Physicians’ Financial Interests

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The ancient Hippocratic oath and other modernized oaths have been penned to uphold new physicians who swear it to stern ethical and professional standards. Themes of operating with “conscience and dignity” and prioritizing the health of patients have been quoted by the majority of practicing doctors in the field of medicine. However, this profession that has been held in such high esteem, has undergone various structural changes that could potentially compromise the ethics they swore by.

The healthcare system has undergone a drastic socioeconomic change. With the emergence of for-profit hospitals and the capability of practitioners to align with pharmaceutical and medical product companies, the aspect of healthcare as a big business is apparent now more than ever. Some medical professionals have taken an interest in the healthcare marketplace by conducting arrangements and financial alliances, which could be both beneficial in enhancing the quality of care and ethically challenging for those interested in self-referral. Doctors who engage in these actions with motivations that epitomize the latter may opt to consider the interests of their own financial game over a patient’s interests – a major concern for patients, other medical professionals, leaders, lawmakers and even the former president. Former Commander-in-Chief Barack Obama frequently alluded to doctor” financial interests and launched a disclosure program in the Affordable Care Act (ACA) to reveal the hidden financial relationships in medicine.

The United State’s healthcare’s large consumption of government, business, and household budgets through medical professionals has sparked conversation about the financial interests and incentives of doctors. This piece will highlight the financial relationships between doctors and third party businesses and its effect on the quality of care.

Does the American Public Trust Physicians?

The “bond of trust” established between doctors and patients has been and will remain to be the foundation of quality care. When this relationship begins to erode, the doctor’s office, hospitals, and medical facilities become a place of unrest and hostility for both patients and physicians alike. And without support, all parties involved will pay the price. The National Institute of Mental Health conducted a poll over a span of 48 years – from 1966 through 2014 – in hopes of shedding light on on the public’s changing perception of members of the U.S. medical profession over time, and the results were alarming.

The Institute found that the public trust in physicians had declined sharply over the past half century. Researchers asked Americans to rate their confidence in the leaders of the medical profession as “low,” “very low”, “high” or “very high”. In 1966, nearly 75% of Americans claimed they had great confidence in the profession and that they trusted their doctors. In 2012, only 34% of the population felt the same. [1] Researchers attribute this decline in trust to the cultural shifts the nation has gradually undergone. The state of the healthcare system is a concern for most residents, and researchers think that people are identifying the medical profession and its leaders as contributors to the system’s complications. But the major culprit in the lack of trust exhibited by the public stems from how doctors perceive a doctor’s motivations, researchers say. Physicians are not viewed as active advocates for public health and healthcare issues, they’re considered an interest group solely concerned with issues within their own profession and personal economic affairs.

The widening patient-physician “trust gap” is an indicator of a serious issue. Are the suspicions from the public true? Is the scrutiny surrounding the interests of doctor’s warranted? Whether the answers to these questions are yes or no or somewhere in between, it’s important for doctors to take these trust levels into account. Medical professionals are required to maintain a healthy relationship with patients to sustain a thriving healthcare system.

Conflicts of Interest

Within the realm of the field of medicine, there have been several threats to professionalism and integrity. These opportunities could reinforce ethical implications in areas involving third parties (pharmaceutical companies, medical devices, biotechnical companies), a doctor’s ownership of medical facilities, and the systems and methods used for payments. The financial relationships some doctors have indulged in has caused conflicts of interest to arise and has given some physicians ample opportunity to “game the system” for their own financial gain.

Medical Product Companies, Pharmaceuticals, and Biotechnical Companies

Some physician’s keen interest in distributorships and healthcare companies has created opportunities that could both improve treatment and overall care for patients and also present a clear risk of illegalities under federal law. Also, the collaboration between companies and doctors may assist in the erosion of the patient-doctor relationship. Patients may begin to doubt if the medical products and treatment options presented are in their best interest, or in the best interest of the distributor or manufacturer the medical product belongs to (which would reward a doctor for the sale and use of a product). No matter which way this partnership is perceived, it’s evident that the interests of patients and a company can become blurred easily.

