INTRODUCTIONPhysician-owned self-referral networks have come under scrutiny. The so-called Stark-legislation (Rep. Pete Stark D-California) has severely limited the ability of doctors to own and invest in referral networks thereby capturing self-referrals. Doctors and hospitals have diversified into these referral devices in order to enhance income generation and to try to circumvent constraints on traditional forms of healthcare reimbursement (Winston 1993).Traditionally, the notion of marketing has been viewed with suspicion and disdain by the medical profession. This paper explores the effects of the Stark legislation on physician practices and whether marketing has (or has not) played a role in the survival of the traditional medical practice. Our research goal is exploratory and therefore we are relying on qualitative research methods. We chose participants because of their likelihood to cooperate in a study that has legal and criminal implications for those healthcare providers that violate the anti-kickback provisions of the federal fraud and abuse laws. Because of the judgment nature of the sample and the sensitivity of the subject, our research should be considered exploratory, 86 HEALTH MARKETING QUARTERLYWe are taking the first look at how and what physicians are doing to comply with legislation that has in effect removed a captive patient base resulting in a need to market heretofore locked in ancillary medical services. Our findings highlight issues that should be investigated fbrther with more comprehensive and structured research (Scammon, Li and Williams 1994).An informal survey was conducted among thirty physician practices (including family practice, various specialty and surgical practices) throughout the central portion of a mid-Atlantic state in which doctors andtor their practice managers were questioned regarding the effects of the Stark legislation on their own investment patterns as well as any marketing as a consequence of the legislation.Our survey results were not surprising with regard to the impact of the law. The legislation has succeeded in eliminating most physician investment in downstream health related services. Many doctors who invested in various imaging centers or clinical labs have divested themselves of any financial interests. Some took huge losses in order to avoid liability.What was surprising were the results of the second part of our survey which dealt with marketing. The practices were surveyed as to the extent of marketing used to obtain or maintain patient base, including such things as measurement of patient satisfaction and the use of outside consulting services. While it would seem apparent that marketing can be helpfhl to doctors facing a new competitive environment, doctors have been slow to acquire a taste for marketing. BACKGROUND OF ANTI-REFERRAL LEGISLATION