Atrium Health’s largest physician group sues for independence after “unreasonable” contract

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More cracks are forming in Atrium Health’s relationships with the doctors under the dominant hospital system’s umbrella.

Nearly every doctor with Mecklenburg Medical Group, one of the largest physician practices in Charlotte, is now suing Atrium Health to leave the organization and operate independently, the group announced Monday.

One sticking point: noncompete agreements in the doctors’ contracts.

The legal action comes as Atrium, formerly known as Carolinas Healthcare System, deals with departures on numerous fronts.

The Agenda reported in March that pediatricians across south Charlotte were declining to renew their contracts, instead opting to form new practices, after a proposed pay cut. Atrium is also in a contract dispute with Southeast Anesthesiology that is playing out in the public.

Atrium Health said Monday afternon that they were surprised by the lawsuit because negotiations had been ongoing. The hospital group said it will allow Mecklenburg Medical Group to become independent.

What’s this lawsuit about?

Dr. Dale Owen, who is leading the physician group in the lawsuit, says the doctors want independence because they’ve been burdened with bureaucratic activities and able to spend less one-on-one time with patients.

Among the changes Atrium made that affected patient care, as alleged in the lawsuit:

  • Cuts to the number of registered nurses assigned to each doctor.
  • Triage nurses removed from clinics and moved to a single facility in Mint Hill.
  • Replacing receptionists in clinics with a call center in Mint Hill.

“It is becoming more and more difficult to deal with complex medical issues when so much more of time is taken up by other matters,” Owen told the Agenda.

Dr. Dale Owen

But it’s also about contracts.

The bulk of the lawsuit deals with new employment contracts Atrium pushed the Mecklenburg Medical Group doctors to sign last year.

The relationship between physician groups and Atrium are generally governed by annual contracts that automatically renew unless doctors opt out. Physicians under the Atrium umbrella get more financial certainty and administrative support, but they also give up autonomy in staffing decisions and general processes.

In the lawsuit, the doctors’ group claims that new employment contracts supposed to go into effect for 2018 dictated “unreasonable” terms.

For example, doctors would not be able to practice medicine within 30 miles of their current location for at least a year under the new non-compete agreement, twice as large a radius as the previous agreement. Meanwhile, overall compensation went down, the suit states.

Atrium Health also proposed splitting apart Mecklenburg Medical Group as part of a new contract, the lawsuit states. The hospital system would have taken specialists out of Mecklenburg Medical Group and merged them into other parts of the system.

All this, combined with Atrium’s dominant market share of the Charlotte area’s healthcare, amounts to “anti-competitive practices,” the doctors say.

In a statement, Atrium Health said it would grant Mecklenburg Medical Group its independence and was evaluating an “appropriate” way to deal with the noncompete provisions.

Is this the same as what’s happening with the pediatricians?

Yes and no.

Both the Mecklenburg Medical Group lawsuit and the departures of numerous south Charlotte pediatricians are tied to new employment agreements sent out by Atrium Health for 2018.

The pediatrician dispute appears to be more focused on overall compensation. Atrium Health acknowledged that they wanted to make pay more equitable across its network, resulting in pay cuts for some pediatricians.

While compensation appears to play a role in the Mecklenburg Medical Group’s desire for independence, this dispute appears farther reaching — at least publicly.

Mecklenburg Medical Group is the largest group of doctors, most of them primary-care physicians, in Atrium Health’s network. They were founded in 1936 and became affiliated with Carolinas HealthCare System in 1993.

Today they have 10 locations across south and suburban Charlotte. The largest two are in SouthPark and Ballantyne.

Since the 1990s, hospital groups like Atrium Health have grown rapidly through acquiring physician clinics and other hospital groups.

Atrium now has $10 billion in annual revenue and 65,000 employees.

That’s pushed hospital leadership to institute more common practices, efficiencies and shared resources across the network. Some doctors have complained about rigid guidelines for how patient visits should be conducted, and an emphasis on star-based reviews.

Mecklenburg Medical Group has also chafed under the changes to support staffing, like the reduction in registered nurses per doctor.

“I think it’s become a more corporate atmosphere,” Dr. Owen said.

What happens to Mecklenburg Medical Group patients in the meantime?

Ninety-two of Mecklenburg Medical Group’s 104 doctors are a part of the suit. Dr. Owen said that patients should not notice a difference as litigation progresses.

The doctors are still technically under contract with Atrium Health, and schedules and appointments should not change.

“We will certainly honor our contracts and provide the same level of care,” Owen said. “It should be seamless to the patient.”

The lawsuit seeks to prevent Atrium from firing the doctors during litigation. You can read the lawsuit here.

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Andrew Dunn
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