by Thomas J. Reed and Paul J. Voss
According to an ACR survey published in 1995 in AJR, more than 90 percent of radiology groups responding had at least part of their practice in hospitals. For some radiology groups, a single hospital practice is the sole location where the group provides services, either by choicei or by necessity (dictated by internal manpower limitations or external hospital pressures). Other groups service more than one hospital and some also practice at or even own their own private offices or outside imaging centers, in addition to working in the hospital setting. With this variety of group practice settings, a number of different practice models and relationships have developed between groups and solo radiologists and the hospitals where they provide services.
In an article in the May 2002 ACR Bulletin,ii we described key hospital contract issues facing radiologists today. Many, though not all, of these issues typically arise in the exclusive contract setting whereby the contracting radiologists are to a greater or lesser degreeiii the sole providers of designated imaging services in the hospital and have some medico-administrative direction over the hospital’s radiology department.
Exclusive contracts are the most common,iv but not the only, form hospital radiology relationships take. Some radiologists have no contract with the hospital but rely solely on the clinical privileges granted them under the medical staff bylaws.v Some radiology groups have no contract to provide any services at the hospital but are part of a joint venture with the hospital or an affiliate, which owns and operates an outside imaging facility.
Other radiology groups may have a contract to provide radiology services on a nonexclusive basis or furnish on-call coverage in the hospital. Still others may have a contract to provide only medical direction and administrative services in the hospital’s imaging department. Finally, a radiologist may be an employee of a hospital or an affiliated professional corporation that employs a number of primary care and specialty physicians.vi
Numerous hybrids of the foregoing models exist along the continuum of relationships that can occur between radiology groups and hospitals. This article will describe the major characteristics of these alternative arrangements and analyze their advantages and disadvantages from the perspective of radiologists.
Open-Staff Radiology Practice
An "open-staff’ model for the practice of radiology in a hospital or "open department" is much (but not always entirely) like it sounds. An open staff typically refers to the fact that the hospital has not, by contract or some other means,vii limited the practice of radiology in the facility or its imaging department to one affiliated group of providers. Theoretically, the hospital will entertain further applications for staff membership and clinical privileges from other radiologists not affiliated with the radiologists already on staff. The foregoing descriptions are qualified because even though some hospitals have not taken overt steps to establish one group as their exclusive provider, the hospitals may still have a de facto exclusive provider.viii A de facto exclusive arrangement most often occurs when a group has a long history of established service to the facility and has proven itself acceptable and accountable to the hospital, meeting all the imaging needs of its patients and medical staff. The hospital will then, sometimes even in the pre-application phase of credentialing, reject the application (or the request for an application) by other radiologists seeking staff membership and privileges.
According to its published policy, "[t]he American College of Radiology has traditionally endorsed the independent practice of radiology in an open-staff setting because hospitals have attempted to use radiology services contracts as a way of maintaining control over the radiology department."ix Over the years, some radiologists have voiced the concern that contracts are a threat to the independent practice of radiology and expressed the opinion that open staffing allows for more independent control by radiologists over departmental issues, such as daily and after-hours coverage, staffing levels and credentialing matters.
Still, other radiologists have indicated that open-staff/open-department hospitals may try to use hospital policy (if they cannot get the medical staff to agree to bylaw or staff rule and regulation requirements) to gain the same sort of control over these issues with regard to those who staff the imaging department. Further, as we noted in last month’s article,x although radiologists generally seem to be at best ambivalent toward contracts, practitioners have recognized certain advantages of contracts over open staffs.
One positive aspect of a radiology services contract is that it can give a group exclusivity over performance of radiology procedures in the department, and it can clearly define the areas of that exclusivity. Being the exclusive provider (whether de jure—by contract—or de facto) can actually allow a group to have more administrative control within the imaging department than if it were to share the department with others who are not responsible for it and who may, for example, want to arrange their own scheduling around their personal schedule and evade on-call responsibilities.
