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.
"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."
The grants, which range from $1 million to $22 million, provide funding to hospitals facing closure or significant cuts in services. The six grantees were chosen from among 13 hospitals that applied.
Grants were awarded to: East Orange General Hospital, $5 million; Jersey City Medical Center, $22 million; Kimball Medical Center in Lakewood, $1 million; Newark Beth Israel Medical Center, $5 million; Raritan Bay Medical Center in Perth Amboy, $4 million; and St. Mary's Hospital in Passaic, $7 million.
Applications were evaluated based on five criteria:
- Hospital faced closure or significant reduction of services
- Extraordinary circumstances created the need to stabilize health care services in the community
- The hospital serves a significant number of uninsured, underinsured and/or Medicaid patients
- The hospital has demonstrated efforts to make efficiencies and improve facility management and governance
- Description of how services will be maintained after June 30, 2009
In addition to the quality and efficiency conditions attached to the grant, the DHSS will require each facility to complete an audit to evaluate whether a grantee's use of the funds was consistent with the provisions of statute, regulations, and any conditions imposed upon the award of the grant.
The DHSS will also report to the Legislature annually to identify the facilities that received grants and the purpose for which the grant was allocated to the facility.
Hospitals awarded stabilization grants must meet certain conditions in order to receive the funding. Facilities are required to document progress on operational performance and quality measures; enrollment procedures for Medicaid and NJ FamilyCare; contract with a firm that specializes in improving revenue collection; and include a state representative on the hospital board for the duration of the grant.
Each grantee is also required to meet hospital-specific quality and efficiency conditions in order to receive funds for the duration of the program.
"These critical conditions are designed to improve quality and efficiency, and ensure accountability for how the funding is spent," said Heather Howard, New Jersey Health and Senior Services Commissioner. "The state has a responsibility to the taxpayers to ensure that all public dollars distributed to hospitals are spent as efficiently as possible."
Hospitals will begin receiving payments after they submit plans outlining how the conditions of the grant will be met. Hospitals will receive monthly payments through June 2009.
Howard said New Jersey hospitals received $2.9 billion in charity care and Medicaid payments last year.
The legislation that created the fund was part of a package of healthcare reforms recommended by the Commission on Rationalizing Health Care Resources, which issued its final report in January 2008. The report revealed that a large number of New Jersey hospitals are in poor financial condition.
As part of the reforms recommended by the Commission, the DHSS has been monitoring the financial condition of hospitals more closely and is implementing an early warning system that will enable the state to intervene earlier when a hospital is in crisis and work with hospitals to look for opportunities to restructure services and improve operations.
"The reforms give the Department the tools it needs to stabilize New Jersey's hospital system and implement strategic planning rather than move from one crisis to the next,'' Howard said.