Testimony of Debbie White, President, HPAE Senate Budget and Appropriations Committee March 21, 2019

Thank you Chairman Sarlo and members of the Senate Budget and Appropriations Committee for the opportunity to speak with you today. My name is Debbie White and I am the President of Health Professionals and Allied Employees – the state’s largest union of healthcare workers – representing more than 13,000 nurses and health care professionals in both private and public health care institutions. I worked as an RN for 27 years at Virtua Memorial Hospital prior to my current position.  I want to speak today to the impact this budget has on University Hospital, health care quality and access, the Department of Health and enforcement of patient safety laws, the opioid crisis, maternity and infant mortality, and public workers’ retirement security.

First, University Hospital and Charity Care:

 HPAE represents 1,200 healthcare professionals working at University Hospital (UH) in Newark. University Hospital is the only public acute care hospital in the state, one of three Level One Trauma Centers, and the only Level One hospital in North Jersey. Government payers – Medicare, Medicaid, and health care subsidies – make up the primary source of the hospital’s revenue, for an average of 73 percent since 2014.[1]

In addition, the State has ranked fifth highest on the list of Federal Medicaid Disproportionate Share Hospital (DSH) allotments since 2008[2], further evidence that New Jersey and University Hospital in particular are in great need of charity care support.[3] Beginning in October 2019 ACA reductions to DSH payments will go into effect with a $4 billion cut nationally in FY2020.[4] The cuts will increase to $8 billion for each successive year through 2025.[5] New Jersey still has approximately three-quarters of a million uninsured citizens[6] and despite New Jersey’s individual mandate, 22,000 fewer residents signed up for ACA plans in 2018.[7]

Given these large cuts to DSH by the federal government and the painful facts of the uninsured and underinsured in New Jersey, the state must prepare for providing the financial support necessary to keep University Hospital a vibrant participant in public health care.

As a premier research and teaching hospital as well as a “safety net” hospital, every public health service that UH provides is critical to the wellbeing of the largely uninsured and underinsured community it serves.

Overall, total state aid to University Hospital has decreased by almost 8 percent ($11.5 million) between FY2014 and FY2018.[8] State charity care for University Hospital has seen a $51 million cut, or 51 percent, since FY2014.[9] And the hospital has operated at a deficit since 2015 as well.[10]

Total charity care appropriations have increased by $10 million for FY2020. HPAE applauds the proposed $10 million increase, but we urge that a significant portion of that increase if not all of it is allocated to University Hospital in addition to the designated charity care funds. Obviously, this will not make up for the $51 million lost over the past five years, but it is start in regaining lost ground. While it may appear to be a rapacious grab, it is not an historical anomaly to designate such a large increase. For example, in FY2018, UH received an $8 million increase in charity care, which saw a reduction again in FY2019 by $2 million.

Line item funding for the University Hospital has again remained flat for the FY2020 budget at $43.8M. Consumer prices in 2019 are 8 percent higher than average prices throughout 2015[11] – just to keep up with inflation, funding for University Hospital would need to increase by $3.5M in the FY2020 budget. HPAE urges you to invest at least an additional $3.5 million in the FY2020 Budget for the University Hospital line item appropriation.

University Hospital expects to spend $585.9M, an increase of $10M from the previous fiscal year. This figure is the minimum baseline dollar amount needed to improve the Emergency Room at University Hospital. The emergency room at University Hospital served approximately 80,000 patients last year, making up 80 percent of total admissions.[12] HPAE urges the NJ Legislature to include $10 million in state funds as requested by Interim President and CEO Judith Persichilli to improve an overcrowded emergency room.

We would like to see the legislature evaluate the costs of improving care at University Hospital and increase University Hospital’s funding to match the demand of the community. HPAE requests in addition to funding ER improvements that you make an appropriation of $11.5 million to make up for the loss in total state aid since 2014 as previously mentioned.

In 2018, the previous University Hospital CEO, John Kastanis, applied to terminate pediatric inpatient services. Despite the withdrawal of the proposal, there are many concerns over the future of pediatric services. HPAE urges you to fund an independent study examining how the reduction or the elimination of those services at University Hospital will affect Newark, a low-income community of color. As a public hospital, it is crucial that UH provide a full complement of care services to the community – any reduction in services will harm those that depend on this hospital. All services are essential to the fabric of the core mission of caring for underserved populations.

Second, funding for the Department of Health and enforcement of patient safety laws:

We are heartened to see that appropriations for the Department of Health received an increase of $16 million for FY2020 after years of neglect under the previous administration. The nurses and health professionals in HPAE and throughout New Jersey rely on the Department of Health to uphold its mission of ensuring access to safe quality health care for all New Jerseyans.

