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Without Funds, N.J. Hospitals Face Crisis
A Community Loses Main Health Center

By Keith B. Richburg
Washington Post Staff Writer
Monday, July 7, 2008

PLAINFIELD, N.J. -- If the country is facing a nationwide health-care crisis, then the condition in New Jersey can be described as gravely critical.

The state has an estimated 1.3 million people without health insurance who cannot pay a doctor or a hospital bill. New Jersey law requires that hospitals treat anyone who walks through their doors, and then get reimbursed later by the state. But the state's looming budget shortfall has forced it to cut back on the reimbursements, leaving hospitals to pick up the tab. And hospitals, in turn, are going broke: Six have closed in the past 18 months, and half of those remaining are operating in the red.

As the economy falters, the number of uninsured is likely to grow, and so will the burden on hospitals. And with more hospitals expected to shut their doors, New Jersey faces a nasty culmination of health-care crises.

The situation has come to a head in this city of 48,000 people -- majority black, largely poor and with many new immigrants moving in. The city's hospital of 130 years, Muhlenberg Regional Medical Center, is slated to become the latest casualty of this faltering system, closing its acute-care facility later this year. The obstetrics and pediatrics wards have already shut, and equipment is being packed up and wheeled out.

The hospital says it lost $16.8 million last year and will lose another $18 million in 2008, leaving its owners little choice but to close it down. But news of this latest closure has hit hard for those in Plainfield and surrounding towns who have come to rely on Muhlenberg. Many are elderly, some have chronic conditions, and they will now have to travel as far as 10 miles away for care.

"I don't think people know what will happen if Muhlenberg closes -- there will be a lot of deaths," said Jeanne Smith, whose husband, Thomas Smith, is paraplegic, needs dialysis and suffers from a variety of illnesses. Thomas Smith, 77, has been in and out of Muhlenberg a half-dozen times in the past year. "My husband probably would have died if Muhlenberg wasn't five minutes away," she said.

"What are people supposed to do?" asked Marion Trabelsi, a retired French and Spanish teacher who was treated at Muhlenberg for a heart attack and who relied on the hospital when she was unemployed and had no insurance. She suffers from high blood pressure and high cholesterol and says the hospital's closure "is definitely a death sentence for me," adding: "I could have a heart attack at any time."

Although everyone agrees New Jersey's health-care system is a mess, no one is quite certain where to place blame. But there is plenty of finger-pointing in all directions.

Muhlenberg, owned by Solaris Health System, blames the huge growth in uninsured patients, the underfunding of Medicaid and Medicare and the state's budget cuts for charity care. "The healthcare system in New Jersey is clearly broken," Muhlenberg says on its Web site. "And hospitals that serve a high percentage of poor and uninsured cannot survive under these pressures."

Some in the community have launched protests over the closure, blaming Solaris for wanting to close a hospital in a poor, heavily minority city while keeping open another hospital in a more affluent town, Edison, where there are fewer charity-care patients.

Others blame the state government for not fully reimbursing hospitals like Muhlenberg that provide care to the poor and the uninsured. Gov. Jon S. Corzine (D) on June 30 signed a $32.9 billion state budget for 2009 that includes $605 million for charity care, a cut of $111 million from last year. In speeches, Corzine has called the cuts to charity care "heartbreaking."

Some health-care professionals blame New Jersey's problems on the proliferation in recent years of ambulatory care centers -- outpatient facilities that have lured many insured patients away from hospitals that were once the main care providers. "They take away all of our paying patients," said Betsy Ryan, president and chief executive of the New Jersey Hospital Association.

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.' "

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