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Some doctors push back against health care trends

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Doctors with a North Carolina physicians group sued health system Atrium Health in April, accusing the Charlotte-based provider of unfair and uncompetitive practices and seeking to end their contracts. Atrium later agreed to release most of the doctors and allowed them to compete in the communities they served.

The case could be an example of what might play out nationwide as doctors encounter various changes after hospital and health system mergers, said Marni Jameson Carey, executive director of the Florida-based Association of Independent Doctors.

“I hope it sets a precedent,” said Jameson Carey.

The national nonprofit trade association started in 2013 with a few hundred members but now has about 1,000 members in 33 states and six chapters, including one in Pennsylvania. It was formed out of frustration over “the negative impact that hospital-physician mergers were having on the quality and cost of health care,” according to the nonprofit’s website.

The American Hospital Association didn’t directly address the North Carolina case. But in an email statement, Melinda Hatton, the association’s general counsel, said hospitals and health systems are exploring new ways to improve quality and reduce costs.

“As the health field moves from volume-based to value-based, America’s hospitals and health systems are working with physicians, other caregivers and their communities to create a better system of care for patients that is coordinated, convenient and more economical and efficient,” Hatton wrote. “Unlike independent practices, hospitals care for all patients who seek care, regardless of their insurance status or ability to pay, maintain standby disaster readiness capacity in the event of a catastrophic occurrence, and treat patients who are sicker and require more complex services than those treated by private clinics.”

Several observers of health systems in Central Pennsylvania maintain that the systems have helped doctors by giving them access to services and by taking care of complex regulations and back-office operations for them. Dr. Karen Jones, a senior vice president at WellSpan Health and president of WellSpan Medical Group, said the complexity of modern care makes health systems attractive to new doctors starting their careers. And it also works with independent doctors to make sure patient needs are being met by providing them access to hospital services and working collaboratively to solve problems.

But those benefits to some doctors and practices can have a downside for others, said Bob Orzechowski, COO at Lancaster Cancer Center in East Lampeter Township. He noted that it is increasingly difficult for doctors to remain independent as health systems sign more and more doctors to work in their networks. Patients could lose out as costs increase and choices shrink.

“Less choice means less competition and higher costs,” he said. “That is Econ 101.”

A doctor who is employed in a health system must abide by that group’s contract, which may mean referring patients to services offered by the system, rather than what might be best or less expensive for the patient, he and Jameson Carey said.

“An employed doctor cannot serve two masters,” Orzechowski said.

It’s also not uncommon for health systems to ask doctors to sign non-compete clauses that prevent them from working in a community should they leave the system, as was the situation in the North Carolina case, Jameson Carey added.

When asked if similar issues have been raised at Harrisburg-based UPMC Pinnacle, a spokesperson said that non-compete clauses have not been a problem, at least as far as what the hospital requires.

“Occasionally, this issue arises with respect to physicians that want to join UPMC Pinnacle but are restricted from doing so with their current employer or group,” Kelly McCall, public relations director for UPMC Pinnacle, said in an email response to written questions.

Jones, who was not familiar with the North Carolina case, said WellSpan uses non-compete clauses but has not faced criticism in which doctors have felt the agreements were unfair. She said she has worked with WellSpan about three years in her current capacity and is not aware of a practice wanting to leave the system in that time period.

Jameson Carey said a root cause of many issues facing health care is that the conversations often center on access, rather than health care costs. Health systems and insurance companies have a vested interest in pushing greater access because more access means more customers and higher profits, yet large health systems add to the expense of health care because of high administrative costs, she said. If costs overall fell, access would increase, she argued.

Jameson Carey pointed to Bureau of Labor Statistics data that shows the number of health care administrators grew more than 3,000 percent from 1970 until 2010, while the number of physicians grew by about 200 percent.

