Miami-Dade County

Jackson Health System, once near bankruptcy, ends year with $45 million surplus

On the heels of a landslide Election Day victory that will send $830 million in taxpayer funds to Jackson Health System for upgrades and new facilities, administrators announced this week that Miami-Dade’s public hospital network closed the year ending Sept. 30 with an unaudited but better-than-expected budget surplus of more than $45 million.

The positive financial finish marks the second consecutive year that Jackson has earned a surplus after an era of hemorrhaging cash, to the tune of about $419 million from 2008 to 2011.

“Like we said, we expected to have a strong year in 2013,’’ Chief Executive Carlos Migoya said Thursday at a meeting of the Public Health Trust that runs Jackson. “This proves the case.’’

But there are challenges ahead for the taxpayer-owned hospital system, Migoya and others acknowledged.

For the coming year, Jackson administrators have projected a smaller surplus of about $11 million — and that depends on the outcome of a Dec. 5 impasse hearing by the Miami-Dade County Commission, which is expected to decide whether Jackson’s estimated 10,000 employees will continue to contribute 5 percent of their base pay toward group healthcare costs.

If commissioners allow the contribution to end on Jan. 1, as called for under the county’s agreement with employee unions, then Jackson would have to cover the cost, which Mark Knight, chief financial officer, put at about $24 million annually.

Jackson’s cost for 2014 would be closer to $18 million, though, because the fiscal year began in October, Knight said.

Still, the change would erase Jackson’s anticipated surplus for 2014 and replace it with a deficit of about $6 to $7 million. Knight said that budget hole would have to be closed with cuts.

Other challenges ahead include lower reimbursements from Medicaid, the state-federal healthcare program for the poor and disabled, which will move more than 3 million Floridians to managed care plans run by private insurers next year.

Migoya said Jackson has lost an estimated $100 million since 2010 because of reductions in Medicaid reimbursements mandated by the state Legislature. He projected that Jackson will lose an additional $6 million in Medicaid reimbursements in 2014.

Jackson administrators also budgeted $10 million this year to upgrade computers and information technology systems to handle patient records and billing.

The new fiscal year has gotten off to a rocky start, with Jackson reporting a 2 percent increase in indigent, nonpaying patients for October compared to the average for the last quarter of 2013. That means the hospital had higher-than-expected patient volumes in October, but lost about $1.5 million net in patient revenues, Knight said. He added that Jackson provides about $25 to $30 million a month in charity care.

“October has historically been a difficult month for us,’’ Knight said, adding that “this most likely is not indicative of what we will see going forward.’’

Jackson administrators reduced the percentage of uninsured people treated at the hospital system in 2013, in part through aggressive screening of patients for Medicaid eligibility.

In other Jackson news:

•  Members of the Public Health Trust said they will demand representation for themselves and Jackson employees on any board assembled by county commissioners to oversee the use of the voter-approved bond funds.

“This is not a process that I’m going to allow to become a political process,’’ said Joe Arriola, vice chairman.

•  Marcos Lapciuc, the immediate past chairman of the hospital system’s board, submitted his resignation effective June 1 after seven years of volunteer service. Lapciuc chaired the trust through its financial recovery in 2012, and he served as treasurer in 2009 when Jackson’s past administrators revealed massive financial losses that threatened to bankrupt the system.

“Now is the proper time to make room for what must invariably be a new generation of citizen stewards who will hopefully continue to lead Jackson into the next chapter,’’ Lapciuc wrote.

The seven-member trust has been short by one member since about June, when Stephen Nuell, a personal injury attorney, resigned.

•  Migoya said the architectural and design firm HOK was awarded an $835,000 contract to create a master plan for the hospital system that will help guide decisions about Jackson’s future, particularly the capital projects and upgrades that Miami-Dade voters approved on Nov. 5.

HOK’s contract will be paid out of Jackson’s 2014 budget, not the bonds approved by voters, Migoya said. And he emphasized that the master plan will have a tightly defined role when it comes to the bond projects.

“It’s not about where we’re going to spend that money,’’ he said of the master plan, scheduled to be completed March 31. “It’s about how everything fits together.’’

Jackson closed the 2013 fiscal year with 27 days of cash on hand, still well below the 175 days of cash that executives want to have to ensure smooth operations — but almost twice the 14 days of cash the hospital system closed with last year.