Too Many Medical Directors?  

Contracting with physicians for medical directorship and administrative services can be a complex process. Given today’s financial environment, it may be difficult to engage physicians to provide administrative services at hospitals and other healthcare facilities.  

From leveraging market data correctly to drafting contracts, the FMV process is resource intensive. A dimension that can be overlooked is evaluating if your organization may have too many medical directorship arrangements.

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An annual or periodic review of all administrative agreements against industry benchmarks or standards can help answer the question, as well as identify potential compliance risks and opportunities to save costs.  

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How do hospitals end up with too many medical directors?

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Hospitals don’t intend to have too many medical directors, but a lack of process or checks and balances can have significant impacts. Some common situations that could lead to too many medical directors are:

●      Negotiating individual contracts without considering the organization’s broader goals

●      Lacking an effective FMV process

●      Not having a centralized physician contracting process

●      Challenging physician relationships that lead to difficult conversations about compensation

●      Not requiring timesheets or having poor coordination with accounts payable

MD Ranger collects contract and payment information on all our subscriber’s physician arrangements, which allows us to produce a distribution of the number of paid administrative positions per hospital by service. Some services have a higher frequency of multiple positions than others, as illustrated below (a sample from over 80+medical directorship services):

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It is considered best practice to review the total number of paid medical directorships and administrative positions at your organization. Larger and more complex facilities generally have more positions. There may be times when more positions are justified, such as an EHR implementation or the start of a new service line. However, if you are consistently on the higher end of the scale, you may want to audit these positions more carefully. 

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How many is too much?

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Too many medical directors could put your organization at risk based on either paying too much or not meeting commercial reasonableness standards. Many organizations have a handful of arrangements paid at or above the 90th percentile; however, if individual or aggregate payments are routinely high and/or there are a larger than average number of positions, that would be considered a red flag.  

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MD Ranger publishes total spending by contract type to help organizations determine guidelines for reasonable payments. Based on MD Ranger’s 2020 Facility Totals Benchmarks, total expenditures for medical direction and administrative by type of organization is below:

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Avoid having too many contracts

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Here are some best practices to minimize the risk of paying too much for too many administrative positions:

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●     Require and check timesheets. Be meticulous when collecting and reviewing timesheets. Take time to cross-reference the duties outlined in the contract with what is listed on the timesheet.

●     Centralize the physician contracting process. By keeping track of your physician contracts in a single location and having a team responsible for drafting, negotiating, documenting, and renewing these contracts, you lower the risk simply by knowing what’s going on. Think critically to ensure that duties are not being duplicated amongp hysicians.

●     Conduct periodic audits.  Consistently review all physician contracts for compliance. Consider using a productlike MD Ranger that can identify riskier contracts compared to market benchmarks.

A Case Study

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MD Ranger can be incredibly helpful to organizations who might suspect they have too many medical directorships. Several years ago, an MD Ranger subscriber suspected it had too many medical directors and a potential compliance issue. Using our tools, reports, and benchmarks, they started to compare their organizations to similar ones.

This organization found they had 120 medical directors, while other organizations similar to them were closer to 70. While not quite twice as many, clearly the volume of directorships was admittedly much higher than peers. The number alone doesn’t make this a non-compliant situation, but we advised them to further investigate and document the need for so many positions.

We strongly recommend that all organizations undergo this type of analysis. The opportunity to combine directorships and streamline administrative positions can be valuable from both a financial and compliance perspective.

About MD Ranger

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MD Ranger partners with leading health care provider organizations to simplify the FMV process and document physician transactions efficiently and cost-effectively.