Economic credentialing, the practice of limiting hospital staffs based purely on financial considerations, is shaping up as the next major battleground for physicians.
But the effort to fight such restrictions is very much in its infancy.
A movement is afoot in a handful of states to ban or restrict hospitals from signing exclusive contracts, which prevent other physicians from seeing patients at that facility.
To date, only Illinois has enacted any sort of law addressing economic credentialing, and that law is quite limited. The Illinois code, adopted in 1995, permits exclusive hospital contracts as long as the hospital provides written explanation for a denial of privileges. Physicians have the right to request a hearing, but a hospital's administration and existing medical staff can hand-pick the appeals panel. Illinois hospitals also may revoke the privileges of current staff members for economic reasons by giving 15 days' notice.
Through 1999, the Illinois Department of Public Health received just four denial reports from hospitals, according to Illinois State Medical Society spokesperson Kelley Elwood. She says there is no way of knowing how many physicians have exercised their rights to an appeal because hospitals do not have to report such incidents.
The Illinois law may be fairly weak but, says medical society President M. LeRoy Sprang, M.D., "At least it acknowledges that the problem exists and, second, it gives due process to physicians." A bill pending in the Illinois House of Representatives aims to tighten restrictions by banning exclusive physician contracts for all hospital services except emergency medicine, neonatology, pathology, radiology and anesthesiology. All physicians would be allowed to provide pain management services.
Sprang calls the exclusion of specific disciplines "reasonable" because these specialists generally are direct hospital employees. "We're not trying to be extreme, we're just trying to restore balance to a system that's constantly changing," he says. "Clearly, our goal is to make sure the institution's primary goal is quality of care." However, Sprang does not expect the bill to pass this year.
Other economic credentialing legislation was proposed this year, with little success, in Arkansas, Tennessee and South Dakota, according to Stephanie Norris of the National Council of State Legislatures. The 2001 legislative session in Arkansas ended with no action on economic credentialing, while the South Dakota bill died in committee. The Tennessee bill is pending.
The Arkansas proposal would have blocked hospitals from basing staff decisions on a physician's association with other healthcare facilities. Lynn Zeno, director of governmental affairs for the Arkansas Medical Society, says, "Good bill, good idea, had the support of the medical society, but it never had a hearing."
The South Dakota State Medical Association last year issued a formal resolution against economic credentialing. However, the state's Supreme Court ruled in January that a hospital may deny privileges to a physician without considering professional qualifications.
Following the judgment, the medical assocation quickly rallied behind legislation supporting its position. "You cannot refuse to give an application based on economic reasons," says governmental affairs director Dean Krogman.
A state Senate committee defeated the bill this spring, Krogman says.
The issue is stickier in Tennessee because state law sets different standards for public and private hospitals. An August 2000 decision by the Tennessee Supreme Court further muddied the waters.
The court said that a public facility, Bradley County Memorial Hospital in Cleveland, Tenn., was within its rights to join with a private developer to establish a physician-hospital organization to compete with and exclude the affiliated practitioners of a privately owned surgery center and a physical therapy clinic. The Tennessee Constitution prohibits any "county, city or town" from holding stock in a private company without voter consent, but the court said that a public hospital was neither a county, city or town.
Physician advocates decried this ruling as the result of a legal misinterpretation. The Tennessee attorney general in 1999 said that legislation passed in 1995 enables public hospitals to choose their staffs based on economic factors.
Until the attorney general's statement, a 1923 precedent held that lawfully licensed doctors in Tennessee cannot be kept off the staff of public hospitals, according to Kevin McMahon, general counsel for The Jackson (Tenn.) Clinic and author of the bill now before state legislators.
"We think it's bad public policy for public hospitals to be able to close their staffs to licensed physicians," he says.