Economic
Credentialing
Harry L. Doerr, M.D., M.H.S.A.* SelectCare, Inc., Troy, Michigan This article defines economic credentialing, dislegal standards on its use, and provides suggestions on implementation to best address both physician and institutional needs. cusses current
In 1916, when a physician applied for membership the medical staff of a hospital, he or she merely wrote a letter to the administrator requesting consideration. There were no specialty boards, so he could decide what area he wished to practice in, and the only criteria were his standing and reputation in the community. Times were simpler back in 1916. Today it is no longer acceptable merely to be licensed to practice medicine, or even board certified in a specialty. Now hospitals are looking at broader, economic issues when appointing or reappointing doctors to their medical staffs. They are scrutinizing litigation histories, styles of practice, lengths of stay, number of denials from third-party carriers, and a number of other nonclinical indicators to judge a doctor’s acceptability for staff membership. Some call this economic credentialing and its scope will undoubtedly increase in the coming years. The Joint Commission on Accreditation of Healthon
istence of a &dquo;closed&dquo; staff when the hospital runs a 60% occupancy rate? How do they justify empty operating rooms but surgeons are not able to get on staff because the medical staff is &dquo;full&dquo;? If the active membership is 600, why do only 20% admit more than 10 patients a year? How can presidents justify allowing one practitioner to cost the hospital thousands on every admission by keeping his or her patients too long? In this age of hospital cost-cutting, how can they justify having doctors on staff who support competitor hospitals by admitting their good payer-mix to the competitor and their nonpayers to their hospital? These are the issues facing the hospital CEOs today.
DEFINING ECONOMIC CREDENTIALING
Just what is economic credentialing, and how does it relate to physician privileges? According to John Blum, Professor of Law at the Loyola Law School, economic credentialing has essentially two meanings. First, it is a system that measures physicians based on explicit cost or charge parameters and that makes those factors key elements in credentialing decisions (2). Under such a system, physicians could be required to generate a certain amount of revenue or profit for the institution, or demonstrate that he or she admits a favorable payer-mix of patients as a condition of retaining staff privileges. Second, it is the evaluation of physicians based on individual utilization data, as described in the Knapp case (3). Most physicians would not find fault with this second aspect of economic credentialing; it is the first that has become controversial and is the main subject of this article.
Organizations (JCAHO) guidelines are not very helpful in the matter of economic credentialing. According to the JCAHO, appointments should be for no more than 2 years and should enable the hospital to review the quality of the practitioner’s work (1). The JCAHO expects that quality data shall be utilized, but it gives no indication how or what quality data care
should be used.
Many physicians are concerned about the use of these nonclinical data to restrict the privileges or membership of physicians. They argue that purely economic indicators are not valid criteria for use in reappointment decisions. But hospital administrators insist that economics and health care are related: How do hospital presidents justify to their boards the ex-
LEGAL STANDARDS of economic data permissible by law? There statutes that address this issue. Thus, we must rely on case law for our answer, with the understanding that not all jurisdictions may follow the rulings that are cited. Given that caution, for the most part, Is
use
are no
* To whom requests for reprints should be addressed at 363 West Big Beaver Road, Troy, MI 48084. This paper was adapted from the author’s presentation at an ACMQ Seminar, May 4, 1991, in Southfield, MI.
