This is essentially the payment of a commission to the referrer with the express intention of ensuring that the referring doctor directs referrals of patients to the payee.
In most parts of the world, the practice is considered unethical and unnacceptable, hence fee splitting is often covert. The reason it is believed not to be in the interests of patients is because it represents a conflict of interest which may adversely affect patient care and well-being, since patients will not necessarily be referred to the most appropriate doctor to provide their on-going care but will instead be referred to those doctors or hospitals with whom the referring doctor has a "fee splitting" or commission payment type of arrangement.
According to the World Medical Association , "The AMA Code provides that payment by or to a physician solely for the referral of a patient is unethical as is the acceptance by a physician of payment of any kind, and in any form, from any source such as a pharmaceutical company or pharmacist or a manufacturer of medical appliances and devices, for referring a patient to that source. Another section specifies that clinics, laboratories, hospitals or other health care facilities which compensate physicians for referral of patients are engaged in fee-splitting, which is unethical".
Among its Definitions of Unprofessional Conduct, the "West Hudson Psychiatric Society Virtual Newsletter" (1997) lists 2Offering, giving or receiving a fee for the referral of a patient (fee splitting), or permitting any person other than an employee or associate to share in your fee, who has not provided an appropriate service directly under your supervision2.
However, the practice, or something resembling it, tends to be tolerated - in "Medicine, Money, and Morals: Physicians' Conflicts of Interest" by Marc A. Rodwin, forms of fee splitting and commission paying for referrals remain common in the USA and are in effect tolerated by key overseeing bodies such as the American Medical Association and Joint Commission International, or JCI.
According to their website, the Joint Commission (JCI) have no published view on the issue of fee splitting, and in fact the Joint Commission stopped trying to provide guidance on medical ethics to American hospitals many years ago , preferring to concentrate on less challenging areas of healthcare assessment, despite the vast importance of medical ethics to patient safety. It is not clear if JCI operate to a similar level of standards when working outside of the USA.
Fee splitting and similar practices are considered unequivocally unacceptable for the medical profession in the United Kingdom.