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Doctor-Owned Primary Care Practice Has Big Plans for Garden State

Initial arrangement includes 15 physicians, but the goal is to extend the practice to hundreds of doctors.

The news that Dr. David Shulkin, president of Morristown Medical Center, is launching a doctor-owned primary care practice that could eventually number hundreds of physicians was greeted yesterday as evidence that the changes sweeping U.S. healthcare are making their way to New Jersey—a state still dominated by small practices that struggle to buy expensive digital medical record technology while facing pressure to improve quality and lower cost.

Shulkin launched the Primary Care Partners group by signing up seven North Jersey primary care practices.

Shulkin also is vice president of Atlantic Health, the healthcare system that owns Morristown Medical Center, Overlook Medical Center in Summit, and Newton Medical Center. Atlantic Health created PCP, then made Shulkin the majority stockholder and president. The initial 15 doctors bought stock, and as more doctors come on board they will also buy stock. Shulkin's equity will shrink, until he is one of hundreds of member doctors who own the practice, he explained.

A primary care practice with hundreds of doctors is unusual in New Jersey but increasingly common around the country. "When I tell people what we are doing," Shulkin said, "they ask, 'what took you so long?'"

Annette Catino, chief executive officer of the managed healthcare network QualCare, said PCP "Is preparing for the future. Healthcare reimbursements are going down and everyone -- hospitals and doctors -- have to figure out a better way: more efficiency with less money. And they will be held to a higher standard; there will be more accountability for the quality of the care they provide."

Catino said Shulkin is in the vanguard of an accelerating consolidation movement among doctors and hospitals. "We will be hearing about more and more of these deals; a lot are being worked on behind the scenes" she said, citing Barnabas Health and Hackensack University Medical Center as those building physician organizations.

Shulkin runs Morristown Medical Center. "I am a primary care doctor. I have a strong belief that primary care doctors are having a very tough time. You need to have a certain size group to meet all the increasing demands -- so I'm helping create a future model of primary care."

Shulkin said his goal is to build a 300- to 400-doctor primary care group, adding that dozens of doctors are considering joining. He pointed out that he has experience running a large doctor group: Atlantic Health employs 300 doctors, but they are all specialists.

PCP's mission "is to figure out a way [for primary care] to survive and thrive in the complexities of the medical environment," Shulkin said. He noted that the future is expected to usher in new payment systems, with doctors getting bundled payments instead of a fee for each service -- a practice that is widely blamed for much of the soaring cost of healthcare.

"There are new ways of thinking about how we have to manage populations of patients," said Shulkin. Delivering cost-effective care, he said, requires technology to measure the impact of care on patient health. "If we don't have a robust primary care community, we are never going to achieve any of the goals that most of us are hoping for the country."

Raymond J. Saputelli, chief executive officer of the New Jersey Academy of Family Physicians, said there is a "strong trend toward physician integration" with other doctors or with hospitals, "because smaller practices don't have the resources to remain viable in the current environment."

Joining a larger group, Saputelli said, provides the opportunity for clinical integration, in which the patient's care is coordinated by the primary care doctor working in collaboration with specialists. The key, he said, is ensuring that a larger organization "does not remove the family physician's independence to practice primary care the way they are trained."

When a doctor joins PCP, "the first thing that will happen is you get a group of experts to come in and install electronic medical records in your practice," Shulkin said—an investment that many doctors have resisted, both because of the expense and the time it robs from their patients.

PCP is collaborating with the physician practice management firm Continuum Health Alliance, which will provide technology, administrative support, and other services. Dr. John M. Tedeschi, chief executive officer of Continuum, said the government wants to see "more integrated doctor groups that can provide the technology and the infrastructure so that we can begin to measure the care we are giving."

For the most part, New Jersey doctors are lagging in the adoption of electronic health records that can be used to keep track of whether patients get routine screenings and preventive care and whether their health is improving.

Most practices "are small and this is very complicated work. You need the ability to do analysis to measure the clinical care you give and make sure the patients benefit from it," said Tedeschi. The challenge, he said, is to use technology, clinical integration, best practices and other tools to prevent healthcare from consuming 20 percent of GNP in the future—up from the current level of about 17 percent. He said patients have to become partners with the healthcare system: "We can't continue on this streak of obesity and heart disease and diabetes."

PCP will recruit physicians in the area served by Atlantic's three hospitals: Morristown, Overlook, and Newton. But Shulkin said PCP is not designed to be a source of admissions for those hospitals. Atlantic traditionally defined itself as a hospital system "but that is no longer the case -- you have to think about our job. We are a not-for profit, a healthcare system, not a hospital system."

"This is not about having doctors admit patients to our hospitals, it is about making sure that primary care doctors in this community see it as a viable place to set up a practice and earn a living," Shulkin explained. He added that when PCP doctors retire, the practice will have the means to bring in new doctors. Today, doctors retire and close their practice for want of a young doctor who can afford to take over.

Ward Sanders, president of the New Jersey Association of Health Plans, whose members include the state's health insurance companies, said he doesn't want to see consolidation drive up costs. "Ultimately, any new arrangements or agreements between hospitals and providers must not lead to increased costs for healthcare".

David Knowlton, CEO of the New Jersey Health Care Quality Institute, said Shulkin is a very savvy businessman who is totally committed to quality: "He believes that quality is the best marketing in any healthcare venture."

Shulkin is leading the creation of a Medicare Accountable Care Organization at Atlantic Health, which will be part of the shift toward paying hospitals for higher-quality outcomes, known as gain sharing. Building a large primary care practice fits into this strategy, Knowlton said, because it is generally thought that an ACO needs to oversee a large and integrated group of patients. It's tough for primary care doctors to survive in solo or small group practices, and Shulkin "is trying to figure out a way to put the doctors in an environment that will work for them." There will be more deals like this coming: "You are going to see a deal a minute," he said.

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