III. The Grant or Denial of Privileges

The decision to grant or deny privileges is made, typically, against a backdrop of requirements set forth in Medical Staff and Governing Body Bylaws, accreditation organization pronouncements, state laws, and federal antitrust and immunity statutes. While these requirements may vary somewhat geographically in their specific language and implementation, all of the requirements demand an analysis of the specific experience, training, and demonstrated competency of the physician in question.

Accrediting organizations and professional associations uniformly acknowledge that credentialing decisions must be based on the demonstrated competency and experience of the physician in question. Decisions which are based upon competitive factors, personal biases, or other similar grounds are not consistent with the obligations of hospitals and physicians involved in the peer review process.

The Joint Commission (JC), in its Accreditation Manual for Hospitals (the “Manual”), sets forth the standards that hospitals must meet for accreditation. The introduction to the Manual’s Credentialing, Privileging, and Appointment standards states that the criteria used to determine grants of privileges or medical staff membership must be “designed to help establish an applicant’s background, current competence, and physical and mental ability to discharge patient care responsibilities. Moreover, they are designed to help assure . . . that patients will receive quality care, treatment, and services.” (Emphasis added). The following standards are particularly relevant:

The organized medical staff has a credentialing process that is defined in the medical staff bylaws.

Commentary states that the credentialing process must examine documentation of current licensure, relevant training or experience, and current competence. Ideally, the documentation of current competence should address at least these specifics:

“1. For applicants in fields performing operative and other procedure(s), the types of operative procedures performed as the surgeon of record; the handling of complicated deliveries; or the skill demonstrated in performing invasive procedures, including information on appropriateness and outcomes. In the case of applicants in nonsurgical fields, the types and outcomes of medical conditions managed by the applicant as the responsible physician should be addressed.

2. The applicant’s clinical judgment and technical skills.”

Specific Elements of Performance include:

1. There are credentialing processes . . . that are designed to ensure that patients receive care, treatment, and services from qualified providers.

There is a process for granting, renewing, or revising setting-specific clinical privileges.

Specific Elements of Performance include:

3. Criteria are developed that determine an applicant’s ability to provide patient care, treatment, and services within the scope of privileges requested.

The process for privileges includes the following:

14. Decisions on membership and granting of privileges must consider criteria that are directly related to the quality of health care, treatment, and services. If privileging criteria are used that are unrelated to quality of care, treatment, and services or professional competence, evidence exists that the impact of resulting decisions on the quality of care, treatment, and services is evaluated.

At the time of renewal of privileges, the organized medical staff evaluates individuals for their continued ability to provide quality care, treatment, and services for the privileges requested as defined in the medical staff bylaws.

The Commentary states that the criteria used for renewals must involve the same steps as those for granting initial privileges, with additional consideration given to the practitioner’s demonstrated ability during the practitioner’s tenure at the organization.

Elements of Performance include:

2. There are criteria that pertain to evidence of current competence and ability to perform the privileges requested.

To like effect is Opinion 4.07 of the Opinions of the Council on Ethical and Judicial Affairs of the American Medical Association:

4.07 STAFF PRIVILEGES. The mutual objective of both the governing board and the medical staff is to improve the quality and efficiency of patient care in the hospital. Decisions regarding hospital privileges should be based upon the training, experience and demonstrated competence of candidates, taking into consideration the availability of facilities and the overall medical needs of the community, the hospital and especially patients. Privileges should not be based on numbers of patients admitted to the facility or the economic or insurance status of the patient. Personal friendships, antagonisms, jurisdictional disputes or fear of competition should be disregarded in making these decisions. Physicians who are involved in the granting, denying or termination of hospital privileges have an ethical responsibility to be guided primarily by concern for the welfare and best interests of patients in discharging this responsibility. (Emphasis added).

A further example of this emphasis on experience and credentials, rather than on specialty, is found in a joint statement of the American Academy of Family Physicians and the American College of Obstetricians and Gynecologists. The AAFP-ACOG Joint Statement on Cooperative Practice and Hospital Privileges (the “AAFP-ACOG Statement”) provides in part:

The assignment of hospital privileges is a local responsibility and privileges should be granted on the basis of training, experience and demonstrated current competence. All physicians should be held to the same standards for granting of privileges, regardless of specialty, in order to assure the provision of high-quality patient care. Prearranged, collaborative relationships should be established to ensure ongoing consultations, as well as consultations needed for emergencies. (Emphasis added).

The standard of training should allow any physician who receives training in cognitive or surgical skill to meet the criteria for privileges in that area of practice.

