September 15, 2016

QUESTION:        If we inform an applicant that his or her application for appointment or privileges cannot be processed due to the applicant’s failure to satisfy our threshold eligibility criteria, do we need to refund the application fee (since we won’t be processing the application and incurring the costs associated with doing so)?

ANSWER:           As a general rule, application fees do not need to be returned to applicants, no matter whether the application that is submitted is fully processed and appointment and privileges granted or the application is “tabled” at the earliest phase of processing.  The fact is, even when an application is processed very little – such as when the applicant is determined to be ineligible by the Medical Staff Office – there are still costs incurred in processing the application.  To illustrate:

  • if the application is not publically available in electronic form, the time spent by the Medical Staff Office to accept the request for an application and, if applicable, send a copy of the application to the requestor;
  • the time for the Medical Staff Office to review the application after it is submitted, to determine whether it is complete (all questions have been answered, all gaps filled, all explanations provided, all supporting documents submitted);
  • the time for the Medical Staff Office to log in the application to any databases where information regarding applicants and appointees is kept;
  • the time and money to consult with legal counsel, if applicable, regarding the individual’s satisfaction of the criteria set forth in the Medical Staff Bylaws; and
  • the time to prepare a letter to the applicant informing him or her of ineligibility to apply.

In all fairness, some practitioners may feel cheated if they pay a several hundred dollar application fee only to find out that they are ineligible to have an application processed fully because of an objective threshold criterion (for example, lack of board recertification, conviction of a particular crime, etc.).  Much of this can be prevented by posting the Medical Staff Bylaws online or sending an electronic copy to anyone who requests an application for appointment or privileges.  That way, the individual will have full access to information about eligibility prior to sending in an application (and prior to paying your non-refundable fee).  Some hospitals also send, along with the application form, a checklist of the threshold eligibility criteria, along with a note informing the requestor that failure to satisfy the criteria on the checklist will result in an application not being processed.  That’s ample notice!

Another way to avoid any confusion, debate, or dispute over the topic of refundability or application fees is to simply adopt Bylaws or Credentials Policy language stating that a non-refundable application fee must be paid prior to any consideration or processing of an application.  The specific use of nonrefundable language makes it clear that no matter how little or how much processing of the application occurs, the fee is the hospital’s to keep.