New Jersey

New Jersey hospitals losing charity care funding

Wed, 12 Mar 2008 07:59:55 -0400

About one-third of New Jersey hospitals will lose funding under a revision of the state's charity-care funding formula. The idea is to minimize cuts in funding to safety-net hospitals who would otherwise face cuts under the fiscal 2009 budget. The new formula will sort the state's hospitals, which deliver $1.3 billion in charity care collectively, into three tiers, based on the percentage of charity care each provides individually relative to total revenue.

Hospitals seen as safety-net candidates will get paid out of a special $35 million fund, but the state budget will otherwise cut charity funds from their current level of $716 million to $608 million. That $35 million fund was recommended by the recent New Jersey Commission on Rationalizing Health Care Resources--you know, the one that suggested that if a hospital isn't really needed, it should be allowed to die. This sounds like another step in that direction.

To learn more about New Jersey's charity budget plans:
- read this Modern Healthcare article (reg. req.)
- read this Newhouse News Service piece

Related Articles:
NJ hospitals going under as state bailout cash ends. Report
NJ begins sorting hospitals. Report

Case study: NJ hospital refinances bond debt

Wed, 05 Mar 2008 06:59:55 -0500

Want to know how much it costs to bail out of the imploding auction-rate bonds market? For one New Jersey hospital, the price tag was $16 million. The Hackensack Medical Center received permission last week to refinance $147 million in outstanding auction-rate bonds. Pushed up by the panic in the auction-rate market, the bonds had seen interest rates double over one month. To get out from under, Hackensack agreed to pay about $7.1 million in professional fees, and another $9 million in fees to undo a related interest-rate hedging deal.

Hackensack joins a throng of New Jersey borrowers that are working on such deals. Last week, a state agency that organizes loans for hospitals and colleges approved plans to speed up refinancing deals for $1 billion in auction-rate bonds.

To learn more about the New Jersey bond situation:
- read this piece from The Star-Ledger

Related Articles:
Auction-rate bond crisis bodes ill for non-profit providers. Editorial
MA authorities make bond transactions easier. Report
IRS cracking down on post-issue bond proceed use. Report

NJ hospitals going under as state bailout cash ends

Wed, 13 Feb 2008 06:59:56 -0500

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)

Related Articles:
NJ begins sorting hospitals. Report
NY gets $1.5 billion to close ailing hospitals. Report
New York health system sues to prevent hospital closure. Report