The Ranks Grow Thinner

Using the commission's blueprint, the state is taking an almost Darwinian approach to monitoring hospitals, thinning the herd through blunt-force economics but stepping in with additional funding when a troubled hospital is deemed to provide critical services.

New Jersey has devised an "early warning system" to monitor acute-care hospitals, identify those with financial problems, and plan an intervention. "It's more about preserving access to services, looking at what percentage of a hospital's payer mix is uninsured or underinsured, and [determining whether] they are offering essential services like trauma. It's less based on the politics and more on the community needs," Howard says, adding that the system is the state's attempt to get out of "crisis management mode, where we would literally get a call on a Friday afternoon from a hospital CEO saying, ‘We can't make payroll on Monday. Can you bail us out?' Given the state's strained finances, we can't support nonessential hospitals."

Kerry McKean Kelly, vice president of communications for the New Jersey Hospital Association, says her organization is sympathetic to the state's fiscal straits. However, she says the state is picking some suggestions from the governor's commission report and ignoring others. Specifically, she says, NJHA wants the state to address low reimbursements and what she says is the unfair competitive advantages of ambulatory surgery centers, which have proliferated in the state in recent years.

McKean Kelly is not assuaged by the state's early-warning system. "These hospital closings aren't happening with the benefit of any state plan. Half are operating in the red, and we would not be surprised to see additional closures," she says. "What we are worried about is that we are going to rapidly reach a point where we have access-to-care issues in New Jersey, where the fat is gone and we are cutting into muscle and the healthcare infrastructure that remains will not be adequate to support the people of this state."

The contention that certain regions of the state are overbedded has its share of opposition, as well. Derek DeLia, an assistant professor at the Center for State Health Policy at Rutgers University in New Brunswick, NJ, points to the growing wait times at New Jersey hospital emergency rooms as one indication that the state is not overbedded.

"People say there is a lot of excess capacity in the system, so let's close a few hospitals. But people in the ERs will tell you they're pretty crowded, and the reason they are crowded is because the beds upstairs are occupied," DeLia says. "There is a lot of slippage between what happens on the ground and this idea that we can keep closing hospitals and it won't be a bad thing."