Hospital critics call for more disclosure : northjersey/news/hospital-critics-call-for-more-disclosure-1.1075801#sthash.Id4p0dUc.dpuf In the 1980s and early 1990s, the state of New Jersey decided whether a hospital could construct a new wing, add beds or buy the latest high-tech machine. Officials knew how much hospitals spent on staff and supplies, as well as care for the uninsured. They told each hospital what it could charge for care. The For-Profit Prescription As investors buy struggling hospitals, big change comes to New Jersey health care Owners of for-profit hospitals in New Jersey A new playbook for hospitals: How investors pursue a financial turnaround Hospital owners line up support in high places Hospital critics call for more disclosure Today, the pendulum has swung in the opposite direction. As for-profit buyers take over one in six of the state’s hospitals, the state requires little disclosure about their operations. Despite the billions in taxpayer funds hospitals receive and the essential services they provide, it is nearly impossible to see how profits are being made — and where they’re going. As major changes sweep New Jersey’s hospital market, affecting critical health care services and thousands of jobs, there is debate over how active the state should be and where the balance should be struck between protecting the public interest and allowing new owners to run their businesses. Health Commissioner Mary O’Dowd said she recognizes the importance of hospital services and wants to assure responsible use of the public dollars that support them. But at the same time, she wants to avoid burdening hospitals with demands that would hinder their ability to do business. “We want them to thrive, we want them to continue to serve their communities as best they can, and we want them to evolve,” she told lawmakers in April. Too much additional oversight, and investors might be deterred from coming to New Jersey, with the result that some hospitals would close. Advocates of a more active state role say that officials lack the tools to effectively protect health-care resources built up through generations of tax exemptions and philanthropy. Even when regulators do impose conditions on a for-profit sale, they say, enforcement is lax. Related: As investors buy struggling hospitals, big change comes to New Jersey health care “Having a license to operate a hospital in the state is a privilege and not a right,” said state Sen. Joseph Vitale, chairman of the Senate Health Committee and a Woodbridge Democrat. “We know everything we can know about not-for-profit hospitals, their financial conditions and wherewithal. We know next to nothing about for-profits. We know nothing about how they operate.” In general, most hospitals feel that enough reporting is required already. And privately held companies, in particular, regard their financial information as proprietary. It’s a competitive business, and they don’t want to give away details that would interfere with their ability to attract patients, win discounts from suppliers and negotiate better reimbursement from insurers. For-profit owners disclose much less about their finances than non-profits do, yet about half of their revenue comes from taxpayer dollars through Medicare, Medicaid and charity-care payments. At non-profits, the salaries and bonuses paid to top executives and doctors; the potential conflicts of interest involving hospital board members; the money spent on lobbying, and the bottom line on revenues and expenses — all of that is easy to learn from the annual federal tax forms submitted as a condition of their tax-exempt status. When non-profit hospitals borrow money on the bond market, too, they must disclose their strengths and weaknesses. “Having a license to operate a hospital in the state is a privilege and not a right.” — State Sen. Joseph Vitale None of that is available for privately held institutions like Meadowlands Hospital Medical Center in Secaucus, the three Hudson County hospitals owned by CarePoint, or HackensackUMC’s for-profit affiliates in Westwood and Montclair. (For-profit companies that are publicly traded must disclose some of this information to the U.S. Securities and Exchange Commission; there is just one such company operating in New Jersey.) For example, the compensation for Thomas Considine, the former state Banking and Insurance commissioner who spent three months as chief executive officer of Meadowlands and is now a consultant to the hospital, is regarded as private, proprietary information. So are the “management fees” paid by many for-profit operators to companies owned by the hospital’s investors. To level the playing field, state Sen. Loretta Weinberg last year introduced — and the Legislature passed — a measure to require for-profits to provide the same information that non-profits submit to the IRS. Related: A new playbook for hospitals: How investors pursue a financial turnaround Governor Christie vetoed it and asked the health commissioner to study the issue. Christie said he wanted to “prevent the state from over-reaching into the business arena.” In response, the commissioner recommended several steps last month aimed at increasing hospital transparency, including asking hospitals to post audited annual financial statements and unaudited