Capital Health hopes for greater charity care funding this year

Statement by Al Maghazehe, PhD, FACHE, President & CEO, Capital Health:

As our elected officials in Washington debate the future of the Affordable Care Act, an issue that could have sweeping implications for New Jersey’s healthcare community, our Governor and his Cabinet are on the precipice of making another important decision that also has significant ramifications for our state’s hospitals. That decision is two-fold: first, how much money from the State Budget to use for Charity Care, and second, how to distribute that money among the 72 hospitals in New Jersey. Given the immense uncertainty at the federal level, and the potential damage ACA repeal could do to hospital finances, especially urban safety net hospitals, we are hopeful that Governor Christie chooses to maintain funding levels for Charity Care and again provides full funding for our safety nets.

Charity Care is a state program that provides free or reduced cost care for New Jersey residents who have no other form of insurance. The Charity Care program, which has been a key part of New Jersey’s health system since the early 1990s, has been a lifeline for millions of New Jerseyans over the years who have lost their jobs or otherwise fallen off insurance rolls because of hard times.

As part of the State Budget every year, the Governor, with advice from the Commissioner of Health, Commissioner of Human Services, and Treasurer, makes an allocation to help cover the costs for hospitals that provide lots of care through the Charity Care program. Thanks to the decision to expand Medicaid, Charity Care has been decreasing since 2014, but it is still a vital part of the healthcare delivery system – especially for our state’s safety net hospitals where the majority of Medicaid and Charity Care patients receive their care. Thanks to Governor Christie’s leadership, last year safety net hospitals were recognized for the vital roles they play in their communities and were prioritized in the funding distribution. . That decision protected access for millions of New Jerseyans.

New Jersey’s safety net hospitals, which represent only 30 percent of the 72 acute care hospitals in New Jersey, deliver over 60 percent of the Charity Care. In fact, the Institute of Medicine defines “safety net” as a healthcare provider that maintains an open door policy for all patients, regardless of their ability to pay, and takes care of a substantial share of low-income or otherwise vulnerable patients. If hospitals cannot demonstrate through real action and real data that they provide substantial service to low-income and vulnerable patients, then they cannot be considered a safety net.

As the president and CEO of Capital Health, a regional non-profit health system with two acute care hospitals and a network of primary care and specialty care throughout Mercer County, I have a unique vantage point. Our health system began in Trenton but expanded to Hopewell in 2011 to meet a growing demand from the suburbs. But even with a new hospital in Hopewell, we continue to prioritize our service to the city where we were founded. In 2015, Capital Health Regional Medical Center (formerly Helene Fuld Medical Center) provided nearly $20 million in Charity Care. When we combine our charity care and our service from Medicaid, 36 percent of the care at Regional is provided to patients without insurance or those who are in poverty. By contrast, at Hopewell, only half this amount (18 percent) of our care is to low-income patients.

One of the key challenges that Regional faces – along with other safety nets – is that Medicaid pays doctors and hospitals rates below the cost of providing care. That means in practice that in the best case scenario, our hospital will be paid 30 percent below the cost of care on 36 percent of our overall patient population.  At our Hopewell campus, where Medicaid and Charity Care only represent 18 percent of our overall revenue, it is much easier to absorb those losses without risking any reduction of services or employment.

That’s why Charity Care is so critical for Regional and all of New Jersey’s safety net hospitals.  Without adequate reimbursement through Charity Care for the free or reduced cost care they provide, they will be faced with tough decisions that could impact the communities they serve, with jobs and essential access to care at stake.

That’s why at Capital Health we are vigilant in pursuing the funding needs of Regional in Trenton. Our continued vitality in Trenton is essential for the health interests of our capital city.  We believe Charity Care funds should be targeted to hospitals that need it most. Charity care dollars should go to hospitals that demonstrate through real data and action that they are our healthcare safety net and need to be the priority.