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

When health plans and hospitals battle, physicians often are left to sort out the mess. Here are some suggestions for getting through it.

By Jonathan G. Bethely — Posted Dec. 18, 2006

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

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.

Back to top


Clash of the titans

Recent conflicts of note between hospitals and health plans:

UnitedHealth Group vs. HCA

Place: Nationwide
UnitedHealth and HCA fought over reimbursement rates, with physicians in Colorado and Florida having to scramble when contracts expired there at the end of August. Part of the new nationwide 5-year contract ties reimbursement rates to performance and quality measures, something United said it insisted upon in a new deal.
Signed 5-year contract in November.

Froedtert and Community Health vs. UnitedHealthcare of Wisconsin

Place: Wisconsin
Neither side spoke publicly about contract sticking points between Froedtert and Community Health and UnitedHealthcare of Wisconsin. But the negotiation turned nasty when Froedtert sent a letter to employers in mid-August implying that they should reconsider doing business with United if the hospital isn't in-network.
Signed a 5-year contract on Sept. 29.

Sierra Health Services vs. Sunrise Health

Place: Southern Nevada
Nearly 600,000 patients would be affected if Sierra Health Services, Nevada's largest health insurer, and Sunrise Health, whose parent company is HCA, don't reach agreement before their contract expires Dec. 31. Both parties are fighting over reimbursement rates.

Rush University Medical Center vs. BlueCross BlueShield of Illinois

Place: Chicago
In a conflict over rates, BlueCross BlueShield first announced in September that Rush no longer would be part of its network as of Jan. 1, 2007.
Signed a contract through 2010.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn