Conflict of Interest – Physician Self-Referral
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Physician investment in health-care facilities can provide important
benefits for patient care. However, when physicians refer patients to
facilities in which they have an ownership interest, a potential
conflict of interest exists. In general, physicians should not refer
patients to a health care facility outside their office practice at
which they do not directly provide care or services when they have an
investment interest in the facility.
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Physicians may invest in and refer to an outside facility, whether or
not they provide direct care or services at the facility, if there is a
demonstrated community need for the facility and alternative financing
is not available. There may be situations in which a needed facility
would not be built if referring physicians were prohibited from
investing in the facility. Need might exist when there is no facility of
reasonable quality in the community or when use of existing facilities
is onerous for patients. In such cases, the following requirements
should also be met:
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Individuals who are not in the position to refer patients to the
facility must be given a bona fide opportunity to invest in the
facility, and they must be able to invest on the same terms that are
offered to referring physicians. The terms on which investment
interests are offered to physicians must not be related to the past
or expected volume of referrals or other business from the
physicians.
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There is no requirement that any physician investor make referrals
to the entity or otherwise generate business as a condition for
remaining an investor.
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The entity must not market or furnish its name or services to
referring physician investors differently than to other investors.
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The entity must not loan funds or guarantee a loan for physicians in
a position to refer to the entity.
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The return on the physician's investment must be tied to the
physician's equity in the facility, rather than to the volume of
referrals.
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Investment contracts should not include "non-competition clauses"
that prevent physicians from investing in other facilities.
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Physicians must disclose their investment interest to their patients
when making a referral. Patients must be given a list of effective
alternative facilities if any such facilities become reasonably
available, informed that they have the option to use one of the
alternative facilities, and assured that they will not be treated
differently by the physician if they do not choose the
physician-owned facility. These disclosure requirements also apply
to physician investors who directly provide care or services to
their patients in facilities outside their office practice.
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The physician's ownership interest should be disclosed, when
requested, to third-party payers.
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An internal utilization review program must be established to ensure
that investing physicians do not exploit their patients in any way,
as by inappropriate or unnecessary utilization.
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When a physician's financial interest conflicts so greatly with the
patient's interest as to be incompatible, the physician must make
alternative arrangements for the care of the patient.
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With regard to physicians who invested in facilities under the council's
prior opinion, it is recommended that they reevaluate their activity in
accordance with this opinion and comply with the guidelines to the
fullest extent possible. If compliance with the need and alternative
investor criteria investor is not practical, it is essential that the
identification of reasonably available alternative facilities be
provided.
(JC Rpt D, A-93) (Reaffirmed A-23)
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Abbreviations for House of Delegates report origination:
EC – Executive Committee; BT – Board of Trustees; CPA – Council on
Professional Affairs; JC – Judicial Council; CHS – Community and Health
Services