Self-referral occurs each time a physician asks a patient to return for an appointment, refers a patient to a colleague in the same medical practice or refers a patient to a facility in which that physician has an ownership interest. Physician self-referral has grown substantially in the last decade and although the practice is not inherently bad, the financial gain for physicians results in an inherent conflict of interest.

This Synthesis examines the growth of self-referral and physician-owned specialty facilities, as well as its effects on health care quality, costs, access and the organization of health care.

Key Findings:

• The number of physician-owned facilities has increased substantially in the last decade, as have the number of imaging procedures performed in physician offices and independent diagnostic testing facilities.
• Self-referral has resulted in higher utilization of services, particularly imaging services.
• Specialty hospitals and ambulatory surgical centers treat more profitable patients (those less likely to have complications or to be on Medicaid) than general hospitals.
• For the types of patients treated, the quality of care provided by specialty hospitals and ambulatory surgical centers is comparable to that of general hospitals. Less is known about the quality in independent diagnostic testing facilities and physician offices.
• Though they are losing some profitable cases to specialty hospitals and ambulatory surgical centers, general hospitals overall are maintaining their profit margins.