Issue link: https://beckershealthcare.uberflip.com/i/1284464
9 CFO / FINANCE Jackson Health 'on a disastrous course' after missing out on COVID-19 relief aid, CEO says By Ayla Ellison J ackson Health System, a safety-net system in Miami, recorded losses of $78 million this year and was shut out of some federal funding meant to help hospi- tals hardest hit by the pandemic, according to the Miami Herald. e six-hospital system received $75 million in funding made available through the Coronavi- rus Aid, Relief and Economic Security Act, but the money ran out amid Florida's surge in cases this summer. ough the federal government made additional funds available to safety-net providers, Jackson Health did not receive any of those funds. is has put the system "on a disastrous course" financially, President and CEO Carlos Migoya wrote in a July 15 letter to local, state and federal elected officials. "We cannot allow the moment in which Jackson is reaching its highest public health calling also be the moment that crumbles its hard-earned financial foundation," Mr. Migoya wrote, according to the report. Safety-net hospitals that reported an operat- ing margin of more than 3 percent in 2018 did not qualify for additional federal aid. ough Jackson Health reported a $30 mil- lion surplus in 2018, HHS calculated it as a $150 million profit. Using HHS' calculation, which included reimbursements the system received through bonds for an expansion and renovation project, the health system's margin was too high to qualify for aid, Jackson Health CFO Mark Knight told the Miami Herald. Rep. Donna Shalala, D-Fla., said HHS made a mistake and as of mid-July was working to get it corrected. "ey just made a mistake in criteria they used, which made the safety-net hospitals look wealthier than they are," Ms. Shalala, who is also a former secretary of HHS, told the Miami Herald. Other safety-net hospitals in Florida were also shortchanged, Justin Senior, president of the Safety Net Hospital Alliance of Florida, told the Miami Herald. He said the University of Florida Health Shands Hospital in Gaines- ville and Tampa General Hospital were also shut out of CARES Act funding they should have received. n Quorum exits bankruptcy, names new CEO By Ayla Ellison B rentwood, Tenn.-based Quorum Health announced July 7 it had emerged from bankruptcy, about three months after entering the Chapter 11 restructuring process. Quorum, a spinoff of Franklin, Tenn.-based Community Health Systems, filed for bankruptcy in early April. The for-profit com- pany asked the bankruptcy court to expedite approval of its re- structuring plan, and the court approved the $1.3 billion plan June 29. Quorum exited bankruptcy with approximately $500 million less debt and a new CEO and board of managers. The company named Joey Jacobs CEO. Mr. Jacobs, who most recently served as chair and CEO of Franklin, Tenn.-based Acadia Healthcare, will also serve on Quorum's board of man- agers. "This company has successfully turned a crucially important corner, and I'm excited to join Quorum Health as we begin this new chapter," said Mr. Jacobs in a news release. "We appreci- ate the court's diligence and are grateful for the wisdom of our bondholders in recognizing the strength of our operations and taking the difficult but necessary steps to provide a platform for success." Quorum's board of managers will be led by Catherine Klema, president of Nettleton Advisors, a financial and strategic advi- sory firm for healthcare organizations. n For-profit providers must pay taxes on COVID-19 relief funding, IRS says By Alia Paavola T he IRS clarified that for-profit providers must pay taxes on COVID-19 relief payments. In enacting the Coronavirus Aid, Relief and Economic Security Act, Congress did not address the taxation of the provider relief funds. However, the IRS updated its frequently asked ques- tions page July 6 to emphasize that for-profit provid- ers are not exempt from paying taxes on the relief payments. The IRS said that the relief payments can't be exclud- ed from gross income under the qualified disaster re- lief provisions of U.S. Code 139 because a payment to a business, including a sole proprietorship, "does not qualify as a qualified disaster relief payment." Tax-exempt healthcare providers are not subject to tax on relief payments, the IRS said. However, the payment may be taxable under section 511 if the payment reimburses the tax-exempt provider for ex- penses or lost revenue attributable to an unrelated trade. n