What are the risks of physician recruitment programs?

Many hospitals are currently conducting physician incentive and recruitment programs. These programs provide a number of privileges to attract reputable physicians to the hospital's staff. The programs have raised a few basic tax questions: Do the programs jeopardize the hospital's tax-exempt status; and are the privileges given to the physicians taxable income, and if so, what are the hospital's reporting responsibilities? Questions like these should not be taken lightly. Some of the risks of the physician incentive programs could include penalties imposed upon the hospital as well as the possible loss of its tax-exempt status.