Insurance Risks Impacting Medical Directorship
Friday, February 28, 2014
By David Shaffer
In follow-up to the American Medical Spa Association’s (AmSpa) article, "Want to be a Medical Director at a Medical Spa? Beware,”Professional Medical Insurance Services
(in association with Worldwide Facilities) wanted to present some of
the insurance ramifications of becoming a Medical Director.
As the Aesthetics Industry continues to grow, so does the demand for
Medical Directors. In many instances, the physicians assuming these
roles are not Dermatologists or Plastic Surgeons. You may ask yourself,
"Is this really a problem considering in many cases, a Medical
Director’s duties are only administrative in nature?” Most would
consider a Medical Director’s responsibilities to include items such as
reviewing and signing off on patient charts, updating policies,
procedures and/or consent forms, delegation of services, etc. Further,
most would also agree that these responsibilities can typically be
accomplished by working a limited amount of time at a given practice.
On the surface this seems like an easy way for a physician to capture
some additional income without dedicating much time or energy.
However, examining this subject in a little more depth, the inherent
risks become apparent. When reviewing AmSpa’s article there was also a
cautionary tale about a physician needing to be competent in the
services delegated. What would happen if a claim arose and the
physician’s competence was challenged? How would an insurer respond?
Many medical professional liability policies contain wording stating
coverage will be excluded if state laws were violated. Knowing this,
the real question becomes, "How would an insurer determine if a
physician held the necessary competency to delegate a specific service?”
To help answer this question a couple of the medical spa industry’s
malpractice insurance providers were approached with this very
question. It quickly became clear that this is an ambiguous topic at
best. Essentially these insurers stated they would have a difficult
time determining if a physician was or was not appropriately
educated/trained in the services being delegated.
One may argue that certificates of completion for a particular
aesthetic treatment had been or could be obtained justifying
competency. While that may be a starting point, the insurers held fast
saying that there is still no way for them to determine that a
certificate course provided the physician with adequate qualifications
to perform and/or delegate a treatment. Because of this, the insurers
indicated they could only rely upon what a governing body mandates. In
this case, they fall back upon licensing bodies.
Thus far, most physician licensing bodies have yet to stipulate the
competencies necessary to be experienced/qualified in aesthetics.
Because training is so subjective, it would be difficult for an insurer
to prove otherwise. Assuming a state board/organization did define the
requirements necessary to perform a particular aesthetic treatment, the
insurers would have a solid reference point to base their underwriting
decisions upon. Should a claim occur and a violation be noted, a
physician’s license and/or insurance coverage could be impacted.
It should be noted that the vast majority of the policies being
written for medical spas today contain no specific policy language
(other than licensure) that would prevent coverage from applying to a
delegated service. Essentially the insurers’ goals are to underwrite
this exposure prior to issuing a policy. However, unless a physician is
actually performing treatments (which would require a full underwriting
submission), this becomes a near pointless task.
There are other risks as well. Physicians must remember that even
though treatment activities at a Medical Spa are often limited in scope,
they still constitute the practice of medicine. Treatments delegated
(directly or indirectly) to an Aesthetician, Registered Nurse, Laser
Technician, etc. ultimately remain the physician’s responsibility since
the delegated individuals cannot operate a medical practice or have
their own patients. Therefore, if a claim was to arise or an
investigation commence, it is the physician’s license and future
insurability that could be jeopardized. The main exception would be if a
state permits the Corporate Practice of Medicine by which
non-physicians can own, operate and hire healthcare professionals.
Another area that is often overlooked is the term ‘administrative
duties’. It has been seen how a significantly different view exists
between a Medical Director’s understanding of administrative duties and
the views of the insurers actually providing coverage. What gets lost
is that a simple act like performing a patient consultation (pre- or
post care) or conferring a patient’s treatment protocol with a delegated
provider is no longer administrative in nature. At this point a
patient relationship is created. When this occurs, the Medical
Director’s actions go well beyond what most insurers intend to cover.
Should a claim against the medical spa, treatment provider and the
Medical Director develop, the coverage provided to the Medical Director
could be denied if a consultation with the patient occurred. To be
adequately insured a physician would need to confirm coverage is in
place for any incidental contact he/she would have with medical spa’s
patients. Assuming coverage is not provided via the medical spa’s
policy, the insurer would need to amend the policy so that it did
include direct patient care to the physician. Alternatively, the
Medical Director would need to rely upon his/her own individual
malpractice policy to extend this type of coverage.
This brings up another point. Often medical spas will state that
their Medical Director’s individual malpractice policy extends to the
facility and its staff. In certain instances this could very well be
the case. Where this occurs most often when the medical spa is being
operated in conjunction with the physician’s private practice and when
the physician is on-site on a regular/routine basis. When this is not
as successful is when a medical spa is operating on a standalone basis
with little intervention from the physician (i.e., when the practice is
essentially being operated by NPs, PAs, RNs, LE, etc.). Before
arbitrarily assuming a Medical Director’s current policy extends to the
medical spa, a call should be placed to the physician’s insurer fully
disclosing the facility’s operations. It is highly recommended that
confirmation of coverage be provided in writing so it can be referenced
in the event of a claim. Medical Directors who currently have or are
considering adding a medical spa to an individual insurance policy
should be aware that any claims brought or alleged against the facility
and staff will show on your individual claims history reports.
Depending on the severity and/or frequency of claims, pricing and/or
overall insurability could become an issue.
Without a doubt there are risks assumed by being a Medical Director.
It is also true that a physician may never be able to completely avoid
the exposure to his/her license, insurance, potential claims, etc. while
working as a Medical Director. However, by identifying the risks and
taking the steps necessary to protect yourself, Medical Directorship
could be a welcomed, enjoyable and potentially lucrative addition to
David Shaffer <email@example.com>
is Vice President of Professional Medical Insurance Services. PMIS
specializes in providing insurance to medical spas and serves as the
exclusive insurance carrier for the American Med Spa Association
(AmSpa). For more information contact David Shaffer at (260) 637-9879,
or send an email to firstname.lastname@example.org