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Health Commissioner Sees Possible New Direction for Newark-Area Healthcare

O’Dowd says shifting state funds could spur expansion of community outpatient services and development of academic medical center

Mary O'Dowd
State Health Commissioner Mary E. O’Dowd

Redirecting state subsidies to Newark-area hospital could result in improved community-based outpatient services while also providing funding for a new academic medical center rivaling those in New York and Philadelphia.

That was a possibility laid out by state Health Commissioner Mary E. O’Dowd in testimony before the state Assembly’s budget committee yesterday.

O’Dowd’s scenario for the future was similar to what was recommended by consulting firm Navigant in its controversial report on Newark-area healthcare.

The Navigant report recommended turning three full-service, acute-care hospitals – Newark Beth Israel Medical Center, East Orange General Hospital and Saint Michael’s Medical Center – into emergency care and outpatient centers, while expanding facilities for state-owned University Hospital.

Saint Michael’s Medical Center has released two reports sharply criticizing the Navigant recommendations, expressing concerns about the effect on hospital finances and local access to healthcare, while also questioning the accuracy of Navigant’s data.

While O’Dowd said she couldn’t address state decisions regarding specific institutions, she said improving outpatient care in the city could reduce the number of emergency-department visits.

“I think those things are possible for the city but much of that is in the hands of the local leadership and the institutional leadership,” O’Dowd said.

Newark Beth Israel, University, and Saint Michael’s had the three worst emergency-room wait times in the state, according to federal data.

Most of the local reaction to the Navigant report has been harshly critical, focusing on the potential loss of acute-care hospital jobs, with local politicians supporting the pending sale of Saint Michael’s to California-based Prime Healthcare.

O’Dowd and acting Attorney General John Jay Hoffman are required to review and decide whether to approve the sale of Saint Michael’s, a process that’s already taken more than two years.

Assemblywoman Eliana Pintor Marin (D-Essex), who represents part of Newark, called on the state to quickly complete the review of the sale.

O’Dowd noted that the state has a strong financial interest in Newark hospitals. It owns University Hospital, and it’s potentially responsible for $232 million in outstanding bonds for Saint Michael’s.

This year alone, the combined state subsidy for five Newark-area hospitals, which also include Clara Maas Medical Center in Belleville, will total $362 million, including charity care; subsidies for mental-health care; a new program targeting care for specific diseases; graduate medical education; and University Hospital funding, fringe benefits and debt service. In addition, state funding for Medicaid payments to the hospitals is expected to be $378.7 million, for a total of $740.7 million in state funding.

“I think what it’s suggesting as a whole is a re-evaluation of how we invest” in Newark hospitals, O’Dowd said.

Financing for nonprofit hospital construction and renovation is provided by the New Jersey Health Care Facilities Financing Authority. The authority commissioned the Navigant report, which cost $849,000.

“It’s helpful for them to have an overarching understanding of the dynamics of the healthcare system” in Newark, O’Dowd said of the authority.

Pintor Marin, the assemblywoman, questioned whether the ongoing review of Saint Michael’s sale could imperil the hospital.

O’Dowd responded that Trinity, the healthcare system that currently owns the hospital, “certainly” has the funds to operate the facility “if they choose to do so, but that would be a financial decision on their part.”

O’Dowd said it’s her hope and understanding that the Navigant report will be used by state Department of Health officials in their review of the proposed Saint Michael’s sale. She noted that the state has a legal responsibility to consider how the sale would affect surrounding hospitals.

“One of the striking things that I come away with after looking at the report is the need for more outpatient and community-based services and potentially less of a need for inpatient services -- and that is not inconsistent with national trends,” she said.

Pintor Marin added that if another hospital closes, it’s essential to maintain services like emergency care.

“It can take you over 30 minutes if you have an emergency” to travel from one side of Newark to the other, she said.

She also noted the need for hospital beds to deal with emergency situations like this week’s Amtrak train derailment near Philadelphia.

O’Dowd said that the state has ensured that emergency services were still available, alongside outpatient services, at other acute-care hospitals that have closed.

And while much of the conversation in Newark since the Navigant report was released has focused on politicians and residents rallying around the existing hospitals, O’Dowd said the report provided an outside perspective on possibilities for the city.

“I do hope that it adds valuable dialogue to the discussion, so that Newark can really achieve the prominence that it should relative to academic medicine and community-based public-health medicine,” she said.

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