Can a physician invest in a health care startup, such as a DME supplier?

There is no blanket prohibition. But the investment must comply with the Stark Law and Anti-Kickback Statute.
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Generally speaking, a physician can make an investment in a health care startup just like any other investor. Issues arise if the physician refers patients to that startup for items or services payable by Medicare or Medicaid. Such referrals are governed by the Federal Stark Law, the Federal Anti-Kickback Statute, and potentially by related state statutes.

There are exceptions and/or safe harbors under the laws that do allow for investments in entities to which the physician is making referrals.  For example, the Anti-Kickback Statute includes a safe harbor that requires (among a number of other items) that more than 40% of a joint venture’s gross revenue come from investor referrals or business otherwise generated by investors. The Stark Law allows investments where (among a number of other requirements) the compensation is based on fair market value and not on the value or volume of referrals.

Be forewarned, however, that this answer does not come close to explaining the complexities and risks involved in a physician investment in a supplier receiving Medicare or Medicaid payments. Only a thorough analysis by an experienced attorney can provide the necessary legal guidance.