by Sharon Kime and Robert Sullivan

Physicians in California practice under a microscope. Virtually every physician is subject to legal constraints or governmental oversight – the Medical Practice Act, the Medicare and Medi-Cal laws, as well as contractual obligations under provider agreements with health plans. For many Sacramento physicians, practicing in the “managed care capital” of America has rendered professional life particularly difficult.

Medical staff peer review, an integral part of a hospital’s operation, should be an integral part of a physician’s practice. When it leads to “corrective action” against a physician’s hospital privileges, peer review has ramifications far beyond the walls of the hospital, involving not only the Medical Board and the National Practitioners Bank but also malpractice carriers and third-party payers to whom the affected physician must self-report. Ultimately, a physician against whom corrective action is taken can lose hospital staff privileges and be faced with a Medical Board disciplinary action, loss of malpractice insurance, and loss of provider status with the very people who pay for the physician’s services to patients. Thus, it should be clear to all physicians that peer review is a serious business.

Market forces have shifted the economic power in the practice of medicine

Along with mutual necessity, a host of potential problems exist between hospitals and physicians: Non-compliance with hospital rules and regulations, medical staff politics, and economic credentialing are some of the more obvious pitfalls.

In the last 20 years, because of managed care, the economic power has shifted from physicians to hospitals, third-party payers and other health institutions. Whereas, in the past, hospitals depended on fee-for-service physicians to supply patients, now physicians are dependent upon health care institutions owned by hospitals.

What this means in the operation of hospitals’ peer review systems is that they are all too often driven by economic motives. While the law provides that physicians should be admitted to membership of medical staffs and accorded privileges based solely on their professional qualifications, any practicing physician or health care lawyer knows that admission to and termination from the staff involve issues of economic consideration, not just professional competence. In other words, hospital peer review is human; it has all of man’s imperfections in spite of the idealistic concepts found in the law and in the medical staff bylaws.

Principles for avoiding hospital corrective action

To avoid being the subject of a peer review proceeding, the physician who practices in a hospital should be guided by four principles:

Practice good medicine

First, the physician should attend to his or her patients in the hospital and practice good medicine. Sounds naive and foolish to say this as a guiding principle. However, all too often, the physicians who run afoul of peer review don’t follow this simple rule. They stretch themselves beyond reason. They do not practice good hospital medicine because of the competing demands of their office practice, multiple hospital practices, or a variety of personal reasons. They simply do not attend to their patients in the hospital. By this we mean they do not make regular rounds, are sloppy in their charting, have poor relations with the nursing staff and their physician colleagues, and, worst of all, little or no rapport with their patients. Good rapport doesn’t simply mean sitting by a patient’s bedside and being charming. It means forging a personal and professional alliance with the patients and among the nursing staff and physicians for the effective care of the patient in the hospital.

Follow the hospital medical staff rules

It is unquestionably true that the rules of the hospital and medical staff can be at times trying and occasionally downright stupid. This is particularly true in the rapidly changing health care field where equipment, therapies, and protocols are frequently changing. Rules are often quickly and foolishly enacted to deal with these rapid changes. Nonetheless, the physician must act constructively under the hospital’s rules. Nothing will get a physician in trouble quicker than practicing in the hospital as if it were his or her domain regardless of the rules.

Actively participate in medical staff duties

The third principal is that the physician should participate in medical staff duties including serving on committees and being active in the governing of the medical staff. All too often, medical staff politics is dominated by hospital-based physicians such as radiologists, pathologists, intensivists, or emergency room physicians. These physicians are either under contract with the hospital or their professional practice is centered within the hospital, thus aligning them with the hospital administration. The interests of the hospital and its physician employees do not necessarily coincide with the interests of the independent physicians who are members of the medical staff. For this reason, it is important that private practice physicians participate in medical staff affairs. If they do not, the medical staff organization may merely become an alter-ego of the hospital. The medical staff should represent the interests of the entire medical staff for there to be fair and even-handed peer review and for there to be a healthy and dynamic relationship between members of the medical staff and the hospital administration.

Insist on Fair Peer Review

Finally, every physician member of the medical staff must insist that peer review be conducted fairly and without regard to economic factors. To achieve this end, it is imperative committees meet and perform their obligations. However, they should not allow the economic forces that dominate the hospital to destroy the true focus of peer review, viz., competent medical care.

For example, competent physicians who take care of Medicare and Medi-Cal patients or patients whose care is uncompensated seem to have a higher incidence of peer review difficulties. It appears as though some hospitals, whether they will admit it or not, actively discourage the admission of patients who cannot pay for their care. Under this policy, the hospital has allies in the hospital-based physicians who likewise would not be paid by these patients for the value of their services. In our experience, physicians who admit these types of patients are subject to hostile peer review at an alarmingly higher rate than their colleagues who do not.

On the other hand, sometimes peer review unfairly strikes physicians with the most lucrative practices. In this situation, peer review can be a result of economic jealousies by colleagues in the same specialty. These are just two examples of the economic influences on peer review. It is important that peer review be conducted fairly and evenhandedly without regard to these economic factors.

Responsibility for fair peer review rests with each and every individual physician on the medical staff. He or she must insist a corrective action against a physician begin with charges that are substantive, not theoretical; that these charges are investigated by ad hoc committee members who are not related to the individuals bringing the charge nor are they enemies or antagonists of the physician being charged. If the charges are sustained and corrective action taken, each member should insist the accused physician be given a judicial review hearing before a panel of physicians who participated in neither the charging process nor the investigative process and are in no way competitors or antagonists of the subject physician. To accomplish this, it may be necessary to bring in outside experts to evaluate the cases involved. Many times, it is impossible for the charges to be fairly investigated by independent members of the medical staff. For the same reason, it may sometimes be necessary for the hospital to spend the money to bring in one or more outside physicians to serve on the judicial review committee.

When all physicians participate in the medical staff organization and in the conduct of peer review, the burden on each of them is minimal. The benefit of a fully involved, active medical staff is enormous. In our experience, such a medical staff has high morale and a sincere and abiding union with the hospital administration in providing quality medical care to patients. Without this type of involvement, the medical staff becomes fractured by internecine rivalries along department lines. It then becomes a captive of the hospital administration, who fills the leadership positions of the medical staff with its own candidates. Inevitably, such a staff at a hospital has numerous corrective actions, bitterly contested judicial review hearings that pit doctor against doctor, nurse against doctor and medical staff against administration. It is not the type of hospital where the energies of the physicians and the hospital staff are focused on the single most important objective – care of patients.

(Robert J. Sullivan is a partner in the Sacramento law firm of Nossaman Guthner, Knox & Elliott. He specializes in administrative law with emphasis on health care. Sharon Barclay Kime was an associate with the same firm, specializing in administrative and health care law.)