Here are five commonly encountered pitfalls in the creation and management of medical director positions. For each, we offer some suggestions on avoiding that problem when creating a medical director position.

We are receiving a growing number of requests from our clients for assistance in rationalizing the medical director positions among the members of their employed physician group. A number of common themes have emerged from these organizations, highlighting how well-intentioned decisions can often lead to complex and difficult problems that consume time and money to unravel—which may expose the organization to significant regulatory and compliance risks, as well as to dissatisfaction among employed physicians.

Pitfall #1 – Designating the lead physician in every group as a “medical director” when the group is acquired. While it may seem logical at the time to designate the most senior partner in a newly acquired group as the medical director for that group, over time it usually leads to an unanticipated proliferation of medical director positions, with little consistency in the job responsibilities or expectations of the individuals in those roles. We recently worked with a health system that now employs some 600 physicians---and which has almost 200 “medical directors”. Some are responsible for major service lines or large geographic areas, while others may only oversee a small (3-4 clinicians) primary care practice site.

Suggestion – Plan ahead as you are building your system medical group. Your strategic plan for growing the group should address the number, location, and responsibilities of the physician leaders that will be part of the organizational structure. Having a clear plan for where you are going, and what jobs will be necessary to help you get there, is essential. Without such a clear strategic plan at the outset, the Cheshire cat’s admonition comes into play---“if you don’t know where you are going, any road will get you there”---and we all know that things don’t work that way.

Pitfall #2 – Valuing all “medical director” positions equally. While there may be some initial appeal in offering equal compensation to all physicians who are designated as medical directors, it can quickly become a point of significant dissension and dissatisfaction as it becomes clear that the nature of each such position and the effort each requires can be significantly different. Some medical directors are responsible for overseeing all medical services in a defined geographic area. Others may oversee a clinical specialty or service line, at either the hospital or system level. Still others may provide direction for a particular practice site or group of sites. Clearly defining the responsibilities of any physician who is designated as a medical director, reasonably determining the time and effort involved in meeting those responsibilities, and determining reasonable compensation for those activities is vital.

Suggestion – A written job description, detailing the qualifications needed for the position, the activities expected of the incumbent, the process for evaluating performance, and the compensation to be paid is essential for each medical director position. Compensation must be reasonable, and be based on the qualifications of the incumbent, plus the time and effort required to perform the assigned duties.

Pitfall #3 – Not explicitly defining the duties of each medical director at the time the appointment is made. As noted, a lack of specificity in defining the duties of each medical director can lead to a variety of internal and external issues. Internally, a vague description of duties can often lead to complaints about an individual being paid for little or no work---or conversely, to complaints that a medical director is overstepping the bounds of his or her role. Externally, a vague job description (or worse, NO job description…) has the potential to lead to regulatory compliance problems if allegations are made that any payments are not for services rendered, but for admissions or referrals to the parent organization.

Suggestion – A carefully developed job description helps the medical director attain a clear understanding of what the organization expects of him or her in that role, and helps the organization value the job and evaluate the performance of the medical director. While the job description may change over time, it is important that there be one in place at the time the medical director is initially appointed to the job.

Pitfall #4 – Failure to align compensation with duties. Misalignment of compensation can have a variety of causes. As noted in Pitfall #2, the “all medical directors are equal” philosophy is one common problem. Other compensation problems can arise from failure to accurately estimate the time required, and the impact on the physician’s clinical productivity and revenue generation. Another frequent problem is paying a medical director a rate consistent with his or her specialty, regardless of the responsibilities of the medical directorship. For example, a medical director for the cardiovascular services line system-wide should probably be either a cardiologist or a cardiovascular surgeon, and their compensation should be aligned with that specialty background. But a regional medical director position need not be filled with a physician from a highly compensated specialty, and the medical director stipend for such a position generally should be lower than that for a specialty service line.

Suggestion – Use external benchmarking data to determine reasonable rates of compensation for specific types of medical director jobs. Here again, the detailed job description is an essential element. But defining the scope of the job (numbers of sites, numbers of clinicians, time required, any specialty expertise needed, etc.) is equally critical in determining reasonable compensation.

Pitfall #5 – Not tracking effort to assure that expectations for the position are actually being met. If a medical director has a job description that indicates the level of effort required averages 10 hours weekly, then some system needs to be in place to insure that expectation is being met. Compensating a highly clinically productive physician as a medical director for 10 hours weekly, with no apparent reduction in that physician’s clinical production, is a red flag for regulators. With the current intense focus on levels of physician compensation paid by hospitals and health systems, being able to provide evidence that the duties being paid for are actually being performed is critical.

Suggestion – Each medical director should regularly track and report his or her administrative activities, and the time required for them. In addition, every medical director should have at least an annual performance evaluation, encompassing both their clinical work and their medical director duties.

One final word. Even if your organization has encountered one or more of the pitfalls above, it is never too late to turn things around. If we can be of assistance in helping you restructure medical director roles, while minimizing potential backlash from the individuals affected, contact us at (800) 821-8481.