Five Hospitals in NJ Have Filed for Bankruptcy Protection in the Past 20 Months and 18 Have Closed Since 2000
Legislation sponsored by Senate Republican Leader Tom Kean (R-21) that increases state oversight of distressed hospitals was unanimously passed by the state Legislature and signed into law today by Governor Corzine.
“Accountability and transparency are essential for hospitals receiving state support, ” said Kean, who is a member of the Senate Health, Human Services and Senior Citizens Committee. “This legislation encourages hospitals to spend resources much more efficiently and allows the state to intervene as soon as signs of deteriorating financial performance are evident. We need to ensure hospitals are fiscally sound so that they remain open and patients have access to quality healthcare.”
Senate Bill 1796 permits the Commissioner of Health, in consultation with a struggling hospital, to appoint a monitor to scrutinize all financial records to prevent further economic deterioration. The intervention would be authorized only if the Commissioner determines that a hospital is at serious risk.
Last year, a State Committee Investigation Report was released that said every year tens of millions of dollars in hospital charity care funding is lost through waste, fraud and lack of oversight. Under Kean’s bill, hospitals would be required to provide monthly unaudited financial information and annual audited financial statements to the Department of Health and Senior Services. Hospitals would also have to permit the Department of Health and Senior Services or, if necessary, a monitor to oversee their financial operations.
“The closure of Muhlenberg Hospital is a prime example, that hits close to home, as to why this legislation is needed, ” Kean continued. “With so many hospitals closing in such a short period of time and so many others filing for bankruptcy protection, it truly is becoming a health care crisis in New Jersey.”
Solaris Health System, which operates Muhlenberg Regional Medical Center in Plainfield, is planning on closing the hospital down due to financial trouble. Solaris says Muhlenberg lost $17 million last year and is projecting an $18 million loss this year. A total of 18 hospitals in New Jersey have closed since 2000, and five hospitals have filed for bankruptcy protection in the past 20 months.
“Efficiently functioning hospitals are paramount to the health and vitality of a region, ” Kean concluded. “New Jersey has some of the best hospitals in the country, and we need to ensure they can keep their doors open serving patients. We cannot afford to have hospitals closing due to poor financial oversight and lax spending practices.”
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August 15, 2008
