New taxes in New Jersey target doctor services

Funds collected from ambulatory surgery centers and elective cosmetic surgeries would subsidize hospital charity care under the new state measure.

By Mike Norbut, AMNews staff. Sept. 13, 2004.

Ambulatory surgery centers and elective cosmetic procedures are being subjected to new state taxes in New Jersey, and doctors across the state are wondering if the measures might lead to more taxes on physician services in the future.

The measures, which were approved as part of the state budget earlier this summer, will impose a 3.5% tax on ambulatory care centers based on their gross revenue and a 6% tax on gross receipts from cosmetic procedures. The money collected will be doled out to hospitals as increased subsidies for the charity care.

Doctors say they had little warning and that the taxes were pushed through at a pace that defies general government bureaucracy. They're wary of being future tax targets.

"This sets up a precedent that you can tax me for anything you want to," said S. Manzoor Abidi, MD, a neurologist in Maple Shade and president of the Medical Society of New Jersey. "This is an important issue to physicians in New Jersey, but I think it has major implications to physicians all over the country. I'm sure other states are going to watch this closely."

The irony is thick as well, Dr. Abidi said. Hospitals are getting a bump in subsidies for charity care, but the taxes are mainly coming from physicians, who provide the charity care at the hospitals and usually go uncompensated for that work, he said.

Sean Hopkins, senior vice president of health economics for the New Jersey Hospital Assn., said hospitals have been looking to the state Legislature to help cover more of the care they provide for uninsured patients. Hospitals provided $778 million in documented charity care in 2002 and $813 million in 2003, but state payments have remained stagnant at $381 million, he said. The new taxes will generate an additional $202 million for hospitals, he said.