This can be seen in a 1997 case in which the United States Court of Appeals for the Eighth Circuit examined an alleged anticompetitive situation where a hospital had made a unilateral decisionxi to deal exclusively with one group because a competing radiologist, who provided his own schedule, would not ensure the 24 hour-a-day availability that the hospital could rely on if it dealt exclusively with one group. In doing its own scheduling to ensure round-the-clock coverage, the group had encountered problems in scheduling around specifications of the nonaffiliated plaintiff. In some cases the plaintiff radiologist, who drew up his own schedule, would only schedule himself for three hours a day and would carry a beeper, but stated that any urgent work should be performed by the other radiologists. The nonaffiliated radiologist also had indicated he believed that he did not need to contract with the other group for such coverage because he felt they had an ethical obligation to cover his patients; therefore, he did not have to pay them for backing him up. The court recognized that the plaintiff’s own failure to be competitive with the group, and not anticompetitive action on the part of the group, was the cause of his downfall and led to the exclusive arrangement with the other radiologists.
In a more recent case, a Colorado court noted that when multiple specialties share the imaging department an environment not unlike "Grand Central Station" can result.xii Similar problems can occur when radiologists from multiple groups vie for the best scheduling, use of equipment and technical assistance, and favorable coverage responsibilities. An exclusive contract reduces or eliminates such problems by bringing the efficiencies and benefits of a single firm resulting in better administration of the department. Because studies indicate that interpretations of imaging performed by radiologists are generally more accurate than when performed by nonradiologists, patient care may also be enhanced by a contract that places all or most of the imaging in the hands of the radiologists.xiii
An additional advantage of an exclusive contract is that it binds the hospital to use the contracting group for some or all of its imaging needs for at least the term of the contract. An open department can quickly become a closed department if a hospital elects to sign a contract with a different group that is more willing to "play ball" when it comes to those things a hospital frequently seeks from its hospital-based physicians, such as participation at discounted rates in managed care contracting.
In the face of a hospital decision to contract exclusively with another group of radiologists, the protections afforded incumbent hospital-based radiologists relying solely on their clinical privileges under the medical staff bylaws are largely procedural—to the extent that they are applicable at all. Some courts have found the bylaw due process protections inapplicable to these types of situations where physicians have lost their privileges due to such hospital management or administrative decisions.xiv
Finally, because the validity of written exclusive contracts is well established in case law, especially when the contracts are backed by hospital policy reflecting the hospital’s independent determination that such contracts would increase efficiencies and improve patient care, written exclusive contracts are at least arguably less vulnerable to antitrust attacks than are so-called open staff departments, which in reality function as de facto exclusive arrangements. Nominally open arrangements can more easily be challenged by those excluded from the department as pretexts for an underlying conspiracy between the hospital and the incumbent physicians to keep competitors out. Radiologists in de facto exclusive arrangements are also still vulnerable to the operational problems faced by radiologists in completely open departments as described earlier. In short, if the nominally open-staff radiology department were actually operated as a de facto exclusive arrangement, it would usually be better to have a written exclusive contract between the radiology group and the hospital. If it is truly an open department, the group should carefully weigh the advantages and disadvantages of entering into a contract with the hospital.
Medico-Administrative Director Contracts
Slightly further along the continuum of radiologists’ integration into the hospital is the contract between a hospital and a radiology group for only the administrative services of the group. The group agrees to oversee the management, scheduling, performance and other administrative aspects of the department;xv the professional services of the group are in such cases provided without a contract. Although many radiology groups provide such administrative services without any contract or any payment from the hospital, a limited number of groups do receive a stipend for these services.
A 1991 Management Advisory Report (MAR) from the Inspector General of HHS, Financial Arrangements Between Hospitals And Hospital-Based Physicians, cited several examples of problematic behavior involving hospitals and hospital-based physicians as possible violations of the antikickback statute. The MAR identified one suspect arrangement in the case of a hospital’s nonpayment or token payment for a hospital-based group’s administrative (Medicare Part A) services involving a pathology group in return for the opportunity to provide Part B services at the hospital.
In Advisory Opinion 97-5, dated Oct. 6, 1997, the IG appeared to recognize that radiologists’ medical director/administrative services are considered to have value, and thus could arguably be considered remuneration in return for referrals if not paid for by a hospital. In that opinion, the IG examined a contemplated radiology imaging center joint venture between a radiology group and a hospital and, based on the facts presented, gave a qualified endorsement to proceed with the venture.
