Although people can start signing up for insurance coverage on Oct. 1 to meet the provisions of the federal Affordable Care Act (Obamacare), the program will start on Jan. 1 when estimates suggest that as many as 300,000 poor people in New Jersey will get coverage under Medicaid.
With a huge percentage of the poorest people in the state in Hudson County, the impact will fall heavily on Hudson County’s hospitals—largely because many private practice doctors are not taking Medicaid patients.
This is because New Jersey has one of the lowest reimbursement rates to doctors for services provided under Medicaid. A doctor in this state receives $23.50 per patient per office visit compared to more than $111 in some other states.
The reimbursement rate is low, and often these cases are more severe than those that come through insurers, so doctors have to invest more time. If they don’t, the patient suffers.
If individual doctors do not take Medicaid, then poor patients will have to continue to go to emergency rooms for care, driving up the costs to the state and federal government as well as taxing the resources of ERs and hospitals that are already feeling a financial pinch, said Dr. Mark Spektor, CEO of Bayonne Medical Center. This would risk putting even more hospitals out of business in the future.
Under the previous system, New Jersey has gone from 97 primary care hospitals to 64, and if the ERs continue to be flooded with patients under Obamacare, more could fail.
One of the purposes of Obamacare is to reduce poor people’s dependency on emergency rooms and thus lower the costs.
Help may be on the way, but …
While the federal government is supposed to raise the reimbursement rate for most services under Medicaid, offering as much as a 109-percent increase to local doctors over what they are currently getting, the plan is only a two-year trial—after which the federal government will reexamine the increase.
Some doctors are not willing to take a chance that Congress will not cut the rate after two years.
For local hospitals, this is very bad news because they will see the brunt of new patients at a significantly higher cost, with little or no control over their own costs to provide services, supplies, staff, and doctors. This means even more overall losses to hospitals and possibly future closings statewide.
CarePoint officials believe they have the answer, and have dumped a ton of money gambling that if they are in a position to take on the influx of new patients, they will make money and manage costs better than traditional hospitals have in the past.
Alex Mclean, who joined the new healthcare network earlier this year as its chief executive officer, said the owners of the three hospitals have a unique view of healthcare and sustainability.
“They have very much a long-term view,” he said, and CarePoint approaches the medical environment from a different point than traditional hospitals.
CarePoint is currently building its own network of providers in and outside Hudson County, buying out practices of established doctors and small medical groups.
This does a number of things, Dr. Spektor said.
CarePoint is a hybrid, a cross between an insurance plan management system and a medical provider built on three Hudson County hospitals: Bayonne Medical Center, Hoboken University Medical Center, and Christ Hospital. But the network is growing and incorporating a number of previously stand-alone medical providers and local physician practices.
This network allows the hospitals to control costs, and provide services throughout Hudson County in a way traditional hospitals cannot.
But it also allows the hospitals to compete against the growing number of storefront medical providers that have traditionally drained off business from hospitals by providing same-day surgery and a number of other bread-and-butter services hospitals traditionally supplied.
The practices purchased by CarePoint also see an upgrade in technology, including new information technology that allows them to tie into the hospital network’s growing databank.
CarePoint becomes an overarching umbrella for services in and outside the hospitals, McLean said.
It allows managers to oversee the costs of services by all their providers, and allows doctors and these small medical venues to share information. A patient can move from one venue to another seamlessly, as information is already at the fingertips of doctors and nurses throughout the system.
Hospital managers can evaluate the in-patient services needed and could adjust hospital beds accordingly.
McLean said in the past that traditional hospital managers had to find a way to fill beds, but did not control the costs of services. Even facing poor reimbursement rates from insurance companies and other payers, the hospitals had a goal of getting patients into those beds.
CarePoint has a different perspective. By controlling competition by owning many of the outpatient services, the three hospitals are less stressed financially because they aren’t losing patients to other providers. The system can also provide patient services earlier during an illness or injury and then reduce the need for more extensive service. And by tracking cases through its vast system it can have a better way to predict how many patients hospitals can expect and adjust their services to meet that need.
Spektor, however, said this system that includes its own insurance, puts CarePoint in a unique position when it comes to the thousands of Hudson County residents who are expected to be covered by Medicaid starting in January.
CarePoint has already established three clinics for the poor, one at each of its hospitals—and is soon to open a fourth in Jersey City in anticipation of becoming a Medicaid provider.
“We have invested a fortune in this,” Spektor said. “If we don’t become a Medicaid provider, we stand to lose a fortune, and we will have to reevaluate whether we can afford to keep these clinics open.
CarePoint, he said, can require its doctors to accept Medicaid patients because the burden of cost and the reimbursement rate is on the shoulders of CarePoint, not the individual doctors.
Although vague on how CarePoint would make money from this venture, it is clear that if the federal government decides to make permanent the higher reimbursement rate, CarePoint will be far ahead of the competition in already having a substantial number of Medicaid patients in its system.
Al Sullivan may be reached at firstname.lastname@example.org.