Establishing Fair Market Value of Compensation Arrangements

As hospitals and health systems continue to purchase independent practices and organically grow their workforce, the trend of hospital- and health system-employed physicians is becoming more prevalent. The resulting employment arrangements frequently implicate numerous healthcare fraud and abuse laws, including the Stark Law and Anti-Kickback Statute, and therefore benefit from review by a knowledgeable, unbiased valuation expert. Our team of compensation valuation professionals draw from hundreds of years of combined experience to produce FMV support for all types of employment arrangements. From FMV opinions for standard, single provider arrangements, to those for complex employment transactions involving multiple providers, varying payment mechanisms, and diverse service offerings, we can assist with any type of employment valuation need.

Upon recognizing the need for healthcare executives to operate more quickly than the valuation industry could allow, HealthCare Appraisers developed an easy-to-use FMV solution known as the Provider Compensation Calculator™ (formerly known as the Physician Employment Calculator™). This Calculator generates customized FMV opinions to aid in physician recruitment and retention and provide defensible support for a wide range of employment transactions.

Learn more about the Provider Compensation Calculator™.

For more than 15 years, HealthCare Appraisers has utilized a proprietary methodology to value on-call arrangements, through which we consider a variety of factors that we believe have an impact on the burden to the provider performing the call coverage. In numerous Advisory Opinions since our proprietary methodology was developed and implemented, the Office of Inspector General (OIG) has cited to a similar set of factors, effectively confirming the validity and relevance of our proprietary methodology.

Our proprietary methodology has been refined over time, ensuring we continually produce objective and defensible FMV opinions for the hundreds of on-call coverage arrangements we value each year. For a customized call coverage application that utilizes our proprietary methodology and delivers almost immediate conclusions, we offer an easy-to-use solution referred to as the On-Call Calculator™.

Learn more about the On-Call Calculator™ here, or request a copy of the 2020 On-Call Review Summary here.

Recognizing the need for alignment strategies that more effectively promote cooperation with medical staff physicians, hospitals and health systems have begun shifting their reimbursement strategies from volume to value.  Similar to the trend in physician professional services arrangements, value-based administrative arrangements are designed to reward the achievement of specific quality metrics and operational efficiencies, as opposed to payment based on hours worked.

One emerging arrangement, centered on this value-based model, involves the management – either exclusively by physicians or jointly by physicians and hospital members – of an entire hospital service line. Unlike traditional medical director arrangements, these service line management arrangements can (i) facilitate working relationships with physicians across several disciplines (who may be unaffiliated with each other), and (ii) potentially offer more lucrative compensation, in the form of monies for achievement of specific outcomes, in addition to a base management fee.

Given the potential to implicate numerous healthcare laws and regulations, including the Stark Law, Anti-Kickback Statute, Civil Monetary Penalty Statute, and IRS private inurement, coupled with relatively lucrative payments, these arrangements require an intricate knowledge of the key regulatory issues and detailed understanding of the valuation process.  HealthCare Appraisers’ team of experts possesses the knowledge and experience to meet these challenges, having valued over 2,000 service line management and co-management arrangements to date, including the arrangement mentioned in favorable OIG Advisory Opinion 12-22, the sole advisory opinion addressing service line co-management.