Among the factors examined by the IG was the represented fact that the fair market value of the services provided by the group as the hospital’s director of the department of radiology was substantially equal to the fair market value of the space in the hospital that was provided to the group at no charge. In its opinion, the IG concluded that the radiology group’s use of hospital space and equipment was in essence paid for by the group providing director services, and that any profit distribution from the joint venture would not represent illegal remuneration for past referrals.
The IG’s recognition of the potential remunerative value to hospitals of medical director services provided by radiologists has not significantly changed the industry practice of nonpayment for such services. Perhaps this is because traditionally hospital-based physicians have provided many of these services as part of their hospital practice. Payment for administrative services may also be uncommon because hospitals (and even radiologists) believe that they, too, have a relationship in place where the value of administrative oversight by the radiologists is cancelled out by the value of the hospital space and equipment the radiologists use without charge. This argument may be vulnerable, however, in hospitals where other physicians on the staff receive free offices without providing any administrative or other valuable services to the hospital.
In any case, one advantage of administrative-only contracts over the more common exclusive services agreement is that hospitals sometimes recognize, even in their medical staff bylaws, that the termination of a medico-administrative agreement with the hospital will not affect the medical staff privileges of the medico-administrative physician. Exclusive professional service contracts, on the other hand, generally provide (and even some bylaws provide) that termination of such contracts causes automatic termination of the contracting group members’ staff membership and clinical privileges without any bylaws hearing and appeal process.
Like the open-staff department, one of the problems with an administrative-only contract is that the practitioner is vulnerable to the hospital at any time entering into an exclusive contract with another group. In such cases, the only process for redress normally available to the practitioner under the medical staff bylaws may be found to be inapplicable.xvi Also, the potential rivalry of independent members of the department vying to do their procedures at optimal times and other departmental operational problems can present a substantial challenge to those charged with the responsibility of departmental medical direction. A contracting medical director can have all the headaches of accountability to the hospital without the corresponding benefits.
Because the department director will be making decisions regarding who gets which times to use imaging equipment and who is on-call after-hours and on holidays, decisions that might be challenged as competitively favoring the radiologists with whom the director is affiliated over other nonaffiliated radiologists and nonradiologists, it is important that a medical director agreement both authorize and approve the medical director to make all such decisions regarding all practitioners utilizing the department. The agreement should also contain an indemnification by the hospital of the director, in case a physician challenges the director’s decisions. The director’s delegate (active when the director is attending CME courses or is away due to vacation, illness or other obligations) should also be preapproved and indemnified in the agreement. A recognition that both individuals will be named on the hospital’s directors and officers insurance policy is also a desirable contract provision.
Medical director agreements for radiologists may be more attractive to hospitals than are such agreements for other specialists. With other specialties, the hospital may be concerned that its payment of a medical director fee may be construed as payment for referrals from the director or his or her group. Hospitals also have to try to fit the arrangements with nonradiologist directors into a Stark law exception so the financial relationship that the agreement establishes does not legally prevent the medical director from referring patients to the hospital. Because the IG does not see radiologists as referrers, these concerns are minimized regarding radiology medical director agreements.
From the radiologists’ perspective, some groups have indicated that the amount of the stipend they received for their work was hardly worth the headache that came with having to monitor and record the time spent performing administrative duties on behalf of the hospital. Hospitals cannot claim the costs associated with compensating the physicians for their director services (for purposes of Medicare cost reporting) without time records or other accurate and verifiable documentation showing that the director engaged in such activities for the amount of time reported to Medicare. As one recent source noted, however, that "[w]ith the declining importance of cost reimbursement (due to prospective payment for services), many hospitals do not insist that compensated physicians maintain the time records required to claim reimbursement."xvii
On-Call Service Agreements and Nonexclusive Professional Service Agreements
An on-call service agreement is further along the contractual integration continuum than a medical director services agreement because the on-call provider document may require the radiologists to provide both professional and medico-administrative services for the hospital. Such agreements are usually designed to fill a void in the hospital’s on-call coverage with payment of a stipend or subsidy to the group for its coverage.
