In late August, the federal government approved the investment structure of a medical device company called Requestor — a decision that may reassure physician investors looking to invest in their area of expertise.

The company, which manufactures devices used for stroke treatment, was created by a physician and is partially owned by physicians, all of whom could influence referrals.

However, the US Department of Health and Human Services (HHS) and the Office of the Inspector General concluded the company’s structure did not violate the Anti-Kickback Statute because the physicians owned only 35% — well below the 40% threshold defined in the safe harbor regulations.

While the federal approval applies only to Requestor, it offers guidance for physicians interested in investing in other ventures. Caution is still warranted: Even with the best intentions, financial incentives can cloud clinical judgment and damage professional reputation.

More than ever, the scrutiny and consequences for physician investors loom large. “It’s always been a point of concern for any administration, but recently, we’ve seen more action with the Department of Justice prosecuting and HHS investigating this type of fraud,” said Nicolette Taber, associate attorney at Dickinson Wright in Chicago who specializes in healthcare law.

So where is the legal and ethical line? Medscape Medical News spoke with physicians, entrepreneurs, and financial experts to explore how doctors can grow their wealth without putting their patients or their credibility at risk.

Low-Risk Investments

The good news is that physicians have plenty of healthcare investment options that minimize conflicts of interest. When it comes to diversified exchange-traded funds and mutual funds, “physicians aren’t treated any different than anyone else,” said Jackie Griggs, lead financial planner for Wrenne Financial, a wealth management firm for healthcare professionals. 

Funds like the Vanguard Total Stock Market Index, she noted, are roughly 9% healthcare related. But the stake a physician owns in any single company “is so miniscule that there’s no way they could benefit from some kind of prescribing.”

In Illinois, where Taber practices, med spas have become another safe and lucrative option, particularly for physicians willing to take an active role rather than serve as silent investors. 

Where Conflicts Arise

Issues surface when physicians own larger shares of a business and stand to profit from referral or prescribing patterns. These financial ties, even when unintentional, can bias clinical judgment and lead to inappropriate care.

“The AMA [American Medical Association] maintains that physicians hold a fiduciary duty to their patients. They have to operate in patients’ best interest, even if it comes at a financial disadvantage,” Griggs said.

Although 2025 has seen a surge in federal investigations, including more than 300 cases of alleged healthcare fraud levied over the summer, few laws directly regulate physician investing or conflicts of interest.

Federal regulations prevent physicians from using their clinical and research insight for insider trading. Stark Laws and Anti-Kickback Statute prohibit self-referrals — cases in which physicians send patients for services that financially benefit them or their family members. Beyond these laws and acts of outright fraud, however, oversight is “patchy,” noted John Shufelt, MD, physician entrepreneur and founder of a physician-only venture capital firm.

Ethics Beyond the Law

The AMA Code of Ethics helps fill in some of the gaps. According to an AMA spokesperson, any investment in health-related businesses that could potentially place financial gain over patient welfare is concerning, including:

• Investing in private equity firms that may negatively impact patient welfare (eg, after selling a private practice to private equity),
• Direct or partial ownership through investment of a device or drug a physician recommends,
• Consulting for investment firms using proprietary clinical information,
• Self-referral, and
• Even the appearance of influence.

“Even if you don’t consciously bias your decisions, the appearance of impropriety can be just as damaging,” Shufeldt said. “Patients, colleagues, and regulators are quick to sense when medicine stops being purely about care.”

At best, such entanglements can cost a physician the trust of patients and colleagues. At worst, they can lead to malpractice lawsuits, compliance investigations, or even board sanctions. 

Transparency and Alignment

Just because an investment introduces some conflict of interest doesn’t mean that it’s entirely off the table, Taber said. The of Requestor decision clearly leaves room for physicians to balance patient care with financial investments. “It’s always important to cover your tracks,” she noted. “Get input from a healthcare attorney or financial expert and make sure you’re complying with all the necessary federal regulations, safe harbor regulations, professional ethics, and employer policies.”

“Physicians are very smart and savvy, Taber added. “But sometimes they ignore the requirements in place. The federal government put these in place for a reason: it’s always with patient safety in mind.”

Like Taber, the AMA doesn’t oppose every potential conflict, but it calls for transparency. The AMA Code of Ethics recommends that all financial interests be disclosed to patients. “Whether on consent forms that patients sign or website bios, patients should be clear on the financial interests of their provider,” Taber advised.

When weighing the ethics of a potential investment, Shufeldt said physicians can always come back to the mission. “If your investments align with the same core mission that drives your medical practice — improving care, reducing costs, expanding access — you’re more likely to stay on the right ethical side of the line.”

Ultimately, physicians’ most valuable investment remains the one they make in their patients’ trust.

Donavyn Coffey is a Kentucky-based journalist reporting on healthcare, the environment, and anything that affects the way we eat. She has a master’s degree from New York University’s Arthur L. Carter Journalism Institute in New York City and a master’s in molecular nutrition from Aarhus University in Aarhus, Denmark.