Report: C

(A-99)

Subject: Creation of a National Labor Organization for Physicians

Presented by: Subashini Daniel, Chair

Referred to: Reference Committee B

I. Introduction

At the 1998 Annual Meeting, the AMA House of Delegates adopted Substitute Resolution 258 as follows:

Based on separate resolutions submitted by the Young Physicians Section and the Organized Medical Staff Section, Substitute Resolution 258 lays the groundwork for the AMA’s involvement in establishing a collective negotiations framework.

The issue was revisited at the 1998 Interim Meeting, with the following recommendation adopted:

The AMA will be addressing the issue of establishing a national labor organization again at this 1999 Annual Meeting. Your Governing Council has struggled with this issue, and agrees that in an ideal world physicians should not be involved in collective bargaining activity. However, we cannot ignore the changes that the profession has experienced, and continues to experience, as a result of the evolution of the medical marketplace. Given the current climate, we believe that the AMA has no choice but to address the need for a labor organization that can ethically, but forcefully, negotiate for physician and patient rights. We present the following information and recommendations for your approval.

The arena in which physicians provide professional services to patients has changed radically in the past two decades. In the past, individual and small groups of doctors provided services to and on behalf of their patients. Now, many physicians are finding themselves in situations where they are part of larger integrated health systems, and health maintenance organizations (HMOs) and other managed care organizations. The balance of control of patient care and workplace issues has shifted to representatives of third party payors and institutions who are dictating the terms and conditions under which medical services are delivered.

Many physicians feel they must collectively react to the coercive economic power wielded by HMOs and other managed care organizations. This economic power has substantially modified the traditional methods of practice for many, if not most independent self-employed physicians. The self-employed or small group physician is the one most at the mercy of the insurers’ economic juggernaut; however, the self-employed physician is also the one at most risk from the antitrust laws when attempting to counter-balance the power of HMOs.

All physicians are not equal when it comes to collective bargaining. In some cases antitrust law (designed to facilitate competition and discourage price fixing or similar market manipulations) bars physicians from collectively negotiating. In other cases physicians are eligible for a "labor exemption" from antitrust regulations, which means that they can engage in collective negotiations that will help preserve their rights as "workers." The applicability of the labor exemption varies widely depending on the employment status of the particular physician.

Resident Physicians: Unions representing residents were the first to organize physicians for collective bargaining. Residents have pursued unionization as a formal mechanism for input into working conditions and implementation of due process at their hospitals. In 1976, the NLRB ruled that residents are students, not employees, and therefore are not entitled to protection under the National Labor Relations Act. However, some individual state courts, such as California and New York, have ruled that residents employed in public institutions are employees under state law, and eligible for protection under state labor statutes. Accordingly, both California and New York have strong resident unions.

The Committee of Interns and Residents (CIR) is the largest union of residents, representing over 9,000 residents, interns and fellows in New York, New Jersey, Massachusetts, Florida, California and Washington, DC. Recently CIR petitioned the NLRB to reverse their 1976 decision and recognize residents as employees. NLRB hearings on this issue were concluded over a year ago, but the decision has been delayed due to internal changes at the NLRB. If the NLRB reverses its decision and considers residents as employees, it is expected that resident involvement in unions will increase significantly.

While waiting for a decision on this issue, the AMA, through the Resident and Fellow Section (RFS), has offered assistance to groups of residents in forming independent housestaff organizations (IHO). The AMA defines IHOs as housestaff organizations 1) not affiliated with a traditional union, and 2) that commit to refraining from engaging in strikes or other actions that could negatively affect the substantial well being of patients. The MSS Assembly passed policy at the 1998 Interim meeting supporting the development of independent housestaff organizations.

The RFS has published a resource manual entitled "Independent Housestaff Organizations: A Win-Win Opportunity," and has worked with residents at Tulane University and Louisiana State University in efforts to establish an IHO. The AMA intends to continue providing resources to support these efforts.

Employed Physicians: Currently about 50% of practicing physicians (including residents and federal government employees) are employees. It is projected that as many as 80% of graduating medical students will be employed by a hospital, group practice, or other entity following residency. Physicians who are employees fall within the labor exemption to the antitrust laws, and may engage in collective bargaining with their employers. However, supervisory employees cannot claim protection under the National Labor Relations Act, and some courts have found that physicians are supervisory employees because their decisions direct other members of their health care team.

