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Highly compensated physicians and compliance: Considering the complexities

Joe Aguilar (joe.aguilar@hmsvalue.com) is a Partner and Natalie Bell (natalie.bell@hmsvalue.com) is a Director with HMS Valuation Partners in Atlanta, GA.

The Bureau of Labor Statistics recently reported that job prospects for physicians are outpacing other occupations despite market pressures that would generally appear to have a negative effect on their opportunities.[1] National physician compensation surveys show a rise in physician compensation in most medical and surgical specialties.[2] Given this reality, health systems trying to continuously improve services to their patients are fiercely competing for top physician talent in their service area. However, top physician talent often comes at a high price and can reach levels well above the 90th percentile based on national compensation surveys.

So, how much is too much when reviewing a physician’s compensation agreement? This is a question that compliance officers and valuation analysts ask themselves almost daily. What analyses should be performed? How does this compensation compare to their peers? What are key factors that need to be considered to mitigate risk? These questions and others become even more challenging when they pertain to a physician who is highly compensated. As the compliance officer goes through the review process, there are key areas that should be considered when determining if the agreement meets fair market value (FMV) requirements. Below are some complexities to consider.

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