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    Steward Health Care pressured doctors to restrict referrals outside chain, suit says

    Dr. Stephen Zappala, a longtime Massachusetts urologist, says leaders of Steward Health Care exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists as a way to keep profits high.
    Suzanne Kreiter/Globe staff
    Dr. Stephen Zappala, a longtime Massachusetts urologist, says leaders of Steward Health Care exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists as a way to keep profits high.

    A whistle-blower lawsuit filed against Steward Health Care exposes a part of medicine largely hidden from patients: the behind-the-scenes pressure health care companies put on doctors to keep patient referrals in-house.

    Dr. Stephen Zappala, a longtime Massachusetts urologist, said company representatives exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists, putting profits first.

    Sometimes Steward representatives would call his patients and pressure them directly, Zappala says in the 35-page lawsuit, incorrectly telling them that they had to have their operations at a Steward facility even if he recommended another hospital. Other times, they would cancel appointments Zappala’s office had made for patients at competing hospitals such as Lahey Hospital & Medical Center or Dana-Farber Cancer Institute.

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    Most hospital and physician networks dissuade individual doctors from referring patients to outside competitors, a practice commonly referred to as “patient leakage,’’ though few are willing to discuss their tactics.

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    They discourage outside referrals for both quality and financial reasons. Doctors generally don’t have access to other systems’ electronic patient medical records, making it hard to coordinate care, they argue. Keeping patients in the system, of course, also means holding on to payments from health insurers for that care.

    Zappala and another doctor who was deposed in his case alleged that Steward’s methods crossed a line.

    Zappala charged that when he refused to comply with Steward’s policies, the company disciplined him for minor infractions and eventually canceled his privileges to operate at Steward Holy Family Hospital in Methuen.

    Steward Holy Family Hospital in Methuen.
    Suzanne Kreiter/Globe staff
    Steward Holy Family Hospital in Methuen.

    Steward and three physicians also named as defendants denied the allegations and recently asked Judge Elizabeth Fahey to dismiss the case, filed last November in Suffolk Superior Court. Fahey rejected the request last month.

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    Callan Stein, an attorney for Steward and two of the physicians, Dr. John Alexander, chief medical officer at Holy Family, and Dr. Stephen Chastain, a director of the Steward medical group, said during a court hearing in March that Zappala was disciplined for legitimate lapses in patient care. Those included being out of town when a hospitalized patient needed him.

    Besides, Stein said, policies discouraging referrals are legal and “extremely common.’’

    Fahey, the judge, responded that that was like a child telling a parent, “All the other kids do it.’’

    Stein argued that patients were not harmed because Zappala sent them to where he believed they would get the best care anyway. That is one reason, Stein contended, that Zappala’s claims don’t fall under the state’s so-called whistle-blower law, which is intended to protect employees who expose systemic problems in organizations.

    But Zappala’s attorney, Lisa Arrowood, told Fahey that more information about the effect on patients will probably emerge. “We’re going to find out that there were many doctors who succumbed to the pressure,’’ Arrowood said.

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    Contracts, including those signed by Steward doctors, usually allow doctors to refer outside the system if a patient requests it, or if it’s in the patient’s best interest, lawyers said.

    But another former Steward doctor who was deposed in the case last Friday said the company rejected outside referrals regardless of patients’ preferences — and publicly “shamed’’ physicians who refused to comply.

    During monthly group meetings, executives projected physicians’ names on a screen with the number of their patients who had gone out-of-network for care, calling out doctors who referred them, Dr. Claudia Gabrielle said. She is now employed by a Beth Israel Deaconess Medical Center practice in Salem, N.H., which she said does not hold similar meetings.

    “It became very money driven and very much like a business,’’ she said.

    Another Steward attorney, Bruce Singal, called Gabrielle’s statements “misinformed’’ and said “encouraging physicians to refer patients to the litany of talented specialists within its network’’ is good care.

    Some insurance plans require patients to get referrals from their primary care doctor before the plan will pay for an outside specialist. Other policies allow patients to make appointments with specialists directly and cover the visits.

    Ruselle Robinson, a health care lawyer in Boston, said most patients do not realize they have choices. Pressure from doctors can be effective.

