Recruiting physicians without inviting trouble

Many hospitals use physician recruitment strategies--generally assistance or employment strategies--to ensure medical staff loyalty. Although these strategies appeal to both hospitals and physicians, they are becoming increasingly problematic. Over the past three years, the government has issued pronouncements that question their legality. Thus any hospital considering physician recruitment strategies would be wise to evaluate them in light of various legal issues. such as reimbursement, nonprofit taxation, corporate practice of medicine, and certificate-of-need statutes. The consequences of failing to consider these issues can be ominous. The penalties for violating the proscribed remuneration provision of the Medicare act can include a fine, imprisonment, suspension from the Medicare and Medicaid programs, or loss of license. Payment issues can result in reduced reimbursement levels. Nonprofit taxation issues can trigger the loss of tax exemption. As a result of the corporate practice of medicine, a physician recruitment strategy may not be reimbursable by third-party payers or may even constitute the unauthorized practice of medicine. Finally, in some states, physician recruitment may trigger certificate-of-need review.