Reform or just change?

Whether we will achieve meaningful health care reform is anybody's guess, but one certainty is that the business of delivering health care services will continue to change.

Very much subject to the continuing forces of change is the relationship between physicians, who deliver health care services, and hospitals, where much of those services are delivered. This relationship, a fundamental component of the health care system, is increasingly impacted by federal and state legislation and regulations, hospital accreditation standards, court decisions, health care and general economics – all of which appear to be accelerating the evolution of the relationship from one of independent parties to that of employer-employee, either in fact or in law.

The physician-hospital relationship once largely began and ended with the hospital's approval of a physician's application for membership on the hospital medical staff with specified clinical privileges. Then 25 years ago, state courts required hospitals to create a system in which the hospital medical staff continuously reviewed the quality of care provided by their peers at the hospital.

Two years later, Washington enacted legislation requiring hospitals to provide a disciplinary process to address physicians whose care fell short of the recognized quality standards.

Hospitals, through their medical staff, strengthened peer review. Now hospital medical staff physicians devote countless hours of uncompensated time in an effort to ensure that hospital patients receive safe and quality health care services. Peer review always looked at both clinical competence and professional conduct that might adversely affect patient care.

But recently, the Joint Commission, a major accrediting entity for hospitals, required hospitals to have written policies defining acceptable and unacceptable behavior and establishing a process for addressing unacceptable professional conduct. As the scope of oversight of physician conduct within a hospital has expanded, courts have begun to consider whether the relationship has the legal elements of an employer-employee relationship regardless of the intent of physicians and hospitals.

Adding to this evolving physician-hospital relationship, hospitals must provide on-call medical services to patients admitted through their emergency departments. Hospitals again rely on their medical staff for these required services. Frequently, these services are provided to patients who are uninsured and otherwise unable to pay for the services, resulting in uncompensated physician time and services.

Increasingly, physicians are insisting that the hospital compensate them for on-call services. This has led hospitals to consider whether it might make sense simply to employ physicians needed to ensure this on-call coverage.

And then there are simple economics. At the physician-practice level, the reality of health care economics is increasingly steering physicians toward specialty areas and away from primary care, and we're seeing the hospital and physician community respond to such trends. According to Peter G. Bush, vice president, Physician Services Southwest Health Systems:

"Southwest Medical Group has a dedicated physician recruiting staff that recruits primary care physicians into our Clark County community on behalf of SMG and on behalf of primary care groups in our community that are not affiliated with SMG.

Young physicians usually base their decision on life-style and pay. In the Pacific Northwest, we have no problem competing for good doctors on the first criteria. But, an inescapable economic fact of managing physician practices across America today is that reimbursement is declining while costs are increasing. Medical groups affiliated with integrated delivery systems like Southwest Health System are attractive to young doctors because they can provide a more diversified, stable and predictable financial platform."

While a general shortage of physicians is developing, there is a well-developed shortage of primary care physicians. More generally, the current economic climate poses the same increased risk to physicians starting or maintaining a practice as it does to any other business.

Greg Montgomery is a partner of Miller Nash LLP. He can be reached at greg.montgomery@millernash.com.

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