Court Ends Hospital Economic Credentialing Policy from Outpatient Surgery Magazine

http://www.outpatientsurgery.net/news/2010/10/8


Ark. Supreme Court Ends Hospital's 'Economic Credentialing' Policy
Judge upholds injunction against policy denying privileges to docs who invest in competing facilities.
The Supreme Court of Arkansas has upheld a lower court's ruling against Baptist Health hospital system's economic credentialing policy, which denied clinical privileges and professional staff appointments to physicians with direct or indirect financial interests in a competing hospital.

The 6-hospital, Little Rock-based hospital system adopted its economic credentialing policy in 2003 and began denying privileges to doctors with financial or ownership interests in other Arkansas hospitals, as well as physicians whose "immediate family" members had financial interests in competing facilities.

The partners of Little Rock Cardiology Clinic, led by Bruce Murphy, MD, sued Baptist Health in February 2004. The plaintiffs had ownership interests in the Arkansas Heart Hospital in Little Rock, which made them ineligible for privileges at Baptist Health per the hospital's new economic credentialing policy.

The physicians argued that the policy "violated various federal and state statutes and tortiously interfered with the doctor-patient relationship," according to court documents. A circuit judge ruled in favor of the plaintiffs and granted a permanent injunction against Baptist Health's economic credentialing policy.

After considering the hospital system's appeal, state Supreme Court Associate Justice Ronald Sheffield upheld the lower court's ruling, finding that Baptist Health failed to show that physicians owning stakes in competing facilities put its economic viability at risk.

"Baptist's motive was to discourage competition by physicians who considered investing in speciality hospitals, and Baptist wanted to force patients to choose between it and the physician appellees," wrote the judge in his Sept. 30 opinion. "The appellees' interest was in patient-physician relationships and the continuity of care, which outweighed Baptist's interest in protecting its economic viability because no evidence supported Baptist's purported need for the policy."

While the decision isn't binding in other states, medical groups are calling it a victory for competition and the physician-patient relationship. "This important court victory demonstrates that economic credentialing policies at dominant hospitals are intended to restrict physicians and prevent patients from choosing competing medical facilities," the American Medical Association said in a statement praising the ruling. David Wroten, executive vice president of the Arkansas Medical Society, predicts the ruling will be used "in other states where they are fighting these same anti-competition policies."

Baptist Health spokesman Mark Lowman said in a e-mailed statement that the hospital system "believes that it has an absolute right to have a conflict-of-interest policy which denies privileges to a physician who has an ownership interest in a competing hospital." Calling the court's decision "disappointing," he says Baptist Health "will continue to analyze the ruling to determine next steps."