Without Funds, N.J. Hospitals Face Crisis

And almost everyone agrees that a key underlying problem is the lack of universal health insurance.

"We need to have universal health care -- we really, really do," said Plainfield Mayor Sharon Robinson-Briggs, who said she has been frantically seeking a buyer for Muhlenberg.

Some of the uninsured are new immigrants from Mexico and Central America who are moving into the town. But most are longtime residents, working-class families, black and white, who have lost their jobs and their health insurance as the regional economy has faltered.

The New Jersey Hospital Association estimates that about 15 percent of New Jersey's population, or about 1.3 million people, lack health insurance. By comparison, about 500,000 of Massachusetts's 6.5 million people were uninsured when that state instituted a universal health insurance plan under then-Gov. Mitt Romney (R).

The number of uninsured is expected to grow as more people lose their jobs because of the weak economy. "I think we'll be seeing more charity-care patients because of the downturn in the economy," Ryan said.

Charity-care reimbursements to New Jersey hospitals have never completely covered the costs of treating uninsured patients. And the amount given back to hospitals is determined by a complex formula that provides a higher reimbursement rate to those whose patient population contains a high proportion of uninsured people.

The wave of illegal immigration is another problem. Illegal immigrants by law cannot apply for charity care. But by law, they must also be treated at New Jersey hospitals, which cannot ask for proof of citizenship. "They get treated, but the hospital is just hoping somebody, someday will pay," said Mary Zink, a Plainfield art teacher who volunteers with the People's Organization for Progress, an activist group that has been leading protests against Muhlenberg's closing.

Further straining the system is that doctors' salaries are not reimbursed under the system.

Hospitals call that a formula for financial ruin.

The New Jersey Hospital Association said that 77 hospitals provided $1.3 billion in charity care, but got back just $716 million from the state. Over the past 15 years, the group said, hospitals have had to absorb $6 billion in losses on charity-care cases.

The economics have taken a toll. New Jersey had 112 acute-care hospitals 15 years ago. When Muhlenberg closes, there will be 76, half of which are operating in the red.

"If we were closing hospitals last year at record levels, imagine what's going to happen this year," Ryan said. "I believe we will see more closures. The patient will be able to get care -- but they will have to travel long distances to get it."

Jonathan M. Metsch, a clinical professor at Mt. Sinai Medical School and adjunct professor at the University of Medicine and Dentistry of New Jersey School of Public Health, has studied the issue, predicting that vendors soon will stop servicing bankrupt hospitals that cannot pay their bills on time, and more will be forced to close soon. "Bankruptcy trumps everything," he said, "and I think we're going to have a run of bankruptcies this summer."

Some state officials have said that New Jersey needs this period of consolidation -- that there were too many hospitals, and that some needed to close to make the system more rational and efficient.

But many of the closing hospitals have been in urban areas and towns with large concentrations of minority and poor residents. Two hospitals in Newark -- St. James and Columbus Hospital -- closed this year, angering local officials. Mayor Cory Booker (D) said he was "angry and anguished and frustrated" by the closings.

"The hospitals that close are generally in urban areas with minority people living there, and they don't count politically," said the Rev. James Colvin, who has also been active in trying to save Muhlenberg or find a new buyer.

"From a 'survival of the fittest' standpoint, it makes sense. We're saying it smacks of the final solution for urban centers. Someone else called it 'genocide lite.' "