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Health Commissioner O'Dowd in transparency report: For-profit hospitals should be required to release financial report

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Mary O'Dowd
Mary O'Dowd

For-profit hospitals should disclose their annual financial statements to the public, just as nonprofits do, and all hospitals should make their quarterly financials public, State Health Commissioner Mary O'Dowd said in a major “hospital financial transparency report” issued Friday evening.

For-profit hospitals have been acquiring what one would consider "troubled" New Jersey hospitals in recent years, and thus far as private enterprises have not had to disclose their finances.

Last year Gov. Chris Christie vetoed legislation requiring financial disclosures by for-profit hospitals.  The governor told O’Dowd to come up with recommendations on the kind of information for-profit hospitals should disclose.

In a cover letter to Christie along with her report, O’Dowd said her recommendations are designed to ensure, “the department gets the information it needs to be an effective regulator in its role protecting the public’s interest and access to health care.”

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If the hospitals do not voluntarily follow her recommendations, O’Dowd said her department can issue rules requiring this increased level of reporting.

State Sen. Joseph F. Vitale, chair of the Senate Health Committee and co-sponsor of the for-profit disclosure bill, welcomed O’Dowd’s recommendation. 

He said the commissioner is “taking the right leadership role in addressing the issue. There is a lot of opposition by the for-profit hospital industry.”

Vitale said information that must be disclosed by nonprofit hospitals “should be a requirement of for-profits. The public and the Legislature and policy makers need this knowledge and information.”

A hospital license “is a privilege, not a right,” and for-profit hospitals depend on public money in the form of charity care, Medicaid and Medicare, and financing via tax-exempt bonds, Vitale said. He said the disclosure of financial information by all hospitals is needed “so we can track and understand their viability and their health.”

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O’Dowd’s recommendations could require rule making by her department if they are to take effect, and Vitale said that could take time, but “this is a good step in the right direction.”

New Jersey Hospital Association spokeswoman Kerry McKean Kelly said the group is concerned about requiring disclosure of quarterly financial statements.

“They are internal working documents with proprietary information. Sharing that information, especially in an unaudited fashion, could confuse consumers and pose risks to the hospital's business operations and plans. We also would note that the report focuses solely on hospitals, while there are many other segments of health care, such as insurance companies, that should be held to the same level of responsibility,” Kelly said.

Kelly said, “We're committed to working with the state on enhanced transparency. We know health care is very complex and can be confusing to consumers, and we want to help provide them with useful information. We're still reviewing details of the report, but we applaud the department for this effort and pledge to work with the state in new areas such as the task force on hospital boards.”

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O’Dowd made several other recommendations, including that hospitals report to the department when they sell their facilities and then lease them back.

O’Dowd said, “There is a possibility that either the owner can evict the hospital operator tenant or the tenant can terminate its lease on little or no notices ... (l)eaving the surrounding community with less access to hospital care.”

Jeanne Otersen, policy director for the Health Professionals and Allied Employees union, said the recommendations “make real improvements in access for consumers to basic financial information on our hospitals and add deadlines for hospitals to submit the information.”

But she would go further: “There is still much more information that for-profit hospitals will not have to provide that would tell a more complete picture on how our health care dollars are being spent.” And while hospitals will be required to disclose sale-leaseback arrangements, “(w)e also will not get information on the terms of sale-leaseback deals that have the potential to put control over our hospitals into the hands of real estate companies.” And she called for “additional enforcement mechanisms, which we believe are essential.”

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