Employed Physicians and Medical Staff Privileges

With employed physicians, the process is basically the same but with a few little twists and turns that medical staff leaders should understand.

A version of this article was first published June 9, 2020, by HCPro's Credentialing Resource Center, a sibling publication to HealthLeaders.

The traditional arrangement when a physician applies for clinical privileges at a health system is that the medical staff services department collects information from multiple sources to verify the physician’s current competence specifically related to the privileges requested.

Then the medical staff, through its defined processes (be it a credentials committee, a medical executive committee, or both), ultimately makes recommendations about those privilege requests to the governing board, which approves, modifies, or rejects the medical staff recommendations. With employed physicians, the process is basically the same but with a few little twists and turns that medical staff leaders should understand.

Privileges Contingent on Time Frame Completion

A best practice for both medical staff bylaws and for an employment offer letter or agreement is to have language to the effect that any application for medical staff membership/privileges that is not completed in 180 days is considered incomplete, at which point processing of that application will cease and the applicant is not entitled to due process under the medical staff bylaws.

Although this may sound harsh initially, the reality is that it can be very helpful. Almost any clean application can be easily processed within 180 days.

Imagine that despite everyone’s best effort an applicant slips through your screening cracks and you discover a huge red flag halfway through the credentialing and privileging process. You need additional time to put the burden on the applicant to produce further information to answer all your concerns. You want to avoid a negative decision on privileges since this opens up a Pandora’s box of litigation, due process, and National Practitioner Data Bank reporting.

By having this language in your documents, the medical staff can end the ordeal after 180 days without opening the door to a fair hearing and the employer can declare the employment offer null and void without high risk of lawsuit for broken agreement. Quite simply, the clock can run out and you are done. Of course, anybody can engage an attorney for any reason, but done properly, this safety valve can help minimize or deflect the possibility of legal action.

Co-Terminus Language

Another very common clause in a physician employment agreement is “co-terminus” language, which addresses whether clinical privileges are tied to the employment contract. If they are, then physicians automatically lose their clinical privileges if the employment contract is terminated. This agreement is between the physician and the employer. As such, it is a clear example of the fact that when an employment agreement with the physician exists, that agreement trumps the medical staff bylaws, which generally state that privileges exist until they are either voluntarily resigned or involuntarily removed.

Co-terminus language can keep the physician from retaining privileges and treating patients after his or her contract has been terminated. 

Non-Compete Restrictive Covenants

Many employment agreements contain “non-compete” language, often referred to as a restrictive covenant. Non-compete clauses recognize that physicians who are no longer employed by the health system are prohibited from competing with that health system in the event that their employment contract is terminated. Generally, the non-competes are based on a specific geography (“x” mile radius from a defined site) and/or a period of time (generally 12 to 24 months). It is important to know how the courts in your state or your region view non-competes.

Some are rigorously upheld as long as they are “reasonable”; other jurisdictions rule routinely against even a reasonable non-compete. Again, medical staff leaders should be aware of such clauses. The terminated physician will often appeal to a medical staff leader to intervene on their behalf, but the medical staff leader really has no standing to do so in these kinds of contractual matters.