Chickens coming home to roost? All the hospitals in the area want to be the biggest and keep expanding. This is the result.

Under Obamacare, reimbursements to hospitals for charity care, i.e. payments for the uninsured and illegal immigrants, may be cut by as much as 50%, according to a NY Times article. Assuming this to be true, the closing of units at Englewood Hospital may be the tip of the iceberg.

As a CPA who has investigated scores of hospital's financial records and have seen their financial finagling (not an official accounting term), and after a review of Englewood Hospital's Form 990 for the most recent year available, 2010, I find this scare tactic of looming layoffs and financial distress just more unsubstantiated rhetoric. It is quite frankly baloney.

The following are Englewood's numbers according to their most recent financial documents filed with the Internal Revenue Service:
Revenue from program services (i.e. actual health care) is $56 million IN EXCESS of expenses for this service. Yet they claimed a net income for 2010 on "only" $6.7 million. So the hospital pulls in $56 million MORE than it cost them to provide actual health care yet report less than $7 million. Me thinks there's lots of "blob" in their records. Here's one area: According to Form 990, page 10, Part IX, Line 25, they had total expenses,of $332 million and spent $110 million on OFFICE EXPENSES (line 13). Hello? That is one-third of their total expenses. On Office Expenses. Do you really think they spent $110 million on coffee and office blinds?

The hospital has $80 million IN SURPLUS. That is cumulative funds which can only be used to further their nonprofit purpose or mission statement - which is to serve the health care needs of the community. Eighty Million. (In 2009 alone, Englewood Hospital had net surplus - that is revenue over expenses of $21 Million).
The top THREE employees pull in a total of $1.4 million in compensation. Average rank and file salary is $46,000. So the people who do the actual work - those at risk for "looming layoffs" make ONE TENTH of what the top 3 pull in. Total compensation to the top 10 emloyees (all non physicians) is $3 million.

In my professional opinion, this is yet another example of a bogus financial distress call in order to scare the workers into thinking they might get laid off or be forced to make concessions. The hospital has $80 million IN SURPLUS. That is cumulative funds which can only be used to further their nonprofit purpose or mission statement - which is to serve the health care needs of the community.

Go to www.commonsense2.com and see my essay "The Basically Bogus Bankruptcy of Hoboken University Medical Center" which explains in detail how The Christie Administration enabled this totally unecessary bankruptcy through his look-the-other-way attorney general office who gave a pass to Hoboken University Medical Center's Board by exempting them from CHAPPA laws - laws which were put in place by then-Governor Whitman to protect the assets of nonprofit hospitals. In a nutshell, Hoboken was strategically drained of funds to pals and good old boys through padded consultant agreements until it could be reported as being in the red (under water).

According to the filed bankruptcy records of Hoboken University Medical Center (actually the managing entity which was Hudson Healthcare - filed last August), the entity was $480,000 (THAT IS FOUR HUNDRED AND EIGHTY THOUSAND DOLLARS), Iin the red yet spent over $2.4 million to take it through bankruptcy (on legal, accounting, and consultant, and court fees) so it could be sold to a private equity firm.

In response to Lynn Petrovich:

As a CPA, you should be aware that profitability is key to success in any corporation. When Pascack Valley Hospital went under and the State of NJ decided “not to bail them out”, was that also a “fraud”.

With a background in health care administration, I have been involved with hospitals for many years. Everything is not “baloney”, just because tax forms are not completed the way that you believe they should be done. You are correct that the executives are paid very well, maybe “too well”. But like in any corporation, these executives have huge fiscal and operational responsibilities. Complying with poorly written Medicare and Medicaid regulations is an endless exercise in futility; you can never win. Dealing with negligence lawsuits; staff turnover; union contracts; uninsured patients; is no small task. Profitability becomes more difficult each year with Medicare and Medicaid cuts and with Obamacare slashing “charity care” reimbursements. It has become critical for hospitals to cut their losses before they occur.

Nationwide, hospital closings are becoming prevalent. If you read about HCA, the largest and most profitable chain in America, they are using radical action to cut costs, including but not limited to collecting fees in the ER. So before using such caustic rhetoric to slam Englewood Hospital, perhaps you might want to see both sides of this story.

