Raymond "Sonny" O'Kelley
Let's Get Down to the Basics
Healthcare Contracts 101 – 10 Basic Contract Types for Healthcare Organizations
Regardless of size or medical specialty, healthcare facilities require certain types of contracts. These healthcare contracts explain the relationship between the facility and the named person or entity, each party’s duties and obligations, when the relationship will end, and other important points that relate specifically to the purpose of the contract. This is by no means an exhaustive list of healthcare agreements or contacts that a medical provider or facility may need. Instead, it is an educational tool to highlight some of the more commonly used being managed by healthcare organizations in the Healthy Contracts CLM.
Physician Employment Contract
A healthcare facility uses a physician employment contract to explain the relationship between the medical provider and the facility. When it is signed by a physician, the physician has agreed to work for the healthcare facilities according to the terms of the contract. This contract addresses on-call obligations, the physician’s usual schedule, pay, benefits, and it may also include restrictive covenants. Generally, a restrictive covenant prohibits the physician from competing with the healthcare facility for a certain amount of time after they leave their position. It may also prohibit the physician from soliciting both patients and other employees or contractors of the facility for a certain amount of time. Restrictive covenants often have specific periods of time in which they are enforceable. This period of time varies by state.
Physician Recruitment Contract
While this may sound similar to a physician employment contract, they are not the same. A physician recruitment contract explains how the healthcare facility attracts physicians to come to work in or for their facility. These agreements are subject to federal Stark laws. Stark laws affect how referrals are handled. This is a particularly important contract for healthcare facilities that accept Medicaid and Medicare patients. A healthcare attorney can review your existing physician recruitment contract to ensure that it complies with federal law.
Managed or Purchased Services Contract
A managed services contract may also be known as a management services contract or agreement. A healthcare facility uses this contract for the purpose of outsourcing certain administrative tasks to a third party. For example, a healthcare facility may outsource its medical coding, collections, transcription, or other office-based functions. It may also be used to contract with a third party that cleans the facility or services medical equipment. A healthcare facility may have more than one managed services contract depending on which tasks they outsource. One consideration a healthcare facility may adopt is a master template for a managed services contract that can be edited for future use.
Medical Director Contract
A medical director contract is healthcare contract that is entered into between the facility and a physician who will help oversee the policies and administration of the facility. This physician may or may not also provide their services to patients. This contract explains the duties of the medical director. This type of contract must comply with both Stark laws and Anti-Kickback Statutes.
Care Transfer Agreements
A care transfer agreement is a healthcare contract that transfers patient care from one physician to another physician. It generally covers the length of care, when and why the agreement can be terminated, the duties of the parties, insurance information, access to records, free choice of the patient, medical judgment, billing, governing laws, and liability issues.
Contracts Related to the Use of Medical Technology
Healthcare facilities rely on various forms of medical technology to serve their patients and to manage the facility’s operations. Most forms of medical technology require a licensing agreement or contract of some kind, typically including a Services Agreement component that governs support and repair services for the med tech. These licenses or contracts explain the relationship between the parties as well as explain how long the medical technology can be used, how many users are licensed for it, and whether updates or support desk services are included.
Compensation and Benefits Contracts
Compensation and benefits contracts are used for certain non-medical staff to explain how they will be compensated and to explain the benefits they receive as an employee. It explains whether the employee is salary or hourly, whether they can receive commission or bonuses, insurance plans, and whether they have stock options. It may also list when the employee is vested in the company. Depending on the healthcare facility, it may also discourage the discussion of salary among employees.
Joint Venture Contracts
When two or more companies or individuals want to take on a new project together, it is known as a joint venture. Joint venture contracts explain the relationship between the parties. It also covers how the parties will share the profits, risks, and assets. A healthcare attorney can help a healthcare facility determine if entering into a joint venture is a good strategic move for the future as well as help draft and negotiate the details of the arrangement.
Contracts for Equipment
Many healthcare facilities enter into a lease for healthcare equipment. Leasing equipment is often more cost effective for the facility than buying brand new equipment. The lease usually includes information such as how long the facility can use the equipment, the price for leasing the equipment, and who is responsible for maintenance.
Managed Care Agreements
The contract between a physician or other health care professional and a managed care organization (MCO) such as a provider-sponsored network, integrated delivery system, health maintenance organization, or other health care plan, is the fundamental document which frames, defines and governs their relationship.