Healthcare Penny Sales Tax: Solution for
Jackson Memorial may be found in Tampa
Miami-Dade may try to fix the mess at Jackson Memorial by mimicking Tampa's successful healthcare system.|
By John Dorschner
TAMPA -- Eddie Colon, 47, is the kind of patient likely to cost any public hospital huge sums. He's an unemployed pipefitter with a chronic disease, hepatitis C. With no health insurance, he long avoided seeing a doctor.
In Miami-Dade County, many such cases result in worsening symptoms until the patient is rushed to a Jackson Health System public hospital for expensive treatment funded by taxpayers.
Not Colon. He lives in Tampa, which has a half-penny sales tax for healthcare. Miami-Dade does, too, but there's a difference. In Miami-Dade, all the local tax money goes to Jackson. In Tampa's Hillsborough County, the money goes to a health plan for the uninsured that allows county residents like Colon to get free care from doctors and clinics, where primary care is far cheaper than a hospital stay.
In Colon's case, he joined the county plan eight months ago, received an ID card and began regular visits to a Tampa General clinic, where he received free meds. The result: No expensive ER visits.
A task force of 20 Miami-Dade healthcare leaders has recommended that the financially troubled Jackson convert to a private nonprofit, a path taken by Tampa General and many other public hospitals across the nation over the past 20 years. The task force's 143-page report, set to go to the County Commission next month, urges commissioners to quickly create a nonprofit with the "independence, flexibility and nimbleness" to make sound economic decisions for Jackson, which has lost $337 million during the past two years.
Many struggling public hospitals have prospered after freeing themselves from political controls and bureaucracy that some healthcare professionals believe are the cause of inefficient operations. Tampa General is one of them.
"The Tampa model is clearly the most relevant to us," says Jorge Arrizurieta, a former Jackson board member who has long campaigned for changing the way Jackson is governed.
It's not clear how easily the Tampa model could be applied in Miami-Dade, with its long tradition of politicians insisting on close control of the public hospital while supporting it with a big pot of tax dollars - $350 million last year. It's written into county and state statute that the half-penny sales tax can only be used for the operation of a "county public hospital."
But with Jackson's dismal financial record, another model is looking increasingly attractive to some county leaders.
There are strong similarities - and interesting differences - between Miami-Dade and Tampa's Hillsborough County. Jackson became the county's hospital in 1918, Tampa General in 1927. In 1991, both counties approved a sales tax to provide healthcare to the poor and uninsured, although with completely different ideas about how to spend the money. In 1997, the money-losing Tampa General became a nonprofit. It struggled at first, but in the past two years, it had a net surplus of $70 million while Jackson lost $337 million. Nonprofits are allowed to bring in more money than they spend but, unlike private companies, they must spend it on the organization, not for paying shareholders.
Miami-Dade is a much bigger county - with much bigger healthcare problems. With many small businesses not offering insurance and many undocumented immigrants who can't get coverage, 29.5 percent of Miami-Dade's 2.5 million are uninsured - 736,000 people, according to the U.S. Census Bureau. In Hillsborough, 18.8 percent of the 1.2 million are uninsured, or about 230,000.
To deal with the problem, Miami-Dade taxpayers shell out both the half-penny in sales tax and a matching amount in property taxes - for a total of about $350 million a year. In Hillsborough, healthcare gets only the half-penny, for about $90 million a year.
The biggest difference is how the money is spent: In Miami-Dade, every dollar goes to Jackson, which a grand jury report last year called a "colossal mess," while in Hillsborough the funds are spread among many hospitals and clinics, emphasizing cheaper primary care over expensive emergency care.
"When I think of Jackson, the image that comes to mind is Jabba the Hutt," says Jay Wolfson, a public health professor at the University of South Florida in Tampa, likening the system to the blob-like monster of Star Wars that consumed everything around it.
In the late 1980s, Wolfson joined Hillsborough politicians and other USF health experts looking for a way to fund healthcare for the uninsured. Then, as now, health experts knew that dollars went farther when used for primary care, because treating people for medical problems when they first crop up is generally much cheaper than emergency room visits.
Wolfson recalls no discussion about giving the half-penny to Tampa General because, though it was a government facility that struggled for cash flow, the hospital traditionally had not received tax funds. "Sometimes we had to go to the bank on Friday afternoons [for a loan] to make payroll," says Wolfson, who was on the hospital board for 12 years.
After the Legislature in 1991 passed a law allowing counties to use a half-penny for indigent care, the Hillsborough County Commission approved by a two-thirds vote a sales tax to provide a county health plan for uninsured whose income was below 100 percent of the federal poverty level. Miami-Dade also approved a half cent but it was designated solely for Jackson.
The plan: 'Live within our means'
Hillsborough's plan is not really insurance, because it doesn't guarantee payments to providers - agreeing only to pay what money it can.
"We live within our means," says Raymond Reed, the county's division director of health and financial services.
In the past year, the program has helped 25,264 people, but in any given month, only about 13,500 people are on the plan, qualifying because they earn less than $908 a month. That means many uninsured who may make more money don't get coverage. The county's last study on the uninsured, from 2005, estimated that about 131,000 did not have coverage.
For fiscal 2011, the plan's budget includes $14 million for inpatient hospital services and another $4 million for emergency room treatment. Tampa General gets $3.5 million a year from the plan for running a Level One trauma center. Much more money goes for doctors and nonhospital care: $25.8 million for specialists, $7.3 million for primary care. For a patient's basic doctor visit, a clinic gets reimbursed $110.
