Sharing an ancillary service with a co-investor

April 7, 2006

I'd like to offer ancillary radiology services. However, my office is too small for the equipment, so I'd like to rent space in a building next door. Another solo practitioner would share the facility and costs with me. Is there anything wrong with this arrangement?

Q: I'd like to offer ancillary radiology services. However, my office is too small for the equipment, so I'd like to rent space in a building next door. Another solo practitioner would share the facility and costs with me. Is there anything wrong with this arrangement?

A: Yes. The Stark law prohibits doctors from owning radiology services unless they are provided in the same building as the doctor's medical office or in a "centralized location." To qualify as a centralized location, the space must be owned or rented by the referring doctor on a 24/7 basis. It can't be shared with a co-investor.

The only way to co-own the radiology equipment is for both of you to have medical office space in the same building as the radiology suite. Even then, you may not be home free. Check whether your state has its own laws on doctor ownership of ancillary services.