Non-Teaching Hospitals - Your future contractual arrangements

Overview

You may shortly be receiving a proposed draft contract from the Public Non Teaching Hospitals at which you have appointments seeking your agreement to a new contract for providing services to public patients. This follows on from the Government's interim general increase in fees of approximately 1.5% from 01/12/00.

The proposed contract has been developed by the State Government having regard for the Trade Practices Act, hence it is not a negotiated contract between the Government and the AMA. The Government has however consulted the AMA which has provided extensive advice on the AMA's concerns and comment on the Government's various proposals. These have been taken into account to varying degrees in determining their final position on a draft template contract for negotiation with individual medical practitioners.

A separate Memorandum of Understanding on non competition issues providing for Medical Advisory Committees, Clinical Privileges Advisory Committees and processes to review applications and clinical conduct is being entered into between the AMA and the Minister. This is an extremely important outcome providing a sound basis for medical input into the management of all non tertiary hospitals and clinical review/dispute processes. Given problems elsewhere in the health industry, the significance of this should not be underestimated.

In the future your arrangements with a NTH may be based on 3 documents:

• Contract - Medical Services Agreement - for Contract
• Clinical Privileges Conditions - for nominated medical practitioners
• The AMA/Minister's Memorandum of Understanding

It is recommended that your contract import the terms of the Memorandum of Understanding.

The draft contract that will be offered is likely to include:

• An average 3.5% increase in pre 2000 rates (some higher, some lower) incorporating the 1.5% increase.
• Specific increases for:
  • GP after hours attendances - Prior to midnight : Level A & B - increased by 14% and 10.5%. After midnight : Level B, C & D - increased by 33%, 16% & 17% respectively.
  • Anaesthetics - Base unit rate increased to $21.00/unit and CA070 redefined as a call back for emergency anaesthesia services which may, where applicable, be charged in association with CA010. After hours loadings have not presently been accepted.
  • Obstetrics - Complicated Delivery item introduced.
  • No reductions - some items which were reduced in the CMBS have been frozen for 12 months - thereafter uncertain.
• Provision for negotiation for remuneration for specified services.
• Indexation:
  • Annual Adjustment - presently by a minimum of the CPI (minus GST effect), with a commitment to develop an appropriate medical cost index to replace it.
  • Provision is also made for a review in May, the Department advising it may reflect changes in CMBS relativities within groups and CMBS item changes within its schedule.
• Rural
  • Attraction/Retention Incentive Loadings : Based on the category of the town recognising the requirements normally expected of a medical practitioner residing and practising in a regional, remote or rural area.
    
    This is an extremely important development providing much needed support and recognition for rural general and specialist practices. Until very recently, loadings were only going to be available for medical practitioners electing to restructure their method of remuneration from fee for service to a fee for service/fixed payment mix. Following submissions, the Health Department reconsidered its position and has determined to offer the loading independent of the doctors choice of remuneration mix.
    
    Percentage loadings vary from 4% to 20% according to the Departments categorisation of the particular town (see attached document. The categories were determined by the Department in consultation with the Rural Doctors Association). The applicable percentage is then applied to the medical practitioner's public hospital earnings for the previous financial year (if not applicable individual negotiations need to occur) to establish the amount payable. A review process is provided for under the proposed contract.
    
    The loadings are however intended to only apply to services provided in the town in which the medical practitioner resides (specific negotiations may be required if a non resident visiting service is provided to other towns).
    
    
  • Choice of Remuneration Mix - FFS or FFS + Fixed

The Government has decided to offer rural practitioners the choice of electing either pure fee for service (100% FFS) or a mixture of regular payments based on a percentage of the previous financial years public patient earnings and fee for service (at 75, 70, 65 or 60%). The percentage chosen will apply to all clinical services.

If a fixed payment component is elected, the amount of that payment will not change unless there is a 20% change in the public workload and subject to a joint review. The AMA has been advised by the Government that these proposals may be attractive to doctors expecting an increase in privately insured patients being treated as private patients with economic benefits to both the doctor and public hospitals. They have also advised that it is quite legitimate provided patients election is respected. The Department has advised that it has informed the Commonwealth and they have not raised any major concerns. Where specialist services are to be provided on a private basis, a proper referral also needs to exist.

