The healthcare industry has one of the largest and most tedious paperwork loads of any industry. A substantial portion of that paperwork doesn’t have anything to do with medical information, but instead has to do with managing contracts and other types of legal documents. In this article we’ll go over some common types of contracts and agreements, the relevant regulatory entities and laws, and some best practices to modernize healthcare industry contracts.
Types of Contracts
Physician Employment Contract
A physician employment contract is an agreement between a physician and a hospital, with the physician agreeing to work as an employee of the hospital. Things included (and negotiated) in a physician employment contract are compensation, benefits, schedule (such as on-call obligations), terms of termination, and restrictive covenants. A restrictive covenant address things such as, in the event of termination, will the physician be able to continue practicing in the area.
Physician Recruitment Contract
A physician recruitment contract is related to, but distinct from a physician employment agreement. In recruitment agreements, a hospital or other healthcare provider lays out the terms of recruiting a physician to come work for them. Typically, a recruitment contracts are laid out specifically to stay in compliance with federal Stark laws, which deals with the handling of referrals. If hired, the just-recruited physician will be in a position to accrue federal inpatient and outpatient referrals (designated as health services or “DHS” in Stark). The proposed financial relationship must stay in compliance with Stark, coming under very strict requirements for both parties. (See here for more information.)
Management Services Arrangement
Management services agreements are used to outsource the management of certain administrative and support employees (basically any non-medical personnel) to a third-party management company. Additionally, in most cases this management company is also in charge of the upkeep of the physical offices and equipment. Workers such as medical practice administrators (who manage various business functions), clerical/secretarial, bookkeeping, and collections personnel who do not perform a direct medical function are placed under the management company. For the physical offices, the management company will lease or sublease the practice’s medical offices. As part of the lease, the management company keeps the offices in good repair (office furniture, facilities, and medical equipment). Included with this is also janitorial and custodial services.
Medical Directorship Arrangement
A medical directorship arrangement is a role that a physician may enter into that is more closely related to the larger policies and administration of the healthcare provider they work for than a normal physician would typically fulfill. Though there is some variance in the specific types of tasks the director may fulfill, there are some common features. A medical director may be involved with policy development, promoting best practices, and providing training. With a medical directorship though, comes the need for compliance with Stark Law and Anti-Kickback Statutes. The office of Inspector General (OIG) along with the Department of Justice are taking initiatives to investigate any possible non-compliant arrangements. At its core, the Anti-Kickback Statute forbids medical directors from making payments in the form of remuneration in exchange for referrals or to attract business that is paid for by federally sponsored healthcare programs. (For more information see here.)
In the medical field, a transfer agreement is a written agreement between two separate healthcare providers for transferring a patient from one to the other. A fairly straightforward document, a medical transfer agreement is nonetheless a legal document requiring witnesses and signatures, and needs to be compliant with specific laws. In a typical medical transfer agreement, terms (length of care), terms of termination, duties, and insurance information are included. Also, liability issues, billing, governing laws, access to records, and free choice and medical judgement sections are usually included.
Contract Management Software
The many different types of contracts related to the medical field, all of which need to meet regulatory requirements and maintain a certain degree of compliance, can create a difficult and tedious situation to navigate. Contract lifecycle management (CLM) platforms make handling these types of contracts easier, more simplified, and more intuitive than ever before. With Concord, you can perform e-signatures and e-negotiations, as well as review, share, and edit contracts from literally anywhere with an internet connection, anytime.
Hospitals are the home of some of the world’s most advanced technologies, but the process of acquiring these technologies usually means entering into a licensing agreement of some kind. To understand how best to manage licensing agreements, it is important to understand the legal implications that accompany licensing agreements. The leading authority on intellectual property and licensing agreements is the World Intellectual Property Organization (WIPO), and they describe a licensing agreement as a relationship, usually spanning only a specified amount of time, and moving toward mutual benefit of both parties.
“It pre-supposes a continuing interaction where the licensor and licensee work towards realizing their common goal, which is to effectively use the technology for their mutual benefit. Assuming that the relationship is successful, and therefore profitable, it would mean that both the licensor and licensee would be financially compensated, usually and primarily in the form of an ongoing incremental income stream on the basis of the success of the product in the marketplace. Licensing, therefore, entails very different legal and practical consequences to those of a sale or assignment.” (See here)
Executive Compensation and Employee Benefits Arrangements
Executive compensation plans and arrangements most generally include a wide variety of legal financial, and tax information. An increasingly complex maze of government regulation and market pressures means that we can’t talk about executive compensation without also talking about tax issues, bankruptcy, securities, and corporate governance issues. There are various types of executive compensation and employee benefits types: salary, benefits, insurance plans, stock options, and bonuses. There are several regulatory methods used to keep executive compensation as fair as possible including extending the vesting period and disclosing salaries. Along with all these facets, security is critical. Keeping the executive compensation and employee benefits in a highly secure location will help greatly with avoiding possible liability issues.
