Northern New Jersey Urban Hospitals Still ‘Struggle’ Financially, HSC Study Finds

Urban hospitals in northern New Jersey have "struggled financially" during the past two years, leaving them "in far worse financial condition" than suburban facilities, while most area health plans have become "financially stable" and have reported profits, according to a study released Aug. 28 by the Center for Studying Health System Change. The report -- which included hospitals in Essex, Morris, Sussex, Union and Warren counties -- also found that small and urban "safety net" hospitals, which treat many low-income and uninsured residents, "appear to be the most severely affected," hit "hard" by declining patient volume and fewer patients with private health insurance (Draper et al., "Financial Pressures Continue to Plague Hospitals," Summer 2001). The AP/Bergen Record reports that the "economic squeeze" on urban hospitals may "threaten access to health care" for many low-income, uninsured residents. "The financial pressures that hospitals are facing [are] increasing the gap between urban and suburban hospitals and leaving the urban hospitals that are the primary caregivers for the low-income and uninsured populations in a very precarious position," HSC researcher Cara Lesser said (Johnson, AP/Bergen Record, 8/29). HSC researchers found that "excess hospital bed capacity" and "high utilization of services" have "contributed" to "higher than average" health care costs at urban hospitals ("Financial Pressures Continue to Plague Hospitals," Summer 2001). New Jersey urban hospitals have lost patients with private health insurance to suburban facilities, "partly because inner-city hospitals have been less successful in negotiating contracts with managed care providers," Lesser said. New Jersey Hospital Association spokesperson Ron Czajkowski described the study as "certainly valid," but said that the "gap between urban and suburban hospitals is not as wide as the study claims" and that suburban hospitals have only "succeeded to a degree" in "achieving more clout" with managed care companies (AP/Bergen Record, 8/29).

Health Plans Improve
The HSC report also found that area health plans, which "shed unprofitable lines of business," such as Medicare and Medicaid managed care plans, improved "profitability" during the past two years ("Financial Pressures Continue to Plague Hospitals," Summer 2001). To become profitable, area health plans also raised premiums and reduced the number of days that they would cover for hospital stays (AP/Bergen Record, 8/29). The full HSC report for the northern New Jersey market is available online. For further information on state health policy in New Jersey, visit State Health Facts Online.