The final Stark II rule: implications for hospital-physician arrangements

Effective January 4, 2002, the final Stark II rule gives hospitals and health systems greater flexibility in structuring compensation arrangements with physicians and physician-owned entities, including more flexibility in structuring employment compensation and providing medical staff perquisites. Further, certain hospital-physician joint ventures are allowed under the final rule. The final rule creates new opportunities for hospitals, but because Stark II remains highly technical and violations can result in potentially substantial financial liability, financial arrangements with physicians should be structured very carefully and reviewed periodically for compliance.