SelectCare, Inc.,
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92 the answer seems to be yes. Hershey reviewed three decisions where privileges were restricted or revoked based upon utilization data (3, 4, 5). In these cases, from different state courts, the issues were inappropriate testing, inappropriate use of medications, and so forth. Although these could be considered by some to be quality issues, the basis for the suit was lack of quality relevance. In each case, the court found the board was justified in utilizing these data. The court even stated in the Knapp case (3) that the fact that the doctor’s length of stay was 50% greater and the costs per case were 31% higher than his peers was as germane to recredentialing as the inappropriate use of laboratory and the unsubstantiated diagnoses. Probably the strongest evidence of the legality of economic credentialing can be found in Edelrrtan v. J. F. Kennedy Hospital (6). Here the New Jersey court reviewed a case where a doctor was dismissed from staff simply because his ALOS was high, he had excessive use of diagnostic tests, and he had over $250,000 in denials from the PROs. Although none of this was pure &dquo;quality assessment&dquo; in the classic, clinically oriented sense, the court upheld his dismissal on the grounds that the decision was an exercise of the board’s duty to administer the affairs of the institution in an orderly and efficient manner. The court’s opinion upheld the right of the board, in fact the duty of the board, to protect the financial wellbeing of the institution. Staff membership was not a right, but a privilege, and could be revoked by the board so long as it was not arbitrary or capricious. Another case was Maltz v. New York University Medical (7), in which an appointment was denied a physician due to limited bed capacity and staffing in the area this doctor would be using. The New York court agreed with the board that its resources were limited and that, despite the excellent qualifications of the physician in question, they simply did not have the ability to service his patients properly. In a third case, Jackaway v. Northern Dutchess Hospital (8), the New York court let stand a demotion from active to courtesy staff when the plaintiff-doctor did not admit the requisite number of cases in the year. Again, no questions were raised about the qualification of the physician; there was merely a lack of commitment to the institution in the form of admissions. These seem to be clear statements that some courts, recognizing the fiduciary responsibility that the governing body has, will allow some latitude in applying parameters other than pure clinical standards for accepting and retaining physicians on the medical staff.
PHYSICIAN RESPONSE Evaluation of physicians from both a clinical and economic perspective seems to be the task of the future. However, this will not be an easy road to take. If the medical staff is not part of the formulation of a plan to use economic data to evaluate their members, and if the hospital administration does not do their homework in preparing good data and education for the staff, backlash will inevitably occur. The American Medical Association (AMA), at the urging of its Hospital Medical Staff Section (HMSS) and the California Medical Association (CMA), went on record at its Annual 1991 meeting as opposing economic credentialing for physicians that is not quality based. Dr. Howard Laing, a California obstetrician, president of the CMA and past chairman of the AMAHMSS, puts it bluntly: &dquo;Quality improvement and economic credentialing cannot coexist.&dquo; He is concerned that hospitals will deny reappointment to doctors with many Medicare and Medicaid patients. Many physicians feel they are merely pawns on an economic chessboard, used to satisfy the fiscal interests of the hospital without regard to their own needs. Others philosophically oppose any attempt by any outside group, be it hospital or government, to inhibit the practice of individual physicians. Given this resistance, it is clear that unless proper data are used, unless medical staff leadership can &dquo;buy into&dquo; the ideas being proposed, unless the hospital leadership can demonstrate the accuracy of its data, and unless the legislatures mandate these types of credentialings, physicians will generally go to the mat over this issue. The (CMA) published a list of indicators that are related to quality and that they would accept as quality-driven economic indicators (Table 1). Not too many doctors would dispute these. In Table 1
CMA’s ACCEPTABLE (QUALITY-DRIVEN) ECONOMIC INDICATORS
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93 contrast, the CMA presented those parameters that they absolutely refuse to consider for credentialing, as they are definitely not related to quality (Table 2).
Many of these indicators that the CMA rejects are exactly the types of data that many hospitals are collecting and using today, including staff development plans, comparison of admissions from competitor hospitals, patient demographics, and utilization of hospital resources. From a pure quality aspect, physicians refuse to admit that these parameters should be used in recredentialing decisions. With the recent introduction of the resource-based relative value system (RBRVS) fee schedule by the Health Care Finance Administration (HCFA), the physician is feeling battered by third-party payers as well. Proponents of economic credentialing contend that physicians are more interested in control of their practices than credentialing itself. They maintain that use of these criteria will produce more efficient, cheaper medical care and will lower the probability of further legislative interference. If physicians educate themselves about how to deliver high-quality care at the lowest possible cost, medicine would be able to answer critics of the current health care system. Therefore, it is to our advantage, they argue, to utilize these data to &dquo;rid ourselves&dquo; of the inefficient, expensive practitioners. Opponents, on the other hand, contend that none of these issues relate to good quality patient care, but amount to attempts to ration health care. Oregon has tried rationing, but the efforts have stalled. When confronted with the choice between
Table 2
CMA’s UNACCEPTABLE (NOT QUALITY-DRIVEN) ECONOMIC INDICATORS
and excessive cost, the oppopublic has chosen not to ration health care. They point to the continuation of first-dollar coverage for health care demanded and won by many employee unions, the loud outcries that occur when hospitals in neighborhoods are forced to close, and the seeming unwillingness of patients to travel more than a few miles for their basic health care. Furthermore, they contend, doctor-hungry rural hospitals and those with many competitors won’t want to risk losing physicians, and so will not utilize these factors (9).
