New Jersey hospitals are working hard to reinvent healthcare to ensure continued quality and access through more efficient, effective healthcare services. That is essential as hospitals face significant federal Medicare cuts at the same time they are preparing to care for our aging population and the added demands of a greater number of insured individuals. “Value” is the bottom line – care that is high in quality but delivered efficiently and in the right setting.

New Jersey hospitals have been working to improve health, provide better care and reduce costs long before the enactment of the Affordable Care Act, but the ACA has pushed us to do more. To that end, N.J. hospitals are:

• Improving coordination of services across the continuum of care. Whether they are forming their own “accountable care organizations” or reaching out in greater collaboration with local post-acute partners, hospitals are forging new relationships, embracing technology like electronic health records and regional sharing of information and using new tools like the state’s Universal Transfer Form to ensure better communication and continuity of care.
• Testing new payment models that promote collaboration. 31 New Jersey hospitals have joined NJHA in a federal pilot project called “gainsharing,” which allows hospitals and physicians to work in collaboration to find ways to streamline patient care and reduce in-hospital costs.
• Investing resources, staff and energy to improving healthcare quality. NJHA’s Institute for Quality and Patient Safety is leading New Jersey hospitals in the federal quality improvement initiative called Partnership for Patients. In the first year of this effort, they have produced tremendous results that not only make care safer for patients, but also reduce healthcare costs in the long run. Those achievements include a 65 percent decline in pressure ulcers, a 45.8 percent decline in ventilator-associated pneumonia and additional improvements in reducing healthcare-associated infections and hospital readmissions.

When the gloomy May jobs report came out last week, the stock market lost all of its gains for 2012. But all the news in the report is not bad. According to an analysis by the Altarum Institute, healthcare jobs continue to grow, continuing a trend since the recession began.

In May, healthcare employment rose by 33,000 jobs, according to the federal Bureau of Labor Statistics. Most of the growth (23,000 jobs) was found in the ambulatory care setting, which includes hospital outpatient services. Hospital inpatient services also added jobs. All told, healthcare workers now comprise 10.8 percent of the total employment picture, an all-time high.

A recent essay in the New England Journal of Medicine questions whether this job growth is a good thing. The authors ask whether more healthcare jobs fuel an inefficient healthcare system that could operate just as well with fewer people. It’s an interesting point – but one I disagree with. While some of the new jobs are in hospitals, most are in community-based settings. That signals a shift in the deployment of healthcare resources and it reflects systemic efforts nationwide to make healthcare delivery more efficient and sustainable. And this is happening at the same time that our population is aging, with 10,000 Baby Boomers turning 65 each day in the United States. There’s no question that we need healthcare professionals to take care of the growing needs of this aging population.

New Jersey hospitals employ 140,000 individuals. Add in all of the other healthcare settings – like nursing homes, ambulatory care centers, home health and others – and healthcare ranks as the state’s second largest employer. From NJHA’s point of view, we appreciate that Gov. Christie recognizes this vital role of hospitals and healthcare by proposing a 2013 state budget that preserves current hospital funding levels and increases nursing home funding by $10 million. In addition, the Governor has spared New Jersey’s Medicaid program from cuts, which has been a target in some other states. That’s important, obviously, for access to healthcare services but it’s also very important for the New Jersey economy. Cuts to critical state funding streams translate to cuts in staffing.

I anxiously await the first federal jobs report that comes out after the U.S. Supreme Court rules on the constitutionality of the Affordable Care Act; that ruling is expected by the end of the month. As we’ve seen throughout this recession, healthcare and jobs go hand in hand. And any decision that greatly alters the future of healthcare will undoubtedly have a monumental impact on some of these trends.

Sometimes the issues being debated in Washington, D.C., seem esoteric and removed from our everyday lives. But the recent debate and subsequent deal to raise the debt limit may have a direct impact on the hospitals, nursing homes, home health care agencies, physicians, rehabilitation hospitals and hospice agencies NJHA represents. It has me worried. Here’s why:

The Debt Ceiling Act calls for immediate reductions in spending of $917 billion. A so-called congressional “super committee” (yet to be appointed) is supposed to make an additional recommendation for $1.5 trillion in cuts by Thanksgiving. Much like the military base closure commission, these recommendations will be subject to a single, yea-or-nay vote by the U.S. Congress. If these recommendations do not pass, the Debt Ceiling Act calls for cuts to defense spending and Medicare spending for healthcare providers only of 2 percent. This translates to approximately $45 billion in losses over nine years to the nation’s hospitals. Hospital funding recently was cut $155 billion over ten years to pay for the Affordable Care Act. This is real money being taken out of a critical sector that provides essential healthcare services and jobs. And it comes at a time when the healthcare system is being asked to transform itself to provide accountable care, medical homes and patient-centered care. Taking another $45 billion out of hospitals during the same time period will make it difficult for us to transition, to reduce readmissions, to implement the appropriate health information technologies and continue our focus on patient safety and quality patient care.

We all count on hospitals for ready access to healthcare services for ourselves and our loved ones. But hospitals also are economic engines in the communities they serve – and recent events have underscored just how important that is for our country. Additional cuts on the federal level will inevitably mean reductions in jobs. That is the wrong thing to do in our current economic climate, where job growth is nominal but the demand for healthcare services remains as strong as ever.

