Practice Economics
An Alternative to Unionizing?
Some states are allowing physicians to negotiate with payers.

BY MARK E. KROPIEWNICKI, J.D., LL.M.

Despite the longstanding and ongoing debate over managed care's impact on the practice of medicine, the simple fact remains that independently practicing physicians are legally barred from unionizing under the federal government's current antitrust laws. This means that more than 70% of practicing physicians can't unionize, even if they wanted to.

Unless and until Congress either significantly changes or repeals the federal antitrust laws, it will remain illegal for independent physicians contracting with payers to either bargain collectively on reimbursement terms or agree collectively to reject contracts. These actions are considered "anticompetitive" and illegal.

WHO CAN JOIN A UNION?

So, who can legally join a physician union? Any physicians who don't have supervisory authority and who are direct employees of a payer or a hospital (or similar healthcare institution) may unionize. Hospital employment is straightforward enough, but what constitutes employment by a payer?

Most physicians who contract with payers are independent contractors who agree to render care to enrollees in return for payment. In fact, most provider agreements explicitly affirm this independent contractor relationship. This was confirmed in 1999 when the National Labor Relations Board (NLRB) ruled that a group of independent, competing physicians in New Jersey who contracted with an HMO were independent contractors, not employees. The NLRB noted that many of the physicians earned less than 10% of their income from the HMO, hired and fired their staff members, chose their equipment, had their own facilities, and could contract with other HMOs.

Federal antitrust legislation allowing collective bargaining by physicians who aren't payer employees may never come. However, some states, using the "state action doctrine," may be easing matters for independent physicians who have previously been powerless in payment and patient care negotiations with payers. The state action doctrine was first established by the U.S. Supreme Court in 1943 and "immunizes" states from federal antitrust laws.

SOME STATES ARE ACTING

A number of states, most recently, New Jersey, have passed legislation to permit physicians at least some ability to negotiate their fees, capitation rates, and discounts with payers that hold a substantial share of the local healthcare market. Often under the supervision of the state, physicians are able to jointly negotiate clinical practice guidelines, physician selection and deselection issues, the timing of payments, the payer's utilization review system, and a number of other elements, regardless of the extent of the payer's market share.

But states like Texas prohibit physicians from striking or boycotting health plans and make the negotiations voluntary and nonbinding, making it questionable how much clout physicians will really gain under such state laws.

WHAT CAN YOU DO?

If most established physicians are presently ineligible to participate in real, effective (i.e., no-choice, binding) collective bargaining, then what can you do to help level the playing field for patients and physicians?

Political action and continued lobbying at both the state and federal level are needed to lessen the clout of payers and to change the way medicine is practiced to favor patients and physicians.

Right now, it appears that state legislation is the most likely and quickest mechanism to allow physicians to gain at least some collective bargaining power with payers. However, state lawmakers need to be made acutely aware that such legislation must require payers to conduct mandatory and binding collective negotiations with physicians if the legislation is to be meaningful and effective.

Mark E. Kropiewnicki, J.D., LL.M., is a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., in Plymouth Meeting, Pa. He regularly advises physicians and practices on their contracting matters and business law obligations. He can be reached at (800) 473-0032.