I recently had the privilege of testifying before the Senate Budget Committee in Montclair, and then hopping in my car to travel the highways and byways of New Jersey (which translates to the Parkway and the Turnpike, along with Route 1) to Trenton to testify before the Assembly Budget Committee. The topic? NJHA’s position on the proposed state budget for 2010.

I handed in my detailed written testimony and spoke from scribbled notes I had made on the back of something. It is always best not to read your testimony. Try to make eye contact and engage the committee members. At the Senate hearing, there was actually a lighting system, like at the presidential debates, to tell you if you were nearing the end of your allotted five minutes. (Green indicated your time was still good, yellow meant “wrap up” and red meant you were out of time). I was still in the green when I finished up.

My message to the legislative committee members was that our hospitals appreciate that, in a budget filled with tough choices, Gov. Corzine did not propose cutting charity care funding, instead keeping it at the current funding level of $605 million. The charity care program is a vital one for hospitals; it reimburses them for a portion of the $1.3 billion in care they deliver to New Jersey’s uninsured residents. I did note that by keeping hospital funding flat, we are in no way stabilizing an essential industry that has seen nine acute care hospitals close their doors in the past two years and six hospitals file for bankruptcy. I also noted that last year, hospitals were cut by $111 million, a 15.5 percent reduction, and closures did occur – the most recent just this month when KesslerMemorialHospital closed in Hammonton. Still, when the Governor is cutting funding to the arts, higher education and to some municipalities, a word of thanks is in order.

I did, however, tell lawmakers that I’m concerned about cuts to graduate medical education (which helps cover the costs of training new physicians), the Health Care Stabilization Fund (meant to stabilize healthcare facilities in severe financial distress), the Hospital Relief Subsidy Fund (which supports hospitals that serve a high number of complex cases, such as AIDS and substance abuse) and to the nursing home industry. NJHA has been working hard to identify existing state dollars that are spent on healthcare in New Jersey that might be eligible for additional “matching funds” from the federal government. We think we may have identified something, and are working through the idea with the Corzine Administration. If we are successful we can restore or mitigate these cuts.

We are operating in difficult and perilous times. For every 1 percent increase in the unemployment figures in New Jersey, another 1.1 million New Jerseyans join the ranks of the uninsured or enroll in Medicaid. Hospitals will be there to serve this population, but each year there will likely be fewer hospitals until we address the now burgeoning number of uninsured through health reform.

Many of us Baby Boomers remember being told by our moms to “clean your plate” at dinner. Why? Because our parents lived during the Great Depression, where money was not plentiful, nor were jobs. I recall my mom making a ketchup and butter sandwich for herself for lunch; she told me that she ate them often as a child during the Depression. Things aren’t quite that bad yet, but I know plenty of folks who have been laid off. Unemployment in New Jersey is up to 7.1 percent at last count, and it threatens to rise even further.

Healthcare is not immune from the impact of the recession. NJHA just did a survey of our member hospitals to see how the recession is impacting them. Some of the findings are instructive – and a bit alarming:

• 80 percent of hospitals reported an increase in charity care patients. That’s a likely sign of folks losing their jobs and, along with them, their health insurance. While that’s bad news for hospitals, the good news for patients is that even though they lack insurance, they are getting quality healthcare in their home state. Caring for the uninsured is part of hospitals’ missions, and it’s also a requirement in state law.
• 76 percent reported an increasing number of patients in the Emergency Room. Again, that’s a likely result of people losing health insurance, and it’s bad news for the healthcare system. The ER is the most expensive place to receive care, so increasing ER use fuels rising healthcare costs. Plus, it’s much better for patients to receive their care in a physician’s office or other setting, rather than waiting until a minor ailment becomes a full-blown emergency.
• Six out of 10 hospitals reported a decline in elective procedures as patients delay certain healthcare services. Even patients with insurance are avoiding costs like co-pays at this time. That loss of patients and procedures hurts hospitals’ revenues.

Those financial losses have a major impact on hospital employees. More than half of the hospitals in our survey reported layoffs in 2008, with another 21 percent anticipating layoffs this year. Those are tremendously difficult decisions for hospitals, but when the revenue from paid patients goes away or diminishes, and the number of patients without insurance goes up, something has got to give….

For communities and consumers all across our state, hospitals are a vital source of healthcare services, 145,000 jobs and so many other benefits. But they are not recession-proof – as we all, unfortunately, are learning.

