Rulings by two state agencies may mean hospitals throughout California must void scores of exclusive contracts with physicians.
Though physicians and their lobbyists hail the cancellations as a step toward giving physicians more freedom to practice medicine, hospital officials fear an erosion in the quality of healthcare delivery, particularly in emergency department coverage.
The state Department of Health Services, which enforces operating standards for California hospitals, in late January voided most exclusive physician contracts at facilities that participate in the state Medicaid program, or Medi-Cal. The DHS said hospitals can't deny privileges simply because a physician isn't part of a medical group with an exclusive contract. The DHS said privileges can be denied based only on the physician's individual medical qualifications.
The DHS concurred with a similar ruling issued late last year by the California Medical Assistance Commission, which oversees Medi-Cal contracting. The CMAC also ruled that physicians must receive equal access.
The only exclusive contracts spared under both rulings were radiology, anesthesiology and pathology services-specialties traditionally performed within the confines of a hospital and not dependent on patient referrals.
Regulations that bar exclusive contracts at hospitals with Medi-Cal contracts have been on the books in California since the early 1980s, with the purpose of granting Medi-Cal patients the greatest possible access to physicians. However, legal experts say the regulations are vague and haven't been enforced. As a result, many hospitals have willingly entered exclusive provider agreements with medical groups for services such as cardiac care, neonatology and emergency medicine.
"It's something that happens all the time," said Connie Matthews, spokeswoman for 557-bed Huntington Memorial Hospital in Pasadena, Calif.
The DHS and the CMAC acted at the behest of physicians who have complained about being prohibited from practicing at hospitals where they have held staff privileges.
The DHS sent Huntington Memorial a letter ordering it to void an
exclusive provider contract with a group of Los Angeles cardiac surgeons.
About 270 of California's 443 hospitals have Medi-Cal contracts, and as many as half of those also have exclusive provider contracts, according to the California Healthcare Association, the statewide hospital lobby that opposed the rulings.
"Most hospitals that have both Medi-Cal and exclusive provider contracts are going to drop their exclusive provider contracts because they're too dependent on Medi-Cal," said Maureen Sullivan, the CHA's legal counsel.
"Exclusive provider contracts don't uphold the mission of hospitals to serve their communities," said Robert McElderry, associate director of government relations at the California Medical Association, which lobbied for the change.
Although Sullivan said she believes the financial impact on hospitals will be minimal, she contended exclusive contracts in such areas as cardiac care lead to improved outcomes-and also guaranteed physician availability during medical emergencies.
"The implication for hospitals and consumers is that the (physician) coverage problem will be exacerbated," she said.
McElderry and others scoffed at the notion that exclusive contracts improve outcomes, insisting they are mainly tools for hospitals to control medical staffs.
The result, according to McElderry, is that physicians who aren't part of exclusive contracts can be kept from practicing at particular hospitals, even if they have long held staff privileges at those hospitals.
The CMA and individual physicians have recounted tales of being forcibly removed, or even arrested, when they ignored orders from hospitals to stop practicing on the premises.
"Exclusive contracts can deny access to a particular doctor or to his or her patient, and that hardly makes sense in an environment where even HMOs are moving toward open access," said Pejman Salimpour, M.D.
The Los Angeles neonatologist has battled Providence Saint Joseph Medical Center in Burbank, Calif., over the issue, noting that exclusive contracts had prohibited him from practicing at the facility in the past.
The DHS recently ordered the hospital to drop its exclusive contract for neonatology. A hospital spokeswoman confirmed that the facility is opening up its neonatal intensive-care unit to other physicians.
In another instance, a cardiothoracic surgeon who has held privileges at Huntington Memorial for six years said he was barred from exercising his privileges beginning in July 1999, shortly after the hospital entered an exclusive provider agreement with the nine-physician USC Cardiothoracic Group.
Huntington's Matthews said the hospital is examining that contract.