Atrium Health said Monday it will grant a request from most doctors with Mecklenburg Medical Group to break away and operate independently of the large hospital system, after the employees sued to free themselves of non-compete agreements.
In a civil suit filed Monday in Mecklenburg County Superior Court, 92 physicians at one of Atrium's best-known doctors practices accused the system formerly known as Carolinas HealthCare of monopolistic and anti-competitive behavior. That behavior includes ordering the doctors in most instances to refer patients needing further care to Atrium-owned or managed facilities. The doctors say they want out of Atrium non-compete restrictions so they could practice independently.
"Though purporting to be a non-profit institution, Atrium — with its bloated management bureaucracy — has repeatedly complained and contended that it 'loses' millions of dollars on the MMG physicians each year," the suit says, adding that the Charlotte region's dominant hospital system has refused to release them from their restrictions.
"In sum, Atrium is acting as the exact opposite of the non-profit health care provider that it claims to be."
In a statement, Atrium said it is determining how to address the non-compete restrictions but did not provide additional details. Atrium added that it wants the doctors to stay with the system, and that it was surprised and disappointed by the lawsuit, noting it was in discussions with the doctors as recently as last week.
"Since some of the doctors from Atrium Health’s practice known as Mecklenburg Medical Group came to us last October, we have been talking to them about what a stand-alone practice might look like," Atrium said. "We worked hard to find a solution that would be mutually agreeable to everyone — and most importantly would ensure that our patients continue to get the best care possible."
A spokesman for the doctors said the group could not comment until receiving a formal response to the lawsuit from Atrium.
Charlotte-based Atrium has grown into a health care giant through years of acquisitions, including of hospitals and doctors groups. In February it announced plans to combine with Georgia health care system Navicent. Under a major deal that was scuttled in March over issues of control, Atrium had sought to combined with Chapel Hill's UNC Health Care.
Mecklenburg Medical, which became part of Atrium in 1993, employs 104 doctors in several specialties, including dermatology, pulmonology and sleep medicine. Of those, 92 are suing Atrium and seeking to have the dispute heard in North Carolina Business Court, which handles complex business cases.
Atrium said it will continue to own Mecklenburg Medical following the departure of the doctors. In their suit, the doctors looking to break away have organized themselves under the name Mecklenburg Multi-Specialty Group.
Brian Kersten, one of the doctors Atrium said is staying with Mecklenburg Medical, praised the system in a statement, saying it has given him the opportunity to develop personal relationships with patients and that he’s more confident than ever in the direction Atrium is heading.
Upset over changes
In their suit, the doctors claim Atrium has enacted changes that are harmful to patients. For example, under what Atrium called "care redesign" the system cut the number of assisting registered nurses helping doctors in clinical work, the suit says. Atrium also took all triage nurses out of practice facilities and warehoused them in a single building in Mint Hill, the suit says.
Atrium also did away with a practice of having a staff member in each practice office to answer patient calls, according to the suit. Atrium replaced those positions with a phone center in Mint Hill, the suit says.
Dr. Dale Owen, a cardiologist spearheading the effort to split away, said in an Observer interview that the move is designed to allow doctors to spend more quality time with patients and provide them with greater value. By getting away from Atrium and its large overhead costs, the doctors expect they'll be able to see patients for more than 15 minutes each, he said.
"That will allow us the opportunity and time to deal with these complex medical issues," Owen said.
For Atrium, it's another legal battle with a group of local doctors.
Last week, a group of Charlotte anesthesiologists, Southeast Anesthesiology Consultants, sued Atrium over a lost contract. Among other concerns, the group has said it lost the contract after refusing to accept an offer from Atrium that would have led to cuts in doctor compensation and Southeast having zero profit margin.
Atrium has said it did not renew the contract because, among other things, the company of which Southeast is an affiliate refused contract provisions that would have ensured patient safety.
Monday's legal action also comes after Atrium last year presented the doctors with proposed new employment agreements with terms that included lower compensation, the suit says. Several of the doctors were told by Atrium that doctors who didn't enter into the new agreements would be terminated for cause, according to the lawsuit.
The new agreements also expanded non-compete agreements banning the doctors from practicing medicine, even as charity work, anywhere within a 15-mile radius of their offices from a year to 18 months in most instances of termination, the suit says. Under the new agreements, that range was broadened to 30 miles, according to the suit.
In its employment agreements, Atrium explicitly mandates Mecklenburg Medical doctors, with limited exception, refer every patient in need of hospitalization, diagnosis or treatment to an Atrium-owned, -operated or -managed facility, Monday's lawsuit says.
That requirement restricts doctors from considering costs to patients when making such referrals, the suit says, noting that Atrium's market power allows it to demand insurance reimbursement rates as much as 150 percent higher than for the same services at other Charlotte-area hospitals.
Owen, the cardiologist, said Mecklenburg Medical will continue to serve patients while the suit works its way through court.
"We're going to continue to do our jobs and abide by our contract with the health care system, and we will continue to see patients as we are doing currently with the same excellent level of care that we provide," he said.
Atrium said it employs more than 1,900 physicians and that it intends to continue caring for its patients at all locations. It also noted it provides fair, nationally competitive compensation for all its physicians.
"As health care continues to change nationally and locally, it is my belief that there is no better place than Atrium Health to practice medicine and for patients to receive care," Dr. Al Hudson, Atrium primary care senior medical director, said in a statement.
"I’m excited about and confident in the direction we are going. The organization, through delegated authority to physician leaders, will continue to carry out its mission of highest quality health care for all members of our community.”
Bucking a trend
The push by the doctors to break off bucks a nationwide trend of physician practices combining with hospital systems, said Barak Richman, a Duke Law School professor specializing in health care policy.
"As a general matter, health policy experts have been quite concerned with that trend, as it seems to cement hospital monopolies and thereby increase the cost of care," Richman. He said the divorce might be a good thing for consumers.
"There is a growing recognition that if physicians are independent from hospitals, they are more likely to direct their patients to lower-cost and higher-value care," he said.
"Hospital-physician integrations have not yielded many of the efficiencies their leaders have promised, and instead they have tended to increase health care spending and health care prices."