The Kadlec reversal: What to do when there is no medical staff due process?

Much has been written about the recent reversal in the Kadlec case. This landmark court ruling initially required hospitals to disclose to another facility evidence of a prior staff member’s impairment, but now that has been overturned. On May 8, the U.S. Court of Appeals for the Fifth Circuit ruled that a healthcare facility has no duty to disclose such information to another hospital. A hospital may choose to respond to a request for credentialing data with neutral information. However, the hospital cannot disclose misleading information. In essence, a “name, rank, and serial number” letter, if factually correct, offers some protection, at least in Louisiana. There is great concern as to what message this sends out to healthcare facilities regarding the exchange of information between facilities.

Robert Berry was a member of Louisiana Anesthesia Associates (LAA), the exclusive provider of anesthesia services to Lakeview Regional Medical Center in Covington, LA. Not often discussed about the Kadlec case is the broader issue of how employment agreements and exclusive contracts affect the way physician performance issues related to technical competence, knowledge, professional behavior, documentation, illness, and impairment are handled.

In doing research for the upcoming book, New Medical Staff Models, there were 15 different models (some with subtypes) noted. Traditionally, independent physicians made up the majority of medical staff members in most community-based hospitals. However, more hospitals are utilizing employment agreements and exclusive contracts with physicians. In fact, such models are increasing exponentially in some organizations. These agreements often have termination-with-cause clauses, but just as many have provisions for termination without cause, requiring only notification within a specified number of days. Normally, what you see in these agreements with the individual physicians is that if the group or the individual is terminated, they automatically waive their right to a fair hearing and due process under the medical staff bylaws. Hospital privileges are often tied to the agreement and are forfeited if the agreement is terminated.

What happens if an employed or exclusive contract physician shows evidence or is suspected of having a problem? One scenario is that should a physician show evidence of or prove to be incompetent, disruptive, or impaired, the agreement is terminated and, thus, the administrative burden of dealing with the issue through a lengthy and costly medical staff can be obviated. Such problems will never be the subject of the medical staff process for investigation, fair hearing, or appeal, as required in the medical staff bylaws. Further, impaired physicians might never receive the evaluation and referral for help to a physician health program, as is required by The Joint Commission standard MS.4.80.

The Greeley Company has long taught the 12 principles of credentialing that begins with Principle #1: Credentialing has no master other than the patient. Other pertinent considerations are placing the burden on the applicant and not processing an application until you have all the information you need. Further information and resources on these principles can be found at www.greeley.com. But let’s focus for a moment on how, in light of the Kadlec reversal, do you get the information you need?

Suppose you are credentialing a new applicant to your medical staff who was at Community Hospital. In response to a request for information, you get a letter that states the physician was on staff from such and such date to such and such date. In light of Kadlec, what might be standard operating procedure for a hospital sending a form letter now becomes a potential red flag. An emerging best practice is to identify not only where the physician held privileges, but also who employed them—a hospital, exclusive contract group, or another group practice. In many hospitals, physician employment and contract issues do not reside in the medical staff office (MSO); indeed, the MSO may be the last to know that the physician was terminated, particularly if the medical staff due process for investigation, fair hearing, and appeal was never activated. The burden on the applicant is to provide the information as to who in the organization can specifically address any issues that occurred under the employment or contracted agreement. Don’t act on the application without it.

As always, have a low threshold for red flags to be investigated. These are some to consider: