A coalition of urban hospitals in New Jersey has retained a Newark, N.J., law firm to prepare for a possible legal battle over charity-care funding.
As a last resort, the New Jersey Hospital Alliance, which represents 22 urban hospitals, has retained Sills Cummis Zuckerman Radin Tischman Epstein & Gross to do some legwork on hospitals' behalf.
However, the alliance continues to seek a settlement with officials of the New Jersey Department of Health, the agency whose audit of hospitals' 1993 charity-care services served as the basis for providing subsidies to hospitals. Hospitals believe the distribution method is flawed and unfair (July 18, p. 10).
"We're trying to negotiate to a point where no litigation would be necessary," said Sister Jane Frances Brady, president of the alliance and chief executive officer of St. Joseph's Hospital and Medical Center in Paterson.
The $315 million distributed by the state's Essential Health Services Commission to cover charity-care costs is "wholly inadequate," Sister Brady said. Under state law, the commission is allowed to provide as much as $450 million in subsidies. It chose the lower amount because that's all that hospitals were able to document, according to the health department's audit.
Hospitals charge that the process for distributing charity-care relief is unduly stringent. To qualify for subsidies, hospitals must collect seven pieces of documentation from every charity-care patient. Urban hospitals said they've been shortchanged because they haven't been able to obtain the required documentation from patients who are homeless or illegal immigrants.
Acknowledging hospitals' dilemma, the Essential Health Services Commission is seeking to distribute another $68 million to cover charity-care expenses that hospitals incurred but were unable to fully document.