HEALTH - Physicians, Unite!
By Marilyn Werber Serafini, National Journal
© National
Journal Group Inc.
Saturday, June 05, 1999
DALLAS--Dr. Bohn D. Allen, a 64-year-old vascular
surgeon, says he is not ready to retire. But this gentle-mannered
physician has about had it with the changes transforming the
practice of medicine. Allen says he works 80 hours a week, but he
estimates that his annual income is half of what it was just
three years ago, when he was working the same number of hours.
Last year, for the first time in 28 years of solo practice, Allen
says he had to withdraw money from his personal savings account
to pay his staff.
Allen's complaint? That physicians in Texas are being
bullied by managed care companies. He says that while insurance
companies are consolidating, becoming bigger and more powerful,
physicians such as himself are losing their ability to practice
medicine the way they see fit.
Under managed care, insurance companies contract with
doctors to care for patients at discounted rates. If physicians
want to see patients in a particular health plan, they must agree
to the terms of that plan's contract. And huge financial
incentives make it hard to say no. Enrollment in managed care
plans has grown dramatically since the early 1990s. For people
who get health insurance through an employer, 87 percent were in
managed care in 1998, compared with 49 percent in 1992. Small
surprise, then, that 92 percent of physicians are in a practice
that has at least one contract with a managed care plan. In those
practices, nearly half of the revenues come from managed care
sources.
Consumer complaints about managed care have already led
to a host of state and federal mandates on health plans. Congress
is re-examining the issue this year, although it's not clear
whether any action will take place. But many doctors don't think
the proposed legislative relief goes far enough. They are
arguing, with increasing vociferousness, for a more radical--and,
they say, more effective--approach: Give doctors a blanket
exemption from federal antitrust laws so they can join together
to negotiate with health plans. Otherwise, the physicians warn,
the balance of power in the health care market will continue to
shift in favor of health plans, leaving doctors without the
strength and leverage to advocate on behalf of patients and
themselves.
''Physicians now are so frustrated about the system, the
regulations, and the power that's been invested in HMOs (health
maintenance organizations),'' said Allen. ''Maybe not in my
lifetime, but sometime in the future, the pendulum has to swing
back toward individualized, personalized care that can only be
delivered by dedicated solo practitioners. We're trying to get
that baby kick-started back in the other direction.''
The organizing is taking shape in different ways, and is
influenced by how physicians get their paychecks. Nearly half of
all doctors are now employed by hospitals and other health care
organizations, and that percentage is climbing: Some 80 percent
of medical school graduates are taking salaried positions when
they enter the job market. For these physicians, unions are an
option.
Self-employed physicians, meanwhile, can't unionize under
labor laws--and many don't want to, anyway--so they're seeking
legislation that would exempt them from federal antitrust rules.
Antitrust laws currently block self-employed practitioners from
getting together to negotiate contract provisions, including
fees, with health plans.
In Texas, the Legislature just passed such an exemption.
Approved by the Senate, 28-2, and by the House, 119-20, the
legislation is now before Gov. George W. Bush, who has until June
20 to sign or veto the bill. The measure would get around the
constraints of federal antitrust law by requiring the state
government to oversee contract negotiations.
A 1943 Supreme Court decision, Parker v. Brown,
established the premise for such state oversight. That decision
said the principles of federalism require that federal antitrust
laws give way to state programs that supplant competition with
state regulation.
In Washington, Reps. Tom Campbell, R-Calif., and John
Conyers Jr., D-Mich., have introduced a bill to permit self-
employed physicians to bargain collectively with health plans.
While the bill has significant support--107 co-sponsors--it is
unlikely to pass Congress this year because it also has
significant opposition, notably from health industry and business
interests.
And the opposition is playing the game hard. ''This is
basically all about money,'' said Jerry Patterson, executive
director of the Texas Association of Health Plans, which
represents Texas managed care plans. From 1993 to 1997, says the
American Medical Association, physicians' median net income fell
an average of 1.4 percent per year, after adjusting for
inflation. Maybe so, says Patterson, but the average doctor in
Texas nevertheless earned $ 217,000 in 1996.
Patterson argues that the ranks of the uninsured in
Texas, now about 26 percent of the state population, will swell
if doctors get their way. ''If doctors are paid more, health
plans have to charge more, so employers and individuals will
decline coverage,'' Patterson said. ''The problem is that the
losers in the fight will be the citizens of Texas.''
Gripes about Aetna
The widely different perspectives of doctors and health industry
officials can be seen in ongoing disputes in Texas between
physicians and Aetna U.S. Healthcare, one of the country's
largest insurers. For some Texas physicians, Aetna is the insurer
for half of their patients. If a pending merger between Aetna and
Prudential Healthcare materializes, that figure will climb--as
many as two-thirds of some physicians' patients could be carrying
Aetna health cards. To stay afloat, physicians say they have to
do business with Aetna. But they also say that the company is so
huge, they can't possibly have any meaningful impact on its
policies as long as they remain, in effect, independent
contractors.
