An effort to combine hospital resources initially went sour, but this hospital’s leadership team used some creative strategies to quickly turn things around.

It was not the best of beginnings. Two Jacksonville, Fla. hospitals decided to merge in an effort to combine resources, but despite the fact that they were located on the same street, the merger did not live up to its potential.

“Pre-merger, both University Medical Center and Methodist Center were struggling,” said Jim Burkhart, president of Shands Jacksonville. “The idea was to combine resources to make a strong entity, but something went wrong with the plans, and the losses in 2000/2001 added up to $64 million.”

Jim Burkhart, President

Against the backdrop of continued losses, the administration began to prepare for possible insolvency. Fortunately, the administration and local leaders initiated parallel efforts to take a more creative path, and a decision to bring turnaround consultants into the picture proved to be a large step in the right direction.

“There were a lot of effective moving parts in the re-direction efforts,” said Burkhart. After the large losses in 2000/2001, the organization had a $2.4 million surplus in 2002. Since then, revenues have risen consistently, going from $11 million in 2004 to $13 million in 2005, $16.6 million in 2006, and this year tracking at $19 million. (Embedded in this steady progression was a $22 million positive result in 2003, but this upward blip was based on one-time actions of city, state, Shands Healthcare, and the University of Florida College of Medicine for special funding.)

Along the way, there was rigorous consolidation of services. “You can imagine, with two hospitals across the road from each other, there was considerable duplication of efforts and costs,” Burkhart explained. Perhaps more important in the long run, there was rigorous retirement of debt. “The combined debt burden in 2002 was $225 million,” Burkhart said. “Today, it’s less than $118 million, and we have just received notification from Moody’s that we are now considered Baa1 investment grade with a stable outlook.”

Management levels and structures also came under close scrutiny, and not simply to reduce costs. “We needed resources that could provide quick response to the ebb and flow of community needs,” Burkhart said. “A lean management structure cuts a great deal of time out of decision processes.”

Community input and involvement was incredible. “The mayor and city council of Jacksonville set politics aside and worked miracles in funding, concessions, and public help,” Burkhart said. “The state modified its disproportionate shares support to give temporary extra help to our region, Shands Healthcare put in money, the University of Florida College of Medicine invested money—everywhere we turned, people grasped the problem and dug deep to help.”

Neighborhood clinics
While the numbers tell a good story, the real gains have been in capitalization for new services and satellite centers. From 2003 to the present, capitalization has totaled more than $130 million—a long way from $1 million in 2000. The money allowed Burkhart and his team to remodel and upgrade building infrastructures, as well as invest in a larger cath lab and MRI equipment. “We unsealed two floors that had been closed for budget reasons and turned them into 75 private rooms with important amenities,” he said. “We’re proud to be one of five centers in the US with proton-beam equipment for cancer care, and we’re working with a key vendor for a $14 million, advanced radiology center that will house a dual-source CT scanner and a PET/CT scanner.”

The creativity of the organization comes through clearly when Burkhart explains its ED strategy. “Like many others, we saw the ED becoming a neighborhood clinic for the marginalized and underinsured,” Burkhart said. “We wanted to find a way to manage triage so those with serious trouble could be stabilized and supported, and those with the sniffles didn’t have to wait hours for their turn.”

To solve the problem, Shands Jacksonville now operates standalone neighborhood clinics that have significantly reduced pressure on the ED. Open after business hours and on weekends, the clinics provided services to more than 6,000 patients last year, and no one is turned away because they cannot pay.

Implied in all this is the level of communications that Shands Jacksonville maintains, keeping community political and business leaders apprised of changes and working in tandem with the University of Florida medical school for resident training and professional staff development. The organization’s board is a source for liaison and cooperation with a variety of constituencies, and Burkhart emphasized its role in the organization’s turnaround and regrowth. “The community advisory committee is passionate and involved, giving us tremendous input for new programs and helping us reach patients with information about our successes,” he said.

“The fun is just beginning,” he continued. “I was one of the consultants that was brought in, and I was fortunate to interview and be selected for the job of president here. It’s rare for a consultant stay to see through all the changes, but it’s something I’ve always wanted to do. We are continuing to be creative and put more muscle and flesh on the programs we’ve started, and that is extremely satisfying.”

Dave Gehman is a Massachusetts-based freelance writer with many years of experience writing about high tech and organizational dynamics. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it