Self-employed Physicians: Collective bargaining is only permissible if it is the result of a labor dispute surrounding the terms and conditions of employment. In order for physicians to be allowed to engage in collective bargaining, physicians must be employees and the dispute must be with an employer. Since the law generally views self-employed physicians as independent contractors, entrepreneurs or independent businesses, they are not viewed legally as employees, and they cannot engage in collective bargaining.

However, the fact that persons who seek to engage in collective bargaining are not in a formal employment relationship does not conclusively disqualify them from the labor exemption. Courts will look at the nature of the relationship to determine whether the persons are employees in substance, even though they do not have a formal employment relationship. Because of the changing dynamics of the marketplace, some physicians contend that they are subject to such a high degree of control by hospitals or health plans that they should quality for the labor exemption. Although this is a valid argument, it is not likely to succeed under current law. Thus, at the present time, self-employed physicians in independent practice do not fall within the labor exemption from antitrust laws and may not engage in collective bargaining with health plans.

It should be noted that self-employed physicians who are affiliated with highly integrated physician groups, such as independent practice associations (IPAs), are eligible to engage in certain collective negotiations. This would apply to physicians who share business and administrative functions for their practices such as billing, credentialing, quality assurance, medical records management and assuming contract risks with other physicians. As groups, these physicians are permitted to negotiate fees and other contract terms with payers. (There are not a significant number of independent physicians who fall into this category.)

Although generally ineligible to engage in collective negotiations, self-employed physicians can benefit from other activities that an organized advocacy unit might provide. These include advocacy efforts directed at resolving or preventing abusive mistreatment of physicians by health plans, and expressing the opinions of physicians about economic and medical issues. The forums for these activities include legislatures, government regulatory agencies, the courts, and formal dialogues with health plans.

In addition, the AMA is supporting legislative efforts to win antitrust relief for independent physicians. The AMA is actively supporting the Quality Health Care Coalition Act, sponsored by Rep. Tom Campbell (R-CA). The act, originally introduced in 1998 and reintroduced this year as H.R. 1304, would allow individual physicians to bargain collectively with health plans and be more effective patient advocates.

In addition to the policies referenced in the Introduction, the AMA has numerous policies related to collective bargaining and negotiation by physicians. These policies include:

• 385.946 - Collective Bargaining for Physicians: The AMA will seek means to remove restrictions for physicians to form collective bargaining units in order to negotiate reasonable payments for medical services and to compete in the current managed care environment; and will include the drafting of appropriate legislation. (Res. 239, A-97; Reaffirmed I-98)
• 385.983 - Issues Relating to the Economic Representation of Physicians: (1) Through involvement in case-by-case adjudications and NLRB rulemaking procedures, the AMA supports attempting to expand the scope of nonsupervisory, employed physicians to permit organization and representation of more physicians under the labor laws. (2) The AMA favors assisting, in a carefully controlled way, the organization and bargaining efforts of employed physicians by providing needed guidance and expertise. (3) The AMA believes that the AMA and medical societies generally are in a better position, both legally and professionally, than labor unions to assist physicians in their collective efforts. (BOT Rep. BBB, A-87; Reaffirmed: Sunset Report, I-97; Reaffirmed I-98)

• 180.975 - Insurance Industry Antitrust Exemption: It is the policy of the AMA (1) to continue efforts to have the insurance industry be more responsive to the concerns of physicians, including collective negotiations with physicians and their representatives regarding delivery of medical care; (2) to continue efforts to have the insurance industry be more responsive to the concerns of physicians and their representatives regarding reasonable requests for appropriate information and data; (3) to analyze proposed amendments to the McCarran-Ferguson Act to determine whether they will increase physicians' ability to deal with insurance companies, or increase appropriate scrutiny of insurance industry practices by the courts; and (4) to continue to monitor closely and support appropriate legislation to accomplish the above objectives. (BOT Rep. DD, I-91; Reaffirmed Res. 213, I-98)

• 385.973 - Collective Negotiations: It is the policy of the AMA to seek amendments to the National Labor Relations Act and other appropriate federal antitrust laws to allow physicians to negotiate collectively with payors who have market power. (Res. 95, A-90; Reaffirmed by BOT Rep. 33, A-96; Reaffirmed A-97; Reaffirmed I-98)

