Compliance Today
The number of hospital-employed physicians continues to grow through the acquisition of medical groups and recruitment of new physicians into employment arrangements. A provision of many medical group transactions requires the acquiring hospital to maintain existing compensation levels for a period of time. However, the hospital must ensure that the compensation plan is appropriate and commercially reasonable and, as such, should assess the extent to which the remuneration of each newly acquired physician meets fair market value (FMV). This article explores several considerations hospitals should use in determining whether a particular physician’s compensation meets FMV and provides a two-step process hospitals can utilize to efficiently evaluate the compensation of newly acquired physicians.