FACTS:
You are the administrator of St. Ives Hospital and Clinics, a 150-bed inpatient and outpatient facility wholly owned and operated by St. Ives Healthcare, a not for profit healthcare system operated by the State. You report to the Chief Executive Officer of the hospital. Your medical staff includes both employed physicians of the system, all of whom are employed by means of employment contracts, and private physicians who have privileges to admit patients to the hospitals. Your employed physicians are not unionized. In some specialties, private physicians and some group practices have non-exclusive contracts to provide services in the facility, and also provide services at other facilities in your area as well as in privately owned ambulatory surgical centers.
THE AGING PHYSICIAN SCENARIO:
One day, your chief of medical staff, Dr. Clark, approached you after a meeting and asked for your assistance. "You know Dr. Kirk, in cardiology, don't you?", he asked. You replied that you did. Dr. Kirk is a well-liked older physician who has been with your institution for at least 35 years. He had recently been ill with a chronic joint ailment, and after several surgeries returned to work needing assistance in the form of a wheelchair. It appears that his need will likely be permanent. "Well," Clark continued, "This is the second consecutive quarter that he hasn't met our department productivity goals, even taking into account his sick leave."
As he spoke, you recalled to yourself that Dr. Clark is also a cardiologist with staff privileges. You are also aware that about six months previously, the Ives HealthCare System Executive Management had promulgated an "Incentive Productivity System" with certain goals for providers to meet, in an effort to begin to tie compensation to financial productivity throughout the system.
Dr. Clark continued: " All our bonuses are going to suffer unless he and others like him are removed from the database". You inquired what, exactly, he meant by 'removed from the database'.
Clark replied, "you know , the financial wizards at administration only crunch numbers. We really don't have a choice here unless we all want to suffer. I'm canceling his privileges and credentials here, and I am giving him his termination today. I think it's within my authority to do it. But I think I should have a letter from you approving it."
You returned to your office to ponder what had been asked of you and the situation presented. Later, as you were pondering the issue, Clark came to your office.
“Oh, yes, I think you ought to see these too,” Clark stated. He presented you a list with three names and identifying case numbers on it, on a handwritten note.
“It has been discussed by the OR Nurses and the residents that they have some concerns about Kirk. They think he messed up in a couple of cases. I’ll have the files brought to you, but that should make your decision easier….”.
THE RECRUITED PHYSICIAN SCENARIO:
You are the administrator of the hospital identified above. You are the process of negotiating a contract with a new pediatric surgeon, Dr. Cutter, who will be employed by your hospital Department of pediatric surgery. In the course of negotiation, Dr. Cutter raises to questions about certain provisions of the contract. The contract clauses that he does not fully understand are as follows:
Indemnification: The Physician hereby indemnifies and holds harmless the Hospital and its directors, officers, employees and agents from and against any claim, loss, damage, cost, expense (including reasonable attorneys’ fees) or liability arising out of or related to the actions or conduct of Physician constituting intentional or willful misconduct, gross negligence (other than as covered by any professional liability insurance policy), or violation of any Federal, state, or local statute, law, or regulation relating to the provision of medical or on-call services, health care fraud, abuse, or self referral, or other material aspects of health care delivery, finance or payment, but excluding billing, coding or any other matter over which Hospital exercises control. Said indemnification shall be in addition to any other statutory, regulatory, or common law right of employer.
Dispute Resolution – Negotiation, Mediation and Arbitration: The parties shall in good faith attempt to resolve any controversy, dispute or disagreement arising out of or relating to this Agreement, or the breach thereof, by negotiation. If any such controversy, dispute or disagreement is not resolved within 60 days of notice to the other party of the dispute, that controversy, dispute or disagreement shall be submitted to mediation under the American Health Lawyers Association Alternative Dispute Resolution Service Rules of Procedure for Mediation. If any dispute is not resolved by mediation no later than 60 days following the commencement of mediation, the dispute shall be submitted to arbitration in accordance with the American Health Lawyers Association Alternative Dispute Resolution Service Rules of Procedure for Arbitration.. Mediation and arbitration shall be conducted in Moab, Utah. Each party shall bear one-half of the costs or mediation and/or arbitration. Each party shall bear their own costs for attorneys’ fees, witness costs, and document production costs. The decision rendered by the arbitrator shall be final and binding, and judgment on the award, if any, shall be entered in accordance with applicable law in any court having jurisdiction thereof. The decision of the arbitrator shall be binding on all of the parties to the arbitration, and also on their successors and assigns, including the agents and employees of the Hospital, and all persons whose claim is derived through or on behalf of Physician.
In the course of discussion, Dr. Cutter states to you: "I don't understand why these parts of the contract are there. If I do something that messes up, you just are going to sue me for negligence or fraud or something like that and were going to be tied up with judges and juries forever anyway. Why should I agreed to indemnify you, because if you think I do something wrong year just going to sue me anyway.
After reading these clauses, what would you tell Dr. Cutter? How do these contract terms affect the relationship between the parties in ways that are mutually beneficial, as well as protective to the hospital?