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The most common arena for peer review is the hospital medical staff committee. Until recently, this was also the arena that had the most direct effect on a physician's practice. Now, peer review efforts by third-party payers, such as professional review organizations (PROs), PPOs, HMOs, and even traditional health insurers, are gaining in importance. These reviews share many characteristics of hospital privileges reviews. The hospital medical staff model for peer review is a good starting point for all types of peer review, but it should be modified for the special circumstances of other peer review environments.

The law grants the professions remarkable latitude in disciplining their own, a practice rooted in a historical context that is very different from current practice. Historically, the professions were seen as a calling, not a business. It was acceptable to discriminate against practitioners for racial, cultural, ethnic, gender, and anticompetitive reasons. The essence of peer review was to ensure that professionals were both technically qualified and socially acceptable. Since these were qualities that the professions were uniquely suited to judge, the law allowed them to be self-governing. In medicine, medical professional societies were granted the authority to determine where and whether a physician could practice. Hospital medical staffs were given the authority to grant or deny the privilege to practice in a given hospital. This delegation of authority has survived, but it is now an anachronism.

The reality of contemporary peer review is frequently in conflict with the medical profession's history. Conflict arises because the trappings of peer review remain, but much of the authority has been eroded.

This erosion of authority began with the civil rights laws. In most parts of the United States, medical practice was completely segregated, and this segregation was enforced through the medical societies. With the enforcement of the civil rights laws, the stranglehold of local medical societies on medical practice was broken. Rulings that hospital privileges could not be predicated on medical society membership quickly followed. (This principle is still flouted in practice by requirements that a physician be eligible for membership in the local medical society.)

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