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REPORT 30 OF THE BOARD OF TRUSTEES (A-99)
Collective Bargaining as an AMA Advocacy Tool
(Reference Committee I)
EXECUTIVE SUMMARY
The arena in which physicians provide professional services to patients has changed radically in the past two
decades. In the past, individual and small groups of physicians have provided the majority of services to
patients. Now the system is becoming more integrated and consolidated, with many physicians finding
themselves in situations of employment, negotiating contractual terms with, or otherwise in situations with
larger integrated health systems and health maintenance organizations holding the balance of power over
patient care and workplace issues.
The House of Delegates at I-98 called for development of a negotiating unit within organized medicine to help
level the playing field with health care payors. Since that time, many steps have been taken in further
development of AMA’s private sector advocacy strategy and a risk assessment of other possible steps,
including formation of a collective bargaining unit, has been carried out. In the course of this work, a great deal
has been learned about who could use the services of a collective bargaining unit, who cannot, and for what
purposes.
The environment within which AMA’s private sector advocacy activities are pursued are complicated by
existing antitrust law which constrains the nature of what the AMA is allowed to do on behalf of physicians and
the number of physicians for which various advocacy tools can be used. Our current efforts are aimed at
maximizing the use of tools that are currently available to us, removing antitrust constraints in order to expand
the kinds of tools that may be employed, and constantly seeking creative new strategies.
Central to the Board’s discussions has been one key fact. Under current antitrust law, the only way physicians
can bargain collectively, regardless of what the activity is called, is in the context of a formal employment
relationship as defined under the National Labor Relations Act. Unless they are part of an integrated group
practice, self-employed physicians can not bargain collectively with payors, and doing so would be a violation
of antitrust laws that carry potential criminal penalties and treble damages. Given this current reality, the
Board’s work has focused on a two-pronged strategy of aggressively pursuing antitrust relief in order to allow
future collective action with payors, while at the same time pursuing a wide range of currently permissible other
advocacy initiatives on behalf of physicians, including possible mechanisms for collective bargaining for those
physicians who are employees.
This report considers the implications, benefits, and risks of a full continuum of actions, with or without a
collective bargaining unit that can or might be undertaken on behalf of physicians as they deal with the complex
issues of the current health care delivery system. At the conclusion of the report are recommendations for the
steps to be pursued to “level the playing field” for physicians.
REPORT OF THE BOARD OF TRUSTEES
B of T Report 30 - A-99
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Subject:
Collective Bargaining as an AMA Advocacy Tool
Presented by:
Randolph D. Smoak, Jr., MD, Chair
Referred to:
Reference Committee I
(Edmund W. Jones, MD, Chair)
INTRODUCTION
The arena in which physicians provide professional services to patients has changed radically in the past two
decades. As medical practice has evolved from predominantly small practice based to the current more
consolidated practice environment, many physicians are finding themselves in situations where they are part of
larger integrated health systems and health maintenance organizations. The balance of control of patient care
and workplace issues has shifted to representatives of third party payors and institutions who are dictating the
terms and conditions under which medical services are delivered.
Managed care has greatly accelerated the consolidation of the health care industry, and both the corporate and
institutional sectors of the health care market have consolidated much faster than has the professional service
sectors. This has produced a very difficult transition period in which some parts of the industry are highly
consolidated and others are not. Consolidated industries function differently from non-consolidated industries.
The dynamics and the strategies are vastly different. In an industry that is in transition, the consolidated
sectors have distinct advantages over sectors that have not yet consolidated. This is one of the key
reasons that physicians, other health professionals, and patients currently are in a disadvantageous
position in the current health industry.
Many physicians feel frustrated and disenfranchised in today’s environment, and feel a strong need to “level the
playing field”-- that is to restore their ability to deal on an equal footing with the organizations that have an
impact on how they deliver services to their patients and how they are paid for their services. At the 1998
Annual Meeting, the AMA House of Delegates adopted Resolution 258 (A-98), including the following action:
RESOLVED, That our American Medical Association develop a negotiating unit, within organized medicine
and with no affiliation with national trade unions, free of antitrust constraints for all of its members in order to
help level the playing field with health care payors.
Since the adoption of the resolution at A-98, the American Medical Association has proceeded to develop a
variety of activities to level the playing field as called for by the House:
1. The AMA’s private sector advocacy program was substantially intensified by the addition of staff (from six
to fifteen positions) and the development of a number of new initiatives such as the “rapid response teams”
(RRT), as elaborated later in this report.
2. Intensive work was done to identify responses to the House action specifically calling for a negotiating
unit, and a specific proposal was developed for how this could be implemented under current law.
3. Aggressive advocacy efforts have been pursued, in collaboration with federation partners, to ease antitrust
constraints so that further steps may be taken in the future.
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This report sets out those actions and their results as well as the possible next steps. Pursuing the goal of
empowering physicians within the current system is a complex matter involving complicated legal
considerations, significant potential fiscal impact, potential membership issues, and potential implications for
the nature and identity of the AMA as a professional association.
Leveling the playing field and empowering physicians in the service of their patients is the overriding objective
of the AMA’s advocacy program. The ultimate purpose is assuring the highest quality of patient care and fair
treatment of physicians. Since the issues, restrictions, and possible solutions vary substantially depending
upon the EMPLOYMENT STATUS of a physician, this report discusses particular employment
situations and recommendations for action for the specific concerns faced by physicians engaged in that
particular professional activity. Specifically, the issues, circumstances, and advocacy activities related
to SELF-EMPLOYED physicians, EMPLOYED physicians, and RESIDENT physicians are discussed
separately due to the substantial differences in their circumstances and the range of possible solutions
available.
However, the AMA’s activities specifically in support of self-employed physicians, employed physicians, and
resident physicians should be understood in the context of the AMA’s overall private sector advocacy program
and the overall antitrust situation as it currently stands.
AMA’s Private Sector Advocacy Program
Since 1995, the AMA’s Private Sector Advocacy (PSA) Group has been actively assisting physicians and
medical societies in addressing a wide variety of issues related to managed care and the rapidly consolidating
health delivery environment. The AMA’s Private Sector Advocacy (PSA) Group, in collaboration with other
AMA resources, seeks to level the playing field in the marketplace for physicians of all practice modes. The
full scope of AMA resources are combined with partnerships with local, state, and specialty medical societies
to achieve the following objectives:
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Expose and eliminate abusive and unfair contracting provisions and management practices
Strengthen physician negotiating leverage
Identify, respond to, and influence emerging trends and issues
Rapid Response Teams -To date, the PSA Group has responded to requests for assistance from physicians and
medical societies in 31 states regarding 24 private sector issues. The majority of AMA assistance has been
provided through interdisciplinary AMA staff Rapid Response Teams formed to address specific
circumstances. These teams, the AMA’s most visible tactic for advocating on behalf of physicians in the
marketplace, extend the work of the prior Division of Representation. Through an on-site presence, they work
actively with local and state medical societies to advocate for physicians at the “grassroots level” on a variety of
issues ranging from resolution of egregious contract provisions to mandatory hospitalist programs. The
Litigation Center and the Advocacy Resource Center are among the key resources that help support these
efforts.
General Antitrust Considerations - A major factor in the development and implementation of AMA’s
private sector advocacy strategy is the matter of what is and is not allowable under current antitrust
law. Some general background related to current antitrust law as it applies to all physicians is important to
understand. Specific applications of the law to self-employed, employed, and resident physicians were
discussed in a paper prepared by Ed Hirshfeld, who was the AMA Associate General Counsel and Vice
President for Private Sector Advocacy until his death in August, 1998 (see Appendix A).
Because of the importance of understanding the specific meaning of certain terms used in this material, a
glossary is provided in Appendix B. It is strongly recommended that members of the House of Delegates
carefully read Appendix A, and become thoroughly familiar with the proper use of the terminology in
Appendix B, in order to have a fully informed basis for understanding the remainder of this report.
B of T Rep. 30 - A-99 -- page 3
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
Purpose of the antitrust laws: The purpose of the antitrust laws is to promote competition, on the theory
that competition leads to greater choice of products and services, better quality and lower prices for the
consumer. These laws prohibit collective action among independent competitors to fix prices or otherwise
set the terms of dealings. Under antitrust law, physicians who are not in an employment relationship
(e.g. self-employed physicians) are viewed as competitors, and therefore may not agree on the prices they
will charge for their services (see Appendix A, pages 23-25).

Labor exemption from the antitrust laws: Collective bargaining can only take place if there is an exemption
from the antitrust laws. The labor laws provide such an exemption by protecting the legitimate activities of
labor organizations and their members, to engage in collective negotiation over terms and conditions of
employment. To fall within the labor exemption, the conduct must arise out of a labor dispute between an
employer and its employees. In other words, the labor exemption is contingent upon an employment
relationship. Only employees who are not supervisors or managers (“non-supervisory employees”) may
form a collective bargaining unit to negotiate with their employees under the labor laws (see Appendix
A, pages 23-25).

What is a “labor organization”? A “labor organization” is a specific legal term under the National Labor
Relations Act (NLRA). It is not synonymous with “trade union.” A labor organization is defined as any
group certified by (i.e. recognized by and authorized to function under the auspices of) the National Labor
Relations Board (NLRB) in which employees participate for the purpose of dealing with the employer
about the terms and conditions of employment.
Any entity, including a medical society, can be certified as a collective bargaining agent on behalf of the
(non-supervisory) employees of a given employer if it meets that definition. In addition, a group of
non-supervisory employees may form a “labor organization” without affiliating with a traditional labor
union or any other organization. For example, a group of physicians employed by Blue Cross Blue Shield
of Massachusetts formed a collective bargaining unit with no other affiliation, certified by the NLRB.
For the purposes of this discussion, “labor organization” and “collective bargaining unit” are
synonymous (see Appendix B, page 47).

Why is the protection of the labor laws so important? The National Labor Relations Act provides
significant protection for employees beyond the important protections from the antitrust laws. It restricts
the tactics that an employer can use to prevent the formation and operation of a collective bargaining unit
(such as retaliation), and it requires employers to bargain in good faith with a duly-certified collective
bargaining unit. Without this protection, employers can disregard, undermine, or retaliate against the
activities of an employee group that is not legally recognized as a collective bargaining unit. This includes
the ability to fire or demote the organizers.

Key point: The ability to collectively bargain under the NLRA requires an employment relationship.
Non-supervisory employees may engage in collective bargaining with their employer (and no other party)
through a collective bargaining unit certified by the NLRB. The relationship between an independently
practicing physician and a payor is not an employment relationship. Within the context of negotiations
under the National Labor Relations Act, it should be noted that physicians in a collective bargaining unit
would not be allowed to negotiate with health care payors on the terms and conditions under which services
are provided. Negotiations could only take place between physicians and their employers. In the case of
physician employees of an HMO or other health plan, the physicians could negotiate collectively with the
HMO or health plan related to their employment because the HMO or health plan is their employer, not in
the capacity of the HMO or health plan as a payor. In this circumstance, the fact that the HMO or health
plan is a payor is only a coincidental factor.
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SELF-EMPLOYED PHYSICIANS
Circumstances and Issues
The most intense interest in leveling the playing field with payors has been expressed by independently
practicing physicians because in many markets managed care plans have obtained economic leverage over
physicians through their contracting practices. As large employers and payors have captured the market, they
have been able to substantially influence the volume and flow of patients to some physicians and away from
others. Patient volume is directed toward physicians who will accept reductions in payment, accept the
additional administrative burdens of the plan, and cooperate with the health plan in its cost reductions and
utilization controls.
This leverage has enabled health plans to assume substantial control over medical decision making, to drive
down the incomes of many physicians, and to threaten the viability of physician practices that will not
cooperate with them. Many physicians feel powerless to respond to the leverage exerted by health plans,
because the current legal landscape gives more power to the health plan. Federal and state antitrust laws bar
any collective action, such as collective negotiation or boycotts, that would enable self-employed physicians to
change the terms of a contract by collectively refusing to participate. These laws are designed to be
pro-competitive because, by enabling health plans to exert economic leverage over physicians, they
theoretically reduce the cost of health care to the consumer. Physicians acknowledge the need to constrain the
cost of medical care, but they are increasingly alarmed about the extent to which current market imbalance
affects clinical decisions and the quality of patient care.
In response to these market conditions, self-employed physicians are looking toward collective action to
provide them with a counter-weight to the economic leverage of health plans. AMA data estimate that there are
325,000 self-employed physicians in the U.S. engaged in patient care as their primary professional activity.
While some are aware that the antitrust laws bar them from engaging in collective negotiations as independent
physicians, some have a mistaken belief that they can engage in collective bargaining if they join a labor union.
Others are working toward legislative reform, such as the Campbell Bill, that would allow them to engage in
collective bargaining with health plans. They are joining the AMA in lobbying their federal representatives and
senators to advance bills that would modify federal antitrust laws, labor laws, or both to allow collective
bargaining by self-employed physicians.
Applicability of Current Law
Under current law, self-employed physicians in independent practice may not engage in collective
bargaining, because they are considered independent contractors and competitors under the current
antitrust laws (see Appendix A, pages 29 - 34). Any attempt to collectively negotiate will be considered
price fixing by the Department of Justice (DOJ) and Federal Trade Commission (FTC) in violation of the
antitrust laws. This antitrust violation carries with it potential criminal penalties and treble damages.
The fact that a union affiliated with the AFL/CIO holds itself out as representing self-employed physicians does
not change the reality that self-employed physicians cannot legally engage in collective negotiations with
payors. In fact, in 1998, the DOJ brought a complaint against the Federation of Physicians and Dentists (FPD),
an AFL-CIO affiliate, alleging that it engaged in collective negotiations on behalf of a group of self-employed
physicians in Delaware in violation of the antitrust laws.

Can self-employed physicians use the “messenger model” to collectively bargain with health plans? No.
The “messenger model,” which is outlined in the 1996 Department of Justice/Federal Trade Commission
Statements of Enforcement Policy and Analytical Principles Relating to Health Care and Antitrust (“the
Guidelines”), is not a tool for collective negotiation on fees or fee-related issues (see Appendix A, pages 33
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- 34). If it is used to collectively gain fee-related concessions from a health plan or health system, this will
be considered price-fixing under the antitrust laws.
The Guidelines permit the use of the “messenger model” to allow independent physicians to market
themselves as a network to health plans. However, the model requires each physician in the group to act
independently in his or her decision making. The physician cannot discuss contract proposals with other
physicians or share information with them, either directly or indirectly under the messenger model. The
third party messenger can only communicate between the payer and the physicians individually, and accept
offers on behalf of physicians individually. The messenger may not engage in any negotiations.
Note: The DOJ complaint filed against the Federation of Physicians and Dentists involves what the FPD
describes as a “messenger model.” The DOJ alleges that the FPD was not acting merely as a messenger,
but was negotiating collectively in order to force price concessions from Delaware payors in violation of
the antitrust laws.

Can a health plan have such control over a self-employed physician that he/she can be considered a “de
facto” employee? Courts look beyond the label attached to a relationship to determine whether either an
independent contractor or an employment relationship exists (see Appendix A, pages 30 - 33). They look at
a number of criteria to make this decision. The general consensus among attorneys is that although health
plans are exerting more control over physicians practices today, the balance in most cases still tips the
relationship in favor of independent contractor status, particularly because most physicians have contracts
with a number of health plans and do not derive a majority of their non-Medicare income from any given
plan.
If the health care market continues to consolidate and physician practices depend heavily on a single health
plan, the balance may tip so that the independent self-employed physician could be viewed as an employee
for purposes of the labor laws. This concept was tested by Local 56 of the United Food and Commercial
Workers in New Jersey that filed a petition with the National Labor Relations Board asking to be certified
as the exclusive bargaining unit for a group of self-employed physicians in New Jersey who participate in
the Amerihealth HMO physician panel. A full panel of the regional NLRB heard the case in November,
1998 and a decision was made in late May, 1999 finding that physicians who are part of the AmeriHealth
HMO network of health care providers in Cape May County and Atlantic County, New Jersey are
“independent contractors” and not AmeriHealth HMO employees. The AFL-CIO petition seeking
certification as these physicians’ bargaining representatives was dismissed.
Physicians also may gain greater leverage with plans by forming more integrated networks and groups.
Can a self-employed physician join a traditional trade union? Yes, a physician could become a member of
the union. However, the union could not represent the physician in collective bargaining with payors.
AMA Activities in Support of Self-Employed Physicians
As indicated above, under current antitrust law self-employed physicians cannot engage in collective
bargaining with payors. This is because payors are not their employers and collective bargaining may only be
conducted between employees and their employers. This is a fundamental constraint which the whole private
sector advocacy strategy for self-employed physicians must acknowledge. Because of it, the AMA addresses
the needs of self-employed physicians in two major ways: One is to work aggressively to remove the constraint
on collective bargaining, and the other is to do everything possible in the meantime to legally advocate for
self-employed physicians.
To achieve this objective, the AMA has pursued the following initiatives:
Removing Antitrust Constraints:
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
Federal legislative solution through support of the “Quality Health Care Coalition Act of 1999, H.R.
1304 (Campbell Bill)” - The AMA is working closely with the Federation to support legislation
introduced by Rep. Thomas Campbell (R. Cal), a former Stanford Law School professor and former
Director of the Federal Trade Commission Bureau of Competition. The proposed legislation would change
the antitrust laws to allow independent self-employed physicians to collectively negotiate with health
maintenance organizations and other health insurance issuers in the same manner that labor organizations
can bargain under the NLRA. However, the bill prohibits strikes or any other actions that would interfere
with patient care. In addition to aggressively advocating for this bill in Congress, the AMA is pursuing an
extensive grassroots campaign to rally support from physicians across the country.

State legislative activity: The State Action Doctrine: At its February, 1999 meeting, the Board of
Trustees approved model state legislation through which states could provide immunity for certain
collective activities by physicians. This legislation is modeled on the “state action doctrine,” a court
created exemption to the antitrust laws. Under the “state action doctrine” the antitrust laws do not apply to
collective action compelled or approved by a state, which is pursuant to “clearly articulated and
affirmatively expressed state policy.” The activity must be actively supervised by a designated state
agency. The AMA model legislation was distributed to the Federation within two weeks of approval by the
Board of Trustees.
The Texas Medical Association immediately introduced legislation, patterned on the AMA model, in both
the Texas House and Senate. The AMA testified at both the House and Senate hearings on the bill, and the
bill passed out of both committees. The bill was subsequently passed by both the Senate and the House in
late May, and final action by the Governor is imminent. The Pennsylvania Medical Society has drafted
legislation on this model, and Washington, DC and New Jersey are also considering drafting similar
legislation for this session. Georgia is considering such legislation for the 2000 legislative session.

Federal regulatory solution through dialogue with the Federal Trade Commission - Concurrent with
its work at the Congressional level in support of the Campbell bill, the AMA has ongoing discussions with
the Federal Trade Commission to push for revisions in the FTC/DOJ 1996 “Statements of Enforcement
Policy and Analytical Principles Relating to Health Care and Antitrust” permitting additional collective
action by physicians within the current laws. In particular, the AMA is seeking changes in FTC policy
covering the application of the “messenger model.”
Advocacy Effort Under Current Antitrust Law:

Managed care contracting campaign - The AMA has actively engaged health plans whose contracts
exhibit unfair provisions that jeopardize patient care and compromise the physician’s role as patient
advocate. Contractual provisions that the AMA has aggressively opposed include all-products clause
requirements, medical necessity definitions, and plan requests to unilaterally change contract terms. In
response to these egregious contract provisions, the AMA has developed the Model Medical Services
Arrangement (i.e. model managed care contract), which serves as the cornerstone of AMA contractual
policy and the prototype managed care contract proffered to health plans during discussions.
--All products clause
Most notably, the AMA has engaged Aetna U.S. Healthcare regarding its all-products policy.
While national discussions with Aetna regarding this policy and other onerous contract
provisions are ongoing, physician opposition to the all-products clause has served as the
catalyst to call for several AMA Rapid Response Teams. For example, AMA staff worked in
concert with the Texas and Dallas County Medical Societies in support of the Genesis
Physician Practice Association’s contractual disputes with Aetna over the all-product clause.
Similarly, the AMA has provided RRT assistance to the Kentucky Medical Association and
the Jefferson County Medical Society over Aetna’s enforcement of the all-products clause.
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The AMA is also working to identify “best practices” in contracting and educate the plans and
the profession about such practices. The AMA has entered into such preliminary discussions
with United Healthcare.

