Hospitals are required to have a medical director of respiratory care as a condition of their participation in the Federal Medicare and Medicaid programs. This gives physicians opportunities to improve the quality of care for the patients in their community, to diversify income streams, and to assist hospitals to meet regulatory requirements for quality. The contracts for these positions are usually provided by the hospital, so it is imperative that physicians know how to protect their interests, what is expected of them, if they are being paid fairly, and that the contract is compliant with all regulatory issues. The directorship relationship with the hospital that provides designated health services and the “stand in the shoes” definition of direct compensation also gives physicians and physician practices guidance to determine if their group and individual physicians are compliant with Stark and antikickback regulations. This article guides physicians through the process of reviewing a contract for medical directorship or service line management services. Information on compensation in the directorship market can be found in at least two standard surveys. Duties and compensation vary among entities and frequently include incentive-based compensation for improving quality measures and operations. Directorships are evolving to service line management as more of the hospital’s reimbursement is linked to clinical quality and patient satisfaction. This article does not offer legal advice, nor is it meant to be all inclusive. Physicians should consult a health-care attorney for any questions before signing any contract.