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Client Referral Rewards

Legitimate Marketing Or Unacceptable Practice?

Your client tells you they will send lots of friends your way, if only you will give them a discount for their goodwill. Or you decide that because your neighboring practice offers a $200 incentive for every referral, perhaps you should do this too in order to compete. You want to show your appreciation for the new business that might have otherwise incurred advertising costs, so why shouldn't you offer financial acknowledgement of the referral?

Hair salons and massage practices rely heavily on referral rewards programs. So why not Medical Spas or Cosmetic Centers? Well, if you are a physician and you offer consideration of any kind for referrals, you are in direct conflict with AMA Code of Ethics Opinion 6.021. You may also be violating your state Board of Medicine regulations, many of which simply defer to the AMA Code for ethical compliance. The opinion argues that the reward may incent the referring client to alter the information and expectations to others in an untruthful or unrealistic way. 

Early in my practice, prior to the AMA opinion, I succumbed for a short time to clients requesting rewards. The referred clients never seemed to have the same level of motivation to have a procedure as someone who came on their own accord. Now when a client asks me for a discount or a free service because they will send lots of friends, I simply tell them the following:

"A referral is the greatest compliment you could ever give me. And I appreciate the kind mention of your pleasant experience. I promise to always give you and those you send to me my very best work."

Reader Comments (5)

The mentioned code of ethics opinion: "Opinion 6.021 - Financial Incentives to Patients for Referrals

"Physicians should not offer financial incentives or other valuable considerations to patients in exchange for recruitment of other patients. Such incentives can distort the information that patients provide to potential patients, thus distorting the expectations of potential patients and compromising the trust that is the foundation of the patient-physician relationship. (I, II, VIII)."

This was always written for practices outside of aesthetics or other cash based practices. Cosmetic medicine is a world unto itself and marketing practices are part of the business. While I think that most docs would have a problem with kick backs for most referrals, I think that this is a different animal and I personally don't have an issue with it.

07.4 | Unregistered CommenterCho MD

I'm a little torn on this one. I don't want to see physicians offering kick-backs for 'real' medicine but for Botox? Common.

This essentially comes down to two sides that have been at war for the last 20 years; the side that loves 'rules' and uses them to try and prevent competition using justifications, usually around 'safety', and those who accept that there are reasonable limits that should be enforced, and then rely on the marketplace to sort out the winners and losers.

The fight between derms and plastics goes on, but it seems that they've found a common enemy in the OBGYNs and FPs who want to add Botox and laser hair removal to their list of services.

I'm reminded of a quote from Lawerence of Arabia in which Lawrence says, "So long as Arab fights tribe against tribe, so long with they be a little people, a petty people, small, barbarous, and cruel."

There are lots of legal issues to consider. From the FTC to state boards of medicine, I have counted more than a half dozen different sources of regulations that could impact a rewards program. Be very careful.

07.31 | Unregistered CommenterMichael S

Our newly hired aesthetician is referring her clients to our NP for botox. She is counting on getting kickbacks for building this area of the business and as the practice manager, I'm unsure of how to compensate for such referrals.

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