I had the privilege today of testifying before the Assembly Budget Committee on the budget challenges confronting our state and the impact they may have on New Jersey’s hospitals and their patients.

The mission of our healthcare providers is to ensure access to quality healthcare for the citizens of our state. And we carry out this mission every day. New Jersey is home to a comprehensive network of acute care hospitals, specialty hospitals, skilled nursing facilities, home health agencies and other healthcare facilities committed to delivering quality, compassionate care.

We know the Legislature and the Governor, like the rest of us, value healthcare as an essential part of New Jersey’s quality of life. And our elected officials face a daunting task in addressing the state’s financial problems. But our healthcare system is already in the grip of fiscal crisis, and the state once again is asking hospitals to do more with less, even as the number of uninsured grows and the demand for healthcare services rises.

Last week before a joint session of the Legislature, Gov. Christie declared a state of fiscal emergency and signed an executive order allowing him to direct the Treasury Department to freeze over $1.3 billion in unexpended funds. While we applaud Gov. Christie for taking bold steps to balance the state budget, we are disappointed in the $12.6 million cut to charity care. This cut comes with an additional loss of $12.6 million in federal matching funds so the overall impact on New Jersey hospitals is $25 million.

The impact to hospitals and their patients is not limited to this cut to charity care alone. Reductions to the NJ FamilyCare program, including a change in enrollment for 11,700 undocumented immigrants and freeze in parent enrollment, will have a direct impact on the healthcare of our citizens. In addition to impeding access to care, these cuts also will contribute to increases in documented charity care provided by New Jersey hospitals – extending the gap between the care delivered and the reimbursement received.

In addition, more than 370,000 individuals who were in crisis and in need of outpatient mental health services came to New Jersey’s Emergency Departments last year because they could not find the behavioral health services they needed elsewhere. A delay in the state’s planned expansion of intensive outpatient services will add to this number as the gap in critical mental health services in the community expands. More than 25 percent of charity care patients who remain in hospital inpatient beds have a primary diagnosis of mental illness, and cuts to behavioral health programs will have a dramatic impact on charity care services rendered.

Even as the Governor proposes other, more severe budget actions, we would hope the health of our state’s citizens and those that provide care to them remain a priority. In the spirit of shared commitment that defines the charity care program, we pledge to work with the Administration and our state legislators on solutions that can help us ensure that the hospital care all New Jerseyans depend on will still be there when they need it.

New Jersey hospitals are hurting. Nine hospitals have closed their doors in the past two years, and six have filed for bankruptcy during that same period. This all occurred before the economic downturn. Needless to say, with the economy plummeting, the financial health of hospitals has further deteriorated. The number of uninsured is growing. According to New Jersey’s Commissioner of Health Heather Howard, the amount of free care – charity care – provided by hospitals increased by more than 4 percent in 2008. Hospitals are losing money on every charity care patient they see, and doctors get no payments from the state for the free care they provide in hospitals.

So in this climate, we were actually somewhat gratified that the Governor did not propose cuts to charity care next year, understanding that he is dealing with a freefalling economy and plummeting state revenues. But we were disheartened to learn that in order to spread the same amount of money around further (we are slated to get $605 million in charity care funding to reimburse for more than $1 billion in real care provided) the Governor chose to cut 22 hospitals that were only getting 10 cents for every dollar of care provided to just 5 cents for every dollar of care provided. We were also disheartened to learn the Governor had chosen to cut funding for essential Graduate Medical Education by $8 million. This fund helps train the doctors of tomorrow. Finally, the Governor cut $4 million from a pool of money intended to stabilize hospitals in distress, and another pot of money for hospitals that serve a high number of patients who have certain high- cost diseases. We are also concerned for our nursing homes, because the Governor proposed eliminating a Medicaid rebasing and inflationary update for these important facilities.

But rather than complain, New Jersey hospitals set about an effort in late 2008 to come up with an industry-wide position on charity care funding AND to identify new funding opportunities. We identified an existing pot of state dollars that could be put up for federal matching funds to help mitigate the cuts. The pot of money actually comes directly from hospitals. It is a 0.53 percent tax on hospital gross receipts that raises $40 million annually. That pot of money is given to federally qualified health centers to provide care to the uninsured. Our plan – which has been reviewed by consultants with expertise in this field – is to use $20 million of that money and redirect it through different channels in the state budget that would qualify for an extra $20 million in federal matching funds. We are trying to work collaboratively with our legislators and the FQHCs to assure them they will still receive their $40 million -- while at the same time bringing an added $20 million from Washington to New Jersey.

Our industry is in dire need. Commissioner of Health Howard testified that she currently has 15 of the remaining 72 acute care hospitals on a watch list because she is worried about their survival. We need the state to come together with the FQHCs to find a way to get this important initiative done, or more hospitals will close – no doubt. Hospitals must provide care to all who walk through their doors regardless of their ability to pay. They deserve fair reimbursement for that care. FQHCs are essential parts of the safety net for the uninsured, but so too are hospitals. And in this economy, no one can afford to leave federal matching dollars on the table. If we lose this opportunity, we will all pay later as we see more hospitals struggle and close.