Major Miami hospital system in ‘death spiral’ as it runs low on cash; reflects woes nationwide

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Big Miami-Dade hospital system nears insolvency

MIAMI — The city’s major hospital network, which runs Miami’s only round-the-clock trauma center and is a safety net for the poor and uninsured, is running out of money and could close, a predicament that illustrates the precarious financial state of many hospitals around the country.

The Jackson Health System will have little cash on hand by the end of March if it does not receive a $67 million advance from the county, said Marcos Lapciuc, treasurer of the Public Health Trust, the institution’s governing board.

“We are very close, if not already in, a health care death spiral,” Chief Operating Officer David Small said.

Jackson could run out of cash and shut by May or sooner, Lapciuc said, and the county mayor said officials were preparing to advance the hospital some money.

“Sadly, it’s not all that unique,” Larry S. Gage, president of the National Association of Public Hospitals & Health System, said of financial difficulties like the one Jackson is facing.

Millions of people across the country have lost jobs and the insurance that goes with them over the last two years. Hospitals, including in the Jackson network, are dealing with more uninsured patients, at the same time they are facing cuts in state and county funding. That has translated into cuts in staff, services and administrative costs at many hospitals across the nation. The financial woes come as President Barack Obama continues to push for a stalled health care overhaul.

Gage pointed to other examples of extreme financial problems. He said the New York City Health and Hospitals Corporation which, depending on state legislation, is looking at anywhere from half-billion to a billion dollars in deficits soon.

Several major California county systems could have deficits in the hundreds of millions, Gage said.

“Obviously the net effect for some patients will be if a facility or services closes down at a particular location you will have to go somewhere else,” Gage said.

Jackson Health system is considering cutting 4,500 jobs and closing two hospitals, which have about 500 beds combined. Lapciuc said supplies are currently adequate but, “vendors sooner or later are going to start being very wary.” Besides the county, Jackson is looking to state and federal sources for help.

Jackson Memorial is the only Level One trauma center, capable of handling the most severe medical emergencies, set up to provide 24-hour emergency care in Miami-Dade, the most populous county in Florida and the 8th largest in the nation.

Jackson sought to reassure patients.

“Although Jackson is in the midst of a financial crisis, we want to assure all patients — past, current and future — that our hospitals, emergency rooms and clinics throughout Miami-Dade County are open for business,” a hospital statement said.

Miami-Dade Mayor Carlos Alvarez wrote in a letter to the hospital and board executives that he has “always been willing to discuss possible advances of funds” and that the county manager is preparing such an advance.

Lapciuc said a flood in indigent care as a result of the recession and not enough public revenues to cover the costs helped lead to the crisis at Jackson.

He said the institution is providing approximately $600 million in charity care this year, while receiving about $400 million in public funds — a $200 million charity health care shortfall.

Caroline Steinberg, vice president for trends analysis with the American Hospital Association, said that nationwide the proportion of emergency department patients with no insurance is on the rise.

“And many hospitals are seeing more patients covered by Medicaid and other public programs,” she said. “And that’s concerning because those programs tend to pay significantly less than the cost of care.”

Steinberg said nine out of 10 hospitals nationwide have cut back, with more than half reducing staff; eight in 10 have cut administrative expenses; and one in five is reducing services.

“The economy is really taking its toll on hospitals,” Steinberg said.

Ellen Kugler, executive director of the National Association of Urban Hospitals, said that when a large safety net hospital closes it can have a domino effect — putting increased pressure on surrounding medical centers.

“Those patients aren’t going to have better insurance or more money that they’ll bring with them to a new hospital instead,” she said.

Kugler said Obama’s health care proposal would help in insuring more individuals, but expressed concern that programs aimed at safety net hospitals will be cut in the long term.