New Report May Explain Financial Issues at Connolly Dermatology

Like many patients of Connolly Dermatology, I have been following the news reports about the company missing payroll, closing locations unexpectedly, and failing to pay rents at certain office locations.

I wrote an article last week about being a Connolly Dermatology patient for the past 20 years.

There have been reports of patients waiting for important skin tests who weren't able to get results, and unpaid workers unable to pay their bills.

Last week, The Philadelphia Inquirer reported that the NJ Department of Labor is investigating complaints that Connolly has missed payroll.

How did things go so wrong for a company that had expanded so quickly from three South Jersey locations -- Linwood, Cape May Court House, and Barnegat-- to having 30 locations in three states?

New reporting on Thursday may explain.

Report Says Company Took a Major Cut in Medicare Reimbursement

Harold Brubaker of The Philadelphia Inquirer reported on Thursday that Connolly Dermatology was the country's top biller to Medicare for the last three years for superficial radiation therapy.

A Connolly Dermatology YouTube video describes the treatment as a state-of-the-art procedure using low-voltage doses of radiation with ultrasound to target nonmelanoma skin cancers.

The Inquirer reports that Connolly Dermatology had significantly increased the use of the treatment, from 116 times in 2020 to 837 times by 2024, according to federal records.

The average patient receiving superficial radiation therapy tended to be age 65 or older and received 16 of the treatments.

Medicare Stopped Reimbursements for Ultrasounds

The problem for Connolly Dermatology came this year when Medicare ruled that it would no longer reimburse for the ultrasound portion of the therapy, resulting in a 40% drop in Medicare reimbursement for superficial radiation therapy.

Quoting The Inquirer, "in 2024, Medicare paid an average of $166 for the ultrasound and $38 for each radiation treatment. Superficial radiation is an alternative to the far more common Mohs surgery, which is a way of removing cancer while preserving as much skin as possible."

As The Philadelphia Inquirer reports, there is no way to assess the impact of this reimbursement cut without hearing directly from Dr. Connolly, but the timing of Connolly's office expansion in 2020 coincides with when the company began billing Medicare for the treatment.

Eddie Davis