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Editor's Page
Shakedown in New Jersey
Dan O'Connor
Publish Date: October 10, 2007

Dan O There are worse things you can be than the physician-owner of a cosmetic surgery center in New Jersey, but it's not a real long list.

Dan O Just ask Allen Rosen, MD, whose one-year-old, one-OR cosmetic surgery center in Montclair, N.J., is about to be taxed twice by the state because of what it is (physician-owned) and what it does (cosmetic procedures).

Check out the state's shakedown plan - it's as if Tony Soprano's crew is running the legislature - and pray your state don't follow suit.

Beginning Oct. 1, New Jersey's physician-owned surgery centers grossing at least $300,000 will have to pay a tax equal to 3.5 percent of their gross receipts or $2000,000, whichever is less, to subsidize hospital charity care. Dr. Rosen figures the cost of doing business will set North Fullerton Surgery Center back $25,000.

Note that this "ambulatory care facility assessment" (spelled T-A-X) is on gross revenue, meaning a center - especially a startup trying to juggle its huge debt service with its trickling cash flow - could be losing money and still be forced to contribute into something called the Health Care Subsidy Fund, which will assist in charity care payments for hospitals.

That's not all. In what's believed to be the first time a specific procedure has been taxed, separate legislation will impose a 6 percent "aesthetic surgery tax" on all cosmetic procedures - surgical and non-invasive (read: Botox and injections).

"A double whammy," says Dr. Rosen, a plastic and reconstructive surgeon who is North Fullerton's medical director and one of its five owners. "It's a bad precedent to set. We're breaking new ground. Not good ground. When does it stop? Are they going to tax veterinarians who clip the ears and tails of dogs? That's cosmetic."

Dr. Rosen calls the taxes "more of an annoyance than a burden." It's the principle of being unfairly and arbitrarily taxed that has riled him. He points out that physician-owners in many cases are the very surgeons providing the charity care for which they're being taxed. And he notes that the aesthetic surgery tax could be a disincentive for some patients to pay for a cosmetic procedure - or to pay to have it done at an ASC.

Let's zoom out and examine what's really happened here: New Jersey lawmakers have singled out and penalized a business for its ownership structure and its service offerings. Simply put, it's an outlandish insult to free enterprise.