DeFede: Jackson Crisis Needs An Honest Broker

MIAMI - (CBS4) - Speaking to Jackson President and CEO Eneida Roldan after Tuesday's marathon Public Health Trust meeting, it was obvious the hospital's financial crisis was taking its toll on her. She was clearly upset with an article I had written earlier this week in which I derided her proposed recovery plan as a dangerous game.

I still believe her plan to close Jackson North and Jackson South, as well as lay off 4,500 employees, was a political threat designed to force the unions to offer wage concessions and the county to come up with the dollars needed to bail Jackson out.

"I've been called political," Roldan said during Tuesday's 12-hour meeting. "I'm not political."

As she spoke her voice was filled with emotion. After the meeting, she held up her hand when I approached -- as if to ward me off.

"It's not personal," I told Roldan, who just shook her head.

"I know it's not personal," she said. "But Jim, you have to help us get a positive message out to the community."

She told me, and other reporters that night, that her proposal was simply a discussion of the worst-case scenarios if no new revenue were to come into the hospital. (Revenue being the code word for union concessions and a sudden influx of county, state, or federal money.)

She also chastised me for a story I had done about her decision to hire a crisis management/public relations firm from Tennessee to help her. The contract was to be for 60 days at a total cost of $99,500. Both Mayor Carlos Alvarez and Martha Baker, president of the union representing Jackson's nurses and doctors, said the decision was a mistake.

Tuesday night she told me she decided to cancel the contract and she sent the folks from Tennessee packing because she was afraid it would become too much of a "distraction."

As she grew more angry with me, her staff eventually pulled her away.

Let me make a couple of points I probably should have made earlier this week. I give Roldan a lot of credit for bringing this crisis to light. When she came in as President and CEO in June 2009 she decided to do things differently than her predecessors.

For years, Jackson had been rolling over, from one year to the next, patient accounts on their books that made it seem like they had more money than they really did. But when her staff took a closer look at it, she realized those patient accounts -- totaling about $130 million -- were never going to be collected. Keeping those accounts on the books was an accounting trick that made it seem like there was more revenue coming into the hospital than was actually the case. It made the hospital look good on paper, but it wasn't honest.

So when she decided to take those accounts off the books, a giant hole emerged in her budget.

There were also other factors for this crisis that were beyond her control. The rising unemployment rate means there are more people without insurance who can no longer pay for their healthcare -- so they end up at Jackson, the one hospital that cannot turn anyone away.

Also the bad economy has meant a drop in the amount of money the hospital collects from the half penny sales tax. People buy fewer TVs and stereos and cars and the hospital gets less money. Last year the hospital received $20 million less in sales tax money than it had expected.

The same goes for property taxes. When the housing bubble burst and home prices fell, the amount of money the hospital collected from property taxes also fell.

Taken all together the hospital finds itself in its worst financial crisis in its 90-year history.

But that doesn't mean there hasn't been mismanagement. For years the hospital did a lousy job of collecting money it should have collected. On Tuesday Jackson's governing board was told that 97 percent of the claims submitted to insurance companies in recent years had mistakes on them, which caused the hospital to either lose money or delay being paid.

Think about that -- 97 percent were filled out wrong.

Today Roldan said that number is 30 percent, but even that is considered unacceptable.

The hospital has had to pay outside consultants to come in and fix the problems on many of the bills. But that outside consultant keeps 40 percent of whatever they find -- which means the hospital is paying millions of dollars to a company to collect money the hospital should be collecting on its own.

Which brings us to today and Roldan's so-called recovery plan.

The plan is disappointing for many reasons and it calls into question Roldan's ability to lead the hospital out of this crisis.

Roldan has been working on this for months. And what I -- and others -- thought she was going to do was present a coherent vision for what the hospital system should look like going forward.

I expected an analysis of which services within the hospital are profitable and which ones are losing money. I expected the plan to suggest new lines that the hospital might want to get into because they would generate money. I expected an analysis of staffing levels and which units would need to be scaled back or possibly eliminated.

Instead what she did was declare that Jackson was going to shrink down to its core elements -- the Ryder Trauma Center, for instance -- and scrap almost everything else.

If another hospital can provide a service, then under Roldan's plan Jackson should abandon it. As a result, one of the recommendations is eliminating all non-emergency plastic surgery. Who loses money on elective plastic surgery? Why get rid of something that should help with your bottom line?

The biggest problem with this plan is that it confuses the short-term cash flow problems the hospital is facing with its long term needs to be sustainable.

They are so focused on the fact that the hospital will run out of money in a matter of weeks, if not days, that they are proposing the most radical treatment possible.

It would be as if a patient had a severe infection in their right foot. But rather than simply amputating the foot, the surgeon decided to cut off the entire right leg. And then just to be safe, cut off the left leg as well, because after all you don't really need two legs to survive.

And because this is the approach Roldan has taken, she has created another problem: A lack of confidence in her by the County Manager, by the Mayor, and by a growing number of commissioners.

If Roldan had presented a plan -- a real plan -- that would have brought the hospital to solid financial ground in 18 months or 24 months, then I truly believe the county would have stepped in and helped them with their short-term cash flow problems.

The reality is that the $230 million budget hole wasn't created this year. It snowballed over a series of years. So nobody should realistically expect that it can be corrected this year either. It will take time to get that red ink off their books.

And there may need to be discussions about either increasing the half-penny sales tax or creating a special taxing district for Jackson -- just like they have for their hospitals in Broward. But there wasn't any of that in her "plan."

But here is the biggest problem of all.

Nobody trusts anybody anymore when it comes to Jackson.

County Manager George Burgess doesn't trust Roldan and Roldan doesn't trust Burgess. The County Commission and the Public Health Trust are at odds. The unions and the hospital's management are still jockeying for position.

There is growing tension between Jackson and the University of Miami. Many at Jackson believe UM is stealing their patients to place them in UM's neighboring hospital (the old Cedars) and UM is frustrated because Jackson owes the university $50 million for services its doctors have provided.

The other hospitals in the area resent they have not been brought into the discussions because whatever decisions are made at Jackson will have a profound effect on them.

Legislators in Tallahassee are angry they haven't been consulted. And so on, and so on.

So what is the answer?

There needs to be an honest broker, someone with clean hands and no axe to grind who can provide the type of shuttle diplomacy we haven't seen since Kissinger made the rounds in the Middle East.

There needs to be someone who can come in and force the unions, force the hospital, force the county, force the University of Miami and the other hospitals to sit down and work something out.

Former County Manager Merrett Stierheim seems to be taking on that role, but if he is, then he needs to say so and he needs to move forward with the Mayor's blessing. Right now he just seems to be dabbling in the matter and acting as an advisor to Roldan.

We don't need dilettantes. We need a diplomat with a blackjack in his back pocket. Stierheim would seem to be a good choice. He helped bail out the school system and the city of Miami when they were in a financial crisis. He understands county budgets and knows all the players.

If Stierheim isn't going to take on that responsibility then someone else needs to step in.

Former Senator Bob Graham comes to mind. He would command the respect of all the parties and while he would not know the inner workings of county or hospital finance, he could quickly pull together a few key advisors who do. (And toward that end, I also think the county commission needs to vote on Tuesday to send their own team of financial experts to go in and examine the hospital's finances. Call it a Financial SWAT Team.)

But more than anything what is needed is someone who can cut through the logjam and get things moving. Whether it is Merrett Stierheim or Bob Graham or someone else, it needs to happen now.