Center for Studying Health System Change

ewark’s poor and disadvantaged residents are concentrated primarily in the inner city neighborhoods of Newark, Elizabeth and Orange, which represent some of the highest incidences of poverty, crime, poor health status and declining urban infrastructure in the nation. Some people assert that the city of Newark has never recovered from the 1967 riots. Slightly more than 13 percent of Newark-area residents are uninsured compared with the U.S. average of 15.2 percent, but this regional average masks much more severe conditions in Newark’s inner city.³³ Although data on insurance coverage are not available on a sub-county level, the city of Newark’s median family income is only 52 percent of the metropolitan area average, indicating a much greater likelihood of residents who are uninsured, underinsured or on medical assistance.³⁴

Despite a fairly well-defined area where its poor residents are concentrated, neither the specific jurisdictions nor the Newark PSMA have established an organized system of care for the poor. Much of the health care provided to Newark’s low-income and uninsured populations is delivered in hospital inpatient departments, clinics and emergency rooms. Newark and Elizabeth have limited ambulatory services networks available to the poor outside of hospital settings. Newark’s sole public institution is University Hospital. Other major safety net hospital providers in Newark are East Orange General Hospital, the Cathedral Healthcare System, the Hospital Center at Orange and Newark Beth Israel Hospital. Many of these institutions are known for serving defined neighborhoods and ethnic groups. For example, St. James Hospital serves a large Portuguese patient base, Columbus Hospital is a major provider to the Italian community and United Hospital, until its closure in spring 1997, was a key provider of services to the mostly African American community of Orange.

The Newark region has only one federally qualified community health center (FQCHC), which operates six sites in the city of Newark. It delivered about 75,000 outpatient visits in 1995, but is considered to be financially vulnerable. It recently closed several sites and reduced the availability of certain services. Local health departments provide only limited direct medical services. Newark’s Department of Health and Human Services, for example, delivered about 5,000 medical visits in 1994.

The state has supported uninsured patients’ access to general acute hospital care through its charity care program. New Jersey residents qualify for the program if their incomes are below 200 percent of the federal poverty level. The state makes partial payments for residents with incomes between 200 and 300 percent of poverty. However, total hospital charity care payments have been reduced from more than $700 million in 1992 to about $440 million currently (including the Hospital Relief Fund). The state recently developed a proposal to require hospitals to set up a managed care network as a condition of receiving charity care funds. If enacted, this proposal may have a favorable long-term impact on the availability of ambulatory services for Newark’s inner city residents. But in the short run, some providers may have difficulty implementing the operational changes needed to remain eligible for charity care funding.

Another state effort to improve access to health care is the newly established Health Access New Jersey Program. Administered by the Health Department, the program provides subsidies for the purchase of individual health coverage to individuals and families with incomes below 250 percent of poverty according to a sliding income scale. The program’s funding of $50 million in 1995 was thought to be sufficient to subsidize approximately 30,000 people.³⁵ Future funding is subject to approval of the state legislature.

New Jersey’s inner city hospitals rely heavily on medical residents to provide service to poor and uninsured patients. It was reported that more than 50 percent of the residency slots in New Jersey hospitals are for primary care practitioners, and the proportion of medical residents who are international medical graduates (IMGs) is more than twice the U.S. average.³⁶ Some New Jersey hospitals have been criticized for relying on medical residents for patient care services, but not providing high-quality educational programs. Future state and federal policy changes may affect the availability of medical residents to provide care in New Jersey hospitals. For the past several years, federal policy makers have debated limiting Medicare graduate medical education payments to hospitals that train IMGs. New Jersey’s medical education establishment also has been discussing residency reductions of about 25 percent. While these policies are sensible from an education and physician supply perspective, they may have an adverse impact on indigent care service delivery in inner city teaching hospitals.

The overall impact of recent health system change on care for the poor in Newark is difficult to quantify, but the most obvious effect is the recent deterioration in the financial status of inner city hospitals that provide the bulk of the care to Newark’s poor and uninsured residents. United Hospital had a community-friendly reputation and was one of the few New Jersey hospitals with an African American CEO. Its closure raises key concerns about the loss of inner city jobs and the need for community members to use other institutions that are not considered equally culturally sensitive. Surrounding hospitals also are worried about the impact of United’s closure on their respective indigent care burdens.

Mandatory Medicaid managed care is another major change affecting care for the poor in Newark’s inner cities. It is too early to understand its impact on the health status of Medicaid recipients, but there are early indications of winners and losers among Newark’s health care providers. For example, Newark’s community health center reported that some of its financial problems stem from newly implemented HMO contracts.

Some respondents noted an outflow of health care professionals in response to Newark’s poor socioeconomic conditions. Doctors practicing in inner city hospitals increasingly are reported to have suburban offices. However, since the region has a relatively comprehensive public transportation system, it is possible that people living in the inner city could visit these physicians via trains or bus lines.

At present, health care for the poor in Newark seems precariously balanced on the backs of inner city hospitals struggling to remain solvent. Few special programs for the uninsured have been developed locally, and the system is hampered by a lack of outpatient capacity. The state must balance continued budgetary pressure with its commitment to New Jersey’s inner cities. Ultimately, development of systems to adequately and appropriately care for Newark’s low-income and uninsured residents will probably require commitment of new financial resources and development of innovative health care financing and delivery strategies at the hospital and state level.