You can see why it’s so tempting for unscrupulous hospital CEOs to offer kickbacks to physicians.
For example, take a look at my March 7, 2016 post, Physician Is 10th Person Found Guilty In Kickback Scheme, reporting on the conviction of Dr. Venkateswara Kuchipudi, the 10th person found guilty for accepting kickbacks in violation of the federal Anti-Kickback Statute (“AKS”) from the now-closed Sacred Heart Hospital in Chicago.
That’s because physicians generate huge amounts of referral business for hospitals. A recently released study by the recruitment firm, Merritt Hawkins, reports that a physician’s referrals are worth, on average, $1,560,688 a year in net revenue to a hospital.
Surgical specialists drive even more profit to a hospital. The Merritt Hawkins study reports that hospital net revenue per orthopedic surgeon is, on average, $2,746,605 a year, while that figure for invasive cardiologists is $2,448,136.
The physician who tries to monetize the value of those referrals by way of a kickback, whether in cash, free services or so on, will, sooner or later, be joining the Sacred Heart Hospital felons in the pokey.
The legal alternative enabling a physician to share in facility revenues is through development, usually in concert with other physicians and a development/management company, of an ambulatory surgery center (ASC).
Although ASC investment usually makes sense for surgeons with a significant volume of procedures that can be performed in an outpatient setting, there is, contrary to commonly held belief, no restriction on investment by non-surgeons. There are, of course, significant AKS concerns at play in the legal structure and operation of any ASC, but, again, there is no prohibition on, for example, primary care physician involvement.
As more and more cases move from the hospital setting to the ambulatory setting, there is a growing opportunity for physicians to participate in facility fees via investment in ASCs.
Making money is not (yet) a crime. Paying kickbacks is. Why not make money?
