Physician-Hospital Integration in the 21 st Century Hoyt J. Burdick, MD, FACHE

Physician-Hospital Integration in the 21 st Century Background and perspectives Economic integration and alignment Employment doesn’t assure engagement Dual track physicians

Physician Hospital Integration: It shouldn’t be that difficult Hospital-Employed Physicians: How Medical Staffs are Coping with the New Reality Janice Dinner, Esq., Associate General Counsel, Banner Health Karen Owens, Esq., Partner, Coppersmith Schermer &Brockleman PLC American Health Lawyers Association 2013 Meeting

PEJ - Physician Executive Journal of Medical Management May-June 2014 The management of medical care has become too important to leave to doctors, who, after all, are not managers to begin with. FORTUNE Magazine, 1970

Let your doctor do his job… and you do yours.

Physician – Manager - Leader Source: Changing Demographics, Competencies and Physician Leadership Peter Angood, MD, presentation, July 27, 2013

Noblis Be willing to share leadership and work collaboratively with one another Understand what our patients need from us Clarify what changes in the patient care process are needed Make changes in our behaviors that get in the way Be willing to deal with each other as true partners Encourage the community to use our local physician and hospital services Physician-Hospital Relationship: What Does True Alignment Mean?

Noblis, Joel Reich, MD

Economic Integration

Motivation to Engage

Hospital Board Administration Human Resources Policies/Procedures Organized Medical Staff Bylaws Peer Review/Due Process

Peer Review “ Review by one’s peers within a hospital is not only time consuming, unpaid work, it is also likely to generate bad feelings and result in unpopularity.” Scappatura v. Baptist Hospital, Arizona, 1978 Until 1986, physicians performing peer review still faced potential extremely serious federal liability, particularly under the anti-trust laws. Health Care Quality Improvement Act - adequate fair hearing - qualified good faith immunity

Employment Law “ Hospitals resisted claims that physicians were their employees simply by virtue of being medical staff members. Most courts found that simple medical staff membership did not equate to an employment relationship because physicians operated with too much autonomy to satisfy legal standards for employment.” Diggs v. Harris Hosp. Methodist, Inc., 1988 St. Luke’s Health System v. State, 1994

Tort Law Under the traditional model, hospitals typically could not be held directly liable for physician negligence. - Ostensible agency – plaintiff led to believe that the physician was controlled by the hospital - Negligent credentialing – hospital failed to adequately credential or oversee the quality of the physician through the peer review process.

Self-governing Medical Staff

CMS, in its Conditions for Medicare Participation, requires hospitals to delegate peer review responsibilities to the medical staff (42 C.F.R ) and these requirements are incorporated into Joint Commission Medical Staff Standards. - Revisions to Final Rule May 12, Hospital Governing body to consult periodically with medical staff - Enables unified medical staff for multi-hospital systems

Physician Employment Trends Hospitals are employing more physicians: what it means for the rest of us The Incidental Economist Contemplating health care with a focus on research, an eye on reform

Demise of independent physician practice The changing health care environment, and what it means for health IT Posted on August 15, 2012 by Robert RowleyAugust 15, 2012Robert Rowley

AMA Principles for Physician Employment Physician’s paramount responsibility to his or her patients (duty to employer - beware of divided loyalty) Free exercise of professional judgment in voting, speaking and advocating for patient care interests, the profession, health care in the community and the independent exercise of medical judgment Patient welfare trumps economic or employer interests Treatment and referral decisions must be based on the best interests of the patient without restrictions/incentives/penalties Medical directors are practicing medicine

AMA Principles for Peer Review All physicians should promote and be subject to an effective program of peer review Identical for all physicians regardless of employment status Conducted independently without interference from any human resource activities of the employer By physician peers – not lay administrators Accorded due process protections for independent exercise of medical judgment No link between employment and medical staff membership or privileges (clean sweep clauses)

Dual Track Peer Review Controlled by Bylaws Determined by peers Reviewed by Committee Subject to due process and appeals rights Traditionally slow and methodical Peer review information that is confidential with limited discoverability Employer Performance Evaluations Controlled by contract Determined by supervisor Reviewed by HR Subject to HR policy May be swift and decisive Performance information may be reviewed and shared with less protection from discovery

Sharing Information? Sharing peer review information with hospital administration may jeopardize peer review confidentiality and immunity under state law. Does a CEO/CMO participate in peer review as an administrator or as an employer? Physician rights of confidentiality, due process and contractual rights under bylaws? Medical Staff action vs. Employer action?

If hospitals employ most physicians over the long term, will the organized medical staff change or even cease to exist? What state and federal regulations would have to be dismantled? CMS conditions of participation that assume a separate medical staff, HCQIA and state codes Will the Joint Commission need to rewrite its medical staff chapter? (again) Physician-Hospital Integration in the 21 st Century

Background and perspectives Economic integration and alignment Employment doesn’t assure engagement Dual track physicians