Medical Directors function as the medical leader of a healthcare facility.  They work together with the administrative leader to oversee the medical aspects of a healthcare facility’s policies and procedures and to lead medical staff.  Most independent facilities operate with a Medical Director, including surgery centers, dialysis units, infusion centers, service lines within a healthcare system, and some independent practices.  The requirements for a medical director can be imposed by CMS, an accrediting agency and by the facility. 

A MeD role should be subject to a written agreement signed by the parties. The agreement can be between the facility and an individual physician or with a medical group and its designated physicians.  Here are some terms to look for in your agreement. 

Compensation. Compensation should be established at fair market value. This is important for the facility and for the physician. A fair market value analysis will be conducted with a low to high range. Naturally, the physician will prefer to know the range that has been provided and would like to see compensation at the higher end. Justifying compensation at the higher end can be achieved by demonstrating length of time in practice and experience, board certifications, publishing, time that will be committed to the role, and extent of support within the physician’s group demonstrated by number of other affiliated providers. 

Duties. The intensity of the medical director requirements vary depending on a number of factors. A new facility will involve significantly more time in its early stages than will a highly functioning existing organization. It is important to know the frequency of meetings, the committees that will be chaired by the MeD, and the history of accreditation and CMS surveys of the facility. A position description and fair market value analysis should include an estimate of time to be dedicated to the role. 

Restrictive Covenants. Medical Director Agreements may contain restrictive covenants that are restrictions on the MeD’s other activities. Restrictive covenants can include a non-compete which prevents serving in the same role with a competitive organization, limitations on the ability to invest in another competing facility, and restrictions on hiring staff or sharing confidential information. Most important to the MeD is to understand the intent of the restrictions and decide their impact. The MeD may propose linking the restriction to the termination of the agreement. Another protection is to reserve a right of first refusal so that the MeD can have the option of also serving as the Medical Director at any new expansion facilities in the market. 

Assignability. In order to preserve the durability of the relationship, allow for reasonable terms of assignability. In other words, if the agreement is with your practice, protect the medical director agreement so that it remains enforceable even if there is a change in ownership of the group or there is a merger or other affiliation.

Insurance. Be sure that the facility provides appropriate levels of liability insurance to cover the functions of the Medical Director. This is in addition to the physician’s malpractice insurance. Also, depending on the MeD’s role within the facility, Directors and Officers fiduciary coverage may be necessary as well.