ED plan: Quality control or anti-competitive?

Exclusive contracts are widely used to ensure good care in the emergency department. But some say the system is outdated.

By Tanya Albert, amednews staff. Aug. 26, 2002.

A Texas emergency physician is challenging two hospitals' practices of signing an exclusive contract with emergency physicians who staff the ED, a common practice among hospitals nationwide.

Emergency Medicine Associates and its manager, emergency physician Manuel J. Martin, MD, say that while the practice still has merit in some areas, it creates a monopoly that decreases competition among physicians and raises prices for patients in Austin, Texas, and Travis County.

Case at a glance
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"Austin has two corporate groups that run the emergency rooms," said Dr. Martin, an Austin native. "Physicians have little to no say in improving the emergency room. Physicians see themselves as punch-the-clock employees. ... I said: 'I don't want my career to be about that.' I wanted more."

Dr. Martin said he and about a dozen other physicians created Emergency Medicine Associates of Austin in September 2001 and were capable of covering emergency departments 24 hours a day, seven days a week. The group also had insurers and managed care companies willing to contract with them, according to the lawsuit filed in Travis County District Court.

But according to the lawsuit, physicians with Emergency Medicine Associates weren't able to do business, because the area's two main hospitals already had exclusive contracts with other groups.

Seton Medical System controls about 49% of the hospital market and had an exclusive contract with physicians who were a part of Emergency Service Partners. St. David's Medical Partnership controls about 41% of the hospital market and has an exclusive contract with Capital Emergency Associates, according to the lawsuit.

That doesn't leave emergency physicians much of a choice about their employment and doesn't leave insurers and patients a choice either, said Jim George, the Austin attorney representing Emergency Medicine Associates and Dr. Martin.

"Normally we think that a competitive market is good in America," he said. "We don't know why emergency rooms should be different."

However, the hospitals and the two groups say there are good reasons why emergency departments should be different.

Michael Regier, Seton Healthcare Network vice president for legal affairs, said an exclusive contract provides stability.

"We don't believe there is any basis" for the lawsuit, said Regier, noting that federal and state courts have considered similar lawsuits and typically found the contracts reasonable because they believe a hospital knows best how to run its operation.

John Bruce Moskow, MD, vice president of Emergency Service Partners, added that a U.S. Supreme Court ruling gave hospitals the right to guarantee that the community has access to care. A contract ensures that care, he said.

"Emergency medicine is time-sensitive," Dr. Moskow said. "You have to be certain a doctor is around."

George said there are circumstances where an exclusive contract may be justified. "But this isn't one of them."

In the lawsuit, Dr. Martin and his group argue that the exclusive contracts evolved as a solution to staffing EDs during a time when there was no medical specialty involving emergency department care. Then, the system was hard to manage and the quality of care varied greatly, according to the lawsuit.

The hospital could contract the management and quality control to physicians willing to provide around-the-clock coverage for the emergency department, Dr. Martin and his group say in the lawsuit.

"But if the justification for the exclusive nature of the contracts goes away, they become unreasonable," the lawsuit states. "The contracts involved in this case have become unreasonable. Because the patient stream is extensive, an exclusive arrangement is not needed to make the provision of physician services in the emergency room financially viable."

ADDITIONAL INFORMATION:

Case at a glance

Emergency Medicine Associates of Austin P.L.L.C. and Manuel J. Martin, MD, v. Daughters of Charity, a nonprofit corporation doing business as Seton Medical System; Emergency Service Partners, a Texas Limited Partner; St. David's Medical Partnership and Capital Emergency Associates P.A.

Venue: Travis County, Texas, District Court
At issue: Whether a hospital system's exclusive contract with a group of emergency physicians unlawfully restricts competition for doctors who want to form a new group to compete to serve the hospital.
Potential impact: If Dr. Martin wins his case, his group of emergency physicians would be able to compete to serve patients in the Austin and Travis County markets. Hospitals say exclusive contracts are necessary to provide the best care to patients.