How a Banker Turns Around a Struggling System: Q&A With Carlos Migoya, CEO of Jackson Health System
Mr. Migoya had faced dire financial situations before. He served as Miami's city manager in a time of crisis, resolving significant budget issues for the city pro bono. Time spent in multiple senior-level positions with Wachovia Bank left him with a firmer understanding of efficiency and appreciation for accessibility, two values he is trying to permanently instill at Jackson.
Driven by the goal to keep Jackson open, Mr. Migoya and his team announced a workforce reduction affecting 1,000 jobs in March. He also promised to donate his bonus to the Jackson Health Foundation if the layoffs saved the system money. So far, Jackson seems to be on the upswing. After months of consecutive profits — June was the third straight month the hospital was in the black — Mr. Migoya said the system's financial status was still serious, but no longer a crisis.
Here, Mr. Migoya discusses the transition from banking to healthcare, how he carried out the difficult decision to lay off employees and what he thinks the largest challenge for Jackson will be in years to come.
Question: Some industry experts have said healthcare has not been as innovative as other industries, such as banking, which has become more convenient and customer-focused in recent years. Coming from a banking background, what are your thoughts on this? What banking values could hospitals benefit from borrowing?
Carlos Migoya: I see a lot of similarities between the two industries. I think what the banking business has done, and what healthcare is doing more of, is making sure we're more accessible to our customers. I'm going to use the word "customer" instead of patient, because at the end of the day, they're the same thing.
About 40 years ago, the banking industry decided to go to a dramatic branching strategy. Probably 20 years ago, on a national level, you started seeing a lot of acquisitions. The [plan] behind that was always to try and be more convenient. At Wachovia, we used to say, 'Bank the people where, how and when they want to be banked.' As banks were building more brick and mortar [through branches], it became evident that wasn't the only way to do it.
The other way was electronically, through the Internet or telephone. That dramatically improved the electronic side of the business to the point where a huge side of the business is done electronically compared to face-to-face. Individuals can make deposits through the Internet. Now, fast forward to healthcare. Hospitals focus on the inpatient side and look at ways to try and deal with the preventive side. Therefore, some of the financially stronger hospitals have started expanding tremendously into primary care, urgent care and emergency departments.
I think the healthcare business is starting to catch itself where banking was 20 years ago. Are we building too much brick and mortar? Do we need to focus on prevention, telemedicine and home healthcare? I think from that perspective, the healthcare industry is lagging behind the banking industry. Frankly, some of this preventive stuff has been mandated through regulations. It's not just healthcare driving more business. On the national level, as some of these big healthcare businesses come into play, there's more competition for the same patient. That means accessibility comes to play a much bigger role [in patient decisions].
Q: In March, you promised to donate your entire bonus to Jackson's foundation if the system saves money this year, post-workforce reduction. What propelled you to make that promise? Can you provide an update on Jackson's financial health?
CM: Here's the thing: When I came on board in May last year, Jackson's forecast was to lose $400 million this fiscal year. So my focus was never on the bonus. Now we're on our fourth straight month of profitability — not that it's a big profit, but it's in the black, so we'll take it.
Unions have said the only reason I've tried to turn this [system] around is for my bonus, when really that was the last thing on my mind. So I said what I'd like to do is turn my bonus over to Jackson for something near and dear to me: the renovation of our labor and delivery rooms. Right now, it's going to be nip and tuck on whether we make profit, break even or lose a slight amount of money. We have three months, but I hope we do make a profit and turn the bonus over to the foundation.
Q: As a lifelong Miami area resident, what does Jackson Health mean to the city? Do you feel a personal connection to this health system?
CM: I came from Cuba when I was 11 and moved to Miami. I grew up here. Miami is my home. When I retired from the bank, for one year I was doing the transformation of Miami finances as city manager. I saw all the issues going on with Jackson Health, and I said there is nothing bigger I can do for the community than leave the legacy of transforming and turning Jackson Health into a sustainable and profitable system for the future. It's a public hospital with several nationally and regionally ranked service lines. It's partnered with University of Miami and the great [physicians] we have here. To provide the care we do here at all levels, for those who can afford it and those who cannot, is very important to me.
My son was born here at 1.25 pounds in 1978, and the only reason he and his mother survived is because of Jackson Memorial. My mother was a living donor to my aunt in the 1980s. There are a lot of people in this community who can tell you great stories about their relatives and friends whose lives have been saved because of Jackson. I felt I had no choice but to step up and do my part in its transformation.
Q: I'm assuming the decision to implement a large layoff at Jackson didn't come easily. How did you confront that difficult decision?
CM: When I got here, I didn't have healthcare background. The management team we brought on board was very experienced, mostly in the private sector. It was very evident early on that we didn't have a system that appealed to the average HMO company. That was a combination of length of stay, as well as rightsizing inefficiency. If we're going to be appealing for HMO business, we needed to make sure we were as efficient as we could be.
It was evident that we needed to make a statement out there that we were an efficient organization with the right LOS averages for acute care with the right staffing. It wasn't like we came up with a number and said we must reduce [the workforce]. We had a management team and asked every director to figure out their necessary staffing level. It was a true right-sizing. A mass layoff is something that says we reduce 5, 10, 12 percent. Instead, we came about with a number we [agreed upon] with directors who need to implement it.
We are through our third month and we've proven the right-sizing came from the ground up. It was reviewed by all clinicians and health experts. I was the last signature. The bottom line is, 'Well, should you be letting people go to unemployment in times that are very difficult?' That is a very difficult decision, but our number one mission is to make sure we have our doors open.
The way I got comfortable with [the layoff], to some degree, is to think of it as making a reduction in force, making it grow right, and hopefully in the future we will be able to not only replace those who we had to reduce — but grow even further. It's like a tree. You have to prune it before it can grow again.
Q: As someone who was named health system CEO without previous healthcare experience, what skills, capabilities and attitudes do you find to be the most powerful — no matter what the industry?
CM: I think the number one most important skill set anyone can have is people skills — the ability to lead people, to present a situation and get a group of people to work toward a common goal. Even though I was in the banking industry for 40 years, the last 20 I was in a leadership role. People would say, 'Oh, you're in the banking business?' and I'd say I was in the people business. In any industry, what's most important is the ability to identify the main issues and drive a team toward that common vision.
Q: What issue has been the greatest source of frustration in the past year? What, if anything, has ruffled your feathers?
CM: There are so many things that have been challenging, but really, I haven't allowed anything to "ruffle our feathers," like you say. Our focus hasn't been on how these things happened, but how we turn them around. We've taken all the different sides of this, from management, regulatory and governance and asked, 'What are the opportunities?'
The biggest challenge ahead of us now is our physician strategy. This hospital has been predominantly [staffed by] academic physicians, who are great for research and critical services. But we need to make sure we also have community physicians in here to be attractive and provide the business necessary to offset some of the care for the uninsured. The biggest challenge ahead of us is making sure those physicians who have trained here come back and stay here.
Q: On the other hand, what is it about Jackson Health that makes you most proud?
CM: What makes me most proud is the amount of miracles that happen here. Thirty-three years ago, my 1.25-pound son survived. At any other hospital that's a miracle. Here, it's just another day. People come into a trauma center with maybe a 10-percent chance of surviving, and they do. That is probably the biggest point of pride. The business issues are only tools to make sure we can continue the type of miracle work we do here.
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