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Physician Self Referral Arrangements: Legitimate Business or Unethical “Entrepreneurialism”

An emerging legal and ethical controversy in the health care industry centers on physician investment in health care facilities to which they make patient referrals. This Article analyzes the policy debate surrounding these physician self referral arrangements as well as the various responses to such arrangements. The Article asserts that an effective legal or ethical response to self referral arrangements must acknowledge and balance both the possible pro-competitive effects of such arrangements and the inherent potential for abuses in this type of business practice. From this perspective, the most effective form of regulation consists of extensive structural guidelines which focus on the physician's referral behavior and limit restrictions on investment procedures. Such an approach would minimize referral abuses and conflict of interest concerns but promote business and competitive freedom.