Judge Rules Against Hospital in Arkansas Economic Credentialing Lawsuit on Louisiana Medical News

Judge Rules Against Hospital in Arkansas Economic Credentialing Lawsuit

By: ROBYN JACKSON

A recently decided Arkansas lawsuit concerning doctors' privileges could have implications for hospitals and physicians in Louisiana.

"We have been following this case for a long time," said Amy Phillips, legal counsel for the Louisiana State Medical Society. "It's a positive case for physicians."

In late February, a Pulaski County Circuit Court judge found that Baptist Health of Little Rock cannot deny doctors privileges if they have a financial stake in another hospital.

In 2004, 11 doctors at Little Rock Cardiology Clinic, who share ownership of Arkansas Heart Hospital in Little Rock with Medcath Corp., of Charlotte, N.C., challenged an "economic credentialing" policy imposed six years ago by Baptist Health, the state's largest hospital system and the exclusive or preferred provider for Arkansas Blue Cross and Blue Shield, the state's largest health insurer. They said the policy not only was an attempt to limit competition, it also interfered with their relationships with patients.

The policy denied doctors privileges at Baptist Health hospitals if they or any of their family members own a stake in a competing facility, even distant relatives or in-laws, or at facilities that were not in the Little Rock area.

Pulaski County Circuit Court Judge Collins Kilgore issued a preliminary order in 2004 preventing Baptist from enforcing the policy. In March 2008, Baptist v. Murphy went to trial before Kilgore, and on Feb. 27, he issued his trial order that said Baptist "intended to interfere with the patient-physician relationships of the plaintiffs" by enforcing the policy. He also said that the intent of Baptist's policy was to suppress competition of specialty hospitals, such as Arkansas Heart Hospital, which operates a 24-hour full service emergency center, six catheterization labs and three heart operating suites. It is also a cardiac training center for the American Heart Association.

"This is a victory for patients throughout Arkansas, and throughout the nation," said Dr. Bruce Murphy, the lead cardiologist plaintiff in the case, in a news release. "Patients should never be forced to choose between their doctor and a hospital and now, at least in Arkansas, they will not need to."

Mark Lowman, vice president of strategic development for Baptist Health, said the hospital administrators are disappointed in the decision.

"Baptist Health believes that the board's decision to protect the community's long term access to a broad range of services was a correct and responsible one," Lowman said in a statement. "Our board's decision reflects our steadfast belief that there is an inherent conflict of interest for a physician who has privileges at Baptist Health to also have a financial investment in a competing hospital in which they personally profit from their referrals to that hospital."

Lowman said the hospital has not decided if it will appeal the judge's decision.

"Baptist Health will study the decision to determine its response," he said.

The American Medical Association and Arkansas Medical Society (AMS) joined the cardiologists in their lawsuit.

Arkansas Medical Society spokesman David Wroten said his organization is pleased with the ruling.

"This was a long, drawn-out legal battle," Wroten said. "It may not be over. They have the chance to appeal. We hope they will not."

He said the decision will help protect doctor-patient relationships.

"This lawsuit was not about doctors. It was about the patient and their ability to choose. Hospital policy should not be based on financial concerns. This policy, by their own testimony, was designed to prevent competition."

In his decision, the judge wrote, "The heart of this case is the patient-physician relationship. The relationship is entitled to exceptional protection. Strong patient-physician relationships are the underpinning of good medicine, and it was uncontroverted at trial that patients who have long-term relationships with their doctors have better outcomes."

Rebecca Patchin, MD, chair-elect of the AMA Board, said in a press release that "Hospital admitting privileges have long been considered an indispensable component of a medical practice. Baptist Health took advantage of this fact to coerce physicians and squash competition from other medical facilities."

Patients benefit when their physicians have staff privileges at multiple facilities, said AMS President David Jacks, MD, "because the patient has a choice of facilities to select from that best suits their needs in terms of costs, quality and convenience."

The policy was "way too broad," because it included distant relationships, including in-laws, or facilities in other parts of the state, Wroten said.

"They considered the whole state their market," Wroten said of the Baptist Health system, which includes Baptist Health Medical Center in Little Rock, and facilities in North Little Rock, Arkadelphia, Heber Springs, and elsewhere.

"In this case, the Arkansas Medical Society and the American Medical Association got involved in a case that had implications for every physician in the state as well as in the states that are facing similar legal challenges," Wroten said. "We hope it sends a message to other hospitals that economic credentialing is not right."

Phillips said she is unaware of any similar policies or lawsuits in Louisiana.

"We hope it doesn't happen here in Louisiana, but it's not out of the question," she said. "As far as I know, we haven't had any reports of it. I've heard rumblings about this issue, but I think they've been settled."