Grand jury is probing Jackson Health System

BY JOHN DORSCHNER
jdorschner@MiamiHerald.com

With Jackson executives using end-of-life terms like ``death spiral'' and ``insolvency'' and a grand jury starting to investigate the public health system's problems, Miami-Dade Mayor Carlos Alvarez said Wednesday he would help get Jackson get a short-term loan but demanded its governing body speed up a decision on a recovery plan.

``At this point, delays are simply too costly to accept lightly,'' Alvarez wrote to Jackson Chief Executive Eneida Roldan, who has called for the Public Health Trust to approve a plan to cut $160 million by March 22. Alvarez wants to see a plan presented to the County Commission on Tuesday.

``I strongly urge you to continue to meet daily, including weekends, to ensure you can submit a realistic plan,'' Alvarez wrote.

Roldan did not immediately respond to a request for comment, but after the letter was sent, the Trust announced it will meet Friday.

``We're working as hard as we can,'' Trust member Abraham Galbut said. ``Every one of us is a volunteer.'' But he wasn't sure if the trust could get a decision as quickly as the mayor wanted, considering the complexities of Roldan's proposal to eliminate 4,500 jobs and close two suburban hospitals if additional funding is not found.

Meanwhile, Miami-Dade State Attorney Katherine Fernández Rundle said she had presented to a grand jury complaints about ``gross mismanagement'' at Jackson. Grand juries decide on their own what subjects to investigate, and testimony is secret. Two highly reliable sources have told The Miami Herald that the grand jury has started hearing testimony from witnesses.

Last month, Martha Baker, president of Local 1991 of the Service Employees International Union, sent a letter to Fernández Rundle calling for a grand jury to look at Jackson's executives as she demanded ``better accountability on the part of management'' and decried what she termed gross inefficiencies that caused the hospital to lose $244.5 million in fiscal 2009.

While it may take months for a grand jury report to be made public, Jackson's cash problems are immediate. The system is already late in paying many bills and it expects to be down to 1 ½ days of cash in early April unless it receives $67 million as a loan so that it could keep going until it receives a payment in special state-federal funds of about $90 million in late April.

Mayor Alvarez said Wednesday he had ``instructed the county manager to take a look at how we can come up with the money,'' but he expressed growing concern that Jackson's finances could drag down the county. By law, the county is responsible for paying Jackson's union workers if the hospital system can't -- about $80 million a month.

If Jackson runs out of cash in May -- as its financial people predict unless drastic measures are taken -- ``the county could face layoffs, further service reductions and a likely immediate drop in our bond ratings,'' the mayor wrote in a sternly word letter. ``This is simply unacceptable.''

Jackson's troubles could lead to cuts ``from existing county services in areas such as public safety, human services and economic development,'' the mayor wrote.

Roldan revealed her recovery plan last Friday and the Trust held a 12-hour meeting on it Tuesday -- at which the ``plan was discussed without any tangible progress,'' Alvarez said.

``I have reviewed your proposed recovery plan, and I am forced to conclude that it currently lacks detail and an in-depth, measurable implementation strategy,'' the mayor wrote. ``Further, I question how realistic many of your proposed reductions are and whether you are proceeding with the urgency demanded by the crisis.''

He said he was directing the county finance director to ``require that you immediately hire a consultant to facilitate the necessary changes in rates, fees, charges and other methods of operations.'' On Tuesday, the Trust board voted 9-6 to hire a consultant to help Roldan decide on cuts.

In an interview, Alvarez said he had yet to see any information that convinced him that it would be necessary to close Jackson North and Jackson South -- moves that will need to be approved by the County Commission. ``We want to make sure that the cuts being proposed for the two hospitals are the only alternatives, and quite frankly, I don't think they've reached even close to that requirement.''

Angel Medina, vice chairman of the board, wrote in an e-mail that the 16-member Public Health Trust was doing all it could. ``Everyone is working exceptionally hard, putting in long hours and trying to squeeze blood from a turnip.''

On Tuesday, Jackson executives reported the system was far behind in paying vendors and growing numbers of patients were avoiding Jackson because of negative publicity. That caused Chief Operating Officer David Small to say that the system could be in a ``death spiral.''

``This situation is very very common'' in failing hospitals, said Paul Goldberg, a veteran administrator of hospital turn-arounds and now chief financial officer at a New Jersey hospital. Vendors will start to demand cash as they deliver goods ``and patients do not feel safe at places with financial problems.''

Jackson has been searching for a new chief financial officer for months. To go through a crisis without a CFO -- ``that's extremely dangerous,'' Goldberg said.

Richard Gundling of the Healthcare Financial Management Association said that a hospital ``running low on cash is very serious.'' Vendors not getting paid and patients staying away further ``hurts the cash position of the hospital. So it is a difficult cycle.''