Monthly Archives: April 2012

Employment Contracts with Hospitals Pose Risks and Benefits to Physicians

As trends suggest that more and more physicians will be employed by corporate entities such as foundations and other payors, physicians and other health care professionals facing employment agreements should consider reviewing those agreements carefully with counsel before signing on the dotted lines.

All sorts of terms that appear benign may become more important as time goes by.

For instance, most employment agreements have sections on length of the employment.  If a physician is giving up a practice for such employment, the long term consequences of the agreement must be considered.  While in most cases termination because of inadequate care is remote, termination because the organization makes major policy changes is very possible in the current medical environment.

Clauses such as arbitration clauses should also be carefully considered as an arbitration can be a very expensive way to resolve disputes.

Other issues such as usual customary care, assignment of billing, and the cost of liability insurance should all be carefully considered. Karen Cheung recently explored the issues involved in these contracts in a recent post at the Fierce Healthcare blog.    She references an article in American Medical News by attorney Steven Harris about the traps of hospital employment agreements.

Also, the American Medical Association site offers useful tips before signing such agreements, read here for their tips.

Before signing any contract, most people make a quick decision about whether it is valuable to have legal counsel.  There are some contracts that, in most cases, do not justify hiring an attorney, such as purchasing a car or contracts for purchases under $5,000. Before signing an employment contract in healthcare, however, it should be considered that:

 1.  Most attorneys these days will agree to a flat fee for review of a basic contract, which is often what these employment contracts are.  For instance, Tredway, Lumsdaine & Doyle, LLP, will agree to a flat fee for both reviewing and negotiating the contract on your behalf.
2.  Attorneys can be sued for bad advice.  If the agreement does not work out like it should, a call to the lawyer that gave you the opinion may give you some relief.
3.  Such a review (and the resulting discussion that takes place in the course of the review) takes the surprise out of the process.  Hear exactly what you are getting into from experienced counsel.
4.  Any qualified attorney can spot areas where changes may be requested and the contract can be rewritten in your favor.

Before changing the way you practice and work for a corporate entity, a physician should have the agreement carefully vetted before proceeding.  Make sure you know what you are getting into before you sign.

Written by Matthew L. Kinley.

Employment Agreements and Compensation for Physicians

With the recent changes in healthcare laws, more physicians are becoming employees of hospitals, medical groups, or affiliate organizations rather than setting up their own practices.

There are a number of considerations and pitfalls that should be taken into account when structuring your employment agreement. The most important consideration for most physicians is physician compensation. A physician should make sure that he or she is checking for fair market value (base salary and productivity bonus) in employment contracts with hospitals, as hospitals are bound by law. The legal limits are imposed by Stark law, 42 U.S.C. §1395nn and the IRS rules for tax-exempt hospitals. See this wiki link for more information on Stark law.

Common compensation methodologies in physician employment agreements should include fixed salary, base salary with productivity bonus or compensation based solely on productivity. Newer physicians to the area generally select a fixed salary for either each year of the contract or for the first year or two followed by fixed adjustments in subsequent years.

Many agreements contain lower base salary combined with a productivity bonus based on either of the following:

1) percentage of collections,

2) percentage of net revenue, or

3) physician work relative value units as established by the Centers for Medicare and Medicaid Services.

The total compensation is generally capped either by a certain dollar amount or by a percentage of base salary, that should be adjusted upward annually by the increase in consumer price index. Physicians should pay close attention to how a bonus is calculated and paid. Legal issues with productivity bonuses or compensation and referrals are triggered by Stark law and the Anti-Kickback statute.

If Stark applies, all compensation arrangements with physicians must be structured to fit the exception to Stark. This is why it is important for an attorney to be involved with the process. Stark law prohibits referrals by physicians who have a financial relationship to the entity receiving referrals if a hospital-employed physician provides “designated health services” under Stark, which are reimbursed under Medicare or Medicaid, unless an exception applies. Other important terms to consider include contract termination, emergency room call compensation, non-competition and non-solicitation provisions, participation in a hospital’s managed care contracts, professional liability insurance, and indemnification.

Written by Pamela Tahim

Orange County Medical Association Selects the Firm as Business Partner

The Orange County Medical Association is pleased to announce another benefit of membership. The OCMA has the law firm of Tredway Lumsdaine & Doyle, LLP, (TLD) as its Business Partner for physicians seeking custom legal services for their professional or personal needs.

OCMA members may receive complimentary consultations and discounted rates on a wide range of legal services, including healthcare and employment law, trust administration/probate, business litigation, real estate, tax and business planning, and asset protection and estate planning.

“Our Medical Professional Plan is designed to specifically help busy physicians protect their professional practices,” said Matthew Kinley, partner at Tredway Lumsdaine & Doyle LLP. “We offer quality legal advice from experienced attorneys in a package that is highly customizable for individual needs. We look forward to offering our services through this special arrangement to the OCMA membership.”

Welcome to Your Go To Legal Resource for Practicing Medicine

At Tredway, Lumsdaine & Doyle, LLP, we take pride on offering legal services for your medical practice. We are attorneys located in Southern California with a unique training and perspectives for doctors, dentists and other professionals in the field of medicine.

Our lead healthcare law attorney is Matthew L. Kinley. Matt has decades of experience as a business and litigation attorney handling all sorts of matters in various tribunals including administrative agencies and courts of law. Matt also handles business disputes between partners and deals with transactional matters involving business entities and real estate for his clients as the need arises.

Joining Matt as healthcare law attorneys at the firm are Pamela Tahim and Chris Sorley. Pamela has a wide range of experience as a litigator with a strong tax background with her advanced degree in taxation. Pamela handles all sorts of issues for medical professionals whether in court or outside of court. Chris rounds out the firm's health care law team with his strong advocacy and litigation skills. Chris recently won a favorable ruling in favor of doctors concerning medi-cal audits.

To round out the litigation skillsets offered at the firm, we also have transactional attorneys including Jennifer Sawday who can assist with doctors and their staff with their estate planning and asset protection needs.  Jennifer joins other firm attorneys who also handle all manner of litigation and transactional matters for firm clients including those in the healthcare.

We are proud to be your attorneys servicinig your needs as healthcare professionals.