NJ Hospitals to Feel Sting of Charity Care Cuts
by Michael C. Gabriele, Editor
07/16/08

Reimbursement from State to Drop by $111M



Fr. Joseph Kukura

NEWARK-Nine of the remaining 13 Catholic hospitals in New Jersey will operate in a "strained financial situation" for the foreseeable future as they face a major reduction in state funding of Charity Care.

Catholic hospitals provided 24 percent of the state's documented Charity Care services in 2007. Father Joseph Kukura, the president of the Catholic HealthCare Partnership of New Jersey, Princeton-who testified before the state's Senate and Assembly budget committees earlier this year-said NJ Catholic hospitals, which last year logged $227 million in Charity Care costs, will be reimbursed only $173 million under the state's fiscal 2009 budget.

Gov. Jon Corzine signed the $32.9 billion budget on June 30. The overall Charity Care reimbursement level allocated in the 2009 budget is $605 million compared with $716 million in fiscal 2008, representing a cut of $111 million or 15.5 percent. New Jersey's 75 hospitals registered combined Charity Care costs of $1.3 billion in 2007. The new state budget would reflect a Charity Care reimbursement shortfall of nearly $700 million for all Garden State hospitals.

"Healthcare access for the poor and vulnerable, especially inner-city residents, will be threatened as financially distressed hospitals are further weakened by the (Charity Care) cuts," Fr. Kukura said.

Charity Care is defined as whatever care is necessary for individuals who present themselves as being in need of medical services at a hospital-usually in the facility's emergency room-but are without healthcare insurance and typically are unable to afford to pay for their care. Charity Care documentation is based on Medicaid costs, which typically are 69 percent below "true" hospital costs.

Gary Carter, who recently retired as president and chief executive officer of the New Jersey Hospital Association, also based in Princeton, pointed out the term "Charity Care" has a specific meaning in New Jersey. Carter-in a guest article published in the May 7 edition of The Catholic Advocate-explained that Charity Care is not "free care" for the poor.

"Our state is one of very few in the nation where Charity Care is a specific mandate written in state law," he wrote. "Most other states operate their own public hospitals that are designated to care for the poor and uninsured."

Carter said that NJ hospitals must treat all comers, regardless of their ability to pay. "It's part of the state's mandate and it's also part of the caring mission of hospitals," he said. According to the mandate, the state is supposed to reimburse hospitals for the care they provide to needy New Jersey residents. "Year after year, that reimbursement falls far short of hospitals' costs," Carter lamented.

When it comes to an emergency room situation, "even after an uninsured person has been stabilized, the hospital is responsible for the continuing care that person receives," Fr. Kukura pointed out. "Many non-acute healthcare facilities (nursing homes, imaging centers, special treatment clinics, etc.) won't accept someone without medical insurance. Hospitals can't 'pass along' an uninsured person."

The Catholic Bishops of New Jersey issued a statement earlier this year warning that the ongoing underfunding of Charity Chare is a "threat to the future of many of our Catholic hospitals" (see The Catholic Advocate, May 21). "We call for healthcare access for the poor and vulnerable to be a priority," the statement said. "We support the efforts that are being proposed to bring universal healthcare access to New Jersey."

The one hopeful signal in an otherwise-gloomy picture is that the state recently embarked on an effort to reinvent or possibly replace the existing Charity Care system-a program that may involve universal healthcare coverage for New Jersey residents. An initial phase of this proposed universal access system was approved by the state legislature, which would strengthen the state's existing Family Care program.

However, Fr. Kukura, while favoring such developments towards universal coverage, said the great danger is that many foundering Catholic hospitals may not survive during the transition period leading up to a new system. Meanwhile, in a separate move, Gov. Corzine signed a bill creating a $44-million healthcare stabilization fund that would provide some assistance to financially stressed hospitals.

Forty-six percent of all acute-care hospitals in New Jersey reported their operations were "in the red" during the first quarter of this year. Nearly half of all Garden State hospitals-including nine Catholic hospitals-are in a "strained financial situation" that could lead to further consolidations or declarations of bankruptcy, Fr. Kukura said, adding that declining Charity Care reimbursements contribute to this mounting financial pressure.

Twenty-two NJ hospitals have closed since 1992, while last year five hospitals either closed or filed for bankruptcy protection. Muh-lenberg Regional Medical Center, a 355-bed acute-care hospital in Plainfield, recently issued a proposal to close in a "certificate of need filing," which was approved by the state in late June.

In the Archdiocese of Newark, Columbus Hospital and Saint James Hospital recently closed, but had some of their services reorganized under the banner of Saint Michael's Medical Center, which will be run by Cathedral Healthcare East, Newtown Square, PA (The Catholic Advocate, Jan. 23).






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