On-call coverage agreements are taking on greater importance with the heightened concern over the rising number of federal penalties against health care providers under the Emergency Medical Treatment and Active Labor Act (the federal patient anti-dumping statute) and the recent expansion of the application of the statute well beyond the established emergency department.xviii Under EMTALA, if a hospital offers specialty services during regular operating hours to inpatients, the services must also be provided through on-call coverage after regular hours as well for the treatment of emergency cases. Failure to do so can subject the hospital to large monetary penalties.xix
Radiologists may subject themselves to liability under EMTALA by agreeing under their medical staff bylaws to participate in emergency department on-call coverage and then failing to meet these obligations.xx While the statute seems to be clear that hospitals which offer a service during regular hours must offer the service and establish schedules for on-call coverage after hours, the EMTALA statute and regulations are not as clear about the responsibilities of radiologists and other medical staff members (absent their agreement under the bylaws to take call) to provide after-hours, on-call coverage in the emergency department.xxi Thus, to address this lack of clarity, some hospitals have decided to ensure adequate call coverage by contract.
Some agreements permit a group to meet on-call responsibilities with the use of teleradiology while others provide a set response time in which the on-call physician must be physically present in the hospital when paged. The limited use of residents in approved programs with documented training in appropriate modalities or of locums tenens practitioners is also sometimes negotiated to supplement manpower of the radiology group during after hours call periods. Other contracts require radiologists to maintain their residence within a set "drive-time" of the hospital to make certain that they will be able to meet their call responsibilities in person. In the case of exclusive contracts, the contracting radiologists almost always have 24 hour-a-day on-site or on-call responsibilities.
Hospitals sometimes express reluctance to enter into an on-call agreement because they claim they will be setting a bad precedent, which others who once provided call for free will use as a basis to argue for payment for their call services. In some situations, hospitals may simply try by fiat to establish a policy requiring all active staff members to be part of their call roster. In other situations, medical staffs burdened by the lack of coverage have gone so far on their own as to amend their bylaws to require all active members to take call.xxii
Coverage agreements sometimes go hand-in-hand with nonexclusive professional service contracts through which the hospital may secure some (but usually not all) of its imaging services from some (but usually not all) of its radiologists.xxiii From the radiologists’ perspective, the primary difficulty with nonexclusive contracts is that the contracting group may have all the responsibility and accountability that typically comes with being the exclusive provider without having the efficiency- and revenue-generating advantages of an exclusive contract. As previously discussed, a group with a nonexclusive contract in a shared department can have the same problems as those practicing in a fully open-staff department, especially if the nonexclusive contract has no director provisions giving the group the authority to control scheduling and other administrative aspects of the department.
Thus, many of the provisions suggested above with regard to medical director agreements should be a part of the nonexclusive agreement. Concerns about the appearance or allegation of bias with regard to the treatment of nonradiologists or nonaffiliated radiologists make the scheduling authority, indemnification and other protections mentioned important to secure in the nonexclusive agreement.
Joint Activities with the Hospital
As discussed in our May ACR Bulletin article, many radiologists faced with a contract ask themselves (and their counsel) the following question: "why contract with a hospital at all?" For some, the thought of not only linking themselves with the hospital through a hospital services contract but actually partnering or jointly operating a facility or facilities with the hospital may seem like "getting in bed with the enemy." Like most contract decisions radiologists face, the decision to venture with a hospital is usually driven by practical realities.
Two scenarios are becoming common in these situations. In the first, a radiology group has no practice outside of the hospital but sees the need or opportunity for new modalities that the hospital lacks. The radiologists have the capital available to purchase or lease the technology immediately, while the hospital cannot or will not budget the funds necessary to bring the desired equipment in-house. The group may or may not have a contract with the hospital and may or may not have a noncompetition clause (noncompete) that limits its ability to independently provide radiology services without the hospital’s consent. Even in the absence of a noncompete, some groups have found that they can enhance their relationship with the hospital by partnering or joint venturing with it, rather than straining the relationship by competing with the hospital. Joining with the hospital in a mutually economically beneficial activity outside the hospital’s walls may solidify the group’s place as the hospital’s provider of radiology services in the hospital, even without a hospital contract. If properly structured, such a joint venture can make it undesirable for the hospital to "pull the plug" on the hospital arrangement with the group for fear of having the group "pull the plug" on the hospital’s participation in the outside imaging center, leaving the group free to compete.
