Hospital — Physician Relationship Factors Causing Tumult and Turmoit Challenge of Competition Symbiotic Increasing Regulatory Complexity.

Hospital — Physician Relationship

Hospital — Physician Relationship

Factors Causing Tumult and Turmoit

• Challenge of Competition

• Symbiotic

• Increasing Regulatory Complexity

Purpose of PresentationPurpose of Presentation

Recognize Strategy and Tactics of Each Side

Identify Collaborative Solutions Failing That — Identify Competitive

Responses

HistoricallyCottage Industry Characterized by High

Utilization and Profits

HistoricallyCottage Industry Characterized by High

Utilization and Profits

High Margins

Full Bed

s

Long Stays

Doctors’ Workshop

Health Care “Boss”

Focused on Care

Unlimited Resources

Limited Paperwork

Little Regulatory Managed Care Interference

High Income/Community Status

HOSPITALS PHYSICIANS

Tightening ViseTightening Vise

Rising Costs Employer

Rebellion Best Care /

Worst Care / Highest Cost

Governmental Response

ImpactImpact

Hospitals — Eliminated Beds; Shorten Length of Stay

Physicians — Taking Managed Care Med School Applicants Declined Focus on Outpatient Care Both — Competing for Limited $$

Current ConsiderationsCurrent Considerations

Respond to Compliance / Reimbursement Pressure

Focus on Developing IT

Assure Staff Loyalty

Develop Strategies for Integration

Fight Declining Compensation/Status

Deal with Managed Care Hassle

Contemplate Redistribution of Power/Income

Find Some Friends

HOSPITALS MUST PHYSICIANS MUST

Hospital ActionsHospital Actions

Medical Director / Staff Leadership Agreements

Coverage Agreements Management Agreements Exclusive Provider Agreements Employment Agreements Independent Contractor Agreements Recruiting Incentives Gain-Sharing Agreements Form PHOs

Physician ReactionPhysician Reaction

ASCs Specialty Hospitals Diagnostic Facilities Rehab Facilities In-Office Ancillaries Inpatient Procedures Ceased Medical Staff Volunteerism IPAs and Group Mergers

Ohio Health ExampleOhio Health Example

Orthopedic Hospital Created System — Duty to Protect / Preserve

Charitable Mission

• Fiduciary Duty of Trustees

• Profitable Services Offset Charity Care

• Physicians “Skimming” Profitable Procedures

• Ensure Privileging Supported Mission Went Public

New RealityNew Reality

Requiring Disclosure of Financial Interests

Disqualifying Doctors from Leadership

Restricting Staff Membership / Voting

Recruiting Competing Doctors

Declining Assistance to Competing Groups

Refusing to Deal with Competitors

Entering Exclusive Contracts

Frantically / Creatively Seeking $$

Searching for Security / Control

Looking for Leverage

PHYSICIANS ARE HOSPITALS ARE

Legal Parameters Supporting Competitive

Efforts

Legal Parameters Supporting Competitive

Efforts Community Service Obligations —

501(c)(3) Fiduciary Duty Conflict of Interest Policy Corporate Authority of Board to

Govern

Legal Parameters Limiting Competitive Efforts

Legal Parameters Limiting Competitive Efforts

Anti-Trust

• Illegal tying arrangements

• Exclusive dealing

• Group boycotts

• Attempted monopolization

• Monopolistic leveraging Private Cause of Action State Unfair Competition Laws

Legal Parameters — Limiting Competitive

Efforts

Legal Parameters — Limiting Competitive

Efforts Medical Staff Bylaws

• State law requirements

• HCQIA

• JCAHO

• Medical Staff Bylaws Vs. Right to Make Management

Decisions

Legal Parameters — Limiting Competitive

Efforts

Legal Parameters — Limiting Competitive

Efforts Contracts

• Covenant Not to Compete Bylaws

• Corporate

• Medical Stark II Anti-Kickback Statute

Managing the Competitive Environment

Managing the Competitive Environment

Collaboration vs. Competition

• Still a Symbiotic Relationship

• Remember the Mission Strategy First Escalating Tactics

Community Awareness Campaign

Community Awareness Campaign

Explain Corporate and Tax Structure Discuss the Mission Work on Relationships

CollaborationCollaboration

Join the “Flotilla”

• Set Common Goals

• Respect Physicians’ Expertise

• Motivate by Vision / Alignment of Goals

• Shared Vision and Goals

• Respect Independent Goals and Action

• Direction Determined Issue by Issue

• Partnership When Goals / Visions Align

Collaborative ToolsCollaborative Tools

Joint Ventures Exclusive Contracts Employment Independent Contractor Medical Director / Staff Leadership

Positions Management Agreements Coverage Agreements Recruiting Assistance Malpractice Subsidies

Confrontational OptionsConfrontational Options

Tighten Conflict of Interest Policies Recruit Doctors to Compete Enter Exclusive Managed Care Contracts Leverage Patient Steerage Refuse to Contract or Require Additional

Terms Engage in “Economic Credentialing”

• Amend Bylaws

• Close Department / Exclusive Contracts

• Limit Privileges

Land Use Restrictions

Build an ArkBuild an Ark

Refuse to Deal with Competitors Decline Assistance

to Competitors Invite “Friends”

on Board Shut the Door

Evaluating the Appropriate Response

Evaluating the Appropriate Response

Designate a Planning / Review Body

• Board Members

• Community Leaders

• Key Loyal Physicians

• Administrators

Key Points of AnalysisKey Points of Analysis

Existing Providers in Market Needs Assessment Nature of Competition ID Friends — Secure Them Analyze Impact of Competition ID Physicians’ Motivations

Solicit InputSolicit Input

Physicians with Competing Interests Medical Leadership Community Leaders

Board’s DecisionBoard’s Decision

Form a Flotilla Build an Ark Go to War

Jeffrey O. Ellis, J.D.Lathrop & Gage L.C.

10851 Mastin BoulevardOverland Park Kansas 66210-2007

[email protected]

Jeffrey O. Ellis, J.D.Lathrop & Gage L.C.

10851 Mastin BoulevardOverland Park Kansas 66210-2007

[email protected]