American College of Physicians: Internal Medicine — Doctors for Adults ®

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Cultural conflicts and antitrust laws dog collective bargaining by doctors

From the December 1999 ACP-ASIM Observer, copyright © 1999 by the American College of Physicians-American Society of Internal Medicine.

By Edward Martin

When the Long Island Hospital where Jonathan Sumner, MD, worked for seven years refused to assign nurses to help with transesophageal echocardiograms, it was the final straw.

In May, Dr. Sumner filed a scathing three-page report with hospital administrators. He contended that because a nurse must monitor sedated patients during the difficult and potentially dangerous procedure, the hospital's new policy jeopardized patient safety. Six days later, he was fired.

While the 56-year-old cardiologist is pursuing a lawsuit to force the hospital to change its policy, he is also fighting to win back his $108,000 part-time job. For that battle, he has turned to the only source he thinks can help: his union, which represents hundreds of doctors and health care professionals in Nassau County public hospitals.

Dr. Sumner is one of a growing number of physicians who have already joined unions or are turning to unions for help. These doctors view unions as their best hope for fighting employers, health plans and other corporate entities on such issues as unfair work rules, dangerous patient care conditions and inequitable pay.

Physicians' flirtation with unions is just one sign of the labor movement's growing popularity in medicine. Last summer, physician unions received a huge boost when the AMA announced plans to form an independent negotiating body for salaried physicians. At the same time, self-employed physicians, who typically cannot join traditional unions, have been working with independent practice associations (IPAs) to collectively negotiate with health plans. Several states have even passed legislation that allows all physicians—including those who are self-employed—to negotiate with health plans in loose coalitions.

Even as organized labor appears to be gaining a foothold in medicine, however, cracks are forming. For one, many physicians remain cool on the idea of labor unions, in part because of negotiators' tough tactics. At the same time, self-employed physicians using other types of negotiating strategies are under fire from federal regulators, who claim that using IPAs to bargain with health plans violates antitrust laws. Even in states that have created new laws giving physicians freedom to negotiate, collective bargaining is faltering because the measures do not give physicians enough clout.

A new option?

The AMA's decision in June to form a physician union was seen by many as a psychological victory for traditional labor unions, which have courted physicians for years with limited success. While unions today represent roughly 40,000 salaried physicians, up from 25,000 in 1996, roughly two-thirds of those physicians are residents and doctors-in-training. Gradually, however, those numbers are beginning to shift, with recent gains coming from physicians employed by staff-model HMOs such as Kaiser Permanente, large hospital systems and physician practice management groups.

Clearly, most physicians have avoided unionizing because of the strike issue. The AMA addressed that concern head-on by promising that its negotiating organization, recently dubbed Physicians for Responsible Negotiating (PRN), would not strike. Andrew Thomas, ACP­ASIM Associate, one of PRN's governors, explained that the organization gives the nation's 108,000 salaried doctors, many of whom find conventional unions distasteful, a new option.

Instead of forcing physicians to join existing unions with tactics that may make them uncomfortable, Dr. Thomas said, PRN will try to create local bargaining units as small as a single multispecialty clinic or hospital under the National Labor Relations Act. AMA officials have said that the organization will negotiate all issues, including pay.

The College supports the idea of physicians collectively negotiating with health plans on quality-of-care issues, but only if patient interests are protected and physicians do not engage in strikes, slowdowns or any type of work stoppage. (For more on the College's policy, see the "Where We Stand" section of ACP­ASIM Online at www.acponline.org.)

Critics wonder whether any physician union, even one run by an organization as large as the AMA, can bring health plans to the negotiating table without relying on the threat of striking. But union leaders counter that striking is not the only way to get the attention of employers. Barry Liebowitz, MD, is president of the Doctors Council in New York and, since March, the 15,000-member National Doctors Alliance, a new coalition of three big physician unions. He said that the council is especially proud of a recent $4 million settlement of a contract dispute for 100 doctors at city-owned hospitals in New York.

And in California, neurologist Robert Weinmann, MD, president of the Union of American Physicians and Dentists, underscored several achievements for salaried doctors in his union. He cited the union's recent accomplishments in dollar terms, including financial settlements ranging from $600 to $90,000, for physicians in disputes with their employers. The union's officials note that while they have authorized two strike votes in the organization's 30-year history, in both instances the issues were resolved before physicians hit the picket line.

Most physician unions say they are loathe to strike, but not necessarily for ethical reasons. Jack Seddon, executive director of the Federation of Physicians and Dentists in Tallahassee, Fla., said that a physician strike would be a "lethal weapon" in the hands of insurance companies. It is illegal in most states to abandon patients, he said, which is exactly how health plans and insurers would characterize a physician strike.

But striking is not the only issue that separates some physicians and unions. Some physicians say that they find a clash of cultures when trying to work with union representatives.

When the Thomas-Davis Medical Centers in Tucson were purchased by FPA Medical Management, conditions for physicians quickly eroded. According to anesthesiologist Robert C. Osborne, MD, FPA slashed budgets and denied and delayed patient care. In February of 1996, the clinic's physicians invited the Federation of Physicians and Dentists to help them unionize. Later, the clinic's support staff joined the campaign.

