[First Reprint]

ASSEMBLY, No. 5917







Sponsored by:


District 31 (Hudson)

Assemblywoman  ANGELA V. MCKNIGHT

District 31 (Hudson)


District 31 (Hudson)


District 37 (Bergen)






     Expands DOH oversight of hospital finances.



     As reported by the Assembly Appropriations Committee on December 12, 2019, with amendments.


An Act concerning oversight of hospitals and amending P.L.2008, c.58.


     Be It Enacted by the Senate and General Assembly of the State of New Jersey:


     1.    Section 2 of P.L.2008, c.58 (C.26:2H-5.1a) is amended to read as follows:

     2.    a. The Commissioner of Health shall prescribe, by regulation:  (1) specific indicators by which a general hospital may be evaluated for financial soundness, and the thresholds at which it may be considered to be in financial distress or at risk of being in financial distress; and (2) the progressive levels of monitoring and department participation in the development and oversight of corrective measures to resolve a general hospital's financial or potential financial difficulties, including the various levels of involvement by an appointed monitor.  The indicators and progressive levels of monitoring and intervention shall be guided by the indicators and levels of monitoring and intervention identified in the final report of the New Jersey Commission on Rationalizing Health Care Resources, issued on January 24, 2008.

     b.    The thresholds of specified financial indicators and corresponding Department of Health involvement that may be triggered by them shall include, but are not limited to, measures relating to:

     (1)   days cash-on-hand;

     (2)   1[cushion ratio] average daily census1;

     (3)   days in accounts receivable;

     (4)   average payment period;

     (5)   1[total] operating1 margin 1[and the margin adjusted to account for fees, allocations, and other payments as described in paragraph (7) of this subsection]1;

     (6)   1[earnings before depreciation;

     (7)   the amount of management fees, allocations, and other payments made to third party entities, and the extent to which those fees, allocations, and payments reflect services actually rendered, with a particular focus on fees, allocations, and other payments made to a related or affiliated entity that does business with, or otherwise transfers assets to or from, the hospital; and

     [(7)] (8)] operating margin adjusted to account for fees, allocations, and other business interactions with interested persons as those terms are defined in IRS Form 990, with the term “interested person” to include owners for the purposes of a for-profit hospital; and

     (7)1 any other factor which the commissioner deems appropriate, including failure to provide required or requested financial information.

     c.     If the commissioner determines that a hospital is in financial distress or at risk of being in financial distress after considering the specified financial indicators set forth in subsection b. of this section and any additional financial indicators as the commissioner specifies by regulation, then the commissioner may appoint, in consultation with the hospital, a monitor to prevent further financial deterioration.  1[Payment for the monitor shall be determined through a contingency contract established between the hospital and the monitor.  The contract shall be subject to approval by the department with regard to the monitor's responsibilities.  In no case shall a hospital bear financial liability if no savings result from measures undertaken pursuant to the contract.]1

     The appointed monitor shall have demonstrated expertise in hospital administration, management, or operations.  A monitor: (1) shall be authorized to attend all hospital board meetings, executive committee meetings, finance committee meetings, steering committee meetings, turnaround committee meetings, or any other meetings concerning the hospital's fiscal matters; (2) may be authorized to have voting and veto powers over actions taken in the above mentioned meetings; (3) shall report to the commissioner and the full hospital board of trustees in a manner prescribed by the commissioner; and (4) shall serve for such period of time as may be determined by the commissioner in consultation with the hospital.

     The commissioner shall maintain continuing oversight of the actions and recommendations of the monitor to ensure that the public interest is protected. 

(cf: P.L.2012, c.17, s.159)


     2.    The Commissioner of Health shall, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations to implement the provisions of this act.


     3.    This act shall take effect immediately.