A. Actions and statements to avoid
- Do not offer less or more shares or a higher or lower price based on the number, volume or value of referrals a physician can generate.
- Do not reallocate shares based on the volume or value of referrals.
- Do not focus on individual distributions being tied to the number of patient referrals. Never make any indications that could lead a potential investor to believe that referrals or performance will determine an individual’s “piece of the pie.” Focus on overall distributions and profits.
- Physicians should not be allowed to invest based upon the fact that they can generate referrals for another physician who may use the center.
- Avoid providing physicians with estimates as to the amount of revenue that will be generated from their referrals or from another physician’s referrals.
- Except as to compliance with the one-third tests, do not develop investor eligibility determinations based on the number of potential referrals. In evaluating physicians, examine compliance with all of the safe harbor criteria.
- Do not create “target lists” of physicians based on their ability to make high amounts of referrals.
- When creating target lists, avoid making notations indicating the potential number of referrals, the growth potential of the physician’s practice, that a certain physician is a good target (based on referrals), etc.
- Avoid using age as an influencing factor when targeting physicians.
- Subject to non-discrimination rules, consider excluding Medicare and Medicaid referrals from any internal revenue and investment analysis.
- Do not offer remuneration or special treatment under various disguises, such as directorship contracts or discounted lease arrangements, in order to induce investors.
- Do not pressure a physician investor to shift their current referral patterns.
- Do not make any indications to investors that low-referring physicians will be pressured to withdraw.
- Units should be sold at fair market value.
B. Actions that can be taken
- Offer equal amounts of units per investor.
- Offer units at the same price per unit.
- Offer units at the then fair market value per unit.
- Provide investor with the current financial statements and not their potential revenues.
- Offer units to only physicians that will comply with the safe harbors — meet all tests and not just the one-third tests.
- Clarify that the hospital or management company partner does not generate referrals for the ASC.
- Review investors against compliance with the requirements of the safe harbors.
- An ASC may ask physicians why they choose not to use the ASC.
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