The Free Exam, the Gift Cards, and the Retail Lease
Dr. Elena Nguyen opens a new office inside a retail optical store. The lease requires base rent of $2,000 per month or 12% of gross optical sales, whichever is greater. Her newspaper advertisement says "FREE comprehensive eye exam-no restrictions," but the front desk is instructed to require patients to purchase frames to receive the free examination. She also pays $25 gift cards to local primary care physicians for each patient they refer and pays a marketing company $50 for every new patient who schedules an appointment. A competing optometrist files a complaint with the Missouri State Board of Optometry alleging fee splitting and false advertising. Dr. Nguyen argues that the lease is a standard commercial arrangement, that the gift cards are only "thank-you" gifts, and that the marketing fee is ordinary advertising. She asks which arrangements create board exposure and how she can restructure them.
1. Analyze the lease. Does the percentage-of-optical-sales provision create a fee-splitting problem?
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It creates significant risk. Optometrists may pay rent for office space, but the rent should reflect fair market value and should not be a disguised share of professional revenue or a payment for patient referrals. A lease that requires 12% of gross optical sales gives the landlord a direct financial stake in the optometrist's patient flow and optical dispensing. The board may view that as fee splitting or as sharing optometric revenue with an unlicensed entity, even if the percentage is nominally limited to optical goods. The "whichever is greater" feature makes the problem worse because the landlord benefits when the doctor sells more eyewear. The safer structure is a fixed, fair-market rent supported by a comparison of local rents, with separate charges for utilities and services. Dr. Nguyen should also ensure that the lease does not require her to refer patients to the optical store and that professional services and optical sales are accounted for separately.
2. Is the "FREE comprehensive eye exam-no restrictions" advertisement lawful? What must be disclosed?
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It is likely misleading. Missouri expects optometric advertising to be truthful and not deceptive. A "free" examination that actually requires a frame purchase is not free without restrictions; the purchase condition is material to the patient's decision. The advertisement should state the condition clearly and conspicuously, for example "Free eye exam with purchase of frames," in the same visual prominence as the word "free." The office staff must follow the advertised terms, and the practice should not use bait-and-switch tactics. Dr. Nguyen should also keep copies of advertisements and be able to show that the offer was honored. If the board finds that the ad was false or deceptive, that can support discipline for unprofessional conduct, even if the underlying examination was competently performed.
3. Evaluate the $25 gift cards to physicians and the $50 per-new-patient marketing fee.
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The $25 gift card for each referral is the clearest problem. Paying a physician or anyone else per referral is fee splitting or a kickback, regardless of whether it is called a gift, a thank-you, or a marketing expense. It can influence clinical referrals and is likely prohibited. The $50 per-new-patient marketing fee depends on what is actually being purchased. A fixed fee for bona fide advertising services, such as designing a website or placing an ad, is generally permissible. But a payment that varies with each patient who schedules is essentially paying for patients, and it may be treated as fee splitting or an improper inducement. Dr. Nguyen should terminate the per-referral gift cards, convert the marketing arrangement to a fixed fee for defined services, and ensure that no payment is tied to referrals or patient volume. She should document the changes and consult the board's advertising and fee-splitting rules.