Increased Administrative Burden, Reduced Reimbursement Continue to Be Top Concerns among New Jersey Physicians

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Brach Eichler’s 2016 New Jersey Health Care Monitor reveals nearly half of all New Jersey physicians had decreased income in the last year. Many plan to merge or modify practice to improve cash flow and operational efficiencies.

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In the face of reduced reimbursements, physicians continue to look for ways to remain competitive and sustain their practices.

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% of those surveyed cited increased administrative burden in their practices having a negative effect (up from 39% in 2015), while 65% cited reduced insurance reimbursements (up from 26.5% 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% of respondents stated their income decreased within the last year. However, this figure actually reflects a nearly 10% change from the prior year, when more than half of all respondents (56.2%) 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% 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% 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%), reduced time with patients (also 53.17%, more than triple the 2015 figure of 15.6%) and increased scrutiny (53.97%). In addition, 48.41% of those surveyed said government intervention was among the underlying factors causing the current healthcare crisis.

Health insurance also was a large concern for physicians; 47.62% said more time spent negotiating or dealing with insurance companies or healthcare payors affected their roles as physicians. In fact, 53.9% 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%) and too much government intervention (61%).

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

  • 24% of those who did so integrated with another healthcare organization.
  • 10.4% contracted with a healthcare facility.
  • 10.4% reduced staff.

Among those that did alter their practice structure, 23.6% said the change resulted in increased cash flow and 28.09% 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% of those who changed their practice structure last year did so by hiring other practitioners. About the same number (23.02%) 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% 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%) 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%
  • Keeping up with regulatory/compliance issues, 51.59%
  • Escalating costs associated with the practice of medicine, 50%
  • Reduced reimbursements, 49.21%
  • Government intervention, 48.41%

About 46% of physicians said they plan to change the structure of their practice in the near future; nearly 27% plan to integrate with another practice (nearly three percent more than the prior year), and nearly 12% plan to contract with a healthcare facility. Another 13.49% plan to retire (slightly less than last year), while nearly 8% 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%) said it has had no effect at all on their practice; just over 30% said it has had a .negative effect on their practice, and about 13% 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%).
  • Besides government intervention, physicians cited insurance companies (nearly 54%) and escalating costs associated with the practice of medicine (50%) 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 multi specialty groups,” noted Joseph Gorrell, a member in the health law practice at Brach Eichler. “Whether this consolidation will result in greater efficiencies and a higher quality of care will be the focus of great interest as this evolution continues.”

Full results of the survey can be found at http://www.bracheichler.com

About Brach Eichler LLC
Brach Eichler’s health law practice offers an array of services to clients across the healthcare field in such areas as physician and hospital contracts; corporate governance and compliance; health care mergers and acquisitions, administrative and judicial litigation; and state and federal regulatory advice. Clients reflect a cross-section of the healthcare industry, including large physician groups, individual practitioners, hospitals and hospital systems, medical staff organizations, physician specialty societies, health care trade associations, from long-term care facilities, home health agencies, and patients and providers seeking insurance coverage and proper reimbursement. The Chambers USA Guide to America's Leading Lawyers for Business included Brach Eichler as having among the five leading healthcare law practices in New Jersey.

Brach Eichler LLC is a full-service law firm based in Roseland, N.J. With over 70 attorneys, the firm is focused in the following practice areas: Business Transactions & Financial Services, Criminal Defense and Government Investigations, Employment Services, Environmental & Land Use, Family Law, Health Law, Litigation, Patent, Intellectual Property & Information Technology, Real Estate, Real Estate Tax Appeals, Tax, and Trusts & Estates. Brach Eichler attorneys have been recognized by clients and peers alike in Best Lawyers in America, Chambers USA, and New Jersey Super Lawyers. Visit http://www.bracheichler.com.

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Nina Dietrich
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