What walks like a union and talks like a union, but isn't a union?
State-supervised joint negotiations between physicians and health plans -- an idea proposed under a hotly debated Texas bill that would sidestep federal antitrust laws. In April, the Texas Senate passed the bill by a nearly unanimous vote, and the House was preparing to vote on it at Modern Physician's deadline.
The House had until midnight, May 25, to vote on the legislation or it would die.
The debate in Texas addresses physicians' concerns regarding traditional unions and may offer a glimpse into the future of collective bargaining by doctors. The bill was backed by the Texas Medical Association and based on model legislation drafted by the American Medical Association.
"I think most physicians view the practice of medicine as a profession. The trade union movement developed around trades and crafts, and I think most physicians would not see themselves falling within that category," says Gordon Green, M.D., a Dallas pediatrician and president of the Dallas County Medical Society. "This bill dealing with contract negotiations would be quite different from the idea of unionizing, which perhaps is why the majority of physicians are in favor of it."
The Texas fight pitted the state medical association and the AMA against Texas health plans, business organizations and healthcare purchasing groups.
The fight was waged on the airwaves, in legislative offices and with business-coalition-led protests on the Texas Capitol steps. The Texas Association of Health Plans called it the single most important issue for the organization this year.
In the original legislation, the bill's authors Sen. Chris Harris (R-Arlington) and Rep. John Smithee (R-Amarillo) wrote that managed-care organizations control so much of the marketplace that fair negotiations between physicians and health plans are unobtainable without joint negotiations.
The bill would give competing physicians the right to jointly negotiate contract terms under the supervision of the state attorney general. All negotiations would be voluntary, nonbinding and subject to the approval of the attorney general. Physicians could not strike.
While contract terms such as formularies, patient protection issues and specialist referrals could be discussed, reimbursement rates could not. Unless, that is, the health plan has substantial market share, as determined by the attorney general. Also, the number of physicians allowed to come together and jointly negotiate would be limited to 10% of the health plan's service area.
"Right now, physicians -- particularly solo practice physicians -- cannot even talk to each other about things that are in contracts. Because we're so busy and can't read fine print on contracts, some people wind up signing stuff and then finding it is really detrimental to patient care," says Robert Gunby, M.D., an obstetrician-gynecologist in solo practice in Dallas. "We need this so we can at least talk to and educate each other, or have somebody look over all this legalistic fine print and say, 'This is going to cause you to not look after patients.' "
Not surprisingly, Texas health plans take a dimmer view of the legislation. The TAHP says health plans don't hold nearly as much market power as the TMA claims.
According to the TAHP, even if the proposed mega-merger between insurers Aetna U.S. Healthcare and Prudential HealthCare goes through, Aetna will control only 18% of the state's market.
The Texas Academy of Family Physicians points out, however, that the merged organization would own about 45% of the market in Dallas, and upward of 50% in the Houston area.
Nonetheless, the TAHP is fond of stating, Texas physicians already make an average of $217,000 a year, and their 1996 earnings were more than 750% of the average Texan's wage.
And independent practice associations already can collectively negotiate with health plans, says TAHP Executive Director Jerry Patterson. "A lot of what the doctors are saying they can't do, they can," he says.
According to Patterson, the bill would hurt low-income Texans because physicians could band together and reject less desirable and low-paying contracts, such as Medicaid.
Kim Ross, TMA vice president for public policy, says those fears are overblown and the bill specifically prohibits cherry-picking patients with desirable insurance coverage. An amendment added to the bill last month says that if a payer offers an all-product contract, physicians must sign it. In other words, doctors would be forced to accept patients from all the insurer's products, including PPO, HMO and Medicare plans.
Still, says the TAHP's Patterson, physicians will control the real monopolies in healthcare if the bill becomes law. Although the number of physicians allowed to come together to negotiate is limited to 10% of a market, that is enough to create a monopoly, he says.
The TAHP is not the only group concerned with physician monopolies. At the TAHP's request, a Federal Trade Commission official analyzed and commented on the legislation. William Baer, director of the FTC's Bureau of Competition, found several anti-competitive concerns, including the 10% threshold.
"For many specialties, a group including all the physicians in a particular specialty or subspecialty would constitute less than 10% of all licensed physicians, and their combination in a single bargaining group could give them significant market power over health plans," he wrote.
Former FTC official Robert Leibenluft, who is now a partner with the Washington law firm Hogan & Harston, also analyzed the legislation at the TAHP's request and raised anti-competitive concerns.
The bill "would jettison competition among physicians by allowing them to engage in price-fixing boycotts and market allocation agreements that would otherwise be per se illegal under the antitrust laws," Leibenluft wrote in his analysis.
Tom Banning, director of legislative affairs for the Texas Academy of Family Physicians, says he's not surprised the TAHP appealed to the FTC -- it's a common tactic to thwart physician organization.
"Managed-care companies always hold the threat of antitrust action by the FTC over physicians' heads," he says.
TMA lobbyist Connie Barron says such local antitrust concerns would be handled better by local officials, and that is what the bill intends.
"What we're saying is the state attorney general can make those determinations in advance, before there's an antitrust suit. We believe they have the expertise," she says.