Report: Over a third of N.J. hospitals are running in the red
12/4/2006  AP

TRENTON — Nearly 40 percent of New Jersey hospitals lost money in 2005 and the rest had relatively small profit margins on average, continuing a nearly decade-long trend, their trade association reported today.

Last year, hospitals across the Garden State had an average operating margin, similar to a profit margin, of only 1.6 percent, while their long-term debt rose and cash on hand to continue operations declined, according to the "Financial Status of New Jersey Hospitals Report."

The report, prepared by the New Jersey Hospital Association, is the ninth in a row to find hospital operating margins of just 2 percent or less. Last year's 1.6 percent average operating margin was less than half the national average for the same period: 3.7 percent, according to the American Hospital Association.

"Almost 40 percent of our hospitals are operating in the red, and that number will only grow unless some major changes are made in charity care funding (from the state), along with adequate payments from other key players," Gary Carter, president of the Hospital Association, said in a statement.

The financial squeeze doesn't leave hospitals any money to increase staff, buy new equipment or upgrade facilities, which could affect patients' access to care, said Sean Hopkins, the association's senior vice president of health economics.

"New Jersey's current health-care climate will not allow hospitals to remain competitive, and the results will be loss of revenue, which could result in more hospital closures," Hopkins said in a statement.

The West Windsor-based association's analysis, calculated from information submitted by seven specialized or rehabilitation hospitals and more than 95 percent of acute care hospitals in the state, found they had a combined profit of $281 million in 2005. That's the difference between the hospitals' combined 2005 revenues of $17.03 billion and their combined expenses of $16.75 billion.

The report does not break down information by individual hospital.

The report found that average total margin, which includes operating margin plus hospital income from grants, endowments and other restricted and nonoperating funds, fell from 2.6 percent in 2004 to 1.4 percent last year.

Meanwhile:

-- Long-term total debt rose from $5.2 billion in 2004 to $5.4 billion last year.

-- Average number of days hospitals can operate using just their cash on hand dipped from 46.7 days in 2004 to 45.3 days.

-- Average time it takes a New Jersey hospital to pay off bills stretched from 71.4 days in 2004 to 71.6 days.