Lawmakers Pass Compromise Bill to Promote Hospital Financial Transparency

Andrew Kitchenman | January 14, 2014 | Health Care
Legislature, union agree to Christie veto in lieu of far-reaching disclosure requirements

Senate Democratic Majority Leader Loretta Weinberg.
Financial information about New Jersey’s hospitals may become more accessible to the public, but the changes won’t be as far-reaching as some advocates for fiscal transparency had been demanding.

The Legislature acquiesced yesterday to Gov. Chris Christie’s demand that it not fully impose transparency requirements that would have the most effect on for-profit hospitals, and instead agreed to give the state Department of Health time to study the issue.

The vote came more than 16 months after Christie issued a conditional veto of the New Jersey Hospital Disclosure and Public Resource Protect Act, citing the potential for “over-reaching into the business arena” by the state

The original measure, S-782, would have required all hospitals to submit to the state all of the financial information that nonprofit hospitals must provide to the Internal Revenue Service.

For nonprofits, the bill would have made their IRS forms – which are already available on sites like — available on the state Department of Health website for the first time.

But for-profit hospitals would have seen a much more substantial increase in their reporting requirements under the measure, since they currently don’t have to make as much information public as is required for nonprofits. The information also would have been posted on the state Department of Health website.

Instead, the conditional veto by Christie would require state Health Commissioner Mary E. O’Dowd to complete a study of hospital finances within six months of the bill being enacted. O’Dowd would report her findings and make fiscal-disclosure recommendations for all healthcare facilities that receive state subsidies regarding their IRS and federal Securities and Exchange Commission filings, as well their audited financial statements.

“This is an issue that calls for a holistic response and potentially significant reform,” Christie wrote in his conditional veto message.

Bill sponsor Sen. Loretta Weinberg (D-Bergen) said O’Dowd assured her that she would seek input from all healthcare stakeholders, “particularly those people who represent the healthcare workers in these institutions, who know them best.”

Weinberg said her goal was to make sure hospitals that receive state support are held accountable.

“Since most New Jersey hospitals operate using public funds, we will be taking a step forward today to increase accountability of how these hospitals use taxpayer dollars,” Weinberg said in a statement.

Some discussions have already occurred since Christie issued the conditional veto.

New Jersey Hospital Association spokeswoman Kerry McKean Kelly said association officials have been working with Department of Health officials and other policymakers on a plan “for appropriate reporting for all hospitals.”

She said the NJHA was concerned that the original bill was burdensome and duplicated existing reporting requirements. The group instead supported a compromise that would strike “the right balance between transparency and bureaucracy,” which was reflected in the conditional veto.

One of the most prominent organizations supporting the bill is the Health Professionals and Allied Employees union, which represents nurses and others working at hospitals in the state. Union officials have sparred with some for-profit hospital operators and have argued that more information about their finances must be made available to the public, citing among other reasons that the companies operate facilities that have received public funding.

“We believe there should be no difference between what is required for the for-profits and nonprofits as far as accountability and transparency,” said Jeanne Otersen, HPAE public policy director.

Otersen said the union would work as a part of a coalition of community groups and health advocates to ask O’Dowd to recommend keeping all of the reporting requirements included in the original bill.

“This would not have been our first option,” said Otersen, adding that since the Legislature must work within the framework of Christie’s veto, “I think we will shape this to be the best it can be.”

Otersen added that it’s not enough for state officials to talk to hospital officials about the issue. She said community representatives, elected officials, healthcare workers and healthcare advocates must be included.

“Private conversations with the hospital association frankly don’t cut it,” she said. “I would hope that the CV would promote a more open process.”

Sen. Joseph F. Vitale (D-Middlesex) reiterated his disappointment that Christie didn’t sign the original bill. He said the Senate Health, Human Services and Senior Citizens Committee that he chairs is at a disadvantage when it can’t access information on for-profits’ financial health.

For-profit hospitals “provide the same services as a nonprofit hospital, and their financial well-being is as important to the patients and taxpayers and the people in the community as nonprofits,” Vitale said. “They shouldn’t treated differently, they should be treated exactly the same.”

Weinberg revitalized her push for increased reporting earlier this year, after the IRS placed $4.46 million in tax liens on Meadowlands Hospital Medical Center owner MHA LLC for failing to pay unemployment and payroll taxes.