Excela Health System memo draws scrutiny

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An Excela Health System document warning staff physicians that their staff privileges may be in jeopardy if they enter business arrangements that compete against Excela has drawn attention from a statewide physicians group and, according to a local health law attorney, could face legal challenges.

The memo -- a summary of the Westmoreland County health system's medical staff development plan -- lists the system's staffing needs in specific specialties. What concerns doctors are later passages stating, for example, that eligibility for staff privileges requires "a willingness to work in a collaborative manner and support the mission, vision and values of Excela Health."

That support means avoiding "potential financial conflicts of interest," the memo says, such as establishing a financial relationship with UPMC or Highmark-affiliated groups -- unless that relationship is negotiated by Excela. It also says a conflict may exist if a physician has financial ties to any competing ambulatory surgery center.

"Half the document dealt with 'potential conflict of interest' information," noted Jan Jennings, president and CEO of American Healthcare Solutions consultants, Downtown. "If I were a private practice physician, I would be very concerned about getting squeezed out."

"They're saying, 'You can't associate with some other entity unless it is done through us,' " said retired general surgeon Donald Brown, who once worked for Excela and is currently a trustee to the Pennsylvania Medical Society for Westmoreland, Lawrence and Beaver counties.

In recent years, more physicians have been selling their practices to health care organizations. Current estimates are that 60 to 70 percent of practicing physicians statewide are now hospital employees, and health systems and hospitals continue to buy physician practices to boost patient referrals.

But some doctors want to remain independent, controlling their own practices while still maintaining their hospital admitting privileges.

Local independent physicians in Westmoreland County "are not happy, but they don't want to say a lot publicly because they want to protect their livelihood," Dr. Brown said. "Excela is a monopoly in this county. There's nowhere else to go. It is an extremely intimidating document."

Excela spokeswoman Jennifer Miele would not confirm the document's content, saying in an email that "a medical staff development plan is a confidential document." She added that "it is commonplace for a healthcare organization to have a medical staff development plan and a conflict-of-interest policy. If you check with other healthcare organizations, they would certainly tell you all of that."

To a degree, the disagreement illustrates some of the dynamics in play as hospitals and physicians navigate a quickly changing health care environment, with major overhauls going on nationally and a high-stakes battle locally between the region's two health giants, UPMC and Highmark.

"A lot of health systems are having challenges with reimbursement and challenges surviving in the market, especially for a smaller hospital in an environment where there are 800-pound gorillas throwing their weight around," said physician Gaspere Geraci, vice president of quality and value for the state medical society.

Hospitals commonly develop medical staff development policies to monitor their manpower needs, Dr. Geraci said. "There are unwritten [conflict of interest] policies that may exist. What makes this instance stand out is because it was written down and it was formally adopted."

Ms. Miele acknowledged that Excela expects to post "double-digit millions of dollars" in operating losses when fiscal 2012 audited results are released in two weeks, although investment gains should put the health system in the black overall.

She said much of the losses last year are attributable to Excela expanding its medical staff, including four obstetrician-gynecologists, six hospitalists, two general surgeons, two orthopedic surgeons, a vascular surgeon and a rheumatologist.

"We're not concerned about the finances. The first two months of this fiscal year look promising. This is a financially viable healthcare organization," she said.

Dr. Geraci said he has been talking with Excela officials about physicians' concerns surrounding the financial conflict of interest policy. "We've agreed to work with each other and try to head off any significant controversy that may occur."

In other words, they do not want disagreements over the policy to end up in a courtroom.

Michael A. Cassidy, chairman of the health law practice group for the Downtown law firm Tucker Arensberg, says that very well could happen anyway.

"There is a lot of concern nationwide whether the concept as a whole is legal. It raises the issue of what is known as 'economic credentialing' " -- making staff privilege eligibility decisions for economic reasons rather than based on a physician's professional qualifications.

Excela, he added, is "saying, 'You only get privileges here if you don't compete with us.' "

There is no federal law or overriding legal precedent prohibiting such a policy, Mr. Cassidy said, although a 2009 Arkansas circuit court ruled against a hospital there for its "economic conflict of interest policy."

According to court documents, the Arkansas hospital policy stated that any physician who acquired a financial interest in a competing hospital would lose or be denied admitting privileges. Noting the impact that policy could have on a physician-patient relationship -- which the court said "is entitled to exceptional protection" -- the court ruled that the policy violated the state's deceptive trade laws.

Mr. Cassidy also cited 28 Pennsylvania Code 107.3, which states that "No applicant shall be denied medical staff privileges ... on the basis of any other criterion lacking professional or ethical justification, including association with a prepaid group practice."

He asked, "Can you say it's unethical for you to own an ambulatory surgery center but, if you agree to send all your patients here, it is ethical?"

Asked about the regulation, Kathaleen Gillis, Pennsylvania Department of Health spokeswoman, emailed that "the Department of Health has no authority over terms and conditions of employment at the hospital."

While the health department enforces the regulations, she added, "Facilities set the standards on what qualifies a practitioner to be eligible for privileges. We ensure that they are following those standards. DOH would step in if they were granting clinical privileges to unlicensed professionals, but we can't tell a facility who to hire."

The concern for physicians, Dr. Geraci said, is how the policy will be enforced. One part states that physicians potentially will have a conflict of interest if they "seek to provide new in-office ancillary testing in an effort to compete" with Excela Health.

Does that mean physicians are supposed to refer patients to the hospital for procedures commonly done in a doctor's office, such as an EKG, he wondered. "Where do you draw the line? How far does it have to go?"

And what happens if the hospital decides there is a conflict, he asked.

"Will it be a quiet conversation in the corner, or is it going to be a notice in the mail saying, 'Effective the end of this contract, we will not be renewing your medical staff privileges?' "

businessnews - health

Steve Twedt: stwedt@post-gazette.com or 412-263-1963.


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