Whether the service agreement involves a direct employment or contracting agreement, a valuation is necessary to determine fair market value compensation. According to the report, the following five considerations are important for developing a compliant physician service agreement that is supportable by valuation.
1. Structure a reasonable compensation rate at the onset of negotiations. According to the report, developing a compensation rate that is reasonable and supportable is important for avoiding situations where hospitals must redact offers during the negotiation. If this were to occur, hospitals could lose money having begun valuations deals that did not transpire.
2. Obtain an independent opinion early in the negotiation process. Hospitals need to determine if a fair market value opinion is needed and then obtain one from a reputable firm as soon as possible, according to the report. The opinion will be the “ceiling” of compensation that can be paid for physicians’ services and will prevent communication over unrealistic terms.
3. Allow the valuation expert to communicate with the physician throughout the fair market value process. Allowing valuation experts to meet with the physician throughout the data collection and analysis will provide transparency and offer all parties a means to communicate effectively.
4. Ensure that a fair market value opinion is obtained for each service within the physician service agreement. Since bundling services within a physician service agreement is common, it is important to meet regulatory compliance requirements for each service, according to the report.
5. Evaluate the reasonableness of the total package of services in the physician service agreement. According to the report, it is integral for all services under the physician service agreement to be reasonable for the physician to provide. There are certain questions that should be addressed, such as: Are full-time benefits being paid to part-time physicians? Is compensation commensurate with productivity? Is the provider making money in the arrangement? Is the term of the agreement reasonable? Is the compensation for administrative services based on significant duties?
More Articles on Hospital-Physician Relationships:
Dartmouth-Hitchcock Acquires Southwestern Vermont Medical Center Physicians
University Hospitals, MetroHealth Recruiting Physicians to Care for Medicaid Patients
TriHealth Purchases Family Medical Group in Cincinnati
