June 27, 2019

QUESTION:        We heard that some hospitals have recruited physicians, had them sign employment contracts, then “red flags” are raised during credentialing, or the physician is denied appointment and clinical privileges.  Is there any language in an employment contract to help in those cases?

ANSWER:            We recommend that all employment contracts contain a provision that states:

If the Physician fails for any reason to commence performing services on the Commencement Date, the Employer may, at its option, cancel this Agreement by serving written notice of cancellation to the Physician.  In the event notice of cancellation is sent, the parties shall have no further obligation to one another.

The provision does not require an employer to cancel the contract, but does give the employer the option.  So, if the physician does not commence performing services because the application has not been acted on because the employer or the hospital is gathering further information, the employer may decide that it does not want to exercise the option at that time.  Conversely, if the “red flags” are significant, the employer most likely would cancel the contract.

While this language is useful to include, it is not a guarantee that a physician who has been recruited will go away quietly.   In fact, we have seen a number of cases where the physician still sues, so the best practice is to better align your recruitment and credentialing decisions so that you do not find yourself in the situation where a new recruit has any significant “red flags.”  For additional information, join us for our audio conference

Aligning Your Employment and Credentialing Decisions
July 2, 2019 – 1:00 pm to 2:00 pm (ET)

or contact us for information on how to obtain a CD or MP3.

June 7, 2018

QUESTION:        Our hospital affiliated group signed an employment contract with a new surgeon.  Before we got very far with the credentialing process, he had moved to town and the Chief Medical Officer of the Group was putting pressure on the Credentials Committee to approve his application for appointment.  The problem is that there were multiple red flags we discovered, including a pending complaint with the state board, a very bad reference, and unexplained gaps in his professional experience.  If he had not been employed by our Group already, we would definitely not want to appoint him.  To make matters worse, we just learned that he resigned his appointment at the last hospital where he practiced and he’s in town.  What do we do?


ANSWER:            We hear some version of this problem on a regular basis from clients all across the country.  In many hospitals and health care systems, the recruitment and employment process are out of alignment with the credentialing process.  It is not uncommon (although it is very unwise) for employment decisions to be made, signing bonuses to be paid, and representations to be made to new recruits of the credentialing process being a “slam dunk” or a “done deal” before the Credentials Committee has reviewed the application.

Everyone who is applying for appointment must meet the same threshold eligibility criteria.  Everyone must bear the burden of demonstrating that they have the requisite:  (a) current competence; (b) technical skills; (c) clinical judgment; (d) adherence to the ethics of their profession; (e) good reputation and character; (f) ability to safely and competently exercise the clinical privileges requested; and (g) ability to work harmoniously with others.  When there are questions or concerns raised about an applicant, the application should be considered incomplete and not processed until those concerns are resolved.

Your credentialing process is the foundation for the quality of care that you deliver in your organization.  You should not take shortcuts or make exceptions, especially for employed physicians.  As hard as it might be, and as much pressure as they might feel, Medical Staff Leaders need to stay the course.  It is important that applicants are treated the same, regardless of whether they are being recruited and employed by the system or they are in private practice.  Keeping the burden on the applicant to address and resolve all concerns is the best course of action.  Medical Staff Leaders should also document, in detail, the concerns that they have.

Moving forward, find a way to align and coordinate your recruitment and credentialing efforts.  Bringing the people together who are responsible for these functions is an important first step.  Efforts should be undertaken to coordinate threshold criteria, objectives, and timelines.  It is also important to find a way to share information early on so the people who are doing the recruiting have the same information that Medical Staff Leaders will have when reviewing the application.  Whether they are working to recruit or credential physicians, the objectives should be the same – bringing high quality physicians into the organization in as timely a fashion as possible.

Please join us in our national program – Credentialing for Excellence – where we discuss this challenge and other credentialing challenges.

March 19, 2015

QUESTION:        In this week’s “NEW CASES,” I see that the U.S. Court of Appeals for the 7th Circuit held that a Chief of Staff’s discussion with an applicant about the red flags in his application and the consequences of denial (reporting to the NPDB) constituted an adverse employment action. Should we immediately halt all such conversations?

