Last year, Gregory Shypula, an oncologist who practices at 399-bed Raritan Bay Medical Center in Perth Amboy, N.J., spent about $30,000 to cover the cost of providing health benefits for the five full-time employees in his office. This year, when the hospital and its system partner, the Robert Wood Johnson Health Network, created a lower-cost plan for its affiliated physicians, Shypula jumped at the chance to switch insurers and save some money.
He wound up cutting his insurance costs by $6,000-a tidy sum for a solo practitioner struggling with everything from higher overhead costs to lower reimbursement rates. Those savings created a strong sense of goodwill between Shypula and the hospital network responsible for providing it.
"I can tell you this plan is comparable to any one I've ever seen," said Shypula, who has four other part-timers at his office in Avenel, N.J. "I actually bought it for myself and my family along with my employees. I saved approximately 25% for health benefits in my office. I've always felt like I had a good relationship (with the hospital network). But in some ways, this helps make you feel a little closer."
For seven-hospital Robert Wood Johnson, the 5-month-old insurance plan is another way to forge a closer relationship with its 1,800 affiliated doctors by providing lower-cost insurance to hundreds or thousands of their employees and dependents. In fact, doctors like Shypula, faced with double-digit increases, helped trigger the change.
"Physicians came to the administration looking for guidance and help," said Peg Douglas, the network's director of program development. "It wasn't the (chief executive officers) who were sitting around one day who came up with this. It was brought to our attention by the doctors."
The New Brunswick, N.J.-based network established the insurance plan for physicians under the provisions of a 2001 state law that authorizes the creation of so-called "multiple employer welfare arrangements" for businesses with a common employee base. The regulatory law was designed to allow businesses with two to 50 workers more bargaining power by allowing owners to form associations to negotiate favorable rates with insurers.
Already, about 50 doctors' practices with more than 95 employees and approximately 105 dependents have signed on for the insurance-an open-access, point-of-service plan administered by Piscataway, N.J.-based QualCare, which has a total of about 500,000 customers in New Jersey.
Andrew Greene, CEO of Robert Wood Johnson, said the QualCare plan will help to "change the dynamics" of hospital-physician relationships by creating a partnership that immediately benefits the bottom line of physicians who are part of the Association of Participating Physicians in New Jersey, the group doctors must join to qualify for the health plan.
"I've got to tell you-there's a real feel-good vibe between a lot of these doctors and the hospitals," Greene said. "From Robert Wood Johnson's perspective, we're not in this to make money. We see it as a way to support all of our activities."
Greene said the plan was created as a trust and partnership between the three entities-the health network, the doctors' association and QualCare. He said he expects Robert Wood Johnson, which put up the $200,000 reserve required by the state law for these kinds of self-insured plans, to basically break even on the arrangement. Though Greene said the network wasn't in any danger of losing doctors, he believes its proactive stance will help foster stronger ties with physicians.
The advent of a hospital helping to provide insurance to its doctors is relatively rare but not unprecedented, Greene said.
Annette Catino, president and CEO of QualCare, said this type of an insurance partnership between a hospital and its physicians is extremely unusual, even though about 15 states have similar laws that encourage the development of these associations.
She said Robert Wood Johnson's plan is among "the first I know of that doctors, working with a hospital system, have joined forces in a (multiple employers welfare arrangement). I've heard of bankers, lawyers, accountants doing this, but I believe that what we're doing here in New Jersey is the first time physicians have done this."