In particular, physicians complain that Aetna designs its
contracts with doctors so that its terms can be changed without a
doctor's consent. And many doctors don't like the contract
provision requiring them to see patients in all of Aetna's health
plans. That means that if a doctor treats patients from Aetna's
preferred provider organization (PPO) plan, the doctor also would
be required to see patients who are in Aetna's HMO. The
requirement is controversial because HMOs typically pay doctors
less and impose more controls over the way care is provided.
Tim Brown, manager of Aetna's West Central region,
defends such contract provisions; they're designed not to benefit
doctors, but patients, he says. ''While doctors might not agree
with every policy we have, we're there to protect the consumer,''
he said. ''We're trying to give them an affordable, quality
product.'' Brown cited the PPO-HMO provision as an example. That
provision protects employees; when an employer switches from a
PPO plan to an HMO plan, employees don't have to switch their
doctors.
And the current system works, Brown said. Aetna
frequently negotiates contracts with physicians, he said, and
doctors always have the right to leave Aetna without notice if
Aetna drops fees or makes other contract changes.
Dallas surgeon Allen has his doubts. He worries that
Aetna is jeopardizing both the quality of the care he provides
and his financial stability. The problem that sent Allen running
to the bank last year involved deadlines for filing electronic
claims. Allen says he could not meet the deadlines because Aetna
was suffering computer problems. He eventually was reimbursed,
but not until he had gone through an independent review panel.
''If it gets bad enough, I'll just have to retire; but
right now, I still love what I'm doing,'' says Allen. ''I still
love to operate. There's still tremendous satisfaction in caring
for patients.''
The Union Label
When you visit a doctor, you expect to see diplomas, not
union posters, hanging on the walls. But you might be seeing both
one day if organized labor has its way.
Salaried doctors--employees of hospitals, private
physician practices, and other health organizations--are showing
increasing interest in joining unions. About 35,000 of the
nation's 1 million doctors now belong to a union, and 15,000 of
them belong to the recently established National Doctors
Alliance, a local union of the Service Employees International
Union.
The formation of the alliance in March wasn't the first
time that employed doctors have unionized. But the alliance
brought new attention to the issue at a time when doctors are
looking for ways to regain clout in the health care market.
Barry Liebowitz, who heads the alliance, said that he
expects rapid growth. ''The press that was generated from this
formation was like the Martians have landed,'' he said. The SEIU
is pumping $ 1 million a year into the union to spur organizing
efforts.
Liebowitz, a pediatrician, stumbled into a doctors' union
20 years ago, when he was having troubles of his own. He had
taken a position as the head of a hospital's ambulatory care
center for children, but he said the hospital was ''bedlam.''
Only with the union's help, Liebowitz said, was he able to
improve conditions. ''They took action to help me get chairs for
the patients, to increase the amount of equipment available.''
Many doctors had hoped--and some still hope--that the AMA
would take a greater role in forming bargaining units. But the
AMA has been struggling with this issue. Although many doctors
are leery about forming a union (some are worried that it won't
look professional), the association's House of Delegates last
summer instructed the board of trustees to create a national
labor organization that would collectively bargain for salaried
physicians. The negotiating unit would work like a union, but its
doctors could not strike.
The board, though, voted in April not to proceed. The AMA
is split over the issue, with some doctors wanting more leverage
in the insurance market, and others arguing that the risks must
be considered more carefully, particularly possible violations of
antitrust rules. It's still not clear whether self-employed
physicians would also be eligible to use the bargaining unit,
because the Campbell bill has not cleared Congress.
The House of Delegates meets again this month, and the
subject is expected to be contentious. ''There are no simple
answers,'' said D. Ted Lewers, the vice chairman of the board.
''We have considered the matter in depth, and we realize that
forming a collective bargaining unit has profound implications
for the AMA, the medical profession, and our patients.''
''Cookbook Medicine''
With the increasing numbers of salaried physicians, the
issue is certain to remain alive. Fred F. Ciarochi, an
endocrinologist with his own practice in Duncanville, Texas, says
that if he were just starting out, he also might consider taking
a salaried position. ''You graduate and finish your training, and
you're $ 100,000 in debt, and the prospect of a salary is a lot
better than the prospect of borrowing more money. By that time,
your wife wants to have a house, your car finally died, and you
have a lot of expenses.''
Rep. James McDermott, D-Wash., a psychiatrist who saw his
last patient in 1987, said: ''It's disturbing to people like me,
who practiced in another time. Old doctors are saying there's no
scientist left in these people. They're being trained to follow a
cookbook.''
