Hospital negotiation grinds to a halt

RITZVILLE – Of the roughly 20 residents who attended the Sept. 27 board meeting of East Adams Rural Hospital, several expressed concerns over the breakdown in negotiations surrounding the employment contract of Charles “Marty” Sackmann, M.D.

Retired English teacher Kris Schwisow led public comments.

“I’m one of about 2,000 of Dr. Sackmann’s patients,” she said. “We patients vote to support this hospital. I feel as though the hospital isn’t supporting me and my doctor.”

Schwisow noted that Sackmann, who was born and raised in Ritzville, was specifically brought in to practice medicine by a prior board.

“I would like you to consider getting him back on contract,” she said. “It’s important that this hospital continues to operate, but it’s also important that it supports all of us.”

Resident Jean Gardner agreed.

“I want my chosen physician, someone I trust, to have a good working relationship with this hospital,” Gardner said. “I ask you to consider restarting negotiations with Dr. Sackmann.”

Board Chairman John Kragt noted the hospital board lacks hiring and firing authority.

“We’re no different from a school board member who can’t hire or fire a teacher,” he said. “As commissioners, we’ve been elected to take care of this facility, make sure it exists, and manage the money. That’s our job.”

“Like most negotiations, these contract discussions centered on money,” Commissioner Eric Walker added. “There are very strictly-enforced laws that tie our hands regarding what we can offer financially.”

Sandra Johnson, the hospital’s legal counsel, added that she contacted Dr. Sackmann’s attorney Friday, July 28, to inform him of another offer.

The following Monday his attorney sent an email informing her that “after considering the offer over the weekend, ‘Dr. Sackmann stands by his original decision and is not interested in employment with EARH.’”

She said rumors started flying after negotiations ended.

“Some said he couldn’t set foot on the premises,” she said. “Others said he couldn’t treat patients here. Not true. He has privileges.

“As long as Dr. Sackmann meets medical staff requirements and has malpractice insurance, there’s no reason he can’t treat patients here.”

“It’s frustrating when people say ‘you don’t like him and you’re trying to get rid of him,’” hospital CEO Corey Fedie said. “We left three offers on the table and modified the contract in areas he requested. But there’s a legal issue we can’t cross.”

As the meeting progressed, the primary sticking point — the “on-call” rate paid to family physicians — came to the forefront.

Attorney Johnson cited two laws pertaining to the issue: the Federal Anti-Kickback statute and the Physician Ethics in Self Referrals Act, more commonly known as the “Stark Law,” named for U.S. Rep. Fortney H. “Pete” Stark of California.

“Under these laws, physician compensation must be consistent with fair market value for actual services rendered,” she said. “We have to use that guidance to determine how much we can pay. If you pay more than fair market value, the government assumes you’re paying for referrals. And that’s illegal.”

Violation of these laws can lead to severe consequences, according to Johnson.

“If you’re caught, the government will shut this hospital down and not bat an eye,” she said. “I’ve seen them do it.”

Gardner pressed for specifics: “With this current contract, would Dr. Sackmann be considered in violation of this law?”

“In years past, specialty doctors were paid for being on-call; family doctors were not,” Johnson said. “Now, family doctors get paid for being on-call, but the rates are low. We can pay for availability, but not for services that aren’t being provided.”

CEO Fedie added, “It’s the on-call rate that’s so significantly different from the norm. We asked Dr. Sackmann to provide fair-market information to support the rate he’s requesting.”

Fedie said that a neighboring facility — Davenport, Othello or Odessa, for example — might pay a higher on-call rate to their doctors, but those rates might not meet the laws’ intent.

Attorney Johnson agreed. She cited a 1992 letter from D. McCarty Thornton, Associate General Counsel for the Department of Health and Human Services, Inspector General Division.

The letter stated, in part, “Merely because another buyer may be willing to pay a particular price is not sufficient to render the price paid to be fair market value.”

In other words, according to Johnson, “Just because someone else is paying a different rate, doesn’t mean it’s permissible for you.”

Gardner reiterated her concerns. “You need to know how bad the feeling is in this community,” she said. “We’re very unhappy. Dr. Sackmann was employed by the hospital for many years, and got kicked out long before the current board was seated. Trust has been lost. Isn’t there a way to make up for that disparity in income so you can keep him on staff?”

Johnson said, “That’s a big ‘no.’ The hospital has to consider the aggregate of all payments to a physician. Again, that total cannot exceed the fair market value for services rendered.”

In a subsequent conversation, the Journal asked why other local hospitals paying higher on-call rates than EARH aren’t also concerned about violating these laws?

“I think they probably should be,” she said. “But I don’t represent those hospitals and I don’t know who their lawyers are. If other hospitals aren’t complying with federal laws, there’s nothing that we can do about that.”