In response to Howard Pearl: Please be advised that Englewood Hospital is a 501(c)3 nonprofit hospital. That means it was given special tax charitable status from the Internal Revenue Service which exempts them from paying sales tax, property tax, and income taxes. It also allows them the capability to issue bonds to purchase capital improvements or equipment which have special tax considerations for the bondholders. In exchange for this consideration, these nonprofit entities are supposed to offer a benefit to the community. Like Health care. Englewood Hospital is in theory owned by the rest of us becuase we are subsidizing their exemptions in making up the differences they don't pay for income, sales and property taxes.

More response to Howard Pearl. Omabacare has NOTHING to do with these distress signals sent out by hospitals. We have had no less than 25 hospitals "fail" or be privitazied even before the totally bogus excuse of Obamacare. And I dot NOT support Obamacare. It is all smoke and mirrors intended to denegrate the employees making them frightened they may be laid off. There is so much to respond to your comment, I don't even know where to begin...and it's getting late, so I will ask YOU, Howard, as a former Hospital Administrator: What entity - profit or nonprofit - spends ONE-THIRD of their total annual budget on "office expenses"?
hmmm??

If our future is HCA, then we as a people are doomed. Healthcare is a human right. Wall Street and the for-profit insurance industries and for-profit hospital industrial complex makes money off people's misery. They have figured out they can make more money when people are sick or dying (especially if they can drag out their misery) than when people are well. So, the next time you boast of making a killing trading that health care or hospital stock, you are absolutely correct.

In response to Lynn Petrovich:

(1) I am not nor ever have been a “hospital administrator”; I stated that I was a health care administrator. I currently work in the industry for a private consulting firm.
(2) I do not condone frivolous hospital expenditures any more than you do. But choosing one specific line item, i.e. “office expenses” to exploit in making your point is not a reason to condemn a hospital. Without knowing the breakdown specifics of that item, you are generalizing.
(3) You have not addressed my specific criticism. Do you wish to deny that Obamacare is going to cut “charity care” reimbursements to hospitals, creating a situation where hospitals will have to find ways to compensate for lost income?
(4) The fact that a hospital is under 501©3 non-profit status does not mean it should not run efficiently. Yes, it can issue bonds for capital improvement and is exempt from taxes. But if they lose money every year from poor fiscal management, they will not survive.

In response to Lynn Petrovich:

(5) Are you indicating that Englewood Hospital is not providing beneficial services to the community and has not done so for many years? Along with Holy Name and Hackensack University Medical Center, Englewood Hospital has provided Bergen County residents with outstanding care. And prior to its demise, Pascack Valley Hospital was an excellent local hospital, but perished because of horrific fiscal management. Englewood Hospital is trying to avoid that fate.
(6) Your argument that Englewood Hospital is “owned by us” is spurious at best. It is equivalent to stating that we elect Congressmen that should represent our best interests when we all know that they only represent their own best interests.
(7) Finally, HCA is owned by private equity firms and is a cutthroat operation. The reason that I brought them up was to show the radical means that may be necessary in the future to keep a hospital profitable when the government continues to cut reimbursements!

Howard, I never said any of the allegations in your two latest posts. Those are solely from your imagination.
AND they are put there by you to spark - no make that "ignite" - negativity against my position which is: HEALTHCARE IS A HUMAN RIGH! And nonprofit hospitals DO answer in theory to the community because we subsidize their nonprofit status.
So I suppose you are paid by the Hospital Industrial Complex to negate any factual information (which I reviewed from Englewood's OWN filed IRS forms!) about nonprofit hospitals.
And again I pose to you: Taking nonprofit status out of the picture, If you spent your hard-earned after-tax dollars investing in the stock of a company, and that company spent ONE THIRD of their expenses on "Office Supplies" thus diminishingng YOUR return on investment, would you still invest in that stock?
or think "hey this is Baloney and the company is (obviously) spending money like they have good old boys and fiiends and pals as "consultants"?
just a simple question unrelated to nonprofit hospitals which you have avoided.
Wot say You?

Lynn, I try to play nice and then you go and trash talk. So let’s cut to the chase.

First, I don’t get paid a dime by the “Hospital Industrial Complex”; I am not even in that industry. I simply have many hospital based clients and spend an inordinate amount of time in hospitals. You throw comments around for “shock value”, not really caring about the facts. Unlike you, I do not abuse hyperbole to make my points or accuse. I simply state my opinion. Nor have I “steered” people to a website to promote myself as you have chosen to do! It is not that I disagree with everything you say, more with the way you say it.

