Surviving the squeeze: How to endure being in the middle of a contract dispute

Like Popeye the sailor, who ate spinach to gain leverage against his opponents, hospitals have bulked up to gain enough power through consolidation to go toe-to-toe with health plans. In the process, contract negotiations between the two combatants have become increasingly contentious.

Somewhere in the middle of the battle between hospitals and health plans, physicians and their patients are left to fend for themselves, often watching from the sidelines as the opposing parties duke it out.

Nowhere was this more apparent than in the bitter dispute between HCA and UnitedHealth. Before the health care giants finally settled on a new nationwide multiyear contract in November, physicians were left holding the bag for nearly two months as patients scrambled to find in-network health care.

Pius Kamau, MD, a thoracic and general surgeon in Aurora, Colo., said while HCA and UnitedHealth battled over a contract, he was forced to delay a number of surgeries at his HCA hospital. Those surgeries he was able to schedule at his non-HCA hospital often were at inconvenient times in the evenings.

"You end up doing surgeries at 6 p.m. because that's the first opening," Dr. Kamau said. "I had to cancel procedures. There are things we cannot do until the agreement has been reached. Physicians have no power at all because you have these two giants. These giants have been acting independent of the medical profession."

So what can doctors do to stay out of the fray? Not much, say some experts. But there are some strategies physicians can use to minimize the strain on their practices and the stress on their patients.

Dr. Kamau said physicians should become more involved with their local, state and national medical societies who advocate on behalf of physicians and patients when issues such as contract disputes threaten patient care and physicians' practices. "We've taken a back seat," he said. "We need to be more proactive."

As United's contract with HCA expired near the end of August in places like Colorado and Florida, the first states where contracts expired, those members affiliated with HCA facilities automatically became out-of-network. The impact on physicians was two-fold: Some physicians saw many of their patients leave in search of in-network services, while other physicians were overwhelmed by those same patients seeking care.

What to do

A contract dispute between hospital system Froedtert & Community Health and UnitedHealth of Wisconsin caused physicians in Milwaukee to employ a strategy that initially raised some eyebrows -- turning to the media. Bruce Kruger, executive vice president of the Medical Society of Milwaukee County, said his organization contacted reporters to focus attention on the patient stories behind the impact that contract disputes have on the entire system.

Admittedly, Kruger said physicians have been skeptical of using the media to prop up their positions. Some physicians were reluctant to speak out on the topic for fear of reprisals from health plans, he said, but the health plans and hospitals often turn to the media to boost their business positions without mentioning the impact on physicians and patients. Kruger urged physicians to "view the media as a possible resource and advocate in bringing these issues to light." In this case, they did.

In the midst of these contract disputes, Kruger said doctors also need to be committed to patients. That's because in tenuous contract negotiations, health plans and hospitals often use scare tactics with patients. In turn, patients look to their physicians for answers.

"Physicians need to be committed to managing and ensuring patients' access to care and facilitating a reasonable process for a transfer of care," Kruger said. "We don't get in the middle of system negotiations. How we professionalize ourselves is how we take care of our patients. We have become more proactive in setting up talking points for our physicians and their practices."

Michael Wasylik, MD, chair of the managed care committee of the Florida Medical Assn., said physicians can also protect themselves by joining the staff of more than one hospital, particularly organizations that have different ownership. Dr. Wasylik said choosing this option may not be as helpful for some physicians, such as those who have only one hospital in their community. Still, it's an option physicians need to consider before contract disputes arise in their communities. Because the credentialing process can take several months, Dr. Wasylik advises physicians to consider the move before a contract dispute appears imminent.

"Patients go to doctors who can admit them to the hospital," he said.

Dr. Wasylik said physicians should also keep on hand a list of up to three physicians to whom they can refer patients. The list should include physicians who are not impacted by the contract dispute.

Lynn Parry, MD, president of the Colorado Medical Society, said physicians turned to Colorado's insurance commissioner before the contract between HCA and UnitedHealth expired. Despite the commissioner's reluctance to intervene, Dr. Parry, a Denver neurologist, said physicians should work hard to drum up support from political and business leaders to keep both sides talking.

"If there's any lesson it's to identify a strong leader or somebody who has enough authority to keep the players at the table or give an extension so that this doesn't happen to patients," Dr. Parry said. "Doctors manage as we always do, but it was unfair to them and potentially hazardous to patients. Physicians have to be working at every level to fix what is certainly a broken health care system."

More to come?

Paul Ginsburg, PhD, president of the Center for Studying Health System Change, said health plans and hospitals have gone through periods of relative peace to full-scale battle and then back again during the past 10 years. It's hard to say where they are now.

"We don't know yet if this is just one situation or if it's the beginning of a trend," Dr. Ginsburg said, referring to the HCA-United dispute. "It's really different parties testing the waters to see if they can get paid more or less. HCA wants to see if it can get higher rates from health plans. Insurers want to explore if they can be tougher with hospitals. ... The collateral damage is the physician and patient."

J.B. Silvers, PhD, a professor of health systems management at Case Western Reserve University in Cleveland, said the dynamics of these contract disputes dates back to the 1990s when health plans began consolidating to gain market power. Then, by the late 1990s, as hospitals began to consolidate, the power shift turned.

"They're more equal than they used to be," Dr. Silvers said. "It's a reverse of what happened earlier. Both have consolidated market power, with not one having the upper hand. Doctors are stuck unless they follow the same direction and consolidate to gain market power."

In a report prepared by the Center for Studying Health System Change, the organization looked at negotiating issues through visits to 12 communities during 2002 and 2003. The study says consolidation has allowed hospitals to gain payment increases and more favorable contract terms in negotiations. Employers, seeking to protect the interests of their employees and keep broad networks, have typically sided with hospitals and physicians, which has helped their negotiating power, the center's report said.

Some experts say the battle lines have been drawn after years of rising health care costs. Hospitals see health plans as using harsh negotiating tactics to line the pockets of their shareholders and top executives. The plans say hospitals need to be more responsive to employers who are demanding lower insurance premiums.

"The most physicians can do is communicate with the public through the media and become more of a voice," Dr. Ginsburg said.