Contracts don't let hospitals refuse doctors, Georgia court rules

Physicians say hospitals are using exclusive contracts more often as a way to control staff independence.

By Amy Lynn Sorrel, AMNews staff. July 24/31, 2006.

Georgia hospitals are allowed to engage in exclusive contracts with specialty physicians to provide certain patient services. But they cannot use the agreements to disregard medical staff bylaws and freeze out other doctors by taking away their privileges, a state appeals court recently decided.

In a 3-0 decision, the First Division of the Court of Appeals of Georgia ruled in favor of a dozen cardiologists who sued Satilla Regional Medical Center over a hospital policy that prevented the noncontracted specialists from using any of the hospital's facilities or personnel, even though the physicians had privileges to practice there.

"The resolution did far more than simply restrict existing clinical privileges -- it effectively terminated them altogether," Judge Debra Bernes wrote. The court also reiterated that Georgia case law requires that if hospitals want to take away physicians' privileges so the hospitals can maintain exclusive relationships, that must be stated in the medical staff bylaws or in contracts with individual physicians, not just in a contract with a professional corporation.

Doctors say the ruling reaffirms that hospitals do not have unlimited authority when they enter into such agreements and preserves the sanctity of the medical staff bylaws.

"[Exclusive] contracts can be a good thing, but they are also becoming more of a way for hospitals to reduce physician autonomy and control their practice," said Brian W. Looby, associate general counsel to the Medical Assn. of Georgia, which filed a friend-of-the-court brief supporting the doctors who sued. The American Medical Association/State Medical Societies Litigation Center joined the brief and contributed to the doctors' legal expenses.