Proposed Hospital Tax is Bad Public Policy

By: Joseph P. Coyle, President and CEO, Southern Ocean County Hospital

Southern Ocean County Hospital has joined with the New Jersey Hospital Association and hospitals across the state in opposition to Governor Corzine’s proposed Hospital Provider Tax, which is scheduled to take effect on July 1, 2006. The proposed 5.5 percent tax on non-Medicare hospital revenue equates to a $1,424 tax per licensed bed, per month for every acute care hospital in the state. This fee would generate an estimated $430 million in fresh revenue,with $215 million going into the state’s general fund, while the remaining $215 million will be used to draw in a dollar-for-dollar federal match to be redistributed to hospitals.

In theory, the bed tax seems plausible. It is designed to help balance the budget by generating an additional $215 million in matching funds from Washington for the state’s general treasury. The problem is, there is a very real possibility that the federal government may not approve the plan. In addition, 25% of the money being returned will be paid to Medicaid HMOs, with no guarantee this money will ever reach hospitals. What’s more, hospitals with a larger proportion of Medicaid patients stand to receive more funding, while a far greater number of hospitals will come out as losers that would see their reimbursement decline.

This new tax will translate into nearly $2.3 million per year for SOCH. The Hospital will be reimbursed an estimated $1.3 million in Medicaid payments. The end result, an annual loss of $947,894. What’s more, in 2005, SOCH provided more than $6 million in charity care, and received less than $400,000 in state funding. This additional financial burden on SOCH will have a far-reaching impact on our ability to invest in new
programs and technology, and to provide the high quality services the members of our community have come to expect, and most certainly deserve.

Consider this. The Hospital frequently operates at full capacity, which translates into an additional burden on an Emergency Department that already handles 35,000 visits per year. In response to this ongoing demand for healthcare, the Hospital will soon begin construction on a new, 32-bed inpatient unit, scheduled to open in 2007. This new tax will jeopardize SOCH’s ability to complete this project, and may even lead to a reduction in services and the elimination of jobs.

Unfortunately, if the proposed Hospital Provider Tax is approved, this elimination of services will be played out at hospitals across the state. In the end, when faced with this additional financial burden, and a decline in Medicaid reimbursement, all of those extra fees ultimately will fall on healthcare users, the average taxpayer...you!

The Hospital Provider Tax will not only have a negative impact on Southern Ocean County Hospital, it represents a threat to the viability of the entire hospital industry in New Jersey. Now more than ever, we need to let the Governor and our local officials know of our concern.

The New Jersey Hospital Association has created a web site allowing you to instantly send a letter to your local elected official. I am asking you to

Log on to http://www.NJHAdvocacy.com
At the top of the page, enter your zip code
After clicking on the “Take Action” box, you have the option of personalizing the letter that has already been provided by the New Jersey Hospital Association, or deleting this letter and composing your own message.

Date posted: 06/28/07 @ 2:56 pm

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