“My hospital is in-network, but the doctor I need is out-of-network; how is this possible?” I cannot tell you how many times I have been asked this question.

In one particular case, I was asked this question by a person who basically said this type of situation was just another way for insurance companies to get over on members; that is, the person said that the insurance company allowed these types of “shenanigans” so as to deny members healthcare while looking legal.

I responded to the member with the information I’m about to pass on to you.

hospitals and doctors have a mutual partnership

Hospitals and doctors have a mutual partnership. What this means is that doctors are independent of the hospitals they work for. This is what “mutual” means: that neither is dependent upon the other. In other words, certain obligations hospitals make are not mandatory for doctors; certain obligations of doctors are not mandatory for hospitals.

So doctors are not hired based on whether or not they agree to every obligation an in-network hospital does. Doctors are not hired based on whether or not they are willing to join an HMO network.

forcing doctors to join hmo provider networks could limit hospital hiring opportunities

Now some may want to ask, “why is this the case?” There’s an easy answer for this. Imagine if hospitals said in the hiring process, “We’ll only hire you if you agree to join an HMO network and received reduced fees for services rendered.” Do you think that hospital would hire the needed medical talent? Do you think doctors would wanna work for such a hospital or clinic? Some think that HMO plans are already too limited in their provider networks, but if the hospitals enforced this “join HMO networks or find somewhere else to work” rule, the limited provider network would become even further limited.

The truth of the matter is that no HMO or PPO plan can force a doctor to join its network. If a doctor chooses not to join because they want to charge higher prices than these insurance companies allow, they have a right to refuse. And no insurance company can make a primary care doctor (PCP) or specialist join its network if he or she is unwilling.

And, as said above, a doctor can be hired by an in-network hospital, yet choose to be an out-of-network doctor. And no hospital can force a doctor’s hand, especially doctors who choose to be affiliated with multiple hospitals and branches. It’s no different than college professors who choose to be affiliated with multiple universities. When I was a student at UNC-Chapel Hill back in the early 2000s, I had a number of professors who were also teaching profs at Duke University. My trombone lessons professor was also a trombone prof at the Ivy League university just eight miles down the street.

The higher you go in the medical world, some doctors are so famous that hospitals hire them despite their affiliations with other institutions. The reality is that good talent, the higher you go, is rare. Like HMO provider networks, the more rare the talent for hospitals, the more exclusive doctors can be. And hospitals ultimately play nice because, they too, need to survive in order to help patients survive.

a question worth asking

If you’ve ever wondered why an in-network hospital has an out-of-network provider, it’s not hard to understand how this is possible, really. Doctors have the freedom to work where they want, and barring them from employment due to their decision to join or refrain from joining an HMO insurance plan affects not only the doctor’s chances of employment but also the hospital’s chances of recruiting excellent talent. And failure to recruit top medical talent could persuade patients to seek out other medical services at other hospitals and clinics.

Hospitals are in competition with each other. To be sure, they want to offer the best medical treatment for patients, but they cannot do that if they cannot recruit top medical talent. In order to recruit the best doctors available, hospitals have to allow some flexible terms for doctors. These flexible terms allow doctors some measure of independence over what they can and cannot do. If you were a doctor, would you wanna work for a hospital or medical center/clinic that restricted your power — or a hospital that would enhance your independence while still giving you gainful employment?

So, how do you think it makes a hospital/medical clinic/center look if they tell a potential medical doctor recruit, “we have a requirement here: you must agree to join HMO networks”? Chances are, unless that doctor is looking to jumpstart his or her medical career and is out of options for work, he or she will say “thanks” and turn their attention to another hospital for employment. Hospitals can do what some want (that is, require all MDs to join HMO networks), but the questions come as follows: 1) which HMO networks are doctors to join? And 2) if doctors join HMO networks, will hospitals give bonuses to compensate for the reduced fees doctors must take on for services rendered?

Hospitals, medical clinics, and medical centers give doctors a measure of independence over what networks they want to join because all doctors deserve compensation for their medical services. Even HMO plans agree with that. HMO plans work because first, they understand that doctors deserve just compensation for their work in helping and healing patients. Good doctors are hard to find, and the good ones deserve more than what they’re paid in HMO networks. HMO plans will admit that, even if secretly.

But HMO plans place human priority over doctor pay: that is, they believe that a commitment to helping patients takes precedence over financial compensation. And so, since medical doctors are committed to people, humanity, that commitment “should” drive doctors to join affordable HMO networks so that they can reach the most vulnerable of us: those who are unable to pay top dollar for healthcare. However, forcing doctors to accept smaller compensation would require hospitals to take that extra compensation on themselves. Hospitals have to give attractive compensation packages already to recruit top doctors; they’re not okay with increasing that financial compensation just to influence a doctor to join an affordable HMO network.

If hospitals have to foot extra compensation for requiring doctors to join HMO networks, who will get that extra cost? The hospitals themselves will pass those extra costs down to the patients, and medical services will rise. No patient wants to see healthcare costs rising. And yet, members don’t want rising costs but want increased flexibility within the network. And yet, to have that increase in flexibility, members must pay for it. Members, in other words, want something but don’t wanna pay for it. This has been the situation since time began.

Members don’t think about this when they express frustration over an out-of-network doctor because they don’t see things from the same point of view. They want to have everybody in-network and go where they want to go for service. But when you’re an HMO insurance company, you can’t just get everything you want. You have to have providers, and that means you have to compromise in order to recruit providers. And when you’re a hospital trying to recruit talent, you can’t just force a doctor to join an HMO network because you want it. Hospitals have larger clientele than just members in a given network; they have to think about their survival, not just the survival of a particular insurance company or its members.

And a hospital can’t survive without doctors; an insurance company can’t survive without hospitals, medical clinics, and medical centers. And so, because insurance companies depend on providers, and providers depend on doctors, they are all dependent in their goals of 1) meeting member needs, 2) growing member lists, and 3) ultimate financial survival.

But when you’re in an HMO plan, you can’t just do what you want to do and expect the plan to cover it and you. There are rules, and those rules must be followed.

You may not like all your options, but at least you have options.