• 385.976 - Physician Collective Bargaining: The AMA's present view on the issue of physician collective negotiation is as follows: (1) Congress is not now likely to change existing federal antitrust laws to provide special protection for physician collective bargaining. (2) There is more that physicians can do within existing antitrust laws to enhance their collective bargaining ability, and medical associations can play an active role in that bargaining. Education and instruction of physicians is a critical need. The AMA supports taking a leadership role in this process through an expanded program of assistance to independent and employed physicians. (3) The AMA supports continued intervention in the courts and meetings with the Justice Department and FTC to enhance their understanding of the unique nature of medical practice and to seek interpretations of the antitrust laws which reflect that unique nature. (4) The AMA supports continued advocacy for changes in the application of federal labor laws to expand the number of physicians who can bargain collectively. (5) The AMA vigorously opposes any legislation that would further restrict the freedom of physicians to independently contract with Medicare patients. (6) The AMA supports obtaining for the profession the ability to fully negotiate with the government about important issues involving reimbursement and patient care. (BOT Rep. P, I-88)

In addition, the AMA has established the Private Sector Advocacy Group to lead initiatives to empower physicians to improve their ability to practice quality medicine and to counteract inequalities that allow health plans and others to dictate standards of care. Efforts in this area include working with the RFS to assist in the development of independent housestaff organizations, seeking enactment and enforcement of laws that correct or prevent unfair managed care practices, providing facts and information in support of initiatives related to improving patient care, and developing tools to assist physicians in gaining additional leverage in the marketplace within antitrust laws.

Physicians are clearly seeking effective representation in the marketplace. As residents or practicing employed physicians, doctors are seeking an effective means of having their voice heard on issues of autonomy, working conditions, and due process, especially as they relate to patient care. With the majority of newly practicing physicians entering traditional employment settings, unions will become an increasingly viable physician tool for negotiating with employers or health plans. In addition, there are strong advocacy efforts in place to relax antitrust restrictions on independent physicians, creating another pool of workers who may choose membership in unions or other organized collective bargaining entities as a way to reclaim their professional authority.

Organized labor is already mobilizing to recruit physicians. In addition to uniquely formed physician unions like the Union of American Physicians and Dentists, traditional labor unions like the Office Professionals Employees International Union and even the United Food and Commercial Workers Union have stepped in to recruit and represent physicians. According to the AFL-CIO, approximately 6% of America’s physicians are currently members of a union, which is up significantly from participation just a few years ago. Most recently, the Service Employees International Union became the umbrella organization for three physician unions, including the Committee of Interns and Residents. The new alliance will be called the National Doctors Alliance, and will represent 15,000 physicians and residents.

Several concerns have been raised over physician participation in collective negotiations in general, and the AMA’s role in developing a national labor organization in particular. We will present some of these arguments below, followed by the reasons we believe the AMA must move ahead with this initiative.

1. The AMA has other means of advocating for physicians besides creating a collective bargaining unit.

   The Private Sector Advocacy Group is involved in many useful activities that are not related to union formation. However, many physicians are weary of relying on the political climate to bring legislative or regulatory relief for the steadily encroaching influence of the managed care industry. If the AMA does not pursue development of a collective bargaining unit, these other efforts are not likely to hold sufficient value for physicians who are committing dues dollars to a labor organization.

2. Unions represent the interests of the workers themselves, focusing on negotiating pay, benefits, and work hours that will be in the best interest of the worker. Many of those opposed to physician participation in unions believe that the involvement will damage the professional reputation of physicians as patient advocates.

   As indicated above, physicians are turning to unions in increasing numbers to bargain on their behalf for various issues, from patient rights to manageable work hours. Many physicians who are pursuing collective bargaining options currently are forced to seek refuge in trade unions because there are limited choices elsewhere. The AMA, precisely because of its commitment to professionalism and placing patient care above physician self-interest, has a responsibility to provide physicians with an alternative to traditional trade unions. By developing its own national labor organization, the AMA can ensure that the goals and methods of the organization meet the highest ethical standards of patient care and professional conduct.

3. A traditional strategy exercised in collective negotiating is striking. Boycotts and walkouts have also been encouraged as a way to send a message to employers. It is unethical for physicians to withhold patient care in any form, thus making collective bargaining activity incompatible with the profession.

   The AMA does not support physician strikes as a means to exercise leverage in collective negotiations. The AMA maintains that withholding of patient care in a strike or boycott situation is in direct conflict with medical ethics. The likelihood that a physician would be faced with a strike situation increases if he or she affiliates with an established trade union. Physicians may be expected to strike for their own issues, or to honor picket lines of other groups represented by the same union. One of the best chances the AMA has to prevent such a situation is to establish its own labor organization, distinct from traditional national trade unions, using only those bargaining methods that conform to the ethical and professional standards of physicians.

