As a first step in examining New Jersey’s health care delivery system, the Commission on Rationalizing Health Care Resources today released its interim report to Governor Jon S. Corzine, Health and Senior Services Commissioner Fred M. Jacobs, M.D., J.D. announced today.

The report analyzes the financial condition of the state’s acute-care hospitals and outlines a method for determining which hospitals are essential to maintaining health care access in their communities.

Governor Corzine has asked the Commission to examine New Jersey’s health care delivery system and advise him on the best ways to improve the health of that system.  The Commission’s final report is expected by December 1.

“America’s hospitals are straining under the burden of economic, technological and other forces, most of which are beyond their control,” said Uwe E. Reinhardt, Ph.D, who chairs the Commission.  “In New Jersey, many hospitals are beyond strained – they’re in fiscal crisis.  Our data analysis shows just how poorly New Jersey hospitals are doing overall and how important it is to move forward with the Commission’s work.”

 Dr. Reinhardt is an internationally recognized health care economist and professor at Princeton University. The 12-member Commission also includes experts in medicine, nursing, hospital administration, community health, law, public health and health policy.

 “New Jersey is facing difficult decisions about our health care system and the most effective ways to spend limited taxpayer dollars,” Commissioner Jacobs said.  “Ultimately, the Commission’s work will help us make more informed decisions based on data and careful deliberation.”

New Jersey government is a major purchaser of hospital services, the report notes.  Taxpayers provide nearly one-quarter of all hospital revenue – or nearly $3.7 billion – through the Medicaid program, the Family Care affordable health insurance program, charity care and other hospital grants, and care for current and retired public employees.   

In making decisions about the state’s health care system, such as whether a hospital is essential to its area, policymakers must look at hospitals within their defined market areas, the report says.  Guided by the work of researchers at Dartmouth University, the Commission identified eight hospital market areas in New Jersey based on patient use patterns.

  To determine whether a hospital in an area is a candidate for state support, the commission proposed evaluating two factors – how financially viable the hospital is and how essential it is to maintaining community access.

Financial viability should be measured by looking at a hospital’s profitability, its capital structure and its liquidity or cash on hand.  How essential a hospital is should be determined by looking at its occupancy rates, its Medicaid and uninsured inpatients and emergency department visits, its trauma services designation and other measures.  Other issues, not so easily quantified, should also be considered – such as impact on travel time for hospital care or impact on particular racial and ethnic groups.

Hospitals that are more essential, but less financially viable could then be further examined for possible financial and other support from the state.  More essential hospitals that are in better financial condition could be monitored for possible signs of fiscal deterioration.

In preparing the interim report, the Commission considered testimony and papers from many sources, including hospital groups, payer groups, consumers and others.

The Commission will conduct three public hearings during the summer in different parts of the state in order to hear the public’s concerns.  Six Commission subcommittees will also meet over the summer to examine in depth issues such as information technology in health care delivery, regulatory and legal reform, and access and equity for the medically underserved, among others.

            For more information, please view the full report on the web at: www.nj.gov/health/rhc/documents/interim_report.pdf.