Joint venture agreements take place between two or more companies, corporations, or individuals. Usually they are short term partnerships that shares profits, risks, and assets as the two entities seek mutual profit. When companies are seeking new technologies or to enter new markets they usually form a joint venture. Partnership contracts and commercial transactions law govern joint ventures in the United States, and are subject to income tax and in some cases, international trade laws. Hospitals may utilize joint-venture agreements as they seek to expand technologically or strategically.
Purchased Services Agreements
Purchased services agreements given to any outsourced, 3rd party that, instead of working directly for the hospital, work as a non-employee contractor to the hospital or healthcare provider. Many healthcare providers look to purchased service agreements as a way to reduce costs. For hospitals these types of agreements generally go into four categories of contractor: clinical, environmental, support-services, and financial. According to beckerhospitalreview.com, purchased services “can account for up to 35 percent of a typical U.S. hospital’s operating expenses.” When managed correctly and efficiently, utilizing purchased service agreements can help hospitals save substantially, but when poorly managed they can present a serious risk. Great care needs to be taken by the contract manager to insure that the best pricing is secured and all the necessary legal and regulatory requirements are met.
Under Arrangement Agreements
An under arrangement agreement is similar to purchased services agreements in that they both contract with a third party to provide a service to the hospital, but there are some key differences. Healthlawers.org describes several criteria of an under arrangement agreement: “the service provided by the third party under the “under arrangement agreement” is treated and billed like a hospital service. The contracted entity is also paid a fee, often on a “per-service” basis. The hospital’s agreement with the contracted entity must require the entity to look solely to the hospital for payment.” With under arrangement agreements, compliance with Stark Law is also a crucial factor. See the starklaw website for more information.
The reality of providing healthcare services means that legal, medical, and real estate issues are not as distinct as they should maybe seem at first, but rather separated by only fine lines. There can be substantial fines for healthcare providers that do not properly manage the real estate of their practice. Berkshirehospitalreview.com shares a story on the nuanced necessity to manage hospital real estate in compliance with federal rules and regulations.
“Detroit Medical Center was fined and agreed to pay $30 million to the federal government to settle allegations of potentially improper relationships between the health system and roughly 250 physicians, which again included leases below fair market value.” Real estate transactions for hospitals bring up two important pieces of legislation: the Stark Law and the federal Anti-Kickback Statute. “Both forbid providers from offering referrals in exchange for some type of business arrangement.” In this case, a potential exchange of referrals for real estate space cause a great deal of liability.
Equipment Sales and Leases
For the specialized equipment that hospitals require, there are many benefits of arranging to lease, or equipment used, instead of buying brand new equipment which can be very expensive. Some leases of equipment can be considered by the IRS a tax-deductible transaction, is more flexible, speedy, and easier to manage than loans. See healthlthleadersmedia.com for a more detailed report on leasing medical equipment.
Ancillary Services Agreements
Ancillary agreements can vary in terms of content, but they generally encompass some of the following categories: escrow agreements, documents of transfer, and post-closing commercial arrangements.
Interns and individuals involved in a residency program require a supervisor as they gain necessary experience. Having a supervision agreement is critical because it provides some key functions. Solidifies roles and responsibilities, establishes collaborative relationships and boundaries, and a review process. A supervisor agreement is a formal document that provides a backdrop from which to conduct performance reviews.
In addition to the types of legal documents healthcare providers need to store and manage, we’ll also discuss the various organizations to stay compliant with in the handling and execution of formal legal and financial arrangements.
Contract Management Software
The many different types of contracts related to the medical field, all of which need to meet regulatory requirements and maintain a certain degree of compliance, can create a difficult and tedious situation to navigate. To make handling these types of contracts easier, more secure, more simplified, and more intuitive than ever before, use the Concord Contract Management Software. With Concord, you can perform e-signatures and e-negotiations, as well as review, share, and edit contracts from literally anywhere with an internet connection, anytime.
Please feel free to give us a call at 844-693-7446 or contact us to learn more about how Concord can be used to manage your medical contracts and agreements.