Carlos Migoya concluded his first year as leader of Jackson Health System with two months of financial surpluses, but major challenges lie ahead in his attempt to turn around the troubled public hospitals.The most pressing short-term issue is that the system is projected to be below 10 days of cash on hand for June, July and August, according to estimates that Chief Financial Officer Mark Knight gave Jackson’s governing board Thursday.

Jackson is planning to maintain this precarious position by continuing its policy of being slow to pay vendors . At the end of April, accounts payable had reached $165 million, and Knight said some suppliers are insisting on cash-on-delivery to continue selling to Jackson.

Migoya said he hopes to reduce accounts payable by about $30 million starting in May — when the bottom line begins to feel the effects of laying off 920 employees.

Migoya, who took over as chief executive on May 1, 2011, reported a surplus of $843,000 in April and $6.2 million in March — a major achievement for a system that lost $419 million the past three years. Migoya said Thursday there’s a chance that Jackson can break even for this fiscal year, which ends Sept. 30, although the official projection is still for a $12 million loss.

On Thursday, Michael Bileca, a board member and state representative, praised Migoya and his team for making today’s system “a far cry” better than it was a year ago: “It took a lot of work to make that happen.”

Virtually all the improvement so far has been through cost-cutting, and some of the toughest work on that is continuing during negotiations with the University of Miami for a new type of operating agreement. Many UM doctors work at Jackson. Migoya said Thursday he is “cautiously optimistic” about the talks and may have news to announce next week.

“It’s a new UM in the last couple of weeks,” board Chairman Marcos Lapciuc said, referring to the medical school’s recent moves include laying off almost 1,000 full-time and temporary workers. Since then, “we’re getting a lot closer” to settling issues, Lapciuc said.

Beyond that, the harder job appears to be developing a strategic plan for new ways to bring in paying customers. The board is planning a day-long retreat on June 22 to discuss strategy.

Jackson also welcomed one staffer and said goodbye to another. Incoming: Thomas Schramm, a veteran South Florida fund-raiser, who is the new head of the Jackson Memorial Foundation. He spent 15 years with Baptist Health South Florida and most recently was director of development for the Florida Grand Opera.

Outgoing: Fernando Salgado, the chief transformation officer, who resigned. Salgado, a onetime executive with IBM and General Electric, was hired by Migoya a year ago for $450,000 at the same time Donn Szaro, a long-time acquaintance of Salgado’s, came on board as chief strategy officer. Szaro died March 31.

When Nobel Laureate Andrew Schally arrived in South Florida six years ago, he was greeted with great fanfare and named a distinguished professor of pathology at the University of Miami medical school. Now he says his work is one of the many casualties of the school’s budget slashing.Schally says UM told him several weeks ago that his annual funding of $150,000 for research would end May 31, part of widespread cuts in the medical school that could eliminate up to 800 jobs this month and trigger major reductions in research.

“I was shocked… We developed so many drugs for the university,” Schally says. “They are killing the goose that laid the golden egg.”

Medical school leaders insisted Friday that they remain strong supporters of Schally, even as the university imposes the cuts. The Miller School of Medicine has lost $18 million so far this fiscal year, sees dire financial problems ahead and already terminated 180 temporary employees in March before Tuesday’s announcement that it is laying off up to 800 full-time employees this month.

President Donna Shalala said last week that, as a result of the cuts, the medical school would stop supporting much “unfunded” research — work that isn’t backed by outside grants from organizations such as the National Institutes of Health.

Research professionals maintain that many major breakthroughs in cancer, diabetes and other medical fields start small, with funding provided by universities, to build the data needed to compete for large NIH grants. They fear that research cutbacks now at UM could set back important scientific work for many years.

“The implications are huge,” said Joseph Whittaker, immediate past president of Sigma Xi, the national scientific research society. “There is a big ripple effect” because research projects, once stopped, take a long time to ramp up again even after funding is restored, and the cutbacks could hurt efforts to build the area into a biomedical research center.

