Providers are often in a position to make referrals: either to other professionals, to services, or to products. As business owners, many providers also refer or incentivize colleagues to participate in business opportunities or other endeavors. While these referrals may seem harmless, the Federal Trade Commission (FTC) governs what you can and cannot do.
One big concern here: what happens when the lines blur between referrals that help patients and referrals that help you? Common scenarios in which this arises:
- You recommend that a patient take nutritional supplements, and you encourage them to purchase them from ABC Nutritionals. You sell ABC products in your clinic and earn a small commission on your sales. You also genuinely believe them to be higher quality than products otherwise available to your patient.
- You took a business course last year and, after implementing the lessons in your practice, you’ve seen your clinic grow exponentially. The school which offered the course has offered you a $50 gift card for each person you can refer to sign-up. You share it with your friends via email, telling them how much it helped you.
- You rent space in a yoga studio where you see patients. After completing rehab, many patients are seeking a new workout regimen. The studio has offered you a commission on any patients who purchase memberships. You maintain a membership yourself and think your patients would benefit from their gentle programs.
Honesty and clarity are crucial
Many companies offer commissions on referrals for a reason: when someone you trust recommends a product or service, your enthusiasm for purchasing it is heightened. This enthusiasm will likely diminish, however, if you knew that the referrer was being compensated for the referral. It’s for this reason that the FTC created an Endorsement Guide, the purpose of which is to promote honest and non-misleading endorsements.
If you’re endorsing something, it’s crucial that you’re as upfront as possible. It’s easy to accidentally deceive a patient about the relative benefits of items you sell in your clinic. You purchase foam rollers for $20 and sell them for $30. Rather than purchasing a foam roller at Target, your patient assumes yours is of a medical grade and is the “best” for them, so they buy it from you. Were you transparent about how that sale benefited both you and the patient? In-clinic product offerings can improve compliance (the patient can begin their HEP immediately), control for the quality of therapeutic products, and may make insurance coverage for some devices easier. But if your patient feels deceived or like you’ve hoodwinked them (when they see the exact same foam roller at Target, for example), that’ll only harm your reputation and the patient-provider relationship.
Social media endorsements are still endorsements
The FTC’s Endorsement Guide also pertains to social media. While “promoted” posts are sometimes identified as such on social media, an endorsement on Instagram may be merely tagged “#ad” without further attribution. Further, not all users or bloggers are being paid to promote an item. As such, the referring user’s honesty and transparency is the only way to tell the difference.
These rules apply regardless of the degree or quantity of compensation that you receive in exchange for your endorsement and referrals. The FTC’s rules apply any time that, when you refer a product, you also receive something in return. And if you receive an incentive that has no cash value?
“Even an incentive with no financial value might affect the credibility of an endorsement and would need to be disclosed.”
Common no-value incentives include the opportunity to try a product for a period of time before returning it to the manufacturer (like a pricey new medical device), or an opportunity to appear in a marketing campaign for your trade organization (even if you’re unpaid, it would give you the benefit of broadened name recognition and reputational strength).
The FTC guidelines remind you that your endorsements should always reflect your experience with the product you’re endorsing. You cannot discuss your experience with something that you’ve never tried. And if you tried something and thought it was awful, then you cannot endorse it as a great product.
While it can sometimes be confusing to know exactly what you should disclose and what might not be necessary, a good rule of thumb is to put yourself in your patient’s shoes. If knowing that the person who’s encouraging you to purchase a great new pain relieving gel will receive a benefit from your purchase, would that influence your decision to buy it? If so, then your patients deserve to know that information.
A few tips for how to make endorsement disclosures:
- A hyperlink simply titled “Disclaimer” or “Legal Info” after an endorsement on your social media page or blog, linking the reader to a page of your website describing the endorsement details is insufficient to meet the FTC’s requirements.
- Tweets that endorse a product or service are likely sufficient to meet the FTC’s requirements if they include either sponsored, promoted, promotion, or paid ad. Starting the tweet with Ad: or #ad is also likely sufficient.
- Your endorsement disclosure should be clear and conspicuous. Don’t make it in tiny or hard-to-read font, don’t make the font the same color as the background, and if it’s being read during a video or audio recording, make your reading speed and word choices easy to understand. Always make the disclosure in close proximity to your disclosure.
- Don’t do anything aimed at distracting your reader/listener from the existence of your endorsement disclosure.
- Disclosures should be made in the same language as the endorsement.
Practical tips for the healthcare provider:
- If endorsing something on social media, be sure to include the recommended language above every single time you recommend that people try the product or service.
- If recommending a product to your patients, we recommend having a written form explaining the benefit you’ll receive and garnering your patient’s signature at the time that they receive the product. This creates proof that you informed them of your relationship with the manufacturer.
- Be extremely careful when taking or giving benefits for referrals to other providers, services, or products. As a healthcare provider, you’re subjected to numerous anti-kickback and anti-referral laws that carry heavy penalties. These are a separate topic and, often, such benefits within healthcare are expressly forbidden even if all parties are informed of the relationship. They’re just not allowed.
Check out the FTC Endorsement Guide for yourself or email us with questions. Please remember that this blog is never a substitute for personalized legal advice.
about the author
Erin K. Jackson is Jackson LLP’s Managing Partner. She is responsible for all aspects of firm management, is a sought-after speaker for healthcare conferences, and is a published author. She is specifically focused upon the intersection of the patient experience in healthcare with the legal and ethical responsibilities of providers.