Market-place solution through practice integration - Self-employed physicians may collectively
negotiate with payors if they have a level of clinical integration and financial risk sharing that is consistent
with existing antitrust guidelines. The AMA is actively working with physicians in Rhode Island and New
Jersey to develop an integration model with the minimum level of integration required by current antitrust
guidelines.

Reimbursement Related Issues - The AMA is actively investigating an increasing number of concerns
from physicians regarding such reimbursement issues as late claims payment, down-coding and systematic
denials of claims. The PSA Group has developed a protocol for processing complaints regarding
reimbursement related issues. Serving as the intake center for these marketplace concerns, PSA staff
conducts the initial fact-finding, including data collection and interviewing. Following an investigation of
the concern, if appropriate, the PSA Group works in concert with other AMA resources such as the
AMA/State Society Litigation Center, the Advocacy Resource Center, and other federation entities.
The PSA group received numerous inquiries from Lee County, Florida Physicians regarding late claims
payment, downcoding, and systematic claims denials by numerous payors. Following an initial
investigation of the claims, the issue was introduced to the Litigation Center, which worked closely with
the Florida Medical Association toward a resolution. In addition, a February PSA fact-finding trip to the
Greater Albuquerque Medical Association (GAMA) revealed that late claims payment was the primary
concern of physicians in the area. Consequently, PSA staff brought the Advocacy Resource Center’s
Claims Payment Timeliness survey to GAMA to quantify the extent of the plans’ late payment. The results
of this survey will be unveiled at GAMA’s annual meeting in May.
Discussion
Clearly, the plight of self-employed physicians is the most difficult to deal with in the context of “bargaining,”
especially as it relates to payors. The constraints of current antitrust law prohibit self-employed
physicians from forming a labor organization that engages in collective bargaining, and allow for
criminal penalties and treble damages for violations. The AMA private sector advocacy efforts outlined
above pursue a two-pronged approach: actively seeking bargaining rights for self-employed physicians
through antitrust reform, and doing everything possible in other (non-negotiating) areas until such time as
antitrust relief is achieved. The Board of Trustees believes that this approach maximizes the potential for
impact under current circumstances, and recommends continuing on this course. An ongoing process of
seeking additional strategies will be pursued as well.
EMPLOYED PHYSICIANS
Circumstances and Issues
Employed physicians often choose employment both because they prefer that practice setting and to escape the
insecurity of being self-employed in the current market environment. Younger physicians often seek
employment because of educational debt and the lack of capital to invest in starting or buying into a practice.
They have sought security of position and income, and protection from abusive practices by health plans. In a
sense, the employer operates as a buffer between the physician and health plans.
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Employed physicians are a large and diverse group. The varied and quickly changing nature of the employed
physician universe is demonstrated by statistics compiled annually by the AMA (See also Appendix C):

Of the 620,876 physicians engaged in patient care activities in 1998, 135,144 (22%) are
post-resident physicians employed by institutions. These are employed as follows:
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32,270 (24%) are employed by hospitals
36,797 (27%) are employed by medical schools and universities
9,925 (7%) are employed by HMOs
13,614 (10%) are employed by state and local government
6,500 (5%) are employed by ambulatory sites
35,588 (26%) are employed by other employers

It is estimated that of the 135,144 employed physicians in the U.S., up to 20% (27,000) are in
“supervisory” positions that make them ineligible to engage in collective bargaining. The
remaining 108,000 physicians would be eligible to engage in collective bargaining through the
potential AMA sponsored collective bargaining unit described later in this section of the report.

In addition, there are 47,731 physicians employed by physician-owned group practices that would
not be eligible for collective bargaining under the potential AMA collective bargaining unit.
Typically, employed physicians become interested in collective bargaining when:
1. The employer sets goals for increased productivity without consulting the physicians about the likely
impact on the quality of patient care.
2. The employer makes significant changes in patient care facilities, staffing, or administrative procedures
without consulting the physicians.
3. The employer demands reductions in physician income.
4. The employer breaks promises or uses heavy handed techniques to force physicians to make concessions.
These practices usually arise from market pressures faced by the physician’s employer. While physicians are
aware of these pressures and are willing to work with the employers up to a point, they become particularly
concerned when changes are made without appropriate physician involvement and when these changes
adversely affect patients. When such circumstances become acute, physicians are increasingly looking to
collective bargaining as a tool that may be of help to them.
Applicability of Current Law
Only employed physicians who are not in management or supervisory positions may participate in a labor
organization to collectively bargain with their employer over terms and conditions of employment, including
compensation. This is estimated to be about one third of employed physicians (see Glossary in Appendix B for
detailed definitions of “employee” and “supervisor” under the NLRA).

Supervisory vs. non-supervisory employed physician: A critical determination in whether a physician
can become a member of a collective bargaining unit formed to negotiate with an employer is whether he or
she is in a supervisory or non-supervisory position. There is no clear guidance from the courts or the
National Labor Relations Board on this issue, and it depends on the facts in each case. No single factor is
determinative. Some courts have found that all physicians in a proposed bargaining unit were supervisory
because their decisions direct other members of the health care team, such as nurses, technicians, and
residents. However, in the past two years, the National Labor Relations Board has taken a broader view,
and has recognized three physician bargaining units. In all three cases, department heads – who have
greater supervisory roles – were not included in the units as members of the bargaining unit.
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
Status of physicians in group practices: Physicians in group practices who have an ownership interest in
that practice are not considered employees of the practice. Physicians who do not have an ownership
interest are considered employees of the group practice.

Publicly-employed physicians: Collective bargaining on behalf of publicly-employed physicians has
been accepted in some parts of the country for years. These physicians generally are organized under state
labor laws that allow state and municipal employees to form labor unions. These physicians also are
protected by Federal law. The AMA believes that a substantial majority of the 42,000 physicians who
currently belong to traditional trade unions may be publicly employed.
Note: Since physician unions have been in existence for a long time and there are still a relatively small
number of physicians who are members, a question often arises regarding why unions are so interested in
organizing physicians. The total number of physicians who are eligible is relatively small by comparison to
the larger national unions (UAW, Teamsters, AFL-CIO). Among the possible explanations of traditional
union interest in organizing physicians is that if physicians are organized, it will be easier to organize the
millions of other health related workers. Traditional physician opposition to such organizing of health
workers would presumably be reduced. Another reason is that if physicians were members of unions,
organized labor’s traditional support of a single payor approach might encounter less opposition from the
medical community.
AMA Activities in Support of Employed Physicians
The AMA is committed to developing strategies that provide employed physicians the tools to engage their
employers in meaningful discussions regarding patient care and conditions of employment. To achieve this
objective, the AMA public sector advocacy activity employs the following multi-faceted approach:

Model employment contract
Similar to the “Model Medical Services Agreement” available to self-employed physicians, the AMA will
develop, maintain and distribute a model employment contract that will offer a reasonable and fair
alternative to the unfair employment contracts offered by some healthcare organizations. Included in the
model agreement will be dispute resolution procedures whereby the parties shall utilize mediation and/or
arbitration as a means of resolving disputes arising under the agreement.

Alternative dispute resolution
In addition to developing the model employment contract, the AMA will actively engage employers of
physicians to address patient care and other issues through Rapid Response Teams (RRT). Central to these
discussions will be the development of dispute resolution mechanisms for physician concerns regarding
employment conditions. The use of dispute resolution mechanisms allows disputes to be resolved in much
less time and at much less expense. These mechanisms can greatly enhance the employee-employer
ongoing relationship, and provide the means to resolve differences fairly and impartially.

Assistance in the formation of a labor organization
Employed physicians, excluding those deemed to be supervisory, are permitted under labor law to form
recognized labor organizations for the purpose of engaging in collective bargaining. The AMA is able to
provide advice and staff assistance to such groups, as evidenced by the AMA’s assistance, along with the
Illinois State Medical Society, to a group of physicians in Rockford (Illinois) who were interested in
negotiating improved contract terms with their clinic.

Potential Sponsorship of an AMA Affiliated Collective Bargaining Unit (CBU)
As discussed above, non-supervisory employed physicians may engage in collective bargaining under
current law. In response to the House of Delegates’ actions with respect to negotiations, the groundwork
has been completed for forming collective bargaining units for eligible physicians. A preliminary
Constitution has been drafted to support such an affiliated entity(s), operating as a “labor organization(s)”
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under the National Labor Relations Act. The following material captures the essential nature and
characteristics of such a potential collective bargaining Unit (CBU).
Fundamental Operating Assumptions - The proposed CBU would operate under the following
parameters:

Any collective bargaining activity that would be operated, supported, or endorsed by the AMA
and/or an affiliate of the AMA, would be established as a professional alternative to organized
labor.

All members, officers, and units of an AMA CBU would follow the Principles of Medical
Ethics and the opinions of the Council on Ethical and Judicial Affairs, including a specific
provision not to strike, nor to affiliate with non-physicians.

The AMA would encourage physicians to first seek resolution of their issues through models
other than the CBU (e.g. assisted discussions, governance reforms, committee structures,
mediation). The goal of the AMA is to resolve problems, not set up bargaining units.

The CBU would not organize physician owned and operated group practices, so as not to
represent some of our members against others.

Any AMA CBU efforts would be undertaken in collaboration with our federation partners.

The CBU would be established by the AMA and the AMA would appoint the CBU’s Board for
the first five years. The law calls for the members of the CBU to elect the Board after five
years. The CBU would be a legally distinct, separate entity from the AMA itself, and the AMA
would not be able to exert control over its policies and actions.

It would not be legal to require members of the CBU to be members of the AMA (although a
CBU could bargain for payment of AMA dues by employers as a benefit).
Issue Agendas - CBU’s could be used to address a wide range of issues on behalf of employed
physicians.
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Appropriate role in governance
Quality/patient care concerns (e.g. support staff; closing of facilities)
Equipment and technology needs
Productivity Standards
Terms and conditions of employment
Hours
Coverage
Clinical autonomy
Respect
Legal and ethical responsibility to meet professional commitments
Evaluation criteria
Compensation
The way these issues wold be likely to come into play, and the relative emphasis among them,
would vary substantially from situation to situation. It is very difficult to predict which ones
would be more or less prominent.
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Negotiating/Bargaining Tools and Tactics - Potential tactics and tools that the CBU could utilize in
addressing these issues and concerns include:
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Collective negotiation and bargaining.
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Informational pickets.
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Non-disruptive public demonstrations.
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Lobbying and publicity campaigns.
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Unfair labor practice petitions.
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Free days – provide free services to patients of the employers thereby reducing revenue to
employer without disrupting care.
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For publicly traded entities, CBU could become involved in shareholder advocacy.
These tactics and the specific tools related to them would have to be consistent with the AMA Code of
Medical Ethics.
The organizing of a collective bargaining unit is done in phases. The developmental phase involves fact finding
and analysis, a process of obtaining background about a group and using that information to determine the
advisability of attempting to organize the group as a local bargaining unit. The next step is educating the group
about the advantages of joining the labor organization, followed by an election in which a majority of those
voting must approve joining the labor organization. If a majority is achieved, the final developmental step is to
successfully negotiate a contract with management. If a contract cannot be reached, the bargaining unit is
dissolved. If a contract is negotiated, phase two consists of contract administration, the monitoring and
adjudicating of problems in accordance with the terms of conditions of the contract.
It is estimated that an active model of an AMA affiliated CBU would complete, or be in the developmental
stage of completing, local bargaining units at 35 locations in the first five years. This will include 25 resident
units and 10 units for employed physicians in hospitals and/or physician practice settings. After five years,
more than 2000 employed physicians and 7500 resident physicians will be members of AMA affiliated CBU
chapters. An additional 3000 former resident physician CBU members will have finished their programs
during this period of time. The total expenses for this five year model are $5.8 million while dues revenues are
more than $6.6 million. Assuming no further growth, revenues will exceed expenses by $2.5million in
succeeding years. These estimates are based on annual dues for employed physicians of $720 and for residents
of $300. Appendix G includes more specific cost information including potential legal costs.
The relatively small number of physicians projected to be members of a proposed AMA sponsored CBU (2000
employed physicians and 10,500 residents) is due to the philosophy the AMA Affiliated CBU would embrace.
While a traditional labor union’s focus is always on expansion and efforts to form new local bargaining units,
the AMA CBU would offer membership to groups of physicians as the last option in a series of alternatives.
AMA’s Private Sector Advocacy team is committed to assisting groups of physicians through a variety of
means up to and including mediation and arbitration. Only after it is determined that the group of physicians
feels that the CBU is the only effective alternative will membership in the AMA Affiliated CBU be offered.
Unlike traditional labor unions, solving physicians’ problems will be the primary goal of the proposed CBU. In
this regard, the success of the AMA Affiliated CBU should be gauged by the number of physicians helped, not
by the number of physician members of the unit.
Discussion
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AMA private sector advocacy strategy for employed physicians is comprised of a variety of activities as
summarized above. One of them, collective bargaining as a labor organization under the National Labor
Relations act, would be a very substantial undertaking and a major departure from any other activities in which
the AMA has previously engaged. Consistent with its fiduciary responsibilities, the Board asked that a risk
assessment be conducted exploring the implications of the AMA engaging in collective bargaining. Appendix
E includes the risk assessment report that was prepared.
The risk assessment considered a wide range of possible implications of the AMA engaging in collective
bargaining as well as the implications of not doing so. It addressed such things as the likelihood of success,
membership impact, the impact on professionalism, the impact on the image/identity of the AMA and of
physicians, communication implications, financial impact, legal considerations, and the impact on other AMA
activities.
Clearly, there are strong arguments on both sides of the question of whether it is in the best interests of the
AMA, members, physicians in general, and patients for the AMA to engage in collective bargaining on behalf
of employed physicians. However, after considering all of the factors, the Board’s judgement is that it is not an
advisable course of action for the AMA at this time. The reasons are as follows:

The potential impact on both the reality and the perception of professionalism as it applies to the AMA and
to physicians could be significant. It would be very difficult for a collective bargaining unit to always put
patient care issues first ahead of self-interest considerations, regardless of the sincerity of intent.

The AMA would have considerable control of an AMA affiliated CBU for the first five years, but the law
requires self-governance after five years, and the safeguards the AMA would require to protect
professionalism and assure that the CBU functioned in concert with AMA policy could not be guaranteed
beyond that point.

Employed physicians who would be eligible to engage in collective bargaining are not generally the
physicians who are most in need of such services in today’s environment, and those who are most in need
(i.e. self-employed physicians) are not eligible.

Projected coverage, according to the proposal that was developed and in conformance with the financial
resources available, calls for only ten CBU’s to be formed in the first five years, covering approximately
2,000 employed physicians. This is not enough critical mass or impact to warrant assuming some of the
risks that would be involved in such an undertaking.

There is considerable expense related to the development of the potential CBUs, even though there would
be projected net income if fully successful. Initially, organizing would be costly, and there is the potential
for a loss of up to $1.5 million if the venture proved to be not successful. In addition, there could be
liability exposure related to these activities that is not quantifiable in advance but which could be
substantial.

The AMA is not experienced in collective bargaining and would be competing with experienced labor
organizations. In addition, the AMA would have to adhere to a strict “no strike” clause (self-imposed in
the interest of professionalism) that would put it at a competitive disadvantage with other, more traditional,
labor organizations that are not so constrained.
Therefore, it is the recommendation of the Board that, in lieu of a CBU, other aspects of the private sector
advocacy strategy for employed physicians should be pursued vigorously.
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RESIDENT PHYSICIANS
Circumstances and Issues
AMA data show that there are 95, 808 resident physicians in the United States. Residents have a long history of
raising patient care issues as well as issues related to their educational programs and working conditions. While
many institutions have resolved these issues, others have failed to satisfactorily address them. After
considerable developmental work, the AMA led an effort in 1998 to strengthen residents’ rights under the
ACGME Institutional Requirements. These new requirements became effective in September 1998. Currently
there are approximately 10,000 residents who are members of unions and there is generally renewed interest in
unions among residents. They believe that, as part of cost-cutting efforts, hospitals are placing more work
demands on them that are unrelated to their education. Hospitals have reduced their non-professional staffs,
especially at night, and are demanding that residents perform many of the unskilled tasks formerly handled by
orderlies and other non-professional staff. Residents find that these demands detract from their education,
place unreasonable burdens on them, and affect the care of patients.
AMA policy considers residents to be employees of the hospital or institution sponsoring the residency
program. The AMA also considers residents to be students. The AMA believes that residents are entitled to
collectively bargain over working conditions, but not over matters involving the content of their educational
program. The AMA argued this position in an amicus brief filed with the National Labor Relations Board in
the Boston Medical Center Case. (discussed below)
Applicability of Current Law
Resident physicians are a distinct group with regard to collective bargaining (see Appendix A, page 35).

Current view of the National Labor Relations Board: The NLRB has a long-standing policy that resident
physicians are students, not employees, and therefore are not entitled to protection of the NLRA.

Boston Medical Center case: In 1997, the Committee on Interns and Residents, an affiliate of the Service
Employees International Unions and the AFL-CIO, filed a representation petition on behalf of residents at
the Boston Medical Center, asking the NLRB to hold that the residents are employees entitled to
collectively bargain under federal law. After the regional NLRB denied certification, citing long-standing
policy, the Committee on Interns and Residents filed an appeal to the NLRB. Many believe that the NLRB
may, in fact, reverse its position in the Boston matter. A ruling is expected at any time.

Collective bargaining by residents permitted in some states: Most states already have labor laws which
allow employees of public institutions (i.e., municipal or state hospitals in this case) to form labor
organizations outside of the oversight of the National Labor Relations Board. The Committee of Interns
and Residents (CIR) and other resident unions have approximately 10,000 residents organized currently
under these state laws. The majority of resident union members are in New York, New Jersey, California,
Florida, and Massachusetts. The public/private distinction between state and federal labor laws is at the
heart of the Boston Medical Center case cited above. In essence, federal labor law, which designates
residents as students, applies at all private training hospitals at this time.

Voluntary recognition of housestaff organizations: A number of teaching institutions, such as Tulane, have
voluntarily recognized housestaff organizations as the representatives of residents. These institutions
engage in discussions with their housestaff over terms and conditions of employment and patient care
issues on a voluntary basis outside the framework of the NLRA.

Impact of reversal of NLRB position on voluntary housestaff organizations: If the NLRB reverses its
position and holds that residents are employees entitled to collectively bargain over non-educational
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aspects of their employment relationship, the voluntary housestaff organizations automatically become
eligible to petition for certification as collective bargaining units under the NLRB.
AMA Activities in Support of Resident Physicians
The AMA is committed to advocating on behalf of resident physicians to respond to patient care and other
issues. The AMA private sector advocacy program is actively pursuing the following strategies to ensure the
accomplishment of this objective.

Assist in the development of Independent Housestaff Organizations
The AMA is committed to assist residents develop Independent Housestaff Organizations (IHOs) that will
allow them to voice their concerns regarding patient care and resident quality of life issues to institutional
leaders. An IHO is an organization that is: 1.) comprised of a multi-disciplinary representation of residents
and fellows; 2.) charged with effectively representing patient and resident/fellow interests within a site of
graduate medical education; 3.) not affiliated with a traditional trade union; and 4.) committed to refraining
from engaging in strikes or other actions that could negatively affect the substantial well-being of patients.
Through an IHO, residents maintain a unique position in the institutional hierarchy, positioned at the
interface of care provision between attending physicians, ancillary care providers, and patients. Thus, their
input is invaluable in improving patient care and identifying operational efficiencies. The IHO may
develop an advisory committee which works collaboratively with hospital administration in identifying and
creating solutions to patient, resident and hospital concerns. In summary, by creating a housestaff
organization, residents can achieve the following objectives:
--Improve standards for quality patient care within their institution
--Protect and enhance the educational experience
--Assume a role in policy-making decisions
-- Groom future physician leaders
--Create services and benefits that assist residents
--Develop protections such as due process for resident physicians
Recognizing the benefits of IHOs, the AMA has developed and distributed a publication, entitled
“Independent Housestaff Organizations: A Win/Win Opportunity,” which outlines a process and structure
for developing IHOs. This guide is designed to educate both residents and institutional leaders on the
benefits and limitations of IHOs. One weakness of this model is that an institution must agree to cooperate
voluntarily with the group of residents looking t start an IHO. It is our experience that not all training
institutions will be agreeable to members of their housestaff forming such an organization and may protest
if the AMA is asked by their residents to assist in the formation of an IHO at their hospital.

