BRADENTON, Fla. — Miami-Dade County commissioners on Tuesday said they stand ready to take over the Jackson Health System should the current board overseeing South Florida’s largest public hospital fail to rectify the financial crisis it now faces.
On a vote of 8 to 5, commissioners approved an ordinance that will enable them to quickly remove the current governing board and appoint a financial recovery board under certain circumstances or if the county mayor recommends such a move.
In March, commissioners placed Jackson on “management watch’’ and ordered county officials to work closely with hospital managers after reports that the system was projected to lose up to $230 million this fiscal year.
With layoffs, budget cuts, and other measures the deficit more recently has been projected at $130 million.
The financial crisis sparked an inquiry from the Securities and Exchange Commission into an $83.3 million bond deal that Miami-Dade County sold last year on behalf of the Public Health Trust, the board that oversees the system, which includes Jackson Memorial Hospital.
In a report on what has happened since placing the health system on management watch, county manager George Burgess told commissioners that a great deal of time has been spent attending meetings and working with hospital management on a plan that is “progressing favorably” to improve Jackson’s cash position. Burgess said he is encouraged that things are “moving in the right direction.”
The hospital also is working to finalize a contract for under $10 million with PricewaterhouseCoopers to work on various budget-reduction and restructuring strategies, he said.
Some of the health systems’s budget problems have been related to improperly classified expenses, bad debt not written off over several years, problems converting to a new accounting system, and rising expenses due to the recession.
Burgess said Jackson officials also have been busy trying to provide a voluminous amount of materials requested by the SEC “on their review to determine if there were disclosure problems” related to last year’s bond deal.
The issue is whether investors were properly informed of the financial situation of the hospital, Burgess said, adding that information was provided in bond documents “to disclose everything we knew, to the best of our knowledge, of what we knew.”
Last year, Miami-Dade sold $83.3 million of revenue bonds for various health system improvements and to cash fund a debt-service reserve.
The bonds, insured by Assured Guaranty, are secured by gross revenues of the health care system and a 0.5% local health care tax approved by county voters in 1991.
The debt is also subject to an intercept program in which the county receives the health care tax revenue first and sets aside the amount required for debt service before sending the remaining revenue to the trust.
The debt also receives a secondary covenant pledge from Miami-Dade to annually budget and appropriate legally available non-ad valorem revenue to maintain the required amounts in the debt-service reserve fund.