In an editorial, Seton Hall University Assistant Professor of Economics Danielle Zanzalari explains why she believes New Jersey hospitals don’t need another taxpayer bailout.
New Jersey’s ongoing rise in healthcare costs won’t be solved by pouring more government subsidies into hospitals.
However, this has been the primary focus of New Jersey’s Governor whom recently expanded subsidies for hospitals via matching Medicaid distributions.
While Governor Murphy’s plan may help hospitals cover the costs of treating low-income or uninsured patients, the fact remains that hospitals are already reaping significant profits.
As of April, nonprofit hospitals saw a 33% increase in profit margins compared to the previous year.
In New Jersey, hospital consolidation has also led to higher operating margins.
Just this past month, Hudson Regional Hospital, Bayonne Medical Center, Hoboken University Medical Center, and Christ Hospital are going to operate under a new partnership structure, further consolidating hospital care.
The real issue lies with the increasing healthcare costs faced by consumers.
Between 1991 to 2020, per capita income in New Jersey rose by 3.59% annually, but medical costs increased by 4.9% per year.
While prices in many sectors have recently surged, hospital services fees have consistently outpaced nearly everything over the past two decades.
Unfortunately, New Jersey is one of the most expensive states for hospital care. Recent estimates show that 85% of New Jersey residents fear they won’t be able to afford the care they need.
Nearly half have been forced to skip necessary treatments, ration their medications, or delay doctor visits due to the high price of care.
History has shown that directing more subsidies to hospitals doesn’t help patients or consumers.
Take Meadowlands Hospital Medical Center in Secaucus as an example. It heavily supported political campaigns and received substantial taxpayer subsidies, yet it became infamous for failing audits and refusing to provide financial records to regulators.
Even with all of the government assistance, the hospital’s owners eventually sold it.
Rather than simply pouring more taxpayer dollars into hospital systems, we must address the underlying issue driving up costs: the lack of price transparency in healthcare, which allows hospitals to charge sky-high fees without accountability.
Hospitals should be required to publish standardized price lists for common procedures, allowing patients to compare costs and choose care that fits their budget.
The absence of transparency and consistency has led to billions of dollars in overcharges for residents. Shockingly, only 41% of hospitals in the state fully comply with federal transparency regulations.
Imagine dining at a restaurant, only to receive a surprise bill after the meal—no one would accept that. Yet, hospitals routinely do this, and the financial consequences for families are far more severe.
For the free market to function properly, consumers must be able to shop around for the best price and quality.
When hospitals refuse to provide transparent pricing, they undermine the market and take advantage of patients in vulnerable situations, all in the name of profit.
New Jersey needs to prioritize solutions that center around patients. Throwing more taxpayer dollars at expensive hospitals in the hope that care will improve or become cheaper has failed before, and there’s no reason to believe it will work now.
Only by empowering New Jerseyans to make informed choices, via price transparency, can we achieve the lower healthcare costs that are so desperately needed.
Danielle Zanzalari is an Assistant Professor of Economics at Seton Hall University and Garden State Initiative Contributor. She researches New Jersey policy, specifically on how to better align economics with economic growth.
“Only by empowering New Jerseyans to make informed choices, via price transparency, can we achieve the lower healthcare costs that are so desperately needed” says this woman in her opinion. She doesn’t make much sense. WHO PAYS FOR MEDICAL CARE OUT OF POCKET??? No one, unless you are a wealthy foreigner coming here for better medical treatment. The basic problem that many urban and rural hospitals have is that a large portion or majority of their patients are on Medicaid (low reimbursements) or indigent, and this does not cover expenses. Comparing medical care and eating in restaurants is a ridiculous comparison. Hospitals are in trouble and shutting down all over the country. While “corporate greed” may be an issue, it is not the primary issue causing hospitals to run the red.
Medical care is an expensive proposition. Doctor, nurse, other personnel salaries, insurance, etc. and the catheter doesn’t go in your arm by itself.
What the author is unaware of is that many hospitals (including CarePoint Health) continue treating 60% + uninsured patients. The subsidies from the state are slim to none which does not cover the millions in costs without recoupment. Other hospitals who do little to no charity care received subsidies in the millions!? I would suggest the author delve into how much money certain hospitals receive for charity care based on their volumes. I think there is a surprise waiting as NO business can function and survive with these losses.