Hospital’s Plight Spurs Advocates of Greater Fiscal Oversight

Andrew Kitchenman | April 2, 2013 | Health Care
Increase in number of for-profits adds urgency to calls for more financial transparency

Credit: Amanda Brown
Sen. Loretta Weinberg
Advocates of requiring more financial transparency by for-profit hospitals say tax liens placed on Meadowlands Hospital Medical Center by the Internal Revenue Service are proving their point.

Senate Majority Leader Loretta Weinberg (D-Bergen) said the state must learn more about the financial health of hospitals like Meadowlands, whose owner — MHA LLC — faces $4.46 million in federal tax liens after failing to pay unemployment and payroll taxes to the IRS.

A bill sponsored by Weinberg last year, S-782, would have required for-profits to file the same financial information as nonprofit hospitals. The bill was conditionally vetoed by Gov. Chris Christie.

“Anybody who’s against transparency, you have to be suspicious, your antenna has to go up,” Weinberg said. “What is it you don’t want the public to know?”

Christie said in his conditional veto statement that the state must be careful to avoid “over-reaching into the business arena,” while still increasing transparency about hospital finances.

Christie instead recommended that state Health Commissioner Mary E. O’Dowd review existing financial reporting requirements and recommend how to make more information available. Officials are conducting that review, according to a Department of Health spokeswoman.

The number of for-profit hospitals has been steadily rising since the first two for-profits opened in 2002. Currently, there are seven for-profits operating in the state, along with one set to open this year (HackensackUMC North at Pascack Valley) and two whose sales are pending (Saint Michael’s in Newark and St. Mary’s in Passaic).

That growth in the number of for-profit hospitals is what is causing increasing alarm on the part of legislators and the Health Professionals and Allied Employees (HPAE) union.

The liens on the Meadowlands were brought to light on March 28 by the HPAE, which represents that hospital’s nurses. The union also questioned the implications of a recent $18 million sale of the hospital’s land, with the hospital leasing the property from the new owner, Rosdev of Montreal, Canada.

Union officials, Weinberg and Sen. Joseph F. Vitale (D-Middlesex) all called on the state to appoint a monitor to oversee the hospital’s finances, a move that the state is considering.

Weinberg said the murkiness of Meadowlands’ finances calls into question the broader issue of for-profit hospital finances and the state’s oversight of them. Vitale is planning a hearing in May to examine for-profit hospitals.

Weinberg said it appears that some hospital conversions to for-profit status primarily serve as real-estate deals, profiting the new owners while leaving the hospitals at greater risk of closure.

“I have a lot of questions about how healthcare is delivered in a for-profit,” Weinberg said. “They drop insurance carriers, they drop services.”

Some for-profit operators drop out of the networks of insurance companies, allowing them to charge more for services. In addition, some nonprofit hospitals have raised concerns that for-profits have increased pressure on them by dropping less-profitable services.

HPAE policy director Jeanne Otersen said state regulation of hospitals hasn’t kept pace with the rapid increase in for-profit operators.

“This is exactly why we needed legislation to require transparency for for-profit hospitals,” she said of Meadowlands’ liens.

Meadowlands Hospital Medical Center spokesman Bill Maer said the liens “have been paid, or are scheduled to be paid imminently.”

He said the focus should be on the hospital’s “record of turning around,” describing the union’s allegations as “another unbridled and recklessly false attack.”

The hospital and union also disagree on which measures of patient satisfaction are more accurate, with Maer pointing to a set of scores that are among the highest in the region and Otersen citing below-average scores.

The Department of Health has taken the union’s concerns “very seriously,” a spokesman said. It is having ongoing discussions with Meadowlands representatives and has arranged for mediation between Meadowlands and the union this week.

Both Weinberg and Otersen said that the issue shouldn’t be framed as a labor dispute, since the liens represent clear evidence of problems with hospital finances, which may reflect underlying problems that could undermine the hospital’s ability to serve the public.

“Obviously the liens are not a false scenario,” Weinberg said. “They are what they are. They are factual.”

Prime Healthcare of California’s proposed purchase of Saint Michael’s and St. Mary’s has added more urgency to having the state take steps to increase regulation of for-profit hospitals.

“If we don’t do this now, I think we lose our capacity to protect not only the patients, who are served by these hospitals, but the taxpayers,” who support all hospitals in the state through various government healthcare programs including charity care, Otersen said.

The union has raised concerns about Prime Healthcare.

Weinberg questioned when the Department of Health recommendations for increasing financial reporting would be available. Department of Health spokeswoman Donna Leusner said the review has begun.

“We have initiated a conversation with hospitals,” she said. “We’ve been meeting with advocates and labor unions. We believe it’s important to hear from all sides.”