When a Hospital Enters into an Exclusive Provider Contract: Do the Adversely Affected Physicians Have a Right to a Fair Hearing Pursuant to the Hospital’s Bylaws?

It is common practice for both public and private hospitals to enter into exclusive contracts with physicians. As such, the medical staff privileges of physicians currently affiliated with the hospital are sometimes affected adversely by such contracting. Hospital bylaws typically provide a physician the right to a fair hearing if the physician’s medical staff privileges are adversely affected as a result of decisions made by the hospital based on competence of the physician. However, hospital bylaws may not address whether the adversely affected physician is entitled to a fair hearing where the decision to enter into an exclusive contract with another physician or group is a managerial decision, not based on the competence of the adversely affected physician.

In some Florida jurisdictions, the termination of a physician’s medical staff privileges due to the hospital’s entering into an exclusive contract with a group of which physician was not a member, was considered the taking of adverse action against such physician’s staff privileges pursuant to the hospital’s bylaws, thus warranting a fair hearing for termination of such privileges.1

Still, in other Florida jurisdictions, other courts have held that when a physician’s medical staff privileges are terminated completely, and such termination is based on a business decision of the hospital, such termination will not warrant a fair hearing pursuant to the hospital’s bylaws. For example, where a physician was denied renewal of his staff privileges due to the hospital’s entering into an exclusive contract of which physician was not a member, physician was not entitled to a fair hearing as such was a business decision by the hospital that was not based on the physician’s competence. 2

Thus, if a physician’s medical staff privileges at a hospital are adversely affected as a result of a hospital’s managerial decision to enter into an exclusive contract with a physician or a physician group of which physician is not a member, this may or may not, depending on the court, entitle the physician to a fair hearing. Whether the physician will be entitled to a fair hearing will depend upon the language of the hospital’s bylaws, the court and any relevant statutory law. Further, if the adversely affected physician has his or her own contract with the hospital, separate and apart from the hospital’s bylaws, it may contain a provision which dictates whether the physician is entitled to a fair hearing. Accordingly, careful consideration should be taken before making the decision to take any action which adversely affects the privileges of a current medical staff member. Physicians should similarly review the hospital’s bylaws and provisions of any proposed agreement regarding the right to a fair hearing prior to executing any contract, and seek legal counsel if their privileges are adversely affected to determine their rights.