ACGME Actions
The AMA has worked with the ACGME to institute new protections and benefits for resident physicians at
their institutions. These new benefits include requiring resident membership on every Residency Review
Committee (RRC), every institution’s GME committee and other institutional committees relating to
resident training. Restrictive covenants are now banned, anonymous evaluations of faculty are now
required, and many residents’ rights and responsibilities are now specified for inclusion in resident
contracts. Most importantly, the following language was approved to improve communication avenues
and the climate for residents within their teaching institutions. This includes:
1. Assurance of an educational environment in which issues can be raised and resolved without
fear of intimidation or retaliation.
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2. Provision of an organizational system for communication and exchange of information on all
issues pertaining to residents and their educational programs. This can be accomplished
through a resident organization or through other forums to facilitate regular assessment of
resident concerns.
3. Procedures to address concerns of individual residents in a confidential manner, protected as
by the use of an ombudsman.
4. Establishment and implementation of institutional policies and procedures for discipline.
5. Establishment and implementation of institutional policies and procedures for adjudication of
resident complaints and grievances.
The AMA recommends continued promotion of Independent Housestaff Organizations in accordance with the
above ACGME recommendations.

Potential Sponsorship of an AMA Affiliated Collective Bargaining Unit (CBU)
The follow-up to House of Delegates actions at A-98 and I-98 included developmental work on a potential
collective bargaining unit for resident physicians. This would be very similar to the potential CBU for
employed physicians as described above. It would be subject to the same overall operating assumptions
and self-imposed restrictions regarding strikes, and would use a similar set of tools and tactics. However,
the issues on which collective bargaining would take place would be different for residents in some
respects, and would include the following:
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Work hours, taking into account the educational needs of the residents and patient safety
Work environment issues regarding safety and general well-being of residents
Grievance procedures
Fairness in evaluations
Support staff
Closing of facilities and residency programs
Equipment and technology needs
Productivity standards
Quality of the educational experience
Relationships with the faculty and administration
Compensation
The proposal for the CBU would project the organization of 25 CBUs for residents, covering an estimated
10,500 resident physicians during the first five years.
Discussion
The Board’s risk analysis of collective bargaining units considered the pros and cons of this kind of activity for
residents. The same concerns that the Board has regarding AMA engaging in collective bargaining on behalf of
employed physicians also apply to resident physicians. In addition, there is concern that HCFA, which is
already trying to reduce Medicare’s support for graduate medical education, may interpret more widespread
collective bargaining by residents as evidence to support the contention that residents are employees rather than
students, and thus justify further reduction in support of the educational component. Lastly, feedback from the
academic community, especially among the leadership ranks, indicates strong opposition to the AMA engaging
in collective bargaining for residents, and membership fallout within the academic community is a strong
concern. On the other hand, not pursuing collective bargaining will likely result in membership fallout among
other physicians, especially residents and young physicians.
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The Board believes that the existing strategies for assisting resident physicians, without the addition of an
AMA sponsored collective bargaining unit, can achieve for residents as much as collective bargaining units
would.
OTHER ACTIVITIES
In addition to the private sector activities described above that are specifically targeted to assisting
self-employed physicians, employed physicians, and resident physicians, there are some activities that apply to
physicians across these groups.
Responding to Emerging Issues
The AMA makes an active effort to identify and respond to emerging trends within the healthcare marketplace.
Two of the most recent trends, plan consolidation and bankruptcies, have stirred significant concern within the
physician community. The AMA has developed advocacy campaigns aimed at assisting physicians in
addressing these marketplace changes.

Health Plan Consolidation: The pace of health plan consolidation has accelerated across the course of the
past year, exacerbating the inequity of market power between physicians and plans. Mergers of a certain
magnitude may jeopardize patient care. The prospective Aetna-Prudential acquisition is the most
prominent example of potential anti-competitive effects of health care mergers. In response to this
proposed acquisition, the AMA took the precedent-setting action of voicing its concerns to the Department
of Justice. Following its initial correspondence to the Department of Justice (DOJ), the AMA has assisted
the DOJ in its scrutiny of the acquisition. Most notably, the AMA produced a “white paper,” which laid out
the concerns of organized medicine about the anti-competitive effects of excessive market share and unfair
contractual practices. In addition, the AMA has coordinated support for local and state societies in markets
most impacted by the acquisition. As of May 10, the DOJ continues to investigate the acquisition and turns
to the AMA for information regarding its marketplace implications. While aggressively opposing this
specific acquisition, the AMA concurrently is keeping track of other plans that have followed Aetna’s
consolidation strategy. For example, the AMA is aware of Blue Cross/Blue Shield plans that maintain
excessive market share. In these markets, the AMA is initiating discussions with local societies aimed at
creating a balanced marketplace.
--Public Awareness: The AMA’s advocacy against the Aetna-Prudential acquisition has provided a
forum for educating the public about the implications of plans possessing excessive market share. For
example, in local markets such as Dallas, Houston and New Jersey, the AMA and local societies have
advanced the “Wallstreet, not Mainstreet” and “Bigger is not Better” messages about plan
consolidation.
--Monopsony Argument: With the recent trend toward plan consolidation, the AMA has identified the
need to develop a body of evidence and academic literature to document why plan consolidation is
anticompetitive and deleterious for patients. The AMA is working with the AMA’s Center for Health
Care Policy Research and a team of external economists to explain the anti-competitive effects of
concentrated buyer power (monopsony). The work produced by this team will prove invaluable for the
AMA in advancing numerous advocacy reforms, including objections to mergers and support of
legislation such as the Campbell Bill.

