March 1998
Volume 62 |
Number 3
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PRACTICE MANAGEMENT
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| Why Can't We Form
A Union? |
Karin Bierstein,
Practice Management Coordinator
Physicians often feel that they have no bargaining power when
they are presented with a third-party payer contract. One response
is to think "union," which would theoretically permit the physicians
to negotiate as a single group and prevent individual low bidding
or capitulation.
Why does this not work?
Most readers have at one time or another heard the lawyers
object, "antitrust." Federal antitrust law prohibits collective
activity to fix prices or to enforce fixed prices. So do most
state antitrust statutes. Bargaining over fees by physicians in
independent practices, or agreeing not to deal with an insurer
who rejects those fees, would constitute illegal collective price-fixing
or group boycott activity.
Aren't labor unions exempt from the antitrust laws?
Yes, but only employed physicians would qualify for the exemption.
The exemption, a product of federal antitrust and labor statutes
as well as of Supreme Court interpretation, extends only to the
conduct of labor unions involved in a labor dispute. The dispute
must concern the terms and conditions of employment. Thus, a labor
organization can negotiate only on behalf of employees, although
other persons may join the organization. The exemption does not
protect independent contractors, which most physicians are.
But am I not an employee of my corporation?
Physicians may be employees of a professional corporation or
of a partnership, as most private-practice anesthesiologists are
and, therefore, the P.C. or partnership can negotiate for the
group, but it cannot collaborate with other independent groups
to increase its leverage.
Don't other independent contractors, such as truck drivers,
engage in collective bargaining?
Yes, and so do screenwriters and musicians, but only under
limited circumstances. In these occupations, the majority of the
participants are in an employment relationship, and some portion
of the workers operate as independent contractors.
The independent contractors are allowed to be part of
the collective bargaining agreements so that they cannot be used
by employers to undermine the collective bargaining agreements
achieved by the employees. This prevents employers from subverting
a collective bargaining agreement by hiring nonunion independent
contractors at lower compensation rates than called for by the
union contract.
Aren't physicians so highly controlled by health plans that
they are, in reality, employees who should be allowed to bargain
collectively?
No. An independent contractor does not become an employee just
because the contractor lacks the clout to negotiate terms of dealing
and has to accept terms offered by a purchaser of the contractor's
services, i.e., a health plan.
What determines whether a person is an independent contractor
as opposed to an employee ?
The criteria that courts use to determine whether a person is
an independent contractor or an employee and how those fit or
do not fit physician relationships with health plans are:
1. The extent of control that the alleged employer may
exercise over the organization and management of the individual's
work. High levels of control indicate employment.
- Physicians contracting with a health plan are generally not
subject to the same kind of control that an employee is. Physicians
who accept "take it or leave it" payment offers and utilization
protocols can be compared to other independent contractors who
work pursuant to specifications supplied by the purchaser of
their services.
2. Whether the worker is engaged in a distinct occupation
or business. Such occupations or businesses point toward independent
contractor status.
- Physicians are in a distinct occupation or business.
3. The kind of occupation and whether the work involved
is usually done under the direction of an employer.
- Traditionally, most physicians have not been employed, although
that is changing.
4. The skill required for the work involved. High degrees
of skill indicate independent contractor status.
- A very high degree of skill is required to be a physician.
5. Whether the alleged employer supplies the instrumentalities,
tools and the place of work. If not, that indicates independent
contractor status.
- Anesthesiologists generally work in a hospital or surgical
center and the hospital provides the equipment, the drugs and
supplies and the operating suite. But the hospital is not the
alleged employer; the health plan is. Employee status is further
undercut by the fact that many anesthesiologists employ and
utilize their own nurse anesthetists.
6. The length of time for which the worker is hired. Long-term
relationships indicate employment status.
- Physicians tend to be terminable "at will" in their relationships
with health plans.
7. Whether the pay is by time period or by the job. Time
periods, especially long-term, indicate employment.
- If physicians are paid on a fee-for-service basis, pay is
by the job and that indicates independent contractor status.
If on a capitation basis, it is less clear, but it is more like
a job-basis payment than a salary.
8. Whether the work is part of the regular business of
the employer. If not, independent contractor status is more likely.
- Health care delivery is usually not the business of a health
plan, but the lines are starting to blur as health plans take
more responsibility for delivery. However, if the health plan
clearly contracts for delivery and does not hire any physicians,
that indicates independent contractor status.
9. Whether the alleged employer and the worker believe
that they have created an employment relationship.
- Typically, both sides do not believe that an employment relationship
has been created.
10. Whether the alleged employer is in business. If not,
that indicates independent contractor status. However, being in
business does not, by itself, indicate that persons who do work
for the business are employees.
- Health plans are clearly in business, but there is usually
a clear difference between its employees and the physicians
who contract to provide services to it as independent contractors.
