A victory for the sanctity of the doctor-patient relationship

A recent court decision in Arkansas made clear that hospital economic credentialing policies may not stand up in court.

Posted Nov. 22, 2010.

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Two of the fundamentals that represent the best of our health system are the physician-patient relationship, and the notion that choice matters in how and where care is delivered. A practical and important expression of them is when doctor and patient can decide the best treatment setting to fit the patient's needs.

That freedom of choice has been under attack by hospitals that have engaged in economic credentialing. That's the practice of excluding physicians because of money matters, not competency or quality of care.

A recent ruling from the Arkansas Supreme Court against one hospital system's economic credentialing policy should make other hospitals think twice about instituting or enforcing such policies of their own.

The case dealt with physicians who owned their own specialty hospital. A recent law effectively stopping the creation of such facilities, however, does not render the ruling moot. Expect that it will be cited when protecting any physicians who feel like their hospitals are arbitrarily cutting them off from their patients.

The case was brought by 12 cardiologists in the Little Rock area. They sued Baptist Health, Arkansas' largest hospital system, in 2004 after it created a credentialing policy that revoked or banned privileges for any physician who had any financial interest in a competing facility. The American Medical Association and the Arkansas Medical Society joined as plaintiffs, and the Litigation Center of the American Medical Association and the State Medical Societies contributed to the plaintiffs' legal expenses.

Baptist Health argued that its policy protected patients from potential conflicts when physicians can refer to their own facilities. The health system also noted that the policy protected the hospital system's economic interests, in that Baptist Health risked losing patients to a competitor.

In late September, however, the Arkansas Supreme Court ruled against Baptist Health, which had asked that a lower court decision against its economic credentialing policy be overturned.

The ruling permanently bars Baptist Health from enforcing its policy. The court not only said the policy was improper but also emphasized that patients and physicians, and physicians and their referring doctors, had a "reasonable expectancy" to doctors' access to hospitals.

The Arkansas Supreme Court, in a 4-0 decision (with two justices not participating), wrote that it agreed with the lower court about the negative effects of Baptist Health's policy. The justices ruled that it "disrupted the physician-patient relationship, discouraged specialty hospitals, suppressed competition and" -- in a nod to the policy also banning physicians if their spouses invested in a competing facility -- "harmed the institution of marriage." The court also rejected Baptist Health's argument that its financial viability had been at risk.

The Supreme Court pointed out that physicians have enforceable legal rights when it comes to their hospital privileges, and that the physician-patient relationship is protected by what it called unreasonable or arbitrary interference by third parties. That means the ruling case applies to any physician, not just the relative few who own specialty hospitals.

It is the first case in which a state Supreme Court ruled against an economic credentialing policy. Previously, other courts had ruled in favor of hospitals in such cases.

The ruling of the Arkansas Supreme Court, because its jurisdiction does not extend outside the state, will not guarantee that another economic credentialing case outside that state goes in the doctor's favor. The ruling does, however, signal to hospitals nationwide not to consider it a sure bet that any economic credentialing policy will stand up in court.

Disrupting the doctor-patient relationship, and the decisions that flow from it, should not be trumped by a hospital's interest in stifling its competition. The Arkansas Supreme Court understood that and set a good example for other jurists to follow.

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