Supreme court ruling won't stop push to control health costs

HACKENSACK, N.J. -- In 2010, Fred Aueron and his partners looked at the new health care reform law and decided to sell their five-doctor practice.

Medicare reimbursements were dropping, and private-insurance reimbursements were worse. To compete, they needed to be much bigger.

And none of those pressures will change, he says, if the Supreme Court throws out the law when it issues its long-awaited ruling, which could come soon as Monday.

"The small, onesie-twosie practice where you put up your shingle out of medical school is not going to be there any more," the 59-year old Millburn, N.J., cardiologist said. "The strategy was to go to a hospital or a large group. And if the Affordable Care Act (ACA) weren't there, it would be something else."

From Wall Street, the decision's potential impact on health care — and the health care business — looks huge. Barclays Capital analyst Joshua Raskin says some health insurance stocks might drop 30% if the court throws out the entire law.

The ACA would require Americans to buy insurance by 2014 or pay a penalty, subsidize coverage for the working class, expand Medicaid and reform Medicare, and further regulate insurance carriers — all in hopes of covering most of the 50 million Americans without insurance and cutting the 18% of gross domestic product the U.S. spends on health care.

Across the Hudson River in New Jersey, the decision's impact looks much smaller. At Summit Medical Group, which bought Aueron's practice and is the state's largest practice group, and Hackensack University Medical Center, its largest hospital, health care's bruising economics and falling reimbursements are spurring change before most of the act takes effect.

Both institutions provide a similar picture of America's health care future, with or without the ACA. They're big and getting bigger through mergers. They're tightening up management to respond to Medicare's push for cost containment and higher-quality care, which preceded the law.

The reason: Medical inflation, while moderating, continues to outpace general inflation, driving fiscal problems for states and for Washington. At the same time, health care remains a tough business: Bond-rating agency Moody's says non-profit hospitals, which control most of the U.S. market, have their lowest revenue growth in 50 years.

Both institutions are experimenting with new ways of getting paid. Hackensack is a trial site for new federally backed payment models such as Accountable Care Organizations, which bundle payments to encourage preventive care and try to de-emphasize costly tests and hospitalizations. Summit is part of a different federally backed experiment where better prevention and integration has helped a group of New Jersey practices cut emergency-room visits by a quarter and hospital readmissions by 37%, Horizon Blue Cross Blue Shield says. Both are spending millions on electronic medical records systems to avoid mistakes and document quality of care — a must as talks with insurers to get above-market reimbursements get tougher.

"The act made us all talk about it, think about it, and do it," said Ihor Sawczuk, chief medical officer at Hackensack. "But I don't think it will stop. It's the right thing to do."

Building scale to save fees

Jeffrey LeBenger understands the need to make health care cheaper. But he still wants his doctors to get paid.