A position as medical director can offer many rewarding opportunities to improve care. The medical director’s time is not meant to be spent on clinical visits or resolving individual problems. Rather, the medical director is expected to take a systems approach to care. On a day-to-day basis, being a medical director requires one to be passionate about excellence, good at meddling, and unafraid to be “under the microscope” and to be political, patient, and persistent. Too often, an excellent physician asked to become a medical director fails because the needed skill set is different. Medical directorship also comes with a myriad of challenges, which any prospective applicant must carefully consider before knocking on the door of opportunity.

As healthcare organizations are continuing to pursue physician champions and place them in positions of leadership, physicians around the country are entering into medical director agreements in a variety of settings. While such an arrangement has advantages for the physician, there are also some potential consequences that physicians should be aware of as they carry out the duties specified in these roles. Government regulators and medical boards aggressively enforce their rules where they perceive a violation.


Two key items in a medical director services agreement

  • Ancillary personnel supervision. In short, know how to do what you offer. Medical directorship encompasses many requirements, oftentimes, including the supervision of various healthcare providers and ancillary personnel. This is part of the agreement for several reasons such as medical staff bylaws, CMS billing regulations, and boards of directors’ oversight stipulations. Failure to provide the appropriate supervision can trigger not only contractual breach notifications, but may also result in allegations of false claims being made to the Medicare or Medicaid programs. Indeed, many times governmental regulators seek to hold medical directors accountable for administrative, civil, or criminal damages.
  • Professional liability issues. Medical directorship also comes with potential issues related to professional liability and the physician’s medical malpractice coverage. These issues may arise from the execution of duties which the medical director is performing as required by the agreement. Physicians serving as medical directors are often required to review clinical, patient care, and risk management policies and procedures as part of their duties and obligations. As mentioned above, medical directors are frequently obligated to supervise other personnel (e.g., other physicians, nurse practitioners, physician assistants, etc.).

There have been cases where the plaintiff’s allegations of negligence are targeted not only at the healthcare provider and facility, but also at the medical director for failure to provide adequate supervision. Therefore, physicians should not overlook medical malpractice insurance and indemnification provisions that are either not included in their medical director contracts or contain poorly written provisions.

Many physicians enter into medical directorship arrangements hoping to “get rich quick” while unsuspectingly jeopardizing their medical license. In 2015, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a fraud alert regarding physician compensation. The Fraud Alert reveals that the OIG recently reached settlements with 12 physicians who had entered into separate medical directorship agreements, which, according to the alert, were each deficient in some way. The deficiencies highlighted in the Fraud Alert include payments taking into account the physicians’ volume or value of referrals, payments being inconsistent with fair market value for the services to be performed, and physicians not actually performing the services called for in the agreements. The OIG also claimed that certain arrangements involved an affiliated healthcare entity improperly paying for the salaries of the physicians’ front office staff, which relieved the physicians of a financial burden which would otherwise have been their responsibility.

Medical director services agreements can have unforeseen negative effects on the physicians who serve in these roles. Understanding the duties of the medical director as well as the associated responsibilities and liabilities is paramount. Consequently, those physicians contemplating entering into such an arrangement should have a qualified individual carefully review the document before signing.

Nick Hernandez, MBA, FACHE

Nick Hernandez, MBA, FACHE,, is the CEO and founder of ABISA, a consultancy specializing in strategic healthcare initiatives.

Since founding ABISA in 2007, his emphasis has been on developing and maintaining a strong relationship with physicians and identifying areas for business opportunity and support. The company’s client list includes physician groups, hospital systems, healthcare IT organizations, venture capitalists, private equity firms, and hedge fund managers.

Nick is a graduate of the United States Naval Academy and a former Captain in the U.S. Marine Corps. He holds MBA degrees in both Operations Management and Information Technology & E-Business Management from Wake Forest University. He is Board Certified in Healthcare Management and has been named a Fellow of the American College of Healthcare Executives.

He is a frequent guest lecturer and is often quoted in the national media. He has consulted with clients in multiple countries and has over 20 years of leadership and operations experience. Nick is a Subject Matter Expert in business strategy, practice management, telemedicine, health IT, and oncology.


  1. The medicine is based on the principle of serving human beings based on their health. Its objectives are to promote their physical and mental health, cure or at least alleviate their illness. His ethics is antroprocéntrica that is humanist.

    There is a direct responsibility for the director of a health center, but also of the doctors who work there.


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