Last week, when Shalala was asked if UM would lose some valuable research because of the cuts, she replied, “We might.” But, she added, the school’s mission remained focused on maintaining top quality research while “attracting and maintaining world-class people.”

Shalala said UM faces the same problems as many other higher education institutions: Government funding for research, mostly through the NIH, remains roughly flat but many more researchers are applying for the grants, at least partly because researchers who started projects with stimulus funds in 2010 and 2011 are now seeking to continue with regular NIH funding.

Ann Bonham, chief scientific officer of the Association of American Medical Colleges, said only about 15 percent of applicants are getting NIH grants.

“The young scientists are the ones at greatest risk,” said Pascal Goldschmidt, dean of UM’s medical school, noting that the average age for scientists getting their first NIH grants used to be 28 to 30. Now they average about 35.

Many young scientists get their start with university funding, and older scientists often keep their work going between NIH grants with “bridge grants” from universities. These are the grants UM is drastically reducing.

“We are not eliminating every unfunded researcher,” Shalala said. “In some cases, UM funded researchers are going to absorb them on their funded budgets.”

But Shalala also said, “If you don’t have grants at the university, you cannot expect the university to fund you for every year to come. We can do a certain amount of that with younger people, as they’re starting out, but no major research university … is carrying people for very long periods of time. We just can’t. We can’t afford to do that.”

Schally, the Nobel laureate who was one of those who got the bad news, moved to Miami in late 2005 after Hurricane Katrina knocked out his lab in New Orleans. His current lab is at the Miami Veterans Affairs Medical Center, where he leads 17 researchers. At age 85, he said he continues to get work at 6:30 a.m.: “I don’t rest on old glory.”

He won his Nobel in 1977 for research that led to new drugs for prostate cancer. Since he arrived in Miami, he’s continued to make news, including finding a molecule linked to rapid growth of tumors.

Schally said UM gets the vast majority of any commercial benefit from his work. “We developed so many drugs. UM stands to collect millions, even billions.”

He said UM informed him he was losing the grant, which he was using to develop chemical hormonal treatments for cancer. “This was not a friendly way to do it,” he said of the notification. He said he has asked for clarification but hasn’t received any.He will likely to have to lay off two researchers next month, he said.

On Friday, the medical school said in a statement that it had made “an extraordinary investment” in Schally’s research — giving him $3.8 million over the past four years with plans for another $993,119 for the fiscal year starting next month — but said it had not yet made any money from his research.

“The Miller School has great confidence in the scientific value of Dr. Schally’s work, and hopes that one day the discoveries he has made at UM will lead to effective treatments for patients, as well as patents that may benefit the university,” the statement said. “At this time, Dr. Schally’s discoveries have not led to any revenue for UM.”

Schally and his clinical director, former UM surgeon Norman Block, said they were astounded by UM’s numbers, speculating that the figures might include endowment money from Block, which he had been designating for Schally’s lab. “Let’s be polite and say the numbers are not accurate,” Block said.

Block said that Schally’s discoveries haven’t “ripened” yet, but they said conservative estimates indicate they could bring $1.3 billion to UM when they came to market.

They were particularly surprised to hear that they would be getting almost $1 million starting in June. “Maybe in confederate dollars,” Block said.

At the opposite end of the research spectrum from a Nobel laureate is Michael Ricciardi, 23, who was earning $25,000 a year in a UM lab that was studying autoimmune functions, fundamental research that could lead to breakthroughs in diabetes, arthritis and other diseases. The work had been funded by an NIH grant, but it had ended. Professors, who had applied for a new grant, needed bridge funds from UM to keep their work going.

That stopped Tuesday, when Ricciardi said he and 10 others out of the 33 in the lab were told to clear out their desks and leave immediately. Ricciardi said he still returned to the lab to maintain a mouse colony because the work on genetics would be lost otherwise.

“I was passionate about what I did,” Ricciardi said, adding that he sometimes worked until 3 a.m. to treat cell cultures that needed constant tending.

