How important is the solvency of hospitals in the US? Just last week I commented on a recent situation here in southern California, a sting operation whereby hospitals were caught breaking the law in the search for additional funds from Medicare and Medicaid with using the homeless as reported in the Los Angeles Times. The intent of the new law in New Jersey is to locate and find hospitals on the brink before tragedy strikes.
The issues are lack of reimbursement for services and what the association describes as "chronic underfunding" of hospital care for the 
poorest patients in the state, but the same hospitals are not allowed to charge more than 15% over what Medicare fees would be, so is this somewhat of a catch 22? It is also to the point where some hospitals have put their receivables out for auction in the recent past. The state Health and Senior Services Department the authority, and access to information, needed to properly monitor the finances of the state's hospitals, and this sounds like it might be something that could possibly spread to other states perhaps looking to monitor the same as 50% of the hospitals in the US border on insolvency. Right now in California, until the state legislature comes up with a budget, which includes healthcare, state workers are all on minimum wage, yes all of them, until it is resolved. A hospital in Hawaii is laying off more individuals this week due to tough financial times.
With the new Medicare law going in to effect in October, compensation is going to get to be more difficult with the 8 "never" occurrences that will not be reimbursed, some of the items are pretty straight and up front, while others offer a lot of gray areas, such as hospital acquired infections. One big claim and lawsuit in one area could easily close up one more hospital. Many are not financially prepared to handle this, so has Medicare been too stringent on lowering the boom? Not to mention, many hospitals have been audited and the auditors have found a lot of money as recently reported, so where do we go from here. Will repayment of some of the audit issues be enough to perhaps throw one more obstacle in the way and further lead to additional insolvency issues?
One more item I think needs to be referenced here in all of this and that is the project of creating hospital budgets. I wrote about this earlier and it is one project that is getting to be very trying and almost impossible to project. Even the "healthy" hospitals face challenges today in trying to project and "guesstimate" at some point what the budgets will be for services, new laws, new rules that don't exist today, but will potentially come in to play in the upcoming year.
So the question here is, what are we doing to our hospitals? The physicians have already gone through this cycle to a large degree and it's apparently not stopping there. BD
TRENTON, N.J. - Gov. Jon S. Corzine has approved a new state law creating an early warning system to help spot financially troubled hospitals. The law comes amid a spate of hospital closures in the state. So far this year, four acute-care hospitals have closed: Barnert in Paterson, St. James and Columbus in Newark, and Liberty Health Greenville in Jersey City. A fifth hospital, Muhlenberg Regional Medical Center in Plainfield, shuts its doors on Wednesday.
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