Electronic Medical Records and Going For Broke: Jackson Health System's Financial Future Appears Grim

I have written on numerous occasions that health IT in its present form, often poorly designed and implemented under current IT leadership structures, is often a waste of precious healthcare resources. The resources might be better spent on essentials such as patient care for the poor or improved human staffing, until this experimental technology is perfected.

As at my site on health IT difficulties and mismanagement I observed:

Healthcare information technology (HIT) holds great promise towards improving healthcare quality, safety and costs. As we enter the second decade of the 21st century, however, this potential has been largely unrealized. A significant factor impeding HIT achievement has been mismanagement of the technology. Mismanagement of HIT is largely due to false assumptions and naïveté concerning the challenges presented by this still-experimental technology, and underestimations of the expertise essential to achieve the potential benefits of HIT. This results in mission-hostile HIT design, and HIT leaders and stakeholders operating outside (often far outside) the boundaries of their professional competencies. Until these issues are acknowledged and corrected, HIT efforts will waste precious healthcare resources, will not achieve claimed benefits for many years to come, and may actually cause harm. Numerous reports in the 2009 articles link corroborate this view, including those from the U.S. Joint Commission and National Research Council.

The following may bring my observations to life.

This from 2007:

RedOrbit.com/News
Jackson Memorial Hospital Uses State-of-the-Art Technology to Drive Improved Patient Outcomes for South Florida Families

Posted on: Thursday, 6 September 2007, 09:11 EDT

Jackson Memorial Hospital (JMH), part of Jackson Memorial Health System, South Florida's leading/largest healthcare provider, recently implemented 11 Cerner Millennium® solutions.

[Including EMR, nursing, pharmacy, radiology, HIM, Eligibility Management, Master Person Index, Registration Management, Scheduling Management, Emergency Department, etc. - ed.]

This marks the hospital's first step in a multi-stage healthcare information technology implementation. With Cerner Millennium® solutions, JMH clinicians now have access to real-time resources to better manage patient care with improved access to cross-department information, evidence-based clinical decision support and streamlined hospitals operations.

"Cerner is pleased to partner with Jackson Memorial Hospital, an institution continually ranked as one of the best hospitals in America," said Trace Devanny, Cerner -- president. "JMH's decision to implement a solution-oriented information technology system reinforces its vision to improve healthcare communitywide. Cerner worked together with JMH to implement multiple Cerner Millennium solutions specifically designed for various roles, venues and conditions that will ultimately improve the patient experience."

These implementations, a mere "first step" towards "streamlining operations," and their maintenance, modification, remediation, and staffing were undoubtedly multimillion-dollar expenses and are likely still ongoing. (See other examples of mass hospital IT expenditures here and here.)

Now, fast forward to 2010. This is stunning:

Jackson Health System's financial future appears grim
Miami Herald
BY JOHN DORSCHNER
Posted on Wednesday, 01.13.10

Looking forward and back, Jackson Health System's grim financial picture just keeps getting worse.

Members of the Public Health Trust, the system's governing board, are being told:

• Patient volume has dropped by 6.5 percent recently, meaning that with all the cost cutting and new revenue plans, Jackson is facing an $88 million loss this fiscal year, and this estimate is likely to get worse.

• The government system may have lost much more money last year than the $56 million it reported in unaudited statements. That loss could conceivably go as high as $150 million.

• Cash on hand to pay bills -- the measure of how the three-hospital system is doing at this moment -- continues to be awful. ``Perhaps a cash hemorrhage,'' PHT member Marcos Lapciuc called it.

The bad news came at PHT committee hearings late Tuesday afternoon. ``Very drastic measures need to happen'' to stem the growing losses, said Chief Executive Eneida Roldan. She said the losses were likely to increase, because considerable funding for poor patients comes from Tallahassee, and the Legislature is expected to cut back on healthcare funding programs as it deals with its own budget crisis.

``We're making very drastic decisions that no hospital wants to do,'' Roldan told the board, including ending contracts for 175 unfunded patients to receive dialysis at out-patient centers.

Ending contracts for unfunded patients to receive dialysis after spending tens of millions of dollars on IT to "streamline operations?" Could this be an example of "Blood for Computers?"

Board members were upset in particular about how the institution, with 12,000 employees and $1.9 billion in revenue, could be so uncertain about its financial performance last year.

The central issue appears to be the proper amount of accounts receivable -- money that the system expects to collect from insurers -- as contrasted with bad debts that are unlikely to be collected. As of Nov. 30, Jackson was listing its accounts receivable at $431.8 million.

``It just doesn't tie in,'' said board member Martin Zilber. ``We talk about $400 million or $500 million like it's buying lunch.''

Ernst & Young, Jackson's auditors, are expected to present the official audited returns within the next month. ``We know there's going to be a sizable adjustment,'' Chief Financial Officer Frank Barrett told the board. But he's uncertain how much.

Uncertain how much money will be "adjusted" in accounts receivable? Apparently all this computerization has not realized a ROI on basic financial management.

Could problems with the IT (e.g., mismanaged design, mission hostile user experience, bugs, etc.) and/or mismanagement of its implementation actually be responsible for the chaos, I ask?

... Perplexed board members heard several explanations. One is that the system has switched computer systems, and the old financial software may have been calculating bills as accounts receivable from years ago, when those items should be listed as uncollectable bad debts.

