Jackson Health was on pace to lose almost half a billion dollars a year before Carlos Migoya took over. In the seven years since then, annual surpluses have reached as high as $64 million.

Within the next 18 months, Miami’s $2-billion government hospital system will wrap up a $1.8 billion in improvements and expansions. The capital spending will mean a new medical center and hospital in upscale Doral, a new rehabilitation center for the world-renowned Miami Project to Cure Paralysis, a network of urgent care centers, remodeling of two satellite hospitals, Jackson North and Jackson South, and of the main facility, Jackson Memorial in Miami.

What makes the investment all the more remarkable is that just seven years ago, Jackson was on track toward a $422-million shortfall in one year alone. “They were almost — not almost — they were bankrupt,” says Joe Arriola, chair of the Jackson Public Health Trust of Miami-Dade, which oversees the hospital system.

The history of Jackson, opened 101 years ago by Dr. James M. Jackson during the days of the Great Influenza as 13-bed Miami City Hospital, is as rich as that of its home city. It performed the first open-heart surgery in Florida and, in 1977, began performing organ transplants. It soldiered through the violence in Miami’s drug hey-day and the onset of the AIDS epidemic. For years, the hospital’s Ryder Trauma Center has been the only trauma center where the U.S. Army sends its doctors for military surgical training. Also, under an agreement, the University of Miami provides most of Jackson’s doctors.

But financing is a perennial issue, especially given the amount of charity care the system provides. The most recent crisis came to a head in 2011 with massive annual losses.

Jackson depends on county taxes, which had taken a hit in the recession. One problem was the governing board, a political body of 22 called the Public Health Trust. Institutional culture contributed to inefficiency. Given its mission to provide top care to all regardless of the ability to pay, the institutional mindset was to spend and expect government to provide, an unsustainable outlook as health care costs soared and the recession’s effects lingered.

Also, the Jackson name had become synonymous with charity ward, not excellence of care. Jackson was where people without resources went. Arriola recalls calling Jackson while on its board to let the hospital know a friend had been admitted and to be sure he had a good room. He was told his friend had the best. Then Arriola visited. “It was a dump. You went in the bathroom, it smelled bad,” he says. There was talk of privatizing Jackson or selling off its satellite hospitals.

At the time, the city government of Miami had weathered a financial crisis of its own after turning to retired banker Carlos Migoya, working pro bono as city manager, to straighten things out.

Leaving a legacy

Migoya had arrived in Miami in 1961 as an 11-year-old Cuban refugee. He attended Miami Dade College, earned two degrees from local Florida International University and built a 40-year career as a bank executive at Southeast Bank, Florida’s second-largest, which became Wachovia.

Migoya was more than familiar with Jackson. He credits it with helping his wife in 1978 survive a difficult pregnancy that reached fruition with the birth of his second son and helping that son, now 40, survive after being born at 1.25 pounds. His mother donated a kidney to his aunt in 1982 in a Jackson transplant. “I knew how important Jackson was and is,” Migoya said.

Helping Jackson, he said off-handedly at a Miami Heat game one night to an inquiring Miami city commissioner, “would be the biggest legacy I could ever leave.”

He soon had his chance. The trust board gave him the job in 2011 by a 9-to-5 vote over executives with long health care-industry resumes. “Carlos didn’t know a damn thing about running a hospital, but he was a great businessman with a great vision of putting a team together,” says the always-blunt Arriola. “We put a really, really good team in place.”

Migoya says that team extends across Jackson’s thousands of employees, but he highlights “the two Dons … two giants in health care” — COO Don Steigman, whose resume included being a senior executive of hospital chain Tenet, and Donn Szaro, who headed global life sciences for Ernst & Young (he passed away a year into the turnaround) — and Chief Financial and Innovation Officer Mark Knight. They provided the health care know-how that Migoya lacked.

Together, they turned over as much as 80% of management in less than two years, replacing some who had left for crisisfree pastures and laying off others. The new team came up with 1,200 staff cuts. Further breathing room came from Jackson’s unionized employees, which is most of the workforce. Jackson’s two unions agreed to wage freezes and benefit cuts that amounted to $100 million a year for four years, says Martha Baker, president of SEIU Local 1991, the union for most of Jackson’s professionals. “Jackson was failing, and we didn’t want to lose this hospital. Our main goal was to make sure this hospital would be sustainable for the next 100 years,” Baker says.

The trust board was cut to seven. Additionally, Migoya required each department to own its expenses and revenue. He renegotiated the deal that keeps UM at Jackson, providing 90% of the system’s doctors, and he improved relations with union workers, giving them and UM a seat at the table as partners. “Mr. Migoya was willing to do the partnership and has continued to walk the talk,” says Baker. She recalls a meeting for Jackson workers that she and Migoya led about the partnership. “Mr. Migoya said to his senior vice presidents and down to directors, ‘if you can’t get your head around it, there’s the door.’ I’ve been at Jackson 35 years now. He’s by far the most collaborative CEO we’ve ever had.”

