Physician alignment: Challenges concerning exclusive contracts

The use of contracts to increase physician-hospital alignment is an increasingly common practice. Exclusive contracts are an example of such arrangements. They allow only physicians who are party to the exclusive contract to be eligible for specific privileges. Specialties traditionally covered by such exclusive contracts include radiology, pathology, anesthesia, and emergency medicine, although some hospitals do not contract exclusively for these specialties. Increasingly, other specialties are covered under exclusive contracts, such as pain management, hospital medicine, intensive care, neonatology, and cardiac surgery.

Regardless of what specialties or services are covered under an exclusive contract, it is important to understand some of the hiccups your organization may encounter. Avoid these pitfalls and your exclusive contracts will be on the fast track to success.

Privileging disputes:
Remember that even if a neurologist is well-trained and competent to read brain CTs and MRIs, he or she is ineligible to apply for those privileges if the hospital has an exclusive contract with a radiology group. The flip side of such contracts is that the practitioner’s privileges are often tied to the contract and the loss of the contract will result in the loss of privileges, regardless of competence.

The inability of an independent practitioner to apply for certain privileges has nothing to do with competence, or even whether they meet your existing criteria for that particular privilege or procedure. The hospital simply should not accept applications for those clinical privileges that are exclusive to practitioners included in an exclusive contract. Likewise, a practitioner is not automatically granted privileges if they are a part of an existing contract arrangement. They must request the privilege and meet the qualifications defined by the hospital to be considered for those privileges.

Decisions regarding competency criteria are the purview of the medical staff. However, decisions regarding which specialties will be provided under an exclusive contract, and the scope of that exclusivity, are the purview of the governing board, usually with significant input from hospital management. Reminding physicians of this distinction is important when handling privileging disputes that involve exclusive contracts.

Lack of communication with the medical staff services department
You would think that the governing board and hospital management would always inform the medical staff services department about these exclusive contracts, particularly since their existence ultimately affects who may apply for privileges in the areas the contracts cover. However, it is not at all unusual to hear that the medical staff services department has never been informed about these contracts. Often, it seems that many governing board and hospital leaders do not understand or even consider why it is crucial to the communicate this information to medical staff leaders and medical staff service professionals.

Lack of communication with potential applicants
When developing privileging criteria and/or a privileging system, exclusive contract arrangements should always be a part of the picture. No other individual or group may apply for privileges in an area that is covered by an exclusive contract, and it is imperative that this is communicated to all potential applicants, preferably right upfront on the privilege form. Communicating this can alleviate any embarrassment for a practitioner who may not be privy to the exclusive contract, and is told after applying for the privilege that he or she is ineligible. 

William K. Cors, MD, MMM, CMSL is vice president of medial staff services at The Greeley Company, a division of HCPro, Inc. in Marblehead, MA.