Doctors contemplating a hybrid remuneration arrangement should ensure that patients have the option to elect private or public treatment and that it is acceptable to the Health Insurance Commission.

It is understood the hybrid arrangement is not being provided in Metropolitan Perth.

The Government's revised draft contract reflects the Health Department's desired position as a basis for negotiation between hospitals and individual medical practitioners or partnerships of natural persons (as distinct from a legal partnership comprising a mixture of individual medical practitioners and other members practising through incorporated entities - there is a view that such hybrid structures cannot negotiate collectively due to the effect of the Trade Practices Act).

Trade Practices Act Considerations

Doctors should be aware that the Trade Practices Act prevents the AMA (WA) negotiating contracts for individuals deemed to be in competition with one another. It also contains a range of potential penalties which could be applied to private independent medical practitioners who operate through different legal entities seeking to negotiate on a collective basis on price, implement a boycott or take action which can have the effect or likely effect of reducing competition etc.

In simple terms, doctors should ensure that they determine their position independently of other medical practitioners unless they are in a properly legally drawn partnership which does not include a mixture of "natural persons" and individual practitioners, medical practice companies.

Members should not hesitate to either contact the Association or their individual legal advisors if they have any questions in relation to the potential application of the Trade Practices Act.

Form and Detail of Contracts Changed

The form and terms of the proposed contract are very different from the previous arrangements. The parties to the proposed contract are the hospital board of management and the independent medical practitioner ("Contractor").

The rights and obligations of the Contractor apply to any medical practitioner nominated under the Contract by the Contractor to perform services on his/her behalf ("Nominated Medical Practitioner").

The proposal also includes a Clinical Privileges Conditions Agreement with the contractors Nominated Medical Practitioner (eg Locums, subcontractors or employees).

The Department has advised that in many instances they would expect the contractor and the nominated medical practitioner to be the same person but still subject to the two documents to reflect the different status and rights and obligations applying. In other instances there would be a contractor and a number of nominated medical practitioners providing services on behalf of the contractor for whom the contractor is responsible. Implications from this structure in terms of liability, indemnity, superannuation and security for nominated medical practitioners etc are significant. The rights of nominated medical practitioners will be subservient to the hospital/contractor relationship under that structure.

Doctors should carefully consider the pros and cons of the contractor/multiple nominated medical practitioner arrangement versus being an individual contractor/sub contractor. The contractor and nominated medical practitioner will need to consider entering into appropriate contractual arrangements with each other.

Superannuation

The draft contract has been structured by the Department to confirm it is a contract for services rather than a contract of employment i.e. as an independent contractor, hence the Health Department intends superannuation will not apply to payments by the hospital to the contractor. Some doctors have been allocated SGC payments in accounts with the State Superannuation Board and will need to take into account the change proposed under the draft contract, their response and determine any counter proposals they put forward. Contractors also need to take into account that they may be liable for superannuation payments to medical practitioners who deliver services on their behalf and seek appropriate advice.

Draft Contract - An Analytical Approach

Clinicians are advised to ensure that they thoroughly consider what is being proposed and if necessary seek advice to determine if it meets their particular needs or requires change.

As previously advised in Medicus, the AMA has had substantial concerns with aspects of drafts forwarded to the AMA for comment. Such concerns are well illustrated by Government's proposals providing that:

• the hospital have the right to unilaterally withhold moneys payable, suspend or vary the terms and conditions of engagement, and;
• unilaterally terminate any contract with the medical practitioner concerned having no recourse.

Whilst the Department at one stage accepted the concerns expressed by the AMA and deleted these proposals, they subsequently reappeared and whilst modified, need careful evaluation.

The contract offered to you may contain provisions which allows the hospital to unilaterally terminate the contract. PLEASE CHECK YOUR CONTRACT CAREFULLY.

