Termination of Hospital Medical Staff Privileges for Economic Reasons: An Appeal for Consistency

The relationship between physicians and hospitals is undergoing significant change. Historically, a physician maintained a private practice in the community and looked to the local hospital for ancillary support when his or her patients were too ill to remain at home. This community-based physician gained access to the hospital by obtaining medical staff privileges. These privileges allowed the physician to admit patients to the hospital, treat patients while they were there, and use the hospital\u27s staff and equipment. The physician generally enjoyed the use of the privileges throughout his or her active career, losing them only if found incompetent. Today, not all physicians maintain a community-based practice. Instead, many are employed by hospitals to staff various departments. Others enter into exclusive contracts, either individually or as part of a practice group, to provide certain services for hospitals. Although these “hospital-based” physicians have a different economic relationship with the hospital than traditional community-based physicians, they usually have similar medical staff privileges. Unlike community-based physicians, however, they may not enjoy the use of their privileges throughout their active careers. Instead, these physicians face the actual or constructive termination of their privileges whenever their contractual relationship with the hospital changes. Physicians who lose or cannot use their privileges for this reason are suing hospitals with increasing frequency. The case law, however, has failed for the most part to articulate the legal principles that govern these controversies. This Article analyzes those cases arising from the loss of medical staff privileges in private hospitals due to changes in the contractual relationship between the hospital and the physician. It does not include cases arising from the loss of privileges for incompetence or other disciplinary reasons or cases decided on antitrust grounds. The Article identifies four kinds of economic relationships between hospitals and physicians. Using these classifications, the Article compares a recent case from Maine, Bartley v. Eastern Maine Medical Center, and its precedents, with recent conflicting authority from Tennessee, Lewisburg Community Hospital v. Alfredson