June 4, 2020

QUESTION:        What’s the difference between closing a department and an exclusive contract?  Are they both still legally valid?


ANSWER:          They may have a similar impact but differ in important respects. Both approaches have been generally accepted by the courts, so long as the process by which they are adopted by a hospital board is carried out carefully.  They have in common the concept that a candidate seeking an application for privileges would be advised up front that no applications will be processed except as consistent with the contract(s) or Board-adopted Medical Staff Strategic Plan (MSSP).   (It’s a good idea to develop a form letter to use in communications with those who inquire.)

Many hospitals have exclusive contracts pursuant to which one group is accountable for the quality of professional services and the smooth operation of hospital-based services.  Traditionally these contracts have involved anesthesia, emergency medicine, imaging and pathology/laboratory.  The contracts typically incorporate performance standards.  Increasingly such contracts (which may be semi-exclusive, with several groups as opposed to a single group) encompass other services such as neonatology, interventional cardiology, hospital medicine and others.

Sometimes referred to as a Plan to “close” department as a shorthand, a MSSP has typically not involved contracts but rather a board resolution and policy. A board committee reviews the community needs assessment and other data to determine how to manage medical staff growth, to promote hospital goals.  Numbers of specialists needed, based on formulas, were often identified and reviewed periodically.  That approach has morphed in more recent years to encompass considerations such as financial conflicts of interest such as investments in competing facilities.  One variation more common today is a board decision to operate a service solely through its employed physicians, or through physicians employed by an affiliated group.

Courts have generally upheld both exclusivity in contracts and MSSPs where it is clear that the process was undertaken by the Board, based on proper, documented hospital objectives, with no appearance of undue influence by any physicians who would stand to gain from reduced competition.  Indeed, there has been relatively little litigation in recent years.  MSSPs were historically adopted in an era where very few physicians were employed.  Perhaps the fact that so many physicians are now employed has led to the decline in challenges to both MSSPs and exclusive contracts.  That said, it is important for the Board to assess options and make reasonable determinations based on the hospital’s mission.  Physician input can be obtained, but avoid votes by departments or committees that could be characterized as collective action to restrain trade.  Such allegations are rare now but it remains important to follow a process to demonstrate reasonableness.  Court approval should not simply be assumed!

November 29, 2018

QUESTION:        We recently received an application from an internist who has moved around a bit more than normal in his nine years of practice (post-training).  Though our application form asks applicants to list all institutional affiliations since the completion of training,  along with starting and ending dates, we have found that this applicant left out two prior employers and four prior hospitals where he held privileges and, further, have found that four of the starting/ending dates that were listed on the application are off by three to six months.

After asking the applicant about the discrepancy, he corrected the application, said that he could not recall exact months when he started or ended a couple of his affiliations, but was piecing it together the best he could from memory, and said he was sorry that he had not given the application more personal attention the first time around.  He further explained that the omission of information from the application was the result of his relying on someone else to fill out the application, in this case, the office manager of the practice that he recently joined.  He said that he gave her his CV to use for reference when filling out this application (along with managed care and malpractice insurance enrollment forms), but now realizes that his CV omits a few workplaces where he spent only short periods of time and did not really develop a significant practice. He invited us to call with any additional questions.

He seems cooperative and this all seems like a fairly legitimate explanation. Do we need to do anything else?

ANSWER:            The most common explanation for missing or incorrect information on an application form?  You got it: “My office manager filled out the form.”  In our experience, Medical Staff leaders are often quite forgiving when faced with such explanations.  And sometimes, that is reasonable (see above introduction, regarding how even a type-A personality attorney can forget the details about her parent’s anniversary!).  But, sometimes, a simple explanation such as this can be a cover for a remarkable history.  It is the hospital’s and medical staff leaders’ job to find out which situation you are facing anytime there is an omission or misrepresentation.  Good policies can help make the process of following up more methodical and easier to implement.

First, note that some hospitals and medical staffs make it a general practice to simply inform the applicant of a discrepancy in information on the form (versus what has been verified by the Medical Staff office) and then give the individual an opportunity to correct the form!  This is generally not a good practice because it basically serves as a “free pass” to any applicant to lie at the outset and then later correct the form, without consequence, if caught in the act.

A better practice is to address all omissions and misrepresentations that are discovered during credentialing in writing addressed to the applicant.  Policies should state that misrepresentations and omissions can be grounds for the hospital or leadership to stop processing the application or, if the individual has already been appointed or granted privileges at the time the misrepresentations or omission is discovered, can be grounds for automatic relinquishment upon notice to the practitioner.