Bonham, the AAMC chief science officer, said she fears the national research picture may be harmed long-term by the grant situation. “Some of our best and brightest minds will not choose to go into research. Innovation comes from people. If we begin to lose that pipeline, we are going to lose our global competitiveness.”

While the research problems may seem abstract to the public, Bonham said they shouldn’t be: With soaring rates of obesity in U.S., corresponding rises in diabetes and the aging of baby boomers, medical research is more important than ever.

“If there are no breakthroughs for these, there’s going to be a huge social burden,” Bonham said. “There are going to be very specific consequences, very real concerns.”

Those concerns may be particularly acute in South Florida. Both Bonham and Whittaker of Sigma Xi say that while other areas are suffering, neither has heard of any medical school undergoing similarly massive cutbacks. On Friday, Moody’s Investor Service issued an updated credit report on UM: “Although it is unusual for a university to undertake cuts of this magnitude in such a short timeframe, most universities and hospitals have been very focused on expense containment in recent years.”

In 2008, when UM announced plans for a new Life Sciences Park, there was talk of the region becoming another Silicon Valley. Shalala said last week that the new Life Sciences building is progressing but is considered a long-term investment, perhaps taking 20 years to show major results.

Although Whittaker, the Sigma Xi leader, said the cuts in the medical school “will not bode well for the future of the region,” Shalala insists changes must be made. UM, she said, is “clearly overstaffed and underfunded in areas like research.”

Posted on Mon, May. 07, 2012

Jackson Chief Executive Carlos Migoya says quality of care “continues to improve,” even during three months when many employees were required to take furloughs.

The latest quality report, prepared monthly for Jackson’s board, shows that for three critical measurements of infection rates — involving catheters, ventilators and lines into the bloodstream — Jackson’s performance in February was in the top quarter of hospitals nationwide. In all three categories, Jackson rated considerably better than it had in February 2011.

The rate of medication errors was 2.4 per 1000 patient days in February — compared to 3.7 per 1,000 patient days in November, before the furloughs began.

Not all of Jackson’s quality measures are top rate. Patient fall rates with injuries through March was 12 percent higher than a year before.

“We are improving” on most fronts, “but we aren’t where we need to be,” Kevin Andrews, Jackson’s vice president of quality and patient safety, told Jackson’s board last month.

Another challenge lies ahead. This month, Jackson starts a major new staffing arrangement after laying off 920 full-time employees in April and hiring 350 part-timers to allow for more flexible staffing to adjust to varying patient levels.

The layoffs mean that virtually all nurses at Jackson Memorial Hospital will be shifted to new jobs requiring retraining. Martha Baker, head of SEIU Local 1991, which represents Jackson’s nurses and other healthcare professionals, says she hears stories from union members indicating that quality decreased during the furloughs and will probably get worse following the layoffs.

“I just can tell you that the word from the trenches is that medication errors” and other quality measures are suffering, Baker said. She said nurses may be afraid to report errors for fear they’ll lose their jobs: “My guess is they’re just under-reporting. Times are tougher.”

Baker said the Joint Commission, the national body that accredits hospitals, recommends management not punish nurses who report errors, but she said Jackson does punish those who report.

Jackson’s Andrews said that’s wrong. He said the Joint Commission does recommend that employees should be punished if they make egregious errors because they ignored proper procedures, but he said Jackson does not punish those who simply report an error and Jackson goes out of its way to urge employees to do so.

“Nurses under-reporting is a national problem,” said Andrews, speaking from Chicago, where he was attending a national meeting to discuss ways to encourage employees to report when they make errors and to create a “just system” in hospitals so that nurses don’t fear reprisals.

Andrews told Jackson’s board last month that he sets the goals high. But in some measures, such as scores for treating heart attack and pneumonia patients, he said Jackson will likely always rank worse than regular community hospitals because Jackson treats higher risk, uninsured patients who often come for treatment when they’re already very ill.

Questions about quality of care have been raised repeatedly in recent months by county commissioners and others, often in response to the union’s concerns that cuts are likely to affect patient safety.

