Doctor-investors could lose Ohio hospital privileges

The credentialing fight is seen as a test case on hospitals who shut out doctors involved with specialty hospitals.

By Katherine Vogt — Posted Jan. 12, 2004

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Physicians who invested in the newly opened New Albany Surgical Hospital near Columbus, Ohio, could soon lose their privileges at several area community hospitals.

The $40 million specialty orthopedic and neurological services inpatient facility opened for business on Dec. 1, 2003, prompting two area hospital systems to declare that they will stand by their policies that can preclude physician investors in such facilities from maintaining privileges at their hospitals.

None of the roughly 30 physician investors in New Albany lost privileges immediately at nearby hospitals. However, OhioHealth and Mount Carmel Health Systems said they were examining their policies and would consider taking action in coming months.

The plans have further polarized supporters and critics of specialty hospitals, which are promoted by some as efficient and streamlined for perfecting specific types of care and blasted by others as cherry-picking the best cases away from general hospitals. Those who favor specialty facilities say that if New Albany physician investors lose their privileges elsewhere, it will ultimately harm patients by denying them access to care at a full range of hospitals. They also say the community hospitals are engaging in economic credentialing, or granting privileges based on financial reasons rather than qualifications.

But community hospital supporters reject the idea that such policies constitute economic credentialing. They say the policies are necessary to prevent conflicts of interest among physicians who refer patients to hospitals in which they have an ownership interest as well as those in which they don't have a stake.

The fight over the development of New Albany has made national headlines, leading some to call it a test case for hospitals across the nation. It also led to legislation limiting specialty hospital development, which is now stalled in the Ohio Legislature. To be sure, the issue has been divisive for those involved.

"I can tell you that it's painful to the medical community here in Columbus," said David Morehead, MD, chief medical officer for OhioHealth. "The physicians who opened up the New Albany hospital, many of them have practiced in Columbus for many years. These are relationships that then become strained by the situation."

OhioHealth's board adopted a resolution in October 2002, that restricts medical privileges for physicians at three Columbus-area hospitals who invest in competing, for-profit, inpatient hospitals. Dr. Morehead said the resolution called for such physician investors to voluntarily relinquish their privileges after the specialty facility's opening. However, the hospital system hasn't decided when or how to implement the policy.

"Plans are being finalized to put sort of what that resolution stated into effect. We have not totally finalized those plans yet," he said. The hospital system does not know how many physicians could be affected.

Dr. Morehead said the board felt the resolution was necessary to prevent a conflict of interest.

"Physicians who admit to two different hospitals but have a financial interest in one are caught in a conflicting situation, which board members believe is inappropriate and is not in the community's interests," he said.

But Carl Berasi, DO, chair of the board of New Albany Surgical Hospital, said there is not a problem with conflict of interest.

"I think physicians make decisions based on the best interests of their patients," he said.

Dr. Berasi, an orthopedic surgeon, said that if physicians at New Albany lose privileges elsewhere it would be detrimental to patients.

"It will have a big effect on [physicians'] ability to practice medicine, but it will have a bigger effect on their patients. Physicians refer patients to the hospitals that they believe can provide the patients the best care," he said. "Who they're really denying the access to is the patients."

The board of trustees of Mount Carmel Health Systems, which owns three hospitals in the Columbus area, adopted a resolution in July 2002, affecting the recredentialing of medical staff members. It prohibits recredentialing "when it is determined by Mount Carmel that its mission and vital business interests may be jeopardized by the physician's investment in a for-profit inpatient hospital," said Russ Kennedy, the system's vice president of public relations and government affairs.

"None of our physicians will immediately lose their privileges as a result of the New Albany facility opening in December," Kennedy said. "If we believe there is cherry-picking, we will have conversations with our physicians about that before we would take any action. And we're hopeful it would be a moot point."

Tim Maglione, senior director for government relations for the Ohio State Medical Assn., said the debate over New Albany presents an issue of access to care and more.

"It is one of those situations where the hospitals are looking to maintain their control over how health care is delivered and they're looking to do that by taking away the autonomy of physicians to do what's best for their patients. It's a fundamental issue to the practice of medicine," he said.

Maglione said the medical association would be prepared to take legal action. "If some of the systems here in Ohio do revoke the privileges, we will be looking for relief not only with the state Legislature, but through Congress and perhaps through the courts," he said.

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