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High doctor salaries raise legal questions

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