The link between hospital opposition to self-governance and economic fear cannot be overestimated. This article explains the damaging ways hospital administrations might behave in their relationships with medical staffs and highlights why medical staffs must know and exercise their rights.

During my decades of experience as an independent counsel to medical staffs, I have often been struck by the scope and intensity of hospital opposition to the efforts of medical staffs to be self-governing. That opposition has included interfering with medical staff elections, precluding elected officers from performing their duties, appointing "alternative" executive committees, interfering with meetings of standing medical staff committees, interfering with medical staff retention of independent counsel, refusing to allocate medical staff treasury funds as directed by the medical staff, absconding with the medical staff treasury, refusing to permit the medical executive committee to sit in executive session, unilaterally amending medical staff bylaws, and unreasonably refusing
to accept amendments to medical staff bylaws adopted by the medical staff.

In some instances, opposition to self-government has manifested itself in even more egregious ways. Notably, there have not only been threats, but actual instances of retaliation against medical staff leaders. Financial punishment has been directed toward medical directors, hospital-based physicians, and in academic institutions, faculty members, who, in their capacity as medical staff members, have supported the concepts of self-governance. In rare instances, acts of intimidation have been directed at staff members whose vulnerabilities have been revealed in what they thought were confidential well-being committee meetings.

It might be useful to start a discussion of medical staff self-governance by considering the reasons why such strenuous opposition exists. In 2002, a strategy analysis by the Voluntary Hospital Association identified domination of the medical staff as a viable strategy to protect a hospital's economic base. The link between opposition to self-governance and economic fear cannot be overestimated. Such fear has been articulated in different ways, but the essence is simply this: To permit a medical staff to be self-governing is to permit it to influence hospital decisions made on matters such as patient care, utilization, hospital contracts with service providers, hospital exclusive contracts and, in the end, hospital strategic policy. Giving such power to the medical staff presents the risk that the medical staff may "interfere" with the "proper" running of the hospital.

Recent history demonstrates the ongoing effort by the hospital industry to further maximize control over medical staffs. The use of vice presidents of medical affairs, board-level "quality" committees and economic credentialing have added to the control that hospitals already exert over exclusive-contract providers and medical directors.

Is the fear that prompts these activities well founded? I have yet to see a hospital demonstrate that its fears of economic losses flowing from self-governance have actually occurred. The battles fought over economic credentialing are illustrative. Hospital demands for "loyalty"--commitments that staff members not practice at other hospitals or ambulatory surgery centers--are predicated solely on the need to protect the hospital from economic loss. In instances where economic credentialing has been struck down by the courts, did economic disaster result? Of course not.

It doesn't require an advanced degree in economics to recognize that a cooperative and harmonious relationship between a medical staff and its hospital tends to serve the hospital's economic interests. By encouraging self-governance, rather than opposing it, a hospital can build an economically beneficial relationship with its medical staff. As obvious as that might seem, opposition to self-governance is alive and well.

Perhaps another explanation for the opposition is a hospital's culture, particularly in a multihospital chain. Complex administrative chains of command are not designed to recognize the decision-making role of the medical staff. The medical staff is something "to be managed" so that it might act "harmoniously," which means "in harmony with the decisions of the hospital administration."

There also exists a more abstract objection to self-governance: It is thought that since the hospital board of directors has a fiduciary duty to protect the hospital, and since the hospital board of directors must exercise "ultimate authority" on hospital matters, there is no room for self-governance. Somewhere along the line, the concept of "ultimate authority" has been taken to mean "unlimited authority" and "unfettered decision-making" and, in the end, "absolute power."

This assertion is not legally correct. However, there seems to be a common strategy among administrators. If they tell a medical staff often enough that it has no power, and if they prevent the medical staff from obtaining independent advice on that issue, the staff will believe that it has no power and act accordingly.

Is the Opposition Working?
The short answer to the question of whether opposition to self-governance is working is "yes and no." Let's examine both sides.

Opposition to self-governance is extremely successful at hospitals with medical staffs that have little or no knowledge of their statutory responsibilities and powers; that cannot maintain cohesiveness; that lack economic resources to act independently; and that lack sufficient will to endure protracted controversy.

The principles established in Medical Staff of Community Memorial Hospital of San Buenaventura vs. San Buenaventura Community Memorial Hospital have been codified as a California statute (Business & Professions Code 2282.5) since 2004. Yet these principles are still not well understood.

