2020 Outlook for New Jersey’s Growing Healthcare Sector

2020 Outlook for New Jersey’s Growing Healthcare Sector

COMPILED BY JOHN JOSEPH PARKER CONTRIBUTING EDITOR

MORE PHYSICIANS ARE SPENDING less time with patients and contending with reduced reimbursement rates than just four years ago. Data privacy and the prescribing of opioids continue to be on the radar, while technology is becoming an increasingly important tool within physician practices.

According to the Brach Eichler 2019 New Jersey Health Care Monitor, the eighth annual survey of New Jersey physicians: 63 percent said they were dealing with an increased administrative burden as a result of regulatory or compliance issues (versus 39 percent in 2015); nearly 56 percent of respondents said the changing healthcare environment has led to reduced reimbursement (versus 27 percent in 2015); nearly half said they were spending less time with their patients (versus 16 percent in 2015); 37 percent spent more on technology in the last year (versus just 9 percent in 2015); and a little over half of physicians surveyed say they are prescribing fewer opioids to their patients (compared with 43 percent in 2018).

In spite of these demands, little more than half of all physicians said their practice structure has not changed in the last year (versus 49 percent in 2018 and 61 percent in 2015).

“In 2019, we saw significant transactions continue to shape New Jersey’s healthcare marketplace such as Summit Medical Group’s merger with New York City-based urgent care system CityMD, as well as continued hospital consolidations,” explains Brach Eichler Managing Member and Healthcare Law Practice Chair John D. Fanburg. “While many physician practice groups already completed mergers and acquisitions in recent years, we still are likely to see the ripple effects of this year’s mega deals on the physician community for some time to come.”

In fact, 16 percent of those physicians surveyed said that they did integrate their practice with another healthcare organization such as another single or multispecialty practice or hospital within the last year (versus 32 percent in 2018 and 37 percent in 2015), in a continuation of the trend, albeit at a lower rate. Of those physicians who are considering merging or otherwise modifying their practice, the reasons remained mostly consistent with the 2018 survey, with the desire to reduce expenses and increase cash flow being the most important reasons, followed by the desire to reduce the administrative burden, boost market share and remain competitive.

According to the 2019 study, data privacy continues to be a focus for physicians in terms of how they run their practice in the face of highly-publicized technology breaches and cyberattacks. More than 4 in 10 physicians said they are investing in technology, while 40 percent also said they are conducting more staff training, and 20 percent are creating a new policy and procedures manual in an effort to protect their patients’ data and privacy.

Opioids continue to be an important topic. Healthcare Law Member Joseph Gorrell noted, “The nation’s opioid crisis has captured the attention of New Jersey’s physicians, as well, with more than half (52 percent) of the respondents prescribing them less often and suggesting alternatives, and 29 percent taking greater care to document patient and prescription data, according to this year’s survey.”

Among the survey’s other key findings:

● 36 percent of respondents said they haven’t felt any impact from the now 18-month-old out-of-network law; 30 percent weren’t sure yet, and 14 percent said their reimbursement had been reduced.

● While the media have talked a great deal about new ways to deliver medical care, the vast majority (72 percent) said they have not considered or are not already delivering medical care in new ways. However, 19 percent have considered telemedicine, 12 percent have considered concierge medicine, and 4 percent have considered home-based healthcare.

● All of the business and regulatory demands on physicians continue to impact their outlook for their practice. While more than 62 percent of New Jersey physicians have a neutral, favorable or very favorable outlook for their practice, nearly 38 percent had an unfavorable or very unfavorable view.

● Reduced reimbursement is physicians’ biggest concern going into 2020, followed by increased administrative burden and keeping up with regulatory and compliance demands. Many still also feel pressure to give up their independent practices and face challenges keeping their client base intact.

While this year’s study didn’t reveal dramatic fluctuations in the trends from the 2018 study, Fanburg notes that it often takes time before “we meaningfully start to see the longer-term effects of some of these changes, such as M&A activity, New Jersey’s evolving cannabis laws and the influence of Wall Street and private equity.

While the relative consistency among the trends between last year and this year may suggest that there is stability in the marketplace, in fact, New Jersey’s healthcare arena continues to evolve, quite dramatically in some ways, and serves as a barometer for the changing practice of medicine across the country.”

Among the trends that Brach Eichler has highlighted for 2020 are:

● New York- and Philadelphia-based hospitals will continue to penetrate the New Jersey market; for example, Penn Medicine, CHOP, and the Rothman Institute have followed other large hospitals like Memorial Sloan Kettering and New York Presbyterian into the New Jersey healthcare marketplace.

● Physicians will continue to move away from smaller practices to hospital affiliations, a decision driven as much by geography, as well as strategy. Specialists, in particular, will need to look more carefully at their referral sources. As hospitals continue to merge, they will exert greater influence over their referral base, which will have a significant effect on which specialists patients “choose.”

● Wall Street and private equity will continue to help physicians monetize their practices.

● Patient care will increasingly be rendered by physician assistants and advanced practice nurses as physicians face growing pressure to be ever- more efficient with regard to patient “throughput,” something that is especially true within the larger practice groups.

In spite of these changes and challenges, more physicians than not still would recommend that a young person graduating from college go into the medical profession, with 53 percent saying so in this year’s survey. “This suggests that, despite the growing regulatory and compliance burdens, as well as competitive pressures, physicians still derive enormous satisfaction from the practice of medicine. This fact really says more about the profession here in New Jersey than anything else, much to the benefit of patients,” says Fanburg.

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