The New Jersey Department of Health and Senior Services has awarded $44 million in Health Care Stabilization Fund grants to six financially distressed hospitals in order to maintain healthcare access in underserved communities.
State officials say this is further evidence that the financial condition of New Jersey hospitals is going from bad to worse.
The grants, which range from $1 million to $22 million, provide funding to hospitals facing closure or significant cuts in services.
The six grantees - East Orange General Hospital, Jersey City Medical Center, Kimball Medical Center in Lakewood, Newark Beth Israel Medical Center, Raritan Bay Medical Center in Perth Amboy and St. Mary's Hospital in Passaic - were chosen from among 13 hospitals that applied.
"The Health Care Stabilization Program was designed to provide temporary funding to hospitals that are the healthcare safety nets of their communities," said Gov. Jon Corzine.
"During one of the worst economic downturns in our nation's history, it is essential that the state provide assistance to ensure access to healthcare services for our most vulnerable residents."
According to the 2008 edition of the New Jersey Hospital Association's Financial Status of New Jersey Hospitals report, nearly half of the state's hospitals - 47 percent - posted overall losses at the end of 2007.
Betsy Ryan, president and CEO of the New Jersey Hospital Association, said the data reveals that New Jersey's hospital industry was on shaky financial ground long before the recent economic meltdown.
"This data underscores the longstanding challenges New Jersey hospitals face in remaining financially sound in the face of insufficient reimbursement from Medicare, Medicaid and the state charity care program," she said.
"It's truly troubling to think that this is the foundation from which our healthcare facilities entered our new economic struggles."
The statewide average total operating margin for New Jersey hospitals dropped from 3.1 percent in 2006 to 0.9 percent for 2007 - the lowest it has been since 2002.
Sean Hopkins, senior vice president of health economics for the New Jersey Hospital Association, said the steep decrease in 2007 total margins leaves hospitals in the state with little means to increase staff, improve facilities or purchase new equipment, which could impact quality of care and access.
"Additional hospital closures are a very real prospect in the wake of aging plants, reduced revenues and - in this economy - a growing number of individuals who are losing healthcare insurance coverage," Hopkins said.