City of Hope’s reorganization plan creates rift with doctors group
A bruising turf battle that pits City of Hope National Medical Center against the organization that provides most of its doctors has created a rift at the prestigious cancer treatment and research complex northeast of Los Angeles.
The controversy — centering on a reorganization of hospital operations — has yielded dueling lawsuits, a doctors’ “loss of confidence” vote against chief executive Dr. Michael A. Friedman and public pleas for support to lawmakers and patients.
Los Angeles County Supervisor Michael D. Antonovich warned in a letter to City of Hope that the raging quarrel “has escalated beyond a simple contract negotiation and now threatens the research and patient care upon which so many of us depend.”
Friedman responded that Antonovich’s assertions “simply do not square with the facts.” In a subsequent letter earlier this month, Antonovich adopted a more conciliatory tone, calling on both sides to “step out of the legal arena … and get back to the table to discuss and resolve the issues at hand.” Hospital spokeswoman Brenda Maceo said that the administrator has since met with Supervisors Zev Yaroslavsky and Don Knabe and that both were “very supportive.”
Other medical professionals are watching the dispute at the venerable San Gabriel Valley institution closely as hospitals nationwide prepare for the uncertainties brought on by federal healthcare reform.
The conflict has been simmering for nearly a year and has gained intensity as the doctors’ organization, the City of Hope Medical Group, filed suit and sought public and political support for its opposition to management’s reorganization proposal. It began when City of Hope revealed plans to create a subsidiary, a nonprofit foundation to oversee business matters at its sprawling campus in Duarte.
The reorganization plan met resistance from the medical group, an independent organization that provides 90% of the center’s 184 active physicians under a contract that expires in January. California law bars most hospitals from hiring doctors directly, a safeguard meant to ensure that physicians, not administrators, have final say in medical decisions.
The group accused hospital management of mounting a “power grab” under the guise of reform. Hospital officials denied physicians’ charges that management sought to undermine the doctor-patient relationship.
Each side contends that the other is elevating profits above care. At stake are tens of millions of dollars in annual revenue and the future of City of Hope’s highly regarded medical staff. The medical group, which has worked at the center since 1977, earns about 80% of its $100 million in annual income from patient billings and from teaching, administrative and research services at City of Hope. Much of that is now at risk.
Administrators argue that the doctors’ group has failed to embrace the kinds of efficiencies called for in the federal healthcare overhaul, such as eliminating duplicative billings.
Under the medical center’s plan, “costs would go down and the efficiencies would improve,” said Dr. Alexandra Levine, City of Hope’s chief medical officer. In the revamped organizational chart, Levine runs the new doctors’ group that will hire physicians.
The current medical group charges that the proposal would put too much power in the hands of hospital administrators. Talk about healthcare reform is a smokescreen for what it terms a hostile takeover, the group’s officials say.
“We believe the quality and efficiency of care will suffer as a result of a hospital having too much control,” said Vince Jensen, chief operating officer of the doctors’ group.
Dr. Lawrence Weiss, president of the group, called the hospital’s planned new foundation “a sham.”
But there is some dissension within the doctors’ organization. Three top physicians — the head of the surgery department, the director of the women’s cancer program and the chair of the anesthesiology department — have filed suit against the medical group, alleging that its actions could result in a loss of jobs, grants and research posts. The group denies the charges and says the dissenting doctors “appear to be acting on behalf of management,” said Ryan Rauzon, a spokesman for the doctors’ group.
The reorganization is not the first time City of Hope administrators have been at odds with their doctors. The hospital has long complained that the doctors’ group was diverting patients to its own private licensed clinic in South Pasadena.
The medical group agreed to remove City of Hope’s name from the clinic but suggested that administrators’ real interest in keeping patients on campus was to gain the higher Medicare payments that go to those treated at licensed hospitals.
City of Hope, which is approaching its centennial year, is one of only 40 comprehensive cancer centers recognized by the National Cancer Institute. In 2009, City of Hope, including its research institute, fundraising activities and 217-bed medical center, reported $889 million in total revenues and a net income of $150 million.
In March, City of Hope’s 24-member board unanimously approved creation of the new foundation that is the centerpiece of the reorganization plan. (Among those voting yes was Eddy W. Hartenstein, publisher of the Los Angeles Times.)
City of Hope also decided not to renew the doctors’ group’s contract when it expires next year. Instead, hospital officials say they plan to bring back individual physicians under the umbrella of the group run by Levine, the center’s top medical officer. After the plan was announced, relations between the two sides quickly worsened and both went to court.
In a letter to almost 30,000 City of Hope patients, the doctors’ group warned in April that administrators sought to shift decision-making from physicians to non-physicians.
City of Hope administrators denounced the missive as a “despicable” scare tactic and accused the doctors’ group of “using sick patients as pawns” in a bid to perpetuate a “monopoly” on services. The medical group accused City of Hope of illegally soliciting its members to join the new physicians’ group run by Levine, a charge denied by administrators.
Efforts to craft a legislative solution to the dispute in Sacramento failed, even though both sides retained high-powered political operatives.
At a court hearing Tuesday, Los Angeles County Superior Court Judge Mary Strobel directed both sides to settlement talks next week. A hearing is set for Oct. 13 on the doctors’ group petition for an injunction against the hospital.
Even in the often-acrimonious healthcare business, observers said, the degree of caustic rhetoric swirling around such a prominent institution was unusual.
In the era of healthcare reform, “there’s going to be an attempt by hospitals to develop new entities that allow them to have more flexibility and get control over more federal Medicare money,” said Glenn Melnick, a health finance expert at USC. “I think what’s happening at City of Hope could be a harbinger of things to come.”
