House Bill 711

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The amendment to Florida Statue Section 155.40- commonly referred to as “HB 711” – generally requires every public hospital system in the state to undergo an evaluation of the potential benefits of selling or leasing the system to a private entity.

Jackson Health System’s evaluation shows that Jackson provides a significant net benefit to the community in excel of public funding sources. As might be expected by Jackson’s financial history, the report also concludes that Jackson does not currently have a positive commercial or “fair-market” value. This conclusion holds true regardless of whether the value of Jackson’s tax revenue is included in the fair-market valuation. The report also shows that Jackson now has a cost efficiency that is comparable to other similarly configured healthcare facilities in Florida and across the county; this is true for Jackson Memorial Hospital, Jackson South Community Hospital and Jackson North Medical Center. To ensure a valid analysis, the substantial costs associated with graduate medical education were highlighted.

Finally, the analysis shows that certain industry-standard measures of care quality were collectively comparable at Jackson to peer institutions in Florida another national safety-net hospitals.

The report, prepared by Public Financial Management, Inc., was formally accepted by the Public Health Trust Financial Recovery Board on April 29, 2013 and made a part of Jackson Health System's public records. To download the report, please click here.

History

During the 2012 legislative session the state passed HB 711, requiring that the governing board of a county, district, or municipal hospital evaluate the possible benefits to an affected community from the sale or lease of a hospital  facility to a not-for-profit or for-profit entity  within a specified time period.

"Affected community" means those persons residing within the geographic boundaries defined by the charter of the county, district, or municipal hospital or health care system, or if the boundaries are not specifically defined by charter, by the geographic area from which 75 percent of the county, district, or municipal hospital's or health care system's inpatient admissions are derived.

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Overview

  • All public hospitals in the state of Florida are subject to the provisions of HB 711.
  • The law requires commencement of the process by no later than December 31, 2012.
  • Once commenced the evaluation must be completed within 160 days.
  • 160 day clock begins upon final vote from the Financial Recovery Board.
  • The exercise is to evaluate the possible benefits to the “affected community” of a sale or lease of its hospital facilities regardless of whether it intends to pursue a transaction.
  • The Evaluation process must include:
    -Valuation: Independent Fair Market Valuation
    -Operating Comparison
    -Public Hearing
    -Public Disclosure
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Evaluation Components

Valuation: An Independent Fair Market Valuation

  • A certified public accounting or other firm with substantial expertise in the valuation of hospital.
  • The valuation must reflect the fair market value of the facilities in a sale or lease transaction.
  • Fair market value is defined as the price that a seller or lessor is willing to accept and a buyer or lessee is willing to pay on the open market and in an arms length transaction or what an independent expert in hospital valuation determines fair market value to be.

Operating Comparison: 

  • An objective operating comparison with similarly situated hospitals with similar service mix, using publicly available data from AHCA and the quality metrics identified by the CMS Core Measures.
  • The purpose of the comparison is to determine if there is a difference in the cost of operation.
  • The comparison must determine whether it is more beneficial to taxpayers and the affected community for the facilities to be operated by a governmental agency or whether the facilities can be operated by a not-for-profit or a for-profit entity with similar or better cost efficiencies or measurable outcomes identified by CMS Core Measures.
  • The Comparison must determine whether there is a net benefit to the affected community to operate the facilities as a not-for-profit or a for-profit entity and use the sale or lease proceeds as required by s. 155.40, F.S.

Public Hearing: 

  • Interested persons must be given the opportunity to be heard with respect to the Evaluation.
  • Notice must be published at least 15 days before the scheduled hearing.

Public Disclosure:

  • Each governing board must publish its findings within 160 days after Evaluation commencement. 
  • Each governing board must make publicly available all documents its members considered as part of the evaluation.
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Public Health Trust

Public Health Trust Board of Trustees
Jackson Memorial Hospital
1611 N. W. 12th Avenue
West Wing, First Floor, Room 108D
Miami, FL 33136
Office: 305-585-6750
Fax: 305-585-5355
Email:  icobb@jhsmiami.org

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