Two workforce impacts accountable care organizations and other non-merger collaborations can have on hospitals.
As the healthcare landscape changes, it is also becoming more interconnected. Consolidation, through acquisitions and mergers, has been a constant force that will likely carry into 2014. However, more and more frequently, hospitals and health systems are coming together in collaborative relationships that fall short of a full-fledged merger.
For example, accountable care organizations often bring together physician groups and hospitals, or hospitals with other hospitals, in financial relationships that are not mergers. While these relationships are expected to improve quality and patient outcomes and lower costs, organizations participating in ACOs and similar non-merger collaborations could see unintended labor-related consequences.
Here, Michael Moschel, a labor attorney with Bass, Berry & Sims, shares two workforce impacts ACOs and other collaboration agreements can have on hospitals.
1. Employment interference. This is a challenge for hospitals involved in risk-bearing ACO agreements especially, since there is a strong financial incentive to perform well, and "those incentives could encourage one member of the ACO to [address] underperforming practitioners," Mr. Moschel says. In other words, an outside entity, like a hospital member of the ACO, could put pressure on a physician practice that is also in the ACO to fire an underperforming physician. "Given the strong financial incentive for ACOs to work, I can't imagine there's not going to be pressure put on groups to deal with underperforming doctors."
Though the pressure to do so may be great, hospitals should avoid interfering with other ACO members' employment decisions, as they could face potential liability. The hospital could be sued for interference with contract or face antidiscrimination claims under the theory that the ACO is acting as a "joint employer."
"What happens when an employee gets disgruntled and wants to sue? They look for the deepest pockets," Mr. Moschel explains. In most of ACO arrangements, the organization with the deepest pocket will be the hospital, and this can lead to "substantial money damages," he says.
To protect themselves, hospitals should make sure their contracts with physician groups have good indemnification provisions. They should also have the performance metrics defined on the front end. "If a practice group is agreeing to metrics and someone isn't meeting them, it's a much cleaner way to deal with employee termination [since] everyone agreed on the front end to meet the metrics," says Mr. Moschel.
2. Strained union relationships. ACO involvement can impact a hospital's relationship with any unions representing its employees. For instance, through the ACO, a hospital may transfer work to a new affiliate that has been done at the hospital by a bargaining unit of a union.
For example, an organization in an ACO may have a more efficient billing system and the other members of the ACO want to transfer their billing to that member. However, if an organization had union members doing that work, transferring the billing to an ACO partner would be transferring out bargaining unit work. That can lead to trouble with the hospital-union relationship that can result in unfair labor practice charges, according to Mr. Moschel.
"Be mindful of collective bargaining agreements and make sure ACOs are set up and administered in such a way that you're in full compliance with those agreements," Mr. Moschel urges.
To avoid this issue, hospitals should involve human resources professionals during the ACO planning process — a component many hospitals forget about. "It's seen as a business deal, and [hospitals] forget about including labor relations and HR people," Mr. Moschel says. However, their involvement is of paramount importance, as they can ensure hospitals stay compliant with collective bargaining agreements when forging a new ACO.