Physician-owned hospital disclosure rules

A hospital that is partly owned by physicians carries a disclosure duty that no other kind of hospital has. Federal law requires it to say, on any public website for the hospital and in any public advertising for the hospital, that physicians own or have invested in it. The rule is short, but questions about it come up in every campaign: does a paid social post count, does a billboard count, is a hospital name enough, and what happens when an ad goes out without the line. This guide answers those questions from the statute, the regulation and what CMS said when it finalized the current wording, and it separates the advertising rule from the written notices that patients and referring physicians owe each other.

Two related topics have their own guides and are not repeated here. The wider set of rules for hospital marketing teams, including patient stories, fundraising and rankings, is in our guide to hospital marketing compliance. Public reporting of payments that drug and device makers give to physicians, which is a different kind of financial tie, is in our guide to Open Payments and marketing. This guide covers what is particular to physician ownership of a hospital.

This is general information, not legal advice. Whether your hospital meets an exception to the physician self-referral law is a question for health care counsel who knows your ownership structure. Sources cited were checked on October 30, 2026: 42 U.S.C. 1395nn, 42 CFR 411.362 and 411.363, 42 CFR 489.3 and 489.20, 42 CFR 482.13, the CY 2016 Physician Fee Schedule final rule (80 FR 70886, discussion at 80 FR 71334 to 71337), the CMS Physician-Owned Hospitals and Self-Referral Disclosure Protocol pages, 16 CFR 255.5, 15 U.S.C. 45 and 52, and the FTC Policy Statement on Deception.

Which hospitals the rule reaches

The physician self-referral law, section 1877 of the Social Security Act and 42 U.S.C. 1395nn, bars a physician from referring Medicare patients for designated health services to an entity in which the physician or an immediate family member has a financial relationship, unless an exception applies. Hospital services are designated health services, so a physician who owns part of a hospital can refer patients there only if the hospital fits an exception. Two exceptions cover ownership of a hospital: the rural provider exception in 1395nn(d)(2) and the whole hospital exception in 1395nn(d)(3). CMS explains both on its Physician-Owned Hospitals page.

Since the Affordable Care Act, both exceptions require the hospital to meet the conditions in 1395nn(i)(1), which CMS put into regulation at 42 CFR 411.362. Under 411.362(b)(1), the hospital must have had physician ownership or investment on December 31, 2010 and a Medicare provider agreement in effect on that date. A “physician owner or investor” under 411.362(a) includes a physician or an immediate family member of a physician, and the interest can be direct or indirect, held through any number of entities in between.

The public disclosure duty sits inside those conditions. It is not a stand-alone advertising rule. It is one of the things a hospital must do to keep the exception that makes its physician owners’ referrals lawful, which is why a missed disclosure is treated as a self-referral problem and not only as an advertising slip.

What must be disclosed and where

The statute, at 1395nn(i)(1)(C)(iv), says the hospital discloses the fact that it is partially owned or invested in by physicians on any public website for the hospital and in any public advertising for the hospital. The regulation, 42 CFR 411.362(b)(3)(ii)(C), says the hospital must disclose on any public website for the hospital and in any public advertising for the hospital that the hospital is owned or invested in by physicians.

Note the word any. In the 2015 rule, CMS recalled that when it first wrote the requirement into regulation in 2010, commenters asked it to exclude billboards, radio and television and confine the duty to print, and that it answered it had no flexibility to exclude types of advertising media, because the statute refers to any public advertising. In the 2015 rule CMS added that the facts and circumstances of a communication, not the medium, decide whether it is public advertising for the hospital.

What counts as a public website for the hospital

The regulation lists, by way of example, sites that are not a public website for the hospital: social media websites, electronic patient payment portals, electronic patient care portals and electronic health information exchanges. In the 2015 rule, CMS explained that a social media site is operated by a social networking service, not by the hospital, and that portals are open only to patients who have already been treated, to whom ownership has likely been disclosed already.

Two points from that discussion matter for a web team. First, CMS said the list is not exhaustive, because new kinds of sites keep appearing. Second, CMS said that even when a site is not a public website for the hospital, the content on it may, depending on the facts and circumstances, be public advertising for the hospital that needs a disclosure. A hospital’s page on a social network does not need the statement as a website, but a paid promotion run through that network may need it as an advertisement.

