HAMMONTON -- William B. Kessler Memorial Hospital suffered a setback in its effort to avoid closure last week when the state rejected its request for financial aid. The state set aside $44 million in "stabilization fund grants" this year to help financially distressed hospitals. Kessler -- which must secure $5 million worth of loans from the community by mid-January to avoid closure -- applied for $2.5 million from the state fund. A Dec. 3 letter addressed to former Kessler Chief Executive Officer Peter C. Colella Jr. explained Kessler was not among the grant recipients because its application "did not sufficiently address the application criteria." In the letter, Matthew D'Oria -- deputy commissioner of the state Department of Health and Senior Services -- said priority was given to applicants that needed money because of hospital closure or for the "stabilization of health care services with a demonstration of extraordinary circumstances." Kessler's application "did not provide a comprehensive assessment of a strategy for going forward and failed to adequately address the existing marketplace conditions and determine if funds from outside sources would provide any stabilization to this facility," D'Oria wrote. "On-going challenges such as demand and regional competition are not sufficiently addressed." Kessler "could and should seek outside resources to support the hospital operations in the form of strategic partnerships," D'Oria added. Jim Rossi -- who recently took over as Kessler's interim CEO, replacing Colella -- was serving as Kessler's director of radiology when hospital officials prepared its application for the state money. "A tremendous amount of work went into that application," Rossi said. "The need, the hospital's condition, the surrounding communities' comments ... the application was very complete. I don't think there are any issues there." "I would have thought the state would have been happy with those answers," Rossi added. "Obviously, it wasn't enough for them." In addition to hiring Rossi, Kessler has appointed a new restructuring task force. The group formulated its plan to turn the hospital around after the Oct. 8 application deadline for the state aid. As for the possibility of trying again for money through this program, Rossi said: "It's over. I talked to (the Department of Health and Senior Services) ... There's no appeal process." Kessler -- which emerged from Chapter 11 bankruptcy a year ago -- was one of seven medical facilities whose applications for state aid were rejected. The $44 million the state made available will be distributed among six hospitals in communities. Half of the money will go to Jersey City Medical Center. Other awards included $4 million to Raritan Bay Medical Center in Perth Amboy, $1 million to Kimball Medical Center in Lakewood, $5 million to East Orange General Hospital, $5 million to Newark Beth Israel Medical Center and $7 million to St. Mary's Hospital in Passaic. "Based on the results, everybody in North Jersey got it. There were no South Jersey hospitals," Rossi said. "It was strange that one hospital got $22 million. No one knows why." Hospitals won't receive payments until they submit plans outlining how they will meet conditions of the grant, such as improving operational performance, quality measures and Medicaid and NJ FamilyCare enrollment, hiring a firm that specializes in improving revenue collection and temporarily adding a state official to the hospital board. While the $44 million in funds is welcome, "several other fragile hospitals have been turned away," said Betsy Ryan, president and chief executive officer of the New Jersey Hospital Association. "This obviously is a very difficult position for a state struggling through a weak economy. But the fact remains that nearly half of the state's hospitals are losing money," Ryan said. In addition to Kessler, other rejected applicants were Christ Hospital in Jersey City, Hoboken University Hospital, Trinitas Regional Medical Center in Elizabeth, JFK Medical Center in Edison, Newton Memorial Hospital and St. Clare's Hospital in Denville. The stabilization fund was recommended by a health-care commission appointed by Gov. Jon S. Corzine and established by lawmakers and the governor in June. It guides extra funding to hospitals facing closure or significant cuts in services that serve large populations of uninsured, underinsured and Medicaid patients. The state also is providing hospitals $605 million to provided state-mandated "charity care" to uninsured patients. Zach Patberg of the Gannett News Service contributed to this report.
Originally published December 10, 2008 |