Commission on Commission on Rationalizing New Rationalizing New

Jersey's Health Care Jersey's Health Care Resources Resources

April 29, 2008April 29, 2008

Department of Health and Senior ServicesDepartment of Health and Senior Services

Commission’s ProcessCommission’s Process

Established by Executive Order-October Established by Executive Order-October 20062006

Comprised of 11 members and chaired by Comprised of 11 members and chaired by Dr. Uwe Reinhardt, Princeton University Dr. Uwe Reinhardt, Princeton University Health Economist and included 3 Cabinet Health Economist and included 3 Cabinet members and Governor’s Officemembers and Governor’s Office

6 Sub-Committees made up of 6 Sub-Committees made up of commission members and industry commission members and industry stakeholders stakeholders

Commission Sub-CommitteesCommission Sub-Committees

Access and Equity for the Medically Access and Equity for the Medically UnderservedUnderserved

Benchmarking Efficiency and QualityBenchmarking Efficiency and Quality

Infrastructure of Health Care DeliveryInfrastructure of Health Care Delivery

Reimbursement and PaymentReimbursement and Payment

Regulatory and Legal ReformRegulatory and Legal Reform

Hospital/Physician Relations and Practice Hospital/Physician Relations and Practice EfficiencyEfficiency

Commission’s ChargeCommission’s Charge Assess the financial and operating condition of

New Jersey's general acute care hospitals against national performance levels

Analyze the characteristics of New Jersey's most financially distressed hospitals to identify common factors contributing to their distress

Develop criteria for the identification of essential general acute care hospitals in New Jersey

Make recommendations for the development of State policy to support essential general acute care hospitals that are financially distressed

Commission’s FindingsCommission’s Findings

Overview of Market:Overview of Market: NJ Hospitals are in poor financial healthNJ Hospitals are in poor financial health

Services (ICU, surgery physician visits) are Services (ICU, surgery physician visits) are utilized at rates much higher than the utilized at rates much higher than the national averagenational average

Nationally Hospital margins are improving Nationally Hospital margins are improving but not in NJbut not in NJ

Without changes in practice patterns and Without changes in practice patterns and reimbursement more closures are comingreimbursement more closures are coming

Commission’s Findings, Commission’s Findings, cont.cont.

Major Causes of poor financial health:Major Causes of poor financial health:

– Lack of universal coverageLack of universal coverage

– Underpayment by public payersUnderpayment by public payers

– Misaligned incentives between hospitals and Misaligned incentives between hospitals and physiciansphysicians

– Lack of transparency of performance and costLack of transparency of performance and cost

– Need for more responsible governanceNeed for more responsible governance

– Portions of the state are overbeddedPortions of the state are overbedded

Key RecommendationsKey Recommendations

Develop an Early Warning SystemDevelop an Early Warning System

Increase Oversight of Ambulatory Increase Oversight of Ambulatory providersproviders

Require baseline hospital governance Require baseline hospital governance standardsstandards

Provide a fund to assist distressed Provide a fund to assist distressed hospitalshospitals

Limit uninsured reimbursement to Limit uninsured reimbursement to Medicare rateMedicare rate

Key Recommendations cont.Key Recommendations cont.

Improve reimbursement to reward Improve reimbursement to reward efficiency and qualityefficiency and quality

Decide whether Charity Care should be Decide whether Charity Care should be concentrated on safety net hospitalsconcentrated on safety net hospitals

Increase funding:Increase funding:– Medicaid physician ratesMedicaid physician rates– Inpatient mental healthInpatient mental health

Key Recommendations cont.Key Recommendations cont.

Expand Community Behavioral Expand Community Behavioral HealthHealth

Preserve Access to Inpatient Preserve Access to Inpatient Behavioral HealthBehavioral Health

Require enhanced hospital finance Require enhanced hospital finance transparency transparency

Status of RecommendationsStatus of Recommendations

Legislation being drafted:Legislation being drafted:

– Early Warning SystemEarly Warning System

– Annual Hospital/Public MeetingsAnnual Hospital/Public Meetings

– Limit Uninsured Reimbursement to Limit Uninsured Reimbursement to Medicare Medicare

– Health Care Stabilization FundHealth Care Stabilization Fund

– Enhanced Hospital Board TrainingEnhanced Hospital Board Training

Status of RecommendationsStatus of Recommendations

Commissioner is meeting with Boards Commissioner is meeting with Boards around the statearound the state

DHSS is requiring monthly reporting DHSS is requiring monthly reporting of key operational and financial of key operational and financial metricsmetrics

Developing Governance regulationsDeveloping Governance regulations