Colorado hospitalists' deal raises exclusivity issue

When a group of 14 physicians in the Denver area landed a deal that essentially gives them exclusive rights to provide hospitalist services at a small hospital, they might have unwittingly been part of an emerging trend in contracting.

Observers say the deal between Internal Medicine Pulmonary & Critical Care Associates (IMPCCA) and suburban Parker Adventist Hospital illustrates how some hospitalist groups are starting to seek contracts that protect themselves from competition by forging exclusive deals with hospitals.

Though such deals are not widespread, some observers say exclusive contracts with hospitals eventually could be the norm for hospitalists, as they are for emergency physicians, radiologists and other specialists.

"You don't have competing ER groups in a hospital, and I think the hospitalist movement is going in that direction," said Alan Puzarne, chief executive of the Irvine, Calif.-based hospitalist services company Cogent Healthcare.

But some critics say exclusive contracts erode patient choice and the choices that should be available to referring physicians. Some believe that restricting the number of hospitalist groups at a hospital could have a negative impact on the fledgling specialty.

"It's better for the profession early on to allow a wider choice," said Larry Wellikson, MD, executive director of the Society of Hospital Medicine. "SHM has clear policy on restraint of trade that really says in the early, formative time in hospital medicine, it makes more sense to allow a wider group of hospitalists rather than a restrictive group to be there."

But leaders at Parker Adventist believed a single group model was a better fit for their facility. After all, the hospital is small, with only 36 inpatient beds. So when the hospital opened in February, they chose to use only IMPCCA physicians for hospitalist services.

Dianne McCallister, MD, an internist who is the hospital's medical director, said the IMPCCA contract technically does not prohibit other hospitalist groups from striking deals with Parker Adventist. But after the contract was granted, the hospital closed its applications for credentials to other hospitalists, effectively rendering the deal exclusive.

"We did not want to be the afterthought of several groups who would come by on their way somewhere else. We wanted one to be present most of the day," Dr. McCallister said.

She said IMPCCA hospitalists conduct multidisciplinary rounds at the hospital with other physicians. Because the rounds are done in one bloc, she said it makes more sense to have just one hospitalist group involved.

Also, she said, having one group could enhance safety and patient care by increasing adherence to protocols and cutting down on confusion.

"Our acuity is higher than we expected, our lengths of stay are lower than expected, our outcomes are on par and our patient satisfaction scores are very high," Dr. McCallister said. "That says to me we are doing the right thing."

Joe Heit, MD, senior partner of IMPCCA, said hospitalist groups had evolved in recent years, with some serving only insured patients. He said IMPCCA sought assurances from Parker Adventist that it wouldn't be stuck being the only hospitalist group treating patients who couldn't pay.

"I'm nervous about going down there and having these groups cherry-pick insured patients, and I'm worried about the financial burden that puts on us," he said. "So I said if there are no other groups coming in, then we can treat both [uninsured and insured]."

Indeed, like other specialties, hospitalists rely on volume to help make ends meet. While Cogent hospitalists don't demand exclusive contracts at hospitals, Puzarne said they do require that unassigned patients from the emergency department get assigned to their group. That helps ensure more volume.

"To be an effective hospitalist program and effective working with the ER, volume is important," Puzarne said. "And the economics of it are such that you really don't want to have lots of doctors vying for patients. Most of the regional and national companies, if they are going to come in and provide extensive services to a hospital, they want assurances that it's going to be financially viable."

Whether the exclusive contracts actually affect patient choice is unclear. Donna Marshall, executive director of the nonprofit Colorado Business Group on Health, said patients requiring hospitalist care likely would be too ill and have too few resources to effectively research choosing an alternative hospitalist anyway.

But she said referring physicians might feel that their choices had been stripped away when dealing with a hospital that won't grant privileges to multiple hospitalist groups.

"A physician would reasonably be expected to have opinions and strong preferences about who they would rather collaborate with," Marshall said. "But by the same token, I'm not sure they get that choice when it comes to anesthesiologists or radiologists."

Dr. McCallister said referring physicians hadn't complained about limited choices at Parker Adventist. "I'm an internist, so I know what it is like. ... What you care about is that the patient gets good care and you get good communication back," she said.

Ted Schwab, a health care consultant with Sokolov, Sokolov & Burgess in Los Angeles, predicts that hospitalists will follow the paths of other hospital-based physicians such as pathologists, emergency physicians, radiologists and anesthesiologists and get into more exclusive deals.

However, he said, "I would project that at the end of the day it's going to be the hospitals that control that contracting position. That's the way it's gone with other four."