Control: Health, Public Safety & Intergovernmental Cmte
File Name: UPDATE ON THE PUBLIC HEALTH TRUST
Agenda Item Number:
UPDATE ON THE PUBLIC HEALTH TRUST
Sally A. Heyman, Prime Sponsor
Health, Public Safety & Intergovernmental Cmte
Chairwoman Heyman called the foregoing discussion item. She stated discussion occurred at the last Committee meeting and before the County Commission pertaining to the Jackson Health System (JHS), the Public Health Trust (PHT), and the Foundation Health Services, Inc. (FHS). She indicated an understanding now existed that the PHT and JHS had authority to supervise, to demand accountability and to provide oversight of the FHS.
Chairwoman Heyman informed the public of an Office of Inspector General (OIG) Final Audit Report dated October 28, 2010, regarding the Management Services Agreement between the PHT and FHS.
Mr. Christopher Mazzella, Inspector General, highlighted the OIG audit report and the responses to the report. He stated this report specifically dealt with credit card expenditures and that the OIG planned to continue its FHS audit. Subsequently, the OIG will issue a second report by the end of this year or early next year on the consulting contract, travel and entertainment expenses. He stated that a third report would be issued addressing performance issues looking at the number of patients obtained as a result of FHS recruitment efforts.
Mr. Mazzella noted that the OIG report for today’s (11/5) meeting identified the following five areas of concern:
(1) questionable credit card expenditures in excess of $100,000;
(2) inability of the FHS to account for office equipment inventory and to explain the rationale for existing office equipment not included on the inventory list;
(3) issues concerning the FHS payment to the Jackson Memorial Foundation (Foundation) for services performed in operating the FHS; the inadequate authentication and duplication of those services;
(4) poor internal controls in existence at FHS; and
(5) lack of oversight by JHS over the FHS operations and the OIG opinion that the FHS return $2.2 million to JHS.
Mr. Mazzella proceeded to provide an overview of the pertinent recommendations included in the report. He suggested that JHS reevaluate its agreement with the FHS and determine whether it was outsourced and followed a competitive process. Mr. Mazzella noted that the JMH International Program (JMHI) was a JHS program and that the FHS was hired to administer the program. The OIG stated that this arrangement was not competitively procured at the time the management agreement was executed. Mr. Mazzella stated that the JMHI needed accountability, recordkeeping and internal control reforms if the JHS determined they preferred to keep the current arrangement.
Dr. Eneida Roldan, President and Chief Executive Officer, Jackson Health System, introduced Mr. Ted Shaw, Interim Chief Financial Officer who would present a report on the financial oversight of FHS and the JMHI.
Mr. Shaw presented the key issues regarding the JMHI as outlined in the presentation. (See Exhibit)
A discussion ensued between Chairwoman Heyman and Mr. Shaw regarding the $2.2 million being held by the FHS and the reconciliation of all payments and expenses paid to and from FHS since the contract inception.
A discussion ensued between Chairwoman Heyman and Assistant County Attorney Laura Llorente regarding the termination provisions of the current contract between FHS and PHT.
Mr. Alan Diamond, Chairman of the Board for the Jackson Memorial Foundation (Foundation), informed Committee members of the Foundation’s mission to independently serve as the principal source of private fundraising for the JHS. He noted that the Foundation was responsible for producing $30 million net income for JHS and anticipated that they would exceed this figure. Mr. Diamond stated that it was unfortunate that the Committee had not received a report on the actual performance of FHS. He noted his confidence that once the report was reviewed, the Committee would concur over the excellent Foundation and FHS performance.
In response to the comments made regarding termination provisions of the current contract, Mr. Diamond informed Chairwoman Heyman that the Foundation and the FHS was willing to terminate the agreement whenever it was determined this would be an appropriate course of action. He indicated that the Foundation was not looking to hold the County to a contract. Mr. Diamond stated the Foundation’s goal was to serve this community. He further stated that the Foundation operated without a profit and that all of its revenue went to the County. He said that there was no need for an involuntary termination and that the Foundation’s governing body should make the determination to terminate the contract if it was performing in an unsatisfactory manner. Mr. Diamond stated that the Foundation believed that it was doing a great job.
Mr. Diamond stated it was unfortunate that the OIG did not report that the Foundation had invested approximately $1.3 million of its own monies into the JMHI. He expressed that if the County had an issue concerning the mismanagement of funds, they were dwarfed by the amount of funding that the Foundation gave from private sources to operate the JMHI. Mr. Diamond stated that once this Committee considered the complete picture, they would find that the FHS did an extraordinary good job and that Mr. Rodriguez did a great job.
Chairwoman Heyman questioned Assistant County Manager Alina Hudak on the status of the performance evaluation of FHS as part of the PHT Management Watch. She also questioned who was responsible to conduct the performance evaluation.
Ms. Hudak stated that the Management Watch addressed a wide variety of PHT issues that the County was dealing with since March 2010. She noted that the Management Watch did not include the FHS operation. Ms. Hudak noted the County Mayor was misrepresented in yesterday’s (11/4) The Miami Herald and that at no time did the Mayor ask to implement a specific business model. She indicated that the Administration was concerned with the OIG report and that they received the report at the same time as everyone else. She stated the Administration deferred to the JHS management to present alternative business models and was looking forward to an upcoming discussion on this issue. She stated that because of Mr. Shaw’s presentation, she was now comfortable with JHS’s aggressive oversight provisions related to the transfer of funds to JMHI.
