For-profit hospital trend dangerous for Hudson County, N.J.

February 22, 2012  By Renée Steinhagen - NJ Appleseed Public Interest Law Center.
 
Hudson County is at a crossroads. Last week, the community faced the prospect that Christ Hospital would be sold to Prime Healthcare Services.If the sale had proceeded, four of the county’s hospitals would have been owned and operated by for-profit entities. Christ would have joined Meadowlands Hospital Medical Center, Bayonne Medical Center and Hoboken University Medical Center as institutions no longer dedicated solely to delivering quality and affordable health care services to their patients.

Jersey City residents would have been faced with yet another hospital that is primarily concerned with maximizing profits for its investors. This is the key defect of for-profit hospitals: The delivery of medical care is merely a vehicle for making profits.

This is a dangerous trend for Hudson County and New Jersey. As more for-profit corporations take over community hospitals, their emphasis will not be on providing needed services in ways that improve outcomes and lower total costs to our residents, whether as patients or taxpayers. Rather, they will be interested in providing whatever services will make the most money for these hospitals and their investors.

The prospect that New Jersey’s community hospitals may even become the source of the next financial bubble is particularly alarming. Last week, Mountainside Hospital, which had sold for $30 million just five years ago to a for-profit investor group, announced that it was selling to a for-profit joint-venture. The price tag? A staggering $190 million, and this despite the fact that Mountainside has an occupancy rate of 60 percent.

Is this really what we want from our hospitals?

The track record of Christ Hospital’s potential buyer was especially worrisome. This corporation did not come to New Jersey with the best of reputations. Activists who were trying to understand why Christ had selected Prime to buy the hospital discovered Prime was practically being run out of its home state of California because of a litany of charges and accusations, including fraudulent practices and inadequate health care services.

Prime’s business model, which is similar to other for-profit hospitals operating in Hudson County, is straightforward: cancel managed-care contracts, drive up costs for those payers by admitting people primarily through the emergency room, and force uninsured and noncommercially insured patients to go elsewhere to find health care services. California’s attorney general has taken the extreme step of twice denying Prime the opportunity to purchase a nonprofit hospital, recently finding that Prime’s purchase of Victor Valley Community Hospital, which had gone bankrupt, is “not in the public interest.”

Why then would the board of Christ Hospital select Prime? A review of documents filed with the state revealed the board did not properly vet the record of Prime’s operations in California. Furthermore, the board did not consider the impact that the sale would have on Hudson County. This failure cannot be repeated.

The commissioner of Health and Senior Services, as required under the Community Healthcare Assets Protection Act, must complete a full analysis of the likely impact any sale of Christ will have on the “quality, availability or accessibility of health care services in the affected communities.” This analysis must take into account the fact that three hospitals in Hudson County are already operating according to a for-profit model.

As the CEO of Christ Hospital stated during a meeting of Christ’s Strategic Planning Committee in January 2011, “the addition of another for-profit institution will potentially throw the health care delivery system in Hudson County into chaos.” I agree. The Christ Hospital’s board should heed his words, and when evaluating new partners should consider whether a sale to a for-profit whose modus operandi resembles that of Prime is in the best interest of Jersey City’s residents. If the board should again fail to do so, it remains the obligation of New Jersey’s Attorney General and commissioner of health to refuse to approve the “new” sale. This obligation persists even if Christ Hospital files for bankruptcy.

The public deserves no less.