Health Care Organization Bankruptcy: While health plans have aggressively moved to consolidate, the
health care marketplace has witnessed a series of bankruptcies that have impacted physicians of all practice
modes. No healthcare organization has been immune. Well known examples are Allegheny Health,
Education and Research Foundation (health system), HIP of New Jersey (health plan) and FPA Medical
Management, Inc. (practice management firm) all of whom filed for bankruptcy within the past year.
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To protect the interests of patients and physicians, the AMA has responded through a
two-pronged strategy. In its initial response to these bankruptcies, the AMA has provided financial and
legal support to state medical societies such as the California Medical Association to advance the interests
of physicians in state-held bankruptcy proceedings. In addition, the AMA is working to develop
educational materials to assist physicians should a financial intermediary with whom they have a
relationship go bankrupt. This piece, to be distributed at A-99, will also educate physicians about how to
evaluate the financial stability of a company before entering into an arrangement and how to provide
maximum protection through contractual provisions.
RECOMMENDATIONS
This report considers the major strategies within the AMA’s private sector advocacy program, including the
specific question of whether to support an AMA sponsored collective bargaining unit. The Board believes that
the House of Delegates’ consideration of this issue will be more focused if it has specific recommendations to
act upon. As always, the Board will actively implement whatever decisions the House of Delegates makes.
Recommendation: It is recommended that the AMA:
1. Aggressively implement the current, multidimensional AMA private sector advocacy
program.
2. Actively promote the Campbell Bill and be ready to assist self-employed physicians in
negotiating with third party payors if it passes.
3. Actively support the formation of independent housestaff organizations.
4. Not form or sponsor any “labor organization” (as defined by the National Labor Relations
Act).
B of T Rep. 30 - A-99 -- page 18
APPENDICES
1. Appendix A -- “Physicians, Unions, and Antitrust” by Ed Hirshfeld (1998)
Pages 22-43
2. Appendix B -- Glossary
Pages 44-50
3. Appendix C -- Summary data on physicians related to professional activity
Pages 51-53
4. Appendix D -- Summary of AMA private sector advocacy activities
Page 54
5. Appendix E -- Risk Assessment of AMA’s Collective Bargaining Unit Proposal
Pages 55-65
6. Appendix F -- Stakeholder analysis on collective bargaining
Pages 66-69
7. Appendix G -- Financial summary related to sponsoring collective bargaining units
Pages 70-73
B of T Rep. 30 - A-99 -- page 19
APPENDIX A
PHYSICIANS, UNIONS, AND ANTITRUST
Edward B. Hirshfeld*
I. INTRODUCTION
The past two years have seen an upsurge of physician interest in unionization. That interest is now present
along the full range of physician practice settings. Two developments during the latter part of 1996 spurred this
interest. One was the August, 1996 announcement of the American Podiatric Medical Association that it was
working with the Office Professionals Employees International Union (OPEIU) to form a union for podiatrists.
This received widespread national media attention, and other trade unions began targeting physicians for
membership.
The other development was the November 8, 1996, ruling of a regional director of the National Labor Relations
Board (NLRB) that physicians employed by the Thomas-Davis Medical Centers, P.C. in Tucson, Arizona
could form a bargaining unit and engage in collective negotiations with their employer.1 This ruling also
received widespread national media attention. Since that time, the NLRB has approved two more physician
collective bargaining units, one in Massachusetts and one in Washington state.
Physicians have responded with interest to this pair of developments. Unionization has become a common
topic of discussion when physicians meet at state and county medical societies and the like. Numerous state,
county, and specialty medical societies have heard presentations from the principal physician unions
advocating affiliation with them; to date, however, no allopathic medical society has chosen such an affiliation.
The American Medical Association (AMA) has handled numerous inquiries about the law of union formation,
the activities unions are allowed to engage in on behalf of physicians, the activities of existing physician
unions, whether medical societies can organize unions, and what activities medical societies can engage in to
assist physicians other than starting a union.
The AMA has also promulgated a formal policy on unionization, which supports the right of physicians to
engage in collective bargaining, and it is AMA policy to work for expanding of the numbers of physicians
eligible for that right under federal law.1 However, AMA policy strongly opposes physicians withholding care
from patients for purposes of gaining leverage in collective bargaining.2 Other kinds of job actions designed to
give the physicians leverage are permissible provided that they do not endanger patient care. The American
Medical Association also opposes requirements that compel physicians to join a union against their wishes.
*
Mr. Hirshfeld was Associate General Counsel and Vice President for Private Sector Advocacy at the American Medical Association at the
time of his death in August 1998. This article was originally written to support Mr. Hirshfeld’s July 1998 presentation to the American Health
Lawyers Association. Special thanks to Helen Jameson, Division Counsel, American Medical Association, who assisted in editing and
updating the article for publication following Mr. Hirshfeld’s death. Questions about this article should be addressed to Ms. Jameson at 515
N. State St. Chicago, IL 60610, Telephone: 312-464-4271, E-mail: [email protected].
Underlying the entire discussion is the fact that many physicians feel they must collectively react to the
coercive economic power wielded by HMO’s and other managed care organizations. This economic power has
substantially modified the traditional methods of practice for many, if not most independent self-employed
physicians. The self-employed (or small group) physician1 is the one most at the mercy of the insurers’
economic juggernaut; unfortunately, however, the self-employed physician is also the one at most risk from the
antitrust laws when attempting to counter-balance the power of the HMO’s.
B of T Rep. 30 - A-99 -- page 20
This article will review the history of the interaction between the antitrust and labor laws, analyze the current
status of physician ability to unionize, and survey the present status of physician unions.
II. ANTITRUST AND THE RIGHT TO UNIONIZE
The Labor Exemption from the Antitrust Laws
The primary impediments to physician unionization are the antitrust laws and their applicability to joint action
by independent economic entities. These laws effectively bar “self-employed” physicians, or any independent
physician group, from acting collectively with other physicians or groups in negotiating economic terms with
health plans. The core problem is that there is a conflict between the goals of the antitrust laws and the labor
laws.2 The purpose of the antitrust laws is to promote competition among providers of goods and services as a
way to enhance consumer welfare. Competition leads to greater diversity among products and services, better
quality, and lower prices. Therefore, the antitrust laws bar combinations and other collective actions among
sellers or buyers of goods and services to raise prices or otherwise set the terms of dealing.
In contrast, the purpose of the labor laws is to keep human labor from being treated as a mere “commodity”, and
to permit collective agreements and action among workers to raise and standardize wages and improve their
working conditions. Strikes, boycotts, and other collective activity to raise wages are permitted and even
favored by the labor laws to protect and enhance the economic power of the worker.
The antitrust laws, on their face, are broad enough to cover human labor; thus, early federal cases held that
collective labor activities designed to pressure employers were illegal. Congress, however, determined that
such labor activities were appropriate, and enacted legislation expressly exempting them from the antitrust
laws.
History of the Exemption
There is both a statutory labor exemption to the antitrust laws, and nonstatutory elucidation and interpretation
of that exemption. The exemption is the product of five sets of statutes. After the antitrust laws were passed,
they were considered applicable to labor organizing and were used to enjoin strikes.3 Subsequently, Congress
passed the Clayton Act, which provides in pertinent part that “the labor of a human being is not a commodity or
an article of commerce,” and that “nothing contained in the antitrust laws shall be construed to forbid the
existence and operation of labor ... organizations.”3 In addition, section 20 of the Act specified certain
activities, such as strikes, picketing, and boycotts, which cannot be enjoined by a federal court when conducted
as part of “a dispute concerning the terms of conditions of employment.”4
Notwithstanding the apparent clarity of the Clayton Act, the federal judiciary was reluctant to acknowledge the
full scope of the labor exemption. Consequently, in 1932, Congress passed the Norris Laguardia Act,5 which
declared a national public policy in favor of labor unions and stated that collective bargaining and union
organization are protected activities. This Act also defines “labor activities” and “parties” to a labor dispute,
and it specifically designates nine categories of activities that are protected from judicial intervention if they
arise from a labor dispute and the defendant is a party to the dispute. When read together with the Clayton Act,
it is clear that these nine activities are exempt from the antitrust laws.
In 1935 Congress passed the National Labor Relations Act (also known as the Wagner Act),6 which created the
National Labor Relations Board, and is the basis for today’s comprehensive federal labor regulation. This Act
does not contain an express exemption from the antitrust laws; rather, it was designed to protect the activities of
labor organizations and the persons that participate in them. Nonetheless it is a reference point for defining the
legitimate labor activities that are exempt from the antitrust laws. The Act created a legally enforceable right
for employees to organize, required employers to bargain with employees through employee elected
B of T Rep. 30 - A-99 -- page 21
representatives, and gave employees the right to engage in concerted activities for collective bargaining
purposes or other mutual aid or protection.
Two subsequent pieces of legislation are of lesser importance for analyzing the antitrust exemption, but should
still be borne in mind. The Labor Management Relations Act7 (also known as the Taft-Hartley Act), enacted in
1947, expands upon the National Labor Relations Act and corrected problems and inequities that had
developed in the enforcement of that Act. Finally, in 1959, Congress passed the Labor Management Reporting
and Disclosure Act8 (also known as the Landrum-Griffin Act). This Act corrected problems and inequities that
had developed in the enforcement of the National Labor Relations Act and the Labor Management Relations
Act. While neither of these acts have an express antitrust exemption, they are used to interpret the scope of the
exemption in the Clayton Act.
In addition to the text of these statutes, the exemption has a judicial aspect, arising from decisions interpreting
the scope of the exemption when the four labor relations statutes do not provide enough guidance, or when they
do not apply to the workers who want to engage in collective bargaining. The rules of law developed in these
cases are referred to as the “non-statutory” exemptions. These exemptions primarily stem from the fact that the
statutory labor exemption covers the unilateral acts of labor organizations. However, some labor organizations
began making agreements with employers that could be classified as restraints of trade. The non-statutory
exemption was developed by federal courts to define when these agreements were exempt from the antitrust
laws.9
When the Labor Exemption Applies
To fall within the Clayton Act’s labor exemption, the activities involved must meet the following criteria:
•
The conduct must arise out of a “labor dispute” and must be the conduct of a “labor organization.”
•
The labor organization must be acting in its own self-interest--it should be acting to further its goals as
a labor organization as opposed to the goals of another entity.
•
The activities must involve the unilateral conduct of the labor organization. Collective action carried
on with other entities, especially if those entities are not labor organizations, may violate the antitrust
laws.
Pending Legislation
In June 1998, a bill that would provide a broad antitrust exemption for physicians was introduced into Congress
by Rep. Tom Campbell (R-Ca), a former Stanford University economics professor and former head of the FTC
Bureau of competition. “The Quality Health-Care Coalition Act of 1998,” and reads as follows:
To ensure and foster continued patient safety and quality of care, any group of
health care professionals, negotiating with a health maintenance organization,
insurer, retail state-licensed payor, or any other purchaser exempt from state
licensure under ERISA, shall, in connection with such negotiations, be
entitled to the same treatment under the antitrust laws accorded to members of
a bargaining unit recognized under the National Labor Relations Act.
In July 1998, the House Judiciary Committee heard testimony in support of the bill from the American Medical
Association and other organizations. At the end of the hearings, the Chairman of the Committee instructed the
FTC to study the extent of leverage held by health plans in the market.
Although the Campbell bill did not proceed beyond the initial hearing stage in the 105th Congress, Rep.
Campbell plans to reintroduce a similar bill in the 106th Congress. The AMA and a coalition of specialty
B of T Rep. 30 - A-99 -- page 22
societies are working with Rep. Campbell’s staff to provide input on proposed legislation. In addition, some
observers believe that in light of the aggressive consolidation strategy of the nation’s large health plans,
regulators, legislators, and the public will become increasingly concerned that health plan power is becoming
anticompetitive and is limiting consumer choice. However, a discussion of health plan market power is beyond
the scope of this article.
III. ABILITY OF PHYSICIANS TO MEET THE CONDITIONS OF THE LABOR EXEMPTION
AND ENGAGE IN COLLECTIVE BARGAINING.
All physicians are not equal when it comes to collective bargaining. The applicability of the labor exemption
varies widely depending upon the employment status of the particular physician. Thus, the analysis of this
section proceeds separately with respect to the different modes of physician practice.
A. Employed Physicians
Background. Employed physicians often chose employment both because they prefer that practice setting and
to escape the insecurity of being self-employed in the current market environment. They have sought security
of position and income, and protection from abusive practices by health plans. In a sense, the employer
operates as a buffer between the physician and health plans.
B of T Rep. 30 - A-99 -- page 23
Nonetheless, employed physicians are a large and diverse group. The number of employed physicians has
increased significantly over the past fifteen years, with the largest increases being among physicians employed
by hospitals. There is still a wide variation in employment settings, which poses challenges for traditional labor
unions seeking to organize physicians. For example in the case of large groups and medical schools that
employ large number of physicians, those physicians have a tradition of collegiality and an infrastructure that
has not provided fertile ground for organizing. However, the rapid changes in the market raise the possibility of
altering the dynamic of all employment settings--especially when employers unilaterally change policies and
procedures impacting physicians and their patients.
The varied and quickly changing nature of the employed physician universe is demonstrated by statistics
compiled by the AMA:10
•
The total percentage of patient care physicians (excluding resident physicians and those employed by
the federal government) who were employed in 1997 was 43.3%. The percentage employed in 1983
was 32.9%. However, this percentage has been stable since 1994.
•
The total percentage of patient care physicians (excluding those employed by the federal government)
in practice for 5 years or less who were employed in 1997 was 64.6%. The percentage employed in
1983 was 37.2%.
•
The total percentage of patient care physicians (excluding those employed by the federal government)
who were employed by “institutional employers” (i.e. hospitals, state and local governments, staff
model HMOs) in 1997 was 32.6% (compared to 2 1.3% in 1988).
•
The total percentage of patient care physicians (excluding those employed by the federal government)
who were employed by physician-owned groups in 1997 was 10.6% (compared to 6.5% in 1988).
•
The 32.6% of patient care physicians who-were employed by institutions in 1997 were distributed as
follows (reported as a percentage of the total physicians employed by institutions):
•
Hospitals: 22.3% (compared to 15.8% in 1988)
•
Medical Schools or universities: 21.2% (compared to 22.1% in 1988)
•
Independent contractors (this category includes physicians such as emergency room physicians
and radiologists who resemble employees in that they contract out services to large
organizations, typically hospitals, and for whom a case can be made that they are in fact
employees): 14.2% (compared to 2 1.3% in 1988)
•
State and local governments: 8.6% (compared to 18.4% in 1988)
•
Staff model HMOs: 8.3% (compared to 9.2% in 1988)
•
Ambulatory care, surgical care, emergency care centers: 4.1% (compared to 3.5% in1988)
•
Other: 21.3% (compared to 9.7% in 1988). The AMA speculates that physicians employed by
hospital affiliates, such as management services organizations (MSOs), may account for a
significant part of the growth in this area. If that is the case, then hospital employment, directly
or indirectly, has accounted for a very substantial part of the increase in the employment of
physicians. However, we do not know for sure. Future surveys by the American Medical
Association’s Center for Health Care Policy Research will try to obtain more specifics about
this category.
B of T Rep. 30 - A-99 -- page 24
Interest in Collective Bargaining. Generally speaking, employed physicians are usually less concerned about
the leverage exerted by managed care plans than are solo and small group practitioners. They usually are more
comfortable with managed care and often believe that they are able to provide better quality of care by working
for an entity with the managerial capacity to apply principles of continuous quality improvement and other
techniques designed to improve quality and reduce costs.
Nonetheless, a significant impetus for unionization arises when employed physicians become disenchanted
with practices of their employers. Typically, employed physicians become interested in collective bargaining
when : (1) the employer sets goals for increased productivity without consulting the physicians about the likely
impact of those goals on the quality of patient care; (2) the employer makes significant changes in the patient
care facilities, staffing of the facilities, or administrative procedures used in the facilities without consulting the
physicians, (3) the employer demands reductions in physician income, or (4) the employer breaks promises or
uses heavy handed techniques to force physicians to make concessions. When these changes come on the heels
of a change in ownership, there is little or no residual trust to cushion the blow, and the physician response is
more acute.
Typically, these practices arise from market pressures faced by the employer. The employer needs to reduce
costs and improve efficiency to remain competitive. Physicians usually are aware of the market pressures faced
by the employer, are concerned about the viability of the employer, and are willing to work to achieve greater
efficiency, higher quality, and lower costs. But, the physicians become upset when they feel that they have no
influence or control over key decisions made by the employer that affect them and their patients. The
physicians are willing to face and deal with market pressures as a group, but they do not like the sense of
vulnerability and lack of control that occurs when the employer does not adequately involve them in key
decisions.
As a result, some employed physicians have become interested in forming unions to engage in collective
bargaining with their employers. In the past two years, there have been a number of newsworthy organizing
efforts among employed physicians.11 As mentioned previously, the National Labor Relations Board has
approved collective bargaining units at the Thomas Davis Medical Center in Tucson, Arizona, Medical West
Associates in Springfield, Massachusetts, the Medalia HealthCare in Seattle, Washington. In addition,
physicians at the Rockford Memorial Health Services Corporation in Rockford, Illinois filed a petition for
recognition with the NLRB, but withdrew the petition with leave to refile after their employer made some
changes in response to the organizing drive.
Although the interest among employed physicians in union formation is generally much less than it is among
self-employed physicians, it is certainly possible that given the volatility of the health care industry,
circumstances may change in such a way to substantial increase the number of organizing efforts by employed
physicians.
The Law’s Impact on Unionization. Physicians who are employees fall within the labor exemption to the
antitrust laws, and may engage in collective bargaining with their employers. Notwithstanding this clear legal
path, however, physician employees who have attempted to form unions have not always had an easy go of it.
Some courts have found that physicians are supervisory employees because their decisions direct other
members of the health care team, such as nurses and technicians. When physicians are found to be supervisory
employees as opposed to non-supervisory employees, then they do not qualify for the protection of the National
Labor Relations Act (“NLRA”).12
Loss of the protection of the NLRA is a significant handicap. That Act is designed to protect and enhance the
ability of employees to engage in collective bargaining by restricting the tactics that an employer can use to
prevent the formation and operation of a union. For example, the Act requires employers to recognize a union
and to bargain with it. When physicians are classified as supervisory employees their employer does not have
B of T Rep. 30 - A-99 -- page 25
to recognize their union, does not have to bargain with it, and the employer is not restrained by the regulations
of the NLRA in how it can attempt to break up the physician bargaining group.
Fortunately, the past two years have brought positive developments on the legal front. Recognition of the
physician bargaining unit at Thomas-Davis Medical Centers, P.C. by the National Labor Relations Board was a
significant victory for physicians,13 followed by the recognition of the bargaining units at Medical West
Associates in Massachusetts, and Medalia Health Care In Seattle. The physicians were not categorized as
supervisory and now have the protection of the National Labor Relations Act. In both cases, department heads
were not included in the bargaining units.
In both the Thomas-Davis case and the Medalia Health Care Case, the employer challenged the decision of the
National Labor Relations Board by disregarding it and refusing to bargain with the union. The outcome of
these cases will have important ramifications as more physicians seek to form collective bargaining units.
The employer did not challenge the decision in favor of the employed physicians at Medical West Associates, a
clinic in Springfield, Massachusetts that was owned by a Blue Cross and Blue Shield organization operating in
Massachusetts. The physicians began organizing efforts when Blue Cross announced plans to sell the clinics
but failed to involve the physicians in selection of a purchaser. The physicians organized themselves without
the assistance of a major trade union, and the physician organizers attribute their success in part to a strong
physician infrastructure that has existed for years at the clinic. The Medical West Associates physicians had a
seat at the table during the negotiations for sale to MedPartners.14
Options for Employers: Obviating the Need for Unionization. In the experience of the AMA, employers of
physicians can avoid a collective bargaining drive by setting up processes and procedures within the
employer’s organization to give physicians a role in decision making. These processes and procedures should
give the physicians meaningful influence in the employer’s organization. Committees and councils that are for
show only, and whose recommendations or decisions are rarely, if ever, carried out, are not adequate for this
purpose. Physicians quickly figure out that the committees or councils do not carry any weight and are a waste
of time.
However, if the physicians are given a meaningful role, they identify with the goals of the organization and are
more enthusiastic participants in efforts to make it a success. Employers whose managers are highly autocratic,
excessively control oriented, or are simply too disorganized or lazy to set up procedures that include physicians
in decision making are the ones likely to experience organizing drives. In addition, if there is a change in
ownership or management, practicing physicians should have a seat at the table and an opportunity for
meaningful input to increase the likelihood of a smooth transition.
Resistance by Employers: The Impact on Unionization Efforts. The employers of physicians who have
engaged in recent organizing drives have put up an enormous amount of resistance.15 Like other employers
facing an unwanted organizing drive, they tend to use every litigation tool available, including litigation over
the configuration of the bargaining unit and other issues. They will litigate these issues as far as possible,
starting with a Regional Director of the NLRB, then the NLRB, then a federal Circuit Court of Appeals, and
then the Supreme Court. In addition, these employers spend heavily on consultants and organizers whose job is
to discourage interest among physicians in the organizing drive.
As a result, a successful organizing drive can take up to three years to complete, and can be very expensive.
Therefore, physicians contemplating an organizing drive must be motivated enough to tolerate the long delays,
have sufficient solidarity to withstand the efforts to discourage participation, and must be adequately funded.
B. Self-Employed Physicians
Background. The primary interest in union formation has come from independent, self-employed physicians
in solo practice or small groups. Unionization has become a subject of interest for many such physicians
B of T Rep. 30 - A-99 -- page 26
because, in many markets, managed care health plans have obtained a material amount of economic leverage
over physicians. Their leverage comes from their ability to direct large volumes of patients to selected
physicians, and to deny those patients to other physicians. The health plans direct patient volume to those
physicians who will accept reductions in payment and cooperate with the health plan in its cost reduction
efforts, especially in reducing the utilization of health care services.
This leverage has enabled health plans to assume substantial control over medical decision making, to drive
down the incomes of many physicians, and to threaten the viability of physician practices that will not
cooperate with them. Many physicians feel powerless to respond to the exertion of leverage by health plans
because the current legal landscape favors health plan power. Federal and state antitrust laws bar any collective
action, such as boycotts, that would enable self-employed physicians to change the terms of dealing (or even
force health plans out of a market) by collectively refusing to participate on a panel. Supporters of these laws
believe that the laws are pro-competitive because by enabling health plans to exert economic leverage over
physicians they theoretically reduce the cost of health care to the consumer.
Both the United States Department of Justice and the Federal Trade Commission have sections dedicated to
enforcing the antitrust laws in the health care industry, and historically their focus has been on providers of
health care – not health plans. One of the primary purposes of these dedicated efforts is to ensure that
combinations of providers do not thwart the evolution of new ways of financing and delivering health care.16
The antitrust enforcers, by their very nature bring this same viewpoint to bear on collective bargaining by
self-employed physicians. In doing so, however, they overlook the fact that physician interest in unions goes
beyond economic issues. Many self-employed physicians have become concerned about the quality of care
that they are able to provide to patients. They feel that the economic demands of managed care plans and the
protocols used by such plans are degrading the quality of care.
As an example, the contracts that major managed care health plans are offering to physicians are becoming
increasingly one-sided. For example, a contract being offered by Aetna U.S. Healthcare, Inc. allows Aetna to
change the fee schedule at will, requires the physicians to participate in all health benefits plans offered or
managed by Aetna now or in the future regardless of the terms of those product lines, and allows Aetna to
change at will important procedures for interactions between Aetna and the physicians, such as the manner of
filing claims, utilization review procedures, and protocols. Because Aetna is one of the nation’s largest
managed care companies17, other plans are adopting Aetna’s contracting practices, in particular the “all
products clause” requiring participation in all present or future health benefit plans.
In a self-protective response to such unsheathed economic power, self-employed physicians are giving serious
thought to whether unionization would provide them with a counter-weight to economic leverage of the major
health plans. While most are aware that the antitrust laws bar them from engaging in collective negotiations as
a group of independent physicians, some have a mistaken belief that they can engage in collective bargaining if
they joined a labor union authorized to represent individuals in collective bargaining procedures. Generally,
most self-employed physicians lose interest in union formation when they find out that the antitrust laws do not
allow them to engage in collective bargaining even if they are part of a union.
However, in the face of a market place dominated by large health plans that essentially can dictate the terms and
conditions of dealing, many self-employed physicians are demanding legislative reform, similar to
Representative Campbell’s “Quality Health Care Coalition Act” that would allow them to engage in collective
bargaining with health plans. They are lobbying their associations, including the AMA, and their federal
representatives and senators, to advance bills that would modify federal antitrust or labor laws or both to allow
collective bargaining by self-employed physicians.
Applicability of the Law. In the absence of legislative action, however, self-employed physicians face an
uphill battle if they wish to engage in collective activity. There are, however, several avenues available for use,
in selected circumstances, that could enable some “self-employed” physicians to engage in collective economic
activity.
B of T Rep. 30 - A-99 -- page 27
1. Is the physician truly “Self-employed”? Before physicians can engage in collective bargaining under the
labor exemption, the bargaining process must be part of a labor dispute. For there to be a labor dispute, the
collective bargaining must concern the terms and conditions of employment. Therefore, the physicians must be
employees and the dispute must be with the employer. Unfortunately, the law generally views self-employed
physicians as independent contractors, entrepreneurs, or independent businesses who do not qualify for the
labor exemption. Because they are not viewed legally as employees, they cannot engage in collective
bargaining.
However, the fact that persons who seek to engage in collective bargaining are not in a formal employment
relationship does not conclusively disqualify them from the labor exemption. Courts will look at the nature of
the relationship to determine whether the persons are employees in substance even though they do not have a
formal employment relationship. Employers cannot escape the labor exemption and the protection extended to
employees by the National Labor Relations Act and its successor statutes by calling their workers independent
contractors instead of employees.
Because of the changing dynamics of the marketplace, some physicians contend that health plans now exert so
much control over their independent practices that they are no longer truly “independent,” and should qualify
for the labor exemption. This is a legitimate argument, but a review of the law reveals that it is not likely to
succeed under current law.
While courts are willing to look at the substance of the relationship to determine whether a person is an
employee for purposes of the antitrust and labor laws, the concept of an employee still is restricted largely to the
traditional salaried or hourly employee who works during designated times at a designated place. There was a
time when the definition of employee seemed to be more expansive. In NLRB v. Hearst,18 the Supreme Court
said that protection of the National Labor Relations Act is “not confined exclusively to ‘employees’ within the
traditional legal distinctions separating them from ‘independent contractors.’” The court went on to say that
inequalities in bargaining power in controversies over wages, hours, and working conditions may as well
characterize the status of independent contractors as employees, and that the National Labor Relations Act may
protect persons who, under traditional concepts and common law definitions, are technically independent
contractors.
However, not long after Hearst, Congress enacted the Labor Management Relations Act, which made clear that
the National Labor Relations Act was restricted to the traditional meaning of “employee,” and that independent
contractors do not qualify for its protections.19 Since that time, the courts have applied common law principles
of agency to distinguish between an independent contractor and an employee. These common law principles
are guided by an analysis of the following criteria:
•
The extent of control which, pursuant to the agreement between them, the alleged employer may
exercise over the worker. The greater the amount of control, such as the hours of work required and the
time and place of work, the more likely it is that the individual is an employee. Independent physicians
that contract with a health plan are almost never subjected to the same kind of controls that an employer
places on employees, such as hours of work, vacation time, work rules, and many others.
•
Whether the worker is engaged in a distinct occupation or business. If so, that is more indicative of
independent contractor than employee status. Physicians are clearly engaged in a distinct occupation or
business.
•
The kind of occupation and whether the work involved is usually done under the direction of an
employer. If the occupation is normally done by self-employed individuals, then that indicates
independent contractor status. Historically, physicians have been self-employed, although that is
changing -- according to AMA surveys about 45% of physicians are now employed.
B of T Rep. 30 - A-99 -- page 28
•
The skill required for the work involved. The higher the degree of skill, the more likely it is that the
individual is an independent contractor. There are few occupations that require a higher degree of skill
than being a physician.
•
Whether the alleged employer supplies the instrumentalities, tools, and the place of work. If so, that
indicates employed status. However, physicians in independent practice normally own or rent their
own office space and equipment, and employ their own staff.
•
The length of time for which the worker is hired. Indefinite and long term relationships are more
indicative of employed status. Physician contracts with health plans are normally on an annual basis.
•
Whether the pay is by time period or by the job. Physicians in independent practice are normally not
paid a salary by health plans. They receive a fee for each service, capitation, or some blend of the two.
•
Whether the work is part of the regular business of the employer. If so, then the person is more likely to
be an employee. There was a time when health care delivery was not part of the business of an insurer,
but that is changing. Delivery is becoming an increasingly important part of the business of a health
plan.
•
Whether the alleged employer and the worker believe that they have created an employment
relationship. Normally health plans and physicians do not believe that they have an employment
relationship.
Unsurprisingly, when analyzed under these criteria, the relationship between a self-employed physician and a
hospital or health plan generally is that of an independent contractor.
A 1997 consent order between the Federal Trade Commission and the College of Physicians-Surgeons Puerto
Rico demonstrates the applicability of the common law criteria--as well as the impact of self-employed
physicians being unable to rely upon the labor exemption. In 1994, the legislature of Puerto Rico authorized
the creation of the College, a quasi-public organization. Under the law, membership in the College is
mandatory for Puerto Rican physicians, and the Puerto Rican government is required to consult with the
College on medical issues that affect the College and its members.
Subsequently, the legislature of Puerto Rico passed a health reform law that is designed, in part, to provide
health care services to indigent persons in Puerto Rico. The College felt that the new program had a capitation
rate that was too low, and that it had other defects. After the Puerto Rican government failed to modify the
program in response to the College, the College held a seventy-two hour protest, and a number of physicians
refused to provide services except on an emergency basis. The Federal Trade Commission investigated,
alleged that the College had sponsored a boycott, and offered to settle with a consent order. The College
accepted the terms of the order, which bars the College from leading subsequent boycotts and requires the
College to pay a $300,000 fine.20
Notwithstanding the foregoing precedents, however, a case currently before the full panel of the regional
National Labor Relations Board presents some hope for self-employed physicians. A union representing a
group of independent self-employed physicians in New Jersey who participate in an Amerihealth HMO
physician panel is arguing that the physicians are de facto employees of the HMO because the HMO (a Blue
Cross affiliate) controls material aspects of the physicians’ practices. Local 56 of the United Food and
Commercial Workers Union in New Jersey21 filed a petition with the National Labor Relations Board asking to
be certified as the exclusive bargaining agent for physician.
On January 8, 1998, the Regional Director of the National Labor Relations Board, Dorothy L. Moore-Duncan,
denied the union’s petition for certification of representation without a hearing on January 8, 1998.22 The
regional director found that the weight of the evidence was substantially more in favor of finding the physicians
B of T Rep. 30 - A-99 -- page 29
to be independent contractors than employees for purposes of the National Labor Relations Act. She
specifically noted both the fact that the contract stated that the physicians were independent contractors and that
the physicians have substantial contracts with and receive a substantial portion of their income from other
health plans.
B of T Rep. 30 - A-99 -- page 30
To the surprise of many, in August 1998, the NLRB ruled that the regional director must grant the union a
hearing to determine whether in practice, Amerihealth exerts enough control over the physicians to warrant
their being considered employees entitled to collectively bargain. That hearing was held in November 1998,
and as of March 1999, a decision had not been rendered. The consensus in the health law community seems to
be that Local 56 and the physicians face an uphill battle; nonetheless, if the regional NLRB should rule in their
favor it would give significant impetus to physicians wishing to balance the economic power of health insurers.
Regardless of the decision, it is likely that the losing side will continue to appeal and that this case will remain
in the spotlight.
In summary, under current law, self-employed physicians in independent practice do not qualify for the labor
exemption from the antitrust laws and do not qualify for the protection of the National Labor Relations Act.
They are classified as independent contractors, not employees. Therefore, they may not engage in collective
bargaining with health plans.
2. Exception to the Independent Contractor Rule. There are some occupations in which “non-employees” have
been allowed to engage in collective bargaining. Examples include truckers who own and drive their
vehicles,23 musicians,24 and screen directors.25 The occupations involved in these areas, however, are generally
not comparable to independent physicians. They involve workers who are frequently in an employment
relationship, but where some portion of the workers in the occupation operate as independent contractors. The
independent contractor relationship is generally closer to an employment relationship than physicians because
of a higher degree of control, the independent contractors tend to come to the place of the party that hire them,
and they tend to work for one person at time. The courts have allowed unions to engage in collective bargaining
on behalf of both the employed members of the occupational group and the independent contractors.
The reason that this is permitted is to preserve the integrity of the collective bargaining on behalf of the
employed workers. If the independent contractors, who are in competition with the employed workers, were
excluded from the collective bargaining process, that could undermine the bargaining agreements reached
about pay and terms of employment. In other words, the courts allow this bargaining on behalf of independent
contractors not to protect the independent contractors, but to protect the members of the occupation who are in
fact employees. These kinds of conditions generally do not occur in physician relationships with health plans
and hospitals.
It may be that in the future there are large numbers of physicians who are employees, and that it may be possible
to demonstrate that a union must negotiate on behalf of both the employed and independent physicians in order
to protect the employed physicians. However, we have not yet reached that point.
3. The use of the messenger model by self employed physicians. The “messenger model” is the most widely
available means for independent physicians to engage jointly in a modicum of negotiating with a health plan.
Generally speaking, the Messenger Model is a means for a group of independent contractors to negotiate in a
legal manner with an entity that deals with each of them. The model is particularly applicable to physicians
because of the fragmented nature of their practices--especially when compared to the increasingly consolidated
insurance arena. The messenger model as outlined by the Federal Trade Commission and Department of
Justice is intended for use by self- employed physicians who wish to form a network that can be marketed to
payers. It would be illegal for the self-employed physicians to agree on fees to charge and engage in joint
negotiations with payers based on those agreements. That would constitute price fixing, which is a criminal
violation of the federal antitrust laws. The messenger model is designed to allow self-employed physicians to
market themselves as a network without engaging in price fixing by agreeing among themselves about fee
levels.
The messenger model is a process whereby providers can gather and present future fee-related information,
meaning fees and fee-related terms that providers are willing to accept, to purchasers and agree upon fees with
B of T Rep. 30 - A-99 -- page 31
purchasers. It allows the physicians in the network to arrive at a fee schedule with payers without the
physicians agreeing among themselves about what fee schedule they will accept.
This is done by having a messenger manage a process whereby each of the physicians in the network arrive at
individual agreements with the payer as opposed to having a representative of the physicians negotiate a fee
schedule on behalf of all of the physicians. The process works as follows:
•
The messenger communicates with each physician individually about what fee-range the physician is
willing to accept.
•
Each physician may give the messenger the prices and other terms that the physician is willing to
accept.
•
The messenger then aggregates the information obtained from each individual physician. In doing so,
the messenger may develop a schedule showing what percentage of physicians in the network would