Without good policy language, Medical Staff leaders who discover omissions or lies on application forms (or any other information provided during the course of the credentialing process) can be left with little recourse but to deny the application based on the individual’s ethics (or overlook the misrepresentation because they don’t want to deal with a denial and the hearing and appeal rights that it brings).  This is too much risk to assume on the part of someone who was not honest and forthcoming about his or her qualifications.  Therefore, it’s important that the Bylaws or Credentialing Manual specify how applicants will be informed of omissions and misrepresentations discovered during the course of credentialing, the opportunity they will be provided to explain, how the explanation will be considered, the consequences of any misstatements or omission, and whether any rights to meetings or due process will apply (we generally suggest that they do not).

If you would like more tips for managing applications that include incomplete, incorrect, or unusual information, join us this spring at a Horty Springer seminar covering best practices in credentialing applicants with unusual histories:

Strategies for Managing Physician Health and Disruptive Conduct

The Strategies Seminar provides an engaging opportunity for hospital and Medical Staff leaders to cultivate a sophisticated understanding of the legal and practical complexities that come into play when the most difficult credentialing and peer review issues arise — specifically, those involving practitioner health, disruptive conduct, and conflicts of interest. By working through case studies and complex scenarios, this course will help participants navigate the land mines that can arise when health, conduct, and conflicts are at issue. Experienced faculty will guide participants to develop problem-management strategies that reduce legal risk, help colleagues, and, most importantly, protect patients.

New for the 2018/19 seminar season: Credentialing Dr. Angle. She’s got skills that you’d like to have.  But she’s also got an unusual application and it’s just so darned hard to nail down the details.  How deep do you really need to dig when, on the surface, the applicant seems so great?

Credentialing for Excellence — Advanced Tools and Techniques

The Credentialing Seminar provides comprehensive training for those involved in all levels of the credentialing process. The seminar is designed for hospital and Medical Staff leaders, Medical Staff professionals, and Board members. Attendees will leave the three-day seminar with the skills and knowledge they need to manage the risks involved in credentialing and to use the credentialing process to establish excellence in the provision of care in their institutions. The seminar is interactive, engaging and thought-provoking so that attendees will get the most out of their experience.

October 25, 2018

QUESTION:        We recently received an application from a nurse practitioner who crossed out the line on our application form asking for the name of the collaborating/supervising physician and wrote that he didn’t have a collaborating physician because our state allows nurse practitioners to practice independently.   Is this true?  Do we have to change our forms and process?

ANSWER:            It depends, but probably not.  A state’s decision (through modification of the professional licensing statutes and regulations) to expand the scope of practice for an advance practice nurse, and to allow such practitioners to practice independently in that state, does not generally supersede the policy decision of a hospital that such practitioners must still work in collaboration with a physician appointed to the medical staff in that hospital setting.  The only exception would be if the changes in the state law were to actually “mandate” that such practitioners be permitted to practice independently — in all clinical settings.  In our experience, with a handful of exceptions, this is not what most states have done, at least not yet.

While it may be a question that the medical staff and board wish to consider further, there is a significant difference between a statute that permits independent practice and one that mandates independent practice.  If the hospital policy continues to require a collaborative relationship, this applicant should be informed that he or she is ineligible to apply unless he or she can supply evidence of a collaboration agreement with a physician.

January 11, 2018

QUESTION:        Our Medical Staff Services Department is reviewing an application for a physician who has been recruited by the Medical Center as an employee. The physician does not meet all of the eligibility criteria in the Medical Staff Credentials Policy, but we understand the contract has already been signed.  What should we do?

ANSWER:            Unfortunately, this is an all-too-common problem. “Credentialing 101” says that an application from a candidate who does not satisfy the Medical Staff’s threshold eligibility criteria should never be processed – even in an employment situation.  So, hopefully, the contract contains a provision that states the contract is conditional upon the physician being appointed to the Medical Staff and obtaining clinical privileges in the relevant specialty.

To avoid this situation in the future, organizations should strive for coordination between their Medical Staff Services Department and their recruiters.  This means educating recruiters about the minimum qualifications set forth in the Medical Staff Credentials Policy, as well as giving your recruiters a list of “red flags” that will slow an application up during the credentialing process (e.g., gaps in experience, negative references, etc.)

