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Lawmakers Want Emergency Funds for Struggling Hospital

Sen. Richard Codey spearheads effort to stave off possible closure of East Orange General Hospital with $7.5M grant for behavioral health program

East Orange General Hospital
Credit: www.evh.org
East Orange General Hospital

Among the last-minute items on the agenda for state lawmakers before their summer break is an emergency measure to invest $7.5 million in East Orange General Hospital. Some fear the economically struggling Essex County facility is at imminent risk of closing.

The legislation — technically a supplement to the fiscal year 2020 budget bill, which has yet to be signed into law — would create a unique grant program for the hospital under the Department of Health. The proposal is scheduled for a final vote in both the Senate and Assembly today, less than two weeks after it was introduced by lawmakers who represent the community or towns nearby.

As amended by the Senate last week, the measure would require the hospital to work with the DOH on a plan to expand its existing behavioral health program for adolescents and adults. If the facility met certain benchmarks, the state would provide funding of $7.5 million in total in monthly installments; the terms of the grant would need to be developed.

The bill also calls for the DOH to include provisions requiring the hospital to repay any public funds it receives through the grant if it declares bankruptcy or ceases operations. The New Jersey Health Care Facilities Financing Authority and Treasury department officials would also play an oversight role, according to the proposal.

Prospect Medical Holdings, a for-profit company based in California, bought the bankrupt hospital three years ago and there are growing concerns the company is looking to get rid of the facility, according to Sen. Richard Codey (D-Essex), who championed the funding proposal. The hospital appears to be operating on a thin financial margin, according to financial reports. Patients occupy, on average, less than 100 of its 166 available beds.

Loss ‘would be devastating’

“For that community to lose a hospital would be devastating,” Codey said Wednesday, noting its closure would cut access to care, force people out of work, and reduce economic activity in the surrounding neighborhood. “We think it can stay open,” he added.

Richard Codey
Credit: NJTV News
Sen. Richard Codey (D-Essex)

His bill (S-3897) is essentially an attempt to buy some time, Codey explained, in hopes that a potential buyer will emerge — hopefully a local, not-for-profit healthcare system that understands the community’s needs and could help the hospital transition into a more profitable model. Expanding its behavioral health capacity makes sense, Codey noted, given the growing need for mental health and addiction services — an issue he has championed for years.

The acute-care facility is also slated to collect more than $4.4 million through the state’s charity-care program in FY2020, which starts in July, a big boost from the less than $1.2 million it got under the current budget. Charity care is determined by a formula that takes into account a hospital’s costs for treating uninsured patients and other revenue considerations.

The FY2020 plan adopted by lawmakers also adds another $1 million for the East Orange hospital as part of the state health department’s accounts, for reasons that aren’t detailed in the budget document. (Most state funding for hospitals flows through charity care or other formula-based programs, so individual budget lines with additional dollars are unusual.)

The East Orange hospital, which dates back more than a century, already has an established behavioral health program for adults and teens. It includes short-term inpatient services, with 37 beds, a partial hospitalization program that provides all-day treatment for people who are living elsewhere, and outpatient treatment options. The staff is able to treat depression, schizophrenia and related disorders, substance abuse and more, according to the website.

Declining numbers

“We thank Senator Codey and the Essex County legislative delegation for their ongoing support of East Orange General Hospital,” said Cathy Toscano, the hospital’s director of marketing and public relations. “We look forward to expanding our mental health and addiction services to better address the opioid crisis in Essex County.”

The hospital has struggled economically, despite investment from Prospect Medical, which is now looking to get out of its five-year commitment in East Orange, as well as several other hospitals in the region, according to ROI-NJ. Emergency-room visits, same-day surgeries, and the average number of days that patients were admitted all declined when compared to last year, hospital financial reports show.

Toscano declined to comment on the possible closure or potential for sale. More than two dozen hospitals in New Jersey have closed since 1992 — several of them based in Essex County — and at least eight, including East Orange, have declared bankruptcy, according to industry leaders.

In East Orange, the facility may be struggling to provide optimal patient care. A national hospital safety grade report released in November by the Leapfrog Group, a nonprofit watchdog, gave East Orange an ‘F’ — the state’s only failing grade — for its performance on certain acute-care metrics. (Leapfrog does not measure behavioral health outcomes.)

The DOH declined to comment on the possible program expansion at East Orange, as is its policy when pending legislation is involved. Gov. Phil Murphy’s office also declined to address the matter, but Codey said the governor — who has remained close to Codey and his district colleagues, despite the growing tension between Murphy and most other Democratic lawmakers — is supportive of the plan. In addition, Murphy’s Lt. Governor Sheila Oliver is a longtime resident of East Orange and a former member of the hospital’s board of trustees.

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