Affordable Care Act Showing Initial Effect on Budgeting for Southern Ocean Medical Center

More Physicians to Be Recruited
By MARIA SCANDALE | Feb 27, 2014
Courtesy of: Southern Ocean Medical Center A view of the new Emergency Department at Southern Ocean Medical Center in Manahawkin.

As uncertainties and delays surround implementation of the Affordable Care Act, it is reality in the budgeting process of healthcare providers such as Southern Ocean Medical Center. The SandPaper interviewed SOMC President Joseph P. Coyle this week for an overview on what is known about the initial impact on hospital operations of the changes commonly referred to as “Obamacare.”

In what he termed “the most significant change I’ve seen in my career,” the ACA’s restructuring of the healthcare industry will bring about 6,000 new patients into coverage in Southern Ocean County, Coyle said. The medical center, as part of the Meridian Health system, plans to hire new physicians, and to open a new center for health, a multi-specialty physicians office, in Waretown.

A concurrent trend nationwide, as Coyle will explain, is to “reduce the number of hospital admissions and try to move care … more into outpatient settings.” Going with that is a stress on preventive health. 

The SandPaper: In terms of budgeting, are we talking about an effect already felt in the 2014 budget, or are you building more planning into the 2015 budget?

Joseph Coyle: We didn’t build a significant impact into 2014, just because there is so much uncertainty. There are a number of forces in play right now, between getting patients enrolled through the exchange and through Medicaid expansion.

At the same time there are programs being developed with insurance companies and others that are designed to reduce the number of hospital admissions and try to move care more into the physician offices and outpatient settings.

You’ve got the increased coverage that’s going to happen that would create more demand for services, at the same time as the government and insurance companies are trying to move those services out of the hospital environment to lower costs.

So there are a lot of things happening, it’s a very dynamic time right now.

… We haven’t begun next year’s budgeting. For 2014, we have budgeted $3 million of investments this year (in a $130 million budget) to bring on new surgeons and new physicians. … We expect to have at least three physicians here by this summer.

SP:  What is the hospital’s action plan to address more demand for services?

Coyle:  “We’re actually trying to transform ourselves from a traditional hospital to more of a broader healthcare provider.

That involves recruiting more physicians to the community in anticipation of more people having coverage; hiring more specialists in surgical specialties like thoracic surgery, breast surgery and vascular surgery, because with more access to insurance, we expect more demand for care.

And we’re working with home health providers and others to make sure that if there is an alternative to hospitalization, that we’re able to provide that in the community.

A lot of this is driven by Meridian Health system, because in addition to six hospitals, we have a lot of non-hospital services, including home health, hospice, nursing homes, an ambulance company – so we really have the ability in the system to provide a lot of care outside the hospital.

One of the other things we have done is to expand the emergency department (a $22 million project). We expect demand for emergency care to go up as more people have access to insurance, so we’ve got plenty of capacity in there, and we have designed the facility so that if patients come in with minor injuries, they can get treated and released quickly, separately from the true medical emergencies.

SP: How much of an increase might we see in the number of insured residents? 

Coyle: We know that we expect the number of uninsured in Southern Ocean County – which currently is about 8 percent of the population – we expect that to fall to 3 percent over the next few years.

That’s a significant reduction in the number of uninsured. The population in Southern Ocean County is about 120,000, so that would be about 6,000 more people getting health insurance.

That would be people enrolling through the exchange or through Medicaid expansion.

SP:  Is the new coverage actually going to pay the hospital bills? In other words, do you have any concerns about the new Affordable Care Act?

Coyle: There are a lot of concerns, obviously, with the selection of the health plans that people choose. In order to keep the costs low … the copayment could be significantly higher.

What happens is if someone’s copayment for an emergency room visit used to be $25 and now it’s $100, it’s a lot harder for us to collect $100 from somebody who is on a low-cost insurance plan. So if we don’t collect that money, now we have to try to get it from patients who have better insurance, and it’s a vicious cycle.

If copayments were $10 and people didn’t pay it, it didn’t affect our ability to keep the lights on, but you lose enough $100 visits, and now it’s really impacting the overall budget.

SP:  To some extent, is it a wait-and-see situation as to how revenues will be affected?

Coyle: In some ways. You can see that enrollment is lagging behind what was projected.

There was a big increase in enrollment in January – 53,000 more people got insurance nationally. But in New Jersey, 55,000 people are enrolled through the exchange, and I think the estimate was that we would be at 250,000 by now. So it’s really hard to predict what the impact is going to be. Everything is so dependent on people actually enrolling.