You should ensure that there is certainty, security and protections to deal with the various situations that may arise, either in terms of a breakdown in relationships between Management and individual practitioners or other circumstances where recourse to the contract will determine the respective rights and obligations of the parties. Eg : After Hours arrangements.

Make sure you are happy with details of any proposed contract. A Checklist to assist you is provided hereunder.

Checklist

• Duration Security in term/renewal
• Certainty of access to facilities eg theatre, beds
• Rights
• Obligations
• Potential liabilities eg insurance, indemnity
• Complexity of contract
• Cost of compliance eg contract, legal advice, billing
• Dispute resolution process
• Scope of contract - does it cover the issues; - what's not in it
• What does the contract provide you with How have the rates applicable to you been changed
• Does the contract adequately remunerate you for clinical services in hours
• Does the contract adequately maintain your independence and remunerate you for clinical services after hours (availability)
• Does the contract appropriately remunerate you for committee work
• Does the contract adequately remunerate you for travel costs
• Does the contract adequately remunerate you for telephone costs
• Does the contract adequately cover the cost of superannuation
• Does the contract provide for appropriate indexation on a regular basis
• Does the contract deal with likely scenarios eg late payments, theatre closures
• Does the contract import the terms of the AMA/Minister's Memorandum of Understanding
• Is the scope and level of the rural loading satisfactory
• Is the remuneration in its totality satisfactory
• Other/Specific issues

AMA/Government Memorandum of Understanding

The AMA has negotiated a Memorandum of Understanding with the Minister and Health Services governing non competition issues covering:

1. Medical advisory committees
2. Clinical privileges advisory committees
3. Clinical conduct / peer review standards

The Association has striven to maximise medical input into the management of hospitals and peer review mechanisms for protecting standards of patient care, dealing with clinical conduct issues and ensuring due process and principles of natural justice apply.

To assist this process, the AMA has secured the Department's broad agreement to ensure indemnification of medical practitioners serving on committees is appropriately addressed.

Importantly, the MOU has a presumption that Hospital Boards should try to attract and retain qualified medical practitioners appropriate to the medical disciplines supported at the health care facility practicing within the community.

The MAC for example, has the role of informing and advising the Hospital Board on medical policies, medical workforce issues, medical requirements of the health care facility, the efficient and equitable use by medical practitioners of health care facilities, subject to TPA and conflict of interest concerns, liaising with medical practitioners and contributing to quality improvement and other activities aimed at better patient care and better use of resources.

The Board is required to provide adequate information to the MAC to enable them to function and take into account their advice.

Provision is also made for the Chairman of the MAC to participate in Hospital Executive Meetings.

In the event that the MAC has not been listened to and an issue is unable to be resolved, the matter can be pursued with the the Board Chairman, the Commissioner and if necessary the Minister. These mechanisms should address concerns that have been raised in debates elsewhere in the health system about the lack of medical input.

The MAC is therefore a pivotal body in ensuring input into the management of the hospital and addressing clinician concerns.

The AMA encourages all doctors to become involved in their local hospital and seek to ensure that it takes into account medical advice, meets the community's needs and appropriately supports patient services.

Conclusion

The AMA has made extensive submissions and lobbied to influence Government in regard to the content of the proposed contract. The Government has had substantial regard to the AMA submissions relative to its initial proposals. As the AMA has not been able to negotiate and involve doctors in its representations due to the operation of the TPA, the Government's proposals may or may not meet your needs. It is emphasised that it is up to you to decide if the proposals meet your needs or require negotiation.

It is important that all Contractors obtain independent advice from their solicitor, insurers and medical defence organisation to safe guard your rights, review insurances and indemnification issues and determine if the proposed contract meets your individual needs or you may wish to seek to negotiate modifications, substantial changes or a different contract. Contact the AMA (WA) on (08) 9273 3008 if you require assistance in obtaining legal advice.

As the latest draft contract was only provided to the Association on 5th December, additional generic advice regarding the legal aspects of the proposed contracts will be sent to members when it is finalised. It will also be placed on the AMA Website www.amawa.com.au for members to access.

Proposed Increases by Locality