Microsites, campaign landing pages, service line sites on their own domain and location pages are not on the excluded list. A team that builds a separate site for a joint replacement program or a new location should treat it as a public website for the hospital unless counsel concludes otherwise.

What counts as public advertising for the hospital

42 CFR 411.362(a) defines public advertising for the hospital as any public communication paid for by the hospital that is primarily intended to persuade individuals to seek care at the hospital. That gives two tests: the hospital paid for it, and its main purpose is to bring patients in.

In the 2015 rule CMS gave examples of communications it does not consider public advertising for the hospital: communications made mainly to recruit staff or for similar human resources purposes, public service announcements issued by the hospital, and community outreach issued by the hospital. CMS said these examples are not a complete list and that each communication depends on its own facts and circumstances.

A commenter asked CMS to add search engine results and online listings of area hospitals to the excluded examples, arguing that nobody makes a medical decision from a listing. CMS declined. It said the test is whether the communication is primarily intended to persuade individuals to seek care at the hospital, not whether a person is likely to make a medical decision based on it. For paid search ads, that answer means the ad is judged by its purpose and who paid, the same as a print ad.

Illustration: a hospital pays for a search ad that reads “Same-week knee consults at [hospital]. Book online.” The hospital paid for it and its purpose is to bring patients in, so it fits the definition. A job ad for [role] at the same hospital, or a sponsored flu season reminder with no call to book, sits closer to the examples CMS described as outside the definition, though counsel should look at the actual wording.

What wording is enough

Under 411.362(b)(3)(ii)(C), any language that would put a reasonable person on notice that the hospital may be physician-owned is deemed a sufficient statement of physician ownership or investment. In the 2015 rule, CMS said statements such as “this hospital is owned or invested in by physicians” or “this hospital is partially owned or invested in by physicians” would meet the standard. It said statements that the hospital is founded by physicians, managed by physicians, operated by physicians, or part of a health network that includes physician-owned hospitals would also meet it.

CMS also said a hospital’s name, by itself, could meet the standard, and gave a hypothetical hospital name built on the word Doctors as an example. A marketing team should not lean on that alone without counsel’s view, because a name that suggests physician involvement to one reader may not to another, and a plain sentence costs very little space.

CMS did not prescribe a location or font size. It said the hospital has flexibility, provided the disclosure would put a reasonable person on notice. It repeated its earlier view that on a website the disclosure should be in a conspicuous place, on a page that current or potential patients visit, such as the home page or the about us section, and should be clear, readable and in a size generally consistent with other text on the site. A statement in a light gray footer smaller than the rest of the page works against that view.

Fitting the statement into each format

Since the rule reaches any public advertising for the hospital, the practical question is how to fit the line into formats with little space. None of the following placements is named in the regulation; they are ways to meet the reasonable person standard that a team can review with counsel.

Website: a sentence in the site footer on every page, plus a fuller statement on the about page, at a size close to body text.
Search ads: the statement in a description line, or wording such as “physician-owned” in the headline, since a footer is not available.
Display and paid social: the statement in the image or caption text that runs with the ad, not only on the landing page.
Video and streaming audio: a spoken line, an on-screen line held long enough to read, or both.
Radio: a spoken line in the script.
Billboards and print: a line in legible type, sized for the viewing distance of the format.
Direct mail and email campaigns: the statement in the body, not only in a linked page.

Build the line into the templates, not into each campaign brief. The hospital marketing guide makes the same point for the footer and ad templates; the work here is listing every template the hospital pays for, including those an agency or a service line manages on its own.

When a disclosure is missed

The disclosure is one of the conditions in 411.362 that a hospital must meet to use the rural provider or whole hospital exception. Under 1395nn(a)(1), when no exception applies, the physician may not make the referral and the entity may not bill Medicare, or anyone else, for designated health services furnished under it, and under 1395nn(g)(1) no Medicare payment may be made for a designated health service provided in violation of that bar. 1395nn(g) also requires refunds of amounts collected in violation and provides for civil money penalties.

In the 2015 rule CMS said that a physician-owned hospital that finds it failed to meet the website or advertising disclosure requirement should use the Self-Referral Disclosure Protocol to report the resulting overpayments. The CMS protocol page has special instructions for submissions that involve only noncompliance with 411.362(b)(3)(ii)(C).

