Physician-Hospital Integration in the 21 st Century

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

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

3. 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

4. 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

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

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

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

10. Physician-Hospital Relationship: What Does True Alignment Mean?

11. Noblis, 2008 - Joel Reich, MD

12. Economic Integration

16. Motivation to Engage

17. Motivation to Engage

19. 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

20. 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

21. 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.

22. Self-governing Medical Staff

23. 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. 482.12) and these requirements are incorporated into Joint Commission Medical Staff Standards. - Revisions to Final Rule May 12, 2014 - Hospital Governing body to consult periodically with medical staff - Enables unified medical staff for multi-hospital systems

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

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

26. 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

27. 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)

28. Dual Track Peer Review 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 • 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

29. 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?

30. Physician-Hospital Integration in the 21st Century • 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)

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