A podcast from JAMS featuring neutrals Christopher Keele, Esq., and Adrienne Publicover, Esq., on disputes within health care systems and how parties can best navigate and mitigate these disputes

In this podcast, JAMS neutrals Christopher Keele, Esq., and Adrienne Publicover, Esq., discuss common types of disputes within health systems and the impact that the pandemic continues to have on disputes. They delve into specific areas where disputes tend to arise, particularly physician employment agreements and whistleblower claims. Their conversation explores the themes that underpin common conflicts within health care systems, including tension between business and clinician interests as well as between health care providers and their respective investors. They also share their thoughts on how the financial pressure brought on by the pandemic has impacted hospital systems and what parties should be thinking about now to get ahead of those disputes.

[00:00:00] Moderator: Welcome to this podcast from JAMS. Today, we're focusing on internal disputes within health care systems. Since the start of the pandemic, we've seen new disputes arise and old ones take on new significance. To walk us through how parties can best navigate and mitigate these disputes, we have two JAMS neutrals with significant health care experience.

Adrienne Publicover in San Francisco and Chris Keele in San Jose, California. So, thank you both for joining us. Chris, can you just first clarify, what do we mean when we talk about health systems? What are they and who are the major players within a system?

[00:00:39] Chris Keele: Health systems, first, there are various definitions and concepts of health systems. Health care think tanks provide some guidance on this and have defined health systems of at least one hospital plus one group of physicians or other professional providers.

I take a more simple and broad view of health systems and simply view it as a business or organization that delivers health care services. The organization has some form of common ownership or other contractual connection. But very simply, it's a business that provides health care.

Major players within health systems include two groups. One is the professional or clinical providers, including physicians, nurses, other clinicians and with that, we have to recognize that patients, the consumer of the health care service, are a major player within health systems. The second sort of core group of a health system is the business and financial management of the business, including employees, officers, directors, various departments, such as HR, finance, legal contracting, and billing and collection, which is sometimes termed as revenue cycle management.

[00:02:06] Moderator: Adrienne, what are some of the most common disputes that arise in a health system?

[00:02:09] Adrienne Publicover: Within the arbitration space, we see a lot of what is commonly referred to as provider payer dispute. It generally involves a hospital or a hospital system suing a health plan for recovery of alleged either nonpayment or underpayment on a group of claims.

Those cases we've had for a while. I think the thing that's changed this past year and a half has been that a lot of the arbitrations now are proceeding virtually over Zoom, even for the foreseeable future. I think that the parties and the council involved in those cases have been really pleased with the virtual model in terms of trying to resolve those disputes.

Then, in the mediation space, we see a lot of employment cases and it's generally hospital employees or physicians. Those can be contractual disputes, wrongful termination, harassment, whistleblower claims.

[00:03:13] Chris Keele: I think Adrienne hit it on the head when she said employment is a big area of disputes. Employment and staffing are a big area. I also think that physician and provider compensation is a big area.

[00:03:28] Moderator: What about new disputes arising since the beginning of the pandemic, like vaccine mandates, for example?

[00:03:34] Adrienne Publicover: So, I haven't seen any lawsuits about vaccine mandates, per se. I think that the issues with the pandemic have created an additional stress on the health care systems, which has the potential to pervade every area of dispute possible and the ADR that comes out of that.

[00:03:59] Moderator: Chris, what kind of effect do you think that the pandemic has had on some of these internal disputes?

[00:04:04] Chris Keele: We can't overstate the significance that the pandemic has had on changes in the health care industry and health care systems. I think we're seeing staffing shortages, obviously, which again implicate employment issues. Vaccine mandates, gosh, what a political football and uncertain area. But I think we're going to see disputes arise internally between employees on the one hand or the groups that represent employees and management on the other hand, concerning vaccine mandates.

Even though, courts have recently struck down the Biden administration requirement for vaccines, I think that we're going to see further court action in that area. Also, we have to recognize that private businesses can still require vaccination and if they do, and I think health care systems will take that step seriously, then we're going to see increased disputes over the mandates.

I also think that with the uptick in private equity investment in, especially in, physician or provider groups, plus an increased activity in mergers and acquisitions and other health care combinations that will also give rise to disputes between the function of the clinician or the professional care on the one hand and the business management on the other.