To keep drug costs down, the plan pays $2.3 million a year to a company that uses software to help patients qualify for free meds offered by drug makers to the uninsured poor. With the software, Reed calculates plan patients get about $10 million a year in free meds.
That's how Colon, the hepatitis patient, gets his meds. He's become an enthusiastic supporter of the system, saying he usually has to wait only 10 or 15 minutes at a clinic to see a doctor.
"They're outstanding,'' he says. "They're taking really good care of me."
Hillsborough's leaders have resisted the urge to expand the program in good economic times, preferring to increase reserves. And in the recession - when some public hospitals, such as Jackson, have reported huge losses due to tax revenue declines - the Tampa plan was able to draw on reserves rather than cut essential services.
For providers, the incentive to participate in the plan has quickly become clear. "We didn't negotiate with the hospitals over price,'' says David Rogoff, a former director of the plan. "We said, 'This is what we will reimburse,' and most of them took it even though it was much lower than insurance companies pay" - because hospitals that didn't join the plan wouldn't get paid anything for uninsured patients. By federal law, hospitals are required to treat all patients who come to the ER.
Most Hillsborough providers say the plan's rates are low. Ron Hytoff, Tampa General's chief executive, complains that the rates haven't kept up with inflation.
"We're getting paid 20 cents on the dollar," compared to the hospital's costs, Hytoff says.
Most providers don't complain. "The plan is a really, really great help to us," says Edward Kucher, chief financial officer of the Tampa Family Health Centers, which has eight facilities. Half their patients are uninsured. Kucher notes the plan has not increased its payment rates in eight years, but he understands the plan is being stretched to cover as much as possible. .
USF's Wolfson says most Hillsborough providers don't gripe about the plan because they realize "something is ... a lot better than nothing."
What's more, providers get quite a bit back by supporting the plan. Reed, the county official, says ten major providers who participated in the plan last year received an additional $121 million through state-federal Lower Income Pool payments to assist hospitals that care for indigent patients.
Tired of the grandstanding
Tampa General's board first considered freeing itself from political control in the 1980s. Since it received no tax money, financial issues weren't a concern.
Wolfson, a former board member, recalls the original impetus was getting out of open government laws. The hospital would pay a consultant for advice, then watch helplessly as competitors swooped in to get free copies of the report.
In the mid-1990s, hospital leaders, tired of grandstanding politicians and bureaucratic delays hampering hospital operations, began a concerted push for change, says Hytoff, now the hospital's CEO.
In 1997, with little public outcry, the Tampa General board voted to convert to nonprofit, with a long-term property lease from the government, a promise to continue serving indigents and a requirement for periodic reports to an oversight board with little enforcement power.
The money-losing Tampa General did not net a surplus overnight, says Hytoff. There were some rough years with double-digit losses. But over time, the hospital started attracting insurers who had avoided the hospital and community doctors who brought in paying patients. Bond money helped, allowing the hospital to remodel so it now has a hotel feel, with recessing lighting and wood-paneled walls - a marked contrast to Jackson, which many say looks like a post office.
One goal - to get free of the Sunshine law - failed, after the Tampa Tribune sued. A judge ruled that since the hospital was operating leased government facilities, its actions and records had to be open to the public.
In the transition to nonprofit, though, the hospital lost sovereign immunity, the legal protection that governments have from large lawsuit judgments. Hytoff figures that change in legal status costs the hospital about $15 million annually.
That issue causes concern for some Miami-Dade task force members. Malpractice lawsuits are much more prevalent in Miami-Dade than Hillsborough, and they think that converting Jackson to a nonprofit should happen only if the Legislature grants the new entity sovereign immunity.
Conversions to nonprofit like Tampa's have been going on for over a quarter-century. A study by the Urban Institute in 2000 found that in three examples, including Tampa's, the changes were successful in large part because local tax dollars didn't flow to hospitals, but instead were spread to include primary care.
But if a hospital already has tax support, as Jackson does, converting to a nonprofit model "gets really complicated," warned Randall Bovbjerg , lead author of the study. He said he could see why governments might get anxious about losing control over a hospital that received a lot of tax dollars.
The Miami-Dade task force has recommended that a nonprofit Jackson should keep getting all the tax money, with an oversight committee making sure the $350 million is spent for indigent care. The task force is not recommending that tax dollars be spread to other hospitals: it does think that a nonprofit will speed up Jackson's responses to market changes and make it more competitive.
Yes, but would it work here?
For some experts, it's unclear how much of the Hillsborough model could work in Miami-Dade. USF's Wolfson cautions that "Miami is the most distinctive market in the state" and what works in Tampa might not work in Miami. He said he wasn't certain Miami had "the political and cultural leadership" to make such dramatic changes.
The Hillsborough health plan emphasizes primary care. Jackson has gone the other way, closing two of its six clinics during last year's budget crunch. A consultant hired by the Jackson health workers' union has said repeatedly that Jackson's road to recovery starts with more primary care, and new Chief Executive Carlos Migoya said recently he wants to open new "ambulatory care centers."
In its report, the Miami-Dade task force didn't deal with primary care. But task force member Lillian Rivera, administrator of the Miami-Dade Health Department, called the system fragmented: "Our patients go through a maze of services... We need to place an emphasis on primary care."