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Exhibit 10.31
PEDIATRIX MEDICAL GROUP
APPOINTMENT
REGIONAL VICE PRESIDENT OF MEDICAL OPERATIONS
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APPOINTMENT, made effective as of the 1st day of June, 1997, by and
between, DOUGLAS CUNNINGHAM, M.D. ("Physician") and PEDIATRIX MEDICAL GROUP,
INC., a Florida corporation ("Company").
WHEREAS, Physician and Pediatrix Medical Group Inc., have entered into
an employment agreement as of June 1, 1996 under which the Company employed
Physician as Chief Medical Officer of the Company (the "Employment Agreement");
and
WHEREAS, Company also desires to appoint Physician, and Physician
wishes to accept such appointment, to the position of Regional Vice President of
Medical Operations ("RMO");
NOW THEREFORE, in consideration of the foregoing recitals, mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. APPOINTMENT
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Company hereby appoints Physician, and Physician accepts
appointment from Company, as Regional Vice President of Medical
Operations-Pacific Region, to be based in Orange, California. Physician agrees
to devote his time and efforts to the performance of the duties of RMO in an
efficient, trustworthy and professional manner, and to undertake such duties and
responsibilities as described in Addendum 1 and such other duties as may, from
time to time, be reasonably assigned by Company's Chief Executive Officer.
Physician shall be subject to direction from the Company's Chief Executive
Officer.
2. TERM
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This Appointment shall commence on June 1, 1997, and shall
terminate on May 31, 1998, PROVIDED THAT this Agreement shall be automatically
extended on each anniversary of the commencement date for an additional one year
term unless either party provides the other with written notice of such party's
intent not to renew at least ninety (90) days prior to the relevant anniversary
date.
3. POSITION COMPENSATION
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Physician's annual base compensation for services rendered
pursuant to this Appointment shall be One Hundred Fifty Thousand Dollars
($150,000) for the term of this Appointment. Physician shall continue to receive
all standard Company benefits and shall be entitled to four (4) weeks paid
vacation per year. On or about the inception date of this Appointment, Physician
shall receive 50,000 stock options at market price with a three year vesting
period. The terms of the Stock Option Agreement and the Company Stock Option
Plan shall control the RMO's rights and interests in said options, which shall
be in addition to any other Company stock options he may have as of the date of
this Appointment. Physician shall be entitled to receive the following as
incentive compensation:
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a. A commission of two percent (2%) of the initial annual "Gross
Profit" contribution from medical groups which may be acquired by
Company (or its affiliates) from within Physicians region. "Gross
Profit" is defined as net patient service revenue less direct costs of
the merged/acquired business in which revenue and costs are determined
following the customary procedures of the Company. Payment shall be
made as follows: The Physician shall receive one percent (1%) of the
PROJECTED Gross Profit for the initial fiscal year from each
consummated merger and/or acquisition in the month immediately
succeeding the closing of the merger and/or acquisition . Additionally,
at the end of the initial fiscal year of the merger and/or acquisition
upon closure of the accounting period, Physician shall receive two
percent (2%) of the ACTUAL Gross Profit for the initial fiscal year
from each consummated merger and/or acquisition, LESS amounts
previously paid as the one percent (1%) PROJECTED Gross Profit for the
initial fiscal year.
b. A commission of two and one-half percent (21/2%) of the increase (if
any) in gross profit contribution from units in Physician's region when
compared year-to-year and on a same unit combined basis. Medical groups
acquired which result in a commission payment in Section 3a. above
shall be included commencing on the three hundred sixty-sixth (366th)
day after the acquisition was consummated.
c. A commission of five percent (5%) of annual administrative fee, if
any, from hospital contracts in Physician's Region, included in the
renewal contract for each year that the contract and administrative fee
remains in force.
d. A commission of one percent (1%) of the annual base gross profit
contributions from units (on a combined basis) in Physician's Region.
This paragraph supersedes the provisions of paragraph 2, sections 2.1
and 2.2 contained in the Physician's Employment Agreement.
4. COMPANY'S MEDICAL BOARD
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As an RMO, Physician shall belong to the Medical Board of the
Company. As a member of the Company's Medical Board, Physician shall participate
in the administration of the following activities, which may be modified by the
Company from to time:
Arbiters all medical issues which arise in his region. Sets
medical policy for prospective groups in his region.
Reviews the CPT book every year, and makes or recommends
changes in coding of bills. Reviews the ICD - 9 book every
year, and makes or recommends changes in coding of bills.
