A Review of Rules and Regulations Related to Community Need

Written by: Kelsey Anderson, MPH, Chris Carnahan


Hospitals rely on recruiting incentives to sufficiently staff service lines and provide needed care to the surrounding community. Although such agreements are necessary in today’s competitive market, they also introduce compliance concerns. Recruiting arrangements enacted by non-profit hospitals garner heightened scrutiny from the IRS and may threaten an organization’s 501(c)3 status. Arrangements should also be examined for compliance with the federal Anti-Kickback Statue, False Claims Act, Stark Laws, and potentially applicable state legislation.

Medical Staff Demand Analyses (MSDAs) include a thorough analysis of a hospital’s projected demand for primary care and specialty physicians according to the facility’s Stark Geographical Service Area. The MSDA can act as a justification of need for the recruitment of a given specialty. This demonstration of community need indicates that a physician relocated to the service area will benefit the surrounding community regardless of whether they join the hospital’s medical staff.1 Healthcare compliance professionals depend upon MSDAs or Community Needs Assessments as a source of commercial reasonableness as well as a valuable tool in strategic planning and physician staffing.2 A thorough MSDA will benefit multiple departments within a hospital or healthcare system (legal, strategic, recruiting) and can streamline internal processes.

Unlike most other strategic reports, an MSDA is conducted with the broader community in mind. Physician supply and demand are explored within the context of the entire service area. At Carnahan Group, analysts utilize the most relevant and up-to-date physician listings and conduct thorough verifications to ensure that an MSDA captures the time local physicians spend caring for patients within a given service area. Tailored physician-to-population ratios are applied, following the careful consideration of demographic data for the service area.

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