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Chiaravalloti & McKnight Bill Requiring Further Financial Transparency in Hospitals Now Law

In light of the potential closure of Bayonne Medical Center due to an upcoming hospital merger, of which elected officials had no prior knowledge, Assembly Democrats Nicholas Chiaravalloti and Angela McKnight sponsored a three-bill package aimed at increasing hospitals’ transparency to help prevent the abrupt loss of important healthcare services in local communities.

One of the bills in the package was signed into law Monday, while the other two have received full legislative approval.

“Accessible healthcare is a human right. For a district as densely populated as the 31st, the closure of a medical center could be the difference between life and death for our residents,” said Assemblyman Chiaravalloti (D-Hudson). “If we had known sooner about a planned merger that could leave residents without access to healthcare, we could’ve had conversations with CarePoint Health to try to determine a better approach. This is why communication between hospitals and elected officials is so critical.”

“This legislation will ensure that a hospital’s business practices are above-board and communities are never at risk of losing important services,” said Assemblywoman McKnight (D-Hudson).

The bill package draws upon recommendations in the State Commission of Investigation (SCI) report regarding hospital-related oversight and accountability in New Jersey, after its investigation into CarePoint Health’s financial management.

The bill signed into law (A-5917) will give broader oversight capabilities to the Department of Health (DOH) by expanding its Early Warning System, whose purpose is to detect whether hospitals are nearing or already in financial distress. The new law would require the system to monitor the quantity and suitability of any fees, allocations and payments made to third parties.

One of the other bills in the legislative package (A-5916) would allow the Commissioner of Health to notify elected officials if certain hospitals are found to be in financial distress.

Increased transparency would also be required of hospitals when it comes to providing financial information to the DOH. The third bill (A-5918) would require non-profit hospitals to share IRS Form 990 and for-profit hospitals to submit equivalent information to the DOH in order to reveal aspects of their revenue and taxation.

Further stipulations would require hospitals to submit information about ownership, leases and rentals of offices and properties. It would also require the identification of investors, business partners and other affiliates while sharing information about projects and ventures financially associated with the hospital.

“With better oversight, we can make sure that what might happen to Bayonne Medical Center cannot – and will not – happen to any other hospitals and their communities going forward,” said McKnight.

“If unstable finances may lead to a shut-down, there must be prior warning to the community and any affected parties. These entities cannot be allowed to operate in the shadows with little oversight,” said Chiaravalloti.

After passing the full Senate Monday, A-5916 and A-5918 now await action by the Governor.