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Baptist Health loses appeal of ruling

By Alison Sider

This article was published October 1, 2010 at 5:28 a.m.

— After more than six years of litigation, the Arkansas Supreme Court on Thursday upheld a ruling against a conflict-of-interest policy designed to prevent doctors from practicing in the state’s largest health system if they have ownership interests in competing hospitals.

The court affirmed a 2009 Pulaski County Circuit Court ruling that Baptist Health’s policy interferes with the doctor-patient relationship.

The economic conflict-of interest policy was adopted in May 2003, but the system has been barred from enforcing it since February 2004, when a circuit court judge granted a preliminary injunction.

A group of doctors at the Little Rock Cardiology Clinic had challenged Baptist’s policy, which would have made them ineligible for reappointment because of their interests in the Arkansas Heart Hospital.

After Circuit Court Judge Collins Kilgore made the injunction permanent in February 2009, Baptist Health appealed the decision.

The Little Rock Cardiology Clinic has a 14.5 percent stake in the Arkansas Heart Hospital, and two of the doctors in the suit also have a direct stake in it.

The Supreme Court reversed the circuit court’s finding that the policy also violated the Arkansas Deceptive Trade Practices Act. In doing so, the Supreme Court rendered moot a cross-appeal for attorneys’ fees allowed under that part of the circuit court’s ruling.

The physicians are still entitled to $2,305.88 in costs, which they were granted byan order issued in August 2009.

Associate Justice Ronald L. Sheffield wrote the opinion for the majority, and was joined by Special Justice Clark Mason. Special Justice Julie DeWoody Greathouse wrote a concurring opinion, which Associate Justice Robert L. Brown, and Special Justice George Ellis joined. Three justices did not participate.

A spokesman for Baptist Health said the policy is no different from conflict-of-interest policies that are commonplace at other companies.

“Baptist Health believes that it has an absolute right to a conflict-of-interest policy that denies privileges to a physician to an ownership interest in a competing hospital,” said Mark Lowman.

Lowman said Baptist is still analyzing the 37-page ruling to decide what its next step will be.

Baptist has said it is concerned that owners in specialty hospitals will “cherry pick” the most-profitable patients, including cardiology cases. When community hospitals such as Baptist are able to handle those more-lucrative cases, the additional funds help them pay for unprofitable services such as neonatal intensive-care units and for charity care.

But critics of Baptist’s policy, including the American Medical Association, say it allows hospitals to interfere in decisions that should be kept between doctors and patients.

“Hospitals cannot use their financial interest to justify policies that interfere with patients’ health-care choices,” Dr. Cecil B. Wilson, president of the American Medical Association, said in a prepared statement.

The American Medical Association and the Arkansas Medical Society both intervened in the case on behalf of the physicians.

Dr. Bruce E. Murphy, president of the cardiology clinic and one of the physicians that challenged Baptist’s policy, said, “If the Supreme Court had reversed this, it would have allowed patient care to have suffered because [the policy] potentially gives the hospital the authority to interrupt that care.”

Murphy said he knew of at least one instance in which a patient who had been taken to Baptist with an acute heart attack could not be treated by her usual doctor because he was barred from working at Baptist under the conflict-of interest rule.

“[The cardiologist] had to call his patient and say, ‘I’m sorry I can’t take care of you anymore, because the hospital has told me I’m not on staff anymore,’” Murphy said.

The decision could have implications for other hospitals that have similar policies in place, or are considering adding them.

“I think to the extent that hospitals try to adopt policies similar to this, this lawsuit will provide them some guidance on the things to stay away from,” said David Wroten, executive vice president of the Arkansas Medical Society.

Elisa White, vice president and general counsel for the Arkansas Hospital Association, said that although she did not know of any other hospitals with economic-conflict policies in place as a condition to grant credentials, many have concerns about the issue.

When doctors have economic conflicts of interest, she said, it is possible they could be swayed by their business interests in determining treatment.

White said that while she did not question the motives of the doctors in the case, she added that any conflict in determining where a patient is treated is a concern for many in the health-care industry.

“We all want our doctors to make decisions in our own best interest as a patient, and we don’t want them to be encumbered with other concerns when they’re making those decisions,” she said.

Business, Pages 27 on 10/01/2010

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