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NJHA: State Faces Access-to-Care Crisis
Date:2/26/2008

$108M Charity Care Cut Will Padlock More Hospitals

PRINCETON, N.J., Feb. 26 /PRNewswire-USNewswire/ -- More hospitals will close, thousands of jobs could be lost, and access to healthcare will tighten for patients across New Jersey under the proposed state budget unveiled today by Gov. Jon Corzine, the New Jersey Hospital Association cautioned.

The austere spending plan proposes a $108 million cut in charity care, with funding of $608 million next year, compared with current funding of $716 million, according to the state's "Budget in Brief" document. That's a $692 million gap compared with the $1.3 billion in charity care services provided annually by the state's hospitals.

"We fully understand that this is an extremely difficult budget year, but in a $33 billion budget we question why healthcare for the poor and uninsured hasn't made it to the priority list," said NJHA President and CEO Gary Carter. "If we don't place greater value on essential healthcare services, then New Jersey better be prepared for more closed hospitals, more job losses and greater waits and longer drives to receive needed healthcare."

Betsy Ryan, NJHA's president-elect and chief operating officer, said the cuts will accelerate the already unprecedented pace of hospital closures and bankruptcies in the last 18 months. Since the beginning of last year, four acute care hospitals have closed, four more have announced closure plans, and five have filed for bankruptcy protection.

"New Jersey only has 78 community hospitals left, down from 112 hospitals just 20 years ago. I can assure you, many of those 78 hospitals will not survive this budget," said Ryan.

Ryan explained that years of government underfunding have put many of New Jersey's hospitals in shaky financial standing. NJHA considers at least 29 of those hospitals "vulnerable," with operating margins of 1.0 percent or less.

"I can't predict which hospitals will close, but I can say that a $107 million cut to charity care will doom a number of those hospitals," said Ryan.

Each hospital that closes takes an average of 1,700 jobs along with it. And the impact is felt not only by charity care patients, but on all communities and all patients who count on hospitals for easily accessible healthcare.

New Jersey is one of just two states in the nation with a charity care system in which all hospitals are required to serve all patients, regardless of their ability to pay. (Most other states have designated "state hospitals," where uninsured patients are directed.) As part of New Jersey's mandate, the state is responsible for reimbursing hospitals for providing these charity care services. Year after year, however, that funding has fallen dramatically short of hospitals' costs. Hospitals' cumulative losses from charity care since the state adopted its deregulated reimbursement system in 1992 now reach more than $6 billion. That, along with poor reimbursement from other government programs including Medicaid, is the leading factor in the financial crisis facing New Jersey hospitals.

"This budget fundamentally ignores the serious problems confronting our state's healthcare system," said Carter. "Even the Governor's own commission cautioned that our state has systematically underfunded hospitals and that essential hospitals must be adequately supported to protect access to care. The Governor has balanced his plan on the backs of countless New Jersey communities and the poor and underserved who count on hospitals for their healthcare."

NJHA also noted that New Jersey loses out on federal matching funds when it cuts funding to hospitals. In a difficult budget year, the Governor's proposal effectively walks away from more than $50 million in federal dollars.

The budget impact also will be felt beyond hospitals. Nursing homes are slated for an anticipated cut of $50 million through the proposed elimination of updates to Medicaid reimbursement.

CONTACT: Kerry McKean Kelly

609-275-4069

kmckean@njha.com


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SOURCE New Jersey Hospital Association
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