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Hospital Consolidations

Medical staff bylaws should address complications By Elizabeth “Libby” Snelson, JD

Consolidations of hospitals have been going apace, and by all accounts the pace will not slow soon. Such combinations, after careful planning and due diligence, are designed to result in highly organized mega-hospitals or systems of hospitals that improve efficiency, market share and revenue stream. If you or your medical staff are part of a consolidation, the odd, new made-up name and logo will be the least of your worries. The building of hospital systems by merger or purchase affects physicians—whose patients are, after all, the reason for the hospital—in several ways. Even if the building and staff remain the same throughout the amalgamation process, physicians should be aware of possible complications.

Membership Multiplied?
Hospital consolidation can take many shapes. Under current Medicare Conditions of Participation—which all hospitals must meet or risk federal funding, which none can afford—each separate hospital must have a separate medical staff. The hospital industry tried, but failed, to change that regulation to allow a single medical staff organization across several hospitals. Separate medical staffs assure physicians more opportunity for input in the standards of care at the hospital in which they serve patients, rather than meeting general standards handed down from afar for the entire system. But preserving the standards and services that are your hospital's hallmark, against pressure to conform to the system’s strategy, will demand the active involvement of the medical staff. Don’t take your medical staff membership for granted; know and exercise your rights and responsibilities.

Discipline Duplicated?
If the medical staff is one of several in a system of hospitals, prepare for standardization of membership and privileges. Administrators will want the consolidated board to present a single membership file, even if you are a member of a different medical staff. While efficiency is a laudable goal, a cookie-cutter approach to medical staff credentialing is simplistic. Variances in standards and rules must be respected. A disciplinary action initiated at one hospital in the system can metastasize into a suspension at every other hospital in the system, even if the rule allegedly broken does not apply to other medical staffs.

Privileges Purged?
In a big corporate integration plan, how one service functions at one hospital may, for ease of administration or cost-saving, be expanded to apply to all system hospitals as part of the “deal.” Thus, an exclusive contract at the acquiring hospital may come to encompass the acquired hospital, and thus, wipe out the privileges of all holding those same privileges in the acquired hospitals. Such exclusive contracts are not the only means by which merging hospitals can affect privileges. A religious hospital joining forces with non-religious hospitals can bring in concerns that shut down entire specialties. The classic example is a Catholic hospital that prevails upon its new partners to abide by the Ethical and Religious Directives for Catholic Health Care Services, thus prohibiting procedures that prevent or terminate pregnancy. Related privileges evaporate because the procedures can no longer be provided as a condition of the consolidation.

Representation Rejected?
Changes proposed in the 2012 Medicare Conditions of Participation would have required a hospital board to include a medical staff member, but the hospital industry succeeded in having the regulation withdrawn, even though the board may govern more than one hospital, and only one medical staff member would have been required. To date, no regulation on medical staff member representation has been adopted. A proposed replacement regulation—42 CFR 482.12 (a)(10)—would only require that a board periodically “…(c)onsult directly with the individual assigned the responsibility for the organization and conduct of the hospital’s medical staff, or his or her designee.” Even if no federal regulation establishes a minimum number of physicians to be on a hospital’s board, medical staff representation should be made a priority when a board is being designed in the course of a merger or consolidation, to assure that clinical interests are continually front and center. The Joint Commission leadership standards themselves acknowledge the logic of clinician representation in Standard LD 01.03.01, Element of Performance 10, which states, “medical staff members are eligible for full membership in the hospital’s governance, unless legally prohibited.” In a consolidated hospital board, particularly, the participation of medical staff members can promote collaboration and compliance with standards.

These and other issues that result from a consolidation should be addressed in the medical staff bylaws. Consolidations do not happen overnight; the medical staff should be involved in preparing consolidated medical staff bylaws on a parallel track with the hospitals’ consolidation planning. To assure that physicians’ rights are protected, and to facilitate an effective consolidation, the medical staff must have independent counsel.

Elizabeth “Libby” Snelson, JD, ( is legal counsel for Medical Staff PLLC.

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