CMS also explained how long a failure lasts. For the website, the period of noncompliance is the period during which the hospital failed to meet the requirement, and September 23, 2011, the date hospitals had to be in compliance, is the earliest possible start. For an advertisement, the period is the duration of the ad’s predetermined initial circulation, unless the hospital amends the ad sooner. CMS’s example was an ad paid for in one issue of a monthly magazine: the period would likely be that month of circulation, even if copies stayed in waiting rooms after it. CMS said the example was general guidance, not a bright-line rule.

For a marketing team, this means two records are worth keeping: the date the website statement went live and any date it was removed during a redesign, and, for each paid ad, its run dates and the final creative showing the statement.

The patient notices are separate from marketing

The website and advertising rule is one of several disclosures. The others are made to individual patients, and they belong in intake materials and referral workflows, not in ads.

Under 42 CFR 489.20(u)(1), a physician-owned hospital, as defined in 489.3, must give written notice to each patient at the beginning of the hospital stay or outpatient visit that it is a physician-owned hospital, to help the patient make an informed decision in line with the patient rights rule at 42 CFR 482.13(b)(2). The notice should say, in a manner reasonably designed to be understood by all patients, that the hospital meets the federal definition of a physician-owned hospital and that a list of its physician owners or investors, and immediate family members of physicians who own or invest, is available on request and must be provided when asked. For a planned stay or visit, it begins when the hospital provides the package of information on preadmission testing and registration.

Under 489.20(u)(2), each physician on the medical staff must agree, as a condition of membership or admitting privileges, to disclose in writing any ownership or investment interest held by the physician or an immediate family member to every patient the physician refers to the hospital, at the time the referral is made. 411.362(b)(3)(ii)(A) sets a parallel condition for the exception: the referring physician owner discloses their interest, and the treating physician’s if applicable, by a time that permits the patient to make a meaningful decision about care. Under 489.20(v), the notice duties in 489.20(u) do not apply to a physician-owned hospital that has no referring physician with an ownership interest, held directly or through an immediate family member, if the hospital signs an attestation to that effect and keeps it in its records.

A different notice applies when no physician is on site at all hours. Under 411.362(b)(5)(i), if the hospital does not have a physician available on the premises during all hours it provides services to the patient, it must disclose that and receive a signed acknowledgment before providing services. 489.20(w) sets a similar notice for any hospital without a doctor of medicine or osteopathy present around the clock, and requires a posted notice in a dedicated emergency department that lacks one.

None of these notices replaces the website and advertising statement, and the advertising statement does not replace them. A campaign landing page can describe the patient notices, but it cannot deliver them.

Physician owners in ads and on practice websites

When a physician who owns part of the hospital appears in the hospital’s advertising and speaks well of it, the FTC’s endorsement rules apply alongside the self-referral rule. Under 16 CFR 255.5, when a connection between the endorser and the seller might materially affect the weight or credibility of the endorsement and the audience would not reasonably expect it, the connection must be disclosed clearly and conspicuously. A business relationship can be a material connection, and an ownership stake in the hospital is a business relationship, so a testimonial from an owner should say so near the testimonial, in addition to the hospital’s general statement.

A physician practice’s own website and ads are a separate case. The hospital rule covers communications paid for by the hospital. A practice page that tells patients its surgeons operate at a hospital they partly own is not hospital advertising under that definition, but the ownership is a fact patients may weigh. Saying it plainly on the page fits the purpose CMS described, that the public should be on notice because ownership may inform a person’s medical decisions, and it keeps the page in line with the written disclosure the physician owes each referred patient.

The exception also bars making ownership depend on referrals. Under 411.362(b)(3)(ii)(B), the hospital may not condition any physician ownership or investment, directly or indirectly, on the physician making or influencing referrals or otherwise generating business. Investor updates, physician liaison scripts and recruitment materials should not tie anyone’s ownership to the number of patients they send.

Words that can mislead: independent, unbiased, second opinion

Under 15 U.S.C. 45, unfair or deceptive acts or practices in commerce are unlawful, and under 15 U.S.C. 52 it is unlawful to disseminate a false advertisement to induce the purchase of services. The FTC Policy Statement on Deception looks at whether a representation, omission or practice is likely to mislead a consumer acting reasonably in the circumstances, and whether it is material.