rationing of health
care
nents argue, the American
IMPLEMENTATION How will this debate be resolved? No
one
is certain
at this juncture, but probably some economic indicators will be used in reappointment in the future. Medical staffs must be educated to understand why this is in their best interests; any attempt to unilaterally impose economic credentialing will meet with
strong resistance from the physicians. The quality aspects of these criteria will have to be
developed and stressed, not an easy task. Providence Hospital has just undertaken such a program, which began with a six-month period in which leaders of the medical staff went to other departments and showed them the data on utilization of beds, operatings rooms, delivery rooms, and physicians. They demonstrated that we had a significant number of &dquo;active&dquo; members who never used the hospital, and thus have prevented others from coming on the closed staff. In spite of these presentations, many of the staff did not understand the issues that prompted this effort. The credentialing task force tried to show them that, given the age of our current staff and the demographics of our patient base, the hospital would be at a 50% occupancy rate within 5 years unless action was taken. Each physician had his or her own &dquo;horror story&dquo; to tell about how a patient couldn’t get into the hospital/ OR/labor room at any given time. The task force had to address these issues at each session. After much discussion, the medical staff did agree to set &dquo;contact values,&dquo; determined by each department and approved by the board, as criteria for reappointment. These contacts can be admissions, procedures, referrals, consultations, teaching and research time, and some administrative functions. Each department has defined what a minimum number of contacts should be for active membership, and then a joint board-medical staff committee reviewed these definitions, unifying definitions and standardizing numbers. The task force felt that a minimum amount of work was needed to
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94 of care given and that if member of our medical staff could not maintain that volume, then he or she did not belong on the active staff. One major concern of the Providence medical staff was that of resources. It is very difficult to convince members of the medical staff that one needs to add more doctors to keep the occupancy rate of 75-80% when they cannot get one of their patients into the hospital. It is hard to argue for more surgeons when the next available OR time is 2 weeks away for an urgent case seen today in consultation. Thus, the board must be willing to commit to those resources needed to support expansion before the medical staff will accept these types of parameters. Another concern is the mix of doctors recruited or courted, for if the hospital relies on getting more surgeons to fill its operating rooms and doesn’t address the primary care base, its efforts will fail. General internists or family practitioners need to be seen as primary resources, and any system that &dquo;counts admissions&dquo; must also be devised to &dquo;count referrals&dquo; from these groups.
adequately judge
the
CONCLUSION
quality
a
Economic credentialing will be a part of the 1990s whether physicians like it or not. The QA departments will be asked to collect these data, and they will be utilized in determinations of privileges. However, the transition to use of nonclinical data will be easier if efforts are made to educate and listen to physicians, to commit to needed resources, and maintain the proper primary care base. References 1. Joint Commission Accreditation Manual 1991. 2. Blum JD. Economic credentialing: A new twist in hospital appraisal process. Journal of Legal Medicine (in press). 3. Knapp v. Palos Community Hospital, 465 N.E.2d 554 (1984). 4. Suckle v. Madison General Hospital, 362 F. Supp, 1196 (WD Wisc
1973). 5. Kaplan v. 6. Edelman
Carney, v.
J. F.
404 F.
Supp. 161 (DC Mo 1975). Kennedy Hospital, NJ Sup CT. C-2104-80
(1982). 7. Maltz v. NYU Medical Center, 121 A.D. 2d 323, 503 NY S. 2d 570 (1st Dept. 1986). 8. Jackaway v. Northern Dutchess Hospital, 139 A.D. 2d 496, 52 NY S.2d, 599 (2nd Dept. 1988). 9. Mayer D. Making docs earn keep. Healthweek 1991;5:April 22.
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