It is obviously difficult for physicians who do not have
a W-2 relationship to demonstrate that they are employees of a
health plan. The National Labor Relations Board (NLRB) has never
certified any organization to represent physicians in independent
practice in collective negotiations with a third-party payer.
Certification is required to trigger the alleged employer's duty
to bargain with the representative.
In January, the Philadelphia regional office of the NLRB
rejected a petition by the United Food and Commercial Workers
to represent several hundred New Jersey physicians who had contracts
with AmeriHealth HMO. The regional director rejected the argument
that the physicians were employees, stating, "Most significantly,
the physicians themselves make the fundamental decisions that
determine the profitability of their practices." She noted that
AmeriHealth patients occupied a fraction of the doctors' time
and produced a fraction of their income. The physicians had almost
total control over their own expenses, determining office size
and location as well as staff size and compensation levels. There
was no evidence that AmeriHealth could restrict the physicians
from expanding, contracting or selling their practices.
The union has appealed the decision to the national office
of the NLRB.
Then why are so many groups of doctors forming or joining
unions?
Anger and desperation, combined with some measure of optimism,
are often the reasons. Most of these groups do not claim to expect
to be able to bargain through their unions over fees. Many of
them want to organize in order to protect the quality of patient
care. Regaining control over patient care decisions was the stated
objective of collective bargaining with the AmeriHealth HMO -
and still the NLRB denied certification.
Even though physicians cannot use a union to compel third-party
payers to negotiate, several groups have seen advantages in affiliating
with an established union. This was the case for about 2,000 doctors
in a physician-owned HMO on Long Island, who last year joined
the Office and Professional Employees International Union. The
doctors joined partly for the purpose of encouraging union health
plans with thousands of members to sign up with their fledgling
HMO. They were also hoping to obtain the support of the AFL-CIO
in lobbying for state and federal legislation to limit health
plans' interference in the doctor-patient relationship and the
exercise of professional judgment.
Similarly, the New York State Podiatric Medical Association
voted as a group to join the First National Guild for Health Care
Providers of the Lower Extremities, which was also affiliated
with the AFL-CIO. The podiatrists were seeking legislative relief
from, among other things, the power of health plan gatekeeper
physicians to block patient access to specialists. Collective
activity to petition government, i.e., to lobby, is protected
by the Constitution and cannot be the basis of an antitrust conviction.
Would it really help us if we were to become employees?
The ultimate answer depends on the issues to be negotiated
and the parties' relative bargaining strength. More immediately,
it may also depend on whether the employed physicians are considered
"supervisory." If they are, they are not entitled to the protection
of the labor laws.
The physicians at Thomas Davis Medical Clinic in Tucson,
Arizona, last year joined the Federation of Physicians and Dentists,
an affiliate of the American Federation of State, County and Municipal
Employees. The physicians were employed by the clinic's HMO owner.
They organized (at the instigation of an anesthesiologist) in
revolt against a cost-cutting program that would eliminate doctors
as well as administrative personnel, increasing patient load and
clerical work. Also inspirational were the owner's restrictions
on referrals to specialists. In this instance, the NLRB did certify
the union as the physicians' collective bargaining agent, rejecting
a claim that the doctors were supervisory employees, and the NLRB
has now gone to court to force the owner to negotiate.
Should we go to Congress?
It would almost certainly be a waste of time. Historically,
there has been no support for legislating an antitrust exemption
for physicians or any other professional or industry group (at
least not since the passage of the McCarran-Ferguson Act in 1945,
exempting the insurance industry). Congress has no compelling
incentive to enhance physicians' ability to deal collectively
with third-party payers. This is particularly true in the wake
of the definition of antitrust "safety zones" for physician networks
elaborated in the Department of Justice's and the Federal Trade
Commission's 1996 "Statements of Enforcement Policy and Analytical
Principles Relating to Health Care and Antitrust."
Well, what can we do?
Anesthesiologists can form networks, consistent with the
"Statements of Enforcement Policy" mentioned above (and discussed
more fully in the "Practice
Management" column in the October 1996 NEWSLETTER).
You can also organize the collection and distribution of marketplace
information, e.g., fee information, in the manner allowed by the
Statements. You can enhance your marketplace clout by increasing
the size of the professional corporations and partnerships to
which you belong - again, with the ultimate restrictions of the
antimonopolization provisions of the antitrust laws in mind. You
can take advantage of an affiliation with an existing labor union,
for purposes other than raising fees, as have some of the physician
groups mentioned in this article. You can affiliate with other
physicians through multispecialty groups or management services
organizations. There really are options.
Acknowledgement:
I would like to thank Edward B. Hirshfeld, Esq., Associate
General Counsel at the American Medical Association, for providing
a good deal of the information in this column as well as an ongoing
education.
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