    “Patients can go wherever they want to,’’ he said. “The limitation is only whether their insurance will pay for it.’’

    Financial rewards for doctors who keep referrals in-house are not uncommon. Partners HealthCare, Southcoast Health System, and Wellforce, which includes Tufts Medical Center, all declined Globe requests for interviews about the topic.

    Partners spokesman Rich Copp said in an e-mail that the organization does not restrict where doctors refer patients but provides “modest financial benefits’’ to practices that maintain or increase the percentage of patients that remain within the Partners system. He said patients typically receive about 60 percent of their care within Partners.

    “Care that remains within an integrated system, using a single medical record, is often better coordinated and more effective than care that bounces patients between different systems,’’ Copp said.

    Andover, MA. 05/21/18, Dr. Stephen Zappala, a longtime Massachusetts urologist, said leaders of Steward Health Care exerted immense personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists as a way to keep profits high. Suzanne Kreiter/Globe staff
    The Boston Globe
    Dr. Stephen Zappala, a longtime Massachusetts urologist, said leaders of Steward Health Care exerted personal and financial pressure on him and other physicians to refer patients only to Steward hospitals and specialists.

    Zappala, who said he runs the largest solo urology practice in the Merrimack Valley, with more than 50,000 patients, said he noticed changes in referral policies in 2010. That’s when Cerberus Capital Management purchased Caritas Christi Health Care, a Catholic hospital and physician network that included Holy Family Hospital. Cerberus converted the system into a for-profit company and renamed it Steward.

    Zappala became a member of Steward’s physician network, which contracted with insurance companies and collected payments for doctors. Steward withheld a portion of their pay — he estimated about 20 percent — and doctors earned it back by achieving certain quality goals that included keeping patients within Steward, doctors said.

    Steward refused to approve his referrals to Dana-Farber and other non-Steward hospitals for an innovative operation in which surgeons removed only a portion of a patient’s cancerous kidney, Zappala alleged. When Dr. Mark Girard, a Steward executive, confronted him about these referrals, Zappala said, Zappala explained that Steward surgeons routinely did an operation in which they removed the entire kidney, which Zappala believed was riskier. Nonetheless, he said, Girard told him to stop sending patients outside the system.

    In an e-mail to the Globe, Singal, the Steward attorney, called these allegations “erroneous and misleading and this will be demonstrated in court.”

    Zappala said he was similarly admonished by Chastain for sending patients to Lahey — which Steward also denies. It was the only hospital in New England that offered high-dose radiation implants to treat patients with prostate cancer, which Zappala believed led to fewer side effects and a lower risk of reoccurrence than traditional surgery.

    Zappala said Steward withheld his $25,000 bonus in 2014 because he performed robot-assisted surgery at an outside surgery center, rather than Holy Family, which he said did not have the equipment needed. Gabrielle said she also tried to refer patients outside the network for less-invasive robotic surgery, but Steward executives rejected those requests even though no Steward hospital did the procedure.

    Some patients went outside Steward anyway, while others relented.

    “We clearly compromised their care to keep them in the network,’’ Zappala said in an interview.

    In 2015, Steward terminated Zappala from Holy Family for not being available to a patient in the hospital, a serious charge called abandonment, which he denies. Last summer, Steward reported the disciplinary action to state and federal regulators, and to health insurers, which Zappala said caused his practice — and income — to shrink dramatically.

    Other doctors also told the Globe that Steward executives pressured them and their patients over outside referrals.

    Dr. Yuliya Mandel, a primary care physician in North Andover, recently ended her affiliation with Steward in part because of growing frustration with its policies.

    “Steward was overstepping its boundaries and infringing on my patients’ right to freely choose the provider or the hospital they want to receive their care,” Mandel said.

    Mandel said she was once asked to call an elderly patient to have him cancel his heart surgery at Massachusetts General Hospital a couple of days before the procedure — and persuade him to have the operation instead at Steward’s St. Elizabeth’s Medical Center. She refused to call.

    A Steward administrator then contacted the patient, and the surgery was rescheduled to take place at the Steward hospital, she said.

    Liz Kowalczyk can be reached at kowalczyk@globe.com.