But ''cookbook'' medicine has become a reality, McDermott
said. McDermott notes that the University of Washington teaches a
course to its medical students on social and economic issues
affecting medicine. ''It's a major change from when I was in
medical school. We were concerned about how the kidney worked and
what the bad cells looked like when cancer set in.''
Forming collective bargaining units, whether through the
SEIU or the AMA, has already proved successful in opening
communication channels between doctors and health plans. Doctors
at the Rockford, Ill., Health System recently worked with the AMA
to form a bargaining unit--a locally organized alternative to a
labor union--that would potentially get standing from the
National Labor Relations Board.
Before they formed the unit, physicians said they
couldn't get the health plan to address their complaints about
things as basic as their difficulty obtaining medical charts. As
soon as the doctors announced their intention to organize, things
began to happen. Within days of the announcement, they say,
health plan administrators were suddenly returning phone calls
and agreeing to meetings. Whether health system administrators
were motivated by their desire to address doctors' concerns or to
derail physician unionizing, the result was the same.
Physicians say they don't like to use the word ''union''
because it conjures up images of doctors in white coats striking
in front of a hospital while patients lie untreated inside.
That's not their intention, they say.
Hospital physicians in New York City have called strikes
several times since the 1980s, and there's disagreement about
whether patients suffered. Liebowitz said that any strike by the
National Doctors Alliance would be a responsible one. ''Never
throw away a tool you may need,'' he said. In some instances, it
is far better to have a responsible strike than to allow a
patient to go into a substandard facility.''
So what is a ''responsible strike''? Health industry
executives argue that there is no such thing. The question even
makes many doctors nervous.
Liebowitz defines a ''responsible strike'' as one that
gives a hospital a lot of notice and fully staffs the emergency
room. Moreover, he said, the alliance will never strike on
economic issues. Only on patient care issues.
Defending Independence
Despite the trend toward salaries for doctors, half of
all physicians still practice on their own or with partners, and
there are powerful antitrust laws standing between them and
solidarity.
These laws were designed to protect consumers by ensuring
competition in the marketplace. Under them, doctors aren't
supposed to discuss their contracts or fees with their
colleagues. The theory is that such discussions could lead to
anti-competitive practices such as price-fixing or boycotts of
certain health plans.
Doctors in the Genesis Physicians Practice Association
know firsthand the fear of being slammed with threats of an
antitrust lawsuit. Genesis is an independent physicians
association, which 900 Texas doctors use to help them negotiate
contracts. The association, in theory, at least, is set up in a
way to steer clear of antitrust violations. That's because member
physicians integrate their finances. For example, if the
physicians association contracts with an HMO, that HMO might give
it a certain amount of money to provide for HMO patients over a
period of time. The association then doles out the money as the
doctors present claims. If the association as a whole doesn't use
all of the money, the doctors profit. If they eat through the
lump sum, they're in the hole--together.
At the end of 1998, Genesis received a letter from a
Washington lawyer representing Aetna who charged that the
physicians' association was attempting to price-fix in its
contract with Aetna.
When Genesis first signed on to care for 8,000 of Aetna's
HMO patients, Aetna agreed to provide Genesis doctors with
clinical information about the patients. On July 29, 1997,
Genesis stopped getting the information, and notified Aetna. By
June 1998, when the clinical records still weren't being made
available, Genesis administrators realized they were losing money
as a result, they say. In only five months, Genesis said,
hospital days for the HMO patients had increased by 15 percent.
''The physicians were eating the cost,'' said Ralph J. Turner,
chairman of Genesis.
''The analogy is like trying to fly an airplane, except
everyone else is giving you the air speed, telling you what's the
fuel supply, the altimeter readings. All of a sudden, you don't
know what the wind speed is, or how much fuel you have, and that
was the situation our physician organization was trapped in.''
Genesis informed Aetna that they were dropping its HMO.
''It was both a financial and a quality matter,'' said Turner,
''but we didn't complain about the amount of money being paid. It
was one of my less-favorable-paying health plans, but we said,
(just) fix the data problem and (we'll) continue at the same
rates.'' Aetna then cited a contract provision that required
doctors to participate in all of its health plans and released
Genesis from all of its PPO and other health plan products.
Altogether, 40,000 patients lost their doctors, according to
Turner. Aetna tried to individually re-sign the doctors, but got
only about 150 of 560 to return, Turner said.
Aetna's Brown argues that money was the sole factor that
drove Genesis to leave the HMO. The data argument ''was cover. It
wasn't the primary issue,'' he said. Brown acknowledges that
Aetna had a computer problem for a couple of months, but he says
that the flow of information was quickly restored.
Then came the antitrust letter. ''Even if (Genesis) were
sufficiently economically integrated, which it is not, its
actions in discouraging member physicians from contracting
directly with Aetna would raise serious antitrust concerns,''
Robert E. Bloch, a lawyer with Mayer, Brown & Platt, wrote in a
letter to Genesis in November 1998.