Under the previous administration, there was a long steady decline in enforcement and inspections. The Department of Health no longer conducted regular inspections; rather, reports made by private accreditation entities filled the role. Those reports are never available to the public, unlike Department of Health inspections that are subject to the Open Public Records Act,[13] so there is no transparency as to what deficiencies may or may not exist. The responsibility for conducting annual inspections should fall on New Jersey’s Department of Health – outsourcing health and safety monitoring to hospital-paid accreditation entities presents an ethical conflict, hardly a fair or level playing field.

Under the previous administration, the DOH was reduced to inconsistent monitoring of an ever-changing healthcare landscape and in enforcing conditions on sales or mergers that would protect patients and the community.  It is critical that you make it possible for the DOH to reinstate transparency and a pro-active enforcement agenda for the benefit of all New Jerseyans.

The recent deadly viral outbreaks at University Hospital and the Wanaque Center for Nursing and Rehabilitation are indicative of the inability for the Department of Health to do its job to full capacity. Two weeks before CMS went into Wanaque in response to the outbreak last fall, New Jersey’s Department of Health had inspected the same facility and found only minor deficiencies. The CMS report is 118 pages long and describes a plethora of training, management, and communication breakdowns that led to the deaths of 11 children.

As legislators, you have the ability to adequately fund the DOH so that it can carry out its mission of hospital safety for patients and workers. Adequate funding will make it possible to hire the staff necessary to enforce current regulations. Under current staffing levels at NJDOH, the state is challenged to enforce current regulations ensuring health and safety standards are practiced for preventing the spread of diseases and to ensure that patients are receiving care in a safe environment.

It is fundamental for NJ DOH to be the advocate for our communities and for taxpayers when hospitals are sold, merged, or recommended to close, or when hospitals desperately need regular department inspections and enforcement of regulations. In these challenging times for health care, New Jersey needs and deserves a Department that will be a real advocate for its patients, communities, and workforce.

Third, public pension funding:

New Jersey’s unfunded pension liabilities have resulted from the state’s persistent failure to make annual required contribution payments.  According to a study conducted by New Jersey Policy Perspective and Keystone Research Center, New Jersey ranked last among the 50 states – by a large margin – for the share of required pension contributions made from 2003-12.[14]  An April 2017 report found that New Jersey again ranked last in 2015 for contributions made as a percentage of Annual Required Contributions (ARC).[15] The same report released a year later found that New Jersey was one of four states with funding at less than 50 percent.[16]

Chronic underfunding is the primary reason New Jersey has a large unfunded pension liability.  New Jersey is the second lowest funded public pension plan in the country, a slight improvement over the previous year, when it was the lowest.[17] This means that the pension is operating on just slightly more than a third of the funds it needs to pay retirement benefits.[18]

The Governor’s proposed $3.8 billion appropriation for the pension, an 18 percent increase over last year, is still only providing 70 percent of the Actuarial Determined Contribution. Solving New Jersey’s self-inflicted pension crisis requires the state to contribute its legally obligated share each year. New Jersey must dedicate funds to make up for past failures to make required contributions.

HPAE urges Governor Murphy and the NJ Legislature to pursue increasing taxes on NJ’s millionaires and large wealthy corporations to generate additional revenue. You must ensure New Jersey public workers will have the retirement security they deserve after dedicating their careers as public servants.

Fourth, substance use and addiction treatment:

New Jersey saw a 155 percent increase in overdose deaths between 2012 and 2018.[19] With 3,118 overdose deaths in 2018, an average of 8.5 deaths occurred daily. An additional 51,892 people had their lives saved through the administration of Naloxone between 2014 and 2018.[20] Each administration of Naloxone is an overdose death avoided. The appearance of fentanyl in overdose deaths in New Jersey has increased by 3,183 percent since 2012, a drug that was originally approved by the FDA only for use in controlling pain in cancer patients.[21]

Under the previous administration, New Jersey lost more than 40 percent of its addiction treatment beds for the poor and uninsured, while as many as 90 percent of those addicted to heroin in New Jersey have no private insurance and rely on Medicaid.[22] HPAE strongly urges the legislature to replace those lost beds and to make sure there is equal access to treatment for all residents regardless of insurance status or ability to pay.

Lastly, Maternal and Infant Health:

 New Jersey’s infant mortality rate is among the lowest in the nation, with 4.8 deaths per 1,000 live births, compared to national rate of 5.9 death per 1,000 live births. But the disparity between white and black infants is stark[23] with black babies in New Jersey dying at a rate of 9.7 deaths per 1,000 births and white babies dying at a rate of 3 per 1,000 births, a 30 percent difference.[24] The maternal death rate is even more stunning:  black mothers make up 46.5 percent of all maternal deaths in New Jersey and 12.8 percent of maternal deaths are white mothers.[25]

Many factors affect birth outcomes and maternal deaths – including the mother’s age, education, health status, as well as access to health care, family support, and awareness of available resources. HPAE supports the appropriation for the doula program and other maternal health measures that will help ameliorate this distressing health-outcome disparity. It must not be a death sentence for African American mothers or babies to be born in this state.

