In Atrium Health contract fight, doctors go on the offensive

Charlotte-area anesthesiologists are in a fight with Atrium Health over the lost of a large contract covering many area hospitals. The group has launched a website that makes its case for staying on.
Charlotte-area anesthesiologists are in a fight with Atrium Health over the lost of a large contract covering many area hospitals. The group has launched a website that makes its case for staying on.

A rare public dispute between a hospital system and one of its vendors continues to heat up in Charlotte.

Atrium Health, formerly known as Carolinas HealthCare System, sparked the battle this year when it didn’t renew a long-running contract with Southeast Anesthesiology Consultants, replacing it with another vendor. In explaining the split, Atrium has said Southeast wasn’t willing to lower costs to Atrium’s satisfaction.

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This weekend, Southeast hit back with an ad campaign and new website that says Atrium’s move will “seriously jeopardize patient safety,” and that the system’s motive is to increase profits but not necessarily lower patient bills. Southeast, which is based in Charlotte and serves most of Atrium’s area hospitals, also alleges the system intends to adopt a radically different anesthesiology model with greater reliance on nurse anesthetists.

“Conglomerate hospital behemoths like Carolinas HealthCare System – now Atrium Health – can have unhealthy consequences for patients and their communities,” the website,, says. “Don’t go to sleep on radical changes in anesthesia care,” it warns patients, warning: “Anesthesiologists are being cut out of surgery.”

Charlotte-based Atrium and the doctor who was awarded the new anesthesiology contract with the hospital system strongly deny such claims.

Dr. Thomas Wherry says doctor staffing won’t decrease when his Charlotte-based company, Scope Anesthesia of North Carolina, takes over July 1.

“The narrative that’s being spread that we’re reducing physicians ... is absolutely false,” Wherry told the Observer. “There will be no material reduction of physicians.”

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Wherry said he is committed to an industry best practice of one anesthesiologist being responsible for no more than four patients at a time, and that Atrium has the same expectations: “It’s actually very clear that we’re not to exceed one-to-four,” he said.

At the heart of the debate is a large contract to provide anesthesiologists at Atrium’s Charlotte-area hospitals: Cleveland, Mercy, Lincoln, Kings Mountain, Pineville, Union – and its flagship location in Dilworth that handles many trauma patients. Wherry and Atrium declined to disclose the contract’s terms.

Consultant lands deal

Since losing a deal it says it’s had for 37 years, Southeast has warned local doctors that Scope might be planning to slash anesthesiologist numbers throughout hospitals. In making such claims, Southeast has pointed to advice Wherry gave in August as a consultant to Atrium. In that presentation, Wherry noted among other things that no state requires nurse anesthetists to be supervised by anesthesiologists.

“That was for discussion purposes and education only and not the basis of any plan moving forward,” Wherry said. “Mednax is taking it out of context to confuse the situation,” he said, referring to the publicly traded Florida company of which Southeast is an affiliate.

Wherry emphasized benefits he said his business model will bring to Charlotte. He said Scope will pay its doctors the same or more than Southeast’s doctors. He also noted that privately run Scope will be able to provide services at lower costs because of less overhead than Mednax.

“I can say with confidence the revenue, instead of going to Florida and to Wall Street, it’s going to stay here in Charlotte for patient care and for support of the community,” said Wherry, who moved from Maryland to Charlotte this year to launch Scope.

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But Southeast says it’s concerned anesthesiologists could be supervising nurse anesthetists in operating rooms at significantly higher ratios than Southeast’s model of one anesthesiologist to no more than four nurses. At some Atrium sites, nurse anesthetists could be performing procedures without an anesthesiologist present, Southeast says.

“Atrium’s proposal could jeopardize patient care and safety during surgeries and other high-risk scenarios when the training, experience and expertise of highly trained, board-certified anesthesiologists are needed most,” Southeast’s new website claims.

Atrium dropped Southeast because it was “philosophically out of sync” with Atrium’s efforts to lower costs for patients while improving quality of care – a shift other health care providers across the U.S. are under pressure to make, said Dr. Brent Matthews, chair of Atrium’s surgery department.

“If you look at just costs, which is a major component of this, that was out of balance in the direction that we needed to go to, to deliver value-based care,” Matthews said.

It’s not the first Atrium contract Mednax has lost, Matthews said. In 2014, Atrium did not choose the provider to continue services at its University hospital.

Southeast is part of Mednax subsidiary American Anesthesiology, which acquired Southeast in 2010.

Atrium put Mednax on notice last year and shared its concerns as well as proposed changes with the company, Atrium Chief Operating Officer Ken Haynes told the Observer. Atrium then tried working with the company to address the issues but the companies didn’t reach an agreement, resulting in the contract not being renewed, Haynes said.

Scope will not be providing anesthesiologists for all Charlotte-area Atrium hospitals.

Northeast Anesthesia Pain Specialists, which is based in Concord, still serves Atrium’s NorthEast and University hospitals, and several surgery centers, Haynes said. The system has no plans to end that relationship, the chief operating officer said.

Atrium also said Albemarle Anesthesia still serves its Stanly hospital in Albemarle.

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Wherry, who completed an anesthesiology residency at Johns Hopkins Hospital, said he’s recruiting doctors in Charlotte as well as outside North Carolina for his new company.

What's next for doctors?

One question that remains unanswered is where doctors employed by Southeast will now work.

Atrium has said it would like the doctors to continue working in its facilities, but both Atrium and Southeast have acknowledged non-compete agreements stand in the way. According to its website, Southeast has 90 anesthesiologists.

Wherry said he would hire Southeast’s doctors if the non-compete restrictions didn’t exist. He said he won’t impose non-compete agreements on any doctors he hires.

“The real story is these onerous non-competes,” Wherry said. “It’s unfortunate that the physicians who are here, and this is their home and has been their home, are impacted.”

Southeast argues it’s not the non-compete clauses that are preventing its doctors from working at Atrium facilities, but rather that Atrium is stripping Southeast’s doctors of their hospital privileges. Southeast’s doctors have worked at Atrium in the past without a contract, Southeast noted. It also pointed out that Atrium uses similar non-compete agreements with other physicians and practices.

Southeast said Atrium hired an outside consultant to create a new anesthesiology model without Southeast's input. The company said it had just begun to examine the model and share its concerns when Atrium abruptly cut off discussions and terminated Southeast's contract.

In a letter Friday to Atrium CEO Gene Woods, Southeast expressed concerns with Wherry’s models. Southeast said if it had accepted Atrium's offer it would have had to slash doctor compensation to the tenth percentile for the region and have zero profit margin.

If Atrium isn't intending to make big changes to its anesthesiology model, why is it replacing Southeast, a recognized leader in anesthesiology? Southeast said in a statement to the Observer. The company said it has been highly successful in developing measures designed to decrease costs while simultaneously enhancing patient safety and quality.

"On the other hand, Atrium Health has a dubious record on achieving affordability in patient care," Southeast said. "The system recently announced a massive effort to cut $300 million from its operating budget, to make care more affordable. More likely: Atrium is slashing costs to increase profits, fund aggressive expansion and cover administrative overhead including million-dollar compensation packages for its senior executives."