Is Economic Credentialing a Necessary Evil at Hospitals?

Economic credentialing, the practice of evaluating practitioners through a monetary lens, has had its ups and downs over the years. These days it is considered a dirty word in many medical staffs, says Robin Locke Nagele, partner in the health law division of Post & Schell, PC, in Philadelphia.

"If you're engaged in economic credentialing, you definitely must be doing something wrong, which is unfortunate, because I think it's actually a fairly accurate term that—from the hospital perspective—is necessary at times," says Nagele.

Despite its connotation, many hospitals and medical staffs engage in it through practices such as physician profiling, exclusive contracts, and conflicts credentialing.

To naysayers, economic credentialing is a greedy practice that elevates the business of medicine to a higher point than quality clinical practices. However, to its supporters, economic credentialing is a responsible practice that ensures resources are properly managed.

"What I consider to be economic credentialing is really taking the economic consequences of having physicians providing services on your medical staff into account when you're designing the services that you're going to provide," says Nagele.

Kathy Poppitt, JD, a shareholder at Cox Smith, PC, in Austin, TX, says that although at some level medical staffs want to distance themselves from the negative connotations of economic credentialing, the practice has deep roots in modern healthcare.

"Recently, there has been some speculation on whether healthcare reform will lessen the need for economic credentialing," Poppitt says. "However, the factors that have lead to economic credentialing are only increasing."

These factors include pay for performance programs, Medicare's decision not to pay for never events, such as wrong site surgeries, and rising malpractice costs.

Nagele says hospitals and medical staffs need continuing education about economic credentialing issues, not only to stay on top of trends but to help dissolve the us-versus-them mentality. She says there is a perception of hospitals and medical staffs as two divergent groups with different economic interests coming into conflict, when in fact the opposite is and should be true.

"These are two groups that need each other and have a very symbiotic relationship and need to be working on the same page to overcome the many challenges that hospital based practice is facing in this day and age both from an economic point of view and a quality point of view."