4. The AMA does not have the experience to compete effectively as a labor organization.

   Although physician unionization is a rapidly growing trend, there is still an opportunity to get in on the "ground floor" of the industry. At this point, no organization is an "expert" at collectively bargaining for physicians’ and patients’ interests. Physicians are attracted by the strength and organizational capabilities of traditional unions, but many recognize the need for an organization that is more reflective of their professionalism. For many physicians, the AMA is synonymous with professionalism. There is currently only a handful of small physician unions. The longer the AMA waits to develop a role in this area, the further behind it will get, and the less able it will be to serve its members. If physicians are forced to seek representation from and pay dues to an organization other than the AMA, they will no longer see a reason to pay dues to the AMA. If the AMA does not become a key player in organizing physician groups, the AMA will become obsolete.

5. Residents should not be included in any collective bargaining unit that may be formed by the AMA.

   Although residents have been classified as students both by the academic community and by the NLRB, there is a clear service obligation demanded of every resident by their training institution (this is often codified in residency contracts). It is our position that once service is an accepted and expected part of residency, the resident is no longer a student, but rather an 'employee in training', and thus should necessarily be included in the category of employed physician.

   Furthermore, professional values and ideals are developed and profoundly influenced during training years. Currently, many organizations are aggressively attempting to capture the attention of residents who are overworked, underpaid, and looking for an avenue to voice their feelings. If the NLRB were to reclassify residents as employees, we believe this situation will worsen significantly. Without a competitive option provided by the AMA, residents will flock to align themselves with affiliates of organized labor. Additionally, if a CBU is formed by the AMA which excludes residents, it will be difficult if not impossible to recapture the attention of those who have already felt abandoned or alienated by their own professional organization.

6. Allowing residents to organize will negatively affect the educational mission of residencies.

As outlined in the introduction, the House of Delegates has called for the AMA to take action and develop a "negotiating unit, free of antitrust constraints, within organized medicine and with no affiliation with national trade unions" (I-98). In discussing the issue, your Governing Council acknowledged regret and disappointment that the professional climate necessitates the creation of collective bargaining units for residents and physicians. However, as the responsibilities of residents increase, as more physicians become employed, and as pressure mounts for antitrust relief for self-employed physicians, the market for a collective bargaining units for and unions physicians presents a tremendous opportunity for the AMA. Your Governing Council recognizes the trend toward resident and physician unionization, and believes a commitment to professionalism and membership value must control the AMA’s decision in this matter. The AMA should take the opportunity to create a powerful and professional alternative to trade unions, which cannot adequately, and in some cases, ethically, represent the interests of residents, physicians and patients. Furthermore, we believe the viability of the AMA rests on its ability to provide value and be responsive to its members, the majority of whom will be practicing in an environment more restrictive than the medical profession has known. The AMA must step in to provide an ethical alternative to traditional labor unions for residents and physicians who are ready and willing to pay for organized collective representation. We fear that the failure of the AMA to offer this alternative could doom it to irrelevancy in the minds of many physicians.

The AMA-MSS Governing Council recommends that the following recommendations be adopted and that the remainder of this report be filed:

1. That the AMA develop and implement a national bargaining unit under the National Labor Relations Act, consistent with our AMA Principles of Medical Ethics (Opinion 9.025), for employed physicians in professional practice, in order to retain the physician’s role as the patient advocate; and
2. That the AMA vigorously support national and state antitrust relief that permits collective bargaining between self-employed physicians and health plans/insurers/hospitals and others under the National Labor Relations Act;
3. That the AMA develop and implement a national labor organization under the National Labor Relations Act consistent with our AMA Principles of Medical Ethics (Opinion 9.025) specifically for resident and fellow physicians.

Fiscal Note: 1st year - $950,000

2nd year - $1.3 million

References:

Hirshfeld, Edward, Physicians, Unions and Antirust.

AMA Board of Trustees Report 41, A-97, Physicians and Unions

Foerstel, Karen, Doctors look for union label, Congressional Quarterly Weekly, 4/17/99.

AMA Young Physicians Section Governing Council Report M, I-98, AMA Private Sector Advocacy Initiatives: An Update

AMA Young Physicians Section Governing Council Report N, A-98, Collective Negotiation by Physicians

AMA Board of Trustees Report 36, I-98, Private Sector Advocacy Activities Update