Practice Economics

Interplay Between Physician Employment Agreement, Hospital Medical Staff Bylaws Important


 

If you are a physician considering employment with a hospital or private practice in which hospital medical staff privileges will be needed or you are currently employed by a hospital or private practice and have medical staff privileges, it is imperative that you understand your rights as an employee and as a member of the hospital’s medical staff, along with the interplay between those two roles.

Employment Agreement and Hospital Medical Staff Bylaws

As an employee of a hospital or private practice, you will have an employment agreement that governs the terms of your employment. In addition, if you are on the hospital’s medical staff, you will also be subject to the hospital’s medical staff bylaws, which govern the terms of your staff membership and clinical privileges.

At the onset of an employment relationship, many physicians focus on the terms of their employment agreements, often ignoring the terms of the medical staff bylaws. This could lead to unexpected surprises, usually toward the end of the employment relationship, because both documents need to be read in conjunction with each other.

Beware of conflicting terms in your employment agreement on the one hand and the medical staff bylaws on the other. Although an employment agreement may include seemingly beneficial terms, hidden language often has the effect of negating its terms by qualifying the employment agreement with language contained in the bylaws. Examples include:

—“In the event of a conflict between the terms of the Physician’s Employment Agreement and the Medical Staff Bylaws, the Medical Staff Bylaws shall control.”

—“Subject to the Medical Staff Bylaws, Physician may …”

—“Except as otherwise stated in the Medical Staff Bylaws, Physician may …”

—“Except as permitted by the Medical Staff Bylaws, Physician may not …”

Beware of conflicting terms in your employment agreement on the one hand and the medical staff bylaws on the other.

Termination of Medical Staff Privileges: Impact on Employment Agreement

Whether you are employed by a hospital or a private practice, your employment is likely at risk if your hospital medical staff privileges are suspended, revoked, or restricted. Even if your medical staff privileges are later reinstated, the initial suspension may trigger termination of your employment agreement.

Therefore, it is important to understand your due process rights, outlined in the hospital’s medical staff bylaws, as to how your privileges can be suspended, revoked, or restricted, as well as the procedure the hospital must undergo to make such a decision.

Medical staff bylaws also include a procedure for due process, including fair hearings and appeal mechanisms for medical staff decisions, such as privilege suspension, revocation, and restrictions.

Termination of Employment: Impact on Medical Staff Privileges

For hospital employees and most hospital-based physicians, termination of your employment agreement, whether for cause or without cause, may be automatic grounds for termination of your staff privileges. In such a case, your due process rights under the medical staff bylaws as they relate to your staff privileges are waived, and you will not be afforded the fair hearing and appeal procedure typically available to office-based physicians on the hospital’s medical staff.

Also, your employment agreement may contractually require you to resign from the hospital’s medical staff upon termination of the employment relationship. For example:

“Physician covenants and agrees that upon termination of Physician’s employment with Employer (whether for cause or without cause), Physician will resign from the medical staff of Hospital X, thereby relinquishing any right to due process pursuant to the medical staff bylaws.”

Some employment agreements may go even further and prohibit you from re-applying for medical staff privileges at that hospital for a stated period of time. For example:

“Physician further agrees that Physician shall not re-apply for medical staff privileges at Hospital X within two (2) years following the later of the termination of Physician’s employment or the effective date of termination of such medical staff privileges at Hospital X.”

Don’t forget about the hospital’s medical staff bylaws when entertaining an employment relationship with a hospital or private practice. The hospital’s medical staff bylaws should be reviewed in conjunction with the employment agreement.


Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at sharris@mcdonaldhopkins.com.

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