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NJHA: No Hospital Safe from State's $143 Million Cut

One-Third Would Receive Nothing for Serving Uninsured

PRINCETON, N.J., March 10 /PRNewswire-USNewswire/ -- Roughly one-third of the state's 78 acute care hospitals will see their charity care reimbursements totally eliminated by the funding cuts proposed by Gov. Jon Corzine, according to details released today by the state Department of Health and Senior Services.

No hospital will escape unscathed from the $143 million cut to the charity care program. "Safety net" hospitals that provide the highest levels of care to New Jersey's uninsured residents will experience a 5 percent reduction. The next tier of hospitals - those that fall in the middle based on the amount of charity care patients they serve - would see their reimbursement cut by 34 percent. And the remaining hospitals will see their charity care payments wiped out entirely.

NJHA analyzed the impact of the cuts on individual hospitals, with many hospitals suffering cuts of $10 million or more. The average hospital would lose $1.75 million under the state's plan.

Twenty-six hospitals would receive nothing back from the state in charity care reimbursement. And yet, those hospitals provided a total of $118.4 million in charity care services last year.

"In past budgets we've had winners and losers in how charity care funds are distributed. In this budget, we all lose. Every hospital in the state will receive dramatically less than they are entitled to under state law -- and this at a time when half of New Jersey's hospitals already are operating in the red," said Betsy Ryan, NJHA's chief operating officer and president-elect.

"We fear the ultimate losers will be New Jersey's residents, many of whom will see more hospital closures, job cuts and service reductions in their communities," added Ryan.

All told, the charity care losses to New Jersey's hospitals would total $143 million under the state's plan, a 20 percent reduction. That includes $108 million in hospital support that was eliminated from the budget, plus an additional $35 million that was diverted from charity care to a new healthcare stabilization fund. State officials said there are no hard guidelines yet for how that money will be distributed, but the money is intended to be used for one-time allocations for communities with closed hospitals or to assist financially strapped facilities.

Meanwhile, the amount of charity care delivered by the state's hospitals stands at $1.3 billion, leaving hospitals to absorb a shortfall of more than $700 million. State records place the total amount of charity care at roughly $950 million, but that figure is based on Medicaid reimbursement rates and fails to adjust for the fact that Medicaid only pays hospitals 70 percent of their actual costs.

NJHA's analysis of the impact on individual hospitals is based on hospitals' 2006 charity care levels and is subject to change. State officials say they plan to distribute funds based on 2007 data, but that data is not expected to be finalized until June.

"These are preliminary numbers, but it's important for our hospitals to have forewarning," said Ryan. "With cuts of this magnitude, they will need time to make some hard choices about cutting services, eliminating jobs or even if they can stay open at all."

NJHA said the cuts are likely to accelerate the unprecedented pace of hospital closures in the state. In the past 18 months alone, four acute care hospitals have closed, four have announced plans to close, and five others have filed for bankruptcy protection. In fact, New Jersey has lost 30 percent of its acute care hospitals in the last 20 years, from 112 to 78.

Those closures are sparking a great deal of concern among Garden State residents. A new poll released today by Monmouth University shows that 74 percent of residents disapprove of the Governor's plan to cut charity care. The hospital cuts registered the highest level of public disapproval among 10 options posed to survey participants. Another recent poll, this one from Rutgers University, showed that half of the state's residents are worried about the string of hospital closures in New Jersey.

NJHA President and CEO Gary Carter said the state's charity care plan fails not only New Jersey's hospitals, but also the vulnerable patients they serve. Most of these individuals are New Jersey's working poor -- those who hold jobs but who do not receive an insurance benefit and can't afford health insurance on their own.

"Charity care isn't just a subsidy," said Carter. "This is real care, provided each and every day to real patients at hospitals across our state. State law requires hospitals to provide this care, and the charity care program is supposed to reimburse them for this service. Unfortunately, the state is not living up to its end of the bargain."

SOURCE New Jersey Hospital Association
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