For many physicians, being recruited by a hospital can be an great way to grow their practice. Hospitals often provide relocation expenses, start-up funds, and income incentives to physicians in order to bring them to their area. These financial benefits can make a huge difference, particularly for new physicians. However, the Stark II laws, which were adopted in July 2004, significantly impact how these recruitments work and who will get recruited in the future.
New Physician in Private Practice
Physicians preparing to set up their first private practices have often benefited from hospital recruitments. The financial incentives generally make it easier for physicians to get started and to survive while their practices get off the ground. Plus, the recruitment takes some of the guesswork out of picking a location for the new practice.
The Stark II laws do impact these recruitments in a number of ways.
First, the recruitment agreement must be outlined in a written contract that is signed by both the physician and the hospital. This is good for both parties because it means there should be less confusion regarding the agreement.
Second, a hospital cannot recruit a physician and provide him or her with financial benefits on the condition that the physician refer patients to the hospital. The physician must be allowed to refer patients to any hospital, even hospitals which are competitors of the recruiting hospital.
Furthermore, the recruited physician can take on staff duties at other hospitals unless such employment is restricted by another agreement, such as a separate employment agreement with the hospital or with a managed care provider.
Third, the hospital cannot base the financial benefits provided to the recruited physician on an anticipated amount of referrals to the hospital by that physician.
All of these rules apply to physicians who have been in practice for less than one year and who are setting up a private practice. The rules for other physicians are somewhat different.