New Jersey hospitals struggle with economy

In Uncategorized on December 1, 2008 at 12:49 pm

Sunday, November 30, 2008


Though health care may be a necessity even in trying times, local hospitals say they are not immune to the strains of the reeling economy.

In fact, Mercer County’s four major hospitals, which together account for more than 7,000 jobs, face worries similar to other businesses: As consumers tighten their wallets, they might spend less on elective surgeries or preventative medicine.

Meanwhile two health care organizations with ambitious plans for construction of new hospitals in Hopewell Township in Mercer County and Plainsboro in Middlesex County have expressed confidence that financial market upheavals will not disrupt those projects.

But as unemployment increases in New Jersey, hospitals also are facing another unique challenge: more and more people find themselves without health insurance while hospitals remain obligated to provide “charity care” to the uninsured.

Already, St. Francis Medical Center in Trenton is reporting a “small uptick” in charity care patients, according to president and CEO Gerard J. Jablonowski.

Meanwhile, Robert Wood Johnson University Hospital at Hamilton recently cut 22 positions from its staff of over 1,800, citing economic challenges shared by other health care providers.

“Fewer patients are seeking elective procedures (and) more people are uninsured because of the increased work force reductions nationally,” Diane Grillo, chief spokeswoman at Robert Wood, said in an e-mailed statement.

Grillo said the staff cuts included “a few nurses who did not have direct patient care assignments” and came through a combination of layoffs and attrition. She did not attribute the work force reduction to any particular economic cause.

“Hospitals in New Jersey are beginning to see the effects of the economic downturn,” she said. “We are confident that these changes will not compromise the care and service our community has come to expect.”

Robert Wood is not the only hospital in New Jersey that has made staff cuts, according to Kerry McKean Kelly, spokesperson for the New Jersey Hospital Association.

“Even in the last couple months, we have seen the elimination of jobs (and) the elimination of some services,” Kelly said. Statewide, hospitals have announced “200 or more” job cuts in the past two months, she said.

Five New Jersey hospitals have closed this year, in addition to three last year, Kelly said. Before those closures, 15 hospitals had shut down in New Jersey in about the last 15 years, she said.

At local hospitals, officials said finances are strong.

“The last three or four months … we have been near capacity, in terms of inpatients that we are treating,” said Barry Rabner, president and CEO of Princeton HealthCare System, though he cautioned that it is “often impossible” to explain trends in such numbers.

Jablonowski said patient numbers are also strong at St. Francis, but noticed another change.

“Over the last year, we have started noticing a small uptick in the number of (charity care) patients” on the order of “a few percentage points of our volume,” said Jablonowski.

“We take care of every patient who needs us, and that’s part of our mission, but the mounting pressure to be able to continue that is what really is the biggest concern of the organization.”

New Jersey has lost 27,200 jobs so far this year, including 6,000 in October alone. The statewide unemployment rate rose to 6 percent in October, its highest level in more than five years.

Rutgers University economist James W. Hughes said that trend is likely to continue over the next 12 months.

Hospital officials fear that will bring more residents without employer-provided health coverage.

The state government, which mandates “charity care” for the uninsured, reimburses hospitals slightly less than 50 percent of the cost of treating each uninsured patient, said Kelly of NJHA.

While local hospitals would like to see that reimbursement rise, some officials fear it might fall once again.

The state’s budget for the fiscal year that began July 1 cut “charity care” funding by 15 percent, according to the NJHA website.

Less state reimbursement “would be potentially tragic news for the state because we already have hospitals struggling, laying off folks, (and) reducing services,” Kelly said.

“We’re also hearing from hospitals that they are delaying construction projects” due to high interest rates and difficulty borrowing, Kelly said.

Two major medical centers are under construction in central New Jersey — Princeton HealthCare System’s campus at Plainsboro and a new location for Capital Health System in Hopewell Township.

Rabner said Princeton HealthCare’s project has not been delayed, though the construction costs may rise.

“Fortunately we borrowed money to complete the project before the economy became so complicated,” Rabner said in an interview. “We do have money to do the work.”

Work toward demolishing existing buildings at the site off Route 1 is under way and “we’re in the process of bidding” other aspects of the project, Rabner said. “We’re just getting the bids back. (We) don’t know what impact the changes in the economy will have on the project budget.”

Capital Health spokesperson Jason Stacchini said the company had no comment for this report.

Last month, Capital Health spokesperson Jayne O’Connor expressed confidence in the financial condition of the company and its ability to finance its $530 million construction project.

O’Connor also said the company had not yet “even gotten to the stage where we’re going to market” for bonds that would fund the construction.



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