quarterly financial statements on their websites so the public “can raise concerns if it believes the hospital is not being a good steward of public funds.” O’Dowd told the governor that hospitals should notify the state before they enter increasingly popular agreements to sell and lease back their land or buildings. They don’t need to reveal details of the transaction or receive state approval, just say that they’re doing it, she said. But at this point her plan is a series of suggestions: The postings would be voluntary, no timetable was set for implementation and no penalties were recommended. O’Dowd plans to meet with Weinberg and hospital CEOs to discuss the next steps, which might include rules and some enforcement provisions, her spokeswoman said. The health commissioner also found no need for hospitals to disclose information about the compensation of officers, board members or highly paid employees. Even the owners’ names aren’t required to be made public; they “should be encouraged, but not required, to be made available,” she said. New Jersey hospital closures Many New Jersey hospitals have closed in recent years, for a variety of reasons. Trends in the practice of medicine have resulted in fewer patients and shorter stays in the hospital. Changes in reimbursement by insurance companies and government programs, such as Medicare, Medicaid and charity care, have meant some hospitals lose money. Some have been mismanaged. Seventy-two remain. 22 hospitals closed 1992: Kennedy Memorial Hospital,Saddle Brook 1995: Zurbrugg Hospital,Riverside 1997: United Healthcare System, Newark 1999: Montclair Community Hospital 1999: SouthAmboy Memorial Hospital 2000:Point Pleasant Hospital 2001: West Jersey Hospital,Camden 2002: St. Francis Hospital, JerseyCity 2002:: South Jersey Healthcare, Millville 2003: The General Hospital Center at Passaic 2003: West Hudson Hospital, Kearny 2004: Hospital Center at Orange 2006: Irvington General Hospital 2007: PBI Regional Medical Center, Passaic 2007: Union Hospital 2007: Pascack Valley Hospital, Westwood 2008: Barnert Hospital, Paterson 2008: St. James Hospital, Newark 2008: Greenville Hospital, Jersey City 2008: Columbus Hospital, Newark 2008: Muhlenberg Regional MedicalCenter, Plainfield 2009: Kessler Memorial Hospital, Hammonton 8 hospitals filed for bankruptcy 2007: Barnert Hospital, Paterson 2007: Bayonne Hospital 2007: Pascack Valley Hospital, Westwood 2007: PBI Regional Medical Center,Passaic 2007: Kessler Memorial Hospital, Hammonton 2009: St. Mary’s Hospital, Passaic 2011: Hoboken University MedicalCenter 2012: Christ Hospital, JerseyCity 8 hospitals converted to for-profit institutions 2002: Memorial Hospital of Salem County 2007: Bayonne Medical Center 2007: Mountainside Hospital, Montclair 2010: Meadowlands Hospital Medical Center, Secaucus 2011: Hoboken University Medical Center 2012: Christ Hospital, Jersey City 2012: HackensackUMC at Pascack Valley 2014: St. Mary’s Hospital, Passaic Sources: New Jersey Hospital Association and state Department of Health When the state did require Meadowlands hospital to provide certain financial documents as a condition of its sale to for-profit owners in 2010, that condition proved difficult to enforce. So far, those reports have been late or missing. Meadowlands paid $12,000 in fines before submitting audited financials for its first year under new ownership — 13 months overdue. The 2012 financials are currently 14 months late — another $12,000 in fines is owed so far, according to the state. And the 2013 report was due last month. Officials at Meadowlands explained the delays to the state in a letter, saying “any transition is challenging, especially for financial reporting.” Disputes with insurers over reimbursement and the need to hire a new auditor contributed to the missed deadlines, they said. However, a report by the hospital’s financial consultant, released by the state in July in response to an Open Public Records Act request by The Record, revealed that the hospital hadn’t started the 2012 report two months after it was due, and that its systems for estimating how much it is owed by patients and insurers were “flawed or non-existent.” While New Jersey moves cautiously, Massachusetts has forged a different path: A detailed picture of the financial health of each hospital — for-profit or not — must be produced annually by the Center for Health Information and Analysis. The center is part of a commission established by law to bring the growth in health care spending in line with the growth of the state’s economy, and monitor the financial viability of hospitals and insurance plans, identifying where costs are rising faster than the goal. The commission recently raised concerns about the sale of a facility to the state’s largest hospital group, predicting it would reduce competition and drive up costs for insurers and, as a result, premiums for their customers. New Jersey’s health commissioner explained to lawmakers this spring that she didn’t want to be too hard on for-profit hospitals. “There are certain institutions that challenge the state in different ways,” O’Dowd said. “We try to work with them, because fundamentally our ultimate authority is to shut them down. That’s not ever where we want to go with an aggressive stance.” The state also