123s of Emergency Room Staffing Arrangements

October 28, 2016

When a patient goes to the emergency room (“ER”) they are typically seen by several people – from the front desk person, to the nurse, to the attending physician(s). This stream of interactions and (hopefully) seamless care makes it appear as though each individual is an employee of that particular ER. Often times, however, this is not the case. Many hospital emergency departments outsource a variety of services, including locating, managing, and hiring licensed physicians. Frequently a physician-owned group contracts with the hospital to provide professional services and even manage the ER. Those physician groups may sub-contract out some duties including hiring professional staffing companies to provide the physicians necessary to treat patients or administratively oversee the department. Because of the complexity of these relationships, this article aims to highlight key contractual terms and regulatory considerations to note when drafting and negotiating these staffing agreements.

From a contractual perspective, the integral pieces in an ER staffing arrangement that must be addressed include: (1) the description and scope of the staffing services; (2) responsibilities over the physician’s training and management; and (3) payment for services.

To properly define the ER staffing services, it is helpful to think of these services as lying on a continuum – it has a wide range of meanings. On one side of this continuum staffing services could mean temporary, locum tenens work, for example providing a physician because an employee-physician has called in sick or suddenly quit. On the other end of the continuum a staffing agency or physician group may be contracted on a long-term basis where the hospital is wholly outsourcing the locating, hiring, and managing of physicians. Because of this range, the parties must be explicit about their staffing needs, and conversely, their staffing capabilities. As noted in the regulatory section below, providing exclusive, long-term staffing services may trigger the application of certain state regulations.

Secondly, the staffing agreement must outline which party is responsible for managing, training, and ensuring the physicians meet and maintain their qualifications. This is especially important because these requirements and metrics vary across ER departments. The staffing company should know which qualifications to look for and what training to provide, if any, when searching for and vetting appropriate providers. This is important for the staffing company to locate appropriately licensed and experienced physicians, but also because these requirements should mirror those in the agreement between the staffing company and individual physician.

The third contractual consideration of an ER staffing arrangement is establishing payment for services since a variety of options exist. Options include whether payment should be set on an hourly or monthly basis, or whether it will be calculated by how many shifts are actually worked versus how many are scheduled. With this many options it is important for the staffing company to consider what makes sense not just from a legal clarity perspective, but also from the business side since, for instance, this timing will need to functionally coincide with how and when they pay the physicians.

From a regulatory perspective there are also three considerations in an ER staffing arrangement – (1) corporate practice of medicine rules; (2) clinical licensing and credentialing; and (3) state and federal health care regulations.

This first consideration comes into play when again thinking about the continuum of staffing services. If the ER requests more permanent, long-term staffing services from the staffing company, this warrants a review of the prohibition against the corporate practice of medicine. This prohibition, which is particularly strong in Texas, means that only certain professional entities may practice medicine and employ physicians; a corporation or lay entity may not employ doctors. If the staffing company is not a professional entity, but, for example, a limited liability company, the contract and underlying duties should not in any way reflect employment of, or control over, the physicians. As such, if the ER seeks permanent, long-term staffing, the staffing company should account for and assess this prohibition – particularly if not formed as a professional entity (See here for more details on this prohibition).

The second piece deals with credentialing. If the same persons are staffing, owning, and providing services at an ER, the credentialing body may have questions. This could impede the credentialing process and raise inquiries as to the exact nature of the relationships between the ER, physician group, and staffing company.

Lastly, certain state and federal health care regulations may be triggered when there are direct or indirect financial relationships with physicians. The 2 most common federal financial regulations are the Physician Self-Referral Act (commonly referred to as the “Stark Law”) and the Anti-Kickback Statute. When certain financial relationships exist amongst physicians, there is potential for Stark Law and Anti-Kickback implications that must be navigated. (See here for a primer on those regulations.)

These considerations are not exhaustive but merely address the most typical nuances existing within such arrangements, particularly since they often involve multiple parties. Should you have any questions or need assistance in properly documenting an ER arrangement or more generally, medical staffing services, email us at info@byrdadatto.com.

ByrdAdatto Founding Partner Bradford E. Adatto

Bradford E. Adatto

Brad decided to become a lawyer during sixth-grade Career Day, when he promised to represent his best friend, a future doctor. A few decades later, he started his own law firm that focused on representing health care and corporate clients.

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