Brach Eichler Survey: Nearly Half of All New Jersey Physicians had Decreased Income in the Last Year

On Sep 21, 2016

An overwhelming majority of New Jersey physicians stated that the changing health care environment negatively affected their medical practices within the last year, according to a recent survey of New Jersey physicians; nearly 81 percent of those surveyed cited increased administrative burden in their practices having a negative effect (up from 39 percent in 2015), while 65 percent cited reduced insurance reimbursements (up from 26.5 percent in 2015). The results were reported in the newly-released 2016 New Jersey Health Care Monitor, the fifth annual survey of New Jersey physicians conducted by Brach Eichler. In July 2016, 126 physicians comprising solo practitioners, members of a group practice and employees of a health care facility were surveyed.

In line with reports of reduced reimbursements, approximately 47 percent of respondents stated their income decreased within the last year. However, this figure actually reflects a nearly 10 percent change from the prior year, when more than half of all respondents (56.2 percent) said their income from their practice decreased, signaling a possible slowdown in a trend that has been occurring for some time.  According to the 2013 survey, 63.4 percent of physicians reported reduced reimbursements.

“In the face of reduced reimbursements, physicians continue to look for ways to remain competitive and sustain their practices.  For example, nearly 13.5 percent took purposeful steps to reduce expenses by changing their practice structure,” noted Brach Eichler Health Law Practice Chair John D. Fanburg. “This is really testimony to the challenging environment for practitioners who must balance the practice of medicine and their desire to treat patients with the growing demands of the business and regulatory aspects of their practice.”

While “administrative burden” (regulatory and compliance issues) was the strongest reported factor affecting their practices, physicians also cited technology expenditures (53.17 percent), reduced time with patients (also 53.17 percent, more than triple the 2015 figure of 15.6 percent) and increased scrutiny (53.97 percent). In addition, 48.41 percent of those surveyed said government intervention was among the underlying factors causing the current healthcare crisis.

Health insurance also was a large concern of physician; 47.62 percent said more time spent negotiating or dealing with insurance companies or healthcare payors affected their roles as physicians. In fact, 53.9 percent of respondents said insurance costs were the primary source for the current healthcare crisis. Respondents noted that other primary sources fueling the healthcare crisis included escalating costs associated with the practice of medicine (50 percent) and too much government intervention (61 percent).

According to the 2016 New Jersey Health Care Monitor, these pressures led to nearly 44 percent of New Jersey physicians to change the structure of their practice last year:

• 24 percent of those who did so integrated with another healthcare organization.

• 10.4 percent contracted with a healthcare facility.

• 10.4 percent reduced staff.

Among those that did alter their practice structure, 23.6 percent said the change resulted in increased cash flow and 28.09 percent said it reduced operational inefficiencies. Also worth noting is that in spite of so many physicians merging with other practices or cutting staff, 23.2 percent of those who changed their practice structure last year did so by hiring other practitioners. About the same number (23.02 percent) plan to do the same in 2017.

Outlook for 2017 Mirrors Current Concerns

When asked about their outlook for their medical practice in 2017, approximately 49 percent held an unfavorable or very unfavorable outlook; this is a slight improvement over last year’s survey, when more than half of the respondents (51.6 percent) stated they had a similar outlook. The key concerns reported over the past year are mirrored in those going into 2017:

• Heightened administrative burdens, 64.29 percent

• Keeping up with regulatory/compliance issues, 51.59 percent

• Escalating costs associated with the practice of medicine, 50 percent

• Reduced reimbursements, 49.21 percent

• Government intervention, 48.41 percent

About 46 percent of physicians said they plan to change the structure of their practice in the near future; nearly 27 percent plan to integrate with another practice (nearly three percent more than the prior year), and nearly 12 percent plan to contract with a healthcare facility. Another 13.49 percent plan to retire (slightly less than last year), while nearly 8 percent plan to practice medicine outside of New Jersey (slightly more than in 2015).

Among the New Jersey Health Care Monitor’s other key findings:

• Regarding the OMNIA Tier insurance program, the majority of respondents (approximately 55 percent) said it has had no effect at all on their practice; just over 30 percent said it has had a .negative effect on their practice, and about 13 percent reported a positive effect.

• More than one-quarter of physicians have been subjected to an audit from a healthcare payor, most often by a managed care plan or Medicare.

• The vast majority of physicians bill in network (81 percent).

• Besides government intervention, physicians cited insurance companies (nearly 54 percent) and escalating costs associated with the practice of medicine (50 percent) as the primary sources for the nation’s healthcare crisis.

“The healthcare market will continue to evolve as we’ll see further consolidation of medical practices and more physicians becoming employees of hospitals and large multispecialty groups,” noted Joseph Gorrell, a member in the health law practice at Brach Eichler.  “Whether this consolidation will result in greater efficencies and a higher quality of care will be the focus of great interest as this evolution continues.”

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