accept offers at various fee levels. However, the messenger may not share this information with the
physicians.
•
The messenger then presents the schedules to payers. Any payer may then make an offer to the
physicians in the network. The offer is most likely to be in the form of a fee schedule.
•
The messenger may accept the offer on behalf of any physician who has given the messenger authority
to accept offers within the fee range offered by the payer. The messenger may also accept offers on
behalf of any physician that are better than any offer previously accepted by that physician. However,
the messenger may not engage in any negotiations with the payer on behalf of the physicians.
•
Any offer that is not within the fee range authorized by a physician must be forwarded to that physician
for acceptance or rejection.
•
The messenger may provide objective information to physicians in the network about a contract offer
made by a payer, such as the meaning of terms and how the offer compares to offers made by other
payers. However, the messenger may not give advice about whether to accept the offer or not, and
physicians in the network may not communicate with each other about whether to accept a given offer
or not. The messenger may not, directly or indirectly, lead or facilitate a boycott of a payer that is
designed to influence the terms of dealing offered by the payer. After establishing whether a physician
will accept the offer, that information is then communicated back to the payer.
As is apparent from a reading of the foregoing points, effective compliance with the messenger model is no
easy matter. Moreover, the government keeps a close eye on physicians employing this model. Indeed, the
DOJ’s complaint against the Federation of Physicians and Dentists shows the thin line that exists between the
messenger model and an illegal group boycott or conspiracy.
C. Resident Physicians
Resident physicians are graduates of medical school who are in a graduate medical education program
sponsored by a hospital or another institution in affiliation with a medical school. In the view of the AMA,
residents are employees of the hospital or institution sponsoring the residency program, and they are also
students. Because of their demanding working conditions and low pay, resident physicians have long been
interested in unions. The largest physician union, the Committee on Interns and Residents, specializes in
representing residents.
Currently there is renewed interest in unions among residents. They allege that hospitals are placing more work
demands on them that are unrelated to their education as part of cost-cutting efforts. Residents claim that
B of T Rep. 30 - A-99 -- page 32
hospitals have reduced their non-professional staffs, especially at night, and that they are demanding that
residents perform many of the unskilled or menial tasks formerly handled by orderlies and other
non-professional staff. Residents claim that these demands detract from their education and that they place
unreasonable burdens on them.
The National Labor Relations Board has a long standing policy that resident physicians are students, not
employees, and therefore are not entitled to protection by the National Labor Relations Act.26 The Committee
on Interns and Residents has filed a representation petition on behalf of residents at Boston Medical Center,
which asks the National Labor Relations Board to revisit that policy, and hold that residents are employees
entitled to collectively bargain under federal law.27 This petition has attracted a lot of attention among resident
physicians and in the legal community, and a decision is expected in the near future.28
In California and New York, state law allows residents employed by state institutions to organize collective
bargaining units.29 In addition to the resident unions organized under state laws, a number of institutions with
resident programs have voluntarily recognized resident organizations as the bargaining agents of residents. In
fact, the residents’ union at issue in the CIR petition mentioned above is voluntarily recognized by the Boston
Medical Center.
Generally speaking, no antitrust issues arise from the collective bargaining efforts of residents. In an economic
sense (even if not in the eyes of the NLRB), they are not actors independent of the hospitals, and they are not in
competition with other residents on an economic level. Consequently, they are not hindered by any fears of
antitrust liability.
D. Summary
Employed physicians generally fall within the labor exemption from the antitrust laws and may engage in
collective bargaining with employers. Whether or not employed physicians have the protection of the National
Labor Relations Act when they attempt to engage in collective bargaining depends on whether they are
classified as supervisory or non-supervisory employees.
Self-employed physicians in independent practice do not fall within the labor exemption from the antitrust laws
and are not entitled to the protection of the National Labor Relations Act. As a general matter, they may not
engage in collective bargaining with health plans. On a case by case basis, it is possible, albeit unlikely, that
some such physicians may be found to not be “independent contractors,” in which case they could collectively
bargain. More likely, the best route for such physicians, under current law, is to proceed under a messenger
model in negotiating with health plans--with the all important caveat that the implementation of the model
should be guided (and overseen) by experience antitrust counsel – or to pursue more complex forms of
integration.
Resident physicians, on the other hand, have little or no worry about antitrust exposure, due to the dependent
nature of their practice/education.
III. THE STATUS OF PHYSICIAN UNIONS
Despite the recent media attention, the number of unionized physicians remains small. According to AMA
information, there are 756,710 practicing physicians in the United States (that figure includes physicians in
residency).30 According to the Department for Professional Employees at the AFL-CIO, about 42,000
physicians are members of unions.31 Of the 42,000 physician union members, about 6,000 to 9,000 are resident
physicians employed at hospitals, and presumably a large number of the remaining members are
publicly-employed physicians who have been represented by unions for years.
A. What Type of Organizations may be Recognized as Unions?
B of T Rep. 30 - A-99 -- page 33
Some physicians believe that a union affiliated with the AFL-CIO that has been certified to represent an
occupation in labor disputes can engage in collective bargaining on behalf of self-employed physicians in
independent practice. That is not the case. The ability of any group of individuals to fall within the labor
exemption and gain the protection of the National Labor Relations Act depends on the status of the individuals,
not on the status of the organization that seeks to represent them. Since under current law, self-employed
physicians in independent practice are independent contractors, not employees, no person or entity can engage
in collective bargaining on their behalf.
Unions and other organizations – including medical associations – may engage in collective bargaining on
behalf of employed non-supervisory physicians. In fact, a group of employees may form an independent single
employer bargaining unit without any outside affiliation, as with the physicians at Medical West Associates in
Massachusetts. To qualify for the ability to represent physicians in collective bargaining under the protection
of the National Labor Relations Act, the association must qualify as a “labor organization” as defined by that
act and be certified by the National Labor Relations Board.
Under the National Labor Relations Act, a “labor organization” is defined as any group, agency, committee,
panel, or plan in which employees, as defined in the National Labor Relations Act, participate, and which is
established at least partially for the purpose of dealing with the employer concerning grievances, conflicts,
wages, rates of pay, hours, or other conditions of work. An entity does not have to have a formal internal
structure to constitute a labor organization under the Act.
Therefore, it is possible for a medical society to become certified under the NLRA to act as a collective
bargaining agent on behalf of the employees of a given employer. Some medical societies are exploring this
option. However, there are a number of legal issues that must be addressed, including potential conflicts of
interest that might arise, and possible issues relating to the tax-exempt status of a medical society. One option
may be to form a separate organization to act as the union.
B of T Rep. 30 - A-99 -- page 34
B. Physician Unions
The major organizations, which are discussed herein, essentially fall into two categories: Those historically
devoted to representing physicians, and large, AFL-CIO trade unions that are now extending their scope to
include physicians.
Physician unions are not a new phenomenon--they have existed for decades. For example, the Committee of
Interns and Residents (CIR), which primarily represents residents employed by hospitals, was founded in 1957.
Of the two largest unions that represent exclusively practicing physicians, one, the Union of American
Physicians and Dentists (UPD), was founded in California in1972, and the other, the Federation of Physicians
and Dentists (FPD), was founded in Florida in 1981.
In fact, the 1970s were a period during which there was a substantial amount of interest among physicians in
unionization.32 At that time, regulations developed by the Medicare program to reduce costs were beginning to
have a substantial impact for the first time. Medicare used hospitals as a vehicle for implementing regulations,
and hospitals had to make demands on physicians in order to comply. Physicians resented the intrusion of
hospital management on their practices. In addition, in some parts of the country, especially California,
managed care began to become a significant factor in the market. However, after a few years of intense interest
and dialogue, interest among physicians in unions faded. Of 26 physician unions in existence in 1975, only two
remain — the Union of Physicians and Dentists and the Doctors Council of New York.33
The two primary unions that specialize in representing practicing physicians, UPD and FPD, engage in
collective bargaining for employed physicians, primarily publicly employed physicians.34 In addition, they
operate independent practice associations for self-employed physicians. The UPD is currently the largest
physician union, with about 5,000 members.35 According to its staff, about 55% of the members are employed
physicians (primarily publicly-employed) and about 45% are self-employed in independent practice. Dues are
$700 a year for employed physicians and $420 for self employed physicians. The disparity is attributed to the
fact that the union can engage in collective bargaining for the employed physicians, but is barred by federal
antitrust laws from bargaining on behalf of self-employed physicians. Self-employed physicians also pay a
one-time membership fee to become part of an IPA that is managed by the union. The IPA claims that it has
three million covered lives.
The FPD is the second largest physician union and has about 2500 members.36 FPD represents both employed
and self-employed physicians, and annual dues are $520. Among the employed physician members are the
physicians employed by the Thomas Davis Clinic in Tucson, Arizona, whose unionization was recognized by
the NLRB in 1997.
FPD is in the forefront of efforts to utilize the messenger model to negotiate contracts on behalf of
self-employed physicians. It has developed and employs an IPA to negotiate contracts using that messenger
model. In the past year, however, FPD has been in the unwelcome glare of the spotlight for its implementation
of the messenger model. It has claimed success in raising payment levels for self-employed physicians
participating in these IPAs. In response, certain payers complained that the union was in fact engaging in
price-fixing, and the United States Department of Justice began an investigation of FPD activities in
Connecticut, Delaware, Florida, and Ohio. In July 1997, DOJ filed suit alleging that in Delaware FPD is, in
fact, engaging in price-fixing and signaling physicians to boycott payers.37 FPD claims that it has been
complying with the guidelines for the messenger model.38 The investigations in the other three states are
ongoing.39
The third largest physician union is the Doctors Council of New York (DCNY),40 which represents 3,300
attending physicians, dentists, podiatrists, and veterinarians employed by New York City agencies, hospitals,
and clinics. In 1991, this union led a strike at New York’s Woodhull Medical Center to prevent layoffs of
hospital personnel and to restore certain services. A settlement was reached. At one time DCNY represented
10,000 physicians in six states, but halted activities outside of New York when the Federal Trade Commission
B of T Rep. 30 - A-99 -- page 35
warned of possible antitrust violations. However, according to an article in the November, 1996 Crain’s New
York Business, DCNY plans to recruit members more aggressively and has started meeting with group
practices in New York City.
While the foregoing unions devote their attention to practicing physicians, there are also two substantial unions
of resident physicians. The largest is the Committee on Interns and Residents (CIR), which represents
5,000-7,000 residents at about 50 hospitals.41 CIR organizes residents in collective bargaining units in those
states that permit such activity. It has lead strikes and engaged in collective bargaining on behalf of those
residents. CIR also organizes bargaining units that are voluntarily recognized by residency program. As noted
above, CIR has filed a petition with the National Labor Relations Board to certify a residents’ union in
Massachusetts.42 The other major union of residents is the California Association of Interns and Residents,
which has 1,000-2,000 members.43
C. Traditional Trade Unions
In addition to the more or less exclusively physician unions, traditional trade unions have begun to target
physicians, especially self-employed physicians, for membership. These unions are aware that the antitrust
laws bar them from engaging in collective bargaining on behalf of self-employed physicians. With some
exceptions, the unions do not attempt to mislead the physicians into believing that they can bargain for them.
Instead, they emphasize that they are aggressive advocates who can help physicians at the local level. They
highlight their affiliation with the AFL-CIO, and the lobbying clout in Washington and state capitols that the
AFL-CIO has garnered. Some observers note that because unions have often been on the opposite side on
issues critical to physicians, such as tort reform, the advocacy angle may have limited appeal to many
physicians.
The unions also emphasize that AFL-CIO affiliated unions control many self-funded health plans organized
under the Employees Retirement Income Security Act (ERISA), and that AFL-CIO affiliated unions negotiate
collective bargaining agreements with employers that control many other ERISA plans. Notwithstanding
ERISA’s bars on self-dealing and its imposition of high fiduciary standards, they state or imply that this
influence over self-funded plans can benefit physicians. To date, it is unclear whether the unions have gained
any concessions for physicians. Finally, they promise that they will work to obtain an exemption from federal
antitrust laws to allow self-employed physicians to bargain
The three major AFL-CIO unions to move into the physician field are the Office Professional Employees
International Union (OPEIU),44 the Service Employees International Union (SEIU),45 and the American
Federation of State, County, and Municipal Employees (AFSCME). To facilitate their entry in to this market,
AFSCME and SEIU have affiliated with existing physician unions, AFSCME with UPD and FPD, and SEIU
with CIR.
Of these three unions OPEIU has had the most reported success to date. It has formed an affiliation with the
American Podiatric Medical Association, and has formed the First National Guild for Providers of the Lower
Extremities. State chapters of the Guild have been formed in Pennsylvania, California, Michigan, and New
Hampshire, and expected to form chapters in at least three other states. OPEIU expects to enroll 10,000 out of
the nation’s 14,000 podiatrists. OPEIU also is targeting allopathic physicians for membership..
OPEIU does not plan to engage in collective bargaining on behalf of self-employed podiatrists or physicians.
This fact was key to a finding by the FTC that OPEIU was not in violation of the antitrust laws.46 To attract
members, it emphasizes its relationship with the AFL-CIO and the influence of that organization in the
Democratic Party, and claims that it will be an effective lobbyist. It also emphasizes its relationship with union
sponsored and Taft-Hartley health plans through the AFL-CIO, and its influence over the health benefits plans
of large, self funded employers through collective bargaining agreements negotiated by other AFL-CIO unions.
OPEIU hopes to assure coverage for podiatry services through these relationships.
B of T Rep. 30 - A-99 -- page 36
Another major union that seeks to represent physicians is SEIU, which has 1.2 million members nationwide, of
whom about 600,000 are health care workers. SEIU’s organizing activities with hospital workers may have led
to its interest in representing physicians and it currently represents some physicians employed by public
hospitals. SEIU is the exclusive bargaining agent for the employed physicians at Medalia HealthCare in
Seattle, Washington whose bargaining unit was recognized by the NLRB. Moreover, in the past year, SEIU has
successfully pursued formal affiliations with the Committee on Interns and Residents and the United Salaried
Physicians and Dentists, which represents about 700 physicians in the New York City area.
Conclusion
The current physician interest in unions is an understandable reaction to the powerful positions some health
plans have staked out in many markets and the heavy-handed tactics that often follow. Because of the pressures
facing physicians in the current environment, the AMA is working in partnership with state, county, and
specialty societies to reinforce its traditional function of aggressive advocacy on behalf of physicians and
patients before the legislatures and the courts and to expand its aggressive advocacy in the private sector, within
the limits of the antitrust laws, both with health plans directly and with the public.
B of T Rep. 30 - A-99 -- page 37
ENDNOTES
1. Even though they are “employees” as a matter of corporate law, both the AMA and the discussion in
this Article characterize individuals who are major shareholders and have substantial influence in the
management of a group practice to be “owners” of that group and thereby be “self-employed.” For the
purposes of the AMA statistics, a “major shareholder” includes a physician but who has the ability and
opportunity to exert a meaningful role in the management of the group practice, regardless of the percentage of
shares that he owns. An interesting question is whether physicians who are employees or shareholders of
entities that are designed to circumvent the bar on the corporate practice of medicine (such as medical service
corporations established by physician practice management companies or hospitals) are “employees” for
purposes of federal antitrust and labor laws. The physicians selling their practices may get non-controlling
shares in the medical service corporation and enter into an employment contract or a long-term independent
contractor arrangement with it. The relationship between the physicians and the medical service corporation
and the controlling entity is confusing, and is subject to a high degree of variation. It will be interesting to see
whether in light of the favorable NLRB rulings, physician practice management companies, hospitals and other
institutions attempt to structure these relationships to avoid jurisdiction of the labor laws.
2. See Daniel J. Gifford, “Redefining the Antitrust Labor Exemption,” 72 Minn. L. Rev. 1379 (1988),
for a discussion of the conflict between the purposes of the federal antitrust laws and the federal labor laws.
3. Clayton Act § 6, 15 U.S.C. § 17.
4. 29 U.S.C. § 52.
5. 29 U.S.C. § 101-115.
7. 29 U.S.C. § 151 et seq.
8. 29 U.S.C. § 401 et seq.
9. See Earl W. Kintner and Joseph P. Bauer, Federal Antitrust Laws, Vol. IX § 72.7 at pp. 311-324,
Anderson Publishing Co. (1989).
10. More information about employed physicians, including the survey techniques and other
information about employed physicians, can be obtained by contacting Phillip Kletke at the American Medical
Association, 515 N. State Street, Chicago, Illinois 60610. Mr. Kletke’s telephone number is (312) 464-4337.
11. Unions have played an important role in collective bargaining on behalf of publicly employed
physicians for years. These physicians generally are organized under state labor laws that allow state
employees to form labor unions.
12. Supervisory employees do not qualify for the protection of the National Labor Relations Act. 29
U.S.C. § 152(3).
13. See footnote 1, supra.
14. (see Physicians Find Power in Unions, Modern Health Care, October 6, 1997.)
15. The participation of physicians in unions is well accepted by public employers, particularly where
the bargaining unit covers many other occupations.
B of T Rep. 30 - A-99 -- page 38
16. Current policy of the United States Department of Justice (DOJ) and the Federal Trade
Commission (FTC) is found in the “Statements of Antitrust Enforcement Policy in Health Care,” issued by the
DOJ and the FTC in August of 1996.
17. If Aetna’s acquisition of Prudential Health Care is approved, Aetna will be the largest health plan
in the country, providing health care services to 10% of the United States. (“Aetna to Acquire Prudential
Health Unit,” Wall Street Journal, December 11, 1998.)
18. 322 U.S. 111 (1944).
19. The term employee “shall not include…any individual having the status of an independent
contractor…” 29 U.S.C. § 152(3).
20. College of Physicians-Surgeons Puerto Rico, 5 Trade Reg. Rep. [CCH] § 335 (10/2/97).
21. The Local 56 Web Site is at http://www.ufcwlocal56.com.
22. Docket No. 4-RC-19260, decided 1/8/98.
23. Local 24, Int’l Brotherhood of Teamsters v. Oliver, 358 U.S. 283 (1959).
24. American Federation of Musicians v. Carroll, 391 U.S. 99 (1968).
25. Home Box Office Inc. v. Directors’ Guild of America, Inc., 531 F. Supp. 578 (S.D.N.Y. 1982),
affd, 708 F.2d95 (2d Cir. 1983).
26. Cedars-Sinai Medical Center and Cedars Sinai Housestaff Association, 223 N.L.R.B. 251 (1976).
27. In the Matter of Boston Medical Center and Committee of Interns and Residents, Case No.
1-RC-20574, currently pending before the National Labor Relations Board.
28. While the AMA believes that resident physicians qualify as employees for purposes of the
National Labor Relations Act, it is concerned about the potential for residency programs, which should be
primarily of an educational nature, to become mandatory subjects of collective bargaining. Therefore, it is
attempting to persuade the Accreditation Council for Graduate Medical Education, a not for profit association
that accredits almost all residency programs in the United States, to adopt a requirement that residency
programs allow residents to form organizations for their mutual benefit and protection and engage in good faith
negotiations with those organizations. Such organizations would be barred from engaging in strikes and could
not force any resident to participate who did not wish to be involved.
29. See University of California v. Public Employment Relations Board, 715 P.2d 590 (1986). For a
discussion of state laws that allow residents to form unions under state labor laws applicable to employees of
state and local units of government, see Daniel W. Srsic, “Collective Bargaining by Physicians in the United
States and Canada,” 15 Comp. Lab. L. 89, 105-107 (1993).
30. For information about the manner in which this statistic was gathered, or for breakdowns, contact
Kevin Kenward of the American Medical Association, 515 N. State Street, Chicago, Illinois 60610. Mr.
Kenward’s telephone number is (312) 464-4919.
31. The unions included in the AFL-CIO’s count include the Federation of Physicians and Dentists,
which is affiliated with the American Federation of State, County, and Municipal Employees (AFSCME), the
Union of Physicians and Dentists, also affiliated with AFSCME, the Federation of Nurses and Health
Professionals, which is a division of the American Federation of Teachers, Physicians Union of New Jersey,
B of T Rep. 30 - A-99 -- page 39
which is affiliated with the International Association of Machinists, the National Guild for Medical Providers,
which is affiliated with the Office of Professional Employees International Union, and the Committee on
Interns and Residents, which is affiliated with Service Employees International Union. The AFL-CIO
Department for Professional Employees is located at 815 16th Street, NW, Washington, DC 20006, and its
phone number is (202) 638-0230, and its E-mail is [email protected]. The AMA, relying on press reports,
had previously estimated that no more than 20,000 physicians were union members. The AMA is now relying
upon the AFL-CIO count.
32. For an account of this era, see Grace Budrys, When Doctors Join Unions, Cornell University Press
(1997).
33. Id. at 16-17. The Doctors Council of New York represents primarily salaried physicians employed
by health facilities operated by the City and County of New York.
34. Although the AMA considers residents to be “employees,” because they are also students they are
considered in a separate category for the purposes of this analysis. As noted above, the Committee on Interns
and Residents has represented residents in collective bargaining for many years.
35. UPD is affiliated with the American Federation of State, County, and Municipal Employees
(AFSCME), a very substantial union affiliated with the AFL-CIO. AFSCME apparently became interested in
representing physicians because it has organized unions of various workers at hospitals owned by state or local
units of government. Rules of the National Labor Relations Board allow physicians to be separate bargaining
units at hospitals. 29 C.F.R. § 103.30. The UPD Web Site is at http://www.dapd.com/jindex.html.
36. FPD is affiliated with the National Union of Hospital and Health Care Employees, the American
Federation of State, County, and Municipal Employees (AFSCME) and the AFL-CIO. The FPD Web Site is
http://www.netally.com/fpd.
37. Sarah A. Klein, “Physicians’ Union Feels Antitrust Scrutiny,” American Medical News, March 9,
1998 at 3.
38. Guidelines for the legal operation of messenger model networks are set forth in the “Statements of
Antitrust Enforcement Policy in Health Care,” issued by the United States Department of Justice and the
Federal Trade Commission in August of 1996, at pgs. 125-127 and 138-140.
39. Sarah A. Klein, “Physicians’ Union Feels Antitrust Scrutiny,” American Medical News, March 9,
1998 at 3.
40. The Doctors Council of New York Web Site is http://www.doctorscouncil.com.
41. CIR’s Web Site is http://cirdocs.org.
42. See footnote 2, supra.
43. It is affiliated with the Hospital and Health Care Workers Union Local 250 based in Oakland,
California, which is in turn affiliated with SEIU. No Web Site was found for this union, but there is a Web Site
for an affiliate, UCAIR, University of California Association of Interns and Residents, at
http://www.igc.apc.org/ucair.
44. The OPEIU Web Site is at http://www.opeiu.org.
45. The SEIU Web Site is at http://www.seiu.org/seiutop.html.
B of T Rep. 30 - A-99 -- page 40
46. See letter of Robert F. Liebenluft, Assistant Director for Health Care, Bureau of Competition,
Federal Trade Commission of Melvin S. Schwarzwald, dated Ma 22, 1997.
B of T Rep. 30 - A-99 -- page 41
APPENDIX B
GLOSSARY OF TERMS
The following glossary of terms covers many of the legal and technical distinctions that relate to the proposal
for a collective bargaining unit and topics related to physician negotiations.
B of T Rep. 30 - A-99 -- page 42
GLOSSARY
AMA Advocacy Agenda: Broad, multifaceted approach to provide physicians with on-site assistance and
tools to help them address professional issues and concerns with entities (health plans, employers, hospitals,
etc.) that now have substantial control over the healthcare delivery system.
Antitrust Violation: Conduct that unreasonably restrains trade or has the purpose or effect of monopolizing
competition. For this report, antitrust issues generally refer to agreements to fix prices, boycott payers, etc.
Bargaining Unit: The National Labor Relations Act does not specifically define “bargaining unit.” Section
9(a) of the Act states only that the employees may select an exclusive bargaining representative in a “unit
appropriate for such purposes.” The National Labor Relations Board has expanded on this minimal statutory
pronouncement to provide that a bargaining unit is a group of two or more employees aggregated for the
assertion of organizational rights or for collective bargaining. The basic test for determining what is an
“appropriate” unit is whether the employees share a “community of interests.” Under this test the Board looks
at five factors: (1) similarity of duties, skills, interests, and working conditions of the employees, (2)
organizational structure of the employer, (3) desires of the employees, (4) extent and type of union organization
of the employees, and (5) bargaining history in the industry.
Steps To Develop A Physician Bargaining Unit
Fact Finding And Analysis: Gather information about the physician group including size,
demographics, major problems, previous efforts to rectify problems, previous labor union activity,
level of dissatisfaction, and other pertinent information and determine the eligibility, advisability, and
likelihood of success of attempting to form a local bargaining unit.
Organizing: Stage an informational campaign regarding the reasons and benefits of forming a
bargaining unit while collecting signed cards from at least 50-66% of the group indicating interest in
the unit. After completion of card signing, continue with an intense informational campaign
culminating in a NLRB sponsored election needing a majority to become certified as a bargaining unit.
Contract Negotiations: Conduct good faith negotiations with the administration resulting in a
contract ultimately agreed to and signed by both parties. A bargaining unit is only deemed successful,
functional and dues collecting following the joint approval of formal labor contract.
Contract Administration: Oversee the administration of the contract and take appropriate action
should employer undertake actions in violation of the contract.
Campbell Bill: Federal legislation, HR 1304, introduced this year by Representative Tom Campbell (R-CA).
This bill would create an exemption from antitrust laws for self-employed and small groups of physicians to
collectively negotiate with health plans.
B of T Rep. 30 - A-99 -- page 43
Collective Bargaining/Negotiate*: To bargain collectively is the performance of the mutual obligation of the
employer and the representative of the employees to meet at reasonable times and confer in good faith with
respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or
any question arising thereunder, and the execution of a written contract incorporating any agreement reached if
requested by either party, but such obligation does not compel either party to agree to a proposal or require the
making of a concession. 29 U.S.C. 158(d).
The NLRB has promulgated formal rules specifically defining appropriate units only with regard to “acute care
hospitals.” 29 C.F.R. § 130.30 Acute care hospitals are those in which (1) the average patient stay is less than
30 days or (2) over 50 percent of all patients are admitted to units in which the average length of stay is less than
30 days. The Board rule establishes eight units that are appropriate in acute care facilities: (1) physicians, (2)
registered nurses, (3) all other professionals, (4) technical employees, (5) skilled maintenance employees, (6)
business-office clericals, (7) guards, and (8) all other non-professionals.
Good Faith: The term “good faith” has been further defined as “an obligation to participate actively in
the deliberations so as to indicate a present intention to find a basis for agreement.” NLRB v.
Montgomery Ward & Co. 133 F.2d 676 (9th Cir. 1958). Except in cases where the conduct fails to meet
the minimum obligations imposed by law or constitutes an outright refusal to bargain, relevant facts
and the “totality of the circumstances” must be studied to determine whether the employer or the union
is bargaining in good or bad faith.
Mandatory Subjects of Bargaining: The Act requires employers to bargain over wages, hours, and
working conditions. Various Board pronouncements have elaborated upon each of these terms. Wages
include but are not limited to the basic hourly rates of pay, overtime, bonuses, incentive plans, shift
differentials, pension plans, health and welfare plans, profit sharing plans, paid vacation, paid holidays,
call-in pay, severance pay, employer-provided living accommodations, meals and services. Hours
include but are not limited to the hours of work each day, the days that will be worked each week,
specific employee work schedules, overtime requirement, break periods and lunch periods. Working
conditions is the generic catchall that defies specific definition. Examples include grievance
procedures, layoff and recalls, discharge, workloads, sick leave, work rules, use of bulletin boards,
change of payment schedules, definition of bargaining unit work, allocation of duties and assignments,
seniority, promotions, transfers, union security, management rights clauses, employee drug and
alcohol testing, safety rules, no strike/no lockout clauses, non-discrimination provisions, change in
operating procedures, relocation of work, cessation of operations.
Permissive Subjects of Bargaining: The Board has recognized certain subjects that are not
mandatory but which the parties can bargain over if they choose. Examples of items which are
permissive include: the definition of the bargaining unit, settlement of unfair labor practice charges,
union label, internal union affairs and interest arbitration.
* The phrase “collective negotiations” has been used with some frequency during informal discussions. This is not, however, a term of art
which is defined by the law or by the NLRB.
B of T Rep. 30 - A-99 -- page 44
Prohibited Subjects of Bargaining: Employers and labor organizations are prohibited from
bargaining and agreeing to certain subjects. The subjects include: certain types of closed shop
agreements, agreements which require the parties to discriminate against certain protected
classes (e.g. race), agreements which require employers to discriminate in favor of union
members, agreements which require an employer to impose certain wages on non-unit members.
Collective Bargaining Unit (CBU): Not a legal term but used by AMA to denote a national labor organization
formed under the National Labor Relations Act (NLRA) under which eligible physicians (employed) can
receive the benefits and protections of the NLRA. The CBU would also provide an organizational structure for
self-employed physicians upon the enactment of the Campbell Bill and in states where state action doctrine
legislation would allow.
Department of Justice (DOJ): The “law firm” for the United States that is one of two government agencies
that enforces federal antitrust laws.
Employees and Management
Employee: The term “employee” shall include any employee, and shall not be limited to the
employees of a particular employer, unless the Act explicitly states otherwise, and shall include any
individual whose work has ceased a consequence, of, or in connection with, any current labor dispute
or because of any unfair labor practice, and who has not obtained any other regular or substantially
equivalent employment, but shall not include any individual employed as an agricultural laborer, or in
the domestic service of any family or person at his home, or any individual employed by his parent or
spouse, or any individual having the status of an independent contractor, or any individual employed as
supervisor, or any individual employed by an employer subject to the Railway Labor Act, as amended
from time to time, or by any other person who is not an employer as herein defined. 29 U.S.C. §
152(3).
Supervisor: The term ‘supervisor’ means any individual having authority, in the interest of the
employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline
other employees, or responsibly to direct them or to adjust their grievances, or effectively to
recommend such action, if in connection with the foregoing the exercise of such authority is not of a
merely routine or clerical nature, but requires the use of independent judgment. 29 U.S.C. § 152(11).
Managerial Employees: Like supervisors, managerial employees are excluded from the definition of
employee under the Act and, thus, may not become part of a recognized bargaining unit. Managerial
employees are those who formulate, determine, and effectuate employer policies and those whose
positions with the employer presents a potential conflict of interest between the employer and the
employees. An attending physician in a hospital has been found to be a non-managerial employee
while doctors employed by an HMO who participated on committees dealing with issues at the core of
the HMO’s operations were found to be managerial. Joint Diseases, North General Hospital, 288
NLRB 291, rev. den. 875 F.2d 350 (D.C.Cir. 1989); FHP. Inc., 274 NLRB 1141 (1985).
B of T Rep. 30 - A-99 -- page 45
Employer: The term ‘employer’ includes any person acting as an agent of an employer, directly or indirectly,
but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve
Bank, or any State or political subdivision thereof, or any person subject to the Railway Reserve Bank, or any
State or political subdivision thereof, or any person subject top the Railway Labor Act [45 USC 151 et seq.], as
amended from time to time, or any labor organization (other than when acting as an employer), or anyone
acting in the capacity of officer or agent of such labor organization. 29 U.S.C. § 152(2).
Federal Trade Commission (FTC): An independent agency of the Executive Branch of the Government
whose five members, appointed by the President, enforce federal antitrust laws. It also has authority to enforce
numerous consumer protection laws.
Guild: Historically, an association of skilled craftsmen, usually with an apprenticeship and performance
standards as a condition to participation. Many “guilds,” particularly those who represent professionals, are
“labor organizations” but not all, and many labor organizations do not call themselves “guilds”.
Labor Organization: The term ‘labor organization’ means any organization of any kind, or any agency or
employer representation committee or plan, in which employees participated and which exists for the purpose,
in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours
of employment, or conditions of work. 29 U.S.C. § 152(5).
Messenger Model: The “messenger model” refers to a model for independent physicians to jointly market
their services to payers through a third-party “messenger” without violating the antitrust laws. The messenger
model does not permit collective negotiations by physicians on fees. The model is a process whereby each of
the physicians in the network arrives at an individual agreement with a payer through a common messenger.
The messenger communicates with each physician individually about what fee schedule the physician in
willing to accept as well as other terms. The messenger aggregates the information from the physicians and
may develop a fee schedule to show the payer what percentage of physicians in the network would accept
various fee levels. However, the messenger may not share this info with the physicians. The payor may then
make an offer to the physicians in the network. The messenger may accept the offer on behalf of any physician
who has given the messenger authority to accept offers within the fee range offered by the payor. If the offer is
not within the fee range authorized by an individual physician, it must be forwarded to the physician for
acceptance or rejection. The messenger may provide objective information to the physicians in the network
about a contract offer, but may not give advice whether or not to accept an offer.
National Labor Relations Act (NLRA): Also known as the Wagner Act, this Act establishes an exemption to
antitrust laws for labor organizations acting on behalf of employees to collectively bargain and created the
National Labor Relations Board to interpret labor laws.
National Labor Relations Board (NLRB): Independent agency of the executive branch with five members,
appointed by the President, to interpret national labor laws.
B of T Rep. 30 - A-99 -- page 46
Negotiating Unit: Not defined by the National Labor Relations Board or law, this generic term can be used to
describe any body involved in facilitating settlements through conference, discussion or compromise. Per this
definition, a negotiating unit could include labor organizations, independent housestaff organizations, highly
integrated physician groups or entities involved in assisting physicians in this negotiating process. This
assistance could take such forms as providing educational materials on issues of concern, engaging in research
or fact finding missions, provide training in negotiating techniques or even assisting groups of physicians in
forming recognized labor organizations. Because of the generic nature of this definition, it is suggested that
additional adjectives or descriptive phrases be used in conjunction with this term to clarify intent.
Physician Classification for Collective Negotiations
Self-employed: A physician who practices either independently of an employer or as part of a group in
which he/she has ownership.
Employed: See “Employee”.
Resident: A physician in post graduate training usually recognized by the Accreditation Council for
Graduate Medical Education
State Action Doctrine: The state action doctrine provides an exemption to the antitrust laws for activities
taken pursuant to clearly and affirmatively expressed state policy and which are subject to active state
supervision. The state must clearly intend to supplant competition with In the health care arena, the state action
doctrine has been used by states in certificate of public advantage legislation to protects the collaborative
activities of rural public hospital districts. The AMA’s model “state action doctrine” legislation would permit
collective negotiations among independent physicians in certain circumstances, and under the direct and active
supervision of an appropriate state agency.
Strike: A work stoppage by a body of workers to gain compliance with demands made on an employer
Supervisor or Supervisory: See “Employees and Management” above.
Trade Union: A non-legal term used to identify labor organizations representing unskilled and semi-skilled
laborers.
B of T Rep. 30 - A-99 -- page 47
Union: The National Labor Relations Act does not specifically define “union.” The then Chief Justice of the
U.S. Supreme Court, William H. Taft, described in American Steel Foundries v. Tri-City Central Trades
Council, 257 U.S. 184, 209 (1921), the essential components of a “union”:
Union was essential to give laborers opportunity to deal on equality with their employer. They united
to exert influence upon him and to leave him in a body in order by this inconvenience to induce him to
make better terms with them. They were withholding their labor of economic value to make them pay
what they thought it was worth. The strike became a lawful instrument in a lawful economic struggle
or competition between employer and employees as to the share or division between them of the joint
product of labor and capital.
A “union,” as described by Chief Justice Taft is always a “labor organization” as that term is defined by
the NLRA, although not all labor organizations call themselves “unions”.
B of T Rep. 30 - A-99 -- page 48
APPENDIX C
SUMMARY DATA ON PHYSICIANS RELATED TO
COLLECTIVE BARGAINING ACTIVITIES
B of T Rep. 30 - A-99 -- page 49
1998 Distribution of Patient Care Physicians
by Employment Status
Patient Care MDs
N=620,631
Non-fed Post-GME
507,876
(81.8%)
Federal
16,947
(2.7%)
Non-fed Post GME MDs
Non-Fed GME
95,808
(15.4%)
Self-employed MDs
325,001
(64.0%)
Institutional Employees
135,144
(26.6%)
Institutional Employees
Hospitals
32,720
(24.2%)
Med Schools & Univ’s
36,797
(27.2%)
Other Employers
35,588
(26.3%)
HMOs
9,925
(7.3%)
Employees of
MD-owned groups
47,731
(9.4%)
State & Local Govt.
13,614
(10.1%)
Ambulatory sites
6,500
(4.8%)
Prepared by the AMA Center for Health Policy Research
B of T Rep. 30 - A-99 -- page 50
1998 Distribution of the Practice Sizes
of Self-employed Physicians and
of Physicians Employed in Physician-owned Groups
S elf E mp loyed M D s
41.5%
40%
25.2%
20%
14.9%
14.5%
2.0%
2.0%
0%
1
2 to 4
5 to 9
1 0 to 4 9
5 0 to 9 9
100+
# of MDs in Practice
E mp loyees of M D -ow n ed G rou p s
40%
31.4%
27.1%
26.3%
20%
8.6%
4.3%
2.4%
0%
1
2 to 4
5 to 9
1 0 to 4 9
5 0 to 9 9
100+
# of MDs in Practice
Prepared by the AMA Center for Health Policy Research
AMA PRIVATE SECTOR ADVOCACY
GLOBAL STRATEGY
The primary mission of the AMA’s Private Sector Advocacy (PSA) initiative is to level the playing field for physicians and their patients with
health care organizations. In coordination with state, local, and specialty societies and other units of the AMA, a global strategy is being
pursued that addresses the marketplace issues of all physicians regardless of their mode of practice and includes deploying multi-disciplinary
Rapid Response Teams (RRTs).
Employed Physician
Resident Physician
Expose and eliminate abusive and unfair
contracting provisions and management
practices

