The University of Medicine and Dentistry of New Jersey could be forced to relinquish the reins of its teaching hospital in Newark to one of its competitors.
Either 490-bed Newark Beth Israel Medical Center or 299-bed Saint Michael's Medical Center, also in Newark, could be getting control of UMDNJ's University Hospital, according to the description of a feasibility study that mysteriously made its way into the state budget, which went into effect July 1.
In two short sentences, the budget dictates that the study consider the cost savings for the state if ownership of University Hospital were transferred to either Newark Beth Israel or Saint Michael's. The cost of the study will come out of a $9.5 million state appropriation for Cathedral Healthcare System, the five-hospital Catholic system that includes Saint Michael's.
One person who had little idea what was percolating until he saw the line item in the budget was Ronald Del Mauro, president and chief executive officer of 10-hospital Saint Barnabas Health Care System, the state's largest, which includes Newark Beth Israel. Del Mauro said he is taking a wait-and-see approach until the study is completed but added that he wouldn't make any move without the consent of Stuart Cook, M.D., president of UMDNJ.
"Right now I'm not in competition with any other facility," Del Mauro said.
Cathedral officials did not respond to several requests for an interview.
UMDNJ would not say whether it supported the idea of University Hospital's being taken over by Newark Beth Israel or Saint Michael's. The only thing Susan Preston, a UMDNJ spokeswoman, would say is: "The university is confident that the study will be conducted in a fair and open process and that University Hospital will fare very well in a comparison."
The feasibility study comes on the heels of another study state health officials released late last year that found New Jersey has far too many empty hospital beds. Short of wholesale closings, the report strongly suggested that the state find creative ways for underused hospitals to go gently into the night.
Some are wondering if the latest study, which has no set completion date, is the state's way of punishing an unruly hospital. Last February, UMDNJ filed a lawsuit against the state in state Appellate Court in Trenton because of a $9 million cut in charity-care funding this year.
University Hospital, with 446 beds, is a unique animal in the New Jersey healthcare landscape--a public hospital in private hospital's clothing.
Operated as the flagship hospital of UMDNJ-New Jersey Medical School, it receives no state appropriation, although its parent, the state-owned medical school, does. Hospital workers also partake in the state's employee benefit program.
With 75% of its patients uninsured or on Medicaid, the hospital takes the lion's share of state charity-care funding for private, not-for-profit hospitals. This fiscal year, the hospital has been promised $51.8 million of the $320 million pool for the state's uninsured. The remainder will be distributed among 46 hospitals.
Financial ills are a chronic condition for University Hospital. In 1999, it suffered an operating loss of $10.9 million on revenue of $316 million, according to university officials. Projected operating losses are $29 million and $31 million for the next two years.
Although few will argue the need to stem the losses, some question the practicality of merging a public, academic teaching hospital with a Catholic-owned hospital such as Saint Michael's.
"Since the state has issued a report that there are too many beds and too many hospitals in New Jersey, it certainly makes sense to study the issue of consolidation in Newark," said John Matuska, president and CEO of 406-bed Saint Peter's University Hospital in New Brunswick. "But any joint operating type of arrangement with a Catholic hospital would have to be structured in a way to meet the approval of the Vatican."