient decline, he said, can be attributed to competition from other rehabilitation centers, or insurance companies refusing to pay a hospital’s rates, or physicians leaving to work elsewhere — and Jackson officials have yet to articulate a reason other than the aging facilities.

“Maybe the reason is the facility,’’ Barbera said, “but I’ve got to believe there’s more than that.’’

In fact, inpatient use has been decreasing among hospitals statewide. And in South Florida, inpatient days dropped 11 percent from 2007 to 2012, according to the 2013 Florida Health Market Review, a comprehensive analysis of healthcare payer and provider organizations in the state.

Allan Baumgarten, author of the report, said Jackson’s projections for increased revenues and patient volumes from capital investments “have to be viewed with a healthy dose of skepticism.’’

“They’ll be lucky if it stays flat,’’ he said of patient volumes.

Baumgarten said one reason inpatient stays have declined is because fewer people have comprehensive health plans and may be putting off elective procedures. But he said that a new rehabilitation hospital could be lucrative for Jackson.

“You’ve got a number of different streams of payment for it,’’ he said, noting that auto insurance and worker’s compensation are among the third-party payers for rehabilitation that do not exist for general medical care.

As Jackson enters an uncertain period for hospitals and the healthcare industry under federal reform, new revenue streams could help offset losses.

Migoya said Florida already has reduced Jackson’s Medicaid reimbursement by about $113 million a year, and he expects those payments to decline as the state moves all Medicaid patients to managed care plans run by private insurers by December 2014.

Given these challenges, Barbera said he believes “the general premise that Jackson needs an upgrade to its facilities.’’

But he’s not entirely certain that upgrades alone will persuade patients to choose Jackson over another area hospital.

Under federal healthcare reform, “There are going to be more people that are going to have choices as to where they go, and Jackson has got to compete with all those various choices,’’ Barbera said.

“Will Jackson be their choice?’’