A lawsuit filed by a group of physicians against the University of California Los Angeles Medical Center is raising issues about relationships between community physicians and academic health centers.
The Santa Monica Anesthesiology Medical Group and the California Medical Association filed the suit in December in Los Angeles Superior Court. It charges that UCLA overstepped its teaching and research boundaries and is in clear violation of California's corporate practice of medicine law.
The suit alleges that UCLA's plan to form a network of for-profit health facilities across Southern California is unlawful, forces community-based physicians into unlawful fee-splitting and referral schemes with UCLA, and pushes private practice physicians out of business.
California's corporate practice of medicine law prohibits the unlicensed practice of medicine and was designed to keep healthcare decisions in providers' hands. The law exempts clinics operated primarily for the purpose of medical education. Four other states have such laws.
Because the university requires staff physicians to refer patients to UCLA medical staff only, patients are deprived of physician choice, says CMA counsel Astrid Meghrigian, and that is a clear violation of the law.
"Saying that you're constitutionally exempt from the law really doesn't cut it in terms of patient care," she says. "When you're talking about commercialization and competing in the private market, there need to be safeguards in place.
"Part of the problem is that they were trying to subsidize (teaching and research) activities through the commercial practice of medicine," Meghrigian says.
Like many other academic health centers, UCLA Medical Center has been buying community hospitals and private practices in recent years in an attempt to increase dwindling revenue streams and secure specialty referrals. Federal funding for teaching and research is on the decline, and many managed-care organizations steer patients away from costly teaching centers.
Beginning in about 1994, UCLA began purchasing primary-care practices in Southern California and requiring those physicians to make referrals to university specialists, says Evan Krantz, M.D., one of the anesthesiologists suing. In 1995, UCLA purchased Santa Monica Hospital, and shortly thereafter UCLA offered the anesthesiologists a contract that would make them university employees. The contract would have required the physicians to pay the university a portion of their professional fees as a condition of receiving referrals from UCLA primary-care providers, Krantz says. After the anesthesiologists refused, they were informed last November that the department would be closed to non-UCLA physicians as of Feb. 1. That date was pushed back to Feb. 21 when the suit was filed.
Settlement discussions between UCLA and the physicians are under way. If they are unsuccessful, the physicians and the CMA will proceed with their case.
"We've determined that we're going to have employment relationships (with physicians)," says John Lundberg, UCLA general counsel. "One reason UCLA is rated so highly is we have a tight rein on the academic side of the employment and don't want a bunch of loosey-goosey joint ventures or partnerships where people have multiple missions, or where they don't have loyalty to the academic activity."
Lundberg defends the university against charges that physicians at UCLA-owned community hospitals who aren't involved in teaching or research are being falsely advertised as medical professors.
"All our activity of a clinical nature goes to support our medical education endeavors," he says. "In other words, our operation of Santa Monica Hospital and our purchase of that hospital all go to support medical education programs as well as research. That doesn't mean each and every activity that goes on at that hospital is necessarily a teaching function."
The anesthesiologists aren't the only Santa Monica physicians unhappy with UCLA's growing presence. Hugh MacDonald, M.D., a private practice neonatologist and director of Santa Monica's neonatology department, says he's received "indirect pressure" from the hospital to join UCLA.
"We've been advised by (hospital) administration that if we don't join with UCLA, we may be at risk for losing our contract," he says. "We're in a very vulnerable position. There is a threat hanging over us that the hospital may take action to remove our staff privileges or close us out of the service. They have set up a situation in which the same activity that occurred with anesthesiology could happen to us."
MacDonald says if discussions with UCLA don't go well, his group is ready to sue. "We don't intend to walk away from a service that we helped develop and that we feel is part of this community," he says, citing concerns about patient care.
UCLA's Lundberg wonders if it's patient care or income level that the physicians are concerned about.
"My sense is that the anesthesiologists are not threatened so much as they want to maintain an extremely attractive livelihood. They would not be able to have (that) as employees of the University of California because we simply don't pay the salaries," he says, adding he's confident the court will rule in favor of the university.
"I think what (the case) will do is define the University of California's exemption from the corporate practice of medicine law, and recognize that, like other institutions, the University of California has to go out and compete with the broader medical community," Lundberg says.
Robert Dickler, senior vice president of healthcare affairs at the Association of American Medical Colleges, says private practice physicians can expect to feel pressure, whether it comes from academic institutions or elsewhere.
"I think it's fair to say they'd feel that pressure -- if not from the university, then from other organizations, large physician groups, other hospitals, many of these carve-out companies," he says. "The question here is not whether they're going to feel pressure; it's whether feeling pressure from the university is appropriate. And I think unless there is a mechanism that can provide the university the wherewithal to fulfill its mission without having to pursue those types of endeavors, the university is obligated to assure that it remains a strong and viable organization."