The Anatomy of Medical Director Contract Samples: Essential Elements and Pro Tips
Anatomy of a Medical Director Contract
A medical director contract is a formal agreement between a physician and a healthcare institution that outlines the physician’s duties, responsibilities, and compensation for overseeing various medical and administrative functions within the organization. It serves not only as a detailed job description but also as a roadmap for governance and compliance, ensuring that both parties understand their obligations in terms of patient care, facility management, and interaction with regulatory bodies.
In the healthcare industry, medical director contracts play a crucial role in managing off-site management functions, such as peer reviews, case reviews, and chart audits, and employing administrative control over physicians, such as credentialing and peer review. "Administrative control" is the ability to make decisions regarding physician privileges, appointments , and disciplinary actions – ultimately serving the shared goal of patient safety and quality care.
Medical director contracts are particularly important for group practices and organizations in the following scenarios:
- Group practices that have engaged an individual for a managerial position to supervise the delivery of medical services by other physicians.
- Physician-owned clinics and practices that provide group practice services but contract out to a hospital or other entity for the services of the physician.
- Medical clinics, outpatient treatment centers, and surgical facilities operated for profit but organized as professional corporations or partnerships.
- Organizations that employ physicians to work at more than one facility, as medical director contracts may eliminate the need for separate services contracts and employment contracts.
Key Clauses of a Medical Director Contract
Even the most standard medical director contract must cover certain essential clauses. It is important to note that the wording of each clause is tailored to the position, the type of service(s) rendered, and the type of facilities. "Must-have" clauses in a medical director contract are:
Scope of services. The contract should spell out the duties of the medical director. Is the medical director expected to provide clinical time, administrative oversight, and/or management of the medical staff?
Compensation. In addition to salary, there may be other forms of compensation included in the contract. These could include bonuses, benefits, contributions to retirement accounts, or stipends for licensing or certification.
Term of contract. The duration of the contract can range from a few months to several years. Generally, though, a medical director would expect to sign a contract for a minimum of one year.
Termination. There are many reasons for premature termination of an employment contract. Common causes are license suspension, lack of hospital privileges, malpractice liability issues, change in the organization, and three or more patient complaints to the Board of Medicine. A physician or employer can also terminate a medical director contract without cause. How much advance notice is required by both parties? How will compensation be calculated for any time not served? Is severance pay expected?
Confidentiality. In addition to any non-disclosure agreements that already exist between the medical director and the organization, it is wise to have in the contract a list of what the medical director is not allowed to disclose to anyone outside the organization.
Legal Requirements of a Medical Directorship
Medical Director contracts are governed by a number of different legal considerations that can impact how they are structured and how they are interpreted. These considerations should be taken into account when drafting or reviewing a contract for a medical director.
One of the primary legal issues to consider when reviewing a medical director contract is regulatory compliance. The Centers for Medicare & Medicaid Services (CMS) has issued a number of guidance documents governing the qualifications and duties of medical directors of nursing facilities, hospices, and home health agencies. Although much of this guidance predates the Affordable Care Act, CMS still considers it to be applicable to these providers. In addition, each state also has its own optional medical director services game regulations, which incorporate several elements from CMS’s guidance.
A second legal consideration is liability. In the past medical directors were often treated as not being liable for negligence unless the facility itself had significant control over the scope or manner in which the physician performed his/her duties. This was often accomplished through use of a recitals paragraph stating that the facility was utilizing a medical director to assist it in meeting the standard of care for the level of care provided by the facility or practice group. However, it is uncertain whether such an approach is still in use in view of the heightened regulatory compliance issues and the regulatory sanctions which may flow from physician non-compliance with the Medicare/Medicaid program participation standards.
Third, legal issues arise with respect to the dispute resolution provisions. Many hospitals and health systems rely upon informal resolution procedures such as meetings with the medical director and the hospital administration to resolve disputes. Other organizations provide for formal grievance procedures. Many contracts also provide for mandatory arbitration. In structured pre-dispute arbitration agreements, arbitration is usually done on the individual basis, although at times multiple medical directors may be bound to arbitrate their disputes in a single arbitration proceeding or in arbitration proceedings together with peer review disputes. While arbitration generally is favored for its speed and efficiency, there are several legal issues that can complicate the arbitration process, including waivers of the right to a jury trial, discovery obligations, venue, remedies, and enforceability of the final decision.
