Corporate consult: The pros, cons and red flags

Investment firms often ask physicians for their medical expertise as a way to gauge the company's financial health. Here are some tips on getting involved.

By Katherine Vogt, AMNews staff. May 23/30, 2005.

Sunil Dhawan, MD, a dermatologist, knows you don't have to be Warren Buffett to be sought after for investment guidance. He often fields calls from leading stock analysts over his lunch hour.

They seek his advice as a medical expert, hoping he can provide insights about products, treatments, the marketplace for medical conditions or anything else that might affect the health care companies they are analyzing. In return for his time and knowledge, Dr. Dhawan gets paid about $300 to $400 per hour.

"You certainly cannot make a living on it unless you do it a lot. But it's a nice way to see what the investment community is looking for. They have some nice ideas. And it does give you some money," said Dr. Dhawan, who practices in Fremont and Milpitas, Calif., the heart of Silicon Valley and the venture capital universe.

The calls typically last about 15 minutes to an hour, and Dr. Dhawan might take a couple of calls a week. He's been doing this type of work for about three years, and the more work he does, the more offers he gets.

Indeed, investment firms are increasingly calling on physicians for expert advice as they push to get the first word on the latest and greatest innovations in health care. The work they offer is attractive to some physicians as they look for extra revenue to offset declining reimbursements.

But the work has the potential to raise conflicts of interest, trapping physicians between their ethical obligations in medicine and their public comments to investors. And that could produce a backlash at medical institutions, as evidenced by the ongoing debate over strict ethics rules recently adopted by the National Institutes of Health. For this reason, experts warn physicians engaging in such consulting relationships to use caution.