Learning Objectives:
- Understand strategies for effective contract negotiation, such as slowing down the process, prioritizing key issues and leveraging unique skills.
- Recognize the importance of accurate and ethical documentation, proper patient follow-up, and comprehensive informed consent processes to mitigate legal risks.
- Cultivate the confidence to walk away from unfavorable deals and plan for professional transitions or exits.
Physicians routinely navigate a complex landscape of contract challenges, from negotiating their first employment contract to partaking in investments and partnerships. While the pursuit of medical practice is driven by patient care, neglecting underlying legal and financial frameworks can lead to significant repercussions. Instances of misunderstanding agreements, noncompliance with regulations, or errors in documentation can transform seemingly minor issues into substantial financial burdens.
According to the American Medical Association, physicians lose an average of 7% of their revenue to coding errors. Subsequently, the U.S. health care system suffers a loss of $125 billion in revenue annually due to improper practices. This reality underscores the need for medical professionals to be equipped with legal and financial wisdom. Amanda Hill, owner and founder of Hill Health Law Group, joined a recent Medical Economics Practice Academy session to walk physicians through common pitfalls and offer strategic approaches to contracts, compliance and practice management.
SOLUTIONS AND TAKEAWAYS
- Take at least two weeks to thoroughly read and understand the terms of a contract, seeking legal help if necessary.
- Before agreeing to any deal, conduct thorough research on market value.
- Ensure staff follow-up with patients for appointments, laboratory results, etc. Building strong personal relationships with patients can be a strong safeguard.
- Exercise caution with agreements that encourage referrals or lack legitimate services.
- Before signing any investment or employment contract, comprehend what it would entail to leave.
MASTERING NEGOTIATION
A fundamental aspect of a physician’s career involves negotiating contracts, from initial employment agreements to partnership buy-ins. Slowing down the negotiation process is crucial. Receiving a contract with a short deadline, such as a three-day window or a Docusign request for next week, is not an ideal start. “You can have your lawyer look at it. You need time to read it and process it,” Hill emphasized. It is also important to educate oneself on key legal terms, especially for investments.
Another strategy is to pick your legal battles. Attempting to edit every clause can make a physician appear naive and potentially jeopardize the deal. Focus on three or four main points. “Let the little stuff go, especially if what you’re getting is going to be valuable to you,” Hill said. Prioritize understanding how to exit the contract, including any tail payments or financial obligations upon departure. What would it take to leave an investment, practice or job, and what binds a physician on the way out? Having a financial buffer, such as three to four months of insurance coverage, can provide the time and luxury of space to navigate transitions.
Honesty is always the best policy for negotiations. Fabricating other job offers is ill-advised, as misinformation can backfire. “This is a small world. I can’t tell you the number of times I’ve encountered somebody who knows somebody who sat on the board of this thing and this charity,” Hill warned. Furthermore, every deal is unique. Physicians should not assume that contract terms or noncompete clauses will be the same for them as they were for a colleague. The focus should be on the specific contract in front of them.
Maintaining a positive demeanor is also highly beneficial. Hill often begins communication on behalf of her clients by expressing their enthusiasm for the opportunity, even if the contract has issues to fix. This allows her to maintain her client’s leverage for the deal. Leverage is not about being top of the class or having multiple board certifications; it is about possessing skills the other party desires. This could include being excellent with patients, being efficient with electronic medical records, having a niche specialty or speaking a language that caters to a specific patient demographic. Weaving these attributes into the negotiation conversation demonstrates how the physician can bring value and money to the organization. Only after establishing optimism and showcasing leverage should the contract negotiations begin.
Ultimately, even with proper time given and one’s homework completed, a deal may still not work out. Feeling trapped or desperate can be sensed by the other party and undermine a physician’s negotiating position. If a deal exhibits red flags, a client senses something is wrong, and if reasonable requests are dismissed, it is often best to decline. Walking away prevents involvement in potentially fraudulent or exploitative situations, saving significant legal and financial distress later.
EXTREME CAUTION AGREEMENTS
Certain types of agreements are hotbeds for trouble. Medical directorship agreements can appear legitimate but hide fraudulent intent. Physicians must perform legitimate work for the compensation received, such as rounding, keeping logs or writing protocols, rather than simply lending their name for a check. Similarly, supervisory agreements for nurse practitioners or other midlevel roles require physicians to understand their state’s rules regarding prescriptive authority, meeting requirements and supervision limits.
Unwritten agreements or those with strings attached are highly problematic. If a vendor offers free services or equipment in exchange for encouraging patient referrals or if a physician accepts federal plans such as Medicare, Medicaid, or TRICARE, they are subject to both the Anti-Kickback Statute and the Stark Law. The Stark Law prohibits referrals to entities where the physician has an ownership interest or financial relationship, whereas the Anti-Kickback Statute deals with receiving remuneration for referrals. Medical spas are another area of concern, as they often seek supervising physicians but can push boundaries regarding the practice of medicine without a license or improper supervision. “Salesmen do not come into your office looking like criminals with trench coats. They’re not hiding out in alleys. They’re coming in the front door with brochures,” Hill warned.
PROPER DOCUMENTATION
Charts are not merely narratives but must satisfy auditors and support billing. Physicians should avoid cutting and pasting in chart notes, as this can lead to errors that compromise the physician’s integrity, making all information suspect. Follow-ups are often the cause of legal issues. Sending traditional letters to patients, even in the digital age, ensures they understand their results and the importance of returning for appointments.
Informed consent is a process, not just a document. Physicians should engage in direct conversations with patients about the risks of procedures, tailoring the discussion to the top three potential complications rather than listing every remote possibility. “It’s important to have those conversations so patients aren’t surprised, because if there is solid informed consent and something does go wrong, patients are understanding of that,” Hill said. For off-label procedures, it is vital to document why traditional standards of care are insufficient or unsuitable for the patient.
Billing and coding errors can lead to financial losses and legal trouble. Physicians cannot outsource their billing and forget about it; they must understand the basics to effectively oversee and audit their billing companies. There have been instances of billing companies providing improper advice or missing deadlines, often with limited liability provisions in their contracts. “Audits are your best friend.If you hire an auditor to come into your practice and audit your charts, then they give you a report and they say, ‘You know what? You’ve been missing start and stop times, for example. Those should have been documented in the record.’ Then you fix the problem, and you don’t do it going forward,” Hill said. Audits help prevent small issues from escalating into problems costing half a million dollars. Knowledge in all these situations is power, and leveraging legal expertise can be a strategic asset.
Check out the full video and materials of this session.