In the second scenario, a group has already established on its own some imaging facilities outside the hospital, perhaps again to fill a void in the hospital’s imaging capabilities or to meet a market need that the hospital has not addressed. The hospital, unhappy with the perceived competition of the radiologists’ outside facilities, wants the group to cease its competition or the hospital threatens to look for another provider to meet the hospital’s imaging needs.
In these circumstances, some groups have decided that the cost of jeopardizing or walking away from the portion of their income earned in the hospital for the sake of protecting their outside income is not worth it. Still, groups in this situation are often reluctant to give up entirely a successful outside practice, force their loyal nonphysician employees to seek other employment or go to work for the hospital and lose for patients the benefits and efficiencies that often come to them from having a well-run outside facility at which they can receive imaging services. Rather than selling the practice to the hospital, some groups have instead proposed that they jointly run the outside center with the hospital.
OIG Advisory Opinion 97-5, discussed above, made joint ventures between hospitals and radiologists more attractive and feasible. The opinion gave a qualified endorsement from the IG (on the basis of an antikickback analysis) to proceed with a contemplated radiology imaging center joint venture between a radiology group and a hospital. The radiology group was a provider of services at the hospital under an unwritten arrangement and provided both professional and medical director services to the hospital. The contemplated joint venture was to be an imaging center with the full range of state-of-the-art imaging techniques, owned and operated by a limited liability company with two members: the radiology group and the hospital. Each of the members was to have voting and distribution rights in proportion to their capital contributions, which were 51 percent of the capital by the radiology group and 49 percent by the hospital. The LLC would hire technical employees and would engage the radiology group to provide, on an exclusive basis, the professional services of the center and the medical director services. The center would not employ or compensate the radiology group but would instead enter into a services agreement with the group, through which it would generate revenue by providing services to and billing patients (just as at the hospital).
It is interesting to note that under the advisory opinion the arrangement did not fall into one of the safe harbors the government has established for contemplated business arrangements and yet was still approved on the basis that it would not result in prohibited remuneration in return for referrals. The IG focused on the fact that neither the group nor the hospital appeared to be able to generate referrals for the center, and that there did not appear to be the likelihood of prohibited remuneration outside the joint venture within the hospital relationship between the parties. Many factors presented by the parties allowed the IG to reach this conclusion.
With regard to the possibility of the radiologists generating referrals, the IG took the same position as in the Stark law definition of referral, that ". . .in general, radiologists do not order the radiological tests they perform; such tests are ordered by the patient’s attending physician."xxiv Under Stark, which prohibits a physician who has a financial relationship with an entity that provides designated health services from making a referral to the entity for a designated health service payable under Medicare, the definition of referral (42 USCA §1395nn (h) (5)(C)) states " . . .a request by a radiologist for diagnostic radiology services . . .if such services are furnished by (or under the supervision of) . . . such radiologist pursuant to a consultation requested by another physician does not constitute a referral." This view by the IG of radiologist services — both through the lens of the antikickback law and the Stark law—also makes it more feasible, to some extent, for radiologists to seek a joint venture arrangement.
The advisory opinion gave other valuable advice to radiologists seeking a joint venture arrangement: "With respect to joint ventures, the major concern (of the IG) is that the profit distributions to investors in the joint venture, who are also referral sources to the joint venture, may potentially represent remuneration for those referrals. A related concern is that, where the parties have a referral relationship wholly apart from the joint venture, distributions from the venture could potentially represent remuneration to one party for referrals to the other party based on those independent relationships," i.e., remuneration to the hospital for the referrals it sends to the group in the hospital setting.
As noted above, the parties seeking the advisory opinion demonstrated that they would not be referrers to the venture, which eliminates the first concern. The parties would have appeared to get around the second concern by eliminating the possibility that the hospital would receive a disproportionate share of the return on the investment—the revenues of the imaging center. Each party received distributions in direct proportion to its investment with no "unearned" remuneration built-in. The IG noted that the solution was not that simple, however, because, in its view, "even in situations where each party’s return is proportionate with its investment, the mere opportunity to invest (and consequently receive profit distributions) may in certain circumstances constitute illegal remuneration if offered in exchange for past or future referrals." Again multiple factors built-in to the contemplated relationship convinced the IG that the mere opportunity to invest was not remuneration to the hospital in return for referrals, either in the past or future.