Develop tools to assist physicians in
their practices (“AMA Model Medical
Services Agreement”)
Aggressively engage managed care
plans to change provisions and behavior
Provide on-site assistance (Rapid
Response Teams (RRTs)
Educate the public/employers on issues
Develop clinical integration models that
meet antitrust laws
Pass the Campbell Bill to reform
antitrust laws
Support state action doctrine legislation
for collective negotiations
Push revisions to restrictive FTC
antitrust guidelines
Educate the public/employers on issues

Develop, maintain and distribute model
employment contract
Engage employers of physicians to
address patient care and quality of life
issues
Provide on-site assistance (RRTs)
Educate the public/employers on issues

Develop alternative models for
resolving disputes
Educate the public on issues

Challenge mergers/acquisitions that
create market dominance
Develop an early warning system and
response to bankruptcies
Improve market research and data base
on key issues
Educate the public/employers on issues
Coordinate all activities with state, local
and specialty societies
Develop input and feedback system
Same as Self-Employed Physician
Assist in the development of
independent housestaff organizations

Develop alternative models for
resolving disputes

Educate the public on issues

Under consideration by the AMA is an
AMA affiliated collective bargaining
unit (CBU) if the National Labor
Relations Board (NLRB) finds residents
are employees
Same as Self-Employed Physician
Same as Self-Employed Physician
Same as Self-Employed Physician


Strengthen the negotiating leverage for
physicians






Identify and respond to emerging trends and
issues



Work collaboratively with the Federation and
patient advocacy groups









Under consideration by the AMA is
an AMA affiliated collective
bargaining unit (CBU) under the
National Labor Relations Act
(NLRA)

