Hospitals Fight for Charity Aid - Corzines budget proposes no increase

March 06, 2007 -- Scott Goldstein STATEHOUSE - Even though the states acute-care hospitals will provide more than $1 billion in free care to the working poor and uninsured next year, Gov. Jon Corzines proposed $33.3 billion state budget reimburses hospitals for barely half the cost.
Hours after Corzines budget address two weeks ago, state Treasurer Bradley Abelow predicted a tense battle by hospitals to get more money for charity care into the budget. It will probably be the most contentious issue during the hearings on the budget, Abelow said.

Corzine has proposed sending the 83 hospitals $583 million for charity care, the same amount the state has paid in each of the past two years. Further vexing the industry, the administration says it will cease supplemental grants, which totaled $123 million last year, to hospitals that provide an extraordinary amount of charity care. With the cut in grants, hospital advocates are saying they are getting what amounts to a cut in state aid.

The New Jersey Hospital Association expects charity-care costs to total $1.1 billion next year, which would leave the hospitals on the hook for over $500 million. For nearly 20 years, hospitals have not been fully reimbursed by the state for charity care, the association said. State law requires hospitals to care for patients regardless of their ability to pay or whether they are insured.

Our view is the state has abnegated its responsibility by under-funding, says Richard Goldstein, CEO of the Council of Teaching Hospitals. It puts pressure on the hospital industry and trade associations to see whether or not we can restore this. This is real money to the hospitals, all of whom have very thin margins.

Hospitals have been making up for the widening gap in charity care and subsidies by laying off staff, canceling programs or passing on the costs to insured patients, Goldstein said. Hospital advocates are relieved that Corzines budget does not include a controversial $50-per-day tax on hospital beds, which the governor proposed last year. It was eventually axed under pressure from critics. Money from the tax would have been redistributed to the hospitals that provided the most charity care.

While we appreciate the fact that the governor did not propose a bed tax as part of his 2008 budget, we must voice our regret that his plan calls for a reduction in health care funding, says Michael DAgnes, board chairman of the hospital association and CEO of Raritan Bay Medical Center in Old Bridge and Perth Amboy.

In his budget address, Corzine acknowledged that hospitals are treating more and more of the uninsured. But he added that the state lacks the money to fully address many worthy causes, including mental health, autism and charity care.

Corzine says hospitals could operate more efficiently if some of the financially weakest were closed. Last year, he created a commission to study reforming the way the state funds hospitals and perhaps even recommend the closure of some.

In addition, the governor says he plans to introduce a plan something that approaches universal health care that would bring many of the states 1.4 million uninsured residents onto the insurance rolls. This would reduce both the number of patients requiring charity care and the hospitals need for state aid.

Here we have a governor who claims he is interested in serving and helping the most needy, but this flat level of aid for charity care may end up decreasing access that the truly needy have to emergency care, says David P. Rebovich, managing director of the Rider University Institute for New Jersey Politics.

The only explanation is that hes trying to push the hospitals toward efficiencies and, you hate to say it, push some of them out of the market, Rebovich says. He may also be trying to generate some broad-based political support for his universal (health care) plan.

Corzines office did not respond to requests for comment last week.

Goldstein says statistics show a surplus of hospital beds in the state that would support contraction of the hospitals. But I dont know how much money you save when you do that, beyond reducing debt service, he says. But the contraction of hospitals would benefit the hospitals that survive.

He says hospitals would gladly embrace a state plan for health insurance reform. We have never seen charity-care funding as the best way to care for people, Goldstein says. There's no room in hospitals revenue stream to pay for health care.

Hospitals cant wait for action, says Suzanne Ianni, executive director of the Hospital Alliance of New Jersey. Until the state enacts meaningful health care reform that not only reduces the number of uninsured but also reduces charity care at our hospitals, increased charity care funding must be a priority, she said.

Adds Joe Kukura, president of the Catholic Healthcare Partnership of New Jersey: Without adequate funding for those who cant pay, many of our hospitals face an uncertain future.

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