A Dose of ADR for the Health Care Industry

By Cooley, John W. | Dispute Resolution Journal, February-April 2002 | Go to article overview

A Dose of ADR for the Health Care Industry


Cooley, John W., Dispute Resolution Journal


It is ironic that the very industry the public relies on for immediate help sorely needs help itself. We're talking about the health care industry and the enormous increase in medical malpractice cases and other health care-related disputes in recent years. In the following article, John W. Cooley discusses how some hospitals and industry leaders are turning to ADR, specifically mediation and arbitration, to cure the health care industry of its own chronic malady. Cooley describes the success of a Chicago hospital in using a special mechanism called co-mediation and encourages members of the health care industry to be just as creative in tailoring ADR to suit their dispute resolution needs. This article is an adaptation of the author's presentation at an International Congress on the private resolution of disputes held in Wife, Brazil, in November 2001.

In the United States, lawyers are now moving into an era where clients are placing a premium on lawyers' creative ability to design processes for resolving disputes, in addition to the traditional tasks of designing problems and solutions. It is not enough anymore for a lawyer to design wonderfully elegant legal problems and solutions and take them to court for adjudication.

Clients are now beginning to expect, and sometimes demand, that their lawyers be architects of cost-efficient mechanisms for converting the raw materials of arcane legal problems and legal solutions into early mutual-gain settlements or limited-risk private adjudications.

Two such primary mechanisms are mediation and arbitration. This phenomenon of process design is blossoming in almost every field of legal practice, and most recently with respect to disputes arising in the health care industry considered in its broadest sense-public and private hospitals, academic medical institutions, private clinics, nursing homes, health maintenance organizations, physician organizations, health care insurers, health care suppliers and service providers, among others. This article specifically addresses the use of mediation and arbitration in that industry.

Mediation and Arbitration

The health care industry in the United States is in the process of revolutionary change. Health care payers and health care providers have been creating new business relationships, as integrated health care systems have been forming to deliver quality health care at lower costs. This integrative movement has carried with it the seeds of conflict and the need to manage and resolve conflict at all levels.

The new relationships are ongoing and mutually beneficial, but are subject to deterioration and dissipation if disputes are allowed to spin out of control in an environment of high financial stakes, strong emotions, inflated egos, and complex technical issues. Because parties in these business relationships are typically contractually bound, they are frequently taking advantage of predispute mediation and arbitration clauses to govern how disputes will be processed and resolved when they do occur.' In dealing with patient disputes, however, health care organizations are more inclined to use arbitration only in post-dispute ADR agreements.2

In July 1998, the Commission on Health Care Dispute Resolution, jointly created by the American Arbitration Association, the American Bar Association, and the American Medical Association, issued its final report encouraging the use of ADR (mediation and arbitration) in resolving health care disputes in the managed care environment and established due process guidelines to be followed in implementing health care ADR systems. Key recommendations in the final report included:

ADR should be used to resolve disputes over health care coverage and access as between patients and private health plans and managed care organizations;

ADR should be used to resolve disputes over health care coverage and access as between health care providers and private health plans and managed care organizations;

In disputes involving patients, binding forms of dispute resolution (i. …

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