10/6/2006

Statement of Brett Harwood, Chair, and Rosemary McFadden, Vice Chair, LibertyHealth System Board of Trustees

Contact Alan C. Marcus/The Marcus Group: 201-902-9000

The Board of Trustees of LibertyHealth System retained Wellspring Partners LTD in June in recognition of the daunting fiscal challenges Jersey City Medical Center continues to face. Wellspring is a nationally recognized organization which has developed and implemented performance improvement plans for some 150 hospitals. They have advised the Board that the challenges Jersey City Medical Center faces are not unlike those faced by urban hospitals throughout the region and the nation. They have also indicated that never has a preliminary draft of a final report prepared by their firm been released or leaked to the media.

A final report and implementation plan is being prepared by Wellspring and we expect to receive it in approximately one week. An article in today's Star-Ledger is apparently based on an early draft of the report that reflects worst case scenarios based on current conditions. It does not necessarily reflect JCMC’s true status or its anticipated condition after completion of the fiscal remediation already underway.

The Board continues to work in close coordination and partnership with Commissioner Fred Jacobs, MD, and his staff at the New Jersey Department of Health and Senior Services, representatives of United States Department of Housing and Urban Development and the New Jersey Health Care Facilities Financing Authority. They share the Board's commitment to make the adjustments necessary to assure short- and long-term fiscal stability at JCMC.

Quality of health care delivery is not in question at JCMC. However, the task of putting hospitals like JCMC on stable financial footings is daunting.

With 80 percent of its patients requiring government sponsored subsidies (Medicaid, charity care, Medicaid HMO and Medicare), JCMC has the highest percentage of government-funded health care in New Jersey.

Jersey City Medical Center has provided approximately $87 million in so-called charity care annually and have been reimbursed only $52 million. The state has assisted several New Jersey hospitals, including Jersey City Medical Center, over the past two years to deal with these inequities. JCMC received additional special relief in the amount of $8 million in the state budget for fiscal year 2006 and $7.2 million in the state budget for fiscal year 2007 in recognition of the population we serve. But JCMC’s charity care shortfall this year alone totals $27 million. The state recognizes this shortfall and the New Jersey Hospital Association can confirm it. Only University Hospital in Newark has endured that kind of shortfall from charity reimbursement over the last several years.

The special appropriation included in the state budget for fiscal year 2007 recognized Jersey City Medical Center's unique charity care situation. The state was not dumping $3 million per month into a failing hospital as irresponsible critics might suggest. The state was assisting an underserved population and that population's principal source of health care.

In addition to charity care, Jersey City Medical Center also provides approximately $80 million in care to Medicaid patients. The hospital only receives 70 percent reimbursement of these costs.

Hospitals like Jersey City Medical Center will continue to struggle financially until state and federal governments promulgate an equitable system of reimbursement for charity care and Medicaid. Unlike most suburban hospitals, urban hospitals cannot balance these shortfalls with patients covered by private insurance.

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