To make sure your Medical Staff leaders have the knowledge and tools that they need to manage difficult issues like this, please join Barbara Blackmond and Ian Donaldson at The Complete Course for Medical Staff Leaders.

July 6, 2017

QUESTION:        We have received an application from a physician and some issues have been raised.  While the physician has excellent education and training, she has moved around quite a bit and hasn’t been able to explain the moves in a way that makes sense.  She also answered “No” to the question on the application that asked “Have you ever withdrawn your application for appointment before a hospital made a decision?”  We have learned that she withdrew an application from the last hospital where she applied to practice.

Our bylaws expressly state that a misrepresentation, misstatement or omission “shall constitute cause for automatic and immediate rejection of the application resulting in denial of appointment and clinical privileges.”  Based on this language, the Chairperson of the Credentials Committee thinks we should deny her application.  What do we do?

Do you think all medical staff bylaws are the same?  Then join us for our new program Credentialing for Excellence:  Advanced Tools & Techniques.  At the program, you’ll get a chance to play “I Wish I Had Your Bylaws,” a provocative game that pits the bylaws of two hospitals against each other in a series of real life scenarios.  There’s a prize for everyone who plays:  excellent bylaws language that you can take home with you.  Click here for a complete copy of the brochure.

ANSWER:            When there are concerns about an applicant there is almost always a better option than “denial.”  A denial of an application triggers a right, in the applicant, to the hearing and appeal process, a process that is time-consuming, contentious and expensive.  And if the recommendation for denial is upheld by the Board, it is reportable to the National Practitioner Data Bank and the State Board of Medicine.

Before the Credentials Committee recommends denial, it should explore, in detail, any and all issues that have been identified.  Remember, the burden should be kept on the applicant to resolve all questions and concerns.  This means that the applicant should be required to explain the misrepresentation about never having withdrawn an application.  You can also require the applicant to provide documentation pertaining to the withdrawal of the application.

And remember to call the individuals who have provided peer references, even if there are no red flags in their response.  People will often provide information over the phone that they will not put in writing.

The Credentials Committee should hold off taking any action on this application.  Continue to gather information from the applicant and from others and keep the burden on the applicant.

And when you get a chance, revise your bylaws!  The bylaws should give you an option administratively to stop processing an application when there is a misrepresentation or omission.


November 3, 2016

QUESTION:        Two registrants at our recent Complete Course for Medical Staff Leaders in Las Vegas  asked similar questions:  An affiliated medical group extended an employment contract to a physician or PA — then asked the Medical Staff Office to send an application.  The group wants recruits to “shadow” a group physician until the application is approved.  Is such shadowing common? If the MSO discovers significant red flags — what can the MSO tell the group?

ANSWER:             “Shadowing” under these circumstances is not prohibited by regulatory or accreditation standards. However, it is not common, in our experience.  It may be wise to wait until an application is deemed complete.  What message would allowing shadowing — before a determination of completeness — send to a candidate who turns out to have red flags?  Would applicants and the group assume that credentialing is just a paperwork matter, and that appointment is likely?  Here are some best practices:

  • The MSO and group recruiters should get together for Credentialing 101! (Of course, they’d be most welcome at our Credentialing Clinic!)  The MSO should develop a checklist or FAQ to help educate recruiters who lack credentialing experience on how to spot a reasonably discoverable problematic past.
  • “Shadowing” should not take place until the application is complete (which means not only that the blanks are filled in, but also that all reference evaluations have been received, primary source verification is done and there are no red flags). Develop a policy if your organization wants to allow shadowing on a regular basis. Shadowing may be attractive if your hospital doesn’t have an expedited process.
  • If reference evaluations reveal issues, the application should remain incomplete, and there should be no shadowing!
  • The group may push for quick action; the MSO and Medical Staff Leaders may need to educate the group’s leaders about the risks of “negligent credentialing.”
  • The evaluators most likely expect confidentiality. But it is appropriate to provide the substance to the recruited practitioner (without revealing identities of the evaluators).  The applicant’s side should be heard.
  • Pursuant to a release, the substance can also be provided to the group’s CMO, who also should sign a peer review confidentiality agreement; and this is best accomplished by an information-sharing policy or agreement.
  • Before allowing shadowing prior to appointment, even with a stellar candidate, provide basic orientation and get the candidate’s agreement to abide by all policies, including patient privacy, in advance of shadowing.
  • The physician who is being shadowed should acknowledge responsibility for informing patients and for the conduct of the physician or PA doing the shadowing.

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.