Memorial Healthcare’s Aurelio Fernandez III is up to the challenge of succeeding a legendary leader
Memorial Healthcare System CEO Aurelio Fernandez III says it isn’t easy to follow an institution like Frank Sacco, who served as CEO for 25 years.
But Fernandez does bring 40 years of experience in the health care field into the role, into which he was promoted in April after previously serving as interim CEO and chief operating officer.
Before that, he spent 11 years with Tenet Healthcare, including stints as CEO at Hialeah Hospital and Florida Medical Center. He joined Memorial Hospital Miramar as CEO nine years ago and was promoted to executive VP and COO for the system in 2012.
Fernandez was interviewed by SFBW Chairman and CEO Gary Press at the sales office for Ocean Land Investments, which has boutique waterfront developments in the Las Olas Isles and on Fort Lauderdale’s beach.
The following transcript has been edited for brevity and clarity.
So I understand you were born in Cuba and came to the U.S. at a young age. Tell us about your early life.
We came to Miami in 1961. I’m a product of the public school system – I went to high school in Coral Gables, Miami Dade College and Florida International University. Miami was a much smaller community.
In those days, you walked around Miami and knew everybody. I remember skateboarding when they were building I-95 back in the early ’60s and hitchhiking to Key Biscayne.
Have you been back to Cuba? What do you think about the thaw in U.S. and Cuban relations?
My mom, my father fought a lot against the Cuban regime. For me to go back as long as the Castro brothers are there is a disservice to all the work they did, so I’m not interested in going back.
You were part of FIU’s first graduating class in 1974 and earned two degrees. Tell us about that.
I went to Miami Dade College and paid my way through college. I was working in housekeeping at Burdines. FIU opened in 1972 for junior and senior year. I graduated in 1974 and a few years later went back for my graduate degree. I used to be a CPA. I had a mentor who said, “You need to go back and get a masters in health care administration.”
When I first went to FIU, there was one house, called “Primera Casa.” You go there now and it has grown so much.
How do you go about putting your own stamp on things in the future?
Frank was an institution not only in South Florida, but in the whole health care system in the state. It’s amazing when we would go to Tallahassee and talk with elected officials and Frank would walk into a room and everyone respected him for what he had done.
He wanted to do what’s right for the patient, and not too many folks in our business look out for what’s right for the patient – it’s “me, me, me, me, me.”
I have to give Frank the credit for recruiting the talent that’s there today, for having the vision and creating the culture that everyone is collaborating to do what’s right. When you are dealing with patients’ lives, it’s very important that we work together and understand the limitations, when you need help to call for help and to create that environment if I’m a physician or working closely with nurses.
I will do my best to elevate the organization to its potential, because the potential is there. The excitement and will to move ahead, to me, is very exciting. People are motivated.
How are you communicating with the North Broward Hospital District – Broward Health? Have there any been any talks of merging?
Pauline Grant, who is the acting CEO, and I have been in constant dialogue. We have a joint venture called Community Care Plan, which is a Medicaid product – a very successful product.
I don’t believe the two cultures are compatible, but I believe there are opportunities.
A lot of health care systems are expanding throughout the region, such as Baptist Health. I see you have a couple of locations in Coral Springs for sports medicine and pediatric MRI. Do you see further geographic expansion for Memorial in the future?
Absolutely. One of our most valuable assets is Joe DiMaggio Children’s Hospital [in Hollywood]. It is the only freestanding pediatric hospital north of us all the way to Orlando.
We are the only hospital in Broward that does pediatric heart transplants. We have done 28 of them and they have all done very well. We are now going to be doing kidney transplants in the next six months. We have an excellent oncology program. We have the largest pediatric fellowship training orthopedic group south of Atlanta.
So we have gone up the coast and met the taxing district of Palm Beach County. The first thing that came out was a huge void of pediatric specialty services in the county. We need to have a presence of specialty pediatric providers in that market. We have been looking at real estate in the Wellington area to put a multi-specialty clinic.
What we have in Boca Raton Hospital now is pediatric sports medicine on Glades Road west of I-95. We have another one in Coral Springs that is expanding, about another 7,000 square feet.
Florida didn’t expand its Medicaid system like some of the other states. How has this impacted Memorial?
Your tax dollars that should be been earmarked for Medicaid are going to other states. The low-income pool, which is $1 billion in the state of Florida, has been taken away because Tallahassee is not playing ball with Washington.
We are a safety-net facility, which means we take care of anyone regardless of their ability to pay. Our hit next year will be $30 million.
Every time you see fewer dollars flowing down here, it’s impacting our ability to reinvest in our community.
The deal was for Medicaid expansion to give $5 billion to the state of Florida, which took Medicaid eligibility from the poverty line to 136 percent of that for two years. After the second year, the only exposure is 10 percent, or $500 million, which the state would have had to come up with in general-revenue funds. So for $500 million, the state has been fighting Medicaid expansion in Florida.
How do you provide transparency to health care consumers? And do you think consumers are getting savvier in researching the quality of care from providers?
We need to be the safest health care system because all the consumers are going to be educated. You are going to shop around for outcomes and see who provides the best care. You are there looking online to see who provides the most service.
We provide more cardiac care than anyone in South Florida. You are going to look at who does the most of something because you want experience.
We have developed a website that accounts for two things: One is safety and quality – with comparisons to state and national average – and the other is price for services.
Right now, anyone who is an employee of Memorial or independent can access a medical consultant through an iPhone, but not just by talking – they can see a visual of the physicians on the other end for minor care. So I’m at home in Broward or Palm Beach at 9 o’clock at night and have a bellyache. I don’t have to get in my car. I go on my phone and a physician will tell me whether I need to go to the emergency room, or go to Walgreens for medication, or go to my primary doctor the next day. [Soon] we will be able to expand this beyond the Memorial team to other plans that we have services with, like United Healthcare, Florida Blue and Cigna. That’s why technology is so important.
Since you had so many years at Tenet, what’s your perspective on working for a for-profit health care company vs. being part of a hospital district?
The fundamental difference is quarterly earnings. Those of you who work in the corporate world have to deliver earnings to Wall Street every quarter. In our industry, our business, it’s not easy. I have never compromised patient care at a for-profit, but I do realize that the investments and infrastructure, certain resources, were limited in the for-profit world.
Not being dependent on Wall Street’s expectations lets me have a longer view than 90-day increments. The Palm Beach initiative for Joe DiMaggio is a three- to five-year journey.
We are a $2 billion organization with 13,000 employees and a payroll of $1 billion. Earnings, which were in excess of $180 million last year, stay in the community to fund $276 million in capital projects and to provide the resources for the physicians to provide quality care.
When the Zika situation appeared, we made a decision – even before it become law – that we were going to screen all of the blood in our system. That was an $800,000 call. It wasn’t in the budget, but it was the right thing to do.
What’s your opinion on the controversy over the cost of the EpiPen?
Pharmaceutical costs are the line item that is out of control. If you look at your insurance plan, pharmaceuticals costs are the ones that are driving your premiums higher. As long as third-party payers are willing to pay and the government says you have to provide them, you are going to pay. As long as you have a monopoly on that medication, prices will continue to rise.