November 20, 2015

Absent Financial Inducements, Should It Be Legal For A Hospital To Require Its Physician Employees To Refer Their Patients To That Hospital?

By the C|C Whistleblower Lawyer Team

Broadly speaking, the Stark and Anti-Kickback laws prohibit hospitals from using monetary perks to induce their employed doctors to increase their referrals to the hospitals. Such perks undermine the practice of medicine by encouraging physicians to make medical decisions based on financial gain rather than patient need.  However, absent such financial inducements, it is generally legal for a hospital to require its physician employees to refer their patients to that hospital.  New research challenges the wisdom of this assumption.

A recent study by three Stanford researchers, published by the National Bureau of Economic Research, found that: “a hospital’s ownership of an admitting physician’s practice dramatically increases the probability that the physician’s patients will choose the owning hospital.”  In addition, and more importantly, “patients are more likely to choose a high-cost, low-quality hospital when their admitting physician’s practice is owned by that hospital.”

In light of this new research, the question becomes: should it be legal for a hospital to require its physician employees to refer their patients to the hospital?  The answer to this question is far from obvious.  There can be advantages to physician-hospital affiliation, including better coordination of care and increased opportunities for quality-based payment mechanisms.  But if physician employment often leads to the selection of a “high-cost, low-quality hospital,” perhaps someone, whether it be the Department of Justice, CMS, or a professional organization, should be keeping better tabs on the downside of permitting this sort of behavior.  What do you think?

Absent financial inducements, should it be legal for a hospital to require its physician employees to refer their patients to that hospital?

    Please let us know why in the comments section below.

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    3 Responses to “Absent Financial Inducements, Should It Be Legal For A Hospital To Require Its Physician Employees To Refer Their Patients To That Hospital?

    1. Seems to me such a requirement is no different than a financial inducement. At the very least, the doctor should be free to make the referral he or she thinks is in the best interest of the patient. There should also be full disclosure as to the basis of the referral and any financial or employment ties to the hospital.

    2. It should not be legal. It’s a bribe, pure and simple. I don’t want my doctor being influenced by anything other than my health.

    3. A hospital should be able to require these referrals. If a patient does not like the hospital, the patient has the choice to seek a physician who is affiliated with a hospital the patient likes.