Dr. Roldan noted that as part of the reconciliation of the expenses and the transfer of the funds, there should be a parallel study conducted to review the number of patients and the actual net revenue coming to JHS.
Chairwoman Heyman questioned whether patients bought in through the JMHI generated the $30 million net income for the Foundation. She also questioned how JHS determined the actual amount of return considering JHS was contributing to the overall funding. She noted these items would be included in the OIG evaluation.
Dr. Roldan stated that the PHT Chief Financial Officer would conduct the evaluation as part of the revenue cycle management process. She explained that revenue cycle management was a method where a health care institution’s senior leadership implemented procedures to ensure short and long term financial stability for the institution. Revenue cycle management also helped a medical entity recover patient accounts receivables, said Dr. Roldan.
Mr. Shaw stated JHS would identify the cash flow as part of the reconciliation process. He noted that the contribution margin was a more appropriate accounting term to recognize the $30 million rather than net income. Mr. Shaw stated he had begun gathering the gross revenue figures covering the last four years for international businesses. He noted it was difficult to identify the source of revenue for visitors receiving treatment due to an accident. Mr. Shaw stated that the total revenues would not be able to be associated with any specific contract for international patients.
Chairwoman Heyman reminded Mr. Diamond that the Committee had not received documents or information concerning the JMHI, the funding associated with this program and the cost to JHS.
Mr. Diamond stated that the Foundation had identified future changes which it intended to implement for the JMHI. He reminded the Committee that the Foundation served as County partners to do the best job possible and welcomed recommendation on methods in which the Foundation could improve its operations.
In response to Chairwoman Heyman’s question regarding how much support JHS provided to the Foundation, Assistant County Manager Hudak stated that JHS provided approximately $7.2 million for the JMHI and $2.2 million for the concierge services.
Chairwoman Heyman stated that the County, PHT partners and all other interested parties had a stake in JHS’s success and everybody was looking to receive the best return for the funding that JHS provided to the Foundation.
Chairwoman Heyman presented an overview of Agenda Item 2C, Legislative File No. 102603 that provided the PHT with compliance directives as outlined in the proposed resolution. She stated that the resolution directed the PHT to terminate its agreement with the FHS. Chairwoman Heyman questioned Dr. Roldan on the status of the 90-day allowance to complete the current FHS contract or 60 days to conduct its assessment versus immediate termination of the contract.
Dr. Roldan noted that JHS had addressed most of the directives mentioned in Sections 1 through 6 of the proposed resolution.
Mr. Shaw stated that there would be an undesirable affect on the JMHI to comply with Section 1 of the proposed resolution. He said that terminating all of the agreements the PHT had with FHS would leave JHS without an existing structure. Mr. Shaw stated that an evaluation of the agreements with a report of the findings would be presented to this Committee in 60 days.
Mr. Mazzella stressed the need to ensure that the current business model was the best model from a competitive perspective. He reminded the Committee of the OIG intent to review performance from a broader perspective.
Chairwoman Heyman asked that the OIG review the FHS performance in comparison to Mount Sinai and other hospitals to determine the best value and the best model, and the return on investment as compared to standard industry practice.
In response to Chairwoman Heyman’s question, Mr. Mazzella stated that the OIG, as a matter of practice and methodology, always reviewed other jurisdictions to see how they did business and what worked for them. Therefore, he noted that the OIG’s analysis of FHS performance would include the information requested by Chairwoman Heyman.
In response to Chairwoman Heyman’s comments regarding a timeframe for issuance of the OIG’s second report, Mr. Mazzella stated that the OIG was looking to provide the report by the end of the year. He pointed out that the third report would be a very difficult audit because the numbers were unclear and the OIG would need to verify, reorder and re-assimilate much data that was not even in existence or accessible.
Commissioner Souto spoke in support and encouraged the OIG to continue its investigation of the PHT and the FHS.
Chairwoman Heyman recommended that the Jackson Health System utilize the County’s Community Periodical Advertising Program (the “County’s Periodical Program”) as an outreach tool for international marketing and promotion of available services. She mentioned that the County’s Periodical Program should promote a continuum of services for the medical community and not just lifesaving treatments. Commissioner Heyman also stated that the County’s Periodical Program be used as a vehicle to communicate and inform this community of its public health system that was devoted to caring for those in this community.
Chairwoman Heyman directed her comments to Mr. Diamond, regarding the need for the Foundation to make every effort to provide the requested information to the PHT Chief Executive Officer and the Chief Financial Officer.
In response to Chairwoman Heyman’s comments, Mr. Diamond stated that the FHS would provide the requested information and any additional information as needed.
Chairwoman Heyman reinstated directives, which she noted, were given on June 10th and several other meetings. She asked Assistant County Manager Alina Hudak to work with representative(s) of the Public Health Trust to prepare a report reflecting the return for each dollar spent the justification for expenditures, and the amount of revenue collected by the Foundation, compared to revenue collected by Mount Sinai and the Baptist Hospital Foundations. She also asked Ms. Hudak to submit a detailed report to representatives of JHS and the PHT and each Committee member, respectively, on the method(s) used to identify patients channeled through the Foundation’s marketing program for treatment at JMH versus tourists or international travelers who sought treatment at JMH.
Mr. Diamond stated that he would provide a specific response to the information requested regarding FHS and Jackson Health International.
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