Vitale Bill To Ease Economic Pressures On Closing Hospitals Approved

TRENTON – A bill sponsored by Senate Health, Human Services and Senior Citizens Committee Chairman, Senator Joseph F. Vitale, which would make changes to the Hospital Asset Transformation Program to provide financial assistance to nonprofit hospitals in the process of closing was approved by the Committee today by a vote of 7-0, with 3 abstentions.

“New Jersey needs to do everything it can to ensure a healthy hospital network which meets the health care needs of its residents,” said Senator Vitale, D-Middlesex. “However, there are times when demand has dried up, or costs are too high, and the only sensible solution is to re-focus our limited State resources elsewhere. When closure is inevitable, the State has a responsibility to make that process as painless as possible for the care-providers and the community at large.”

The bill, S-2352, would clarify provisions under the “New Jersey Health Care Facilities Financing Authority Law,” which governs the hospital asset transformation program. Under the bill, hospitals would be authorized to apply for and receive transitional aid to pay off any outstanding bonds or existing debt service, regardless of the status of any third-party appeals into the closure of the hospital. The Department of Health recommended the change because the appeals process, in regards to hospital closure, can sometimes take up to two years, exhausting the hospital’s resources to provide a seamless transition to a more sustainable community health care model.

“The health of the community should not be held in limbo while the hospital closure appeals process is going on,” said Senator Vitale. “People within the community have every right to appeal the decision to close a local hospital. But out primary focus has to be on the continuation of health care services for the community in need.”

Senator Vitale noted that the appeal over the closure of Muhlenberg Regional Medical Center in Plainfield stood as the perfect example for the need to change the existing system. In 2007, operating losses at Muhlenberg had become unsustainable, and Muhlenberg’s parent company, Solaris Health System, applied with the Department of Health for a Certificate of Need to close the Medical Center, so as not to jeopardize care at Solaris’s other affiliates. Muhlenberg’s Certificate of Need was approved and the hospital closed its doors to inpatients on August 13.

However, more than a month after Muhlenberg closed acute care services, a third-party group representing the City of Plainfield, People’s Organization for Progress, and the Save Muhlenberg group filed an appeal. According to Senator Vitale, because the appeals process is ongoing, Muhlenberg cannot access financial assistance intended for closing hospitals, and as a result, safety net programs at Muhlenberg, and the financial integrity of Solaris’s other affiliates, may now be in jeopardy.

“Regardless of your opinion on whether or not Muhlenberg should be closed, New Jersey needs to ensure that the financial insolvency that lead to the hospital’s problems doesn’t spread to other health care affiliates under Solaris,” said Senator Vitale. “We need to do what we can to isolate the problem, and ensure that people in the community served by a closing hospital still have access to quality health care. This bill would act as a needed shut-off valve to protect the integrity of the rest of the health care system when a hospital begins the process of closing its doors to the public.”

The bill now heads to the full Senate for consideration.

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