Stitches have been applied to the gaping financial wounds at Hoboken University Medical Center.
The New Jersey Department of Health and Senior Services (HSS) awarded $7 million in stabilization funds to HUMC last week, and hospital officials are negotiating labor concessions that may give the hospital a slight cushion for 2010.
The hospital reportedly lost a third of its assets last year, and an audit uncovered poor fiscal practices. The administrators responsible for the high losses – CEO Harvey Holzberg and CFO Ron DeVito – have been relieved of their duties, but both remain on the payroll. Holzberg will be leaving as of Dec. 31.
More than half of the state funds over the last two years were given to Hudson County hospitals.
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The hospital expects to cut $6 million in salary to help eliminate its $12 million gap for the coming year. Combined with the $7 million in aid, this may provide a slight cushion if Gov.-elect Chris Christie makes state aid cuts.
HUMC, formerly known as St. Mary, was saved from closure in 2006 when the Hoboken City Council voted to back $52 million in bonds to keep it open. Wary taxpayers were concerned that if the hospital failed, the taxpayers would have to make up the funds. Since then, local activist groups have kept a watchful eye on the entity’s finances.
After the city voted for the bonds, the hospital was transferred from a non-profit called Bon Secours to the quasi-governmental ownership of the Hoboken Municipal Hospital Authority, and plans were made for a new Emergency Room to lure more patients. However, the recent fiscal audit showed that so far, the new ER did not bring as much extra money as previously thought.
Hudson’s health care issue
HSS Commissioner Heather Howard announced last week that $40 million in Health Care Stabilization Fund grants were awarded to nine financially-distressed hospitals, most notably St. Mary’s Hospital in Passaic ($9.5M), Jersey City Medical Center ($7M), Christ Hospital in Jersey City ($7M), and HUMC ($7 M), and Newark Beth Israel Medical Center ($4 M). Last year, the state awarded $44 million in stabilization grants.
According to the state, award preference was given for hospitals facing closure or significant reduction of services; extraordinary circumstances; and a significant number of uninsured, underinsured, or Medicaid patients.
Hospitals were also selected if they have demonstrated efficiencies and improvements and if it is likely that the services will be sustained after the grant funding ends.
Hospitals are required to document progress on operational performance and quality measures; enroll and participate in the Universal Coverage for Infants pilot program, and include a state representative on the hospital board for the duration of the grant.
More than half of the state funds over the last two years were given to Hudson County hospitals, with the county getting $43 million of the total $84 million awarded. JCMC was granted $29 million over that time.
“Over the last year, the leadership at Jersey City Medical Center has worked hard to begin weaning itself off of its dependency on state subsidies with the objective of becoming self sufficient,” said a press release from a JCMC spokesperson.
The grant fills a funding gap for uninsured, underinsured, or Medicare patients that the state does not cover, the spokesperson said.
There were differing opinions on whether the state would award the stabilization funds before the Christie administration takes over in Trenton.
Christie wrote a letter last month asking Gov. Jon Corzine to freeze all discretionary funds until Christie takes office in January.
Staying afloat
Now that HUMC has another year to work with, Hatiras said the hospital will start by examining contracts with health care providers like Horizon/Blue Cross.
Hatiras said that of the two problems his hospital has to deal with – state payments for uninsured patients and provider payments for insured patients – the providers are the least likely to pay the full amount.
Other local hospitals like Bayonne have been operating outside of a provider contract, which is risky but can force providers to renegotiate.
The state released a study in 2008 that pointed to six major causes for the struggles of hospitals in New Jersey, a report that guided the issuance of stabilization funding.
The Commission on Rationalizing Heathcare Resources, in regards to hospital failures, cited lack of universal health care coverage; low hospital reimbursement rates; inefficient hospital/physician relationships; lack of transparency on quality and cost of services; poor governance by hospital boards; and unfavorable geographic proximity, or rather, “When there are a number of competitors nearby, hospitals find it difficult to negotiate more favorable insurer payment rates or to influence physician practice patterns.”
Hoboken has five hospitals in an approximate five mile radius, thus contributing to HUMC’s difficulty in remaining competitive.
The report also addressed the oversupply of hospital beds across the state.
“The analysis revealed that the state currently faces an oversupply of hospital beds that is manifest in every market area of the state, but most pronounced in the Hackensack, Ridgewood and Paterson and the Newark/Jersey City market areas,” according to the report.
Officials respond
Hoboken Mayor Dawn Zimmer said more work needs to be done to ensure that the hospital will be financially self-sufficient, but she is confident Hatiras is on the right path.
“This funding is very welcome news,” she said, “and will allow much needed additional time to improve the hospital’s financial performance and pursue its recovery plan.”
She and Hatiras thanked Hoboken resident Gov. Jon Corzine and Commissioner Howard, as well as members of Christie’s transition team who supported the awards.
State Senator and Union City Mayor Brian Stack endorsed the funding for HUMC, especially since the hospital service his town.
“(HUMC) is important to the local constituency, and we need to ensure this hospital will continue to serve residents of the district,” Stack said in a release. “During the past few months, I have been working with the administration of the hospital to see that the financial needs of the facility were addressed.”
Assemblyman Ruben Ramos Jr. said, “I have invested much effort into the success of the hospital.”
Ramos sat on Hoboken’s City Council in 2006 when they voted to back the institution.
“I look forward to continuing to fight for adequate funding so that the constituency receives first class healthcare,” he said.
Timothy J. Carroll may be reached at tcarroll@hudsonreporter.com.