Dr. Osborne said that he now regrets having made the overture. "The representative they sent us had no formal education and tattoos all over his arms," he said. When a union official came to Tucson, Dr. Osborne recounted, "He would ride around in a Lincoln and stay in a suite in the most expensive hotel in town. I would ask, 'How can you waste money like this, when we're trying to organize unwed mothers making minimum wage?' He said, 'I deserve it. I've paid my dues.' "

But for Dr. Osborne, the clincher was that the union didn't really help. He said the union that represented his clinic was a "powder puff" that was outmaneuvered by FPA's attorneys and stymied by federal labor rules. According to Dr. Osborne, 70 of the clinic's 130 physicians quit within a year of unionizing, disgusted by union bureaucracy and unfulfilled promises. The clinic closed in late 1998 when FPA filed for Chapter 11 bankruptcy.

Self-employed doctors

While salaried employees debate the merits of joining traditional unions, self-employed physicians have been finding other ways to negotiate with health plans. Some have turned to nonprofit IPAs that are set up by the unions but run as separate entities.

For example, Jonathan Ng, FACP, a solo internist in San Jose, Calif., joined the Union of American Physicians and Dentists as soon as he completed his residency nearly 20 years ago. Dr. Ng credits the union's IPA with helping him fight HMOs that deem only the cheapest treatments as "medically necessary." He said the IPA has also helped him reverse downcoding by the California Industrial Medicine Council, which administers workers compensation, and has fought slow payments and billing abuses by HMOs.

While the IPA model of negotiating has been used successfully across the country, it is now under attack by the Federal Trade Commission (FTC). In recent congressional testimony, Robert Pitofsky, the commission's chairman, accused doctors of "attempting to impose their collective will on consumers and the marketplace," and has threatened them with fines and jail for acting collectively.

Earlier this year in Truckee, Calif., the FTC forced the North Lake Tahoe Medical Group, which has 91 members, to fire physicians who allegedly boycotted Blue Shield of California in a rate dispute. The federal agency accused the group of conspiring to boycott health plans that offered anything but conventional insurance.

And the Department of Justice, in a Delaware case that marked its first antitrust action against a physician union, sued the Federation of Physicians and Dentists in the fall of 1998. Officials say that by improperly sharing information, orthopedists in the union organized a boycott against Blue Cross & Blue Shield of Delaware.

The scrutiny comes as little surprise to union officials. Dr. Weinmann, whose union runs one such IPA, acknowledged that, "We push antitrust as far as we can and still stay out of trouble." Mr. Seddon, executive director of the union targeted by the Justice Department, said that he anticipated the court challenge. "We knew it would only be a matter of time until some insurance company complained to the Department of Justice," he explained. "We hired antitrust attorneys before we got into this, and we know we haven't violated the law. Otherwise we'd be running and hiding, rather than spending millions to defend this challenge."

Help from legislators?

Legislative help may be on the way. A bill by Rep. Tom Campbell (R-Calif.), former head of the FTC's bureau of competition, would give solo practitioners and other self-employed doctors leverage they now lack. The Quality Health Care Coalition Act of 1999 would forbid strikes and anticompetitive measures but would otherwise allow self-employed doctors to confront health plans and employers on all issues.

The bill could reach the floor of Congress early next year. It has been supported by the College, the AMA and most state medical societies. The law would force health plans that claim doctors are financially squeezing them to prove it by opening their books to administrative law judges or mediators—and hence, the public.

While the Campbell bill makes its way through Congress, several states are trying to offer stopgap measures. Last May, Texas lawmakers passed the Managed Care Freedom of Choice Act, opening the door for independent physicians to negotiate under state supervision. The measure took effect in September, and the state attorney general recently drafted final rules.

The law will allow doctors to collectively negotiate contract terms such as preventive health measures, clinical practices, timely payments, referral procedures and reimbursement methodology. The law, however, specifically excludes collective negotiations concerning fees, capitation rates or other issues even remotely involving pricing.

Some say that such an exemption could doom the law, much as it did a similar six-year-old Washington law that served as its model. The Texas law "doesn't permit fee-related issues, and that's what doctors really want to get at," explained Duane Thurman, the governor's policy advisor who formally monitors the law. So while the law allows physicians to negotiate with health plans over their coverage of immunizations, they cannot address pay issues like managed care discounts.

In Texas, the law makes an exception. In cases where a health plan dominates a market, competing Texas physicians can share pricing information, but only if they represent fewer than 10% of a geographic area's doctors.

The Washington law has another major flaw. Because antitrust laws supersede it, insurers cannot be forced to bargain with physicians who organize under its auspices.

The Washington law was never used to negotiate a contract between physicians and a health plan until this summer, when Washington State Medical Association (WSMA) Representation Services, a bargaining unit that represents 4,300 physicians, sat down to talk with Premera Blue Cross.

Premera officials acknowledged that the company agreed to the talks to generate physician support for a new managed care contract. The insurer also faced the prospect of otherwise having to get the contract approved by Deborah Senn, the state insurance commissioner known for her fierce dislike of managed care.

Once the negotiations began, however, the insurer took charge. Of 23 provisions the medical society put on the table, Premera changed six and amended five. While the insurer did make some concessions—it agreed not to revisit a determination of medical necessity unless it had been given incorrect or false information—it didn't budge on volatile issues confronting doctors nationwide. These include all-products clauses that force doctors to accept unwanted lines of business, and verification rules that compel them to pocket losses if they treat an ineligible patient, even if the insurer stated that the patient was covered.

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