So, I think that's going to be an area where internal disagreement and non-alignment will increase. The other area that I think we're seeing or will see in terms of internal disputes is with the increased use of telehealth and telemedicine, I think there will be disputes internally over the delivery of health care services using that technology and who controls what internally. I also think it will implicate provider or physician compensation issues.

[00:06:06] Moderator: Can you talk a little bit more about physician employment agreements and the host of potential conflicts they present?

[00:06:12] Chris Keele: Physician employment agreements are an interesting animal, if you will, because physicians are the heart and soul of health systems and the product or service that health systems provide.

There are regulatory restrictions on how physicians and other professional providers can be compensated or what concerns they need to be sensitive to in providing health care. So, for instance, the stark law in a kickback statute, prohibit referrals and sort of a referral based upon personal and financial relationships.

So how do physicians get compensated? They get compensated by basically three things. One is the quantity of care that's provided. Two is the quality of care provided. Three is the type of care provided or the specialty services. It's a complex model to compensate physicians under services, agreements, or employment agreements that take into account various factors in all three of those areas. It constantly changes with the dynamic part of health care.

So, for instance, when the pandemic started in 2020, the volume of patients, the number of patients decreased. With that, there should have been a decrease in physician compensation, but health systems decided that with that they would lose the quality care that the patients needed because physicians would either try to find a different place to provide services or quit altogether.

So, they adjusted the model and had to incorporate that into the compensation system, enhance into the employment agreement process. Specialty groups pose a different problem because they usually operate in mass within a health system and can add a unique value to the systems practice. So, it's like negotiating an agreement with, on a constant basis, a valued system or valued component of the clinical system within the entire organization.

So, physician compensation, physician agreements, add a complexity that is at the heart of the health system. If there is some tension between the business side of things and the clinical side of things, that can portend possible jeopardy to critical parts of the practice and critical parts of the system.

[00:09:20] Moderator: Adrienne, health care whistleblower claims can raise the blood pressure of a lot of folks inside health systems. Have you seen an uptake of those and what kind of issues they give rise to?

[00:09:32] Adrienne Publicover: Yes, there has definitely been an uptick and I think that these types of actions have the potential to strain what is already a taxed system. They are expensive to litigate. They are disruptive to the business practices of the hospital system.

One of the ancillary issues that comes up in these cases is insurance coverage. There are a lot of reasons why the health care systems would want to explore ADR for these types of claims and to ensure that they're engaging neutrals that have that experience on the insurance coverage aspect of it as well.

[00:10:12] Moderator: Chris, can you talk a little bit about the common themes that underlie these conflicts within health systems?

[00:10:18] Chris Keele: There is tension on a micro level between business and management interests on the one hand and clinician professional quality of care interests on the other. The magic of health care systems is how do those interests join and align to one, make money, which is the business interest and continue to allow a smooth productive operation from an organizational standpoint and give quality care on a timely basis, regardless of what that care is.

It could be acute care, or it could be long-term care. It could be medications, it could be emergency care, but it's that merging in a smooth and productive way that's the magic.

What happens is there is always some stakeholder on the business side that will push back against the professional clinician on the other side saying, Oh, no, that's not efficient or, Oh no, you're undermining our ability to recover and recoup reimbursement from health plans and payers, et cetera.

Then on the clinician side, they're going, Oh wait, you're interfering with our ability -- you're impeding our ability to deliver quality care because you only have your business interests in mind. So that's on the micro level. The macro level is when you start getting private equity, SPACs and major investors involved who want immediate quick gains from their investment in health care systems.

But that then undermines the long-term goal of the provider side of building a sound quality practice to provide high quality health care. So, there's that macro tension. So, when I refer to this tension, that's what I'm referring to and we see it. Adrienne, when you referred to the disputes between providers on the one hand and plans and payors on the other concerning either unpaid or underpaid reimbursements, there's a tension there because business management wants one thing (i.e., just settle the darn thing and get as much as you can).

The provider side however goes, Well, wait, it's because of some uncertain term or some disagreement over a term in these contracts, these services agreements, that's giving rise to these disputes. Why can't we resolve that so that we don't keep having to fight each other and really resolve this at the foundational level?

But business management goes and contracting, and revenue cycle folks go, Yeah, just get rid of it. We need to just resolve this and move forward.

[00:13:25] Adrienne Publicover: I would say just from an ADR perspective, I think Chris has keen insights into the internal workings of this. But I think from an ADR perspective, just following up on what Chris just said about the plan versus the hospital, when these cases come into arbitration, sometimes they deal with issues of medical necessity and where I think that the hospital system is in the situation where they feel the plan is second guessing the services that were provided.

