Monday, April 28, 2014

No Good Deed Goes Unpunished: Think through Labor
Implications when Forming Partnerships with Other Providers

Imagine an accountable care arrangement with two main partners – a health system with three hospitals and a large multi-specialty physician group practice.  Before they partnered in this arrangement, the health system relied on hospital-based imaging units for outpatient scans. The physician group practice, however, has three outpatient diagnostic imaging centers. These large, modern, and convenient centers perform a large number of procedures, which tends to both lower cost and improve quality.

The partners agree that the health system will start referring outpatient scans to the practice’s imaging centers – the whole point of accountable care arrangements, after all, is to align providers to deliver the best outcomes for patients in the most efficient ways possible.

Not so fast.

In steps the labor union that represents the workers at the hospital-based imaging units. The union files an unfair labor practice accusing the health system of improperly diverting work away from the collective bargaining unit that represents the imaging workers. Patients continue to go to the hospital-based imaging units, even though they are not as modern or convenient. The accountable care arrangement loses an opportunity to cut costs and improve quality.

Consider Labor Implications Upfront 
This scenario is hypothetical, but with more than 600 Medicare and private accountable care organizations already established across the country, it could happen tomorrow. These arrangements offer great benefits for patients, providers, and payors. They also heighten the risk of certain labor complaints and may offer more opportunities for union activity than organizations realize when they enter into these collaborations.

The executives, consultants, and attorneys who create these collaborations must consider a huge number of issues. They devise strategies to distinguish the organization in the marketplace, build a provider network, model finances, determine governance, set clinical protocols and care processes, and make a myriad of other crucial decisions.

With all that on their plates, it is easy to see how the labor and union implications of the collaboration could be overlooked. Failing to consider these implications, however, could be very costly and disruptive to the operations of an ACO. These implications fall into two broad areas: issues of joint employment status and increased opportunities for union activity.

Who Is Calling the Shots? 
Plaintiffs’ attorneys invariably look for the deepest pockets. Collaborations with other provider organizations expose hospitals and health systems in particular to the risk that they will be considered a joint employer of physicians or other employees of a partner organization in an ACO or other collaborative.

The specific issue is whether one of the partners in the collaboration is making decisions that affect the employment status of individuals directly employed by another organization. The legal question becomes whether an employee with a dispute has joint employment status –- that is, he or she is considered not only an employee of the original hiring organization, but also of one or more of the other organizations in the collaborative -– because of the shared power the partners exercise over employment decisions.

Take for example a physician in a group practice that is a member of an ACO. The physician is underperforming his metrics for outcomes, cost, and use of the ACO’s agreed-upon clinical protocols. Other organizations in the ACO want the physician removed because he is not using the protocols and not meeting performance objectives. All of the partners in this example are sharing the risk that the physician’s behavior will hurt the financial performance of the ACO.

Are the other partners liable if the physician sues the group practice for wrongful termination or discrimination?

The legal agreement for a collaboration should have strong indemnification provisions to limit each partner’s exposure if they are found joint and severally liable in an employment dispute. And, as part of the due diligence leading up to the finalizing of a collaboration, each organization should provide proof or adequate security that it can provide the indemnity. The larger entities, of course, will want to mitigate their “deep pockets” risk.

Moreover, in drafting organizational documents, the partners should ensure adequate separation in the employment decision-making process. That is, the ACO should have no control or decision making authority with respect to employment decisions of each of the member partners.

Opening the Door 
An ACO that has a mix of unionized and non-unionized organizations involves risks for both types of employer.

For non-union entities, forming a collaboration with a unionized partner could increase the risk that unions will gain a foothold in their organizations. Greater coordination of patient care is a central tenet of an accountable care collaborative. Working together to improve care for patients means that workers across the partner organizations have to communicate with one another. Once those communication channels are opened, and then strengthened by day-to-day interaction, they can become conduits for unionized employees to discuss union organizing with non-organized employees.

As illustrated in the example at the start of this article, unionized employers have to take special care to ensure that actions taken to further the aims of the ACO don’t run afoul of collective bargaining agreements, particularly prohibitions on subcontracting and the assignment of bargaining unit work to non-bargaining unit employees.

Both unionized and non-unionized employers have to consider the implications for their organizations if there is a strike or other labor action by workers at one of the ACO partners. Even if employees of the partner organizations aren’t working directly next to each other, they may be in the same buildings or on the same campus. Here are some questions that must be considered:

  • If employees of a unionized hospital strike, do the workers of the hospital’s ACO partners have the right to honor the picket line? 
  • Are employees of different organizations who are connected only through an ACO protected for purposes of “concerted activity,” including union organizing under the National Labor Relations Act? 
  • For non-unionized healthcare providers, do the benefits of partnering with a unionized healthcare provider outweigh the risk of exposing the non-unionized workers to unionized partner employees and union organizers? 

Having plans in place for dealing with these issues before they occur is essential to having an appropriate response to them should they arise.

These potential employment and labor issues should not dissuade executives of hospitals, health systems, physician group practices and other provider organizations from forming accountable care arrangements. These structures hold great promise for changing the way care is delivered for the better. That said, provider organizations must consider these issues and build in safeguards designed to mitigate them, ideally when they are in the process of forming their ACO.

Michael S. Moschel
Bass, Berry & Sims PLC
Nashville, Tennessee

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