SNJ Business People

Health System CEOs Say Consolidation in Region ‘Makes Sense’ and May Be ‘Inevitable’

07/29/10

  Every month we ask experts from across the region to help our readers by responding to what, we hope, are some thoughtful, real-world questions that can make a difference to business leaders in South Jersey.
  This month we’re taking on the topic of health care and we enlisted Cooper Health’s John Sheridan and Kennedy Health System’s Martin Bieber to help us get a handle on all of the changes that are remaking the region’s healthcare landscape.
  First, we asked Sheridan about the massive investment in new bricks and mortar by the region's major healthcare providers over the last several years. We wanted to know how and when the payoff on this investment will come? And we also wanted his take on the notion that the region is now over-bedded.
  “Most studies indicate that South Jersey is not over-bedded whereas North Jersey is over-bedded,” Sheridan told us.
  “I can’t speak for other hospitals, but Cooper’s new Pavilion has made a very positive statement to the South Jersey community:  Cooper is not only the hospital that delivers high-quality tertiary care, it is also a place where those services are provided in a first class facility with state-of-the-art operating rooms, emergency department, and patient care beds.  All of that is located on a well landscaped, secure campus.  That investment is already paying great dividends,” Sheridan says.
  Next we asked Sheridan and Bieber if they anticipate any major consolidation in the regional health care market? And, if so, when and where?
  “If I had a crystal ball, it would be much easier to answer this question,” Bieber replied.
  “Logic tells me, however, that it makes sense for there to be some level of integration and consolidation within the South Jersey healthcare market over the next few years. I believe that the ‘who, how, what, where and when’ questions will be influenced by economics, future healthcare regulation (on both the state and federal levels), as well as the direction of healthcare reform.”
  Sheridan’s response was even more direct. “Consolidation in the regional health care market is inevitable,” Sheridan told us.
  “The pressure to consolidate will accelerate under the recently passed health care reform legislation which is moving the country toward Accountable Care Organizations, which will require groups of hospitals, physician groups, and other providers to come together to provide a health care delivery system large enough to cover a sizeable portion of the population in a defined geographic area,” Sheridan predicted. 
  Next, we asked both Sheridan and Bieber what each would wish, if he could wave a magic wand and make one concrete change in health care in South Jersey a reality.
  “My wish,” Sheridan replied, “would be that the regulatory agencies would take steps to insure that health care services that can be provided in New Jersey are provided in New Jersey. 
  “More than $1 billion of health care services are provided to South Jersey residents outside of New Jersey. To a large extent, this is unnecessary, and results in self-inflicted damage to the local economy, raising costs of health care to employers and employees alike.
  “It also raises the cost of health care to taxpayers because the State of New Jersey, particularly in its Medicaid program, is forced to pay higher costs for services delivered outside New Jersey,” Sheridan argued.
  Bieber’s wish, which paralleled Sheridan’s, would be “for the residents of South Jersey to learn that—for most healthcare needs—the medical expertise, facilities, talent and technology they seek already exists, right in their own backyard.
  “In other words, there is less of a need today to “cross the river” into Philadelphia to seek care—even specialized care—than there was years ago. In the years ahead, we expect that the need to leave the South Jersey area for highly specialized care will even further diminish. 
  “Kennedy is especially proud to have partnered with its medical staff and its principal academic affiliate, UMDNJ-SOM, to continually raise the bar of improved clinical outcomes.
  “We’re also proud to serve as the training ground for many excellent physicians who have chosen to stay in this region, and we’re committed to bringing the clinical talent necessary to serve the needs of our community right here in South Jersey,” Bieber said.

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