Now that the president moved the employer mandate back a year to 2016 for certain classes of employers, that’s another lag for people who didn’t have insurance.

As the next couple of years evolve, we’ll know who has coverage, what kind of coverage it is, what kind of services they’re going to be accessing. Meanwhile, we’re just trying to make sure that we provide good surgical care, oncology, cardiology, orthopedics, certain things that we have always done well, so that we will continue to do them well and have enough physicians here; then we’ll be successful under any health system. 

SP:  Will the population call for more off-campus centers for health, such as you have in Forked River and Little Egg Harbor?

Coyle: We hope to add a multispecialty office in Waretown in 2014, making sure that physician accessibility is there. We have identified some locations. There are really no physicians’ offices in Waretown, and that area has grown significantly in the past five years and is expected to continue to grow.

One of the things that happened in Massachusetts when they went to universal health coverage was (a problem with) getting access to primary care physicians. You’ve got patients who never had insurance, never got to a doctor, and now they have insurance for the first time. They get that card in January, go to the doctor in February, get diagnosed with something, and now they’re going to the doctor routinely, so getting into a doctor’s office is a challenge.

So, we’re recruiting heavily to get doctors, to make sure we have access for people as they come onto the health insurance rolls. 

SP:  Who are the people who will be newly insured? Families, young people?

Coyle: I think you’ll see independent business people, tradesmen. There are a lot of small building contractors in the area who may or may not be insured, but probably couldn’t afford health insurance. You’ll see quite a lot of people who work in places such as daycare centers, areas with relatively low wages where the health insurance benefit becomes so significant that it’s impossible to provide.

For our part-time employees (at the hospital), if you convert it to an hourly wage, it’s about $8 an hour just for health insurance. If you’re a small business and you’ve got employees at minimum wage, you’d have to double the cost to provide health insurance. So, smaller employers who haven’t been able to provide that, I think their employees are the ones likely to end up on the exchange.

SP:   Might they come into the system with undiagnosed problems that are advanced?

Coyle:  What you’ll find, unfortunately, with people who don’t have insurance is that they don’t get screenings. They wind up getting diagnosed very late in terms of cancer, as an example. So if you have access to mammograms and prostate screenings and you get diagnosed earlier, you’re going to have a much better outcome. So we hope that’s going to translate into better health for the community.

SP:  Earlier, you spoke of an emerging trend in healthcare that includes reducing the number of admissions. That raised a question in my mind about straining the ambulance services if the patients have to return to the hospital.

Coyle: One of the things we’re doing is looking to help people manage the chronic diseases better, like congestive heart failure and emphysema, and one of the things the government has looked at in the last few years is the readmission rate: how frequently patients get readmitted within 30 days of discharge, as well as implementing penalties for hospitals that have high readmission rates.

Southern Ocean Medical Center is one of only five hospitals in New Jersey that is not paying the readmission penalty, because our readmission rate is low. We think that is because we have always done a lot of good community outreach with support groups, wellness programs, and having the Ocean Club fitness center, which is now Meridian Fitness and Wellness.  I think we’re ahead of the game in a lot of those areas.

Getting out into the community, avoiding hospitalizations, helping people manage their healthcare more effectively is where healthcare is going.

The Affordable Care Act is the most significant change that I’ve seen in my career. It’s really just the first phase in 2014; there are a lot of other things that are going to be happening.

SP: Occasionally on the debate programs on TV, we’ll still hear calls to repeal Obamacare, but insurance companies and others are already entrenched in compliance. What do you think of that eventuality?

Coyle: One of the inevitabilities is, if there is more demand, we want to make sure we have services available, so that’s why physician recruitment is key and why we're making investments in areas like cancer care, neurosciences and cardiovascular care. Those are the main areas that a community hospital needs, to be prepared to take care of people regardless of what the economic environment is.

Because of health reform creating more demand, we’re looking at those as the areas where we can expect the demand to be increasing the most – and we still have to realize we’ve got a generally older population, and the senior population is expected to continue to grow in Southern Ocean County, and those are the areas in which seniors need care as well.

SP:  Other than the support of donors and successful fundraising efforts through the hospital foundation, is there any other reason that the hospital is in a good financial position up to these changes?

Coyle:  We have seen growth in our surgical volume. In the past year, we’ve had 350 additional surgical cases compared to the previous year because we have been bringing on surgeons, and as a result, that makes us financially strong.

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