Miami Herald – December 30, 2010
Florida’s government-owned hospitals will be in the political cross hairs after Tuesday’s inauguration of Rick Scott, once leader of the nation’s largest for-profit hospital chain.
The governor-elect’s transition team has recommended creation of a panel to study whether government-owned hospitals — Miami-Dade’s Jackson Health System and Broward’s two hospital districts among them — are necessary.
“This is going to be a very hot topic during the legislative session,” said Barney Bishop of Associated Industries of Florida, lobbyists for the state’s large businesses.
The new focus on public hospitals comes as a related crisis looms: Because the state has failed so far to deliver promised Medicaid reforms, Florida stands to lose $350 million in special funding from the federal government unless it can get an extension of a waiver.
These funds, called the Lower Income Pool, are crucial to Jackson, which received $258 million from the pool last year.
Jackson — with its record of financial troubles — may face particular challenges in the new administration, according to Alan Levine, who chaired the committee that made the healthcare recommendations to Scott.
“Make no mistake,” Levine said. “The governance of Jackson has historically been very poor. . . . They’re going to find that the Legislature is going to be increasingly unwilling to fund the infamous misadventures of Jackson.”
Levine has been a healthcare policy advisor for former Florida Gov. Jeb Bush and for Louisiana Gov. Bobby Jindal.
He served as chief executive of Broward Health — the government hospital system in North Broward — and is now an executive with Health Management Associates, a for-profit hospital chain based in Naples.
The time is ripe for reassessing the roles of government hospitals, Levine said, because major “safety net” hospitals across the country are converting from government ownership to nonprofit entities.
Levine points to Grady Memorial in Atlanta, which converted to a nonprofit run by a board of civic leaders to get it away from the control of politicians. After the change, Grady went from years of losing money to breaking even.
In Florida, Levine said, two urban counties have operated successfully without a major government hospital.
In Palm Beach County, the healthcare tax district pays for care for the poor and uninsured at whichever local hospitals they use. A health plan provides primary care for some.
In Hillsborough County, Tampa General Hospital converted from government ownership to a nonprofit. Tax dollars cover insurance for county residents unable to get regular coverage, who then go to any local hospitals, including for-profits.
But in places like Miami-Dade and Broward, the tax dollars go only to the government hospitals. Other hospitals that treat the uninsured don’t get tax money. Instead, they frequently pass along the cost to patients who do have insurance.
“The money should follow the patient,” said Dominic Calabro of Florida TaxWatch. “This is public money for public purposes. It’s a seething issue. It’s been there a long time.”
Steven Ullmann, health policy professor at the University of Miami, said that in theory it makes sense for dollars to follow the patients, particularly since federal law requires emergency rooms to treat patients regardless of their ability to pay.
But Ullmann notes that if the current system is abandoned — and with it, some government-paid primary care — more uninsured patients are likely to wait until they are very sick and end up in the ER. That would ultimately cost taxpayers more money, he said.
If nongovernment facilities had a choice about providing care to the uninsured, Ullmann wonders whether they would choose to do so, particularly since reimbursement rates for such care tend to be low. “The incentive would not be terribly strong,” he said.
Miami-Dade, with at least 500,000 uninsured residents, has much deeper problems than other Florida counties. In fiscal 2010, Jackson received about $328 million in tax money but paid out $420 million in uncompensated care for the uninsured and county-required programs, such as inmate healthcare.
Palm Beach County, with about half of Miami-Dade’s population, spent $154 million in taxes for healthcare.
Brian Keeley, chief executive of the nonprofit Baptist Health South Florida, doesn’t want to contemplate alternatives to Jackson. “It’s a critical resource,” he said. “We cannot let Jackson close.”
He said Baptist already provides large amounts of uncompensated charity care; without Jackson, Baptist and other hospitals would be overwhelmed.
Jackson facilities are owned by the county; Broward’s public hospitals are part of government taxing districts. The governor and the Legislature don’t have the power to close any of them, but Levine noted that the hospital taxing districts were created by the Legislature and could be changed by the Legislature as well.
“The value of the government-run hospitals in their communities is not in question,” said Levine’s report to Scott. But he proposed that a panel study whether to separate hospital taxing authorities from ownership of the facilities.
Broward Health is considering conversion to nonprofit status while still receiving property tax dollars. In Miami-Dade, 41 civic leaders have urged that Jackson be governed by a nonprofit board.
Levine’s report admonished that if such changes take place, taxpayers should not be cheated.
“If a government-run hospital is sold, it must be sold for fair market value” to the highest bidder, he wrote. “Taxpayers have invested significantly in those assets.”
Frank Nask, chief executive of Broward Health, said his group is studying leasing the government-owned facilities at fair market value.
Bishop at Associated Industries said selling government hospitals could provide local governments with money to fund other projects.
If the facilities were sold to for-profit companies, the buildings would be subject to property taxes, raising more funds. That would promote Scott’s goal of lowering local tax rates, Bishop said.
Bishop said Jackson — which lost $244 million in fiscal 2009 and $100 million in fiscal 2010 — is a prime example supporting the argument that government hospitals cannot be trusted to spend money wisely.
One example: Jackson can’t even say how much specific services cost and how much revenue they generate.
Executives say they are working to fix that problem.
Bruce Rueben of the Florida Hospital Association, a trade group of mostly nonprofit facilities, said his group’s overriding focus for the upcoming legislative session is extending the Medicaid waiver to maintain $350 million in Lower Income Pool payments.
Rueben said there is nothing wrong with studying whether public hospitals are cost-effective in providing services.
But he pointed out that Levine’s report recommends that Scott fight to stop the federal healthcare reforms — and contends that if the reforms continue, far more people will have insurance and there will less need for government hospitals.
The debate between government and nongovernmental hospitals over who should get tax money isn’t going to end any time soon, Rueben said.
“It’s been controversial and will continue to be controversial. If it was easy to make both groups happy, it would have been done already.”