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Addressing Conflicts of Interest in Physician and Nurse Practitioner Employment Contracts

April 18, 2023
Est read time: 3 minutes

Collaboration in the medical community is generally accepted as beneficial and advantageous. This has been the case for much of the history of medicine. A position statement from the American College of Physicians (ACP) found that medical professionals meet with representatives, collaborate in community-based research, and develop or invest in health-related industries. These activities often offer important opportunities to advance medical knowledge and patient care, but they also create an opportunity for the introduction of bias.

Medical professionals, including physicians and nurse practitioners, have a duty to act in the best interests of their patients. However, conflicts of interest can arise when a physician’s personal interests or financial relationships compromise his or her professional judgment. To address such conflicts, physician employment contracts often contain clauses designed to prevent and manage conflicts of interest. This blog explores the implications of potential conflicts in employment.

Understanding the Most Common Conflicts

Physicians and nurse practitioners face a variety of potential conflicts during their practice, many of which have little to no significance. Some, however, can have serious legal and ethical implications. These are the most common conflicts that physicians and nurse practitioners face:

  • Referral and kickback arrangements: Florida’s Anti-Kickback Statute and Florida’s Patient Brokering Act prohibits healthcare service providers from receiving payments or other incentives in exchange for referring patients.
  • Self-Referral: Federal and State Stark Laws, otherwise known as physician self-referral laws, prohibit a medical provider’s referral of patients to entities in which the medical provider has a financial interest, such as a lab or imaging center that a physician owns.
  • Conflicts with Research Activities: Occasionally, a conflict in research may arise, particularly if the medical provider has a financial relationship with the study sponsor or owns equity in a company that has an interest in the research outcome.
  • Pharmaceuticals and Medical Devices: Medical providers may have financial relationships with pharmaceutical companies or medical device manufacturers, such as consulting arrangements or stock ownership. This can create a conflict of interest if the physicians or nurse practitioner is more likely to prescribe certain drugs or devices.
  • Medical Directorships and Other Compensations Arrangements: Physicians and nurse practitioners may receive payments or other compensation for serving in roles alternative to their main employment. These positions can create a conflict of interest if the provider’s financial interests conflict with their duty to act in the best interests of their patients.

Clauses in employment contracts that are meant to prevent and manage conflicts of interest are typically targeted towards these conflicts. Given the possible results from such conflicts, these clauses are carefully considered, particularly when a conflict is already known prior to the commencement of employment.

Implications of Conflicts

Conflicts can have serious consequences for both patients and medical providers, and can run up health care costs. Patients may receive suboptimal care or even suffer harm if the provider’s judgment is compromised. Conflicts can damage trust between providers and patients as well as providers and employers or facilities. Certain conflicts may result in legal and ethical consequences as well; hence why clauses managing conflicts are carefully prepared to address multiple aspects of any outstanding or expected conflicts.

Addressing Conflicts in Employment Contracts

Physician and nurse practitioner employment contracts may seek to thwart any conflicts by including certain contractual provisions or clauses. Some common ones include:

  • Disclosure of financial relationships
  • Restrictions on financial relationships
  • Limitations on prescribing and ordering tests
  • Separation of research and clinical practice
  • Continuing education requirements

Wondering if you have a conflict? Concerned that a conflict may affect your employment arrangement? We are here to help.

We always recommend seeking legal counsel if you are unsure that your contract properly addresses conflicts of interest appropriately and complies with applicable laws and regulations. By addressing conflicts of interest proactively, employers can promote ethical and professional behavior and build trust with their patients.

If you are an employee or employer and need help managing potential conflicts of interest, contact our team at Howell, Buchan & Strong. We can review your agreements, determine the legal impacts, and provide advice on how to avoid legal complications.

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