Finally, the ACOG’s own Guidelines for Women’s Health Care state that “[s]tandards for granting privileges should be established by the institution’s governing board and applied uniformly. The standard of training should allow any practitioner, regardless of specialty, to meet the criteria for privileges in a specific area of practice as long as training criteria and experience are documented. Therefore, the credentialing and granting of privileges are local activities that should be based on training, experience, and demonstrated competence.” Additionally, the Guidelines add that “[p]hysicians who are appropriately trained in a technique, have sufficient experience performing it, and have demonstrated current competence should be granted privileges accordingly.” (Second Edition, 2002).

Courts prefer credentialing decisions to be made primarily on the basis of competency and quality of care. The courts have frequently invalidated restrictions on privileges when the restrictions were based upon factors other than the demonstrated capabilities of the physician in question. See, e.g., Desai v. St. Barnabas Medical Center, 510 A.2d 662 (N.J. 1986) (restriction based upon years of practice invalidated); Berman v. Valley Hospital, 510 A.2d 673 (N.J. 1986) (restriction based upon years of practice invalidated); Berman v. Valley Hospital, 510 A.2d 673 (N.J. 1986) (restriction based upon affiliation with another physician invalidated) Armstrong v. Board of Directors of Fayette County General Hospital, 553 S.W.2d 77 (Tenn. Ct. App. 1976) (restriction based upon specialty certification found unreasonable).

In general, courts agree that a credentialing decision can include consideration of whether the physician is board certified. However, only North Carolina seems to have held that board certification can be a mandatory requirement for privileges. See, Cameron v. New Hanover Memorial Hospital, Inc., 293 S.E.2d 901 (N.C. 1982). Interestingly, in reaching this decision, the Cameron court mistakenly relied on an Ohio case, Khan v. Suburban Community Hospital, 340 N.E.2d 398 (Ohio 1976), which found that a hospital’s denial of privileges was not arbitrary and capricious when the physician was unable to meet any of the approved criteria, only one of which was board certification.

While other cases are often cited for the proposition that board certification can be a requirement for privileges or staff membership, these cases do not actually support that proposition. Rather, the courts in these cases have upheld board certification only when alternative qualification criteria, such as residency and other training requirements, are also available. See, e.g., Khan, 340 N.E.2d 398, supra, Sarasota County Public Hospital Board v. Shahawy, 408 So.2d 644 (Fla. Dist. Ct. App. 1981) (stating that criteria not arbitrary and capricious when physician could receive privileges in Cardiac Catheterization Laboratory if: 1) a) board certified by American Board of Cardiology; b) two years of cardiac catheter training and experience; and c) maintains quality and experience levels; or 2) did not fulfill these criteria, but was unusually qualified), Hull v. Board of Comm’rs, 453 So.2d 519 (Fla. Dist. Ct. App. 1984) (finding qualification criteria and eligibility requirement that physicians have completed sufficient residency training to be board eligible in a specialty valid), Smith v. Vallejo General Hospital, 170 Cal. App. 3d 450 (1985) (holding residency training requirement for certain privileges was valid), and Dooley v. Barberton Citizens Hospital, 465 N.E.2d 58 (Ohio 1984) (finding two-year residency requirement for podiatrists was not reasonably related to accepted measures of skill, education and competence). Thus, the general rule is that if an applicant is board certified, they may be considered to have the requisite experience, training, and competency for privileges, but an applicant who is not board certified should still be eligible for privileges if they otherwise demonstrate sufficient experience, training, and competency.

In addition to experience, training, and competency, courts will look to certain other legitimate grounds for making staff privilege decisions, but the reasons still must be related generally to concepts of competency and/or quality of care. See, e.g., Weston v. Carolina Medicorp, Inc., 402 S.E.2d 653 (N.C. App. 1991) (suspension and revocation of privileges upheld for failure to comply with hospital’s policies on patients with HIV); Everhart v. Jefferson Parish Hosp. Dist. No. 2, 757 F.2d 1567 (5th Cir. 1985) (ability to work with others was reasonably related to quality of care and so denial of privileges on that basis did not violate a doctor’s right to substantive due process).

Similarly, when it can be shown that a hospital and/or peer review committee’s denial of privileges used a quality of care argument as a pretext for anticompetitive action, courts are likely to find the action unlawful, in part for antitrust reasons that are discussed infra. See, e.g., Boczar v. Manatee Hospitals & Health Systems, Inc., 993 F.2d 1514 (11th Cir. 1993).

The teaching of these cases is quite clear. Allowing or disallowing privileges for reasons unrelated to the experience, training, and competency of the physician in question is subject to very close judicial scrutiny.

