Landing a medical director position can mean extra income and interesting work, but many physicians don’t realize they’ve taken on new and unexpected risks.

“A big problem is that the term ‘medical director’ has no legal meaning,” said Michael S. Byrd, JD, business and healthcare attorney with ByrdAdatto in Dallas. “The role of medical director can range from having clinical oversight where you’re in the chain of patient care; to a strictly administrative function; to a combination of both.”

Problems arise when physicians don’t bother to understand their contractual responsibilities and resulting risks, he said.

“Far too many doctors don’t read the contract before they sign,” Byrd said.

Jeanne Varner Powell, JD, director of risk management at Phoenix-based Mutual Insurance Company of Arizona, a medical malpractice insurer, said doctors often don’t recognize the different types of liability exposure they assume when taking a medical director job. 

“Then they’re surprised when they get slapped with a lawsuit alleging that they were responsible for the facility’s policies and procedures and for making sure the staff is following them, Varner Powell said.

Consequences can include losing the medical director job, losing your medical license, or even being charged with negligent homicide.

That’s what happened to an anesthesiologist in Texas who became medical director of a medical spa offering intravenous (IV) infusions. In 2023, a 47-year-old patient died after the unlicensed medical spa owner gave an IV infusion treatment. Supervising medical director Michael P. Gallagher, MD, was about 100 miles away at the time. The infusion contained elements known to be fatal if infused too quickly.

Gallagher was charged with criminally negligent homicide, failure to supervise, and alleged delivery of a dangerous drug. The spa owner was also charged. Both pleaded not guilty. 

In September 2026, the Texas Medical Board temporarily restricted Gallagher’s medical license. Pretrial hearings will take place later this month.

The case led to the creation of House Bill 3749, known as Jenifer’s CQ Law, which regulates elective intravenous IV therapy.

“‘The absentee physician’ is a large risk in medical director jobs,” said Byrd. “Doctors don’t think they need to do much in these jobs, and so they don’t do much.”

Byrd described risky situations for physician-medical directors:

Medical Spas and Similar Facilities

Nursing homes and other long-term care facilities are heavily regulated and clearly identify a medical director’s duties.

Wellness centers, medical spas, and IV clinics are different; the practice needs a physician’s medical license in order to practice.

“The medical director’s license is what gives that practice authority to treat patients. The doctor may have no idea that it’s their license that allows this business to basically practice medicine. So…they are ultimately responsible for anything that goes wrong,” said Byrd. 

While medical directors may not actively treat patients, as medical directors they retain clinical authority and oversight, which exposes them to malpractice risk.

Physicians often underestimate their administrative burdens as medical directors and may not realize they are mandatory, said Varner Powell.

Medical directors must develop policies and procedures and ensure staff are trained and follow them, she added.

Those at facilities serving Medicare patients also must participate in Quality Assessment and Assurance Committees and facility assessments, as required by the Centers for Medicare & Medicaid Services, she said.

Physicians can be held negligent for failing to carry out these responsibilities. Varner Powell described one lawsuit against a medical director where “the plaintiff’s position was ‘you should have known that the physicians at the facility were delivering substandard care, and it was your job to make sure that they’re being educated on current standard of care issues.’”

Hospital Medical Director Positions

“You can generally think of hospital medical directors as a direct leadership role, and their responsibility is typically not in the chain of care,” said Byrd. “The risk lies with federal healthcare laws governing the way physicians are paid.”

A hospital medical director job is one of the legal ways that a hospital can attract desirable specialists to treat their patients there and pay them for it. But how hospitals pay doctors is strictly regulated. Physicians should not expect to do little for their supplemental income and must log the time they spend on medical director responsibilities, Byrd said.

Your Current Malpractice Policy May Not Cover You

Your existing malpractice policy typically won’t cover you for administrative responsibilities that come with a medical director job.

“Some policies have a list of exclusions, and that list typically includes administrative duties or functions,” Varner Powell said. “And often that’s exactly what a medical director role is. You need to communicate up front with the facility and ask, ‘Are you providing coverage for this position?’ If they’re not, ask your carrier.”

You may need to add an errors and omissions policy that will cover you for your medical director side job, said Varner Powell. That covers financial losses and legal defense costs related to managerial, rather than patient care, mistakes.

Advice to Physicians Considering a Medical Director Job

1. Make sure you read the contract thoroughly and fully understand all job responsibilities and hidden risks

Confirm whether you’re being asked to serve as an owner, supervisor, collaborator, or advisor, said Byrd.

“Any time the word supervisor is used in your contract, make sure of what that includes and what it entails,” Varner Powell said. “If that’s one of your job duties, you have liability exposure for supervising certain staff or providers.”

2. Have a healthcare attorney review the contract 

“Healthcare is one of the most heavily regulated industries,” said Byrd. “Many laws built to protect patients are counterintuitive to normal business and some risks are not apparent in the contract.”

Byrd described one physician in North Carolina who had a business attorney review her contract to be a medical director for a medical spa. Because she and her attorney did not know that state law also required the spa to be owned by a physician, she found herself under investigation for aiding and abetting the unauthorized practice of medicine. “A healthcare attorney reading that contract would have seen that within 30 seconds and would have saved her from a compliance problem.”

3. Make the time to do the job right

Some doctors have more than one medical director side gig, and spend little time in each facility.

Get a realistic assessment of how much time per week you’ll need to devote to the position and make sure you can maintain that workload. 

Despite many cautions, Byrd said being a medical director often is a positive experience. 

“It’s just important to understand there are expectations and risks that go with it and doctors need to understand what they are,” Byrd said.

The experts cited in this article had no relevant disclosures.