Commission on Rationalizing New Jersey's Health Care Resources April 29, 2008

1. Commission on Rationalizing New Jersey's Health Care Resources April 29, 2008 Department of Health and Senior Services

2. Commission’s Process • Established by Executive Order-October 2006 • Comprised of 11 members and chaired by Dr. Uwe Reinhardt, Princeton University Health Economist and included 3 Cabinet members and Governor’s Office • 6 Sub-Committees made up of commission members and industry stakeholders

3. Commission Sub-Committees • Access and Equity for the Medically Underserved • Benchmarking Efficiency and Quality • Infrastructure of Health Care Delivery • Reimbursement and Payment • Regulatory and Legal Reform • Hospital/Physician Relations and Practice Efficiency

4. Commission’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

5. Commission’s Findings Overview of Market: • NJ Hospitals are in poor financial health • Services (ICU, surgery physician visits) are utilized at rates much higher than the national average • Nationally Hospital margins are improving but not in NJ • Without changes in practice patterns and reimbursement more closures are coming

6. Commission’s Findings, cont. • Major Causes of poor financial health: • Lack of universal coverage • Underpayment by public payers • Misaligned incentives between hospitals and physicians • Lack of transparency of performance and cost • Need for more responsible governance • Portions of the state are overbedded

7. Key Recommendations • Develop an Early Warning System • Increase Oversight of Ambulatory providers • Require baseline hospital governance standards • Provide a fund to assist distressed hospitals • Limit uninsured reimbursement to Medicare rate

8. Key Recommendations cont. • Improve reimbursement to reward efficiency and quality • Decide whether Charity Care should be concentrated on safety net hospitals • Increase funding: • Medicaid physician rates • Inpatient mental health

9. Key Recommendations cont. • Expand Community Behavioral Health • Preserve Access to Inpatient Behavioral Health • Require enhanced hospital finance transparency

10. Status of Recommendations • Legislation being drafted: • Early Warning System • Annual Hospital/Public Meetings • Limit Uninsured Reimbursement to Medicare • Health Care Stabilization Fund • Enhanced Hospital Board Training

11. Status of Recommendations • Commissioner is meeting with Boards around the state • DHSS is requiring monthly reporting of key operational and financial metrics • Developing Governance regulations