Rewarding patients for referrals: good marketing or bad practice?

Did you know that patient referral incentives could put you in breach of your professional obligations?

Ruanne Brell, Medico-legal Advisor, and Dr Walid Jammal, Senior Medical Advisor-Advocacy at Avant, in an article first published in Australian Doctor, warn that rewarding patients for referrals could put you in breach of your professional obligations:

Example: Dr S’s new patient mentions that she decided to come in for an appointment because her neighbour has been telling everyone how brilliant Dr S is. This isn’t the first time this patient has referred friends and Dr S would like to say thank you. She thinks it would be nice to send a $200 gift voucher for a local restaurant.*

For medical practices, as for other businesses, great word of mouth is very valuable and it is something you want to encourage. In some industries it is not unusual to pay referral fees, and we have heard of doctors being asked by patients if they will pay such fees. You may have seen advertisements for “refer a friend” programs. Or, when a patient is a great source of referrals, it could seem like a nice gesture to thank them by sending them a gift.

The problem for doctors is that paying for referrals could put you in breach of your professional obligations.

What does the law say?

Under each state and territory’s Health Practitioner Regulation National Law, it is unprofessional for a doctor to give someone a benefit, or offer to do so, for referring another person to you. In the NSW legislation, “benefit” is specifically defined as money, property or anything else of value. Even in the other states and territories where the term has not been defined, it is likely that what constitutes a benefit will be interpreted broadly. Therefore, it could include direct payments, gift cards or vouchers as well as other objects or goods. The person receiving or being offered the gift does not have to be a patient themselves.

It is worth noting that repeated occurrences of unprofessional conduct can sometimes amount a benefit could be interpreted as direct payments, gift cards or vouchers to the more serious offence of professional misconduct, if those instances when considered together are sufficiently serious to warrant a finding of misconduct. Therefore, arguably, a doctor who had a regular practice of paying patients for referring other patients for treatment could be found to have committed professional misconduct, depending on the individual circumstances. Such findings can lead to reprimands, sanctions or registration conditions being imposed on the practitioner.

What if you advertise?

This sort of conduct may also be a breach of the advertising provisions of the National Law, which state that health services cannot be advertised in any way that provides inducements to someone to use a health practitioner’s services. The Medical Board of Australia Guidelines for advertising- regulated health services reinforce this position. Breaches of the advertising provisions attract fines of $5,000 for individuals and $10,000 for corporations.

Ethical considerations

The legislative provisions are incorporated into the general guidelines for doctors in the Medical Board’s Good Medical Practice:

A Code of Conduct for Doctors in Australia, which states that it is not good medical practice to offer inducements to patients.

Key take-away

Word of mouth is a priceless endorsement, but do not feel the need to financially reward someone for thinking you are a great doctor. On the contrary, paying someone with money, gift cards or in any other form, for referring others to you is unprofessional and may result in disciplinary action. If you are approached by a patient or anyone else for such a payment, politely declining on legal and ethical grounds is the best response.

* The scenario is based on Avant claims experience to date. Information has been de-identified to preserve privacy and confidentiality.