welcomes the influx of private capital when buyers take over a struggling hospital. As Christie said at the ceremony for the reopening of HackensackUMC at Pascack Valley under for-profit management: “It’s not about the companies that will run it. It’s not about the physicians and nurses and other health care professionals who will be working in it. It’s about the people we serve.” The new operators say they are worthy of that trust. “We don’t plan on selling any of our facilities,” said Chad Melton, the CEO of the Westwood hospital. “We’re long term.” There are no shareholders taking dividends, he said. Rather, any hospital profits are reinvested to make the facility better. Similarly, as regulators considered whether to approve the purchase of St. Mary’s Hospital in Passaic by Prime Healthcare Services, a Prime executive was reassuring. “We’re expert in turning around community hospitals,” said Peter J. Adamo, the regional CEO for the Philadelphia area. “The first thing you do is infuse some capital.” For facilities that have been without equipment and paying top dollar for supplies, he added, that “infuses some hope.” Planning To win approval for a hospital sale in New Jersey, the buyer commits to keeping the hospital open for a certain period, usually five or seven years. The state requires that most services be maintained, but doesn’t ask what size of hospital and mix of services would work best over the long term. The state’s approach has meant missed opportunities, critics say. They don’t want a return to the days of controlling every major equipment purchase, but the sale of a hospital is a good time to right-size the number of beds it has and make sure it emphasizes the services the community needs, they say. To win approval for a hospital sale in New Jersey, the buyer commits to keeping the hospital open for a certain period, usually five or seven years. Does the city of Passaic, for example, really need an elite open-heart surgery program at St. Mary’s, which Prime took over this month, when hospitals in Paterson, Hackensack and Newark already can do those operations and each year, fewer people get them? Heart surgery generates a lot of high patient billings, but the top priority Passaic residents identified, in a yearlong series of meetings to assess community needs, was to maintain and expand mental-health services. State regulators could “evaluate how things are going in that hospital and what kind of changes need to occur to have a positive impact on the system as a whole,” said Renee Steinhagen, director of New Jersey Appleseed Public Interest Law Center, which has analyzed and commented on proposed sales at public hearings. But they’ve squandered the chance, she said. “The [health] department is failing to exercise the opportunity.” Vitale, of the Senate Health Committee, points to a pending purchase in Newark as an example of the need for planning. Prime wants to buy St. Michael’s Medical Center, a 358-bed facility located just blocks from University Hospital, a teaching hospital owned and supported by the state. Taxpayers would absorb more than $200 million of St. Michael’s debt to keep it alive. But rather than subsidize both sides in that costly competition, a coalition of community activists says, the state should force the hospital’s future owners to coordinate care with other Newark facilities to meet the city’s health needs. “Let’s try to rationalize what happens in Newark,” Vitale said. “What’s the best health system that Newark needs? It’s not three hospitals with 1,500 beds.” After pressure from lawmakers and civic leaders, the state hired a consultant to “assess opportunities for consolidation or regionalization of hospital services in Newark and surrounding towns.” The consultant’s report is due Nov. 15, and will be considered as part of the state’s decision on Prime’s purchase of St. Michael’s, a Health Department spokeswoman said. Oversight In recent years, the Health Department has handed over responsibility for routine hospital inspections to national accreditation agencies. The move saves money and allows the state to concentrate its limited resources on complaint investigations, according to O’Dowd. She noted that New Jersey is one of 48 states that rely upon outside agencies. The results of complaint investigations are no longer posted online. In addition, the state relies on hospitals when it comes to their annual license renewals. The CEO must attest that the hospital is “in compliance” with all federal and state laws, and the license will be issued. Last year, the acting CEO of Meadowlands signed that the hospital was in compliance at the same time that the hospital had failed to pay federal payroll taxes and had been fined by the Health Department for failing to submit its annual financial report. These incremental changes in state oversight have been driven as much by state belt-tightening as the national trend toward deregulation in the health care industry. New Jersey abandoned its hospital rate setting in 1992 after it was challenged in court. And the range of capital expenditures that need approval – from new wings to high-tech machinery – has shrunk over the years. “There’s a transition occurring in health care, and not just in hospital care,” as for-profit owners replace longtime not-for-profits. — Donald