Hoboken University Medical Center (HUMC) needs to cut 15 percent of its budget to break even in 2009, even though they are banking on a 15 percent increase in revenue as a result of the upgraded emergency room that will be completed over the summer, hospital officials said at a meeting Wednesday.
Vice President for External Affairs Joan Quigley said the hospital lost $4.3 million last year, and was hurt by the economic downturn.
It was also last year that the hospital refinanced the $52 million bond issue that had been backed by the city as per a City Council vote in 2005. The fact that the city underwrote the hospital to save it from closing is the reason taxpayers have been overly concerned about whether the hospital will break even.
When the hospital refinanced in 2008, Quigley said, it was stuck with high-interest, short-term refinancing.
City and hospital officials who were integral to keeping the former St. Mary Hospital afloat with that bond have been touting the hospital’s success ever since, but many are concerned that the legislative bailout will eventually hurt taxpayers.
In Hudson County, three other hospitals have closed in recent years, leaving seven.
By law, hospitals in New Jersey must treat anyone who comes into the emergency room, forcing local hospitals to deal with many indigent patients who can’t always pay.
In addition, hospitals are not expected to make a profit, so they walk a fine line between breaking even and ending up in the red.
Harvey Holzberg, the hospital’s chief executive officer, who earns approximately $800,000 per year without benefits, said at a Hospital Authority meeting Wednesday night that the hospital needs to make a 5 percent reduction in staff.
He said the management firm of the hospital is working with employee unions to sort out where the cuts will come from.
Officials are also offering some employees a one-time buy back plan to incentivize retirements.
According to Holzberg, the hospital already saved $3.2 million in the restructuring of contracts.
He blamed the 2008 losses on a bad economic situation and a lack of insured or fully-insured patients.
“We are far from recession-proof,” Holzberg said.
Will ER attract insured?
The proposed budget for 2009 projects a 15 percent increase in revenue as a result of the ER, Ron DeVito, chief financial officer, said at the meeting.
“People with choices go to the newest, fanciest ER.” – Joan Quigley
And the hospital is expecting their percentage of uninsured patients, normally 17 percent, to decrease with the opening. They said they expect more insured patients to use the new ER.
“People with choices go to the newest, fanciest ER,” Quigley said. “People without [choices] go to the nearest ER.”
DeVito said, “It’s more appealing to people with money, people who pay their bills.”
Average length of stay
In 2007, HUMC was the second worst hospital in the state, based on average length of stay for Medicare patients, but they are showing a marked improvement, according to new figures.
Medicare recipients spent an average of 8.3 days in the hospital in 2007, but in 2008 that number reduced to 6.5 over the three-month period from October to December.
A longer stay is actually considered a negative, because payment for Medicare varies for different procedures and diagnoses, and if the hospital takes longer to discharge the patient, they do not get paid for it.