Physician Recruitment Fraud

There appears to be a growing trend toward the fraudulent inducement by some hospitals of physicians to relocate their practices and move to a new hospital cachement area based upon false representations as to the assistance the hospital can or will provide to establish the physician in the community, the "pent up need" for the physician's services in the community and the existence of a favorable payer mix in the community.  Many of these representations are made by head hunters out to score a "head" at all costs.  A physician with a useful specialty for the hospital moves or starts his or her practice in the community and frequently finds that he or she is treated pretty much an employee without the security of a salary.  The hospitals use the inducement of an "income guarantee" for the first year to help jump start the practice.  The income support usually runs for a year and then disappears.  The amount advanced in the first year is then converted into a loan with the balance to be forgiven over the next three years if the physician continues to practice in the community.

The problem is that there is not a enough business in the community either because established referral patterns are difficult to break down or there are political factions within the community which may or may not have been created by the recruiting hospitals that make referrals to the physician supported by the hospital unlikely.  The result is that a physician can find himself or herself in an untenable economic environment, but trapped from moving elsewhere because of the large debt to the hospital. The prospect of litigation with a hospital by a new physician with a struggling practice can be daunting. Many of the so-called recruitment contracts look the same, but carry different ramifications.  One prominent hospital system guarantees a fixed amount toward expenses and income, but when setting out an example showing a substantial six figure income understates the expenses way below the MGMA median for similar practices.  When the expenses consume the guarantee the actual first year income is substantially less than "guaranteed."

Short story: physicians responding to recruitment deals should not rely on physician recruiters and oral predictions of success by hospital administrators. They would do well to assume that any inducing statement is false unless the hospital is willing to put it in writing.  The political situation and existing referral patterns should be checked out well in advance or acceptance and the proposed contract should be referred by an attorney who is familiar with recruitment deals.  Always check to see if the hospital would be willing to employ the physician for four years instead of the one year guarantee.  A reluctance to employ should raise some red flags of caution. 

Comments

[Andy Monin]

I appreciate your post. We are in the process of hiring a 24 year old inside sales person who has spent the last 9 months at one of these physician's recruitment firms. The stories that come our of her mouth are truly unbelievable. Great blog... great information! Keep it up!

[Dr. Sam Sprehe]

I have been a victim of this exact fraud, and would be happy to testify or give a lecture about the trap.