Fix funding formula for hospitals

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There are no rewards for stating the obvious; still, Department of Health and Senior Services Commissioner Fred M. Jacobs deserves credit for refusing to pull punches in his appearance before the Assembly Budget Committee last week, calling the state’s health-care system what it is: “broken.” Jacobs said the state has reached a point where no one — neither patients, doctors, hospitals nor the government — is happy.

There are crises everywhere: doctors are fleeing the state over the high cost of malpractice insurance; hospitals are bleeding money; employers’ health insurance costs are skyrocketing and fewer are able to offer insurance to their workers.

No Assembly committee can solve all these problems simply by talking to a member of the governor’s cabinet. Indeed, despite the fact that several committees are looking at the health-care crisis and preparing to offer suggestions that may include everything from universal coverage to closing down some of the state’s hospitals, it seems nearly impossible to imagine, given the grim budget, that there will be either the money or the political will for sweeping change. But the budget committee can at least set some standards.

The state requires hospitals to treat every patient that walks through their doors; in return, it is supposed to reimburse them for the costs incurred by those who are unable to pay for their care. Charity care is given out through a formula, a formula that has pleased some and dismayed others, mostly suburban hospitals. So quietly, over the last several years, the state has altered the picture. It has has failed to increase the amount it provides for charity care; hospitals say it now reimburses them for only about half of the $1 billion in charity care they provide annually.

Instead, state lawmakers have relied more and more heavily on discretionary grants to hospitals, grants that are not tied to any obvious formula or demonstrated need, but are handed out at the close of the budget process, away from public scrutiny.

According to a recently published report, virtually all of the more than $110 million awarded last year went to the 60 percent of hospitals that had hired lobbyists to plead their cases. Huge amounts went to hospitals with big lobbying bills — and high profiles. In his appearance before the budget panel, Jacobs asked that the Legislature come up with some way of gauging whether that money was well spent. He said his office could not audit the hospitals without additional help; but the budget committee chairman, Assemblyman Louis D. Greenwald, D-Camden, did not seem to think the oversight should fall to the Legislature. That is nonsense.

First of all, the state should not rely on discretionary funding; if the state can devise formulas, though admittedly imperfect, for charity care and for school funding, it certainly can devise a method for granting additional aid to hospitals — even supposing that a formula other than charity care is needed.

There are certainly times when a specific hospital may warrant funding above and beyond what a formula can provide it. But it seems far better to err on the side of too little discretion rather than too much. There is nothing fair about a standardless system guided by relationships, money and chance. The hospitals, and the taxpayers, deserve better.
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