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Small group practices may become thing of past because of Obamacare

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Continuum, founded by Dr. John Tedeschi, provides practice management.
Continuum, founded by Dr. John Tedeschi, provides practice management. - (AARON HOUSTON)

Changes in modern society did away with the individual family doctor who made house calls more than a generation ago.

Changes in modern health care services now are threatening to do the same thing for doctors in small medical practices.

Experts say the demise of small practices — or their absorption by larger groups and hospitals — is an unintended consequence of the Affordable Care Act.

Whether this ultimately is good for health care is up for debate.

Attorney John Fanburg, chair of the health law practice at Brach Eichler in Roseland, is living the trend. He has helped negotiate the acquisition of about a dozen physician practices by hospitals around the state.

"For the one-, two- or three-physician group, it's really hard given the increased overhead and the relatively flat level of reimbursement (from insurance companies, the government, other payers)," he said. "Doctors are talking to everybody all the time."

They feel they have to.

The new health care reform landscape is leading many doctors to either go to work for a hospital (in the community) or merge into larger practices so they can afford the costly switch to electronic medical records and embrace new care models such as "population health management," a concept where clinicians engage patients to control chronic diseases.

Hospitals, which previously were happy just to give doctors privileges, are now pushing to have them on staff.

Atlantic Health, which oversees four hospitals — including heavyweights Morristown and Overlook Medical Centers — has been increasingly hiring physicians as employees. It now employs roughly 500 doctors.

And more than a year ago, Atlantic Health launched a new physician-owned primary care practice, Primary Care Partners, which is affiliated with Atlantic but is independent of the hospital system.

Primary Care Partners now has 52 physicians, but Atlantic Vice President Dr. David Shulkin said he sees that growing to 100 in the next year.

"Doctors want different things," Shulkin said. "(Primary Care Partners is for doctors) who want to be part of a larger organization so they can share electronic medical records and share resources but still control their own destiny."

Shulkin said when he came to New Jersey from New York four years ago, he was struck by two alarming trends: the aging and retirement of primary care doctors and the rise of "concierge medicine," where doctors exit the high-stress, time-starved primary care practice and instead devote more time to a smaller set of patients.

"If you don't make primary care sustainable and you don't make it economically viable, you won't have the foundation to deliver proper health care in the community," Shulkin said.

The Primary Care Partners physicians remain in the community and are more likely to bring on new doctors as their business expenses are spread over a larger practice, Shulkin said. They buy malpractice insurance at group rates and can afford to bring in consultants to train the entire group to keep up with changes in the profession.

Primary Care Partners also contracts with Continuum Health Alliance for business services such as billing and electronic records.

Founded by pediatrician Dr. John Tedeschi, Continuum provides practice management for a number of groups, including Marlton-based Advocare, a group practice founded by Tedeschi that now has more than 500 physicians.

Tedeschi said he founded Continuum 16 years ago "to make doctors happy being doctors again, and take away the things that are bothering them so they can get back to their patients and be as successful as they can possibly be."

The Valley Hospital in Ridgewood has a 200-physician practice with more than 30 medical and surgical specialties. Marc Goldstein, president of Valley Medical Group (VMG), said the group continues to grow and is currently in discussions with more than 50 medical practices.

"Our acquisition of community-based primary and specialty physician practices will ensure that patients residing in communities served by Valley Health System continue to have future access to quality primary and specialty care," Goldstein said.

Goldstein said doctors join VMG for several reasons, with managing the new health care rules and regulations near the top of the list.

"Managing a private practice is becoming more and more difficult," he said. "Joining VMG offers support for the practices, the ability to practice as part of a large, multispecialty group, and financial security."

Larry Downs, chief executive of the Medical Society of New Jersey, said a key motivation for doctors to go to work for hospitals or merge into larger practices is the rise of new payment models that reward doctors for hitting certain quality and efficiency targets.

"Some of these new payment models require a bigger investment in health information technology to track quality and follow patients more closely," Downs said. "And some of the technology is almost unsustainable for a small practice."

Downs said doctors have felt a downward pressure on reimbursements for years.

"Going forward, the promise of health care reform is that if physicians provide the right care at the right time to the right patients, the system will save a whole bunch of money and reward those efforts by sharing those savings with doctors," he said.

It's often a good thing.

"We've seen hospital-based doctors who are enjoying it and providing quality care," he said.

Of course, it doesn't always work out. Some doctors find they don't like the hospital they are at and work to move to another. Others don't like it period.

It's the other trend Fanburg sees.

When he's not working to bring hospitals and doctors together — something that has brought him plenty of work the past two years — he's working to undo some deals.

Fanburg said he's currently advising two physician practices looking to terminate mergers with hospitals.

"Physicians who've been in private practice for many years (can't always adapt to working for hospitals)," Fanburg said.

How many ultimately will be forced to do so remains to be seen.

E-mail to: beth@njbiz.com
On Twitter: @bethfitzgerald8

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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