New Jersey needs to better monitor hospitals' financial conditions and may have to play a more active role in ensuring that essential facilities can survive financially.
A report, issued late last week by the governor's Commission on Rationalizing Healthcare Resources, indicated the state should get more involved in helping hospitals. But some observers say it suggests the state may eventually play a role in deeming which hospitals are essential and which are not.
The state's hospital association largely supported the findings of the report.
The 13-member commission's report recommended that the state closely monitor the financial health of the state's 112 hospitals and help facilities that are in distress and whose failure could adversely affect communities' access to care.
Financial health is a significant issue in New Jersey, where five hospitals have filed for bankruptcy in the last 18 months and 15 facilities have closed their doors in the last decade.
"This report gives us the tools we need to shape the future of our healthcare system, so we're not just running from crisis to crisis," said Health and Senior Services Commissioner Healther Howard. "Fixing the state's healthcare system is a shared responsibility. By working together ... we can make the changes we need to support essential hospitals and make sure the communities they serve will have access to quality healthcare."
The state's Department of Health and Senior Services said it's talking to the New Jersey Health Care Facilities Financing Authority about creating an "early warning system," increasing oversight and expanding reporting standards.
Key problems affecting the financial health of providers include a lack of insurance for 1.3 million residents; underpayment by public payers, putting financial pressure on providers with fewer privately insured patients; diverse financial incentives for physicians and hospitals; lack of transparency on quality and costs; inconsistent governance by hospitals' boards; and proximity of providers in some areas of the state.
The commission proposed a variety of steps to stabilize the state's hospital system involving state oversight, hospital funding, hospital efficiency, transparency in facility operations and accountability.
Many of the suggestions involve tradeoffs in return for financial support. For example, the report suggests requiring hospitals receiving state support to meet efficiency standards to ensure that public funds are appropriately used.
The report suggests examining a series of measures, such as occupancy rates and the number of Medicaid and uninsured patients treated by a hospital, to determine whether a facility can be classified as essential. It suggested that software be used to analyze data related to essential factors and a hospital's viability.
The report also suggested creating a distressed hospital program to aid financially troubled essential hospitals, and said the state should consider increasing Medicaid payment rates for certain services at those hospitals.
Betsy Ryan, chief operating officer and president-elect of the New Jersey Hospital Association, applauded the commission for several key findings, including its recognition of the severity of the problem confronting New Jersey's hospitals and the communities they serve.
Ryan said key sections of the commission's report acknowledge that hospitals "are truly in poor financial health" and that "the charity care program, like Medicaid, pays hospitals less than the full cost of care. The program is thus another example where state government pays less than full costs - hospitals and other payers are expected to make up the difference."