A real life example of this phenomenon and the ethical complexities that come along with it, is the case of Dr. Hamid Abbasi. The Minnesota physician has innovated a new type of back operation that promotes satisfying results with minimal physical trauma. In the video presentation on Dr. Abbasi’s website, he explains that a very small incision is made in the back, causing less blood loss than more invasive procedures. He claims that after the operation, some patients get discharged from the practice on the same day they underwent surgery, with only a few hours of recovery needed. However, not only are benefits available for the patients who undergo the emergency medical procedure, Dr. Abbasi reaps some benefits as well. As an investor in the distributor that sells the medical device required for this operation, he receives some of the profits from his patients’ devices. According to federal records, this medical product company distributed at least $365,325 to physician partners over the course of only five months – one of the largest payouts ever recorded of its kind. [2] In collaborations with large sums of money as incentives, it’s tempting for doctors to prioritize financial interests over the best alternatives for patients.

This arrangement is just one of thousands that occur between doctors and healthcare companies. Over the past few years, the federal government has made efforts to cast these financial efforts in the hospital, as a push towards more transparency in the field of medicine, and as a way to repair the patient-doctor relationship.

It’s no secret that federal regulators have been critical of these collaborations. Even the former president, Barack Obama, has frequently spoken on the topic, and worked to implement legislation that makes these financial partnerships public and accessible for the American people to see. In fact, in some states is required for doctors to disclose these financial conflicts of interest so the patients are aware of what is going on.This disclosure requirement gives patients the option of deciding to consult with another doctor for a second opinion.The Board of Medical Practice is hoping to get this regulation passed in all states. In Minnesota, where Dr. Abbasi practices, doctors have to consult with their patients about their business dealings, especially when this product is actively being recommended to their patients. If they fail to do so, they’ll be facing penalties against their medical licenses. Lawmakers are encouraging patients to ask their doctors questions as to why they are making certain decisions or administering certain treatments. The more clarification visitors can garner from doctors, the more likely they are to make a decision that will provide them with the most favorable outcomes.

Physician-Owned Medical Facilities

Physicians who own hospitals are commonly known for the excellent healthcare they provide. Actually, in January, the Physician Hospitals of America (PHA) made an announcement that “16 of the 31 winners of the prestigious inpatient Patient Satisfaction Summit Award were physician-owned hospitals. However, despite their high accolades, the future expansion of these hospitals is not guaranteed. Owners are experiencing serious issues with regard to the growth and development of more physician-owned hospitals. Although there are less administrative barriers between patients and doctors in these hospitals, critics have questioned the intentions of owners and the doctors who choose to work in these medical facilities.

One of the major barriers these hospital owners has faced was in 1989 when a Congressman by the name of Pete Stark implemented the “Stark law.” [3] It was enforced to prohibit physicians from referring Medicare and Medicaid patients to facilities in which they had a financial interest in. But owners of physician-owned hospitals by operating heavily through the “whole hospital” exception in the clause. This loophole allowed referring doctors to obtain financial stakes in other hospitals as long as they were licensed to perform services at the hospital being referred.

The Affordable Care Act

But physician-owned hospitals have never been more impacted than they were by the announcement of the Patient Protection and Affordable Care Act. The act, implemented in March 2010, strictly prohibits physician-owned hospitals from launching or expanding. This includes a ban on adding more procedure rooms, operating rooms, and beds. However, the reform does not limit emergency rooms in these hospitals. This act has also placed a vast emphasis on increasing transparency.


Blendon, Robert J., John M. Benson, and Joachim O. Hero. “Public Trust in Physicians — U.S. Medicine in International Perspective.” New England Journal of Medicine 371.17 (2014): 1570-572. Web.

Carlson, Joe. “Doctors’ Financial Interests, and Potential Conflicts, Have Become Public Information.” Star Tribune. Walser, 3 May 2015. Web. 17 Mar. 2017.


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