Additional aspects of the joint venture arrangement between the parties, beyond the fraud and abuse factors, are worth noting. Of particular interest is the fact that the radiology group was the 51 percent owner of the business. This split (or a greater percentage for the radiologistsxxv) is recommended in a radiologist/hospital joint venture to give the group, on the basis of its majority ownership, some measure of control over the operation of the facility (except to the extent that certain decisions may require "super-majority" or unanimous approval of the members, or as may be otherwise provided in the LLC operating agreement). In addition, the radiology group should be named the managing member over the operation of the facility.
Other groups joint venturing with a hospital have structured these types of arrangements with buy-out provisions in the joint venture documents, which allowed the group to purchase the hospital’s interest in the venture if, for example, the group’s hospital practice was terminated. As noted above, this can act as a deterrent to the hospital ending the hospital relationship in that they would then risk losing their interest in the venture and gaining a competitor to their in-house imaging services.xxvi
In cases where a hospital has been unwilling to enter into the type of joint venture discussed above and unwilling to enter into an exclusive contract with a radiology group, which has an independent office or imaging facility that "competes" with the hospital, some groups, to maintain their hospital practice, have sold their "technical radiology business" at these independent facilities to the hospitals but in some cases, reserved the right to reacquire the facilities in the event the group’s hospital practice is terminated. A radiology group can still maintain an interest in the facility in several ways.
Some groups have subleased their outside facilities to the hospital with or without an option of the hospital to purchase the facilities at some point down the road. The group remains, of course, the provider of professional services but may also lease to the hospital and manage pursuant to a separate contract the group’s technical personnel and the facility and provide billing services for the entity through the group’s billing personnel.
Commercially reasonable, fair market value arrangements arrived at through arms-length transactions, with no reimbursements based on the volume or value of referrals are, of course, recommended from an antikickback and Stark perspective. Another advisable aspect of such arrangements, as discussed above, where the hospital obtains an ownership interest in the group’s facilities, is a provision or provisions through which the group retains a contractual right to purchase the facilities back if ousted from the hospital under certain circumstances or within certain time periods.
Employment of Radiologists
Employment model arrangements involving hospitals and radiologists are, in our experience, much less common than the other arrangements discussed above.xxvii Corporate practice of medicine prohibitions and other legal issues may apply to such arrangements, making employment somewhat, though not necessarily significantly, less attractive to hospitals. The employment model may be less appealing from the radiologists’ standpoint in that it brings with it the greatest surrender of autonomy and control to the hospital of any of the models, even though many employment contracts provide that "the employer shall exercise no control over the manner in which services are provided" to establish that a physician and not the hospital is the one practicing medicine and is responsible for the care provided. Employment also means that termination of the relationship can be (unless otherwise provided by contract) "at will," i.e., instantaneously with or without notice as long as no illegal or discriminatory purpose is behind the termination.xxviii
The chance for equity ownership in the business, common when a radiologist is employed by a radiology group, is greatly decreased if not eliminated when the radiologist is employed by a hospital or its affiliate corporation. Compensation may be on a preset salaried basis with or without some type of productivity bonus (after application of departmental expenses to revenues). A noncompete clause and a surrender of clinical privileges with termination of the employment and without a bylaws hearing is also possible under an employment contract. These may be the reasons why most radiologists opt to practice under the other available hospital/radiologist integration models.
Conclusion
Most hospitals seem to favor exclusive contracts with radiologists, probably because they ensure direct accountability from the contracting group to the hospital and guarantee all of the hospital’s coverage needs will be met. However, there are a number of other possible hospital/radiology practice models. Each of these arrangements has its own advantages and disadvantages, which should be carefully considered by radiology groups in light of the individual group’s practice needs and objectives. u
Endnotes
* The authors have a Chicago-based national health law practice, Law Offices of Thomas J. Reed, representing and advising physicians and medical staffs, primarily radiology groups and individual radiologists and radiation oncologists, on a variety of legal matters including hospital contracts, managed care, group practice, antitrust, fraud and abuse and staff privilege/credentialing issues. The firm has also represented professional societies including the Illinois Radiological Society, the American Medical Association and the American Academy of Orthopedic Surgeons. This article is not intended as legal advice and should not be used as a substitute for consulting an experienced health care attorney familiar with these kinds of issues.