 

Turning a Profit

The first full year under the new regime, Jackson achieved an $8-million surplus. Migoya donated his $160,000 bonus to the hospital foundation.

Voters bought into a vision from Migoya and the hospital trust for a sustainable Jackson buoyed by new and rebuilt facilities. In 2013, with nurses and other workers campaigning door to door, voters approved an $830-million bond issue for the new projects, such as 100-bed Jackson West in Doral, a remodeling that touched every room in each hospital and the new 250,000-sq.-ft. Christine E. Lynn Rehabilitation Center for The Miami Project to Cure Paralysis at UHealth/ Jackson Memorial Medical Center

Annual surpluses, which have reached as high as $64 million, provided more money for improvements. Success bred success. More patients necessitate more staff. Jackson’s payroll recovered to pre-layoff levels and then some. It now employs 12,500, up from 9,500 after the initial cuts, and Migoya expects to add 1,000 more over two years as new facilities are finished. As Jackson’s brand reputation improved, more patients make it their hospital of choice. “We have the Robin Hood mentality,” Migoya says. “We want to attract paying patients to help us pay for the ones who can’t.”

Those who can’t remain numerous. Jackson under Migoya last year spent $382.6 million on charity care — nearly $10 million less, actually, than it spent his first year. Jackson brought in a company to screen patient financial health while doctors screened physical health. It found many of Jackson’s charity care patients qualified for Medicaid, and that brought Jackson some reimbursement for care. Jackson also now treats more indigents in primary care clinics, where they can have a doctor manage their symptoms and hopefully hold off chronic disease rather than have them repeatedly showing up at the ER, which is more costly.

Migoya, in 2017, was given the Greater Miami Chamber of Commerce’s Sand in My Shoes Award, its highest honor, for his contribution to the region. His annual pay, factoring in car allowances and other benefits, tops $1 million, making him Miami- Dade’s best-paid county employee. His pay is comparable to that of CEOs of other South Florida public health systems and substantially less than CEOs make at large private systems.

‘It’s not like we’re done’

Jackson still has challenges. As union president Baker says, “It’s not like we’re done and rolling in the dough.” Without tax support, Jackson would be losing money. Like some other huge hospitals in Florida, Jackson gets just one star out of a potential five in the federal government’s rating of Medicare-certified hospitals based on quality measures and patient surveys. Jackson says the ratings don’t take into account that its patients include the sickest of the sick from around the globe. Migoya says the system has a plan to improve its star rating “dramatically” in the next three years.

Another challenge, as elsewhere in health care, is money as insurers and the government look to contain costs. The Legislature has cut funding for uninsured care; Jackson’s share of state dollars for low-income people is $105 million less annually than it was five years ago, Migoya says.

He says he expects greater financial stability when all Jackson’s new facilities begin generating cash. He turned 69 this year and has two more years on his contract and expects to stay beyond that to stabilize the new operations. “How much longer, I really don’t know at this point in time,” he says.

As of June, the avid road bike rider and skier was very much in touch with the patient side of health care, recovering from a knee replacement four weeks earlier. He reported the pain and swelling diminishing over the weeks and that he was doing his physical therapy religiously. “Come December,” he says. “I want to be able to ski.”

Of course, he had the surgery done by a UM physician at Jackson.

Migoya on …

Affordable Care Act
Obamacare had — has — a lot of problems in it, but Obamacare is only the first step toward a solution. As we continue to work on the second phase or the third or fourth, eventually we will get it right.

Drug Prices
Pharma overall takes advantage of the whole black box of R&D, and based on that, they overcharge. We need to find a better way to deal with that so we can have more acceptable costs as they relate to pharmaceuticals.

Expanding Medicare
Medicare for all is not affordable. Look, I believe that every person should have insurance. But incentivizing people to have insurance — we’ll never get there because the average 25 year old, even if you make the insurance affordable at $150 a month, is going to say, “I don’t need it.” The way the current system works, the people who are really incentivized to get insurance are those who are sick and the elderly. So insurance becomes more expensive because you have the people who use it the most as the only ones who are insured. I believe that instead of incentivizing the individuals, we should be incentivizing employers. Obamacare exempted the small businesses. A huge percentage of the United States is employed by small businesses. If somehow we were to incentivize it by reducing payroll tax cost or some other kind of tax — not 100% subsidize but some kind of incentive to split the cost — that would help everyone along. That will also take pressure off Medicaid and Medicare, which is also something that right now is unaffordable for this country.

 

Read more in Florida Trend's August issue.

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