As physician specialties continue to evolve, it is inevitable that conflicts will arise among different specialists approaching similar health issues from varying backgrounds. The traditional boundary lines separating specialties have increasingly become blurred. Moreover, the proliferation of physician-owned ancillary ventures is often seen by hospitals as treading on their traditional territory, frequently inducing health systems to strike back with a variety of countermeasures.

While the battle zones have ranged across the spectrum of health care, one frequent zone of conflict has been the hospital radiology department. Historically, the radiology department was physically distinct and involved a limited number of modalities, all clearly diagnostic imaging-oriented. As the payment reforms of the early 1980s drove hospitals to sever their traditional employment relationships with radiologists, the prevailing model was for a hospital to award an exclusive contract to a private radiology group to manage and staff the radiology department. That private group would typically rely solely on third party payors for its clinical revenue, with only administrative functions compensated by the hospital. The hospital achieved stability and accountability and the radiologists in turn were given security and protection from competition. Everyone was happy.

As technology matured, radiology evolved beyond its traditional diagnostic role to include a variety of therapeutic and invasive procedures that placed radiologists in competition with other specialists, particularly cardiologists and vascular surgeons. At the same time, a number of other specialties developed procedures which relied on the use of technology that was generally only available in the radiology department: fluoroscopy, CT and other imaging modalities. Gastroenterologists, neurosurgeons, cardiothoracic surgeons, orthopedists, and invasive cardiologists all wanted access to this advanced technology as well. Exclusive contracts written based on the old assumptions became increasingly obsolete. Simultaneously, the advent of DRGs resulted in a shift away from inpatient care and opened opportunities for freestanding providers of outpatient services.

Many radiologists viewed the incursion of other specialists into their traditional preserve as an economic and professional threat. One reaction was to use their bargaining power to negotiate exclusivity clauses with hospitals that expanded the definition of "radiology" to include all use of imaging equipment. Non-radiologist specialists, whose clout with hospitals is derived from their admission statistics, pushed back. Some hospitals tried, with varying levels of success, to split the difference and allow limited access to radiology facilities and equipment by qualified non-radiologists under certain conditions, and in some cases agreed to reimburse the radiologists for lost revenue.

The more entrepreneurial radiologists recognized that there were rewarding opportunities outside the hospital campus. Taking advantage of broad exceptions for radiologists under the Stark self-referral law, radiology groups began to develop freestanding imaging centers, either alone or as joint ventures with hospitals, commercial entities, or both. As a result, the battle lines over imaging shifted from physician vs. physician to physician vs. hospital. Many hospitals increasingly began to insist on noncompete clauses in their exclusive contracts with radiology groups to prevent them from investing in competing facilities. Facing similar pressure, some hospitals chose the non-adversarial path and elected to participate in freestanding imaging ventures with their contracted radiologists.

Other specialists were quick to enter the ancillary service market, particularly as financing options for costly imaging equipment made the acquisition of such equipment more practical for group practices. Imaging modalities previously available only in hospitals became more common in outpatient settings – cardiologists expanded into CT, MRI and PET, neurology groups bought their own MRI magnets, OB/GYNs added mammography, bone densitometry and ultrasound capabilities, etc. The availability of mobile imaging equipment allowed practices to share units they could not have otherwise afforded on their own.

The federal government’s reaction took the form of the Stark law, which sharply restricted most ancillary joint venture opportunities among unaffiliated practitioners while permitting group practices to offer ancillary services integral to the practices’treatment of their own patients.

Non-radiologists are allowed to participate in imaging by purchasing or leasing imaging equipment and providing the services in either a full-time "centralized building" apart from their medical offices, or in a site located in the "same building" as their offices (which may be shared with others). The 2004 Phase II Stark rule sets forth three alternative ways the "same building" test can be met based on hours of operation, physician presence and historical referral patterns. In each case the group must render some services unrelated to the designated health service at the site.

One notable carve-out under the Stark ban on ancillary joint ventures exempts ambulatory surgery centers. ASCs remain a popular investment opportunity for surgeons and other physicians who perform cases in them, while presenting a competitive threat to hospitals.

The private insurance industry has identified the growth and expansion of imaging technology as a major source of cost increases. Here in Pennsylvania, after the expiration of the Certificate of Need statute in 1996, CT, MRI, PET and other imaging services have increased explosively. The dominant western Pennsylvania insurer, Highmark Blue Cross Blue Shield, reacted in 2005 by contracting with New Jersey-based National Imaging Associates (NIA) to manage imaging services for its health plans, and adopting new credentialing criteria for participation in their managed care network. While some of those criteria are quality oriented, others appear to target medical practices and other independent players who provide less than a full-time, full-service imaging center. One particularly controversial element that may be intended to curtail self-referral prohibits any sharing of imaging equipment among independent practices or entities. Another restricts PET services to hospitals or hospital joint ventures. It is hard to see why some of these rules promote quality services. Although it may be too early to tell, it appears that the credentialing policy may have had unintended consequences by providing incentives to expand, rather than abandon, physician-owned imaging operations in order to qualify.

The latest element added to the imaging cost-control effort is NIA’s implementation earlier this year of a preauthorization process for many imaging procedures. Highmark’s senior vice-president of provider services, Sandra Tomlinson, told Pittsburgh Business Times in 2004 that the various initiatives are expected to result in up to a 25 percent reduction in utilization of imaging services as a result of eliminating duplicative and unnecessary testing.

The incursion by physicians into traditional hospital lines of business (imaging, surgery, laboratory, physical therapy) has been a driving force in the development of so-called "economic credentialing" or "exclusive credentialing" policies. Such policies restrict opportunities for physicians with ties to competing entities, and range from requiring disclosure of such relationships, to foreclosing competing physicians from holding leadership positions, to their most extreme form – denying or terminating such physicians from staff membership. Some economic credentialing policies have been upheld in a few isolated lawsuits but have not been widely tested in court. The Office of Inspector General solicited comments on the validity of such policies in December 2002 but to date has taken no formal action to address their legality.

The Stark Law prohibits physicians from investing in providers of "inpatient and outpatient hospital services" but permits such investment in "whole hospital" ventures. Initially, the concept of a "whole hospital" included separately licensed facilities that limited their services to certain specialties – typically cardiac, orthopedic or surgical. Some such facilities were free-standing, but others were set up as "hospitals within hospitals." Hospital reactions varied: some partnered with physicians as landlords and/or equity partners, but others tried to block these new competitors through political and lobbying efforts as well as by adopting economic credentialing policies. Ultimately, Congress and CMS have taken steps to block the further development of such physician-owned specialty hospitals, and the issue continues to be hotly debated at the policy level.

Finally, the specter of renewed Certificate of Need legislation rears its head periodically. In April, Pennsylvania State Representative Phyllis Mundy introduced a bipartisan bill, H.B. 2618, which would bring back CON, citing a 47 percent increase in the number of MRI units in Pennsylvania from 1999 to 2001. This bill goes further than the old CON program and includes a ban on physicians referring patients to any facility in which they have a financial interest.

Turf battles show no signs of abating. Physicians, hospitals and business entities alike continue to aggressively pursue ancillary revenue streams, and as reimbursement dollars remain limited, conflicts are unavoidable.