New Physician Joining Existing Practice
Often new physicians prefer not to immediately jump into private practice. The stress of beginning a medical career and of running a business can be too much for some. For this reason, a large number of new physicians opt to join existing medical practices. This allows them to focus more on delivering quality care while also giving them a chance to become familiar with the day-to-day running of a practice.
Under the Stark II laws, new physicians who choose to join existing practices can still be recruited by hospitals and can still receive financial benefits from such a relationship. However, there are some changes.
First, everything has to be in writing. The recruitment agreement between the hospital and the physician AND the agreement between the hospital and the existing practice must all be spelled out in contracts and must be signed by the parties involved.
Second, the financial incentives paid by the hospital must go to the recruited physician, not to the practice. However, the practice is allowed to keep a portion of those funds in order to cover the expenses they incurred in bringing in the new physician.
One of the most important changes deals with income guarantees. Recruited physicians are often made income guarantees by hospitals as part of their agreements. These guarantees give physicians the security of knowing they will earn a specific amount of money, regardless of the initial success of their practice.
Before the Stark II laws, a recruited physician working with an existing practice would receive a specified salary from the practice. From that salary, a portion would be deducted for the expenses of the practice. This portion would be determined by dividing all of the expenses up equally among all of the physicians. The hospital would then pay the difference between the salary the recruited physician actually received and the income the hospital guaranteed him or her.
The Stark II laws no longer allow practices to calculate expenses using this method. Instead, only expenses directly related to the recruited physician can be deducted from his or her salary by the practice. For example, if a recruited physician joins a practice which uses a single receptionist for all of the physicians, the new physician cannot be expected to cover part of the expenses for that receptionist because that position existed prior to his or her joining the practice. On the other hand, if new equipment must be purchased as a result of the physician joining the practice, then those expenses could be deducted from his or her salary.