If that was the case (and I note the "may have", implying the organization is not even certain of this explanation), why was this discrepancy not noted before or during the transition? Who, exactly, was managing this project? This would be a stunning example of IT mismanagement making what happened at Yale some years ago look like a cakewalk, and on par with the mismanagement at another Miami hospital, Mt. Sinai, as I posted here.

... On Monday, the board was shown a presentation on bill collecting with a complex grid of flow charts and time lines. Still, some board members expressed concern about why Jackson's financial people didn't have a better handle on key measures of the system's condition.

A question arises regarding whether the massive IT implementations are causing data irregularities, confusion, or are not functioning properly in other ways affecting financial management.

``I don't totally understand the reasons,'' said [board member] Ernsto de la Fé.

... The fiscal 2009-2010 budget had calculated a loss of $6.5 million. Of that, $107 million was the baseline loss, reduced by $59.8 million in new revenue building ventures and $41.5 million in cost-cutting.

"Cost cutting" usually is synonymous with "layoffs." How many millions were spent on computing instead of jobs, I wonder?

Additional information on these financial difficulties are available at the Miami Herald:

• Jackson Health System faces more financial losses

Jackson Health System faces more financial losses

Looking forward and back, Jackson Health System's grim financial picture just keeps getting worse.

Members of the Public Health Trust, the system's governing board, are being told:

Patient volume has dropped by 6.5 percent recently, meaning that with all the cost cutting and new revenue plans, Jackson is facing an $88 million loss this fiscal year. This estimate is likely to get worse.

•Donna Shalala tries to mend fences with Jackson Health

Donna Shalala tries to mend fences with Jackson Health

While Jackson Health System's governing body struggled Tuesday to find more ways to cut costs and increase revenue, University of Miami President Donna Shalala made a rare appearance before the Public Health Trust to ``personally apologize for statements by members of the university leadership team last week.''

She was referring to UM Board of Trustees Chairman Phillip George's comments to Jackson leaders that he was disturbed about the quality of doctors that Jackson had been hiring in recent years. ``I wouldn't send my family to many of them,'' George said.

Shalala noted that the Jackson doctors, all fully credentialed, were often approved by UM department heads to practice at Jackson. ``If they are good enough for Jackson patients, let me tell you, they are good enough for me and my family.''

•Jackson Health System may close clinics, nursing homes

Jackson Health System may close clinics, nursing homes

Needing to present a balanced budget for Miami-Dade Commission's approval Thursday, the Jackson Health System is proposing to close two primary care centers, both of its nursing homes, outsource inmate healthcare and reduce support to other entities that care for the poor and uninsured.

``We are in an extremely unique position,'' Chief Executive Eneida Roldan said Wednesday. The public health system is having to cut services to meet an estimated budget deficit of $133 million for its next fiscal year at a time when the commission must also deal with filling a shortfall of more than $400 million in other county programs.

Some doctor services at Jackson Memorial may also be curtailed, Roldan said. ``Because Jackson has been forced to reduce its funding for the annual operating agreement with the University of Miami,'' she wrote in a message to employees, ``the university is also planning to reduce its services offered at our facilities.''

•Jackson Health System's cash pot falls to dangerous levels

Jackson Health System's cash pot falls to dangerous levels

Even after plans to reduce staff and close units, Jackson Health System is getting dangerously close to its bare minimum for cash-on-hand -- a key indication of financial health.

As of Oct. 31, Miami-Dade's public hospital system had 20.8 days of cash to pay its bills, including payroll and keeping the lights on. Its governing body, the Public Health Trust, has set 20 days as the lowest Jackson should go.

``When it gets below 20 days, that's when I declare an emergency,'' said Frank Barrett, chief financial officer. He said he is already talking to county administrators about getting an advance to fund payroll if the system runs out of cash.

•Jackson Health's finances continue to deteriorate

While IT is not a definite cause or contributor to these problems, I sense familiar patterns. Perhaps forensics related to hospital computing, the decisions to spend so many millions on the technology, and the actual impact of the implementations might shed additional light on the reasons for this apparent financial debacle.

Perhaps the hospital system would have better spent that money on buttressing its financial stability, and hiring smart people to have kept better track of its finances.

An analysis of these issues might likely provide a cautionary tale for hospital executives planning on massive new HIT expenditures to "streamline operations."

Addendum:

This is a good time to once again call attention to this paper by a perspicacious author from Down Under:

Pessimism, Computer Failure, and Information Systems Development in the Public Sector. (Public Administration Review 67;5:917-929, Sept/Oct. 2007, Shaun Goldfinch, University of Otago, New Zealand). Cautionary article on IT that should be read by every healthcare executive documenting the widespread nature of IT difficulties and failure, the lack of attention to the issues responsible, and recommending much more critical attitudes towards IT. link to pdf

Feb. 11, 2010 Addendum:

CFO at Miami health system resigns

MIAMI – Frank Barrett, chief financial officer and executive vice president at Miami's Jackson Health System, has resigned after five years in the position. The health system's board of directors criticized Barrett strongly last week after he reported miscalculated financial losses. Barrett had revealed to the board that Jackson Health lost $203.8 million in fiscal 2009, although he had originally reported a $46.8 million loss. The projected loss for fiscal 2010 rose $87 million to $229 million.

-- SS