Author: Erica Jacobovits, JD
It is a well-documented threat that the United States is currently facing a shortage of physicians, a trend which is expected to exacerbate in the near future. According to one study conducted by the Association of American Medical Colleges (AAMC), the U.S. will face a shortage of as many as 120,000 physicians by 2030. This projection is particularly harrowing given the critical need for physicians to treat an aging population, which by 2030 is predicted to increase by 50%. While several legislative proposals are on the table to address these issues, these efforts have largely been stymied by the congressional process. Accordingly, many hospitals and medical practices have turned to foreign-trained or educated physicians to help alleviate this staffing shortfall.
The current predicament facing U.S. employers attempting to ameliorate physician shortages through efforts such as the recruitment of foreign-educated or trained physicians, has become more difficult given the current Trump Administration’s “Buy American and Hire American Executive Order”, which purports to safeguard and promote American workers, as well as difficulties in applying and obtaining green card applications and visas, and in particular H-1B visas which support approximately 25% of current foreign medical residents training in the U.S.
While there are certain non-monetary hurdles to overcome when recruiting a foreign-trained physician, such as admission to a U.S. medical residency program and navigating the current regulatory complexities of the Trump Administration’s policies and proposals for immigration reform, there are various financial considerations that have both business implications as well as potential healthcare fraud and abuse regulatory implications. Examples of such financial considerations include the fees associated with a physician’s application for naturalization and other related fees, sign-on bonuses and relocation allowances.
FMV Pitfall: When determining the FMV of compensation under professional services and employment arrangements, healthcare operators and employers must stay informed regarding the potential nuances in taxable compensation considerations as well as changes in U.S. regulatory policies and laws. In the context of physician recruitment of foreigners, it is imperative to understand which benefits (for example, assistance with fees associated with a visa application) may ultimately have implications on taxable income, and therefore FMV compensation.