Many physicians are referred to state physician health programs (PHPs) for evaluation, monitoring, and treatment of mental health and substance use disorders. Most PHPs are "diversion" or "safe haven" programs, meaning that physicians who suffer from alcohol or drug problems can have their case diverted to the PHP in lieu of being reported to the state licensing board. If the physician agrees to cooperate with the PHP and adhere to any recommendations it might make, the physician can avoid disciplinary action and remain in practice. These programs are therefore quite powerful and yet, to our knowledge, there has not been any systematic scrutiny of the ethical and management issues that arise in standard PHP practice. Given our 20 years of service as associate directors of one state PHP we analyze and evaluate the standard operating procedure of many PHPs and offer ethical critique as well as suggestions for improvement.