Increased Administrative Burdens, Reduced Reimbursements are Top Concerns Among NJ Physicians

The vast majority of New Jersey physicians (95.31 percent, up from 89.89 percent in 2014) believe that the changing healthcare environment has negatively impacted their role as a physician, according to a just-released survey conducted by Brach Eichler.  According to the 2015 New Jersey Health Care Monitor, of those, more than 39 percent said that they felt an increased administrative burden as a result of the changing environment, while 26.5 percent said reduced reimbursement and 15.6 percent reported reduced time spent with patients were among the most prevalent ways in which their practice had be negatively impacted. More than half of the survey’s respondents (51.6 percent) have an unfavorable or very unfavorable outlook for their medical practice for 2016, as well; this figure is up from just 39.9 percent which held the same view last year for their practice in 2015.

Brach Eichler conducted the statewide annual survey — currently in its fourth year — among physicians, including solo practitioners, members of a group practice or employees of a health care facility, in October and November 2015.

According to Brach Eichler Health Law Practice Chair John D. Fanburg, “New Jersey’s dynamic regulatory environment and demanding business climate have long challenged healthcare providers here; in this regard, New Jersey is seen as a bellweather of sorts for the practice of medicine nationally. Our survey has shown year after year that providers are feeling the pressure more than ever.  The implications of this are far-reaching for this important sector of our economy.”

According to the New Jersey Department of Labor and Workforce Development, the health care industry contributed $30 billion to New Jersey’s Gross Domestic Product in 2012, or roughly 7 percent of all state output (latest available from the U.S. Bureau of Economic Analysis). In addition, health care is the only industry that has added jobs in the state every year 1990 – 2014 while increasing its share of jobholding from 7.5 percent in 1990 to 11.7 percent in 2014.

According to the 2015 New Jersey Health Care Monitor, when asked whether their reimbursement rates had increased, decreased or stayed the same, more than 62 percent said they had decreased. “The combination of decreased reimbursement, coupled with growing administrative and compliance demands, not only directly impacts physicians’ bottom line, but their ability to sustain a viable practice,” Fanburg said.

Worth noting, nearly 15 percent said they were planning staff reductions in the near term; 15 percent were planning to retire, and more than 7 percent were planning to leave New Jersey to practice elsewhere. “These are compelling figures that are certain to impact the delivery of care, as well,” he added.

Payors v. Practitioners

Many practitioners maintain that the Affordable Care Act (ACA) has negatively impacted their medical practice (51.5 percent) and heading into 2016, nearly 32 percent said they are most concerned about ACA’s impact on reimbursement.

“It’s interesting because there is no research to substantiate this concern – that ACA hurts reimbursement.  In fact, logically speaking, the opposite should be true. Despite the fact that our survey has shown year after year that this perception exists, in actuality, the reduction in reimbursement rates likely has more to do with the leverage of the insurance companies than anything else,” explained Joseph Gorrell, a member in the health law practice at Brach Eichler.

The survey also revealed that more than one-quarter of practitioners surveyed were subject to an audit from an insurance company (this is up slightly from 22.73 percent in 2014).  “This is a substantial number of practitioners that have been affected and largely suggests that insurers are more aggressively looking at issues such as fraud and overbilling among New Jersey’s practitioners,” Gorrell added.

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

  • More than half of all respondents (56.2 percent) said their income from their practice decreased in 2014.
  • While fewer than 4 in 10 respondents said their practice structure had changed in the last year, nearly 60 percent (59.3 percent) were considering changing the structure in the near future, with nearly one-quarter of those planning to integrate their practice with another healthcare organization and another 21.9 percent planning to hire other practitioners.
  • Of those planning to merge or otherwise modify their practice, most respondents 48.5 percent said they would take this step to reduce expenses.  Another 23.3 percent said increasing their cash flow was the key driver for this decision, and another 19.2 percent said it would help them boost their market share.
  • Accountable Care Organizations and Medical Home Models still don’t have much traction in New Jersey, with just 26.6 percent and 9.38 percent respectively, saying they are a member or have entered into such a contract.
  • Respondents said that, on average, 86 percent of their billing is in-network and only 8 percent of respondents bill solely out of network.

“The proposed out-of-network bill that is being discussed in the New Jersey legislature is so far reaching and in some respects, out of step with the reality of healthcare delivery in the state.  While we certainly need to look at those instances where the patient is facing out-of-network fees even after they believe they have gone to an in-network facility or provider, we need to adopt a more moderate and common-sense approach to this important issue without creating even more unnecessary administrative burden on the provider,” said Fanburg.

The move toward integrating their practice with other providers continues to be a consideration among providers in New Jersey. with 37.04 percent of providers that changed their practice structure in the last year integrating it with another healthcare organization (versus 38.71 percent in 2014) .  When asked if they were considering changing their practice structure in the near future, nearly 60 percent said yes, and the majority of respondents said they would be integrating their practice with another health care organization (versus 50 percent in 2013).

“Consolidation  among providers continues to be a popular option as they try to reduce expenses, increase cash flow, reduce inefficiencies in the operations of their practice and, in general, maintain or bolster their market share in the face of growing competition from larger group practices, growing healthcare systems, and even telemedicine providers,” explained Fanburg.  “For example, the regulatory environment for telemedicine is expected to change and be more flexible in 2016 which will further add pressure on the smaller practices that have yet to affiliate or consolidate. We will see a greater influx of out-of-state providers offering heath care services to New Jersey residents.”


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