Trustees for Jackson Health System on Thursday approved two big contracts for Miami-Dade’s public hospital network: a $127.8 million annual agreement with the University of Miami for physicians and medical services, and a two-year contract extension with a pay raise for CEO Carlos Migoya.
The annual agreement with UM extends an affiliation that began in 1952, and establishes new payment rates, physician duties and other obligations between the partners.
Unlike last year, when renewal of the agreement provoked a heated exchange between UM’s representative and a Jackson trustee, Jackson trustees adopted the agreement with little public discussion during the hospital board’s meeting Thursday.
The total value of the agreement exceeds the prior year’s contract amount by about $10 million, and includes a separate $5.6 million agreement for the Miami Transplant Institute, which is staffed with UM transplant surgeons and buys organs from a UM-run organ bank.
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Marcos Lapciuc, a trustee who last year accused UM of siphoning insured patients away from Jackson Memorial and steering them toward the university’s own hospital across the street, said he was putting his faith in UM’s new president, Julio Frenk.
“I hope he will do what he says,” Lapciuc said. “The past president said one thing and did another. ... I really hope that this president will do and speak from the same side of his mouth.”
The agreement extends exclusivity provisions for UM to provide Jackson with trauma, pediatrics, obstetrics and gynecology, and organ transplant services through May 2018.
The separate agreement for MTI, which is among the busiest organ transplant centers in the nation, amounted to about $1.1 million more than Jackson has paid UM for those services in the last two years but accounts for a projected growth in transplant surgeries. The additional funding also will aid in the recruitment of a heart and lung transplant surgeon, a pediatric gastroenterologist, a hepatologist and a nephrologist.
Among the new items included in the annual contract:
▪ Pay-for-performance incentives and a penalty program pegged to clinical outcomes.
▪ Addition of UM neurosurgery services at Jackson South Community Hospital in South Miami-Dade and at Holtz Children’s Hospital on the Jackson Memorial campus in Miami.
▪ Six new full-time positions to support graduate medical education, at an annual cost of about $1.6 million.
Trustees also voted to extend the chief executive’s contract for two years, and to give him a pay raise of about $140,000 a year.
Migoya, who was named CEO in 2011, will now earn an annual salary of $730,000, with an incentive package that would pay him a $75,000 bonus plus 2 percent of the sum of net fund assets that exceed $1 million, up to a maximum of 50 percent of his salary.
David Bjork, a compensation consultant with Integrated Healthcare Strategies, said Migoya’s total pay package was below the national average for an experienced hospital CEO.
Migoya reported to trustees that the Florida Legislature is likely to adopt a budget that will preserve most of Jackson’s hospital payments through a federal-state government program known as the Low Income Pool, or LIP.
Under the proposal, the state will invest about $400 million in recurring general revenues to increase Medicaid rates for hospitals. That $400 million will draw down a federal match of about $600 million for Florida’s Medicaid providers, mostly hospitals but also physicians. In addition, Florida will receive up to another $600 million in federal funds to pay hospitals that treat large numbers of uninsured and under-insured patients on Medicaid.
Migoya said Jackson likely will see an overall reduction of $6 million to $7 million a year under the Legislature’s proposal, which still needs approval from the governor and federal regulators.
“We dodged a big bullet this year,’’ he said in reference to the risk of losing the LIP program altogether, which would have cost Jackson about $200 million a year. “I think we’re in a good place right now.”
Migoya reported that the county’s public hospital system experienced its strongest financial performance of the past eight months in May, posting a budget surplus of about $9.5 million.
But he warned that Jackson faces uncertainty as the Affordable Care Act calls for reducing grants to hospitals that treat the uninsured while increasing the numbers of Americans with insurance coverage — a significant shift in funding that will require hospitals to operate more efficiently while pursuing new opportunities for growth under the health law.
“We need to have less reliance on federal reimbursements,” he said. “That is the future.”