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CA Hospitals Fight for Right to Hire Docs on Constitutional Grounds

 |  By HealthLeaders Media Staff  
   September 02, 2009

Does the Medical Practice Act, which bars California hospitals from hiring doctors, violate the 14th Amendment, the one that guarantees equal protection under the law?

Welcome to the latest argument in the campaign by California's hospitals to recruit and retain primary care providers and specialists by hiring them and offering them benefits.

Just like county hospitals and academic medical centers, as well as hospitals in nearly all other states get to do.

Pamela Ott, executive director of the 49-bed Sierra Kings District Hospital in the farm community of Reedley, 25 miles southeast of Fresno, thinks the law most certainly does violate the constitution. She's having trouble recruiting another obstetrician, really needs a general surgeon, and is looking for a cardiologist to set up practice in her underserved area.

Alexzandra Hollingworth, MD, a young, board certified general surgeon fears she may not be able to continue her practice in the San Joaquin Valley because "the payer mix does not provide enough money to make a living as a doctor.

"I'm not talking about a decent living," said Hollingworth, 38. "I'm talking about any living at all. I'm talking about being able to pay the rent." She also wants to work in a setting with benefits, like health insurance, as many of her friends in Virginia and New York enjoy.

Tom Petersen, a director with the Association of California Healthcare Districts, also says California's Medical Practice Act is unconstitutional. The Sacramento-based group is pushing for passage of legislation that would lift the prohibition for hospitals operating in rural areas as well as hospitals operated by special health districts as long as they serve a medically underserved population.

"The majority of the people who are harmed because of this existing law are people who are black, brown or poor, or two of those three," says Petersen. This is about people who have no one to advocate for their healthcare, and that means they're treated unequally under the law."

Other organizations and state agencies that support change include the California Hospital Association, the Medical Board of California, the Regional Council of Rural Counties, the California Alliance of Retired Americans, and many other groups.

Even Dolores Huerta, cofounder of the National Farm Workers Association with Cesar Chávez, has joined the campaign, saying she knows the scarcity of physicians in rural and impoverished parts of the state disproportionately harms patients because doctors aren't always there in emergencies, and because they have to travel much farther to get the care they need.

Unfortunately for their cause, the influential California Medical Association, which represents a large share of the state's physicians, vehemently disagrees and has defeated two of three bills that would have lifted the ban.

The remaining bill, SB 726, was heavily amended to include some of the provisions in the defeated bills.

However, as amended, the bill allows only two physicians instead of 10 to be hired per hospital, with another three allowed only if the hospital can show in a public hearing the need for additional hires.

Additionally, other provisions in SB 726 would limit its application only to hospitals in medically underserved areas and only those which can prove that they tried unsuccessfully for at least 12 continuous months to recruit physicians.

As it stands, it passed a key committee with a 15 to 2 vote in August. And is expected to be approved by the Assembly.

But the CMA may kill this bill too when it goes before the state Senate in coming weeks.

The CMA's chief objection is its fear that hospitals acting as employers would tell doctors what kinds of care their patients should get. They suggest that such direction might depend more on the allowances in the patients' insurance policies, even though specific language in the bills would prohibit that.

Another CMA argument is a fiscal one. In a letter Aug. 21 to the Assembly Appropriations Committee, CMA lobbyist Brett Michelin says such a bill would increase costs to the state with higher charges for Medi-Cal (Medicaid) patients.

"If SB 726 is allowed to become law and physician services are delivered in the hospital or hospital owned clinic, the hospital or district may become eligible for reimbursement for services provided by the facility," Michelin wrote. "This would increase costs to the Medi-Cal system for every enrolled patient that receives services at a hospital or district owned facility instead of at a physician office."

Michelin added that the ban on hospitals hiring doctors "has been preserved by the Legislature and the courts since the 1930s."

Currently, only teaching hospitals, prisons, and county hospitals are exempt from the state law. California is only one of a handful of states that has such a rule. And prohibitions in other states are rarely enforced.

Hospitals are allowed to offer physicians a minimum income guarantee for the first two years they come to certain underserved communities to start a practice.

But, Ott says the questions out of these doctors' mouths are: "That's great for two years. But what do I do after that if I can't get the volume to be self-sustaining? Why would I stay here if I can go to another state and know I could be gainfully employed, regardless of the patient care volumes I have in the future?"

Several hospital officials who have lobbied for bills similar to this one in Sacramento say every time legislation gets to the floor for a vote, a few days before, every legislator got a call from his or her personal physician.

"The physician tells the elected representative, 'You need to vote against this because I'm asking you to.' That's the same tactic CMA has used every time this has come up. Everyone gets a call," recalls a Southern California hospital government relations representative. "You can't beat that."

Rural and district hospitals in underserved areas argue that they have trouble filling their emergency room call panels because private practice physicians who take call are unlikely to get patients with insurance.

And that's true in Fresno County, where Pam Ott struggles to find doctors. A June report by the California Health Care Foundation found that Fresno County has significantly fewer specialists per capita than the state average, including anesthesiologists, cardiologists, emergency physicians, geriatric specialists, gastroenterologists, general practitioners, neonatologists, orthopedic surgeons, pathologists, psychiatrists, and pulmonologists.

According to that same California Health Care Foundation study, Medi-Cal is a large part of the problem, because the low reimbursement rates have prompted more physicians to decline to accept those patients.

"Over 50% of primary care doctors do not accept Medi-Cal or uninsured patients because what California pays doctors who treat these patients is among the lowest in the nation," says Sharon A Spurgeon, CEO/administrator for Coalinga Regional Medical Center, also in the San Joaquin Valley. "Doctors receive only $24 per office visit--less tan half of the actual cost of care. Doctors simply cannot afford to set up private practice in poor communities and hospitals in these communities are not allowed to hire doctors."

Petersen, who represents the healthcare districts, says the core message is this: "No one but those in disenfranchised populations are impacted by this. But who benefits from this policy? Who is protected? Are people better off by having their diabetes go untreated than by having it treated by an employed physician?"

"If that's true," Petersen asks, "why hasn't the CMA pursued legislation to take away the exemption that currently exists" for academic medical centers and county hospitals?

That's a good question.


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