i For example, some radiology practices have evolved or moved into an area where practically all the demand for radiology services is being met by the hospital’s radiology providers, or the community has two hospitals and traditionally it has evolved where one group practices at one hospital and the other practices at the other hospital in town.
ii "Key issues in today’s hospital radiology contracts", ACR Bulletin, 2002 (5); 58: p.16.
iii Given increasing "exceptions" granted to various nonradiologists to perform certain imaging procedures one might question whether such contracts are truly "exclusive." However, they usually are at least exclusive in the sense that radiologists affiliated with the contracting group are the only radiologists providing services in the hospital.
iv A 1989-90 ACR survey of radiologists indicated that at least 49 percent of all respondents were under an exclusive hospital services agreement. (See "Radiology practices and their contracts with hospitals, 1989-1990: A representative sample survey"; Jonathan Sunshine, William C. Chan, Pamela J. Kassing; AJR:157, December 1991.) A 1984 American Hospital Association survey of hospitals indicated that 59.9 percent of all respondents had in place an exclusive hospital radiology services agreement. (see Morrisey and Brooks, "The myth of the closed medical staff", Hospitals, July 1, 1985).
v Courts are split as to whether medical staff bylaws are a "contract." Supporting the notion of bylaws as a contract see Vakharia v. Little Co. of Mary Hosp., 917 F. Supp. 1282, 1302 (N.D. Ill. 1996); Bass v. Ambrosius, 520 N.W.2d 625 (Wis. App. 1994); Islami v. Covenant Medical Center, 822 F. Supp. 1361, 1370 (N.D. Iowa 1992); Lewisburg Community Hosp. v. Alfredson, 805 S.W.2d 756, 759 (Tenn. 1991). But see O’Byrne v. Santa Monica Hospital Medical Center, No. B143702 (Calif. Ct. App. 2001); Zipper v. Health Midwest, 978 S.W. 2d 398 (Mo. App. W.D. 1998); Munoz v. Flower Hosp., 507 N.E.2d 360 (Ohio App. 1985); Medical/ Dental Staff of St. John’s Episcopal Hosp. v. Board of Managers, No. 81-3793 (N.Y. Sup. Ct. June 22, 1981); Leider v. Beth Israel Hosp. Assoc., 182 N.E.2d 393 (N.Y. App. 1962).
vi As the economics of the hospital-radiologist relationship have been described there is a continuum of the degree of "integration." See William J. Lynk, Tying and Exclusive Dealing: Jefferson Parish Hospital v. Hyde (1984), The Antitrust Revolution: Economics, Competition, and Policy, 3rd ed., published by Kwoka and White (Oxford Univ. Press, 1999) and "Restraint of Trade through Hospital Exclusive Contracts: An Economic Appraisal of Legal Theory" William J. Lynk, Journal of Health Politics, Policy and Law; Vol. 9, No. 2, Summer 1984. A radiologist with no contract and clinical privileges has no or minimal integration into the hospital at one end of the continuum, and an employed radiologist is completely "integrated" at the other end of the continuum. Nonexclusive/coverage/joint venture/exclusive arrangements are examples of "partial integration" somewhere between the two end points of the continuum. With more integration comes more hospital control and accountability.
vii One common other means of limiting the practice of a specialty in the hospital is a staff development plan, which is a unilateral action on the part of a hospital to restrict the number of practitioners in a given specialty, usually to avoid overtaxing personnel, equipment and other resources in the hospital.
viii In one recent Colorado case, a court noted that an exclusive anesthesiology contract, which the United States Supreme Court held not to be violative of the antitrust laws in Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S.2 (1984), had in fact deleted the exclusivity language in contract renegotiation but the hospital continued to treat the contract as exclusive anyway and the Supreme Court analyzed it as an exclusive contract. Ryals v. St. Mary-Corwin, Reg. Med. Ctr., No. 97CV0907 (D.Ct. Pueblo Cty., 2/25/02), slip op at p.8.
