Budget ambiguity on $9 million psych hospital closure at issue

TRENTON – Why is the state banking on only $9 million from the closing of a state psychiatric hospital? Some

TRENTON – Why is the state banking on only $9 million from the closing of a state psychiatric hospital?

Some legislators were estimating that closing a 310-bed hospital like Hagedorn Psychiatric Hospital in Somerset County – which was the subject of a closure study last year – would bring an expected savings in the tens of millions.

The state budget vaguely calls for savings of $9 million from closing a state psychiatric hospital, but has no information on which of the four state-run mental health hospitals will close its doors.

The initiative, unclear in its specifics, is the eighth largest spending reduction in the proposed FY12 budget, but very few lawmakers are clear on what it entails.

“You don’t just put $9 million (in the budget) and not say what you’re going to close,” said state Sen. Richard Codey, (D-27), of Roseland. He’s one of several legislators who have been fighting to keep Hagedorn Hospital open. The hospital was last in patient population of the state’s four with 142 patients as of early March.

The unspecified $9 million savings is troublesome to Codey, but if the state was actually planning a hospital closure, he said that he would have expected to see $40 million or $50 million in savings built into the budget.

The ambiguity of this particular budget item prompted Assemblyman Patrick Diegnan, (D-18), of South Plainfield, and Codey to send a letter to the Governor’s Office in mid-March asking the administration for some clarity. They haven’t yet received a response, but the Department of Human Services provided some insight to State Street Wire Wednesday.

“(T)he savings booked in the FY12 budget represent a portion of full savings from the closure of a hospital,” said DHS spokeswoman Nicole Brossoie in an email. “If the closure is set for June 30, 2012 with the process beginning upon finalization of the FY12 Budget (on or before July 1, 2011), there is a year of ‘phase-down’ during which operations are being reduced but not eliminated: all overhead expenditures associated with running a hospital – heating, electric, staffing, food, supplies, etc. – are still required, albeit at an adjusted level.”

No one is sure what hospital will close, and some sources warned not to assume it was Hagedorn. Along with the Hagedorn Closure Plan, Brossoie referred to another report generated out of DHS last year, the State Psychiatric Facilities Task Force alternate report that recommended closing Trenton Psychiatric Hospital (TPH).

“The Hagedorn closure report suggests a first-year savings of about $10 million with an annualized savings of $44 million and the TPH closure proposal suggests about $16 million (in) year one with an annualized savings of about $82 million,” Brossoie said. “Again, I presume the $9 million provided in the (proposed budget) is a conservative figure used as a placeholder until a decision is made regarding which of the four psychiatric hospitals to close.”

Commenting on his inquiry for more information earlier in the week, Diegnan said, “We need every facility we have. We need every bed that we’ve got.”

From the other side of the aisle, state Sen. Mike Doherty, (R-23), of Washington Township, held up his budget vote last year over Hagedorn’s threat of closure – vexing the GOP-controlling front office.

This year, he’s paying close attention to this particular budget item again, but Doherty is already glad to see stable funding included in the budget for the hospital itself, matching last year’s $50 million.

DHS Commissioner Jennifer Velez is scheduled to appear before the Assembly Budget Committee on April 7 and the Senate Budget and Appropriations Committee on May 2, at which time further explanation is expected. Budget ambiguity on $9 million psych hospital closure at issue