Money Woes Threaten Future Of Jackson Memorial Hospital

MIAMI (CBS4) - Jackson Memorial Hospital is facing a "drastic situation" in which it will run out of money this summer and not be able to pay their employees without an immediate "influx" of cash, Miami Dade County commissioners were told Thursday during a meeting with the hospital's governing board.

"We are in a drastic, drastic situation," said Martin Zilber, a member of the Public Health Trust. "We can't even continue to do what we are doing at the level we are doing it without significant cash influx."

CBS4 I Team investigator Jim DeFede reports that fellow board member Mark Rogers offered an even more dire prognosis.

"I believe Jackson is non viable," he said. "I want to repeat that again. I believe Jackson is non viable. As an economic entity it will not survive and you should be told that directly."

But rather than trying to cut their way into solvency, Rogers said Jackson has to change the way it does business

"The answer to Jackson is not cutting costs," he said. "The answer to Jackson is growing new business."

In the short term, commissioners were told that they might have to advance Jackson anywhere from $30 million to $70 million in the next few months so that it can continue to meet its payroll. But even then, Jackson is facing an annual loss of $100 million this year.

While Jackson has made progress collecting money from patients – a problem that was at the heart of Jackson's earlier financial crisis – the latest problems are myriad. The hospital is treating fewer patients than expected which will cost the hospital $76 million in lost revenue. The hospital is also expecting to lose $56 million in state funding.

Additionally, the hospital has nearly $1 billion in capital construction needs. For instance, the hospital must update its sprinkler and fire alarm system which could cost at least $10 million.

County Commissioner Sally Heyman said Jackson has not done enough to resolve its financial problems.

"It just seems to be to be crisis mode [jumping from] one crisis to another," Heyman said, "and my concern is that we still haven't gotten to the causes of the crisis."

Jackson's underlying problems are immense. As the county's safety net hospital, Jackson provides $700 million each year in charity care for individuals who could not afford to receive treatment elsewhere. But the hospital only receives about $350 million from the half-penny sales tax and Miami Dade County to offset that care.

Jackson needs to find ways to close that gap. And given the political climate in the county, Jackson officials are afraid to ask Miami Dade residents for an increase in the half penny sales tax.

Commissioners Carlos Gimenez predicted the county would be able to give Jackson  the advance the $30 million to $70 million advance it needs, but he's annoyed this is the second time in a year the county has had to bail Jackson out.

"It's de ja vu all over again and part of the problem I had last year is I didn't think they were being aggressive enough," Gimenez said.

Jackson officials assured commissioners they were moving ahead with reforms, it just takes time. They also stressed that patient care was not affected.

While Jackson's long term financial problems were not resolved Thursday, one issue that was settled was establishing a salary for the new president of Jackson. The selection committee set the salary at up to $975,000. The current president makes $665,000. With benefits and incentives the new president's salary could top $1 million.