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Physicians Cautioned about Divided Loyalty between Patients and Hospitals

Posted Dec 28 2012 12:00am

It's no secret any more. A large percentage of physicians, particularly younger ones, are hospital employees. This is causing some tension as I described in a previous note (see:  Hospital Consolidation Leads to Abuses and Higher Costs for the Government ). Hospitals are trying to influence their physician employees about some basic components of patient care such as how many lab tests to order, which patients to admit, which to discharge, and when to discharge them. Much of this is not new. However, there is increasing attention being paid to the growing hospital C-suite influence on healthcare delivery as Obamacare begins to challenge the hospital bottom line. The AMA now feels the need to issue a policy about the primary responsibilities of physicians and the issue of divided loyalties as detailed in as recent NYT article (see:  Doctors Warned on ‘Divided Loyalty’ ):

With hospitals buying up medical practices around the country and seeking to make the most of their investment, the American Medical Association reached out to doctors this week to remind them that patient welfare must always come first and not be overridden by the economic interests of hospitals that now employ doctors in ever-growing numbers. ....“A physician’s paramount responsibility is to his or her patients,” the association said. At the same time, it added, a doctor “owes a duty of loyalty to his or her employer,” and “this divided loyalty can create conflicts of interest, such as financial incentives to over- or under-treat patients.” ....Hospital employment agreements often include provisions that discourage doctors from sending patients to providers of services that are not affiliated with the hospital....The trend [of physicians as hospital employees] has accelerated..., in part because of federal policies that encourage doctors and hospitals to band together to coordinate care [in ACOs]. In addition, many doctors have found that private practice on their own is no longer profitable and comes with a host of complications, so they are more receptive to the idea of hospital employment....Dr. Jerry D. Kennett, a leader of the American College of Cardiology, said he was aware of cases in which a hospital had told doctors not to place defibrillators in Medicaid patients because “it’s a money-losing proposition” for the hospital. In other cases, he said, hospitals have told doctors they must use the hospital for laboratory work and certain imaging procedures, even if doctors found that they got better results or better service elsewhere....In compensating doctors, hospitals often pay a salary with a bonus that depends on a doctor’s productivity, contributions to the quality of care and patient-satisfaction ratings....Another issue addressed in the guidelines is what happens when a doctor and a hospital part ways. Hospitals frequently seek agreements to ensure that physician employees will not work for competitors if they leave the hospital staff. Such agreements typically prohibit a doctor from practicing medicine in a certain geographic area for several years after the doctor’s employment ends.

Despite the fact that there will be occasional victories for physicians in some of these skirmishes, the battle lines are now becoming apparent. Hospitals are increasingly "corporatized" with much more attention to the bottom line. Physicians, as hospital employees, will become pawns in this struggle. Directives to them about to how to practice medicine will become more and more ambiguous in order to stay within the letter of the law.  All of this will turn into a big cat and mouse game. Although the AMA appears to be taking the high road in terms of this new set of policies, it too is pursuing a grand, and ultimately fruitless, strategy. Physicians will respond first to the policies of its hospital employer and the power of medical societies like the AMA will atrophy.

Where is all of this headed? Certainly, at least for some, in the direction of more physician labor unions that will be created to redress power imbalances. However, there is one quirky aspect of healthcare delivery that has inhibited the growth of such unions -- Medicare reimbursement. Here's an excerpt from the blog note on this subject (see: Is It Time To Revisit Physician Unions? ):

Physician unions are not new and have been in existence for many years. Their numbers peaked around 1974, with an estimated total membership of 55K. That was a time when physicians were seeking specific relief from malpractice liability cost increases, relief from government regulation and talk of nationalized health care. Those numbers have drifted downward but remain steady at about 40K. The main reasons cited for lack of interest in unions is that currently they can’t be used as collective bargaining units for reimbursement. Physicians are also afraid to join for fear of bringing the wrath of the federal government down upon them.

The fact that Medicare reimbursement cannot be modified by collective bargaining does not seem to have stifled the unionization of nurses and their goal of better wages. Physicians may also seek to unionize for issues beside compensation such as interference with their professional decision-making.

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