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NJ Physicians Look to Join ACOs, Large Group Practices

Decreasing reimbursement, complex regulations drive need to merge.

Some New Jersey physicians may not think all that favorably of the Affordable Care Act, but they are looking to one of its mechanisms to deal with rising overhead, changing reimbursement rates, and other issues.

That's one of the findings of a survey of more than 400 Garden State physicians published Monday by the New Jersey Health Care Monitor.

Click to expand.

The survey documents the various ways that the ACA is affecting in-state physicians who are solo practitioners, members of a group practice, or employees of a healthcare facility. These trends include merging with other practices, deciding to practice in another state, and signing on with Accountable Care Organizations (ACOs) -- regional consortiums that team doctors and hospitals to improve patient healthcare and reduce wasteful spending.

Who's Afraid of the ACA?

Nearly half of the respondents (48 percent) have a very dim view of the ACA. That tally includes 14 percent that want to see it repealed.

About 10 percent regard the legislation favorably.

What may be most surprising is that almost 33 percent of respondents are taking a wait-and-see attitude toward a law that will directly affect their professional (and possibly their personal lives). Another 6 percent are "not sure" what effect the ACA will have on their practices.

Perhaps the most disheartening finding is that the majority of New Jersey physicians (57.2 percent) said that they would not recommend to a family member that they pursue a career in medicine.

Mergers and Changes

According to the survey, the desire to reduce expenses and increase cash flow rank among the most important factors driving New Jersey physicians to merge or otherwise modify their practices this year.

Specifically, 52.8 percent said they plan to integrate with another healthcare organization -- such as a single-specialty or multispecialty practice, an individual practice association, a hospital system, or a joint venture. Another 33 percent said they plan to hire other practitioners; 12.8 percent said they will contract with a healthcare facility this year; 11.9 percent plan to leave their practice to either join another practice or work under contract with a hospital, and 14.7 percent said they plan to retire.

Saying Goodbye to Garden State

The survey also reports that 11 percent of respondents said they were leaving New Jersey to practice medicine elsewhere. John D. Fanburg, managing member and head of the healthcare practice at Brach Eichler, the Roseland law firm that conducted the survey, said that both Pennsylvania and New York hold advantages over New Jersey.

“In New York there are more payers, the reimbursement is higher" he said. New Jersey has a high cost of living, but the payers pay less because it is perceived to not require or demand higher reimbursement, and in some geographical areas there are a lot of providers, so it’s a supply-and-demand issue.”

Fanbure continued, “Pennsylvania has tort reform law, but they do not have as many payers. However, the cost of living is less unless you are in the Pittsburgh or Philadelphia area. Overhead is lower, so the margin of profit is greater.”

Looking at ACOs

Regardless of what they may think of the ACA, nearly one-third of practitioners are currently considering or have already joined an ACO.

They're making this move for a variety of reasons: Some are reacting to increasing regulation and decreasing reimbursements. Others are looking to cut cost or believe that being a member of a team will boost their competitiveness.

Fanburg explained that ACOs -- according to the Affordable Care Act -- were not merely about containing costs. Rather, “the idea was to compel physicians to agree to reimbursement tied into the quality of care being rendered as opposed to the amount of care being rendered.”

“When you are in a larger group with horizontal and vertical providers, he noted, "you can have more impact on the course of treatment.”

“In a hospital setting you could see half a dozen different specialists. You need a physician who is overseeing the care of all the patients. There is a certain amount of coordination necessary in order to have a plan in place when patients leave the hospital, to keep the patients out of the hospital.”

Fanburg said that the ACO is supposed to provide “the mechanism to enhance and reward that kind of coordination with economic incentives.”

“We’ve been advising our physician clients to consider being with larger groups. It’s very hard for the solo or two-person practice.”

Guidelines for ACOs are outlined under the Medicare Shared Savings Program of the Affordable Care Act.

Behind the Curve on Merging

Fanburg said, “Physicians on the West Coast have been moving into larger groups for years,” but in New Jersey, “many physicians still operate in small group formats of five or fewer physicians in a practice.”

“Physicians really need to rethink how they practice medicine.” Fanburg also indicated that initial New Jersey Health Care Monitor survey is a “baseline” survey and that Brach Eichler plans to perform the survey twice annually going forward.

“We’ve been doing more informal surveys over the years. But this is the first with specific questions [for physicians] and casting such a wide net throughout New Jersey.” The new survey focuses on the physician for a reason, he explained.

“We have some of the best healthcare offered on the planet in New Jersey, but it comes down to the doctor. For the first time in New Jersey, we are trying to think of the physicians.”

The survey was conducted in July and August 2012.

Mary Barr Mann is a freelance writer based in Maplewood, NJ.

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