units (WRVU) and professional collections. As
a result, the compensation is potentially consistent with FMV. However, in situations such
as these, FMV assessments are always recommended to ensure compliance. In addition,
the hours listed above may warrant additional
review to ensure the physician can reasonably
work the hours and to confirm the physician
is not receiving multiple streams of income
during the same hour of service.
1. Create a documented compliance program and ensure triggers are in place
to determine when/if a valuation/FMV
assessment is needed.
2. Analyze total hours worked and ask if it is
reasonable for the physician to be paid for
that amount of hours. Also, can the physician reasonably perform this amount of
workload without negatively impacting
other areas of the physician’s practice?
3. Review each compensation component
in the agreement to ensure the physician is not receiving multiple streams of
income during the same hours worked.
For example, a minimum amount of hours
are required for physicians receiving base
salaries. In essence, this time has already
been paid for.
4. A highly productive physician will likely
warrant a compensation-per-WRVU rate
at or below the median percentile. (Note:
An inverse relationship exists between
compensation and compensation per
WRVU — higher producing/earning
physicians will indicate a lower compensation per WRVU.) Ensure benchmarking
analyses are performed and review to
see if compensation and productivity are
5. Review and document any instances of
physician practice losses. It is important
to detail why the losses are occurring.
For example, when hospitals purchase
physician practices, it is not uncommon
for general overhead to be allocated to the
physician practice profit and loss statement, which creates a loss on paper. In
addition, many health systems will strip
out the ancillary services post-transaction
and move these services to the hospital.
The loss of this technical revenue stream
may result in physician practice losses.
Another factor, which can create physician losses, is many health systems will
negotiate stronger payer contracts for
the hospital, while accepting lower rates
for outpatient physician services. Each
of these are the result of decisions the
Compensation Component Notes Compensation Estimated Annual Hours
Annual Base Guarantee Base Guarantee or $75 per WRVU $800,000 2,000
Quality Incentive Outcome based metrics $50,000 n/a
Medical Director $175 per hour up to 240 hours per year $42,000 240
Call Coverage Compensati on
(1: 5 Rotation)
Required to provi de fi ve ( 5) days per month
uncompensated. Paid $1,000 per 24 hour shift
after day five ( 5). Physician provides two ( 2)
additional days per month. $24,000 576
Total $916,000 2,816
Example: Highly Productive Pediatric Surgeon
Table 2: Example of compensation for a highly productive pediatric physician
WRVU = Work relative value units (a method for calculating the volume of work or effort expended)