News Release

Trenton -- A new advisory commission will examine the hospital industry, assess the overall financial health of facilities, identify warning signs that might place a facility in jeopardy and recommend options for hospitals looking to merge or convert to other uses, Commissioner Len Fishman announced today.

The new commission -- formed at the direction of Gov. Christie Whitman -- is in response to a request by hospitals to study an industry that has undergone tremendous change in the last five years with mergers, acquisitions, competition for services, certificate of need reform and expanded managed care.

In their February 5 letter, hospital CEOs asked the Governor "to begin an immediate examination of our concerns and to work with us to devise solutions that will preserve our health care safety net, particularly in our urban areas."

The task force will bring together hospitals, employers, consumers, government, unions, doctors, nurses, and others involved in health care.

"Access to quality health care is one of the most important rights consumers have. We need to examine our hospitals in this state and the challenges they face in this very changing market place" the Governor said.

Over the last decade, some hospitals in New Jersey have consolidated, merged, joined systems or closed, the Governor noted. "Everybody including hospitals and government need to be prepared for any future changes," she added.

The advisory commission will also respond to the findings of a report by the state Health Care Facilities Financing Authority, which is analyzing the financial condition of the hospital industry in New Jersey. That report, expected in March, will be looking at capacity, demand, revenues and expenditures in hospitals.

The advisory commission is expected to report to the Commissioner in June.

In addition, a Hospital Assistance Unit will be created within the department to help hospitals and their boards explore options for their future, including restructuring, consolidation of services and changing the type of services offered. Hospitals need viable options to achieve a balance between their revenues and expenditures. The state will consider financial assistance to a hospital in retaining the consultants necessary to evaluate a hospital's current and future strategies.

"In using the new unit within the department, hospitals will be opening themselves up to a process that seriously considers some fundamental changes," said the Commissioner.

"We're saying to hospitals in need of help that they have to be pro-active at an early stage in order to get the best possible outcome."

The administration already has taken many actions to support hospitals, especially urban inner city hospitals that serve a disproportionate numbers of uninsured patients. These include:

• Supporting charity care and hospital relief programs that distribute $523 million annually to hospitals caring for disadvantaged populations. The formula used to distribute these funds is effective in that the majority of the funds go to hospitals providing most of the care to the poor and uninsured.

• Reforming the certificate of need law to eliminate Certificate of Need requirements for many services and streamline them for others. This makes it easier for hospitals to add or remove services in response to changing market conditions. The Certificate of Need reform commission continues to examine the impact on urban hospitals if further revisions to Certificate of Need requirements are implemented.

• Promoting partnerships between urban and suburban hospitals, including the new cardiac services pilot program which will allow a suburban hospital to offer satellite cardiac surgery services in partnership with an urban hospital cardiac program. Revenues from the cardiac program in the suburban hospital must be used to support programs and operations in the urban hospital.

• Expediting decisions on hospital mergers, consolidations, conversions of use and/or closures that require a full Certificate of Need, without compromising the complete review of these transactions.

• Responding effectively to assure uninterrupted access to care when services or facilities are closed through such measures as ensuring emergency transport of patients, and transfer of records and extension of admitting privileges to physicians at the receiving hospital

• Supporting HCFFA's program for refinancing hospital debt, which has resulted in a record number of refinancings. In 1998, HCFFA issued $1.4 billion in bonds. About $1 billion of these bonds represented refinancings, which resulted in present value savings for New Jersey hospitals of more than $57 million.

Note: Members of the Advisory Commission on Hospitals have served on a prior committee that examined health care issues. Attached is the list of members.