A San Gabriel Valley-based medical group representing nearly 200 doctors and administrators has filed a lawsuit against City of Hope, claiming that the medical center’s plans to create a nonprofit foundation are illegal.
The Duarte research hospital is proposing to disband the current City of Hope Medical Group and have its doctors work for a nonprofit foundation. The center has a two-year contract with the medical group that expires in January. Negotiations with the group broke down last week.
“The medical group has refused to join this illegal scheme because it will result in the medical center acquiring a degree of control and influence over physician practice,” according to the Los Angeles Superior Court lawsuit filed Monday.
The lawsuit specifically alleges that the foundation is illegal under a state law prohibiting corporate medical practices, which are illegal in California and other states under the theory physicians may be pressured to reduce the quality of care in order to increase profits.
City of Hope, whose cancer research and treatment programs have an international reputation, contends that nonprofit foundation model is comparable to that of other academic medical centers in the state, such as at Cedars-Sinai Medical Center in Los Angeles. Doctors who opt not to join the foundation will continue to have privileges to treat patients at City of Hope, it said.
But Dr. Larry Weiss, president of the medical group, contends that the proposed foundation is different from the cited examples because it would only control the doctors and not also related clinical facilities, such as the main outpatient clinic at the hospital or a recently opened clinic in South Pasadena which the medical group owns and operates. If the clinics were managed by the foundation, doctors would not object to being part of it, he said.
Weiss also noted that if the hospital, rather than the foundation, owned the clinics, it would be able to bill Medicare at higher rates. “It’s about the money,” he said, referring to what the doctors believe is the hospital’s rationale for keeping the facilities out of the foundation.
Hospital executives acknowledge that an integrated foundation arrangement, which they call more efficient, will enable City of Hope to better adapt to changes in reimbursement policies once federal health care reform is implemented.
“Integrated organizations are going to be preferred,” said Chief Executive Michael Friedman, insisting that the foundation is still a draft and there is room for negotiation on what the new entity would govern.
“I think this comes down to two different visions of what kind of medical practice individual doctors would like,” Friedman said. “They are both perfectly valid and good. There are some doctors who don’t like any foundation because they want to be independent … but there are others who appreciate this new vision and want to be part of it.”