ix The policy also states "[h]owever, the College recognizes that today the exclusive contract is a widely used method of establishing an administrative relationship between a hospital and an individual radiologist or group of radiologists." From the 2002 Digest of Council Actions, ACR Policy on Medical Staff Privileges, Exclusive Contracts and Economic Credentialing. This is consistent with AMA Policy See AMA HOD Policy 230.994 Encouragement of Open Hospital Medical Staffs.
x "Key issues in today’s hospital radiology contracts", ACR Bulletin, 2002 (5); 58.
xi See Ralph Read, M.D. v. Medical X-Ray Center, P.C. et al. 110 F. 3d 543 (8th Cir. 1997).
xii Ryals v. St. Mary-Corwin Reg. Med. Ctr., No. 97CV0907 (D. Ct. Pueblo Cty., 2/25/02) slip op at p. 9.
xiii See "Fed concerned about misinterpretations by non-radiologists", RSNA News, October 2001.
xiv "Key issues in today’s hospital radiology contracts", ACR Bulletin, 2002 (5); 58: p.16.
xv As with any of the contracts discussed in this article that involve a hospital component, medical director agreements may also apply to the services of a group at outside facilities as well.
xvi At least in the case of an exclusive arrangement, even where there is a waiver of bylaw due process, some opportunity to appear before the hospital board or administration might be negotiated into the contract.
xvii Health Care Fraud and Abuse: Practical Perspectives, American Bar Association, 2002, p.281
xviii See "EMTALA- Federal penalties for patient dumping rise; industry wary of OIG’s broad interpretation"; BNA Health Law Reporter, 10-21-99, p.1675. See also "EMTALA: A compliance quagmire beyond the emergency room"; AHLA Health Law Digest, September 2001, p.3.
xix Ibid.
xx See "On-call coverage under EMTALA" ACR Bulletin 2001 (7); 57:22
xxi CMS recently issued a proposed rule through which it claims"[w]e are proposing to clarify the circumstances in which physicians, particularly specialty physicians, must serve on hospital medical staff ‘on-call’ lists." Despite this proposal, the rule does little new in this regard indicating basically that "[e]ach hospital must maintain an on-call list of physicians on its medical staff in a manner that best meets the needs of the hospital’s patients", and that "[p]hysicians, including specialists and subspecialists, are not required to be on call at all times" (67 Fed. Reg. 31404 (2002)). This guidance was already provided by CMS (then HCFA) in its May 1998 "Interpretive Guidelines-Responsibilities of Medicare Participating Hospitals in Emergency Cases."
xxii A 1995 publication "The Physician Credentialing and Peer Review Answer Book" answered the question "Can applicants be required to participate in an on-call schedule for the care of emergency department patients as a criterion for staff membership and privileges?" in the following manner: "This can be a condition of medical staff membership. On-call availability for emergency department service is commonly accepted by the medical profession as a reasonable condition of staff medical membership and has not been a serious contention resulting in litigation." We are aware of at least one case dating back thirty years (Yeargin v. Hamilton Mem. Hosp., 195 S.E. 2d 8 (Ga. 1972)) that dealt with the issue. This issue has been contentious for a number of medical staffs. Given the EMTALA requirements and recent rise in enforcement actions mentioned above it will not be a surprise to see this become a serious issue resulting in litigation.
xxiii As noted earlier, though a written contract may not have an exclusivity provision and is thus technically not "an exclusive contract" some groups are nonetheless the de facto exclusive provider in reality.
xxiv Loc.Cit.
xxv 97-5 did note that a hospital investment of too small a size might look to OIG as if "the financial investment required is so small that the investor has little or no risk" and was allowed to invest and receive profit distributions as remuneration for referrals.
xxvi Such a provision was not described among the facts related to OIG for the venture evaluated in Advisory Opinion 97-5.
xxvii When we have seen employment offered to radiologists, it has been where the group had already provided services at a hospital and been offered employment by an affiliate of the hospital under the same system. The proposed arrangement involved an income guarantee for a limited period with a gradual phase-in to compensation tied to productivity.
xxviii Employment "at will" or termination without cause alleviates the employer of any obligation to articulate or prove a reason justifying termination. In such instances, the burden will rest on the discharged employee to prove that the termination violated an anti-discrimination statute or was otherwise illegal. | 
