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CEO on Safety Net's Turnaround: 'Never Waste a Crisis'

 |  By Philip Betbeze  
   January 24, 2014

When healthcare outsider Carlos Migoya took over as CEO of one of the most dysfunctional public hospital systems in the nation, Miami's Jackson Health had lost hundreds of millions of dollars and was on the cusp of being sold to a for-profit chain. Three years later, things are very different.

Carlos Migoya, President and CEO of Jackson Health System

During his 40 years as a banker, Carlos Migoya spent a lot of time making personal calls on businesses. He says he usually made between 20 and 30 calls a week. That level of contact helped him develop a strong sense about which businesses were likely having major problems.

"It got so I could quickly tell the difference between what was a well-run business and what was not," he says. And how did he feel about Miami, FL-based Jackson Health System?

"I had never seen a place that was as broken as this was."

Migoya had little to prove. He didn't need, or initially ask for, the job to help fix what was so broken. In what was widely seen as a last-chance opportunity to keep the health system under county ownership, Migoya came to Jackson in May 2011 as its president and CEO after a year as Miami city manager, which followed his retirement from banking.

He certainly didn't need the money. Retiring from the last of several senior positions at Wachovia Bank took care of that. In fact, he donated $160,000—the bonus he earned for turning around Jackson's money-losing ways—back to the hospital itself.

"I wasn't doing this as a career move, but as a community one," he says.

Big System, Big Problems
Jackson's turnaround is a big story for a lot of reasons. For one, public safety net hospitals are often poorly reimbursed compared to their competitors, but it's mostly a big story because of how deep in the red the organization was, how it had become a national laughingstock for incompetent management, and simply because of how big it is. The main hospital, Jackson Memorial, has 1,550 licensed beds, and it's only the biggest of six hospitals in the system.

Migoya came aboard as the hospital evaluated a takeover offer from a for-profit suitor. The offer was billed as a billion-dollar effort, but Migoya says it really amounted to assuming Jackson's huge debt and committing to making capital expenditures for several years. No cash.

"It was essentially takeover payments, like they say in the car industry," he says.

Migoya convinced the board to let him and his team try to crack the problem before making any rash decisions such as selling out.

"When I got here, there was little accountability, and little control over what was going on," he says. "Frankly, sad to say, very few department managers knew their budgets, much less where they stood against them."

Thankfully, the level of clinical care quality was high, he says, freeing him up to make administrative moves that he was confident would turn the financial tide. Migoya put together a leadership team made up of individuals who were used to accountability and put them to work overhauling the rest of the senior administrative staff. He says hiring the right chief operating officer and chief strategy officer were his best decisions.

'Never Waste a Crisis'
"What we needed was the right strings pulled administratively to not only stop the bleeding that happened in the past, but to determine how to grow going forward," he says.

Migoya's new COO and CSO found other attractive, experienced hospital executives to join the senior leadership team, and all recruited heavily from for-profit hospitals. Ultimately three-fourths of the senior administrative staff was turned over, Migoya says. By the end of the 2012 fiscal year, the first for which Migoya and his team were responsible, they had turned a predicted $400 million annual loss into an $8 million profit just by implementing and holding managers accountable for basic business best practices, he says.

"Never waste a crisis," Migoya says. "Jackson was literally about to close its doors if we didn't do this transformation," he says. "Our days cash on hand were in the single digits and we had over 120 days in accounts payable. We had to make some radical changes."

Migoya says his most important duty during this time was making the case to county commissioners and unions that difficult choices had to be made in the restructuring.

"That was difficult for unions to understand and difficult for the commissioners," he says. "But over time, we delivered on our words and we've built much better relationship with both county commissioners and the unions."

The numbers were significantly better in 2013, in which the health system booked a $45 million profit. Migoya says profit would have been higher, except that to invest in the future, the health system added staff in clinical areas and invested heavily in information technology. Even a $1 million loss last December thanks to increasing numbers of self-pay and uninsured patients was only a small blemish on the turnaround.

More Work To Do
The turnaround is nice, but Migoya insists the current Jackson team is only half-finished. Now that its finances are stabilized, he says the system's "sentinel" strategy is to make sure it becomes an attractive hospital for all patients. That means transforming the hospital's payer mix to some degree. Like most safety net hospitals, Jackson depends a great deal on government reimbursement. Medicare makes up about 15% of its payer mix, and Medicaid, 35%.

"We also want to get away from the stigma that people come here only if their life depends on it, and go somewhere else for everything else," he says. "Modernizing [the] plant is a big piece of that. Getting employees to be more patient-centric, to focus on patient satisfaction, and, last but not least, that the management team caters to managed care companies to make sure we have competitive rates."

See Also: HL20: Laurent Gueris—Creating a Better Patient Experience Environment

The capital to fully implement that strategy came in an $830 million capital bond approved by Miami voters last November that will provide funding for modernizing the existing campuses as well as adding urgent care centers, a children's ambulatory pavilion and a new rehabilitation hospital. That will make Jackson attractive not only to local patients, Migoya says, but to medical tourists.

"Jackson deals with a lot of people who have huge trauma. Somewhere else is where they often go for rehab care. So having a rehab hospital that people will use here will attract medical tourism," says Migoya, noting that Miami is a gateway to Latin America.

An important factor in getting the bond issue passed was the creation of a citizens' advisory board ensure the funds will be used as intended. That's part of our transparency," Migoya says. "We will create a website where anyone in the community can see how much money [from the bonds] we've used, and for what purpose."

Focusing on the future will be important, he says, because the radical transformation of the healthcare industry will be a negative for Jackson, especially the health insurance exchanges and the fact that the state of Florida has not yet expanded Medicaid.

"Legislators are dragging their feet," he says. "If we have expansion, the negative impact to Jackson will be $75 million next year. Without it, the negative impact will be closer to $150 million. So that's one more reason to make this an attractive place for paying patients. We have to offset that and we won't get tax money to do it."


Philip Betbeze is the senior leadership editor at HealthLeaders.

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