IRS guidelines define community need
In a 1994 settlement with the Internal Revenue Service, Hermann Hospital in Houston agreed to pay more than $1 million in fines for improper inurement to recruit and retain physicians for a three-year period from 1989 to 1992. The hospital also agreed to abide by Hospital Physician Recruitment Guidelines set forth in the IRS settlement. In return, the hospital was allowed to maintain its tax-exempt status.
The guidelines prohibit the hospital from offering incentives to physicians with medical staff privileges unless these doctors meet specific performance requirements. The guidelines also say there must be a demonstrable community need to recruit physicians into the market. Here are the IRS' criteria in the Hermann Hospital settlement to justify providing allowable incentives to recruits:
* a population-to-physician ratio that is less than the Graduate Medical Education National Advisory Committee's ideal ratio for a particular specialty;1
* a documented lack of availability of a particular service, or long waiting periods for that service;
* designation of the community as a Health Professional Shortage Area as defined by law;2
* a demonstrated reluctance of physicians to relocate at the hospital due to the hospital's location, such as a rural or inner-city area;
* a reasonably expected reduction in the number of physicians of a particular specialty due to retirement within three years;
* a documented lack of physicians serving indigent or Medicaid patients, providing that newly recruited physicians commit to serving a substantial number of such patients.
References
1. Copies of the GMENAC report can be found at U.S. government depository libraries under catalog number HE20.6002:M46/4/V.1-7.
2. 42 CFR Sections 5.1-5.4. *
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