Misaligned incentives and interests between physicians and hospitals were identified as one of the major causes of the poor financial health of New Jersey hospitals in a just released report by a commission charged with finding a way to allocate limited public funds to an excessively needy hospital system.
In a scathing indictment of the nations schizophrenic health system and short of creating a hit list of hospitals, the New Jersey Commission on Rationalizing Healthcare Resources provided a framework for separating the non-essential, financially-distressed hospitals that should be shut down from the essential, financially-distressed hospitals deemed worthy of state financial support.
The commission, headed by Princeton healthcare economist Uwe Reinhardt, said its most important conclusion to emerge from its year-long study on the financial health of New Jerseys healthcare system is that New Jersey hospitals are truly in poor financial health. Besides physician and hospital misalignment, lack of universal coverage, underpayment by public payers, and lack of transparency of performance or cost were among the biggest culprits for hospitals sickly balance sheets, according to the commission.
The commission identified the northeast area of the state in the New York vicinitywhere 154-bed Pascack Valley Hospital recently closedas having the largest surplus of hospital beds although there is an oversupply in all regions. In cases where a poorly operating hospital is deemed non-essential, closure should be allowed to happen with the States role limited to facilitating the process to minimize disruption, the commission said. In cases where a hospital is deemed essential, the State should take a prominent role in providing financial support.
The commission cautioned, however, that evaluating hospitals according to the criteria is a dynamic process, meaning the situation could change due to both internal hospital and external factors. In separate letter to the Governor, Reinhardt complained that the name of the commission is a misnomer insofar as the nations health system is anything but rational. -- by Cinda Becker