Introduction to Health Care Law
Professor Edward P. Richards
LSU Law Center
http://biotech.law.lsu.edu/
Key Issues
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Scientific medicine is about 120 years old
Technology based medicine is less than 60 years old
Doctors are not scientists and many do not practice
scientific medicine.
There is no stable model for medical businesses, leading
to constant change and unending legal problems.
Health care finance shapes medical care and is a huge
mess
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Critical Dates in Medicine
1400s
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Birth of hospitals
Places where nuns took care of the dying
No medical care – against the church’s teachings
No sanitation – assured you would die
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Early 16th Century
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Paracelsus
Transition From Alchemy
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Mid 16th Century
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Andreas Vesalius
Accurate Anatomy
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Early 17th Century
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William Harvey
Blood Circulation – the body is dynamic, not static
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1800
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Edward Jenner
Smallpox and the notion of vaccination
First important preventive treatment
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1846
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William Morton - Ether Anesthesia
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1849
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Semmelweis
Childbed Fever and sanitation
Controlled Studies
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1854
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John Snow
Proved Cholera Is Waterborne
Basis of the public sanitation movement
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1860-1880s
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Louis Pasteur
Scientific Method
Simple Germ Theory
Vaccination For Rabies
Pasteurization to kill bacteria in milk
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1867-1880
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Joseph Lister
Antisepsis – surgeons should wash their hands
and everything else, then use disinfectants
Listerine
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1880s
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Koch
 Modern Germ Theory
Organic Chemistry
 Birth of the modern drug business
The real starting point for scientific medicine
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1850s - 1900s
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Sanitation Movement - Modern Public Health
Sewers
Clean drinking water
Land use laws to protect against industrial
dangers in residential neighborhoods
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Schools of Medical Practice - pre-science
(1800s)
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Allopathy
 Opposite actions
 Toxic and nasty
Homeopathy
 Same action as the disease symptoms
 Tiny doses
 Less dangerous
Naturopaths, chiropractors, osteopaths, and several
other schools
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Most Medical Schools Are Diploma Mills
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No bar to entry to profession
 Small number of urban physicians are rich
 Most physicians are poor
Cannot make capital investments
 Training
 Medical equipment and staff
Courts and legislatures see no reason to favor one group
 Physicians unsuccessfully push for state regulation to
create a monopoly
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Legal Consequences
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No Testimony Across Schools of Practice
Different from Medical Specialties
 Surgery, Internal Medicine, Pediatrics
 All Same School of Practice - Allopathy
 All Same License
 Cross-Specialty Testimony Allowed
Still important with the rise of alternative/quack medicine
 In many states, there are no legal protections if you go
to an alternative medical practitioner
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Transition to Modern Medicine and
Surgery
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The Business of Medicine
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Mid to Late 1800s
 Physicians are Solo Practitioners
 Most Make Little Money
 Have Limited Respect
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Surgery Starts to Work in the 1880s
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Surgery Can Be Precise - Anesthesia
Patients Do Not Get Infected - Antisepsis
First time there is an objective benefit to going to
a doctor and hospital
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Licensing and Education
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Once there are objective differences (people live)
between qualified and unqualified docs, people care
about licensing and credentialing
Licensing starts to make sense when there is a reason to
differentiate between practitioners
Limits market entry and competition
Licensing and credentialing has market value
 You can make more money with better training
 You can make more money with better equipment and
facilities
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Hospital-Based Medicine
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Started with surgery
Medical laboratories
 Bacteriology
 Microanatomy
Radiology
Services and sanitation attract patients
 Internal medicine
 Obstetrics patients
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The Tipping Point
About 1910, going to the doctor and
particularly the hospital shifted from being
more dangerous than avoiding them to
increasing your chance of survival.
Corporate Practice of Medicine - 1920s
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Physicians Working for Non-physicians
Concerns about professional judgment
Cases from 1920 read like the headlines
Banned in most states
Real concern was laymen making money off
physicians
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Physician Practices
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Shaped by corporate practice laws
Sole proprietorships
Partnerships
Mostly small
Some large groups
 First organized as partnerships
 Then as professional corporations
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Impact of Corporate Bans
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Physicians do not work for non-governmental hospitals
 Contracts governed by medical staff bylaws
 Sham of “buying” practices
Physicians contract with most institutions
Charade of captive physician groups
 Managed care companies contact with group
 Group enforces managed care company’s rules
 Physicians can be as ruthless as anyone
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Post WW II Technology
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Ventilators (polio)
Electronic monitors
Intensive care
Hospitals shift from hotel services to technology
oriented nursing
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Post World War II Medicine
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Conquering microbial diseases
 Vaccines
 Antibiotics
Chronic diseases
 Better drugs
 Better studies
 Childhood leukemia
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The Evolution of Hospitals
From Nuns to MBAs
Old Days
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Charitable immunity
No independent liability for nurses
No liability for physician malpractice
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Reformation of Hospitals
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Paralleled changes in the medical profession
Began in the 1880s
Shift from religious to secular
 Began in the Midwest and west
 Not as many established religious hospitals
Today, religious orders still control A majority of
hospitals
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After Professionalization
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Demise of charitable immunity
Liability for nursing staff
Negligent selection and retention liability for medical staff
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Hospital Staff Privileges
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Physicians are usually independent contractors
Hospitals are not vicariously liable for
independent contractor physicians
Hospitals are liable for negligent credentialing and
negligent retention
Hospitals can be liable if the physician is an
ostensible agent
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Joint Commission on Accreditation of
Hospitals
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1950s
 Now Joint Commission on Accreditation of
Health Care Organizations
 American College of Surgeons and American
Hospital Association
Split the power in hospitals
 Medical staff controls medical staff
 Administrators control everything else
Enforced by accreditation
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Contemporary Hospital Organization
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Classic corporate organizations
 CEO
 Board of trustees has final authority
 Part of conglomerate
Medical staff committees
 Tied to corporation by bylaws (contract)
 Headed by medical director
Constant conflict of interest/antitrust issues
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Medical Staff Bylaws
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Contract between physicians and hospital
 Not like the bylaws of a business
Terms of the contract
 Selection criteria
 Contractual due process for termination
 Limits on privileges
Negotiated between medical staff and hospital
board
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Hospital Economics
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Old days
 More patients meant more money
 More docs to admit patients
 Insurance was so generous it cross-subsidized
indigent care
Now
 Hospital beds were closed to save money
 Insurance and government pay is very limited - no
cross-subsidy
 Under-insured or over-cared-for patients cost money
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Managed Care Pressures on Docs
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When is denying care cheaper?
What is the timeframe issue?
Insurers increasingly control the patients
Employee model
Contractor model
De-selection
 Financial death
 No due process
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Specialty Hospitals
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Complex care is safer when regionalized
Specialty hospitals can provide better care at
lower prices
 Do not need to provide money losing services
 Do not take uninsured patients
Shift the most valuable patients from community
hospitals
Dramatically increase unnecessary surgery
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Drugs and Medical Devices
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Covered later in the course
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