Outlook Uncertain For NJ Hospitals Despite Improved Operating Margins

PRINCETON – Efforts to reduce costs allowed New Jersey hospitals to post a modest increase in the statewide operating margin for year-end 2009, according to a report released by the New Jersey Hospital Association last week.

The statewide average operating margin was 1.7 percent in 2009, up from 0.2 percent in year-end 2008. The financial future remains uncertain, however, as New Jersey hospitals face more than $4 billion in Medicare cuts over the next decade.


Nearly half of the state’s hospitals have cut jobs in the last two years and about a quarter have cut programs or services, according to a January 2010 survey.

In the past five years, 10 hospitals have closed. About a third of New Jersey’s remaining 73 acute care facilities posted losses at the end of 2009.

“New Jersey hospitals have taken some very difficult but decisive actions to counteract the effects of the recession and other financial pressures,” said NJHA President and CEO Betsy Ryan. “Hospital closures and job cuts aren’t welcome news for any community but they’re a necessary reality for New Jersey hospitals.”

“While we certainly enjoy this break in the clouds, the storm hasn’t passed for New Jersey hospitals,” said Sean Hopkins, NJHA’s senior vice president of health economics. “New Jersey hospitals still must contend with a harsh marketplace and poor reimbursement – along with the looming federal cuts and tremendous uncertainty under healthcare reform.”

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