A proposed joint venture involving ownership of an ambulatory surgery center (ASC) by a hospital and a physician group could constitute unlawful remuneration; however, the safeguards put in place would lower the risk sufficiently and the joint venture would not be subject to administrative sanctions in connection with the anti-kickback statute.
Joint venture. Under the proposed arrangement, the hospital and physician group would enter into a joint venture to own and operate an ASC with two operating rooms in a medical office building owned by the hospital and located on its campus. The hospital would initially develop a single hospital operating room in a space within the building. Upon receipt of necessary regulatory approvals, the hospital would then contribute the assets used to operate the operating room to a separate corporate entity after which the operating room would be operated as a Medicare-certified ASC. The physician group would then purchase a 50 percent share in the corporate entity. At the conclusion of this transaction, the hospital and the physician group would jointly own the corporate entity, which in turn would own and operate the two-operating room ASC.
Proportional investment. Physician investors' ownership in the physician group would be proportional to his or her capital investment. Additionally, each physician received at least one-third of his or her medical practice income for the previous fiscal year or previous 12-month period from the performance of procedures payable by Medicare when performed in an ASC.
Referral limitations. Physicians employed by the hospital or its affiliates would not make referrals to the joint venture ASC; nor would the hospital undertake any actions requiring or encouraging its medical staff to refer patients to the ASC. In addition, the hospital will continue to operate its own facilities for outpatient surgery.
Minimal risk. Under the proposed arrangement: (1) certain commitments would limit the ability of the hospital to direct or influence physician referrals; (2) each of the physician investors is qualified to invest in the ASC directly without destroying its eligibility for safe harbor protection; and (3) the amount of payment to a physician in return for the investment would be directly proportional to the amount of capital invested by that physician. For these reasons, while the proposed arrangement would result in income to investors that would not be protected by any safe harbor, it involved minimal risk of fraud or abuse.
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