Op-Ed: Cycle of Litigation Between Towns and Nonprofit Hospitals Must End

Cathleen Bennett | January 7, 2020 | Opinion
Legislation to create a community contribution fee that nonprofit hospitals would pay to their host municipalities would be a win-win
Cathleen Bennett

A vacant city lot in Paterson will soon be replaced with an apartment complex containing wraparound support services for those with chronic health needs, thanks to a multimillion dollar commitment from St. Joseph’s Health.

The communities served by RWJBarnabas Health are boosted by the health system’s Hire Local, Buy Local, Invest Local initiative, which builds up neighborhoods with jobs and local investments.

New Jersey’s vaping crisis is the focus of a $1 million commitment from Hackensack Meridian Health, including grants for schools and community groups for vaping device buyback programs.

And across South Jersey, Cooper University Health Care and Inspira Health are leading local collaboratives to end homelessness and create housing stability.

Those are but a small sampling of the significant investments that New Jersey’s nonprofit hospitals make in the health and well-being of their local communities. Some $2.8 billion in “community benefit” programming is documented by New Jersey hospitals each year, and I know that only begins to scratch the surface of the investments they’re making in housing, nutrition, education, transportation and other social determinants of health.

Stream of lawsuits

And yet, our nonprofit hospitals remain the target of an unending stream of lawsuits pitting them against their local municipalities. In 2015, a single case in New Jersey tax court, Morristown Memorial Hospital v. Town of Morristown, opened the floodgates with more than 40 lawsuits challenging the property tax exemption of nonprofit hospitals. I hate to imagine the amount of money our towns and local hospitals have paid to litigate these cases the last four years, but I do know that money and energy would be much better spent on towns and hospitals working together to improve health in their communities.

That’s why it’s high time that our state Legislature and Gov. Murphy enact A-4013/S-2642, which creates a community contribution fee of $2.50 per bed per day to be paid by nonprofit hospitals to their host municipalities. The money would be used to offset the municipal services the town provides to our hospitals. It’s a win-win to preserve nonprofit health care in our communities, while providing financial support to our municipalities.

New Jersey has a long-standing tradition of nonprofit health care. All of New Jersey’s hospitals — for-profit and nonprofit alike — provide charity care for the poor and uninsured and other community support. The distinction for nonprofit hospitals is that they are governed by local boards, rather than shareholders. All of their margins are reinvested into health care in their communities. That’s why it’s essential that we adopt a statewide solution to end the litigation and fiscal uncertainty for our hospitals and our towns.

A-4013/S-2642, sponsored by Assembly Speaker Craig Coughlin, Senate President Steve Sweeney, and Sens. Joseph Cryan and Paul Sarlo, allows nonprofit hospitals and municipalities to move forward in pursuit of healthier communities. It’s sound public policy that creates predictability, fairness and consistency that cannot be accomplished through the costly and counterproductive cycle of litigation.

New Jersey hospitals are responsible for roughly $19 billion in economic activity across our state, including more than 150,000 jobs. In many locations, the local hospital is the area’s largest employer. Our hospitals and our towns share a common commitment to the health of their communities. They need each other to accomplish wellness for their residents. Quite frankly, it confounds me that we can’t reach common ground for a statewide solution that puts new dollars in municipal budgets while allowing nonprofit hospitals to continue to invest in good health in their communities.

It’s time to create a constructive statewide solution and come together in pursuit of good health for our communities.