Texas AG's Action Not Likely To Add MD Bargaining Clout

Physician Compensation Report, Oct, 2001

Texas Attorney General John Cornyn's decision Aug. 30 to let 11 physicians in separate practices negotiate jointly with Blue Cross/Blue Shield of Texas is unlikely to have any impact on the balance of power between managed care and providers in that state.

Cornyn's action, essentially an antitrust exemption under a 1999 state statute that will expire in 2003, was based in part on a finding that Blue Cross's rates in rural Henderson County, Texas, were so low -- they haven't risen in five years -- that they affect physician income and recruiting and therefore the delivery of health care in the long term.

The exemption will not add to physicians' bargaining clout, either in Henderson County or generally in Texas, says Stephen Nesbit, D.O., who has seen the man aged care "wars" there from several perspectives. He is the medical director of a 100,000 member HMO, MethodistCare in Houston, and previously owned two practices and worked in hospital administration.

The statute is a "weak law, just a political statement," Nesbit says. While a stronger law might give physicians a small amount of added clout, he doubts that many of them in the state will form "unions" or bargaining cooperatives under any law.

The law does not force a payer to negotiate with the bargaining group, even after its physician members have gone to the expense of winning the attorney general's approval for the group. And Blue Cross says it will not negotiate with the physicians.

The law also limits the bargaining group to negotiating with specific payers as approved by the attorney general, rather than with any payer the physician members choose. It authorizes joint negotiations only against a payer with a dominant local market share, because the finding -- that good health care in the market area is threatened -- would be possible only against such a payer.

Of course, if the 11 physicians formed a single group, it could negotiate with all payers for them. How ever, the physicians gave no indication that they in tended to merge their practices.

The group approved by Cornyn included five primary care physicians, two ob/gyns, and a general surgeon, orthopedist, ophthalmologist and podiatrist.

Contact Nesbit at (713) 479 4411 or snesbit@methodistcare.com.