Don't snooze through sleep clinic proposal

Contract Language. By Steven M. Harris, amednews contributor. April 14, 2003.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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The increasing number of hospital-based and freestanding sleep disorder centers has caused many doctors to consider becoming involved in this area of medicine, particularly as medical director of a center.

In addition to the compensation and related responsibilities that will probably be key negotiation points, there are several other issues you should consider prior to executing a contract to become a medical director of a sleep disorder center. These key provisions include the subjects of private practice, independent contractor status, clarifications to law, and accreditation issues.

Make sure your contract contains a provision enabling you to continue your private practice separate from the sleep disorder center, and that such a practice will not be considered to be competing with the center.

The issue as to whether physicians as medical directors are independent contractors or employees for federal income tax purposes has been addressed by the Justice Dept.'s Tax Division and continues to be the source of litigation in several jurisdictions. Inclusion of an independent contractor provision within your contract will help to clarify, but not ensure, your relationship with the entity that owns and operates the center.

Also, because insurance coverage issues will continue to evolve for sleep studies, you should think about including a provision that addresses what happens to your contract if there are substantial changes in Medicare reimbursement or other regulations that impact your ability to function as the medical director.

Your proposed contract will most likely contain a compliance provision stating that, as medical director, you agree to comply with all applicable laws and regulations and with the policies and procedures of the sleep disorder center, and that you will provide services in accordance with applicable accreditation standards.

Many sleep disorder centers are seeking accreditation as a benchmark for reimbursement, continued certification and licensure, and as a key element of managed care participation agreements. It is important you are aware of what your role and duties as the medical director will be in relation to initial accreditation of the center and maintenance of such accreditation. The accreditation process will require you to have additional responsibilities and involvement during the accreditation survey preparation and following the survey to ensure continued compliance.

Harris, a partner at McDonald Hopkins in Chicago, concentrates on health care law and has counseled physicians, physician networks and health care groups nationally. The author and publisher are not rendering professional advice and assume no liability in connection with its use. He can be reached at 312-280-0111, or by email (sharris@mcdonaldhopkins.com).