Then the other part of those disputes has to deal with exactly what Chris talked about, which are the contract interpretation disputes. When you have arguable ambiguities, how are those ambiguities resolved? Then what does that ultimately mean for the hospital system in terms of the payments?

[00:14:30] Moderator: The hospital systems have been under financial pressure during this pandemic. What kind of impact do you think that's had on dispute resolution?

[00:14:38] Adrienne Publicover: I think it's had a huge impact and twofold. I think we're seeing fewer cases in the arbitration sphere settle, because number one, exactly what you just mentioned. The hospitals have been under incredible financial strain as a result of the pandemic. Number two, with virtual ADR, I think it's easier to, and more efficient and more economical, to actually arbitrate these cases in the new virtual world.

[00:15:11] Moderator: I suppose another question. Chris, just knowing we have these disputes, what can parties do to get ahead of them? To minimize and mitigate them in the future? If they're seeing disputes of the same kind repeat over and over?

[00:15:25] Chris Keele: The thing that systems can do to mitigate the disputes isn't so much how do they minimize the disputes the disputes are going to arise, and this is really a function of their business organization collaborating with the professional or clinical side of things with the guidance of legal compliance, finance, et cetera. So, the disputes will be there. It's what can we do as neutrals to help that?

I think the thing that we can do is to step in when the health systems acknowledge and recognize that there's a problem, that there is a dispute or disagreement, or not necessarily a conflict, but that the interests or objectives are not entirely aligned when they can acknowledge that call on a neutral to come in, to step in and develop with their collaboration, a structure and process to resolve those disputes as quickly and efficiently as possible. I wanted to recommend to our listeners a recent article actually just published in JAMS ADR Insights on December 8th, authored by Richard Burke, who is a JAMS vice president and an executive director of the JAMS Institute. Where Rich sets out sort of in not great detail as Adrienne I've talked about and not the same focus, but what a mediator or arbitrator can do to help structure a process to tackle these disputes.

[00:17:13] Moderator: Adrienne, do you agree that structuring disputes is where neutrals can really have an impact?

[00:17:17] Adrienne Publicover: I think that is absolutely one impact they can have. I think that neutrals can also be used to help strengthen relationships between the hospital systems and the payors. Certainly, through the mediation process, I've been involved in contract negotiations and helping parties see the limitations with their contracts, the ambiguities in the contracts and see where contracts can be improved.

So, I think that the neutrals can play several different roles.

[00:17:49] Moderator: So looking forward, what do you expect to see in this space?

[00:17:52] Adrienne Publicover: Virtual ADR has created a paradigm for the plans and the payers to more efficiently and economically resolve their disputes, which might mean less settlements and more arbitrations.

But I do notice that, even for years to come, no one seems to be in a rush to return to a live arbitration setting. Maybe there'll be hybrid, but virtual will definitely at least play a part in the resolution of some of those disputes.

[00:18:27] Chris Keele: I think that in 2022, we are going to see hopefully the pandemic subside and life, including health care, begin to level out for lack of a better term.

Having said that, I think we're going to see the same issues that we've identified before, internally, employment and staffing. Those issues are going to remain. I think we're going to see health systems suffer the consequences of staffing shortages. I think vaccine mandates are going to continue to be an urgent and pervasive topic internally.

I think that, again, telehealth, telemedicine and the provision of health care services through that mode is here to stay and we're going to see systems deal with the issues that arise out of increased use of telemedicine, including data breach issues and data security issues, who controls and who is responsible, for what part of telemedicine internally, including delivery of health care services, as opposed to maintaining and implementing the technology behind telehealth. I think it's also going to continue to affect the issue of provider compensation.

[00:19:57] Moderator: We'll definitely keep our eye out. I want to thank you, Chris and Adrienne. Thank you so much for a great conversation. I really appreciate it.

[00:20:04] Chris Keele: Its been a pleasure. Thank you.

[00:20:06] Adrienne Publicover: Thank you very much.

[00:20:08] Moderator: You've been listening to a podcast from JAMS, the world's largest private alternative dispute resolution provider. Our guests have been Adrienne Publicover and Chris Keele.

For more information about JAMS solutions for health systems, please visit http://www.jamsadr.com/healthsystems. Thank you for listening to this podcast from JAMS.

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