May 4, 2016

Why Jackson Health System hired a CEO with no health care experience

Daily Briefing

In 2011, Jackson Health System had lost $419 million in the past three years. But Miami-Dade's century-old public hospital network didn't turn to a health care executive to lead them out of the crisis.

It turned to Carlos Migoya, a retired banker with no health care experience.

For 35 years, Migoya had run some of the largest banks in the United States. One item on his resume especially caught the health system's eye: He had helped turn around Miami's bloated budget as its city manager in 2010.

At the time, Jackson Health System was facing its own budget problems. It was on the brink of financial crisis due to bad debt and budget overruns.

Many health care experts and elected officials said that Miami-Dade should sell the hospital network to a private operator and step back from its commitment to serve all residents, regardless of their ability to pay.

But Migoya had a different plan. After being selected as Jackson's CEO in May 2011, he replaced the system's management team and floated several controversial proposals:

  • Obtaining more than $50 million a year in benefit and salary concessions from labor unions;
  • Reducing payments by $52 million under its annual agreement with the University of Miami (UM) Health System, which called for UM to care for the system's uninsured patients, supervise resident training, lead Jackson's clinical departments, and more; and
  • Cutting about 1,200 full-time jobs—an 11 percent workforce reduction—and hiring part-time workers to fill the difference.

While state officials liked the plan, health system staff and labor unions did not. But his proposals helped turn the system around, and that success ultimately gained him the support of labor officials.

"He's transformed this place," says Martha Baker, president of the labor union that represents 5,000 Jackson doctors, nurses, and other professionals.

Migoya also won the support of voters: Miami-Date residents in November 2013 approved $830 million in debt bonds to pay for rebuilding and remodeling the system's facilities.

Results

In 2015, Jackson reported its fourth consecutive year of budget surpluses; that year's $62 million surplus was the largest in the system's history. Now that the system is in better financial shape, Migoya has restored pay to previous levels.

Other changes have improved the system's finances, too. Infection and injury rates are going down, and the number of insured patients is going up. While Migoya initiated a tougher screening process for potential Medicaid patients, the Affordable Care Act also helped increase the rate of insured patients. 

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Migoya's goal is to make the network completely financially independent from taxpayer money, which provides the bulk of its budget. While state taxes currently make up $830 million in Jackson financing, Migoya says that financial independence could happen in 15 to 20 years (Marshall, Becker's Hospital Review, 5/2; Chang, Miami Herald, 4/30).

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