Arizona Orthopaedic Society

Me listening to people tell me that what healthcare really needs is even more rules and regulations.

Stark is a wonderful example of how a seemingly simple regulatory idea can become pervasive. The original goal was straightforward: limit physician self-referral to reduce unnecessary services and save money. It began with laboratory referrals in 1989 and later expanded to imaging and other services. Over time, that became a complex framework reaching into physician ownership, compensation, employment, office leases, equipment arrangements, and more. Routine business relationships can require extensive review to determine whether they fit an exception. That compliance infrastructure has a measurable cost. In 2017, the American Hospital Association estimated that hospitals, health systems, and post-acute providers spent $38.6 billion annually complying with nine categories of federal regulation. That figure includes many requirements beyond Stark. Within that total, fraud-and-abuse compliance, which includes Stark and the Anti-Kickback Statute, cost an average community hospital approximately $340,000 annually. These are historical estimates, not current costs or a Stark-only total. For an independent practice, this becomes very concrete. Providing office imaging, sharing ancillary revenue, or entering certain leases and hospital agreements can require legal review, documentation, and ongoing attention to Stark’s exceptions. Those arrangements may be perfectly legitimate, but establishing and maintaining compliance still takes resources. A small practice pays those expenses from the same budget used for staff, equipment, and physician income. These costs and associated compliance risk can make remaining independent harder while giving larger organizations an advantage. Any serious assessment of the law should account for that effect. Before celebrating another law intended to save money or protect physicians, we should ask what it costs to comply, what legitimate activity it discourages, and whether it makes independent practice harder to sustain. The intended benefit is only part of the calculation.