Malafronte, president of the Urban Health Institute and a New Jersey hospital consultant. But reductions in the state’s spending on oversight have left the public vulnerable, Patrice Mareschal, an associate professor at Rutgers University and the author of a recent study on the issue, said in a conference call with reporters. “Oversight is a core governmental function. It serves as a sort of police patrol.” The use of state-appointed monitors to observe hospital operations is increasingly rare, too. Twelve years ago, when a Salem County hospital was sold to a for-profit company, the state sent in a monitor to make sure the conditions of the sale were honored. The union at Meadowlands hospital and state Senators Vitale and Weinberg have called for a monitor there. And some community advocates asked the state to appoint a monitor if it approved the sale of St. Mary’s. Without one, “our communities are left to themselves to defend against cuts in services, cuts in staffing, and hits on the quality of health care,” said India Hayes-Larrier, an organizer for Citizen Action, a consumer advocacy group, and coordinator of the Campaign to Protect Community Health Care. She was particularly concerned about whether the hospital would remain “in-network” with various insurance plans, so that patients won’t find themselves paying more for care there. But O’Dowd said a monitor generally isn’t needed. The state can require reports, levy fines, make unannounced visits and even appoint its own representative to the board of a struggling hospital, she noted. Those tools are sufficient to protect patient care and guard against wrongdoing, she said. O’Dowd points to the increased scrutiny the state has applied to for-profit sales. “Beginning with Salem more than a decade ago, the department has placed an increased number and more complex conditions” on the approvals it grants for such sales, she said. The approval for the 2007 sale of Montclair’s Mountainside Hospital contained 12 conditions, while this year’s approval of the sale of St. Mary’s contained 29, she said. Regardless of their ownership, she said, all hospitals must provide care to uninsured patients. They must hold annual public meetings. And they must give the department certain financial information that can serve as an “early warning” of potential problems – though that is not shared with the public. The state’s goal, she said, is “to strike a balance between protecting patients and public resources and not placing an undue burden on hospitals.” Meanwhile, the pace of change is accelerating — five for-profit conversions in the last four years, and four more sales pending this year. “There’s a transition occurring in health care, and not just in hospital care,” as for-profit owners replace longtime not-for-profits, said Donald Malafronte, president of the Urban Health Institute and a New Jersey hospital consultant. “It’s just beginning in New Jersey. We’re taking baby steps.” Email: washburn@northjersey Lindy Washburn’s reporting on the for-profit ownership of health care institutions was supported in part by a fellowship from the Association of Health Care Journalists, with assistance from The Commonwealth Fund. _____________________ New Jersey hospital closures Many New Jersey hospitals have closed in recent years, for a variety of reasons. Trends in the practice of medicine have resulted in fewer patients and shorter stays in the hospital. Changes in reimbursement by insurance companies and government programs, such as Medicare, Medicaid and charity care, have meant some hospitals lose money. Some have been mismanaged. Seventy-two remain. 22 hospitals closed 1992: Kennedy Memorial Hospital,Saddle Brook 1995: Zurbrugg Hospital,Riverside 1997: United Healthcare System, Newark 1999: Montclair Community Hospital 1999: SouthAmboy Memorial Hospital 2000:Point Pleasant Hospital 2001: West Jersey Hospital,Camden 2002: St. Francis Hospital, JerseyCity 2002:: South Jersey Healthcare, Millville 2003: The General Hospital Center at Passaic 2003: West Hudson Hospital, Kearny 2004: Hospital Center at Orange 2006: Irvington General Hospital 2007: PBI Regional Medical Center, Passaic 2007: Union Hospital 2007: Pascack Valley Hospital, Westwood 2008: Barnert Hospital, Paterson 2008: St. James Hospital, Newark 2008: Greenville Hospital, Jersey City 2008: Columbus Hospital, Newark 2008: Muhlenberg Regional MedicalCenter, Plainfield 2009: Kessler Memorial Hospital, Hammonton 8 hospitals filed for bankruptcy 2007: Barnert Hospital, Paterson 2007: Bayonne Hospital 2007: Pascack Valley Hospital, Westwood 2007: PBI Regional Medical Center,Passaic 2007: Kessler Memorial Hospital, Hammonton 2009: St. Mary’s Hospital, Passaic 2011: Hoboken University MedicalCenter 2012: Christ Hospital, JerseyCity 8 hospitals converted to for-profit institutions 2002: Memorial Hospital of Salem County 2007: Bayonne Medical Center 2007: Mountainside Hospital, Montclair 2010: Meadowlands Hospital Medical Center, Secaucus 2011: Hoboken University Medical Center 2012: Christ Hospital, Jersey City 2012: HackensackUMC at Pascack Valley 2014: St. Mary’s Hospital, Passaic Sources: New Jersey Hospital Association and state Department of Health
Posted on: Tue, 26 Aug 2014 10:56:33 +0000
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