ANSWER:        No – you do not need to immediately halt informal discussions with applicants regarding the concerns you have about their applications. Nor need you stop educating applicants and medical staff members about the credentialing process and its intricacies. HOWEVER, as always, you should be careful about the legal implications of how you communicate regarding these matters.

First, let’s look at how the Seventh Circuit described the conversation between the Chief of Staff and Dr. Simpson (internal citations omitted):

Dr. Eric Miller [The Chief of Staff] called Dr. Simpson to give him a “heads-up” about the Credentials Committee’s concerns about his application for medical staff privileges. Eric Miller explained to Simpson that if his application were to be denied, it would have to be reported to the National Practitioner Data Bank. Eric Miller outlined some of the Committee’s concerns, including Simpson’s employment and education history, the need to take an oral exam to obtain licensure from the state of Wisconsin, the two malpractice lawsuits, and interpersonal communications. Eric Miller wanted to give Simpson an opportunity to withdraw his application and avoid the risk that a denial would have to be reported to the National Practitioner Data Bank.

* * *

Dr. Eric Miller accused him of “disruptive behavior,” referring to his interaction with [the CEO] when he attempted to get his sign-on bonus. Eric Miller told Simpson that he would have expected an applicant to be on his “best behavior” and more “collegial” during the pendency of his application for medical staff privileges. Simpson suggested that [the hospital] hire him on a probationary status to see how he would do if Eric Miller was concerned that he was disruptive. Eric Miller responded that they had had some “bad actors” in the past, and it was easier not to hire a bad actor than to get rid of one. Simpson also stated that Eric Miller said he wished Simpson well in finding a position that was a “better fit.”

* * *

We agree that Dr. Simpson has suffered an adverse employment action. To establish an adverse employment action, “a ‘plaintiff must show that a reasonable employee would have found the challenged action materially adverse.’” A reasonable physician would have found the threat that his application for privileges would be rejected and that the rejection would have to be reported to the National Practitioner Data Bank to have been materially adverse. While an applicant who voluntarily withdraws an application cannot state a prima facie case of discrimination, Dr. Eric Miller’s warning indicated that it would be futile for Simpson to maintain his application. The writing was on the wall. In essence, viewing the facts in the light most favorable to Simpson, he was compelled to withdraw his application for privileges before the Credentials Committee voted on it; thus the withdrawal does not undermine his prima facie case.

It is clear that, based on the evidence at hand in the Simpson case, the Seventh Circuit believed that the Chief of Staff had not only educated Dr. Simpson about the credentialing process, the concerns with his application, and the consequences of any potential denial – but, also had impressed on Dr. Simpson that his application would, in fact, be denied.

So, what can be learned from this opinion? First, always have more than one person present if you are going to have this sort of discussion with an applicant. That way, you won’t run into a “he said – she said” type of situation.

Secondly, always document these conversations. Documentation serves as great evidence of what was really said years later, when memories have faded. A good way to create the necessary documentation is to follow up in writing, with a letter to the applicant, thanking him or her for talking with you and then outlining briefly the content of your discussion.

Third, never imply or express that the outcome of a credentialing matter has been decided when it has not. Dr. Simpson came away from his conversation with the Chief of Staff believing that he had been told that his application would be denied and he would be reported to the Data Bank, so it would be better for him to go somewhere else where he could fit in better. This is despite the fact that his application was still on hold at the Credentials Committee level of review (it was incomplete due to missing pieces of information). And, though there were a number of unresolved red flags that were part of his application, there was no reason, at the time the Chief of Staff called him, for anyone to conclude that Dr. Simpson would complete his application sufficiently to have it processed or, in the event that he did complete the application, that it would be denied.

Fourth, to make sure that you choose your words carefully and don’t give the wrong impression, prior to having this type of meeting with an applicant, consult with hospital legal counsel and other medical staff leaders involved in the credentialing process. Then, based on those conversations, create a checklist of items to be discussed with the applicant and use that checklist as the talking points for your conversation. Finally, have legal counsel review any follow-up letter, to be sure that any points of confusion are ironed out in that letter. That way, everyone can be clear that a “heads-up” conversation is just that – a heads-up to the applicant about the current status of his or her application, the immediate next steps in the process, and the details of the credentialing process that lies ahead, including any possibly unexpected consequences (such as reporting to the NPDB).