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Summer 2006

Medical Directorship Of Anesthesia Services: Are You A Player...Or Are You Just Being Played?

Mark F.Weiss J.D.
Advisory Law Group

Wow, what a day! You've just left a meeting with the hospital's CEO. Of the fifteen anesthesiologists in your openstaffed department, the CEO wants you to be the new, first medical director of anesthesia services. You've been the department's chair for the past two years, but now you've been offered an administrative stipend of $2,500 a month. It doesn't appear to be any more work than what you've been doing, and the $2,500 is more than you need for the payments on a new Porsche!

Just as you feel your grip on the steering wheel, the alarm clock jars you awake. Should you savor the memory . . . or be thankful that it was only a nightmare?


Relax. Put your feet up. In order to analyze the dream, we need to back up a bit and consider the operation of an anesthesia department, as an element of the medical staff, in the absence of any mandate from hospital administration.

Without the overlay of hospital administration, an anesthesia department operates on either an "open staffed" or a closed staffed" basis. Note that this article does not address the somewhat rare instance in which all of the anesthesiologists are direct employees of the hospital itself.

In an open staffed department, any anesthesiologist can apply for privileges. If the applicant meets the medical staff 's and department's credentialing and proctoring requirements, he or she attains medical staff membership and clinical privileges in the department. In a closed staff department, no new applications for staff privileges through the anesthesia department are accepted: the hospital's governing board, after approval by the medical staff, has determined that there are a sufficient number of anesthesiologists and that admitting more would be detrimental to keeping existing members busy enough to prevent them from seeking work elsewhere, thereby affecting patient care.

In either case, open staffed or closed staffed, absent some business entity relationship that exists among the anesthesiologists, the physicians each operate an independent "business" and need only meet the requirements set forth in the medical staff and departmental rules to retain their right to a full share of the workload. In other words, if they decide to take time off or if they block out every other Tuesday so that they can work in some surgery center there is little that the department can do.

Medical Directorship Although they are sometimes split into two written documents, the usual medical directorship agreement between an anesthesiologist and a hospital imposes two classes of obligations on the medical director: The first involves administrative and supervisory duties. The second involves coverage obligations. Each of these classes of duties is discussed in detail below.

Administrative and Supervisory Duties As is obvious, a medical director agreement obligates the anesthesiologist who enters into it to become the "medical director" of the anesthesiology department. Generally speaking, the agreement obligates the director to supervise the delivery and performance of all anesthesia services required at the hospital.

In addition to this general charge, the usual medical director agreement imposes on the medical director a host of specific supervisory and administrative duties. For example, the medical director is required to establish the anesthesia schedule; to supervise the development and implementation of quality assurance and quality improvement programs and procedures; to advise on the selection, retention and termination of all nonphysician personnel who may be required for the proper operation of the department; to serve as the liaison between the anesthesiology department and hospital administration; to direct non-physician department personnel in the performance of their services; to assist the hospital in the connection with preparation for and participation in JCAHO and other surveys; and to devote significant time to serving on various hospital administrative, as distinguished from medical staff, committees.

Coverage Obligations In addition to administrative and supervisory services, medical directorship agreements generally require the director to assure coverage of all of the hospital's anesthesia requirements. In other words, the medical director usually takes on the responsibility of guarantying 24 hour a day, 7 days a week coverage by a sufficient number of properly trained anesthesiologists to meet the needs of the facility.

The Dilemma You're right if you think the supervisory and coverage duties imposed pursuant to a medical director agreement seem to be the same as those imposed on the holder of an exclusive contract. In fact, the combination of administrative and coverage obligations imposed on a medical director pursuant to a medical director agreement is nearly, if not exactly, the same as those imposed under an exclusive contract. However, an exclusive contract has one, essential element that is lacking from the medical director agreement relationship - the medical director agreement does not give the director the right to exclusive control of the professional staffing of the department. The problem is, without the grant of exclusivity, it may be difficult, if not impossible, for the medical director to fully perform his or her obligations pursuant to the medical director agreement.

Anesthesiologists offered medical directorships often undervalue the distinction between a directorship and an exclusive contract. They tend to view the grant of exclusivity as a tool to fend off competition; the holder of an exclusive contract has the ability to determine who may, and therefore who may not, practice in the department. In reality, the power created as a result of exclusivity is not merely external in its focus, it is also used internally - to control the business activity of, and the anesthesiologists within, the department.

For example, in the case of an openstaffed department consisting of ten independent anesthesiologists, how can the one physician holding the medical director contract gain sufficient control over the department members so as to be able to guaranty coverage? Absent the power to remove someone from the schedule or to otherwise discipline the other department members, a power that comes with exclusivity, the director won't have the teeth to force the department members to act in the manner required to meet the director's obligations under the hospital contract.

Exclusive contracts generally deal with the issue of coordinating administrative control with medical staff department control. But in the case of a medical director agreement, there is usually no contract language synchronizing these two positions. If the medical director can't force his or her appointment as chair of the anesthesia department, he or she will lack the medical staff-level authority to control the schedule and will not have the ability to use the implicit threat of medical staff discipline to enforce cooperative behavior.

Conclusion Whether your medical directorship will be a dream or a nightmare turns on several factors. Central, of course, is whether or not the proposed relationship includes an obligation on your part to guaranty full coverage of the facility's anesthesia needs. If you are a member of a group without an exclusive contract, are there also independent anesthesiologists practicing in the department? Are there locums anesthesiologists who might later demand a full time share of the schedule? Can any non-group members be persuaded to join the group, so as to be able to gain administrative control over them by way of employment or shareholder/partnership contracts? Do the medical staff bylaws and departmental rules provide a way for the department chair to be appointed as opposed to elected? If not, a contracted medical director might be at odds with both the business independence of the majority of the anesthesia department as well as the department's elected medical staff leadership.

Let me end on a word of caution. Out there in the real world, I am more than aware that the legal and business advice I pass along to my clients is blended with many other factors, wants and needs, one of the big ones being money. But weigh carefully the fact that the amount of a monthly stipend, from the Porsche-payment variety to ten times that amount, might not be sufficient to offset the damages that the hospital might seek if you are unable to perform pursuant to the contract.