Clinical compensation arrangements encompass agreements in which a provider or a group of providers is paid to provide clinical services on behalf of a hospital or health system. Clinical compensation arrangements may include, but are not limited to, the following compensation structures:
- Annual fixed compensation
- Productivity-based compensation (e.g., per work-RVU compensation)
- Base annual fixed compensation with productivity-based incentive compensation
- Hourly compensation for part-time clinical services
In seeking to derive a fair market value indication for clinical services, PCC requests information from client management regarding applicable agreement-specific factors, including:
- Will the provider be employed, or serve as an independent contractor?
- Will clinical services be provided on a full-time or part-time basis?
- What is the provider’s specialty?
- What is the provider’s annual work-RVU production level?
- What is the provider’s annual professional collections level?
- What is the payer mix for the provider’s services?
Once these agreement-specific factors are determined, PCC implements various valuation methodologies drawn from Stark Law guidance, industry best practices, and proprietary algorithms to determine a fair market value indication for the subject compensation arrangement.
On-call coverage compensation arrangements include agreements in which a provider or a group of providers provides on-call coverage services to a hospital or health system, typically in regards to emergency room coverage. Typical on-call coverage compensation arrangements include the following compensation structures:
- Fixed per-shift compensation
- Availability compensation with additional activation compensation (i.e. compensation for physical responses to the facility)
Many agreement-specific factors are incorporated into PCC’s analysis of on-call coverage compensation, including:
- The provider’s employment status
- The length of each on-call coverage shift (e.g. 24-hour shift, 12-hour shift, etc.)
- The provider’s specialty
- Whether the provider will bill and collect for professional services provided while providing on-call coverage
- The provider’s relative burden of on-call coverage (determined by analyzing the expected frequency, intensity, and acuity of professional services to be provided while providing on-call coverage)
Medical directorship compensation arrangements include agreements where a provider serves as a medical director over a specific service line of a hospital or health system. Medical directorship compensation arrangements are typically structured as an hourly rate or a monthly/annual stipend.
PCC’s assessment of medical directorship compensation includes a review of the following agreement-specific terms:
- The provider’s employment status
- The provider’s specialty
- The expected number of annual hours a provider will perform medical directorship services
- The provider’s level of experience (determined by a review of the provider’s curriculum vitae (CV))
Service line coverage / subsidy compensation arrangements include agreements where a physician group provides full coverage for a specific specialty service line of a hospital. Service line coverage arrangements typically require a physician group to provide a mix of both clinical and on-call coverage services based on the needs of the hospital’s service line.
Often, the aggregate annual professional collections generated from a physician group’s clinical services do not provide that group with a sustainable level of compensation when providing service line coverage. In these cases, an annual compensation allocation, known as a coverage or subsidy stipend, for the collections shortfall is supportable in line with FMV.
Service line coverage compensation arrangements are typically structured either as an annual coverage stipend for the physician group’s expected collections shortfall (when the physician group retains professional collections for clinical services) or as a total annual compensation stipend guarantee (when a physician group does not retain professional collections for clinical services).
PCC’s FMV assessment of service line coverage incorporates the following agreement-specific terms:
- The specialty of the physician group and service line to be covered
- The expected annual clinical and on-call coverage hours to be performed by the physician group in providing coverage for the service line
- The physician group’s expected annual work-RVU production level
- The physician group’s expected annual professional collections level
- Whether the physician group will bill and collect for clinical services provided
- Whether the physician group will provide any administrative (e.g. medical directorship) or management services in support of the service line
PCC has experience in providing FMV assessments of provider compensation for various other compensation arrangements, such as the following:
- Co-management services, in which a group of physicians provide administrative oversight, planning, and clinical implementation services for a hospital’s service line with the goal of improving a list of pre-defined quality metrics for the service line
- Management services, in which a physician group provides various business and administrative tasks associated with the smooth function of a hospital service line
- Professional & technical reimbursement splits for clinical services, in which a hospital bills and collects for professional and technical services provided by a physician group and compensates the physician group on a percentage of global collections (typically seen in radiology professional services agreements)
- Quality incentive bonus compensation for clinical services, in which a hospital provides an annual incentive bonus to physicians for the clinical implementation and improvement of pre-determined quality metrics
- Technology services, in which a physician or physician group holds ownership in a company providing technology services to a hospital or health system
- Life sciences consulting and/or clinical research services, in which a physician provides clinical research or other consulting services to a pharmaceutical or medical device company
PCC’s personnel has extensive experience in providing FMV assessments a wide variety of idiosyncratic physician compensation arrangements and is well-positioned to leverage this expertise for any unique provider compensation arrangement.