Develop, maintain and distribute a
model organization structure for
residents (Independent Housestaff)
With AMA staff and appropriate
Federation organizations respond to
resident patient care and quality of life
issues
APPENDIX D
Self-Employed Physician
B of T Report 30 - A-99 -- page 54
Objectives
B of T Rep. 30 - A-99 -- page 55
APPENDIX E
RISK ASSESSMENT OF FORMING AN AMA AFFILIATED
COLLECTIVE BARGAINING UNIT
At the 1998 Interim Meeting the House of Delegates instructed that the AMA conduct a risk assessment of
activities and proposals that have major implications for the organization or its members. Accordingly, The
Board of Trustees had a formal risk assessment be conducted of as a basis for its discussion of forming a
collective bargaining unit(s). The following is the result of that assessment.
As part of the risk assessment process, and in order to provide additional perspective, surveys were done of both
the public and the physicians to assist in assessing the impact of AMA developing a collective bargaining unit
for physicians. Findings from the surveys will be shared with the members of the House as soon as they are
complete.
It is important to emphasize that this risk analysis is aimed specifically at facilitating an informed decision
regarding the proposal to establish a collective bargaining unit (CBU). It does not assess the entire AMA
private sector advocacy program.
The analysis that follows is by topic. For each of the topics, as much input as possible has been compiled, and
both the potential risks and the potential benefits have been summarized. The discussion of the risks and
benefits attempts to provide context and a basis for interpretation. As is always the case, many elements of risk
and benefits assessment are, in the final analysis, subjective in nature. Consequently, a clear “thumbs up vs.
thumbs down” bottom line is, in many cases, not possible. In addition, there is risk and benefit related both to
doing the CBU as well as not doing the CBU. The analysis covers both considerations.
A danger in risk assessment is that it is always easier to identify potential problems than to forecast or
guarantee future success. This analysis attempts to provide some balance between potential risks and
potential benefits as well as identify mitigating arguments in both instances where it seems appropriate.
In some instances, an item may not be either a risk or a benefit per se, but just a factor to be noted and
considered. Many of the potential risks and benefits that have been identified as part of this assessment
are expressed as questions rather than statements because of the nature of the topic and the lack of hard
data to support competing views or suppositions. The purpose of the analysis is as much to stimulate
thought on these matters as to provide definitive judgements.
Likelihood of Success in Meeting the Key Objective
What is the likelihood of an AMA sponsored CBU being successful in “leveling the playing field”?
The “pro” arguments on this question include the following:



An AMA sponsored CBU would be much more credible than a traditional labor organization in
addressing patient oriented issues, and thus could be more effective in bargaining on key health
related issues, especially those directly affecting patient care. It would have the opportunity to
redefine the nature of what a bargaining unit can do and thus be the leader in that redefined arena.
The AMA is a physician organization, and therefore an AMA affiliated CBU would be more
attractive to physicians. They would trust it to understand their issues better. In an activity where
overall critical mass is a key factor in potential leverage and impact, this would be an advantage.
This would be a dramatic move and make a big statement to physicians (even those not covered
directly by the CBU) that the AMA has entered a new era of highly intensified advocacy, by adding
a tool that is the most direct way to address the needs of employed physicians in situations where
B of T Rep. 30 - A-99 -- page 56
employers refuse to address issues. It would “jump start” AMA’s advocacy image and thereby add
to the potential strength of the CBU itself. To not make some kind of dramatic “action statement”
to America’s physicians in today’s challenging environment is in itself a risk.
The “con” arguments are as follows:



The AMA is a newcomer to the field of collective negotiations and is restricting its potential
effectiveness up front through the no strike clause. What makes the AMA think it will be able to
compete with established labor organizations that have decades of experience, and why would
those on the other side of the bargaining table take such a newcomer seriously?
The effectiveness of the “labor movement” has been in decline for years. Why would we pick this
arena as the place to expand our advocacy capability?
Advocacy is a “ results oriented” type of activity. There is a risk that if the new CBU does not have
several early and big wins, this particular advocacy approach will be discounted as “beyond
AMA’s capability” and that could be worse than not having done it in the first place.
Another aspect of assessing the likelihood of success relates to scope. The current proposal focuses on
residents and some “employed” physicians under current legal definitions. The data indicate that about 50% of
physicians are employed, and of these, some portion (one-third to one-half?) are non-supervisory. While this is
a substantial number of physicians, there are many more who would not be covered and would remain
frustrated by the current environment. What about the small, independent (i.e. self-employed) practitioners
who are the “victims” of the current environment who are most in need of help, but who would not be helped
directly by a CBU unless further antitrust relief is achieved (i.e. Campbell Bill)? Does “success” require an
assumption of expanded scope in the future or not? Under current expectations of scope, will it meet the
expectations of the principal groups that are asking for collective bargaining to be made available?
Impact on Professionalism
Professionalism is a founding and enduring concept for the AMA, and is central to its vision and strategic plan.
Would the formation of CBU(s) enhance, detract from, or have no effect on the AMA as a professional
association, or on physicians as a “profession”? The CBU proposal explicitly rules out the strike as a tool,
declares the code of medical ethics as fundamental principles that must be honored. It strongly states that never
compromising patient interest, the most fundamental requirement of professionalism, would be vigorously
adhered to. These dimensions of the proposed CBU are there to protect professionalism. If they are adhered to,
and the interests of patients are placed in a paramount position so that they are never compromised,
professionalism would be protected.
A related concern is that under the antitrust laws one of the requirements is that “the labor organization must be
acting in its role as a “labor organization” acting in the interests of its members. This can be interpreted as a
direct threat to the requirement of professionalism that patient interest must always be subservient to
self-interest. However, the requirement of the Clayton Act is that “the goals” of the members must be served,
and if those goals are directed at patient care issues the requirements of professionalism may be served by the
CBU.
Given the stated intent that professionalism would be the framework within which the AMA-sponsored CBU
would function, the risk then comes down to whether these fundamental protections for professionalism can be
maintained in reality, and the likely impact this would have on effectiveness of the CBU and on the image of the
AMA as a professional association or of physicians as a profession.
With regard to effectiveness, under these rules what tools are available to the CBU, how effective would the
AMA’s CBU be in competition with more traditional CBU(s) that do not have these restrictions and can use
more aggressive tools? One argument is that the AMA would have a hard time competing in a “hardball”
situation. The counter argument is that physicians would not respect or affiliate with other CBU(s) that refuse
B of T Rep. 30 - A-99 -- page 57
to prohibit strikes and do not conform to the code of medical ethics, and thus would have a competitive
advantage.
The other risk that is cited is whether the “no strike” and other restrictions can be assured for the longer term. If
a CBU is formed under these rules and proves to be not effective because of them, would pressure build to
change the rules? This is the “slippery slope” argument, which always involves speculation. It is a concern that
some hold as a serious question, however, because it puts in question how realistic it would be to expect a CBU
to be able to maintain professionalism in the face of increasingly hostile pressures.
With regard to the professionalism image of the AMA and physicians, the question is whether either would be
viewed as less “professional” if the AMA is affiliated with a CBU. The most important dimension of the
perception issue as it relates to professionalism is what impact an AMA sponsored CBU, or any other CBU,
would have on the perception of physicians by patients (in their role as patients, not as the general public). If
physicians are seen by their patients as “members of a union,” would it negatively affect the trust relationship
with their physician? If patients see their physicians as “members of a bargaining unit that fights for patients’
interests,” would it strengthen the trust relationship? If either of these trust effects is realized, then
professionalism itself will be affected. It is a factor that cannot be adequately assessed but which at least must
be considered.
The bottom line on professionalism comes down to a question of whether there is or is not a fundamental
inconsistency between professionalism and being “a labor organization.” Some believe that these are
fundamentally different things conceptually, and one organization cannot be both at the same time. For those
who hold this view, the technical distinction between the AMA and the CBU (i.e. legally separate
organizations) is not a compelling distinction. Others believe that it may be conceptually possible to be both,
but that in reality it would be difficult, if not impossible, to maintain that compatibility in practice. This view is
based on the premise that a CBU, by its nature, would gravitate inexorably toward more self-interest issues and
increasingly aggressive tactics, and would incrementally move toward “strike-like” behavior. Still others are
very comfortable with the conceptual compatibility of professionalism and the nature of the proposed CBU(s),
and are confident in the AMA’s ability to stick to the rules. This view supports the eventual transformation of
the “traditional labor movement” based on the proposed design as truly pioneering work. Unfortunately, there
is no simple formula for selecting among these views. It depends on what you believe and what you think the
“realities” will produce.
Identity of physicians
There are two issues related to the identity of physicians that should be considered. One is that physicians who
bargain through a CBU may be viewed as less than professional. Will physicians be considered just another
traditional labor group like the autoworkers or the teamsters? One view of this is that they will be, and that is
undesirable. The other view is that the public will as easily make the distinction between a physician and an
autoworker as they do between a teamster and a teacher. It can be argued that if the CBU is successful in
addressing patient related concerns, it might actually enhance the public view of physicians.
The other identity issue relates to how physicians are perceived by those with whom they will be bargaining.
One of the key concerns of physicians is that managed care firms and hospitals have stopped relating to them as
real professionals, and consider them “just another factor of production in the medical care machine.” If
physicians bargain collectively through what are generally viewed as labor organization approaches, will they,
in effect, be acknowledging this status? In order to qualify under the labor laws, physicians must not be
considered “supervisors”, and thus may reinforce the view that they are just another group in the generic
category of “providers?” On the other hand, is that necessarily a problem if that is how the people on the other
side of the table think about them already? A dimension of this that bears thinking about is whether physicians
will begin to think of themselves in this way, and what the implications of that may be to the future of medicine
as a profession.
B of T Rep. 30 - A-99 -- page 58
Identity of the AMA
Identity is a big part of the potential benefits and risks of the proposed CBU(s). A key assumption is that even
though the CBU is organizationally distinct from the AMA, it will be AMA sponsored and most observers will
not make the distinction between the AMA and the CBU. The major upside potential of the CBU for AMA’s
identity is with physicians who are feeling under siege and desperately want someone to come to their aid with
new approaches that hold some real promise for enhancing their position. The CBU proposal, even though
limited to certain groups, would send a strong signal that “the AMA is stepping up to the plate in a new and
tangible way.” The identity of the AMA as “a real player” would be enhanced among those physicians.
The downside risk relates to the identity of the AMA as a professional association and of physicians as a
profession (see discussion of professionalism). Some will take the view that “a union is a union even if you call
it a CBU,” and the AMA cannot be both a professional association and a union at the same time. This concern
goes to the issue of perception. Even if the AMA can defend on intellectual grounds the CBU as not being a
threat to professionalism, if the perception is there the damage will follow. A complicating factor here, of
course, is that the perception “on the street” will likely be that “the AMA has become a union.” Those who
want to make this case will do so, and those who don’t will likely be silent. Hence, the decision to go ahead
with the CBU does carry with it a predictable risk of AMA’s identity as a professional association being
challenged.
There are counter arguments. One is that after an initial flurry of publicity, no one will really care. The dust
will settle and the perceptions of the AMA will turn out to be not significantly different than they are now. The
other counter argument is that establishing the CBU will be interpreted by some as simply “confirming that the
AMA has been a union all along, it just hasn’t called itself that until now.” This latter view, while not very
palatable, does mitigate the concern related to a CBU changing the AMA’s image.
A possibly relevant fact related to the image issue: in a 1998 Harris poll of 1,013 adults conducted to assess the
public’s trust in people in various professions, 83% indicated that they would trust “doctors” (ranked third
behind teachers and clergy) and 37% indicated that they would trust “trade union leaders” (ranked eleventh).
Based on this finding, a key to making sense out of the various arguments related to the impact on image is the
extent to which we think the CBU could be successfully distinguished from other labor organizations as
something different and special. It should be noted, however, that teachers were one of the two groups rated
above physicians in the findings, and teachers are one of the most prominent examples of a profession whose
professional association is a formal labor organization under the NLRA and bargains collectively on behalf of
its members.
Membership
The potential impact of any proposed new activity on future AMA membership is a major consideration. The
CBU proposal has potential positive and negative membership implications. The survey results may provide
helpful input on this. However, care should be exercised in interpreting the survey results, because it is likely
that many, possible most, respondents to the survey are not well versed in the many technical distinctions and
detailed considerations attendant to the AMA engaging in collective bargaining activity. In addition to the
survey work, a stakeholder analysis was conducted informally among the staff and leadership of councils and
sections which provides some insight into how certain subgroups of physicians might view active pursuit of a
CBU (see Appendix F). The stakeholder analysis indicates that:


Residents and young physicians in particular (approximately 80,000 members in total) are likely to
strongly favor collective bargaining as a tool that could give them an additional way of addressing needs
and concerns.
Feedback from the Medical Student Section, IMG Section, and Organized Medical Staff Section suggests
that these constituency groups support the effort.
B of T Rep. 30 - A-99 -- page 59

The strongest opposition would be in the academic community. An assessment of opinions from the
Council on Medical Education, Section on Medical Schools, and American Association of Medical
Colleges indicates strong opposition to AMA organizing a CBU for residents (they did not express their
views on collective bargaining for non-resident physicians). This assessment includes deans, other
administrators, and general faculty. The survey results will shed additional light on this factor.
However, these stakeholder views do not translate automatically, one way or the other, to membership
impact for the AMA. In general, support or opposition to a particular AMA policy or action has tended to
have more impact in the form of members leaving than joining. If the AMA sponsors CBU(s), those directly
benefiting from the action might be inclined to express their appreciation by joining or maintaining their
membership in larger numbers. It is important to note that retention is the key dimension of membership
impact that is expected in relation to the CBU proposal. However, since the CBU would be a separate
organization whose membership cannot be legally linked directly to AMA membership, and since the CBU will
involve dues also, there is a price barrier in the form of the combined dues of the CBU and AMA. With price
sensitivity by physicians already an issue in today’s economic climate, assuming short term upward movement
of AMA membership in the absence of a more formal membership linkage between the CBU and the AMA is
difficult to defend. It should be noted, however, that the price issue will be there regardless of whether the
AMA sponsors CBU(s). If others provide these services, they also will be competition for the dues dollars of
physicians.
If we look beyond those physicians who would be directly affected by the CBU, we might project a positive
membership response as physicians see the AMA taking a strong and aggressive step to fortify physicians
against the pressures they are facing. This would be a response to the “step up and do something” expectation
of physicians. Here again, however, recent experience suggests caution in assuming appreciation will translate
to sending in a dues check.
If the AMA establishes a CBU for residents, it is very likely that there would be some membership fallout in the
academic community, at least in the short term and possibly longer. The strength of opposition, at least among
the academic leadership group, regarding the AMA supporting a CBU for residents is difficult to overstate, at
least based on the stakeholder analysis, and would likely translate into some membership loss. How
widespread and long-term it would be is hard to estimate. Although academia has not traditionally been viewed
as a stronghold of support for the AMA, the data indicate that actual membership market share among academic
physicians is not significantly different from overall market share.
However, it is equally likely that there would be membership fallout among residents and young physicians if
the AMA decides not to establish a CBU. These groups as well as the Organized Medical Staff Section were
among the key sponsors of the HOD actions that led to the CBU proposal, and they have substantial
expectations that the response will focus on how, not whether, this will be done.
Longer term membership impact could be different from the likely short-term impact, but there is no way of
specifically predicting that. If the AMA forms CBU(s) and they are very successful, it would enhance the
AMA’s advocacy profile, and more physicians may support the AMA as a result. The potential for this would
increase if the Campbell Bill is passed and more physicians (i.e. self-employed physicians) become eligible for
formal bargaining rights. For the longer term prospects, the question of linkage between the CBUs and the
AMA, either formally or by association in the minds of physicians, would continue to be a key determining
factor in this regard. In summary, overall membership impact is not a “take it to the bank” proposition by any
means at this point, either on the upside or the downside.
Financial
The five year financial projections call for expenses of $5.8 million to develop 35 CBU’s (10 for employed
physicians and 25 for resident physicians) covering approximately 12,500 physicians (2,000 employed
physicians and 10,500 resident physicians). Revenue of $6.6 million is projected from dues ($720 per year
B of T Rep. 30 - A-99 -- page 60
from employed physicians and $300 per year from resident physicians). Expenses include an assumption of a
50% success rate in forming CBU’s (i.e. one half of organizing attempts will be successful). If the whole
venture turned out to be not successful for some reason, that would be known by the end of year two, and the
sunk costs at that point are estimated at under $1.5 million.
Clearly, however, the primary reason for considering this proposal is not financial. The question is what the
subsidy tolerance for this activity is in relation to the non-financial benefits it could generate. In the early
stages of development, the CBU(s) will not have their own experienced staff and will have to rely on outside
expertise, making the costs somewhat higher. As the CBU(s) develop their own staff expertise, these costs will
come down.
The analysis of the likely membership impact does not suggest that the CBU venture should be relied on as a
source of increased net dues revenue, at least in the short term. Longer term impact on dues revenue would
depend on the relative success of the CBUs (both scope and impact), and on the AMA’s ability to creatively
translate that into membership impact in the absence of a formal linkage between CBU membership and AMA
membership.
The impact on non-dues revenue is highly uncertain. The AMA publishing staff have expressed a concern that
the potential negative reaction from the academic community could translate into a reduced flow of high quality
manuscripts for the AMA journals, since academia is the principal source. If this happens to the point that
advertisers become concerned, it could damage AMA’s competitive position in a tight advertising market. If,
as a result, readership scores dropped, the impact would be accentuated.
Legal
During the first five years, the linkage between the AMA and the CBU(s) would be close, and the legal
exposure of the CBU(s) would be shared by the AMA. It would be critical, therefore, that the CBU(s) adhere
strictly to the legal requirements under the NLRA. Subsequent to the initial five year period, the AMA’s legal
exposure would depend on how the formal linkage between the AMA and the CBU(s) evolved.
As legal questions surface which go beyond the labor law expertise directly available from the AMA’s Office
of General Counsel, appropriate outside expertise will be consulted.
Communications
The communications arena is where many believe some of the greatest challenges would manifest themselves
if the CBU proposal is approved and implemented. Many of the relevant points related to communications
impact in general are covered under the “identity” discussions above. There are two principal challenges to a
successful communications effort related to the CBU proposal. The first is to make sure that the agendas of the
CBU(s) really do maintain a critical focus on quality of care and patient-physician relationship issues. This is
not to the exclusion of physician interest issues, but the higher ground issues must be in the lead, must be real,
and must never be compromised. If this reality is not there, no communications effort will make it appear to be.
As discussed above, there is some concern that the basic nature of a “labor organization” will tend to gravitate
toward putting physician interest agendas in the lead. The ability of the AMA sponsored CBU(s) to prevent this
from happening would require pursuing the CBU(s) as a “new model” of a labor organization that redefines and
redirects traditional labor organization tendencies.
It is very important to understand that the communications activities related to implementation of the CBU
proposal would have to be broad-based and diverse. The principal focus of this risk assessment is on the
constituencies within medicine, and on the general public perception. However, it is critical to understand that
keen interest in such an AMA initiative would include the business community in general, opinion leaders
throughout society, and a wide variety of other interests outside of health care. We would need to make sure
B of T Rep. 30 - A-99 -- page 61
that there is in place a total communications strategy, based on careful market research with many audiences,
and which includes carefully developed, credible messages that can be consistently and skillfully delivered.
The second communications challenge will be communicating the “new reality” described in the preceding
paragraph. Eventually, the “show me” test would be applied, but initially there would be a high level of
skepticism. The timing of this initiative, following two years of challenging coverage for the AMA, means that
we would be launching this effort in a climate that will not be inclined to give the AMA the benefit of the doubt.
Those who are most skeptical will be the most vocal, and others will be quiet and wait to see what happens.
Overcoming this initial negative coverage tendency will require very well thought out messages, complete
consistency, and thick skin in the early phases.
The AMA is in the process of implementing a communications program that positions the simple question: “Is
it good medicine?” as a key theme and criterion for assessing health policies, programs, and practices. It is
critical that the implementation of the collective bargaining activity and the new communications theme be
totally synchronous in every way – in substance, in implementation strategy, and in execution. If the CBU
reality is different (i.e., self-interest dominated), it will severely jeopardize the credibility of AMA’s
communications efforts.
Impact On Other AMA Activities
There are both positive and negative potential impacts of the CBU activity on other AMA activities. The
following are some of the more prominent areas of such impact.
Advocacy – The CBU proposal is designed as a new dimension of AMA’s broad based advocacy program, and
is obviously designed to complement and add to AMA’s overall advocacy impact. A possible risk factor is
whether other players in the advocacy arena (allies or opponents) would view the AMA differently as a result of
involvement in collective bargaining. For example, would Democrats tend to view AMA more as a potential
ally and Republicans view us as more of an opponent as a result of having what may be seen as a “labor”
affiliation? If either or both happens, it is good, bad, or just different? Would the addition of a major new
advocacy tool position the AMA as a more respected player in the advocacy arena? Would it affect
relationships with other private sector players such as business, consumer groups, and organized labor?
Medical Education, Science, and Public Health – Given the predicted negative reaction of the academic
community to a CBU for residents, what, if any, spin-off impact would this have on participation in and
relationships around AMA’s education, science, and public health programs, especially related to the activities
of the Liaison Committee on Medical Education and the Accrediting Council on Graduate Medical Education?
Is there any way to predict or mitigate any such impact?
Ethics - The AMA ethics activities will also come into play if AMA pursues collective bargaining activity.
Inevitably, ethical considerations will surface that will have to be addressed quickly and thoroughly. In
addition, employees in the AMA’s Ethics Institute may feel that an AMA affiliation with a labor organization
may create a credibility issue related to their work.
Existing and Potential Business Ventures – As the AMA pursues increased non-dues revenue through
appropriate business ventures, it would have to consider the impact of its collective bargaining activities on its
business relationships. For example, how would this affect a business relationship with an insurance company
that might, in another context, be on the other side of the bargaining table from an AMA CBU?
Competitors
This assessment would be incomplete without considering competitors. To some extent, this is covered under
“Prognosis” above. Clearly, the established labor organizations would be competition for any AMA affiliated
B of T Rep. 30 - A-99 -- page 62
CBU(s), and the pros and cons of AMA being able to compete effectively with them is a factor that must be
considered and for which there must be a strategy if the decision is to go ahead.
Two other dimensions of competition should be noted. One is the interest that has been expressed by state
societies (see section II above). If their interest in collective bargaining is translated into action, will it be in
competition with the AMA or as partners? What is our level of expectation that we could make it a partnership
rather than a competitive situation? What are the implications of this for the AMA’s overall relationships with
the federation? Could the CBU activity be a basis for joint efforts within the federation, or would it tend to be
a divisive force?
The second issue is the potential for an AMA sponsored CBU itself to become a competitor with the AMA.
One of the concerns that has surfaced is what happens after five years if the CBU members voted in a totally
new Board that wanted much more independence from the AMA or wanted to pursue a different bargaining
philosophy that the AMA might take issue with? If the CBU spins off, will it become another one of the various
organizations that the AMA has had a hand in creating only to find itself competing with? What, if any,
safeguards can be built into the design to minimize this risk? If the AMA sponsors multiple CBU(s), what if
some spin off and others do not? What would this do to the “critical mass dimension” of being in the collective
bargaining arena? These are downstream risks, but should be considered in the design phase of the work.
Employees
The AMA is a private employer that employs some physicians. Would AMA physician employees be
permitted to form or join a CBU? What impact, if any, would this have on the AMA as a workplace? What if
this extended to AMA employees in general in the form of a desire to collectively bargain with the AMA on the
grounds that if the AMA is supportive of collective bargaining by its members, why not also by its employees?
Aside from the above specific questions, there is the general impact on employees of AMA sponsoring a “labor
organization.” AMA employees probably reflect the same range of views on this idea as do other groups,
including AMA senior management and the Board. It is possible that some employees might be very
uncomfortable working in an organization that may be viewed by some as a “labor organization.” This is one
of the things that an employer must be prepared for in the normal course of business as organizations implement
change. The other employment dimension may be that in order to successfully pursue collective bargaining
activities, staff with new skills may be required. Even though the CBU(s) would be separate organizations and
would have their own staff support, AMA may need some additional skills to help manage the relationship with
them.
B of T Rep. 30 - A-99 -- page 63
SUMMARY
Many factors have been covered in this risk assessment. What do they all add up to? This is truly a “mind of
the beholder” circumstance in many respects, but some key themes do come through.