Layoffs are occurring in many places of employment in New Jersey, including hospitals. Hospital layoffs often generate a lot of news coverage, largely because hospitals are integral parts of their communities – often the largest employer and a key driver of the local economy. Overall, healthcare is the second largest employer in the state.

Just about every day I read three to four newspapers – the ink-on-paper versions that get your hands dirty. But during the day, when I am at work, I often check a couple of newspaper Web sites for breaking New Jersey and national news. And I have noticed a recent phenomenon. When a hospital announces a layoff and it is reported on a newspaper Web site, there often follows a series of comments from members of the public about how this is related to free care to undocumented immigrants (often the phrase used is “illegal aliens.”) So I thought I should comment.

N.J. hospitals and healthcare facilities are wonderful institutions that provide quality of care to all individuals. There is no doubt that federal law requires hospitals to provide emergency care to all, regardless of their ability to pay. That requirement extends even further under New Jersey law, which requires hospitals to provide care to all persons in all settings – not just in the emergency room – regardless of their ability to pay.

The United States has close to 50 million uninsured residents, and the State of New Jersey has 1.3 million uninsured. The state’s own statistics show that N.J. hospitals provide close to $1 billion in state-mandated care to the uninsured. That number is based on what the state’s Medicaid program would have paid hospitals for those services, but Medicaid only covers about 70 cents of every dollar of care provided by hospitals. In reality, the value of the care our hospitals provide to the uninsured reaches $1.3 billion annually.

How much do hospitals receive back from the state for that $1.3 billion in healthcare for the uninsured? The amount is subject to the state budget process each year, but the current budget reimburses hospitals just $603 million for that care. The obvious underfunding, nearly $700 million this year, creates a budget hole for N.J. hospitals. Other holes exist in hospital budgets because Medicaid doesn’t cover the cost of care they provide, nor does Medicare, the federal program that provides health coverage for seniors. This is true for doctors and hospitals alike.

So believe it or not, we have a system where major government payers do not cover the true cost of caring for the folks who come through hospitals’ doors each and every day. You can be the smartest person in the world, but if you have a large number of your patients who are a combination of uninsured (charity care), Medicaid and Medicare, you are likely losing money on each patient you see – hence the layoffs. The layoffs are occurring now because hospitals used to be able to rely on investment income to plug budgetary holes, but nobody is making money on investments these days.

So where do the undocumented immigrants come in? They are a portion of the uninsured that receive care from N.J. hospitals all over the state, but they are by no means the largest component. We estimate that N.J. hospitals provide approximately $200 million to $300 million in free care for this population each year (on top of the almost $1.3 billion in state-mandated charity care we provide). That’s a lot of money, but caring for undocumented immigrants is just one component of a much greater problem. The larger issue for hospitals – and for patients and communities – is the growing number of uninsured. And most of these folks are good old American citizens.

This is a very special time of year. I’m reminded of my own Christmases as a child when I see the excitement build in my son as he counts down the days. My husband and I do our best to teach him about the importance of giving, so he knows this holiday is about much more than shiny gifts under the tree. It is a time to give, and a time to give thanks for all we have. And it’s a time to help out those who do not have as much as we are blessed to have in our lives. It’s also an appropriate time to thank a wonderful, dedicated group of people that our state is very lucky to have, and that is the 145,000 people who work in our hospitals and healthcare facilities. These doctors, nurses, respiratory technicians, pharmacists, physical therapists, food service personnel, custodians (I could go on and name every job title, but I won’t!) are there for all of us 24 hours a day, 7 days a week. They work on holidays, when the rest of us are lucky enough to be home enjoying time with our families. They perform miracles each and every day of the week. And they are there whenever we need them.

My family, like so many others, has personally experienced their selfless care. When my son was just a toddler, we were decorating our house for the holidays. I put stocking holders spelling out “NOEL” on my mantle and began to hang stockings from each letter. Before I could hang the four stockings, my son toddled over and pulled the heavy gold “N” down and it hit his head. Blood spurted out, and we rushed him to the local hospital. He was put into a papoose to immobilize his arms and was quickly stitched up. The scar is still there, hard to see, but I know where to look when I pull back his hair. Those heavy gold letters were boxed up later that night and are somewhere in my basement, never to be used again. But the folks at that local hospital were there for us that night, and they are still there for all of us, when we need them. Thank you to all of the dedicated workers in our hospitals, nursing homes, hospices, home health agencies, rehabilitation hospitals, long term acute care hospitals, psychiatric hospitals and assisted living centers. Keep doing the great work that you do each and every day, even as the rest of us sleep or enjoy the holiday with our families. We thank you.