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.