Commission On Rationalizing Healthcare Resources Issues Final Report

Source: Department of Health and Senior Services, January 24, 2008

From the press release:
New Jersey needs an “early warning system” to monitor acute-care hospitals, identify those in financial distress and intervene in advance to protect communities’ access to care, according to the final report of the Governor’s Commission on Rationalizing Healthcare Resources. The report also recommends the state better monitor public money spent on health care to ensure it is used efficiently.

Five New Jersey hospitals have filed for bankruptcy since July 2006, and 15 hospitals have closed in the last decade. Many hospitals, especially in the northeast, have too many empty beds. More hospitals will face possible closure in the next few years, the report predicted.

The report identified six major causes of the industry’s overall poor financial health:
• No Universal Health Care Coverage – More than 1.3 million New Jerseyans lack health insurance, including 250,000 children.
• Low Hospital Reimbursement Rates — Underpayment by public payers forces hospitals to charge others more to try to make up the difference. Hospitals with fewer privately insured patients are most vulnerable.
• Hospital/Physician Relationship – Hospitals and doctors have differing financial incentives and professional interests. Hospitals depend on physicians for patient referrals, but have little control over how many resources (lab tests, etc.) doctors use and whether they’re used appropriately.
• Lack of Transparency on Quality and Cost – Hospitals have been slow to measure and report on performance and care costs. Hospitals need this data to guide them in improving both efficiency and patient care.
• Governance by Hospital Boards – In some cases, hospital boards have not exercised proper oversight of their institution’s finances and management, thus threatening the future of valuable community assets.
• Geographic Proximity – 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.

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