On May 1, State Rep. Cynthia Stafford D-Miami, told a rally on the grounds of Jackson Memorial that labor reductions “will disrupt patient care and patient safety,” while a person in the background held a sign: “Mr. Migoya: Don’t Take Quality Care Away from the Patients.”

Migoya insists he hasn’t done that, but he acknowledges that a huge retraining job is now taking place, with almost all nurses at Jackson now in new roles, many involving complex expertise.

“This is major musical chairs,” said SEIU’s Baker, who called the process “kind of crazy” and a waste of taxpayer money. She thinks it would have been far simpler and cheaper to do fewer layoffs.

One example offered by Baker: In the Jackson Memorial West Wing 5 telemetry unit, 17 of the 21 full-time clinical nurses were told their jobs have been eliminated. Nineteen part-timers will be hired to take their place.

Since most senior nurses don’t want to accept part-time work, that means four experienced nurses would be left in the unit. The 17 who lost their jobs in the unit then start a “bumping” process, displacing nurses in other units with less seniority.

Baker said many of those 17 were likely to end up at Jackson North, where most nurses’ seniority goes back only to 2006, when Jackson purchased the facility from Tenet. In turn, those Jackson North nurses, if they couldn’t find other work, could become part-timers in the telemetry unit, where they will need new training.

Chief Executive Carlos Migoya agrees with that assessment of job changes. “Blame civil service,” which requires the bumping ritual. “If the union gave up bumping, that would mean a lot less retraining.”

Baker calculates the retraining required by the layoffs will be $1.3 million per two-week pay period and will go on for several pay periods.

Migoya said he estimates the total cost of retraining will be about $2 million — a fraction of the $69 million that his team estimates Jackson will save annually with the layoffs and new part-timers.

Up to 800 people will lose their jobs under a major restructuring at the University of Miami medical school, President Donna Shalala said Tuesday.State budget cuts, less research money, lower compensation from insurers and cutbacks in payments by Jackson Health System made the changes necessary, Shalala said during a meeting at the Miami Herald.

“It’s not a great situation,” Shalala said, “but at the end of the day, we’ll be a much stronger healthcare system of a much higher quality because we will be able to reinvest in healthcare delivery. … We’ve moved this institution to new heights. The world is changing beneath our feet.”

Laid-off workers are being notified this month, Shalala said. A notice UM filed with the state Tuesday announced the university would cut 800 jobs by July 31, but Shalala said the final number is likely to be lower. The cutback is the largest by any employer in the state since the medical school’s campus neighbor, Jackson, announced 920 layoffs in February.

The UM reduction amounts to 8 percent of the medical center’s 10,000-person workforce. Shalala said no doctors or nurses who provide clinical care would be affected. The cuts announced Tuesday come after 182 temporary workers were laid off in late March.

Most of the UM layoffs are concentrated in research and administration as the university centralizes services to serve the entire enterprise. About 150 people who schedule appointments will lose their jobs in various departments as that service is centralized. About 150 in research administration and 110 researchers will also be let go, according to the letter UM filed with the state.

This year, the medical school lost about $8 million in state funding, a spokeswoman reported. It also lost $16 million in payments from Jackson.

Recently consultants from PricewaterhouseCoopers were brought in to study the medical school operation, finding duplication in administrative jobs. “We are going to actually take — from top to bottom — a whole layer out,” Shalala said.

Unfunded research programs are also being slashed. Shalala said this is a national problem for all medical schools, because more researchers are applying for research grants, meaning fewer are funded.

“What we’ve chosen to protect is patient services,” Shalala said. “Nothing that we’re doing will affect the education of our students or the quality of the healthcare. In fact, what these moves will allow us to do is to improve the quality of healthcare at our hospitals, in our clinics and assure us that we can recruit and retain the finest healthcare professionals in the country.”

Shalala acknowledged that UM leadership had heard intense objections from the faculty. The agenda for a faculty council meeting scheduled for Tuesday evening included two dozen topics including “explanation for such short notice for drastic changes” and “lack of faculty notification or involvement.”