According to the Association of Independent Doctors, or AID, about 50 percent of U.S. doctors were independent in 2009. About 33 percent are independent today. Dr. Anthony Dippolito, who heads the Pennsylvania chapter of AID, said state trends mirror the national numbers. For WellSpan, the ratio of independents to health system doctors still is about 50 percent, Jones said.

Jones, as well as other observers, noted that the reasons for escalating health care costs cannot be attributed to one factor, such as hospital mergers or consolidation among health systems. Everything from drug prices to government regulations to new technologies play a role in costs, Jones pointed out.

In addition to those pressures, Dippolito said, operating a private practice has become increasingly difficult as health systems use highly competitive marketing practices to lure new doctors and then limit an independent’s ability to access hospital privileges. Dippolito, who runs a surgery center in the Bethlehem area, noted that the case in Charlotte highlighted what those trends have been nationally.

McCall of UPMC Pinnacle said her health system works with independent doctors when it can.

“Our philosophy and practice is to work with independent physicians in the community as much as possible,” she wrote in response to written questions. “It has not been our practice to purposefully compete directly with independent physicians.”

Jameson Carey said the loss of independent doctor offices hurts communities in more ways than access, choice or competition. Independent offices pay local and state taxes, including property taxes, while most hospital systems operate as nonprofits. Dippolito said nonprofit hospitals often point to their charity work or community donations, but noted that smaller for-profit hospitals will pay millions more in property taxes.

Pennsylvania has 169 licensed general acute care hospitals and 23 percent are investor-owned, while 77 percent are nonprofit. Sixty-two Pennsylvania hospitals operate on “razor-thin margins,” Rachel A. Moore, a spokesperson for the Hospital and Healthsystem Association of Pennsylvania in Harrisburg, said in an email response to questions. Of that 62 with negative operating margins, 17 are investor-owned, Moore said.

Doctors, especially those just starting out, find it hard not to work for a health system, where the pay can be higher and they don’t directly handle as much paperwork and red tape, observers noted.

“I don’t fault doctors for going to work for a hospital,” Jameson Carey said. “They are under a lot of pressure.”

Those pressures include navigating an increasingly bureaucratic network of insurance and Medicare rules, Jameson Carey and Orzechowski said.

HAP’s Moore said the health care system has been shifting from one based on the quantity of patients to one based on preventive care and wellness and that has affected the business models for everyone.

“As the delivery system changes, the business structures for hospitals and physicians has, as well,” she said in an email.

She agreed that independent doctors face numerous obstacles -- from regulatory requirements to the issues involved with running a small business -- that make moving toward a health system attractive, where such overhead and red tape are handled for them.

“Partnerships with hospital systems can alleviate some of the pressures that can occur in the new health care environment,” she said.

Adding to the difficulties, Dippolito said, is that independents get less in reimbursements from insurance companies than hospital systems.

“It’s a struggle to survive,” he said.

The case involving Atrium Health and Mecklenberg Medical Group is significant because it highlighted what can happen after a health system gains too much power in a local market, Jameson Carey and Dippolito said. The suit showed that the doctors had been asked to accept lower pay and were being forced to refer patients to Atrium-owned facilities, Jameson Carey said.

According to an April article in the Charlotte Observer, about 90 doctors in the medical group of 104 doctors had joined the suit alleging anti-competitive behavior on the part of Atrium and were seeking to break away and form their own group. The suit claimed that policies at Atrium also had affected patient care by cutting personnel and limiting doctors’ time with patients.

Dippolito said that metrics used by some health systems require doctors to keep visits with patients to 15 minutes -- a complaint that was aired in the Mecklenberg suit.

“That’s bad for the patient,” he added.

Efforts to reach Atrium officials were unsuccessful. The Observer reported that the health system had asked the doctors to stay on until January, with an incentive of a 10 percent bonus.

Despite the struggles, Dippolito said, he has been in private practice for 32 years and intends to remain independent.

“We are still free,” he said. “I am going to be ending my career as a private doctor.”

Editor's note: This story has been modified from its original version to clarify Dr. Karen Jones's tenure at WellSpan and her comments.

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