Reviews all active medical malpractice cases pending in his
region, and makes recommendations. Works with other RMO's in
reviewing issues of common interest.
5. EDUCATIONAL LEAVE & EXPENSES
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In recognition that the appointment of RMO is critical to
ensuring the integrity and mission of the Company, Physician shall be entitled
to educational leave of 10 days annually during this Appointment without
diminution of compensation. Company shall reimburse expenses incurred by
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Physician while attending educational meetings and for publications, association
membership, and other materials related to medical management, in the amount of
$3,500.00 annually. Said days and expenses for educational leave are in lieu of
those provided under the coexisting Employment Agreement.
6. ACTIVITIES
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Physician agrees during the term of this Appointment to devote
his productive time and effort to the Company and shall not directly or
indirectly render professional services to any other person or entity for
compensation except as an employee of Company, unless Physician shall first
obtain consent from the Company's Chief Executive Officer to render other such
services. Physician further agrees that during the term of this Appointment, and
thereafter, he will not disclose, other than to employees of the Company, any
information related to Company's patients or practices without prior written
consent of Company, and that upon termination of this Appointment, Physician
shall not remove or retain, without Company's written consent, any lists,
letters, files, confidential information of any type or description, or other
property of Company.
7. TERMINATION OF APPOINTMENT
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This Appointment may be terminated upon mutual consent of the
parties. Company may terminate this Appointment immediately, without penalty,
for "cause." For the purposes of this Appointment, the term "cause" shall mean:
a. Dishonesty in the performance as RMO.
b. Failure to perform the duties of RMO in a reasonable and
timely manner.
c. Substance abuse in a manner which materially affects the
performance of Physician's duties as RMO.
d. Conviction in a court of competent jurisdiction of any felony,
or any misdemeanor that adversely affects Physician's ability to carry
out his obligations hereunder.
e. Mental illness which interferes with the performance of
Physician's duties as RMO.
f. Termination or non-renewal of the Employment Agreement.
Either party may terminate this Appointment without cause upon
ninety (90) days notification prior to termination.
8. QUALIFICATIONS
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In accepting this Appointment as an RMO, Physician confirms he
possesses the following qualifications:
* B/C Pediatrician or Obstetrician.
* Extensive physician management experience.
* MBA or equivalent (preferred).
* Unit Medical Director with the Company for at least 3 years
(preferred).
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THIS AGREEMENT has been executed by the parties this 1st day of June,
1997.
/s/Douglas Cunningham, M.D.
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DOUGLAS CUNNINGHAM, M.D.
/s/Lawrence M. Mullen
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LAWRENCE M. MULLEN
CHIEF FINANCIAL OFFICER
PEDIATRIX MEDICAL GROUP, INC.
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ADDENDUM 1
REGIONAL VICE PRESIDENT OF MEDICAL OPERATIONS
DUTIES AND RESPONSIBILITIES
1. Overall quality of care.
2. Profitable management of units.
3. Represents physician aspect of company for business development
efforts.
4. Responsible for same store growth of units in region. Encourages ideas
from unit medical directors, evaluates proposals (with home office
help) and recommends projects.
5. Responsible for coordinating integration of acquired practices (with
practice integration department) in region.
6. Coordinates timely re-negotiation of hospital contracts (with hospital
contracting department) for units in region.
7. Coordinates managed care contracting (with managed care department) for
units in region.
8. Coordinates physician scheduling of units in region (with scheduling
department).
9. Addresses complaints and concerns of hospital administrators, patients,
referring physicians and payers in region (clinical, billing, etc.).
10. Coordinates recruiting needs and efforts (with recruiting department)
for region.
11. Keeps track of Q/A and statistical outcomes for units in region.
12. Conducts peer review and performance evaluation for medical directors
in region.
13. Coordinates research and education efforts (with research and education
department) of physicians and units in region.
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REGIONAL VICE PRESIDENT OF MEDICAL OPERATIONS
DUTIES AND RESPONSIBILITIES (CON'T.)
14. Implements information initiatives in region (V-O, NeoData, etc.) with
information department.
15. Coordinates credentialing efforts (with credentialing department) for
physicians in region.
16. NNPs
17. Sets up regional meetings.
18. Site visits once a month.
19. Reports to CEO.
20. Charity/contribution requests.
21. Set up assistant medical director's program - identify candidates, make
recommendations for openings, review data, Ob's, etc.
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