Doctor at odds with hospital's conflict-of-interest policy

What is the price of loyalty? Janet Cathey, MD, would be among the first to tell you that it can be pretty steep.

The Little Rock, Ark., gynecologist is engaged in a legal fight to keep her staff membership and clinical privileges at Baptist Health -- the largest health care system in Arkansas.

Physicians are not litigious by nature. Indeed, if most of them never saw the inside of a courtroom in their lifetime, that would be fine by them.

But Dr. Cathey said she has been left with no choice. Under a "conflict of interest" policy Baptist Health's board of directors enacted, her privileges weren't going to be reviewed. Instead, they were about to be yanked from her because her husband is one of many investors in the Arkansas Surgical Hospital, a 16-bed specialty hospital designed for orthopedic and neurosurgery spine care that Baptist Health considers a competitor.

In Dr. Cathey's eyes, having her privileges pulled was to be her reward for 19 years of loyalty to Baptist Health.

Dr. Cathey has built her practice around the hospital.

When she purchased her office, she purchased on the campus of Baptist Health Medical Center -- Little Rock. She schedules 95% of her surgeries at Baptist Health. And many of her business decisions, including those about health insurance contracts, are based on her professional relationship with Baptist Health. But her loyalty goes beyond the professional.

The Cathey family receives health care from Baptist Health. The children were born at Baptist Health, and they were treated there for the croup or when they needed stitches.

She and her husband, neurosurgeon Steve Cathey, MD, have appeared in promotional materials and television commercials for Baptist Health.

They have served as chairs for the Baptist Health Foundation's annual fund-raiser, which raises almost $250,000 annually.

Yet when Dr. Steve Cathey decided to invest in the Arkansas Surgical Hospital, all of Dr. Janet Cathey's loyalty meant nothing. It also meant nothing that Dr. Janet Cathey is not an orthopedic surgeon or a neurosurgeon, but a gynecologist. It meant nothing that she has not invested in the specialty hospital. And it means nothing to Baptist Health that she cannot refer patients to the specialty hospital because it provides no gynecological services.

She is married to a physician who can, and therein, in the eyes of the Baptist Health board of trustees, lies the problem, according to a lawsuit she filed in state court.

The complaint Dr. Cathey filed states that in May 2003, the board, in anticipation of the Arkansas Surgical Hospital's opening, "adopted a policy that mandates denial of initial or renewed staff privileges to any practitioner who, directly or indirectly, acquires or holds an ownership or investment interest in a competing hospital." The trustees extended the restriction to the immediate family members of anyone who invested in a competing hospital as well. The lawsuit also alleges that the policy denies a hearing or appellate review to anyone who has been deemed in violation of the policy.

After the policy was passed, the rumors started.

In a recent speech to physicians at the American Medical Association Interim Meeting in Dallas, Dr. Cathey said that once the policy passed, no one seemed to know how it would be applied. Some thought the policy would be applied to each physician when his or her credentials came up for renewal. Others believed Baptist Health would revoke the privileges of all investors the day the new hospital opened. Still others heard that Baptist Health had set aside $18 million to litigate lawsuits challenging the policy.

All of these discussions were rumor, Dr. Cathey said, because not a single physician to her knowledge had been told directly what would happen.

Eventually she got tired of the rumors and, although her credentials weren't up for renewal until February 2006, she decided in March 2005 to contact the administrator of Baptist Health -- Little Rock inquiring whether the policy would apply to her.

She was stunned when he told her that her privileges would be revoked the day the new hospital opened.

She said she had a conversation with Baptist Health Senior Vice President and Administrator Douglas Weeks, in which she made it clear that she had no investment in the spine hospital. He made it clear to her that it didn't matter and that Baptist Health would make no exceptions to the conflict-of-interest policy.

Dr. Cathey said that when she told him that revoking her privileges would destroy her practice, he replied that her husband might want to sell his shares in the Arkansas Surgical Hospital, if having her privileges revoked was going to have such an impact on her practice. In a follow-up letter, Weeks informed her that when the Arkansas Surgical Hospital opened, she would need to obtain other physician coverage for any patients she had admitted to the hospital.

The physician's lawsuit alleges that Baptist Health's policy is "an illegal contract in violation of Arkansas public policy and constitutes a tortious interference between Dr. Cathey and her patients."

She estimates that approximately 3,500 of those patients, some of whom have been seeing her for upwards of 15 years, would be adversely affected if she lost her privileges.

These are patients whom she knew and cared about and who trusted her, patients who had some of their most intimate medical conversations with her -- their gynecologist.

After weighing her options, she asked the Circuit Court of Pulaski County to prevent Baptist Health from revoking her privileges. The court granted her request for a preliminary injunction, and it is the only reason she is still practicing at Baptist Health today. The court has yet to hear her full lawsuit.

Dr. Cathey will be the first to admit that she is now David to Baptist Health's Goliath. Baptist Health, which did not return phone calls seeking comment, is the largest health care system in Arkansas with more than 120 facilities, including four major hospitals.

The threat of economic credentialing

Dr. Cathey's sole reason for filing the lawsuit was to be able to continue to see her patients. But she has learned through this experience that economic credentialing is a threat to every physician who is practicing medicine today.

To be sure, this type of economic credentialing can interfere greatly in the doctor-patient relationship. It has become a weapon to be wielded when hospitals believe that physicians are "cherry-picking" the most lucrative cases for specialty hospitals in which they have an investment.

Credentialing traditionally has been based on quality and competency. Should Dr. Cathey's privileges be revoked on economic grounds, the denial must be reported to insurance companies, the state medical board and other hospitals.

And it could be interpreted by patients or these other entities as a statement about Dr. Cathey's competency as a physician instead of what she believes it is -- a squeeze play to force her husband to give up his interest in the Arkansas Surgical Hospital.

There is a special irony here. The Drs. Cathey always have kept two independent medical practices, declining to discuss the day-to-day businesses of running their medical practices and to whom they were referring patients. Instead, they discussed family business -- cheerleading, algebra and car pooling.

The one thing they set out to keep out of their personal relationship as much as possible is the thing now inflicting the greatest harm. Dr. Cathey said that much of the stress had been placed squarely on their family. Her son has heard things at school that have led him to ask why his mother would sue Baptist Health, and her husband feels guilty and angry.

But these are feelings her family must overcome, Dr. Cathey said.

She now believes that this type of economic credentialing, if allowed, could lead to hospitals attempting to shut down other enterprises that might be "competing" with the hospital and that physicians can no longer be complacent.

Right now, it is a "competing hospital" that triggers the conflict-of-interest policy, but it someday could become outpatient surgery centers or imaging centers. Before long, she said, physicians could be forced to conduct all diagnostic testing at Baptist Health.

Dr. Janet Cathey acknowledges that this concept might be farfetched to some, but, she noted, it once seemed farfetched to her that Baptist Health would revoke her privileges because her husband invested in a specialty hospital.