Secondly, you claim that I imagined the allegations in my responses. Do you even read what you write? Your own words “Englewood Hospital is in theory owned by the rest of us because …..”.
Your position that “Healthcare is a human right may be admirable”; it is a nice thought. But where is it written that some people have to pay and others don’t? Should individuals with no insurance or illegal aliens, particularly those who utilize emergency rooms for primary care, have the same rights as individuals who work hard and pay for private insurance?

Until such time as socialism becomes primary in the U.S. and capitalism secondary, your theories have some flaws.

Lynn:
Yes, hospitals should be accountable. And I agree that we should be informed about the “office supplies expense”. It seems unreasonable and I would like specifics. But unlike you, I do not jump to condemn without all the facts. It is so easy to claim that “the good ole boys are stealing our money”, it makes great incendiary writing that everyone loves to believe. But, the reality is never so simple.

So Howard, I read you don;t like socialism.
Interesting since the roads you drive on to get to work are socialized (you don't drive on Howard's Road do you?) and when you flush a toilet, you are using our socialized sewer systems, and if you've ever taken a book out of a library or gone to a public school or....hey! are you saying you don't support our two century old health care system which helps the most at risk patients - our soldiers? Because the Veteran Administration IS socialized medicine. And I support the VA.
And it has been THE most successful health care system - at a fraction of the profit-first industry's cost - since before the Civil War.
Howard, you are entitled to your own opinions..but not your own facts.

Lynn, Howard has been pulling this crap on me for a while now, you aren't alone.

Howard had made 3 important concessions regarding my initial post about the questionable financial finaglings of Englewood Hospital in light of the fact they are threatening layoffs:
(1) he agreed CEO and others at the top are grossly over paid and in fact I pointed out their compensation is ten times the average worker's salary.
(2) he agreed hospitals need to be accountable.
(3) he agreed that spending one third of your budger on "office expenses" is unreasonable and considered a peek at those numbers was a reasonable request.-

So given those 3 concessions, isn't it prudent to investigate the financial operations of the hospital before threatening layoffs?

I don’t deny that I am not a big fan of socialism. I have watched our welfare system encourage abuse for years, with thousands of citizens and non-citizens collecting benefits illegally. The food stamp program is a disaster with fraud permeating the entire system. Towns like Kiryas Joel in NY have 50% of their population on food stamps while the men shirk gainful employment. Our tax dollars support these programs.
The VA system has flaws also, but I agree that it has greatly benefited our veterans. But VA homes are not always well run and accessing the benefits can be very difficult. Often, families have to hire a professional to assist and to explain the entitlements.
The current economic downturn has created massive unemployment. Our system should take care of these desperate families that have lost homes and cannot find jobs in the current market. I favor programs to expedite citizenship for “illegals” working in the U.S. and paying taxes. But I refuse to endorse the financial support of “illegal aliens” that slide into our country to take advantage of “free health care” through our emergency rooms.
It is unreasonable to investigate a hospital because they threaten layoffs. Micromanagement of hospital affairs will only create chaos. However, it is certainly reasonable to request a full disclosure on the “office expenses” before we totally condemn the hospital and pass judgment.

To Matt: The expanded Medicaid program will have only minor effects on reducing “charity care”. (Some states are even refusing the Medicaid changes because it allows too much federal control.) More importantly, “charity care” will not be reduced, simply the reimbursements. Hospitals will have to find a way to compensate for the losses, most probably with staff reductions. Insurance premiums are “sky-high”; insurance companies are bloodsuckers; that needs to be addressed. FYI: my organization helps all those people in need that you are talking about; so if I am heartless, I am in the wrong profession. My problem is with those that take advantage of the system. Government involvement is the major problem; they add new dimension to incompetence when running any program. (Two out of the last three times that I went to the DMV, the computer systems were down and everyone was told to come back another day.)
Note: Sally’s comments regarding Pascack Valley Hosp. are her opinion and may be valid from her experience. It does not change the fact the fiscal ineptitude drove the hospital under and created a health care vacuum for towns in upper Bergen County.

Affordable health care is not free health care. We all want a system that works; the current one is badly broken. As for what to do with "illegal immigrants" who need health care, my suggestion is that they be required to pay something, so they understand that there are costs involved. If major health care is required, our tax dollars should not be covering it. I heard of one hospital that found an interesting solution for an individual who was over 65 who needed nursing home care. The hospital supposedly paid air fare to fly him back to his native country so his relatives could care for him. Humane and effective.