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July 21, 1989

Conflicts of InterestProfits and Problems in Physician Referrals

JAMA. 1989;262(3):390-394. doi:10.1001/jama.1989.03430030078038

READERS of JAMA will not be startled to hear that the economic restructuring of medicine poses major moral and legal challenges. While most physicians have reconciled themselves, however uneasily, to prospective payment, aggressive utilization review, and preferred provider arrangements, many are deeply disturbed to find their own interests increasingly pitted against their patients'. First, many find themselves placed under incentives that reward or penalize them for their fiscal (im)prudence in ordering medical interventions for their patients. Second, physicians are investing as entrepreneurs in a burgeoning health care market. As researchers they may own stock in the same company that sponsors their investigations.2 As clinicians they may invest in such health care enterprises as freestanding diagnostic imaging facilities, minor emergency centers, and home health care agencies (The Wall Street Jounal. March 1, 1989:A-1, A-6). Physicians make these investments for a variety of reasons. Payers' preference for an outpatient over an