Some wording sits badly next to physician ownership. A hospital that is not part of a larger system may describe itself as independent in that sense, but “independent advice”, “unbiased surgeon recommendations” or “a second opinion with no stake in your choice” from physicians who own the hospital is a representation that the ownership contradicts. Leaving the ownership out of a page that makes such claims is the kind of omission the deception statement describes. The fix is to drop the claim, not to bury the ownership line further down.

Capacity and expansion announcements

Under 411.362(b)(2), a hospital relying on these exceptions may not increase its operating rooms, procedure rooms and beds beyond the number for which it was licensed on March 23, 2010, or on the effective date of its provider agreement if it first had one later that year, unless CMS approves an exception under 42 CFR 411.363. The CMS Physician-Owned Hospitals page points to the request process and lists requests it has received.

This affects marketing more than it seems. An announcement of new operating rooms, more beds or an added procedure suite should match what the hospital is licensed for and, where needed, what CMS has approved. Copy announcing expansion should not run while a request is still pending, and a team should confirm the licensed count with the compliance office before describing growth in numbers.

Illustration: two ways to run a joint replacement campaign

Illustration: version one runs search ads, a billboard and a radio spot for a joint replacement program at a physician-owned hospital. None includes the ownership statement, the campaign landing page sits on a separate domain with no footer statement, and a surgeon who owns part of the hospital says in the radio spot that patients get “an unbiased opinion”. The hospital site itself has the statement, but only in small gray type on the privacy page.

Illustration: version two puts “[Hospital] is partially owned by physicians” in a search ad description line, on the billboard in legible type and in the radio script. The landing page carries the same sentence in the footer at body text size and on its about section. The surgeon’s spot says “I am one of the physician owners of [hospital]” and drops the unbiased opinion line. The team keeps the run dates and final creative for each ad, and the intake team confirms the written notice goes out with the preadmission package.

Checklist

Has counsel confirmed which exception the hospital relies on and that 411.362 applies?
Is the ownership statement on every page of every public website for the hospital, including microsites and landing pages, in a conspicuous place and readable size?
Does every paid communication meant to bring patients in carry the statement in the ad itself, whatever the medium?
Are the statement and its size built into the templates that agencies and service lines use?
Are run dates and final creative kept for each paid ad, and the dates the website statement was live?
Do physician owners who appear in ads disclose their ownership near their endorsement?
Are “independent”, “unbiased” and similar claims removed where physician owners make or appear in them?
Does any capacity or expansion announcement match licensed numbers and any CMS approval?
Do intake materials deliver the written physician-owned hospital notice and, if applicable, the notice about physician presence, separate from marketing?
Do referring physician owners give written disclosure at the time of referral?

How we help

We build websites, local search, Google Ads and AI front desk tools for independent practices and health businesses. For a physician-owned hospital or its owner practices, that means a website with the ownership statement built into the footer and about page, ad templates that carry it in every format, and intake flows that point patients to the written notices without replacing them. We do not decide whether your hospital meets an exception; your counsel does. Our tools are built with HIPAA in mind. We confirm in writing what a BAA covers before any patient information flows through a tool, and if it is not covered, we do not route patient information through it. We are not a healthcare provider and we do not give legal or medical advice. We do not sell lead lists and we do not pay for referrals. For the wider rules, see our healthcare marketing rules hub.

Does a physician-owned hospital need the ownership statement on its social media page?

Under 42 CFR 411.362(b)(3)(ii)(C), social media websites are not a public website for the hospital. CMS said in 2015 that content on such sites may still be public advertising for the hospital, so paid promotions there need their own review.

Do search ads need the disclosure?

CMS declined in 2015 to exclude search engine results from public advertising. A search ad paid for by the hospital and meant to bring patients in fits the definition in 411.362(a).

What exact words satisfy the rule?

Any language that would put a reasonable person on notice that the hospital may be physician-owned. CMS said “this hospital is owned or invested in by physicians” would meet the standard.

Do recruitment ads need the statement?

CMS gave communications made mainly for recruiting staff as an example of what it does not consider public advertising for the hospital, while saying each communication depends on its facts.

Is the website statement enough to inform patients?

No. The hospital must also give each patient a written notice under 42 CFR 489.20(u)(1), and referring physician owners must disclose their interest in writing at the time of referral.

What should a hospital do if it finds ads that ran without the statement?

Talk to counsel. CMS said the Self-Referral Disclosure Protocol is the way to report resulting overpayments and has special instructions for this type of noncompliance.

Sources

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