Most states have provisions within their hospital licensure statutes that prohibit hospitals from excluding particular groups of practitioners. For example, certain state laws prohibit exclusion of physicians based on type of medical degree earned (such as M.D. or D.O.) See, e.g., Tex. Occ. Code Ann. § 151.051; Ohio Rev. Code § 3701.351; Fla. Stat. Ann. § 395.0191. Other statutes require that hospitals afford clinical privileges to non-physician practitioners such as nurse midwives. See, e.g., Ohio Rev. Code § 3701.351.

State statutes also may establish standards for the credentialing process. A New York law provides that it is an “improper practice” for a hospital to take an adverse action against a doctor’s staff privileges without providing written reasons that relate to “patient care, patient welfare, the objectives of the institution or the character or competency of the applicant.” N.Y. Public Health Law § 2801-b. New York courts have held that physicians have a cause of action under the statute for improper practices. See, e.g., Lipsztein v. Mount Sinai Hospital, 565 N.Y.S.2d 812 (N.Y. App.Div. 1991).

Similarly, the Federal Statute which provides limited immunity from liability for those participating in peer review decisions does not provide such immunity where the decisions on privileges or credentials are based upon competitive factors or are otherwise made “not in good faith.” This statute, The Healthcare Quality Improvements Act of 1986, as amended, 42 U.S.C. Sections 11101-11152, (the “Act”) provides that those who participate in peer review deliberations and determinations are shielded from liability if they act in good faith. Specifically, the statue immunizes physicians from damages for determinations made in peer review deliberations only where the peer review action was made “in the reasonable belief that the action was in the furtherance of quality health care, . . . and . . . in the reasonable belief that the action was warranted by the facts. . .” 42 U.S.C. Section 11112(a). What constitutes good faith in any particular situation will vary. However, suffice it to say that decisions made on the basis of factors other than demonstrated competency, training, and experience will be subject to very close scrutiny.

Also of interest are the Conditions for Participation in the Medicare Program. These Conditions are codified in regulations at 42 C.F.R. 482.12 and provide as follows:

The hospital must have an effective governing body legally responsible for the conduct of the hospital for the conduct of the hospital as an institution . . . .

(a) Standard: Medical Staff. The governing body must:

(6) Ensure the criteria for selection are individual character, competence, training, experience, and judgment; and

(7) Ensure that under no circumstances is the accordance of staff membership or professional privileges in the hospital dependent solely upon certification, fellowship, or membership in a specialty body or society. (Emphasis added).

The Interpretive Guidelines for the State Operations Manual (Appendix A, Revision 1, effective 05-21-04) has recently clarified that this condition allows a hospital to require board certification when considering a physician for membership. However, the hospital may not rely solely on board certification in determining whether to grant membership, but must consider additional factors such as training, character, competence, and judgment. Nonetheless, “if all criteria are met except for board certification, the hospital has the discretion to decide not to select that individual to the medical staff.”

Although the Interpretation only addresses use of board certification to exclude practitioners from the medical staff, it implies that the criteria could also be applied in regard to granting privileges. The Interpretation is clear in stating that the hospital’s rules and criteria for membership or privileges must be applied equally to all practitioners in each category. Therefore, if any non-board certified practitioner is admitted to practice in a professional category, board certification cannot be the only requirement or grounds for denial of membership to other practitioners applying for membership in that same category.

Interestingly, the Interpretive Guideline requires consideration of training, character, competence, and judgment in addition to board certification. Because the 42 C.F.R. 482.12(a)(6) selection criteria are individual character, competence, training, experience, and judgment, it appears that under the Interpretive Guideline, board certification is deemed a substitute for experience or training or competence or all three.

Therefore, although exclusion of non-board certified practitioners from the medical staff no longer disqualifies a hospital from Medicare participation, excluding an experienced practitioner from a professional category, or limiting privileges because he or she is not board certified would still be problematic under the JC hospital accreditation standards, court rulings, and other state and federal statutes, which all place great emphasis on the practitioner’s experience, training, and competence and which uniformly find that an otherwise qualified physician may not be excluded merely because they are not board certified.

Decisions made to deny privileges to family physicians on the basis only of assumed risk, without any support in the medical literature and without any evidence of greater morbidity or mortality, would in our judgment be highly suspect under the principles discussed above.

Additionally, such decisions would put in jeopardy the care of numerous patients in certain areas where access to quality care depends upon family physicians and general practitioners.

As the JC standards, the AMA Opinions, the case law and the statutory law make clear, the central tenet of privileging decisions is that they be made in good faith and be based upon the demonstrated competence of the physician in question. Decisions which do not measure up under either of the just stated standards, and decisions which appear to be based on competitive rather than scientific reasons, will subject the participants to risk of liability.