Arguments in support of implementing the CBU proposal center around the needs of physicians in a
changing and hostile environment. As the least centralized and most oversupplied sector of a rapidly
centralizing industry, physicians are at an extreme disadvantage and are looking to the AMA to help.
Collective action is a logical response if effectiveness in a centralized environment is the nature of the new
game. This would be a key addition to AMA’s other advocacy skills and tools that are aimed at leveling the
playing field.

But collective bargaining is not among the AMA’s core competencies, and our fundamental commitment to
professionalism will deny us use of some of the most powerful traditional tools of collective bargaining.
We therefore would have to invent a new approach to collective bargaining that focuses on putting
self-interest in second place behind patient interest, and uses different tools and tactics, the specifics of
which have yet to be fully developed. We would also have to be prepared to deal with the inevitable
external skepticism this would generate in the early stages.

Confidence is high among some that these challenges not only can be overcome, but can be translated into
an opportunity to send a clear signal to the medical profession that the AMA recognizes the need to change
and expand its already broad advocacy agenda and skills mix.

Others find it very difficult to reconcile the fundamentals of professionalism with what are viewed as the
inevitable tendencies of labor organizations to gravitate toward self-interest agendas, because that is what
they are fundamentally designed to do. And there is concern that because of the limitations of antitrust, we
are putting our professional identity and heritage at risk to help a relatively small number of physicians,
while many self-employed physicians who are among those most desperately in need of help would not be
covered by this activity.

Probability of success in reinventing what labor organizations do and how they do it is central to
reconciling the different views of the CBU proposal and its implications. If implemented, the risk of
failure in this regard includes alienation of the academic community, potential damage to our image as a
professional association, and disillusionment of physicians related to a hope that may not be realized. On
the other hand, if we can successfully invent a new approach to collective bargaining as outlined in the
proposal, the AMA will have made major inroads in repositioning physicians as a “power player” in the
new environment in a way that has tangible and visible impact for physicians, and thus will have added
materially to its range of advocacy capability for the future.

A further complication is that there is also risk in not implementing the CBU. Physicians are under extreme
pressure in today’s environment and are desperately in need of assistance. They look to the AMA and
organized medicine to “do something about it.” Many feel that traditional advocacy efforts are helpful up
to a point, but that today’s environment presents different challenges that require a new set of advocacy
tools. They are looking for additional tools and approaches, and collective bargaining is a tool that many
physicians believe to be appropriate to add at this time. Residents, young physicians, and members of the
Organized Medical Staff Section in particular, strongly hold this view and were among the sponsors of the
HOD resolutions asking for development of the CBU. A risk of not pursuing the CBU, therefore, would be
a high level of disappointment among these constituency groups at having passed up what is perceived as a
real opportunity to extend AMA’s advocacy capability in tangible ways. And if the AMA does not
establish a CBU it will likely be in competition with other CBU(s) (sponsored by organized labor or others
– some possibly within organized medicine) for the allegiance and dues dollars of physicians in any case.
Lastly, time is a risk of not proceeding. This is a choice that must be made in the near term or this particular
B of T Rep. 30 - A-99 -- page 64
opportunity will be lost. It will be hard to enter this field at a later time if significant organizing takes place
in the next year, which is likely.
B of T Rep. 30 - A-99 -- page 65
APPENDIX F
STAKEHOLDER ANALYSIS REGARDING POSSIBLE
AMA COLLECTIVE BARGAINING ACTIVITIES
To support the Board of Trustees discussions of the collective bargaining proposal, an informal stakeholder
analysis was conducted among staff and leaders of AMA councils and sections. This was done to collect
impressions and anecdotal reactions to the proposal, and is not a scientific survey. Nevertheless, it provides
some impressions of the kinds of support and/or concerns that might be expected from various groups.
AMA STAKEHOLDER ANALYSIS
AMA
Members/
Market
Share
% Change in
Membership
Over Last 5
Years
Likely
Attitude
on CBU
Stakeholder
Number
Medical
Students
68,000
38,000 /
56%
Slightly
Increasing
Support
Resident
Physicians
100,000
31,000 /
31%
Relatively
Stable—Slightly
Decreasing
Strong
Support
Young
Physicians
167,000
52,000 /
31%
Declining—37%
Share in ’92
Strong
Support
Organized
Medical Staff
Section
(Co-author of
HOD Res 258,
A98)
House of
Delegates
Women
Physicians
Minority
Physicians
90%
Physicians
have
medical
staff
privileges
585
105,700
96,700
20% of
hospitals are
represented in
Section
100%
Decline even
greater in states
with high
managed care
penetrations
N/A
N/A
43,800 /
26%
29,000 /
30%
(Estimated
Data)
N/A
Strong
Support
Relative Impact of
Stakeholder for AMA
Assessment
Section Staff /
Leadership /
Assembly
Section Staff /
Leadership /
Assembly
Crucial for Future
“Proceed forward carefully with an emphasis on
education and positive communications.”
Crucial to Future
Large Universe
Section Staff /
Leadership /
Review of HOD
Actions
Crucial to Future
Large Universe
“If we don’t proceed now, the unions that take
over organizing residents will use our retreat as
a recruiting tool by saying ‘even the AMA
won’t help you.’”
“AMA should proceed to develop a union for
employed physicians, but should not place its
primary focus only on the organization of
residents. Those practicing physicians who are
employed must be focused on as well. Need to
also strongly implement activities that focus on
self-employed physicians.”
Section Staff /
Leadership /
Assembly Over
Last 2 Years
Strong
Support
Staff
Discussions with
Delegates
Support
Staff
No
Statement—
Have Not
Addressed
Staff
Need to reverse declining
membership-Section has
indicated need for strong
advocacy for Young
Physicians and patients
Important, and Key Target
for this Activity
While difficult to define
constituency, this group
reflects majority of
physician population.
Critical
Principle Policy-Making
Body
Broad Based Representation
of Medicine
Important, and may be
over-represented as
employees.
Represents 24% of physician
population
Important
(Taken from staff Risk Assessment Profiles)
“Proceed with implementation of CBU for
physicians, but carefully target selection of
Resident Physician and Employed Physician
groups. The AMA must have successful initial
experience.”
“Though it may cause problems, the AMA must
take its place at the table.”
“Except for the costs, seem to be fewer risks in
proceeding than not proceeding.”
“Focus AMA collective bargaining efforts on
residents and pursue other aggressive forms of
action to help physicians in managed care
arena.”
B of T Rep. 30 - A-99 -- page 66
(Co-author of
HOD Res 258,
A-98)
Basis for
Assessment
B of T Rep. 30 - A-99 -- page 67
AMA
Members/
Market
Share
% Change in
Membership
Over Last 5
Years
Number
International
Medical
Graduates
131,900
Self Employed
295,000
122,000 /
41%
Decreasing
Employed-Sup
ervisors
Unknown
Unknown
Unknown
Employed-Clin
ical
213,000
61,000 /
28.6%
Decreasing
Medical
Specialty
Societies
95
35%
Unknown
Largest 15
Represent
About 80%
Physicians
State and
County
Medical
Societies
52 State
Specialty
Society
Members are
AMA
Members
65% of State
Society
Members are
AMA
Members
(1998 Data)
Stable
Group Practice
Advisory
Committee
17
AMA
Leadership
44,200 /
34%
Likely
Attitude
on CBU
Strong
Support
Basis for
Assessment
Relative Impact of
Stakeholder for AMA
Assessment
Section Staff
Important
“Go forward. Representing physicians in this
tangible way could go a long way toward
reconnecting us with physicians in some
settings.”
25% of physicians
15% of AMA members
4000
County
Represent-i
ng Large
Group
Practices
(>100
physicians)
N/A
Mixed—Wou
ldn’t Impact
Them
Mixed—
Wouldn’t
Impact Them
Strong
Support—Tar
get of
Activity
Mixed—Prim
arily Along
Academic
Lines
Staff
Support
(Taken from staff Risk Assessment Profiles)
Staff
Staff / HOD
Research to
follow
Important Segment
Staff, Medical
Society Staff
Very Important to Have
Them Engaged / Involved on
This
“A mixed bag based on interests of various
specialties.”
Staff / Medical
Society Staff
Critical to Have Them
Engaged / Involved In This.
“The only risk is not to proceed.”
Critical Partners in Ensuring
Success
5 of the 17
practices
have 100%
AMA
Membership
(n=2,200)
Increasing
Strongly
Opposed
N/A
N/A
Mixed
Staff Meeting
with Group
Practice
Advisory
Committee
Significant
Critical to Ensuring Success
“Strongly opposed to this concept and many
have indicated membership withdrawal.”
B or T Rep. 30 - A-99 -- page 67
Stakeholder
B of T Rep. 30 - A-99 -- page 68
Stakeholder
Number
AMA
Members/
Market
Share
AMA Staff
Public
N/A
N/A
N/A
N/A
N/A
N/A
Hospitals
N/A
N/A
N/A
Academic
Physicians-Full
-time Faculty
30,373
9191 /
30.3%
(Per Self
Designation
on AMA
Masterfile)
70,000
Unknown
Significant
Decrease—32.8%
in 1993
Unknown
(Estimate
Based on
LCME
Annual
Survey)
Figures based on 1997 data unless otherwise noted.
Likely
Attitude
on CBU
Basis for
Assessment
Mixed
Refer to
Survey
Results
Oppose
Staff
Will Directly
Be Target of
CBU
Oppose
Staff
Resident
Activity—Str
ongly Oppose
Employed
Physician
Activity—Un
known
Resident
Activity—Str
ongly Oppose
Employed
Physician
Activity—Un
known
Relative Impact of
Stakeholder for AMA
Assessment
(Taken from staff Risk Assessment Profiles)
Critical to Ensuring Success
Staff
Staff
Questionable Allies
Impact on Student / Resident
Attitude
B or T Rep. 30 - A-99 -- page 68
Contributors to
AMA Journals
Academic
Physicians-Pri
mary
Employment is
Medical School
% Change in
Membership
Over Last 5
Years
B of T Rep. 30 - A-99 -- page 69
APPENDIX G
AMA AFFILIATED COLLECTIVE BARGAINING UNIT (CBU)
FINANCIAL FORECAST
This document forecasts the projected expenses and revenues associated with the formation of an AMA
affiliated CBU for its first five years. The document covers projections for what is considered an active model
and later predicts the financial implications of a very slow growing model.
In order to create and monitor successful individual bargaining units, an AMA affiliated CBU must conduct
two phases of activity: the developmental stage (includes fact finding and analysis, organizing, and completed
contract negotiations) and the contract implementation stage. The developmental stage can take between 9 and
24 months and must be successfully completed before members begin paying dues to the CBU. This will
account for a considerable delay in accumulating revenues vs. upfront costs to that labor organization.
5-Year Projections
It is anticipated that an active model of an AMA affiliated CBU will complete or be in the developmental stage
of completing, successful local bargaining units at 35 locations in the first five years. This will include 25
resident units and 10 units for employed physicians in hospitals and/or physician practice settings. After five
years, more than 2000 employed physicians and 7500 resident physicians will be members of AMA affiliated
CBU chapters. An additional 3000 former resident physician CBU members will have finished their programs
during this period of time. The total expenses for this five year model are $5.8 million while dues revenues are
more than $6.6 million. Assuming no further growth, revenues will exceed expenses by $2.5million in
succeeding years.
Active Growth Model
Following are more detailed financial predictions and assumptions for an AMA affiliated CBU that project the
flow of costs and revenues based on successfully developing 5 new housestaff and 2 new employed physician
groups each year. These numbers and projections for a more slowly growing CBU model are fully detailed on
the attached chart.
Assumptions
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Based on the success rates of traditional labor organizations, the figures assume that approximately 50% of
all developmental efforts will result in the formation of a bargaining unit that successfully negotiates a
contract.
Dues are only paid by members of successfully developed bargaining units. Costs related to failed
developmental attempts are included in these figures.
In some cases, the development process and the accompanying costs can span three fiscal years.
Fixed costs include management and secretarial salaries (through the vice president level), benefits, legal
fees, overhead, postage, printing and Board costs. They are adjusted +5% each year for inflation.
Salary, benefits and travel costs of contract and staff organizers/negotiators are in the developmental costs.
All figures are based on an average of 250 employed physicians at a hospital, 100 employed physicians in a
practice group, and 300 housestaff per institution.
Revenues are based on $60 dues per month for employed physicians and $25 per month for residents for
basic development and contract implementation. When revenues exceed costs, they can be used to provide
B of T Rep. 30 - A-99 -- page 70
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additional services to the members or the individual bargaining units including dues reduction and
supplemental payments for AMA/state and county dues.
Per unit developmental costs will be highest in the first two years as the AMA affiliated labor organization
contracts with professional labor organizers to conduct the developmental phases and train in-house staff.
In year two, the CBU’s staff will begin conducting the developmental stages independently from contract
staff and will be totally self-sufficient at the end of that year.
Financial Predictions
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In the first year, fixed costs will be $415,000 plus developmental costs of $535,000. These figures are
based on contracting with professional organizers and one full-time organizer employed by the AMA
affiliated CBU.
In year two, additional in-house organizers will be added, as the use of outside contract staff will diminish.
Fixed costs will be $405,000 as developmental expenses are $847,000.
Total expenses for these two years including $35,000 for contract implementation for those units
successfully organized, is about $2.2 million.
Dues from established bargaining units would offset these expenses in year two by approximately
$350,000.
In year three, fixed costs of $425,000, developmental costs of $625,000 and $70,000 in contract
implementation costs yield total operating expenses of slightly more than $1.1 million.
Year three dues revenues will total about $1.4 million. Exceeding expenses by almost $300,000 in year
three as the staff will now be functioning independently of outside contract organizers.
Developmental and fixed costs will remain fairly stable in subsequent years with contract implementation
costs increasing $35,000 per year as additional local bargaining units are added to the AMA affiliated
CBU.
As additional units are added, dues revenues will continue to increase. The labor organization will be able
to repay AMA for all of its start-up costs and retain almost $900,000 for distribution in member services
and benefits by end of year five.
Slow Growth Model
The preceding model assumes a fairly active rate of growth in a market where resident physicians are
considered employees by the NLRB and eligible for the protections of the NLRA. If the NLRB rules that
residents are students and ineligible for the protections of the NLRA, residents at public institutions will still be
eligible to join a labor organization and collectively bargain in most states. Residents at private institutions
would not be eligible to bargain under an AMA affiliated CBU, but would continue to be encouraged to form
independent housestaff organizations. Following is a very slow growth model for the AMA affiliated CBU that
would anticipate the successful development of only one resident bargaining unit per year and only one
employed physician group per year.
Assumptions
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This model uses the same basic assumptions as the preceding model except as noted.
The employed physician group would be hospital based in years 1,3 & 5 and physician practice group
based in years 2 & 4.
Fixed cost would remain largely unchanged but only one staff organizer/negotiator would be needed.
Because fewer units being organized equates to less/slower on-site training for staff, consultant
organizers/negotiators will continue to be used into year three.
Financial Predictions
B of T Rep. 30 - A-99 -- page 71
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Development costs would be $280,000 the first year and $328,000 the second including $10,000 in contract
administration costs.
Dues revenues will off-set $135,000 in the second year so total net costs less revenues for the first two years
will be about $1.3 million.
In year three the use of contract organizers/negotiators will diminish and organizing costs will drop to
$200,000-$240,000 for that and subsequent years.
Total expenses will exceed revenues by approximately $200,000 in year three and $160,000 in year four.
In year five the CBU will break even and will realize a positive cash flow of $60,000 in its sixth year.
Subsequent years will result in annual six figure surpluses.
The total financial liability until revenues match costs in year five is less than $1.7 million.
Exit Strategy
The preceding figures represent a fairly successful as well as a very slow growth model of an AMA affiliated
CBU. If the AMA affiliated CBU wants to close operations, it may do so at any time and its local chapters can
assume control of the CBU or affiliate with another existing labor organization.
Should the AMA institute an affiliated CBU that is a complete and total failure that is unable to establish a
single successful local bargaining unit, the additional financial jeopardy to the AMA would be $1.0-$1.4
million for two years of operation at which point the organization would likely be shut down.
B of T Rep. 30 - A-99 -- page 72
AMA AFFILIATED COLLECTIVE BARGAINING UNIT
AMOUNTS IN (000s)
ACTIVE MODEL
1
2
3
4
5
6*
Fixed Costs
415
405
425
450
475
500

Development Expenses
535
847
625
625
625
270

Contract Implementation
35
70
105
140
175
1287
1120
1180
1240
1030
350
1400
2100
2800
2500
(937)
280
920
1560
2470
YEAR
Expenses

Total Expenses
950
Dues Revenue
Total Gain / Loss
(950)
SLOW-GROWTH MODEL
YEAR
1
2
3
4
5
6*
Expenses

Fixed Costs
415
405
425
450
475
500

Development Expenses
280
318
240
189
189
117

Contract Implementation
10
20
30
40
50
733
685
669
704
667
135
486
513
702
729
(598)
(199)
(156)
(2)
62
Total Expenses
695
Dues Revenue
Total Gain / (Loss)
*
(695)
No new bargaining units being developed