A couple of weeks ago, a New Jersey commission made the decision to stop providing bailout funds--typically, advances from the state's charity care pool--to struggling hospitals that they felt weren't providing essential services. This was scary news for administrators, given that according to the commission's analysis, 38 of the state's 78 acute care hospitals scored below the state average on key financial metrics like profitability and liquidity. How bad is the situation now? Consider Barnert Hospital, which was $45 million in debt and had $200,000 in the bank. Not too surprisingly, it had to file for bankruptcy and close this month. And it's probably not the last to face this prospect.
The state's hospitals, for their part, say they might not need bailouts in the first place if the state's charity care reimbursement program paid better. According to the commission's own report, charity care payments cover only 70 cents on the dollar on average, and sometimes fall as low as 22 cents on a dollar. Given that about 1.3 million of the state's 8 million residents are uninsured, that can hit a hospital pretty hard.
To learn more about the financial issues facing New Jersey hospitals:
- read this piece from The New York Times (reg. req.)
- read the Commission on Rationalizing Health Care Resources report (.pdf)
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