Death of an exception or much ado about nothing.

Abstract

Hospitals often engage in physician recruitment in an effort to fulfill a community need for a particular medical specialty. In doing so, the hospital must comply with the regulatory requirements of the physician recruitment exception of the Stark law, which over the years has generated a great deal of discussion and perhaps confusion. The publication of the Stark II, Phase II regulations in March 2004 was supposed to provide guidance and clarity, but the new regulations have raised a number of new issues and concerns, particularly regarding the requirements imposed on recruiting arrangements involving group practices. This Article reviews the regulatory requirements of the new physician recruitment exception and addresses several of the concerns that have been raised. Specifically, it examines the new regulatory definition of the "geographic area served by the hospital," the restrictions on income guarantees when the recruited physician joins a group practice, and the prohibition on additional practice restrictions. The author concludes that, while some of these concerns are legitimate, others will have little practical implication and should not hinder the ability of hospitals to engage in reasonable, beneficial recruitment activities.