Physician and advanced practice provider compensation arrangements are continually evolving, as compensation must be competitive with the market and in compliance with the established industry regulations. Compensation arrangements must meet the standards for fair market value (FMV) and commercial reasonableness (CR) among others.
The growth in hospital employed provider networks and the industry’s transition to value-based care requires valuation methods that account for compensation arrangements under both fee-for-service and fee-for-value reimbursement. Notable changes include incorporating elements that recognize quality outcomes, cost efficiency, and patient experience. As providers may receive both fee-for-service and fee-for-value reimbursement, as the demands of healthcare providers expand to include more qualitative metrics the complexity of evaluating these arrangements increases. Appropriate rigor is needed to ensure that compensation remains compliant with the addition of value-based and other elements to the compensation model.
At Coker, we have extensive experience in assessing compensation arrangements from a fair market value and commercially reasonable perspective. Valuations can range from employment agreements to professional services agreements, clinical co-management agreements, distributions from ACOs/CINs, call pay and medical director agreements, and others. We have valuation expertise across a myriad of transactions in which remuneration changes hands between hospitals and physicians.
We tailor our approach to the needs of our clients and treat every situation as unique. Our consultants perform initial due diligence where we request data and converse with the client to ensure we understand the situation. Our team develops initial analytics, conclusions, and recommendations that we explain to our clients before drafting more formal documentation.
We see compensation valuation as a multifaceted analysis where it is incumbent upon the valuator to understand both the quantitative and qualitative aspects of a transaction. We use sound quantitative market data to serve as the foundation for any analysis, then apply our knowledge of the specific dynamics of the particular situation, coupled with our healthcare industry and valuation expertise to formulate our conclusions. Our conclusions and recommendations assist organizations as they strive for compliance in today’s evolving healthcare market.