Physicians and hospitals are squaring off in a heavyweight battle that could leave both sides battered, bruised and bloodied.
Last week, six cardiologists in Little Rock, Ark., filed a lawsuit against Baptist Health, alleging the five-hospital system illegally revoked their admitting privileges because the doctors are indirect investors in Arkansas Heart Hospital, a competing for-profit specialty facility that is part of MedCath Corp.
Just weeks earlier, hospitals in Idaho and Ohio pulled the privileges of about two dozen doctors, sending a clear message that governing boards and administrators are prepared to take drastic measures to maintain market share in the wake of a proliferation of specialty hospitals. About 100 of these facilities have been built in recent years, and community hospitals say they drain profitable service lines that have traditionally helped fund money losers like indigent care and emergency departments.
"This is just the tip of the iceberg," said Paul Danello, a healthcare lawyer with Washington-based Ropes & Gray who was formerly with HHS' inspector general's office. "Six months ago, everything was quiet. Now, we're seeing three or four major issues involving economic credentialing."
The looming civil war is not likely to end with an armistice any time soon. The question is: Who will be left standing?
"This is an extremely dangerous tactic for hospitals," said Jack Lewin, president and chief executive officer of the California Medical Association, which represents roughly 35,000 physicians. "These moves are likely to lead to consequences that the hospitals have not intended, such as physicians deciding to move more swiftly to develop their own facilities."
The issue is clearly a touchy subject for the warring parties. Two large national medical-specialty groups whose members could be most seriously affected by economic credentialing, the American College of Surgeons and the American Academy of Orthopaedic Surgeons, would not comment for this story. Steve Campanini, a spokesman for Tenet Healthcare Corp., said credentials for physicians are based on community need and clinical expertise. "As an overall strategy," he said, "Tenet does not have a specific national policy" on economic credentialing. Some large not-for-profit systems, including St. Louis-based SSM Health Care, which has 20 hospitals and approximately 5,000 affiliated physicians, have no corporate policies regarding this issue, officials said.
Though credentialing battles have been waged off and on for years, the most recent cases have generated widespread attention because more and more hospital boards now seem willing to take off the gloves. This battle between administrators and physicians has intensified despite the passage of the Medicare bill last year that imposed an 18-month moratorium on new specialty hospitals.
"It's high-stakes poker," said Roger Strode, a healthcare attorney and senior partner with Quarles & Brady in Milwaukee.
Though rare, lawsuits involving economic credentialing are not unprecedented. One notable case involved a lawsuit nearly four years ago against Avera St. Luke's Hospital in Aberdeen, S.D., which allegedly violated its own bylaws by refusing staff privileges to new orthopedic surgeons who were part of the Dakota Plains Surgical Center. The state Supreme Court ultimately ruled in favor of the hospital in 2002.
The newest lawsuit, filed by the six Arkansas cardiologists, was filed in U.S. District Court in Little Rock on Feb. 10. It alleges that Little Rock-based Baptist Health violated federal antikickback statutes and the Arkansas Medicaid fraud statutes by revoking the privileges of two doctors and threatening revocation of four others because of their indirect economic interest in Arkansas Heart Hospital. The doctors all practice at Little Rock Cardiology Clinic, which owns a 14.5% interest in the heart hospital. Two of the five doctors also own additional minority shares in the heart hospital, which opened in March 1997.
Bruce Murphy, a Little Rock cardiologist whose privileges will be revoked Feb. 26 after 18 years at Baptist, said it was curious that Baptist would take this action seven years after the opening of the heart hospital. He said Baptist is now attempting to set a precedent only because a group of neurosurgeons and orthopedic specialists are building their own competing hospital.
"The question is who's in charge," Murphy said. "Healthcare is delivered by doctors and nurses. It's not delivered by the board of trustees, the administrators or the assistant administrators-they never see a patient unless they're walking through the parking lot. It's time for doctors to stand up and say, `This is not right.' We're the captains of the ship."
In mid-January, OhioHealth, an eight-hospital system based in Columbus, revoked the privileges of 17 staff physicians who invested in the New Albany (Ohio) Surgical Hospital, a 42-bed orthopedic facility located in a suburb of Columbus. About a week after OhioHealth dropped its bombshell, Eastern Idaho Regional Medical Center, in Idaho Falls, revoked the privileges of five physicians who had invested in for-profit Mountain View Hospital, a multisurgery facility that opened in late 2002. The board at Eastern Idaho Regional, which is owned by HCA, said the doctors were changing their referral patterns and directing patients to their own facility.
Neither the doctors in Ohio nor Idaho have filed lawsuits in their cases, but observers suggested that legal action is likely.
HCA spokesman Jeff Prescott said the nation's largest hospital chain does not have a specific policy on revocation of privileges based on economic factors, and he added, "Those are decisions made by hospitals." Eastern Idaho Regional is the only HCA facility known to have taken such extreme action, he said.
The decision by an individual hospital board to revoke privileges, Prescott said, "is really a last resort. Physicians are a critical part of what a hospital does. From our standpoint, though, if those (actions) are needed and if a hospital makes a decision to do it, we'll support it."
The inspector general's office is preparing to issue a guidance on whether hospitals are violating federal antikickback statutes by revoking or refusing to grant privileges to physicians who own a financial stake in competing healthcare facilities, Danello said.
The guidance is expected sometime this year, and sooner rather than later, Danello said. He said he believes the inspector general is likely to rule in favor of hospitals.