Fair Market Value and Right Sizing Physician Compensation

“It was like that when I got here.” – Homer Simpson

[Checklist] Physician Compensation Arrangements

By Mike Fleischman, Stroudwater Associates

We’ve heard this phrase exclaimed several times recently by newly appointed CEOs and CFOs who have inherited dysfunctional, and in some cases legally questionable, employment and medical director agreements with their staff physicians. The Inspector General’s office of HHS is now focusing greater attention on compensation plans for physicians employed by hospitals and health systems. Outcomes of this increased scrutiny include:

  • A Midwest hospital’s agreement to pay the United States $34M to settle alleged False Claims Act violations arising from improper payments to oncologists
  • A Florida health system’s settlement to the federal government of $69.5 million for alleged violation of the False Claims Act by engaging in improper financial relationships with nine physicians
  • A Florida nonprofit’s $118.7 million agreement to settle claims that it paid bonuses to employed physicians based on a formula that improperly took into account the value of the physicians’ referrals

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