With the formation of two new provider-sponsored managed-care networks in New Jersey, the channels for capturing patients are rapidly proliferating in the state. But instead of selecting a single network, many providers are hedging their bets by signing up with several.
The latest networks, unveiled just three weeks ago, further expand referral opportunities.
Several hospital executives are opting to participate in more than one network as "a strategy to protect the hospital's interest," said Annette Catino, president of QualCare Preferred Providers, a Piscataway, N.J.-based PPO sponsored by hospitals and physicians, which has more than 100,000 enrollees.
One of the new networks links the teaching affiliates of Newark, N.J.-based University of Medicine and Dentistry of New Jersey, a statewide system of medical, dental, nursing and health professions schools.
newly created University HealthCare Corp., to be based in Newark, is designed to deliver services in the state's 21 counties.
Organizers say it is the nation's first statewide managed-care network operated by a group of coordinated academic health centers.
Separately, some 5,000 primary-care and specialist physicians, with more than 50 hospital affiliations, have created what they say is "the first physician-sponsored, statewide preferred provider organization." South Plainfield, N.J.-based Physicians Health Care Associates of New Jersey was formed by 20 independent practice associations and will serve as the physician component of Just Care, a Boulder, Colo.-based cooperative healthcare system. Just Care plans to create a partnership among payers, consumers and providers in New Jersey.
"Managed care is moving much more rapidly than anyone predicted in New Jersey," said Stanley S. Bergen Jr., M.D., president of UMDNJ.
Some 15% of New Jersey's residents are enrolled in HMOs, according to state government statistics. Official figures weren't available on total managed-care enrollment, but many experts believe the penetration may be as high as 40%.
As managed-care penetration grows, providers are pursuing multiple managed-care strategies to keep patients coming.
"There's tons of overlap," said Chet Pniewski, president of Health Care Management Associates, a South Plainfield, N.J.-based firm that's administering Physicians Health Care Associates.
One example is Robert Wood John- son University Hospital, a New Brunswick, N.J.-based affiliate of UMDNJ. As part of its strategic plan, the hospital participates in QualCare; First Option Health Plan, a Red Bank, N.J., HMO owned and operated by providers; and UMDNJ's University HealthCare network.
Following the deregulation of New Jersey's hospital rate-setting system in 1993, administrators of Robert Wood Johnson University Hospital began studying how academic medical centers in other parts of the country were securing referrals.
"What we saw was you couldn't really predict what network would succeed," said Harvey Holzberg, president and chief executive officer of the 418-bed hospital and president of the five-hospital Robert Wood Johnson Health System. As a result, the hospital decided to become involved in as many networks as possible.
"We bring something of value to all of them," Holzberg said.
As a member of several networks, Robert Wood Johnson University Hospital has to be careful to avoid participation in the management and marketing decisions of multiple plans. Now that Holzberg is on University HealthCare's board of directors, he resigned his position as a member of the executive committee of First Option Health Plan.
Because of the interns and residents UMDNJ provides, teaching affiliates had little choice but to join the network, according to one managed-care executive, who asked not to be identified.
University HealthCare will deliver services through its six-region network of providers. Each region consists of an academic health center that will provide tertiary-care services, and community hospitals will provide less complicated care.
Its physician network consists of the faculty practice plans of UMDNJ's medical schools, and similar plans or physician-hospital organizations at community hospitals.
University HealthCare intends to offer HMO and PPO products. It has an HMO license in Essex County, and approvals for other counties are pending. The state has no licensing process for PPOs.
"One of the things we're trying to do here is have another revenue stream for the university," Bergen said. UMDNJ provided a loan of about $1.5 million to fund University HealthCare's start-up costs. He expects that to be repaid within 18 months, and any profits generated by University HealthCare would help to support UMDNJ's teaching programs.
Keeping costs down will be one of the network's greatest challenges, Bergen acknowledged.
The other new network, Physicians Health Care Associates, enters the market 16 months after the creation of QualCare. When QualCare announced its formation in November 1993, it was the only provider-sponsored PPO in the state and the largest such network to be formed (Nov. 22, 1993, p. 26). It now has 39 hospitals and more than 6,000 physicians.
The difference is that Physicians Health Care Associates is exclusively controlled by its physician members.
However, Physicians Health Care Associates also will compete with Trenton-based Physicians Healthcare Plan of New Jersey, a physician-sponsored HMO formed last year through the sale of shares to physician members.
Physicians Health Care Associates President Stephen E. Hefler, M.D., said the PPO's formation began 11/2 years ago. Some 20 IPAs across the state each contributed $2,500 toward the legal and administrative start-up costs, he said. "We need to have a much stronger voice in determining medical necessity, quality of care and how finances are spent," Hefler said.
Physicians may only participate in Physicians Health Care Associates if they are members of the involved IPAs. More than 35% of participating physicians are primary-care practitioners, and more than 90% are board-certified or board-eligible, according to the company's marketing materials.
Hefler said he is even more excited about the prospect of being part of Just Care. Among other benefits, Physicians Health Care Associates will have access to electronic fund transfers, and plan participants will have access to cost and outcomes data.