Thank you for the opportunity today to share our concerns and priorities with this committee.

[1] University Hospital Audited Financial Statements 2014-2017 and Unaudited Financial Statement 2018.

[2] The Kaiser Family Foundation database currently provides DSH data from 2008 through 2018.

[3] Kaiser Family Foundation website, accessed 13 February 2019, https://www.kff.org/medicaid/state-indicator/federal-dsh-allotments/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D

[4] Citizens Budget Commission. “DSH Cuts Delayed.” 11 April 2018, https://cbcny.org/research/dsh-cuts-delayed ; Rebecca Pifer. “Medicaid advisory panel calls for phasing in DSH allotment reductions.” Healthcare Dive, 25 January 2019, https://www.healthcaredive.com/news/medicaid-advisory-panel-calls-for-phasing-in-dsh-allotment-reductions/546866/ .

[5] Supra.

[6] Extrapolated from U.S. Bureau of Labor Statistics data of 8 percent uninsured rate in NJ in 2017 with a population of approximately 9 million.

[7] Nicole Leonard. “Uninsured residents at risk for penalties as N.J. law takes effect Jan. 1.” Press of Atlantic City, 31 December 2018, https://www.pressofatlanticcity.com/news/breaking/uninsured-residents-at-risk-for-penalties-as-n-j-law/article_d44e6f70-a603-554f-9b94-5bcd10c4af76.html .

[8] University Hospital Audited Financial Statements 2014-2017 and Unaudited Financial Statement 2018. This includes charity care, GME, budget line item, mental health, and HRSF/DSRIP.

[9] New Jersey Department of Health Funding Pool Summary, FY2015, FY2016, FY2017, FY2018, and FY2019 and University Hospital FY2018 Audited Financial Statement Table of State Appropriations, p. 19.

[10] University Hospital Audited Financial Statements 2014-2017 and Unaudited Financial Statement 2018.

[11] Bureau of Labor Statistics, https://www.bls.gov/cpi/# .

[12] Persichilli, Judith (2019) Monitor’s Report on the Assessment of University Hospital (2019). https://nj.gov/health/healthfacilities/documents/UH%20Monitor%20Report%20-%20121018%20(1).pdf

[13] Andrew Kitchenman. “Healthcare workers union accuses state of inadequate monitoring.” NJSpotlight, 26 March 2014, http://www.njspotlight.com/stories/14/03/25/healthcare-workers-union-accuses-state-of-inadequate-monitoring/

[14] Stephen Herzenberg, “New Jersey Has Modest Public Pension Benefits.” New Jersey Policy Perspective, 17 December 2014, https://www.njpp.org/budget/new-jersey-has-modest-public-pension-benefits .

[15] Pew Charitable Trusts, “The State Pension Funding Gap: 2015.” April 2017; http://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2017/04/the-state-pensionfunding-gap-2015

[16] Pew Charitable Trusts, “The State Pension Funding Gap: 2016.” April 2018, https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2018/04/the-state-pension-funding-gap-2016

[17] Danielle Moran. “Pension Fund Outlook Brightens in 41 States.” Bloomberg, 12 October 2018, https://www.bloomberg.com/graphics/2018-state-pension-funding-ratios/ .

[18] Supra, see table in article. NJ has approximately 35 percent of the funds needed to pay benefits.

[19] NJCares website, accessed 18 March 2019, https://www.nj.gov/oag/njcares/ .

[20] Supra.

[21] Supra.

[22] Star-Ledger Editorial Board. “Christie pegs his legacy on the drug fight, but deserves a B-minus at best.” NJ.com, 24 September 2017, http://www.nj.com/opinion/index.ssf/2017/09/christie_pegs_his_legacy_on_the_drug_fight_but_des.html .

[23] Susan Livio. “Here’s how N.J. will combat ‘shameful’ death rate for black infants.”  NJ.com, 11 July 2018, https://www.nj.com/healthfit/index.ssf/2018/07/heres_how_nj_will_promote_healthy_births_in_black.html .

[24] Eric Kiefer. “New Jersey’s Black Infants, Moms Face Mortality Gap: Lawmakers.” Patch, 20 September 2018, https://patch.com/new-jersey/belleville/nj-s-racially-skewed-infant-death-rate-crisis-level-caucus .

[25] Supra.