Physician unions are bad for patients, government report says

Physician unions are bad for patients, government report saysAllowing physicians to bargain collectively "will harm consumers financially and is unlikely to result in quality improvements," according to the Department of Justice and the Federal Trade Commission.

The comments were made as part of a 361-page report titled, "Improving Health Care: A Dose of Competition." The report is the culmination of a series of hearings held from February to October of 2003 on various aspects of health care competition, including group purchasing organizations, physician information sharing, and geographic market definition, in addition to physician unionization.

"This report represents almost 2 years of work including 27 days of joint hearings," outgoing FTC chairman Timothy Muris said at a press briefing. "We have seen dramatic increases in health care expenditures in the last 2 years. Unfortunately, all too often [these increases] don't produce improvements in quality of care. Our agencies agree that a dose of competition will help the health care marketplace to provide such care."

The report made six recommendations for improving competition within the health care marketplace. (See box.)

One recommendation urged state and federal government not to enact legislation allowing for physician collective bargaining. Instead, the report suggested, governments should work more vigorously to enforce existing antitrust laws. "The agencies believe that antirust enforcement to prevent the unlawful acquisition or exercise of monopsony power by insurers is a better solution than allowing providers to exercise countervailing power," the authors wrote.

The Union of American Physicians and Dentists, a 5,000-member independent labor union, disagrees. "While for-profit managed care plans conspire to delay and deny access to sophisticated and necessary diagnostic studies and treatment, entrenched pro-big business interests remain adamant that doctors and their patients should not have a level playing field," said UAPD president Dr. Robert Weinmann. "It is obvious that nothing worries the greed-encrusted barons of managed care more than the possibility that doctors will step outside their usual and customary professional associations and become active labor union protagonists."

Dr. Weinmann's advice to other physicians: "They should join their nearest doctors' union as fast as they can write the check."

The American Medical Association also was disappointed with the report. "The AMA is disappointed that the [report] failed to recognize the long-term impact of continued consolidation of the health insurance market on patients and physicians," AMA immediate past president Dr. Donald J. Palmisano said in a statement. "In many markets nationwide, physicians have no negotiating power with dominant insurers over contract terms that have a real impact on patient care. The AMA will continue to oppose health insurer mergers that reduce competition and will continue to seek legislative relief for physicians."

But not all physician unions were as negative on the report. The good news, according to Mark Flaherty, general counsel for Physicians for Responsible Negotiation (PRN), a physician union started by the AMA, is that the report defined "collective bargaining" very narrowly, to refer only to groups of otherwise unaffiliated physicians. "Their discussion doesn't impinge on other forms of collective bargaining like financially integrated groups and clinically integrated groups."

In addition, the report "said something that surprised me," Mr. Flaherty continued. "It said they would consider 'pay for performance' to constitute financial integration. If you're financially integrated, that's all it takes to be affiliated." That policy could embolden more physician groups to try collective bargaining.

PRN has had its own struggles as it tries to attract more union members. Since its inception in 1999, it has signed 42 members, all working at the Wellness Plan, a Detroit-area HMO. PRN also has another 80,000 "sustaining members--people who send us money because they like us to exist," he said.

The union is working on certifying bargaining units at two other health care facilities, one in Illinois and the other in New Jersey.

In May, PRN disaffiliated itself with the AMA and signed an affiliation agreement with the National Doctors Alliance, a unit of the Service Employees International Union. As part of the disaffiliation, the AMA agreed to forgive about $3 million in loans it had made to PRN, Mr. Flaherty said.

Physician unionization was not the only physician-related issue discussed in the report. Another recommendation dealt with financial incentives for providing high-quality health care. "Private payers, government, and providers should experiment further with payment methods for aligning providers' incentives with consumers' interests in lower prices, quality improvements, and innovation," the report said.

Six Recommendations for Improving Competitiveness

The Department of Justice and the Federal Trade Commission offered six recommendations for improving health care competitiveness in their joint report:

1. Private payers, governments, and providers should continue experiments to improve incentives for providers to lower costs and enhance quality, and for consumers to seek lower prices and better quality.

2. States should decrease barriers to entry into provider markets.

3. Governments should reexamine the role of subsidies in health care markets in light of their inefficiencies and the potential to distort competition.

4. Governments should not enact legislation to permit independent physicians to bargain collectively.

5. States should consider the potential costs and benefits of regulating the transparency of pharmacy benefit managers.

6. Governments should reconsider whether current mandates best serve their citizens' health care needs.