Three months before the financial situation at Shands Jacksonville (Fla.) Medical Center went solidly south, Chief Executive Officer Robert Norton announced he was heading north. When he moved from Jacksonville to a new job as president of North Shore Regional Medical Center in Salem, Mass., Shands Jacksonville, a public hospital that serves mostly indigent patients, was on the verge of seeking emergency help from none other than the governor of Florida.
In the wake of its leadership change, Shands Jacksonville has became one of the first potential casualties of the federal government's decision to phase out a regulatory loophole used by some states to pump up their Medicaid budgets by billions of dollars.
The 678-bed public hospital is in such dire straits that Florida Gov. Jeb Bush last week approved an $11 million advance Medicaid payment to the hospital. Shands Jacksonville said that without early distribution of the quarterly Medicaid payment, which it normally would receive in April, it would have trouble paying its bills.
"We believe (the advance payment) will help," an official at Florida's Agency for Healthcare Administration told Modern Healthcare. Not-for-profit Shands Jacksonville, however, "is in a serious cash-flow situation," Bruce Congleton, the Medicaid agency's communications director, said.
Norton, who left Shands last month after three years at the hospital, could not be reached for comment on the hospital's financial situation.
Shands Jacksonville's circumstances-and those of hospitals in other states-could worsen later this year when the Centers for Medicare and Medicaid Services begins phasing in a new maximum Medicaid rate that will bring the "upper payment limit" down to 100% of Medicare rates from 150% (See related story, p. 34). The move is expected to reduce federal contributions to state Medicaid budgets by $9 billion over five years, but it also eliminates a tool that many states have used to support safety net facilities.
In fact, Shands Jacksonville has not even received federal matching funds in fiscal year 2001 under the old upper payment limit. If it had received that money, Shands Jacksonville would be breaking even, said Paul Rosenberg, senior vice president and general counsel at five-hospital Shands HealthCare, with which Shands Jacksonville is affiliated. No Florida hospitals have received the federal dollars due to a bureaucratic hang-up between Florida's healthcare agency and the CMS, Rosenberg said.
The hospital has brought in Cambio Health Solutions, Brentwood, Tenn., to help it develop a turnaround plan.
Shands Jacksonville was formed in 1999 by the merger of two struggling Jacksonville hospitals, 191-bed Methodist Medical Center and 332-bed University Medical Center.
For the fiscal year ended June 30, 2001, Shands Jacksonville lost $12 million on revenue of $418 million.
Aware of the hospital's plight, Bush worked closely with Florida Senate Majority Leader Jim King, a Republican from Jacksonville, to arrange the early Medicaid payment. A spokeswoman in Bush's office said the governor wanted "a solution that will benefit Shands and, therefore, the community."