Emergency Care for New Jersey Hospitals
Posted August 15, 2008

In a scene that’s become increasingly familiar, on Wednesday, New Jersey witnessed the closing of yet another hospital – this time, Muhlenberg Regional Medical Center in Plainfield. After years of financial difficulty, the 355-bed hospital, which opened its doors 130 years ago, simply could not afford to continue operating.

“We were losing $50,000 a day and $1.5 million to $2 million a month,” stated Steven Weiss, Public Relations Director for Solaris Health System, the non-profit organization which has owned the hospital since 1996. According to Weiss, the hospital had been functioning on a deficit going back even further.

As Newsday.com reports, Muhlenberg is the fifth acute care hospital in New Jersey to close its doors this year, and NJBiz.com notes it is the seventh hospital in the state to close in the past two years and the 23rd to close since 1992. Other closures this year include Barnert Hospital in Paterson, Saint James Hospital in Newark, and LibertyHealth, Greenville Hospital. Last year’s list included Pascack Valley Hospital in Westwood and Union Hospital.

And the culprit is one that has been plaguing the state’s hospitals for years: lack of state aid to finance the unfunded mandate to provide charity care for uninsured patients. Solaris Health System attested to the same by blaming Muhlenberg’s closing on deficits resulting primarily from a lack of state funding to pay for the treatment of uninsured patients. In Muhlenberg’s case, the situation was particularly acute because, as NJBiz explains, more than 71 percent of the patients admitted to the hospital in 2007 either had Medicare or Medicaid or no health insurance. The statewide average is 59 percent.

Hospitals across the state, however, are feeling the pain. In its 2008 Update: The Crisis Deepens – ‘What Will Happen to My Hospital?’, the New Jersey Hospital Association (NJHA) reports, “The alarms are sounding for New Jersey’s hospitals…. [F]ive hospitals have filed for bankruptcy protection in the past 18 months. Half of the state’s 77 … acute care hospitals are losing money.” According to the NJHA report, the reasons for this are several.

• First, almost half of hospital revenues come from Medicaid and Medicare. Yet, these government programs pay just 69 and 89 cents, respectively, for every dollar of treatment provided.
• Second, the state under-funds charity care by hundreds of millions of dollars each year. The NJHA forecasts that in 2008, hospitals will spend more than $1.3 billion treating poor and uninsured patients. The state will reimburse only $715 million of that.
• Third, hospitals pay an additional $275-300 million each year to treat illegal aliens. This medical care will never be denied by the hospitals, but they rarely if ever are reimbursed for it.

The Philadelphia Inquirer reports that Governor Corzine recently signed legislation aimed at addressing the state’s hospital crisis. The bill (S1796/A2608) allows the state Department of Health and Senior Services to monitor a hospital’s finances. As primary sponsor Senator Robert Gordon (D-Bergen) explains:

Through this legislation, the Department of Health will have an early warning when a hospital becomes fiscally unstable and will be able to intervene before the fiscal instability gives way to fiscal insolvency, and yet another health-care facility in the Garden State has to close its doors forever.

While we share the concern over hospital closures, we question the wisdom of making Trenton into our hospitals’ bookkeeper and auditor – particularly given the state’s own dismal record of financial mismanagement. The solution to New Jersey’s hospital crisis is not a new government oversight program. Rather, it is real structural reform that begins with addressing the way hospitals are reimbursed for the care they not only desire but also are required to provide.

Unless that reform materializes, we will no doubt mark the final day of even more New Jersey hospitals.   

 

 

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