I am often invited to speak to medical executive committees. When I do, I often learn that medical staff leaders are unaware of  medical staff rights and the mechanisms that exist to enforce those rights.

There is a general awareness of the right to set the criteria and standards for membership and privileges, and to enforce those standards. However, few medical executive committees are aware that the medical staff has the power to establish clinical criteria and standards to oversee and manage quality assurance, utilization review and chart review. Similarly, many medical staff leaders think that the hospital administration has some role to play in selecting and removing medical staff officers and determining how medical staff dues are to be used. Of course, Business & Professions Code 2282.5 (a)(3) and (4) provide just the opposite.

Most medical staff leaders are aware of their right to retain independent legal counsel, but unaware of the implications of that right as it relates to the ability of the medical staff to meet confidentially with an attorney and to maintain privileged attorney-client communications. Confidentiality alone compels the conclusion that there is a right to meet in executive session, a point often contested by administrators.

Many medical staff leaders are not familiar with the dispute resolution provisions of Business & Professions Code 2282.5 and the process by which a medical staff can go to court after reasonable efforts have been made to resolve differences with a hospital governing board. Even fewer leaders appreciate the importance of the statement of legislative intent that precedes Business & Professions Code 2282.5. The relationship between medical staffs and hospitals is determined to be one of "mutual accountability, interdependence and responsibility of the medical staff and the hospital governing board for the proper performance of their respective obligations." In other words, the governing board must be accountable to the medical staff for the proper performance of its responsibilities in the same way the medical staff must be accountable to the board for the proper performance of medical staff responsibilities. This extraordinarily important language is often overlooked.

When medical staff leaders are not fully conversant with the rights and powers of the medical staff, hospital opposition to self-governance can succeed by simply telling medical staff leaders that they have no power. This message is frequently communicated both by hospital leaders and by attorneys hired by the hospital to provide legal services to the medical staff. In essence, the message is that the hospital's "ultimate authority" trumps whatever the medical staff might wish to do, so it's pointless for the staff to do anything!

Opposition to self-governance also succeeds in the absence of medical staff cohesiveness. Hospital administrators have long known that the easiest way to control a medical staff is through a strategy of "divide and conquer." A common method of controlling the medical staff is to establish relationships with a few key medical staff members, who are told that their "help" is needed by an administration simply trying to "get things done." In the past, hospital-sponsored leadership retreats have been a fertile area for developing such relationships.

More powerful still are the economic ties that a hospital administration can establish with medical staff members, not just in the realm of exclusive contracts and medical directorships, but also in terms of preferential treatment in staffing and equipment purchases, operating room scheduling, or patient flow from hospital-controlled IPAs. For-profit institutions have extended this strategy even further by encouraging medical staff members to invest in the hospital itself, thereby enabling them to argue that medical staff self-governance will cause economic injury to the member. It's not easy to vote against one's own economic interest, so these strategies are often successful in fragmenting the medical staff and developing medical staff opposition to self-governance.

Opposition to self-governance also succeeds when a medical staff lacks sufficient economic resources and sufficient will to engage in protracted battles. For example, consider something as simple as implementing amendments to medical staff bylaws. When those amendments articulate principles of self-governance, hospital administrators and boards of directors often oppose them. In such cases, the hospital's argument to the chief of staff has been: "Why don't you drop these amendments. You are wasting your money because we will prolong the controversy until you are out of resources." (This is, in fact, a real quote.)

Clearly, administrators know that while Business & Professions Code 2282.5 has a dispute resolution process that ultimately entitles a medical staff to go to court to defend its rights, that process is expensive and, in the absence of sufficient economic resources and sufficient will, medical staffs will be unable to complete the process.

Where Have Medical Staffs Prevailed?
Now let's look at the other side. There are many instances in which opposition to medical staff self-governance has failed. Some of these events have achieved recognition in California and, on occasion, throughout the nation.

In 2002, the Ventura case established the right of medical staffs to go to court to protect and preserve their authority and powers over quality of care issues, to protect their own medical staff treasury, and to ensure their ability to freely elect their own leaders.

During 2003 and 2004, the medical staff of Western Medical Center Santa Ana successfully opposed the acquisition of its hospital by one entity and then successfully negotiated an agreement with the corporation that ultimately acquired the hospital. That agreement, among other things, established the right of that medical staff to review and approve certain contracts with "related parties" that were linked economically to the hospital owner. The agreement further established the right of the medical staff to elect representatives to the governing body of the hospital, to participate in the selection of key administrative officials, to participate in decisions regarding the allocation of hospital resources, and to ensure adequate capitalization for the hospital. Thus, after the Ventura case established the rights of the medical staff over traditional areas related to quality care, the Western Medical Center case expanded the realm of medical staff interests to include economic issues that relate to quality of care.

