It was a fateful meeting of the Baptist Health executive board in May 2003, when the panel adopted an "economic conflict of interest" policy.
At that time, the Baptist Health system, the largest in Arkansas, began a strange, winding journey to nowhere, when it decided that physicians couldn't be part of their establishment if they dared work at a competing hospital in the state.
With its decision, Baptist Health also targeted physicians' family members and relatives. If these relatives of the hospital physicians also worked at other hospitals, the Baptist physician would lose his job, a representative of the Arkansas Medical Society told me. Records filed before the Arkansas Supreme Court confirmed what he said.
The hospital threw down the gauntlet. A big mistake.
After six years of litigation and untold dollars spent on litigation, Baptist Health lost its legal gamble. Arkansas's highest court opinion ruled on September 30 that Baptist Health couldn't deny physicians' privileges if they are financially invested in a competitor.
The court acted on appeals from a lawsuit brought against Baptist Health by a group of 12 physicians, the American Medical Association as well as the Arkansas Medical Society. The decision upholds last year's lower court decision that found Baptist Health had acted improperly by inappropriately restricting hospital admitting privileges and interfering with the patient-physician relationship.
Baptist Health apparently was feeling the heat of competition with new healthcare facilities in the Little Rock area and didn't like that one bit. The health system runs the 248-bed Baptist Health Medical Center in North Little Rock and other facilities. But the health system lost track of what the court said was the "heart of this case"—the "patient-physician relationship.
The "strong patient -physician relationships are the underpinning of good medicine," the Supreme Court stated. "It was controverted at trial that patients who have long term relationships have better success."
In the wake of the Supreme Court decision, David Wroten, executive vice president of the Arkansas Medical Society, says gleefully that it has national implications. "The ruling has implications not only for the economic credentialing tool used by some hospitals to interfere with doctor-patient relationships in a knee-jerk reaction to protect themselves to prevent competition in the marketplace."
Credentialing decisions should be within the context of the medical staff, involving competence and quality, and relationships with patients, says Wroten. "But this policy was not up to the medical staff."
The hospital's economic credentialing policy has precluded a physician from working at Baptist hospital "if that physician, or any of several specified family members, holds an ownership or investment interest in any other hospital in Arkansas."
The Baptist policy that blocked family members of physicians from working at competing facilities was particularly a cause for dismay, Wroten says. It was too extreme, he adds.
Baptist Health was trying to force patients to choose between it and the physicians, according to the American Medical Association. The state high court's decision showed the physicians' interest in patient-physician relationships outweighed Baptist's interest in protecting its economic position, Wroten says.
Physicians and their families were deeply affected by the Baptist Health policy decision made in 2003. Several years ago, Janet Cathey, MD, an Arkansas gynecologist, became a "glaring example" of the alleged wrongs that Baptist had wrought, Wroten says.
According to the AMA, Baptist Health several years ago sought to terminate Cathey's staff membership because "her husband, who was also a physician, owned an interest in (Arkansas Surgical Hospital), a competing facility." Cathey sued the hospital, and ultimately Cathey's husband a neurosurgeon, sold his interest in the surgical hospital, which opened in 2005.
"Although Dr. Janet Cathey could not have referred her patients to (Arkansas Surgical Hospital) because ASH does not provide gynecological services, Baptist Health informed Dr. Cathey that it would revoke her privileges pursuant to the policy on the day ASH opened," according to court papers filed by physicians opposing Baptist. She dropped her lawsuit and Baptist Health agreed not to contest her position.
When the Baptist board passed the restrictive policy in 2003, one of the plaintiffs, Bruce Murphy, MD, had an appointment to the Baptist Health board that was to expire in February 2004, according to the court records. At the time, Murphy, a cardiologist, owned 14.5% interest in Arkansas Heart Hospital as well. The Baptist Health policy prohibited him from the ownership.
If the Arkansas Supreme Court ruled in Baptist Health's favor, Murphy, president of a cardiology clinic, told the Arkansas Democrat-Gazette, "It would have allowed patient care to have suffered because the (policy) potentially gives the hospital the authority to interrupt that care."
A spokesman for Baptist Health also told the newspaper the policy is no different from conflict of interest policies at other companies. In the statement to the newspaper, spokesman Mark Lowman said, "Baptist Health believes that it has an absolute right to a conflict of interest policy that denies privileges to a physician to an ownership interest in a competing hospital." Baptist Health was deciding what the next step would be.
His statement addressed only the employed physicians, not relatives.
Next step? U.S. Supreme Court? Will that be a waste of money?
Money, however, seems to be an extremely significant issue here. Baptist Health has said it was concerned that owners in specialty hospitals would "cherry pick" the most profitable patients.
The Arkansas high court acknowledged the economic issues, but said Baptist Health was wrong. "While society has a strong interest in Baptist's continued viability, the evidence showed that its finances were never at risk. These factors, and others, led to the judge's ultimate finding that Baptist had acted improperly," Associate Justice Ronald Sheffield wrote in the opinion.
When physicians have admitting privileges at multiple healthcare facilities, patients benefit, Cecil Wilson, MD, president of the AMA said in a statement.
"Free of Baptist's restrictive policy, physicians can now offer patients the benefit of choosing a facility that best suits their needs for cost, quality and convenience," he said.
Unfortunately, Baptist's unwise policy also came at a cost to physicians, and ultimately, to the hospital itself.
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