Steve Green, a biology professor and former head of the UM faculty senate, said that although the administration believed it had been transparent and forthcoming in deciding on cutbacks, his colleagues in the medical school told him they found the process “mysterious” and were angry that it was done by outsiders who weren’t experts in research and looked only at numbers. “That’s what’s irritating people. That’s the major cause for the morale crisis,” he said.

Shalala, who has led institutions of higher education for a total of 24 years, said she’s accustomed to dealing with complaining faculty when she tries to make changes. “There is nothing I haven’t heard before.”

Pascal Goldschmidt, dean of the medical school, said that all the decisions were based on national standards for most effective research standards. Jack Lord, the medical school’s new chief operating officer, said the consultants made recommendations, but university leadership made the final decisions.

Some critics have long warned about looming disaster at the medical school. Last October, car dealer Norman Braman, a long-time UM trustee who has donated more than $5 million to the university, wrote a scathing letter to Leonard Abess, chairman of the board, complaining that “poorly conceived decisions by the medical school administration have put the university at significant risk. … In the ‘for profit’ world, administrators would have already been fired for repeatedly failing to perform according to stated goals. Unfortunately, this is not the case at UM where people are instead given bonuses and raises as the university gets weaker and weaker.”

Braman — who later resigned from the board — attached to his letter a list of projections that UM executives gave trustees before the university purchased the 560-bed Cedars Medical Center in 2007 that predicted the hospital would produce a net surplus of $44 million by 2011 and $58 million by 2012.

In fact, the medical school’s monthly financial report, obtained by the Herald, showed that UMH, the former Cedars, showed a surplus of $4.8 million for the first 10 months of this fiscal year.

Shalala responded to Braman’s criticisms Tuesday, saying that “everybody is entitled to their own opinion,” but she noted that “UMH is solvent” and helping pay for educational and research losses at the medical school.

Overall, UHealth, the clinical enterprise, had a surplus of $61.8 million, while the Miller School of Medicine, including the teaching and research efforts, showed a loss of $79.8 million. The entire medical center enterprise had a loss of $17.9 million for the 10-month period.

For UM administrators, the problem is that the medical school was expected to produce a surplus of $25 million for the year, to help fund overall university operations. That means the medical center was $43 million behind expectations.

Joe Natoli, UM’s chief financial officer, said the university has invested considerable amounts in the hospital and clinical practices and expects them to produce major paybacks.

Still a major concern for the UM leadership is Jackson, Miami-Dade’s healthcare safety net for the poor and uninsured, which has lost $419 million the past three years. Lump-sum payments to UM have dropped from $130 million in fiscal 2010 to $114 million in fiscal 2011. The two organizations are now struggling to craft a new kind of annual operating agreement, with Jackson “leasing” UM doctors, rather than making lump-sum payments to the university.

Both sides agreed to have that arrangement in place by June 1, the start of UM’s fiscal year, but negotiations have dragged on.

Last week, at a meeting of the Jackson board, Goldschmidt begged Jackson executives to determine by June 1 how much they plan to pay UM during its new fiscal year. “We just cannot carry on without that information.”

Jackson Chief Executive Carlos Migoya said his team was working on the issue, but didn’t offer specifics.

Shalala said Tuesday she’s confident the deal with Jackson will get done. “We don’t want to complain about this relationship. We’ve got to make it work.”

But the extent of that relationship is still unclear. Last month, the University of Miami Hospital applied to state regulators for permits to create adult transplant programs for heart, liver, kidney and lungs. For decades, those have been premiere specialties that UM doctors have performed at Jackson Memorial.

Shalala said UM is committed to working with Jackson on transplants, but it seeks “flexibility” for the future on how to best handle long-term transplant patients, particularly if Jackson decided to drop some of the transplant programs.

On Tuesday afternoon, Jackson’s Migoya sent a letter to board members and county leaders saying he hoped Jackson and UM can continue being partners in transplants, but “we will take all necessary steps to protect this unmatched program from being diluted by competitors who cannot offer the same level of care. Regardless of the actions taken by other hospitals, Jackson is completely devoted to preserving and expanding our transplant service.”