A risky move: The new rules of relocation

Getting an agreement might be harder after a tightening of Stark rules. But some say the new regulations clarify what constitutes a violation.

By Katherine Vogt, AMNews staff. Oct. 25, 2004.

The murky waters of physician recruitment recently became a little clearer as new federal law cast more light on precisely what is and what is not allowed with physician relocation agreements.

The second phase of the updated Stark II regulations took effect in July, shaping rules about deals involving existing medical groups, noncompete clauses in contracts, and recruitment payments, among other things.

Some observers say the new rules, combined with some indications that federal prosecutors are more closely examining physician recruitment, could result in hospitals and medical groups being more conservative or careful in which relocation incentives they offer and being more strict about enforcing all terms of contracts once they are signed.

"Hospitals are now going to be much more concerned with enforcing their agreements," said Jeremy Miller, a health care attorney with Miller Health Law Group in Los Angeles. "Even though in the past they said they would let things slide, now they are feeling that they can't give anyone breaks because it could be misconstrued as not being compliant with the law."

"So that's another reason physicians need to be careful with what they find," he added.

The updated Stark law did not reduce or increase the amount of compensation or total value that can be offered in recruitment packages, said Mark E. Smith, executive vice president of Merritt, Hawkins & Associates, the Irving, Texas-based physician recruitment firm. But it did make some significant changes to the rules affecting physician recruitment into established practices.