Are New Jersey doctors, fed up with high insurance costs and the burdens of managed care, really leaving the state?
In 1984, when Louis G. Fares II, a general surgeon, joined his father’s Hamilton-based practice, the future looked bright. Fares Surgical Associates P.A. thrived, and by the late 1990s it employed seven surgical members. Today the practice is down to three people: Fares; his 84-year-old father, who no longer performs major surgeries; and another practicing surgeon, David Hertzog.
“We’ve seen a slow exodus of the younger members of the group,” says Fares, the chairman of surgery at St. Francis Medical Center in Trenton. Some have set up practices in other states, he says. Fares attributes the trend to the rising cost of medical malpractice liability insurance and the shrinking reimbursements member surgeons receive in the era of managed care.
Being on call every other night, Fares says, has taken its toll. He and Hertzog each perform 400 to 500 surgeries a year, up from 300 to 350 in 1990. Still, Fares says, “I’m making less than what I made in 1990.” He recently learned that his $100,000 annual insurance premium will increase next year by 20 percent.
Fares says he stopped taking on complicated cases and conducting lengthy surgeries because of already high demands, with their attendant risks. He knows many other surgeons in similar straits, he says, and he worries about the way the current situation ultimately will affect the care patients receive. “We are not a bunch of greedy doctors,” Fares says. “If I really wanted to go for the money, I’d have left the state years ago. I could earn three or four times what I do out of state. I stay because my family is here. This is my home.”
The densely populated and affluent Garden State may have access to some of the best medical care in the nation, but for years medical practitioners have been sounding an alarm. They worry that doctors, particularly in high-risk specialties like obstetrics and neurosurgery, are curtailing their practices or leaving New Jersey, where, they say, they are subject to huge insurance premiums and unprotected from litigation.
In June 2004, after years of contentious debate between doctors and trial attorneys over the issue of jury award caps, Governor James E. McGreevey signed into law a compromise measure that, although it didn’t cap awards, provided a subsidy fund of $78 million, of which $51 million would offset high premium payments for doctors in high-risk specialties. The state Division of Banking and Insurance plans to start disbursing the fund later this year.
So are New Jersey doctors curtailing their practices and leaving the state? According to the state Board of Medical Examiners, from 2000 to 2004 the number of licensed doctors in New Jersey dropped by 61, or 0.2 percent, from 32,745 to 32,684. But these figures aren’t broken down by medical specialty. A 2003 survey conducted by the American College of Obstetricians and Gynecologists found that 23 percent of its New Jersey members had stopped practicing obstetrics, a far higher figure than the nationwide 14 percent. The survey was widely cited as evidence of a crisis, at least in obstetrics.
A recent study by the Rutgers University Center for State Health Policy concluded that the number of doctors “with a principal office in the state” declined by 702, or 3.6 percent, between 2001 and 2003. In ten specialties, including general preventive medicine, general surgery, and obstetrics-gynecology, the number of doctors declined by more than 5 percent, while four specialties, including plastic surgery and geriatrics, saw the number of doctors increase by more than 5 percent. “There is no dramatic exodus of doctors,” says Joel C. Cantor, the center’s director.
Francine E. Sinofsky, of the Obstetrical & Gynecological Group of East Brunswick, says that two of her practice’s seven members no longer practice obstetrics and points to the high cost of malpractice insurance and other expenses as a “contributing factor.” Today her practice is reimbursed only half to two-thirds of what it received for attending births fifteen years ago. One of the group’s gynecology associates pays an annual malpractice insurance premium of $14,000, she says, while another who practices surgery and obstetrics pays more than $100,000 a year.
Still, Sinofsky says, her group picked up patients from a once thriving four-woman ob-gyn practice nearby that lost three of its members; one stopped practicing obstetrics, another moved to Colorado to find a better insurance environment, and a third gave up medicine altogether to become a real estate agent. As vice-chairman of New Jersey’s chapter of the American College of Obstetricians and Gynecologists, Sinofsky is compiling a database of obstetricians who have stopped practicing in the state, to provide hard evidence of the problem for future policy debates.
Stephanie E. Fox, an adjunct professor at Seton Hall Law School who teaches medical malpractice law, says New Jersey doctors also bear a degree of responsibility for the malpractice insurance burden, citing a January 2003 report issued by Public Citizen, the consumer watchdog group founded by Ralph Nader, that took issue with New Jersey insurers’ and doctors’ tying malpractice costs to the legal system in general. The report noted that “repeat offenders are responsible for most malpractice costs in New Jersey.” Using the federal government’s National Practitioner Data Bank, Public Citizen found that between 1990 and 2002, 5.5 percent of doctors were responsible for 61 percent of all malpractice payouts.
Fox also cites a Wall Street Journal report about anesthesiologists who successfully lowered insurance costs by harnessing technology—practicing on computerized mannequins—analyzing claims data, and developing procedures to reduce recurring incidents.
Ron Czajkowski, a spokesman for the New Jersey Hospital Association, would like to see the state Legislature form a task force of hospital representatives, physicians, insurers, and lawyers to address the difficulties facing the medical community. “Let’s put aside political differences, get some hard data, and look for some solutions,” Czajkowski says.
Lauren Otis is a contributing editor.
If you think finding auto insurance in the Garden State is taxing, try finding malpractice insurance. Of the 79 companies licensed to write malpractice policies, the top 7 account for 90 percent of the market, while half the agencies no longer write policies. The 7 are Princeton Insurance Company (47 percent); MD Advantage Insurance Company of New Jersey (18 percent); ProSelect, a subsidiary of ProMutual Group (14 percent); GE Medical Protective (4 percent, but selectively issuing policies); ProNational (3 percent); NJ PURE (2.5 percent); and Conventus (2 percent). Of those, only ProSelect and ProNational are rated by A. M. Best, the Oldwick-based independent firm that evaluates an insurance company’s financial strength and ability to meet its obligations to policyholders.
MD Advantage, Conventus, and NJ PURE are not rated because they are mutuals, and Princeton was de-listed last year, at its own request. But Princeton reports that its surplus grew substantially in 2004, noting on its Web site, “For NJ individual policyholders, 80 percent of all claims were closed without indemnity payment, the same percentage as in 2003.”
Some factors that doctors consider before choosing an insurance company and policy:
• Total assets
• Capital surplus
• Ranking of company by size
• Rating by A. M. Best and/or Standard & Poors
• Years in business
• Growth
• Policy type and coverage
Sources: Medical Society of New Jersey, July 2005; New Jersey Department of Banking and Insurance, July 2005; MBS Insurance Services, Denville, July 2005; Medical Liability Monitor, 2004-2005.