Home arrow Business Issues arrow Incentives and Ownership for Hospital-Employed Physicians and for Primary Care Physicians
Incentives and Ownership for Hospital-Employed Physicians and for Primary Care Physicians Print E-mail
Written by Scott Becker, JD, CPA   
Monday, 28 April 2008
1. Can an ASC offer hospital-employed physicians incentives to use an ASC?

It is generally improper to provide financial incentives to a physician in exchange for referring cases to a surgery center. For example, one could not offer hospital-employed physicians special bonuses, monetary gifts or any sort of monetary incentive in exchange for referring patients to physicians who would perform procedures at the new ASC or for such physicians directly performing cases on patients at the new ASC. In contrast, it may be permissible for the hospital-employed physicians to own an interest in the new ASC. 

Here, you should offer all of the physicians the same terms of investment (with respect to purchase price and amount of ownership each physician may purchase) and, the hospital should not provide physicians with financing for their investment or guarantee any loans for their investment. All physicians should be required to abide by the same terms for such purchases. There are strong arguments that hospital-employed physicians buying interests directly in surgery centers on the same terms as all other physicians, without any special arrangements or treatment, would be appropriate. There are also arguments that it would be improper to allow the hospital-employed physicians to buy shares in the surgery center. At minimum, it is critical that the hospital-employed physicians purchase interests in the new ASC on the same terms as all other physician investors.

2. Does an ASC have to allow all hospital employees to use its ASC?

Generally, whether or not a surgery center can economically credential a hospital physician is a state-by-state determination based on whether or not the state laws allow economic credentialing and economic privileging. As a private facility, a surgery center generally would have more flexibility to utilize economic credentialing criteria in determining whether to grant a physician staff privileges. That stated, in practice, when a hospital and physicians joint venture to develop a surgery center, it is much more often the case that other hospital physicians would not be restricted from performing services at the surgery center.

3. Must incentives be provided to community
physicians?

There is no requirement that you offer incentives or ownership to other community physicians. However, you generally cannot discriminate when offering investment opportunities to physicians based on the volume or value of potential referrals from such
physicians. In any event, providing “incentives” — other than assurances that you will treat their patients well — is likely inappropriate.

Legally, there are certainly no requirements to provide any financial considerations for hospital staff or hospital-employed physicians. In fact, there are strong arguments that any financial consideration provided would be provided only in accordance with requirements of a specific safe harbor under the Anti-kickback Statute. 

4. What incentives can be provided to primary care physicians?

We are not aware of a specific means to provide incentives to community primary care providers to send their patients to the surgery center. You can certainly assure the physician that after the patient’s care is completed, the patient will be referred back to the primary care provider. You can also likely assure the physician that you will provide the patient with great care, at a great facility and with great follow-up. However, you cannot provide any type of financial incentive to the patient or the primary care provider for referrals.

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