Are Employed Physicians Offered Peer Review Protections?

This is an excerpt from an article that originally appeared on Credentialing Resource Center on October 9, 2017. 

The AMA’s 2016 Benchmark Survey found less than 50% of physicians (47.1%) had an ownership stake in their practice. The percentage of physicians who were employees in their practice increased from 41.8% in 2012 to 47.1% in 2016.

The AMA survey noted in 2016 that practice ownership ranged from 27.9% among physicians under the age of 40 to 54.9% among physicians age 55 and older. Younger physicians were more than three times as likely as older physicians to be employed by hospitals. Fourteen percent of the under-40 cohort were direct hospital employees, compared to only 4.2% of physicians age 55 and older.

The trend toward physician employment brings with it many issues that alter the traditional relationship between a physician and a hospital. The degree to which this relationship changes is also a product of the specific written agreement between the physician and the hospital.

According to the NEJM Career Center, the accelerated physician recruitment effort, along with hospital consolidation, has seen organizations recruiting 30 or more physicians at once for employed positions. Recruitment strategies include both new graduates and practicing physicians who are willing to sell their practice and transition to an employed position.

For new graduates coming out of a residency or fellowship, this translates into many new employed practice opportunities. For MSPs, this could mean a significant spike in initial appointment volume and increased pressure to onboard new recruits through a physician-friendly, seamless procedure. The competition in recruitment is not just singled out to hospitals and healthcare systems but also to retail clinics, telemedicine companies, and concierge medicine practices, according to statistics from the NEJM Career Center.

The need to meet governmental and commercial insurance requirements for patient outcomes and patient satisfaction is reflected in the structuring of compensation plans. For everyone’s benefit, quality metrics as well as productivity should be defined and quantified. While medical staff bylaws continue to serve as the “constitution” for medical staff, a physician employment contract can circumvent some aspects and protections afforded to voluntary physicians. One such example is the right to a fair hearing. A physician who is discussing a potential employment contract should seek legal counsel and ask many questions, including how much input they will have when performance issues are discussed and whether there will be an appeals process in the event of a disagreement over the performance evaluation. While not legal in all states, the hospital may also seek to bind an employed physician to a reasonable and enforceable noncompetition agreement.

One of the most complicated areas is when the investigation and decision-making functions of peer review committees and human resources departments become entangled in an investigational review. When complaints are received regarding a physician’s performance, the process may result in termination of the physician’s employment and denial of privileges, which can bring into question peer review immunity and privilege that may be provided by state law and the Health Care Quality Improvement Act (HCQIA).

When it comes to an employed physician, the hospital’s protected peer review information may be exposed in litigation. For a hospital employed physician with staff privileges, the investigation and decision-making process is often conducted under confidential peer review. In such cases, the physician will likely seek to compel the hospital to produce all documents related to the adverse decision and take the deposition of key decision-makers. To protect its peer review material, the hospital will likely object (regardless of whether the information could help the hospital win its case). The protection of peer review immunity and privilege will likely rest upon whether the case is in federal or state court, along with the impact of any public policy issues. According to Washington Healthcare News, the number of employment-related claims where peer review information is sought through discovery is on the rise, and it has resulted in successful motions to compel.

It is also important to note that there is no immunity protection under HCQIA when the individual is protected under the Age Discrimination in Employmnet Act and the Americans with Disabilities Act. The release of peer review information can have a resounding impact on a hospital’s medical staff and cause irreparable harm to the medical staff’s relationship with the administration and the governing body. While steps should always be taken to protect confidential peer review documentation, limiting meeting attendees to only those who are most appropriate is equally important.