Your Turn
Michael R. D’Agnes
Guest Column
Hospitals need adequate charity care aid

Recently, as we participated in Cover the Unin-sured Week 2004, a national campaign to raise awareness for the nearly 44 million Americans who do not have health insurance, we focused on the daily struggle of New Jersey hospitals that foot the bill for uninsured patients.

At Raritan Bay Medical Center, (in Middlesex County, for example) charity care is our leading financial challenge. Last year, the hospital provided nearly $40 million in charity care services to our community. Yet we only re-ceived $15 million in reimbursements from the state. This equates to 41 cents on the dollar.

Cover the Uninsured Week 2004 highlighted the dire need for hospitals across the state to receive adequate charity care aid. Recognizing the crisis, Gov. James McGreevey called for a $30 million in-crease in this funding in his February budget address. In late April, the state commissioner of health reported the current budget proposal actually calls for a $55 million boost in additional charity care funding.

While I am certainly appreciative that the administration understands this issue has reached a boiling point, hospitals need considerably more state funding to help cover the escalating charity care costs. Last year New Jersey hospitals provided an increase of $200 million in charity care services, totaling $778 million.

With 55 hospitals receiving just 12 cents on the dollar for charity care reimbursements, New Jersey hospitals are showing clear symptoms of financial distress — three hospitals announced they were closing last year, 5,000 hospital jobs were eliminated over the past 18 months, and Moody’s Investor Services downgraded the state’s nonprofit hospitals to a "negative" financial outlook.

Hospitals simply cannot survive if they continue to provide free care to all uninsured people who walk through the door at the current reimbursement levels.

Making up this 88-cent shortfall is drastically affecting how New Jersey hospitals can fulfill their mission to provide quality care to all.

There is legislation that has been introduced in both houses of the state Legislature that would give hospitals an adequate amount of charity care, based on industry-wide consensus. The bills, A-2406 and S-1214, revise the ex­isting charity care formula to provide $300 million in additional funding.

This proposed legislation holds "safety-net hospitals" harmless, while requiring that every hospital in the state receive at least 50 percent of what Medicaid would have paid for patient services. I truly hope legislators statewide understand the critical im­portance of this bill and sign on as co-sponsors.

I am also concerned about the method by which the governor plans to fund charity care in the upcoming year.

Hospitals should not be ex-pected to pick up the charity care tab through a proposed increase in the existing hospi­tal assessment from 0.53 percent of annual revenues to 0.7 percent. We are already shouldering an overwhelming amount of the charity care burden.

In New Jersey, there are 1.8 million people who are uninsured; about 210,000 of them are children. I am truly wor­ried about how hospitals can continue to serve this population without a sig­nificant spike in charity care funding.

Helping New Jersey hospitals serve the uninsured is a critical step toward solving this state’s health care crisis.

Michael R. D’Agnes is president and chief executive officer, Raritan Bay Medical Center, Old Bridge and Perth Amboy divisions.