Reaching the right terms in hospital-radiologist contracting at RSNA

December 08, 2016
by John W. Mitchell, Senior Correspondent
Two experts shared pitfalls and strategies at an RSNA session last week in Chicago to ensure the exclusive contracts radiologists sign with hospitals protect their tenure and work environment.

There have been recent changes radiologists need to know about, according to W. Kenneth Davis, Jr., an attorney with Katten Law in Chicago who specializes in representing radiology groups.

"Many radiology groups, and even some hospitals, still believe agreements must be terminable without cause after two years," said Davis. "However, the relevant legal guidance from the IRS has changed."

According to Davis, if a radiology group is contracting with a nonprofit hospital, its exclusive provider agreement can be a five-year, "no-cut" agreement. This means the group can negotiate a five-year contract that is not terminable, except for breach.

He cautioned that radiologists must also be aware of Stark Laws and anti-kickback statutes.

"Don't ignore Stark Law compliance just because you're a radiology group and you think the radiologists don't make referrals for designated health services," Davis stressed.

Other emerging contract issues Davis cited were: the right to provide exclusive services (no carve-outs, sometimes problematic with new services); private use and benefit, such as that related to nighthawk reading services; excessive billing and collection charges; and shifting supervisory responsibilities to the radiology group.

"There is significant effort by hospitals to shift cost burdens - such as the expense of management - to the radiology group, but they don't want to pay the radiologists for those duties," said Davis.

He also warned of "insidious provisions." These include any contract clauses in the contract that give the hospital the unilateral right to set coverage and call requirements. Neither party should have the right to terminate the contract without cause and there should be provisions for either party to cure a breach of contract for at least 30 days, with 90 days preferable. "Clean Sweep" provisions, which require radiologists to cede their medical staff privileges if a contract is terminated, should also be avoided.

Performance standards must be negotiated and carefully weighed.

"Performance standards should be unique to the relationship," Davis said. "These should be based on sound clinical principles and not just standards the hospital has heard about that other hospitals are using. The hospital should never have the right to unilaterally modify the performance standards."

The main thing, according to Davis, is that radiology groups need to have a realistic idea of how much leverage they might have in a negotiation. He also advised to try to keep the discussions from becoming confrontational.

Dr. Lawrence Muroff, FACR, CEO of Imaging Consultants, Inc. and clinical professor of radiology at the University of Florida said good contracts are achieved before negotiations even begin, and echoed the importance of friendly terms. "It's important to develop good relationships with the hospital administrator, the board and medical staff," he told HCB News.

"Attempt to establish trust," he said, and leave adversarial positions to advisors or attorneys.

Muroff also cautioned against non-compete clauses in the event the contract is terminated, and recommended avoiding confidentiality clauses surrounding negotiations or in the contract.

Radiology groups should not give up their right to legal redress and, according to Muroff, under no circumstances should the group enter into any contract that may subject it to civil or criminal liability. He added that the groups should ensure that the contract gives them the right to provide exclusive services for the entire hospital and owned facilities, not just in the radiology department.

Both Davis and Muroff supported the overall concept of "getting to yes", a popular term among hospital administrators conducting negotiations, and a reference to a book by that name.

"This is a very good book that is easily understood," shared Muroff. "It is a quick read and very relevant to what radiologists do."