Physician Self-Referral and Physician-Owned Specialty Facilities

Physician self-referral ranges from suggesting a follow-up appointment, to sending a patient to a facility in which the doctor has an ownership interest or financial relationship. Physician referral to facilities in which the physicians have an ownership interest is becoming increasingly common and not always medically appropriate. This Synthesis reviews the evidence on physician self-referral arrangements, their effect on costs and utilization, and their effect on general hospitals. Key findings include: the rise in self-referral is sparked by financial, regulatory and clinical incentives, including patient convenience and doctors trying to preserve their income in the changing health care landscape. Strong evidence suggests self-referral leads to increased usage of health care services; but there is insufficient evidence to determine whether this increased usage re ects doctors meeting an unmet need or ordering clinically inappropriate care. The more signicant a physician’s financial interest in a facility, the more likely the doctor is to refer patients there. Arrangements through which doctors receive fees for patient referrals to third-party centers, such as “pay-per-click,” time-share, and leasing arrangements, do not seem to offer benefits beyond increasing physician income. So far, the profit margins of general hospitals have not been harmed by the rise in doctor-owned facilities.