Overview
Rising provider compensation combined with increased scrutiny necessitates that health systems have a strong compliance program in place for adherence to Fair Market Value (FMV) and Commercial Reasonableness. HSG experts partner with health systems to guide compliance efforts and to develop FMV and Commercial Reasonableness opinions supporting a health system’s compensation strategy.
HSG completes a comprehensive assessment of physician and Advanced Practice Professional (APP) compensation arrangements and resulting compensation levels, given position requirements, duties, documented work effort, and productivity. HSG assesses and provides opinions of associated risk by physician based on our years of physician compensation experience, as well as widely accepted fair market value standards and parameters.
How We Work
HSG works with health system leaders to stratify their current risk, and develop and actionable plan going forward.
- No Concern. For physicians assigned to this category, HSG believes that the physician’s compensation is within fair market value parameters, compliance risk is minimal, and no further action is needed. For example, compensation is not above 75th or compensation is above the 75th but compensation and production percentiles are “reasonably” aligned.
- Moderate Concern. The compensation of physicians assigned to this category is moderately concerning. This simply means that we believe that the compliance risk is high enough to warrant a formal fair market value and commercial reasonableness opinion to formally document that the compensation is, as deemed by a third-party, fair market value and commercially reasonable. Examples of physicians assigned to this category include but are not limited to physicians whose base or guaranteed compensation is above the 75th percentile of applicable benchmark data or whose total compensation is above the 90th percentile.
- Significant Concern. The compensation for physicians assigned to this category is of significant concern to HSG, and in our opinion, corrective actions are required to bring the compensation in alignment with fair market value standards. For example, physicians with total compensation above the 75th percentile and total compensation percentiles exceeding wRVU production percentiles by more than 10 percentiles (or 10% once the 90th percentile is eclipsed)
FMV Compensation Frameworks
HSG also provides opinions on Fair Market Value and Commercial Reasonableness across a number of compensation frameworks, which include but are not limited to:
- Individual physician of advanced practice professional (APP) compensation arrangements.
- On-Call arrangements
- Co-Management arrangements
- Acquisition or lease of assets
- Medical Directorships and other administrative management
- Leadership and Governance participation
Additional Analysis and Consulting
HSG leverages its proprietary set of market and provider network data analytics to help our clients understand the current state of the market, build effective strategic planning initiatives, monitor performance against defined objectives over time, and reassess and reprioritize on an ongoing basis.
HSG Compensation and Compliance
No matter the size of organization, provider compensation is a complicated issue, encompassing issues of strategic alignment, financial sustainability, and regulatory compliance, all of which demand a coordinated, comprehensive approach from health systems and their employed networks.
Compensation Plan Redesign
Employed provider compensation continues to trend higher while reimbursement does not. HSG partners with health systems to develop compensation philosophy and specialty-specific models that are financially sustainable yet promote retention in a competitive environment.
Hospital-Based Subsidy Arrangements
As resources constrain and expenses rise, health systems are experiencing explosive growth in their subsidies for hospital-based specialties. HSG works with health systems to evaluate the operational and contractual cause for subsidies and evaluate and implement action plans to reduce subsidies while maintaining patient care delivery.