Genesis President Stanley D. Pomarantz said it was
''blatantly obvious'' that the letter had ''little merit. It was
an intimidation tactic to get the doctors to sign (the contracts
on an individual basis). They took the letter and started
dropping into practices unannounced to get physicians to sign
on.''
Before the Genesis incident, two physician groups in
Houston had run-ins with Aetna, but Aetna and the physicians
worked out their problems. In one of the incidents, Aetna cut
physician reimbursements to doctors at Baylor University's
hospital by 40 percent, according to Paul Handel, a urologist in
Houston. ''It was the middle of the contract year, without ever
letting us know,'' said Robert T. Gunby Jr., an
obstetrician/gynecologist. The doctors threatened to quit, and
Aetna restored the reimbursements to their original level. ''This
is a good example of how the system does work, successfully,''
said Aetna's Brown.
But, starting with Genesis, Aetna has been less willing
to listen to doctors' concerns, say Texas physicians. ''They've
drawn a very strong line in the sand and said, 'This is our
contract.' The stronger they get in the market, the worse we
are,'' said Gunby. Now, Aetna controls 40 percent of Gunby's
practice. If the merger with Prudential goes through, Gunby
estimates that Aetna would control as much as 60 percent or 70
percent. ''You can't walk away from that.''
The Resistance
Federal Trade Commission Chairman Robert Pitofsky
sympathizes with the concerns of physicians. ''It's the feeling
on the part of doctors and patients that some HMOs have
considerable power, and that they adopt procedures that are not
in the best interest of patients,'' he said in an interview with
National Journal. ''Doctors feel they want the opportunity to
represent patients, and that they can't do it effectively
individually.''
Nevertheless, Pitofsky argues--strongly--against giving
physicians an exemption from antitrust laws. ''I wouldn't dismiss
doctors' arguments that it's not a level playing field,'' he
said. ''The question is, what's the better way to deal with it?
Labor law exemptions go much too far.''
Pitofsky says that physicians already have the ability to
collectively negotiate, so long as they don't talk money. ''If
they wanted to negotiate a case where the HMO says they're not
going to do hip replacements for people over a certain age, and
the doctors say it's wrong as a matter of care, that's not an
antitrust problem,'' he said. ''But even if it was, we wouldn't
bring a case.''
Pitofsky had to think a bit harder before deciding
whether the FTC would bring a case against physicians who might
boycott a health plan because it wanted the physicians to
participate in all of its managed health care plans--the
complaint that the Texas doctors have with Aetna. After taking a
day to think that one through, Pitofsky said that if the doctors
weren't trying to raise their fees, he did not expect that the
FTC would bring a case.
Doctors in Texas, though, aren't reassured. While the
threat of an expensive antitrust suit is hanging over their
heads, they say they're uncomfortable coming together to
negotiate any contract provision.
Patterson, the executive director of the Texas
Association of Health Plans, acknowledges that there are ''some
circumstances'' in which doctors are treated unfairly, but he
says that the problem isn't big enough to warrant national or
state legislation. He draws a war analogy to make his point:
''We're not dropping nukes in Kosovo on single tanks.''
Karen Ignagni, the president of the American Association
of Health Plans, which is the umbrella organization for groups
such as Patterson's, charges that doctors aren't being
''straightforward'' about why they want the antitrust exemptions.
She, too, says it's a money issue. ''If they want a discussion
about (protecting doctors), we ought to have it straight up, and
we haven't had that,'' she said, noting that doctors now say
their purpose is to protect patients.
''We don't object at all to a discussion about where
doctors stand relative to health plans, and talking out issues
where physicians feel they are challenged.''
Ignagni said it's unfair for doctors to blame all of the
changes in the health care system on managed care. ''Doctors have
gone through major changes that would have occurred even if
managed care didn't come onto the scene,'' she said. They're
shifting from solo practices to group practices, and also to
salaried positions, she said, because there are more and more
obligations put on them because of new technology and increased
information.
The AAHP will have to try to thwart proposals for
collective negotiations in several states, including Pennsylvania
and Illinois, and also in Congress, where the House Judiciary
Committee is expected to hold hearings soon. But Texas is the
furthest along, so that's the state that everyone is watching.
Still, whether the ability to negotiate collectively will
actually lead to such talks is unclear. Several years ago,
Washington state enacted a law to allow doctors there to
collectively negotiate on everything except fees. But as it
turned out, no health plan chose to negotiate with the doctors,
and the doctors did not strike or boycott.
Texas physicians, though, boast that they're feisty.
Texas was early in passing several anti-managed care bills. In
fact, it was the first to allow patients to sue their health
plans for delayed or denied services. Says Allen: ''Most Texas
physicians come from an independent background. Defend the Alamo!
Never say die! Physicians here have always been tremendously
independent.''