The following year, the medical staff of Alvarado Medical Center in San Diego successfully established its right to participate in the selection of the hospital's purchaser. Following an Office of Inspector General order mandating Tenet Healthcare to sell the hospital as part of a settlement agreement in a criminal prosecution, the medical staff used 2282.5 to gain participation in the selection of the new owner. Thus, the medical staff's interest in economic issues affecting quality of care extended to the ultimate issue of who would own the hospital.

In all of these examples, the medical staffs in question were knowledgeable, cohesive and in possession of sufficient economic resources to maintain a battle for a protracted period of time. The last of these cases, Alvarado, illustrates an important lesson. There, no protracted battle was necessary. The mere fact that the medical staff demonstrated that it knew its rights and was prepared to fight for them, including going to court if necessary, was sufficient to produce a prompt resolution.

There are many other examples that have taken place below the radar, in which medical staffs have successfully negotiated disputes with hospitals and their governing boards. In each of those cases, the fact that the medical staff was knowledgeable, cohesive and adequately funded was instrumental in producing a resolution.

Why Fight For Self-Governance?
When medical staffs know their rights and powers, exercise them, and if opposed, demonstrate cohesiveness and staying power, the end result is a change in the environment of the hospital and a change in the relationship between the hospital and its medical staff. If you were to consult with the medical staff leaders who participated in the struggles at Community Memorial Hospital, Western Medical Center and Alvarado, you would likely be told that those struggles were worth it, because those medical staffs gained greater influence over matters affecting quality of care.

That influence is critical in many respects. Medical staffs are the principal advocates for quality of care in a system in which many decisions are predicated upon financial considerations. A study released in the May 2007 issue of the journal Medical Care found that hospitals are pushing too hard to streamline and cut costs and are putting patients at risk for medication errors, nerve injuries, infections and other preventable mistakes by doing so.

If we have a system of mutual accountability as the legislative intent in 2282.5 states, hospitals should not be allowed to "push too hard to streamline and cut costs" without someone pushing back. That's the function of the medical staff.

Of course, it is not fair that medical staff leaders, who are paid little if anything for their time, must divert attention away from their practices to serve as advocates for quality of care against competing forces which are, by comparison, extremely well staffed, well funded, and in control of the battlefield. And it is even more unfair that medical staffs should have to fund battles to establish their rights to be advocates for quality of care. However, when quality of care hangs in the balance, what is the alternative?

Where Do We Go From Here?
When I speak at large gatherings of medical staff leaders, there are always some leaders who tell me that my presentation does not reflect what's going on at their hospitals. They have enlightened administrators who work cooperatively with them every step of the way, recognize their authority, and facilitate their actions. My response is always the same: I am delighted and I wish it could be so everywhere. But just in case things change, I advise them to memorialize their successful system in their medical staff bylaws.

And for those not so fortunate, why not learn from the successes of other medical staffs? First, become knowledgeable about your rights and powers. This is not accomplished by going to hospital-sponsored seminars, but rather through your national, state and local medical associations, through independent legal analysis of your current situation, and through your own leadership retreats. Then, make medical staff cohesiveness a goal. Strive for consensus and for internal decision-making that places quality of care above all other considerations. Next, marshal your resources. Establish a treasury sufficient to enable a defense of your positions in court if necessary. Finally, be willing to assert your rights. Demonstrate your knowledge, your cohesiveness and your willingness to fight, and it's likely that you will not have to do so.

Tom Curtis is a partner with Curtis Green & Furman LLP in Pasadena. He graduated from Georgetown University Law Center in Washington, D.C. He was a founder of one of the first law firms specializing in the representation of physicians. His practice focuses on representing physicians and physician organizations in healthcare litigation, medical staff issues, peer review, and disciplinary and licensing matters. Curtis works closely with the California Medical Association and the American Medical Association and serves as chair of the American Bar Association Health Law Section Physician Issues Committee. He was the principal attorney for the Medical Staff of Community Memorial Hospital of San Buenaventura, successfully resolving the leading case in the nation on medical staff self-governance. He can be reached at 626/585-9800.