Hospitals are being accused of violating federal laws designed to keep financial considerations from influencing doctors' decisions, Kaiser Health News reports with The Daily Beast.

What's happening: Various lawsuits allege that hospitals are overpaying doctors or offering incentives like free office space in exchange for the downstream revenue that doctors create through referrals.

Background: It's illegal for doctors to refer patients for services that the doctor has a financial interest in, and for hospitals to pay doctors for referrals.

  • These measures are supposed to help keep costs down by discouraging doctors from using excessive, unnecessary health care.
  • The lawsuits are raising the question of whether financial arrangements like high doctor salaries count as illegal kickbacks.

The other side: One hospital facing a lawsuit said that the generous salaries that it gave doctors were the only way it could provide specialized care to local residents.

The bottom line: Lawsuits aside, there's no disputing that hospitals are gobbling up physician practices, the market is becoming more consolidated and doctors generate significant revenue for hospitals.

Go deeper: Doctors bring in a lot of money for hospitals

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