“But these guys down the street are doing a deal, so why can’t I?” questioned the frustrated physician.

“Well, who knows exactly what they are doing, and even if they are doing a deal, that does not mean it is right, right?” responded the mildly patient health care lawyer.

We seem to hear the above banter all too often in health care today. One medical practice may appear to be doing something that is contrary to a statute or regulation, and another practice wonders why they are being told they cannot do that same thing. So what is going on?

Well, today’s health care industry is overwhelmingly regulated and complex. Not that there is anything wrong with regulation, but we seem to be faced with a fair amount of opportunity for confusion in how the industry is being regulated.

Let’s take the Stark Law for example. A massive federal regulatory program in existence for about twenty years that basically prohibits physicians from profiting off of their referrals of Medicare patients. That, of course, is a gross generalization. Since 1989, the initial version of the Stark Law has been expanded and undergone three phases of official rulemaking plus various additional regulatory tweaks here and there that make interpretation and enforcement of the law somewhat, shall we say, complicated. You add in various state mini-Stark Laws, and you just double the complexity. How complicated is all this for just one program? Well, there are attorneys who pretty much do Stark Law for a living.

So what is the point? Be careful. When a medical practice sees a deal out there in the health care marketplace and they are told by someone else who is participating in that deal, “heck yah, our consultant told us this is totally legit,” your response should be to do this—your own due diligence.

What is due diligence? This is a phrase borrowed from the securities and business world about conducting an independent investigation before making a deal. Applied to the health care compliance world, due diligence generally means to do your own research and analysis on a proposed transaction or deal to make sure you will not harm your practice. Potential harm to consider would be whether a deal might get you into hot water with federal regulators, say, for instance, if the deal was not permitted under the Stark Law.

Is due diligence enough? Probably not because of the complexity and confusion in health care. But, it is a good first step rather than just relying on what someone else was doing. Researching and analyzing any transaction or deal requires a detailed look at the facts unique to your practice. What may work for one practice, may not really work for another practice.

In sum, just because someone else appears to be doing something, that does not mean you should too. Do your own due diligence first.