Chiaravalloti & McKnight Legislation to Require Further Financial Transparency in Hospitals Passes Assembly Committee

In light of recent news regarding 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 have sponsored a three-bill package aimed at increasing hospitals’ transparency to help prevent the abrupt loss of important healthcare services in local communities.

“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.

One bill (A-5917) would 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 legislation would require the system to monitor the quantity and suitability of any fees, allocations and payments made to third parties.

Another bill (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.

The legislation will now go to the Assembly Speaker for further consideration.