How Jackson Health saved $160 million without cutting a single job

Jackson Health System, one of Florida’s largest public healthcare providers, has slashed $160 million in operating expenses without any layoffs, a remarkable feat amid the industry’s staffing challenges.

The cost-saving measures were identified with the help of consulting firm McKinsey & Co., which worked with the hospital system to pinpoint inefficiencies and implement strategic cost reductions.

Jackson Health System CEO Carlos Migoya told Miami Today that the efforts focused on reducing costly overtime, improving patient discharge times and ensuring accurate documentation for reimbursement, resulting in a 5% reduction in the system’s $3 billion budget.

Mr. Migoya explained that the initiative began two and a half years ago as Jackson Health faced rising costs and a staffing shortage exacerbated by the aftermath of Covid-19.

“We saw what was going on with inflationary trends and everything going up in price, including staffing costs. We had just come off of covid, where we had a shortage of staff and we were paying a lot of overtime at the time and it was a major challenge. So, we started looking at consultants around the country that had experience in those scenarios,” he said.

That’s when Jackson Health started working with McKinsey & Co. to improve organizational efficiency rather than reducing staff, a crucial distinction given the industry’s ongoing staffing challenges.

“The view was that we were short of staff, so therefore, as we became more efficient, it was not about cutting staff but about right-sizing the organization to the current staff we had,” Mr. Migoya said.

By addressing operational bottlenecks, such as delays in medical imaging that kept patients hospitalized longer, Jackson Health improved patient length of stay while reducing overtime costs by $70 million to $80 million annually.

“One of the big things that we ended up getting was a major reduction in overtime by improving our efficiencies and making sure that patients could leave as soon as they were ready to go home and not necessarily have to wait an extra day or two because they had to have an x-ray or an MRI or CT or something that would delay the process,” Mr. Migoya continued.

“We have also dramatically improved our staffing levels. That’s one reason our overtime has been reduced by a substantial amount of money,” he added. “At the same time, we now have one of the lowest turnover rates of any hospital system, certainly in Florida and maybe in the country, with a turnover ratio around 6%.”

While Mr. Migoya said he couldn’t speculate on whether a similar model could work for other hospitals, he noted that improving efficiency is critical across the industry.

“No one is looking to pay more for the same procedures. Insurance companies, Medicaid and Medicare are all looking to pay less,” he said. “The only way that hospitals can stay profitable is by improving their efficiencies.”

With the two-year agreement with McKinsey & Co. concluded in December 2024, he said, Jackson Health has since incorporated these lessons into its internal transformation office to sustain long-term improvements.