Common Mistakes in Medical Directorship Agreements
Common pitfalls when using medical director contract samples and how to avoid them are as follows:
The aforementioned pitfalls are common mistakes many doctors make when drafting medical director contracts. A physician may adopt a medical director contract sample that is poorly structured and could expose him or her to liability.
Physicians should not change a sample contract or a contract template without first consulting with an attorney experienced in reviewing, drafting, and negotiating medical director contracts. The pitfalls discussed above could be avoided by adhering to applicable laws, adhering to rules of licensing boards, not rushing through the process, and obtaining a review by an experienced attorney.
Medical Director Sample Contracts
A medical director contract sample typically resembles a standard physician employment agreement in the sense that it first introduces the contracting parties (i.e., the healthcare facility and the new medical director). However, medical director contracts usually include more detailed sections such as standards of practice, additional compensation packages, key performance indicators (KPIs), and provisions to outline how renewal agreements will be created.
The first several pages of these agreements are fairly straightforward and are essentially copied directly from the language included in the standard physician employment agreement template. The contract will identify the designated location, the effective start date, the length and expiration date, and key parties such as the healthcare facility and the medical director. It is very important to ensure that all information is accurate and that everything in this section matches exactly what was discussed with the intended medical director.
The contract will then move on to identify and define important responsibilities and duties such as medical supervision, policy-making, managing up to five other providers with the same medical specialty or specialty group , and the option for leadership training programs.
One of the most important aspects of medical director contracts is outlining the compensation structure. This includes salary which is normally listed at $250 to $300 an hour or $1000 to $1500 per day that the medical director fulfills their roles and responsibilities. The contract generally will provide for a simple calculation: the hourly rate of $300. Multiply that by eight hours every day and the total amount for daily salaries is $2400. The contract should then allocate this amount monthly (i.e., $72,000 per year) and in relation to a percentage of full-time equivalency (FTE) (i.e., 80% = $57,600 a year).
Any additional compensation provided to the medical director outside of their standard salary should be clearly outlined and accurately reflected on the contract. For example, bonuses can typically range from $500 to $2000 on a quarterly basis and are typically obtained by receiving positive feedback or achieving quarterly goals such as patient satisfaction or utilization.
Additionally, any type of incentive compensation must be double-checked with the Chief Executive Officer (CEO) and at the corporate level to ensure maximum compliance with state and federal laws.
Finally, after all of the details such as termination clauses, IP rights, and dispute resolution requirements are clearly, legally, and plainly outlined in the contract, then both parties can electronic sign the document (with the CEO signing on behalf of the healthcare facility). Many healthcare facilities will implement a new onboarding program through the human resources department to make this process easier for both sides.
Medical Director Contract Negotiation Tips
When it comes to negotiating a medical director contract, there are several strategies that can be effective. First and foremost, it’s essential to identify your own needs and goals before entering into negotiations. Consider what you require from a medical director, both on an ongoing basis as well as in terms of the initial engagement. What do you believe is a fair compensation? Do you have specific services in mind for your medical director to provide? Are there aspects of your organization or of their position that you feel need to be clarified and substantiated in writing?
Identifying your needs beforehand can help steer negotiations onto the right track. Additionally, it can give you a solid point of leverage when negotiating compensation and other aspects of the contract.
During negotiations, be sure to advocate your own needs while still being conscious of the needs of the other party. Believe it or not, thinking about the medical director’s needs can help yourself too. For example, if you know that your medical director highly values his or her time, you can offer to include more relevant tasks in their job description so they don’t feel that they’re wasting time.
Finally, always be sure to seek legal advice and review any medical director contract sample presented to you carefully. By doing so, you protect yourself against any potential problems in the long run.
Medical Director Contract Tools and Resources
There are several resources and tools available to assist in the drafting, review and understanding of medical director contracts. For online templates, a simple Google search will yield a number of results from both law firms and independent tools such as the Medical Director Handbook, a subscription-based service that provides a detailed overview of medical director contracts along with sample contracts and forms . Legal consultancy services are also a reliable resource for medical director contracts. They can provide personalized consultation about the risks and benefits of different clauses in a contract. Finally, software solutions for health care professionals such as MD Tech offer interactive resources for health care executives, office staff and physicians to understand the intricacies of a medical director contract.