Many hospitals, physician groups, and consultants use survey data from companies like MGMA, Sullivan Cotter and AMGA as a proxy for fair market value compensation. However, special care must be taken in applying and utilizing this data or you run the risk of developing a compensation that doesn’t meet fair market value.
1. Don’t assume the median compensation is a safe and conservative indication of fair market value compensation. It’s important to consider certain metrics such as services provided, experience, total hours worked, wRVUs and collections. If a physician is producing at levels below the median or they have limited experiences then paying a physician at the median compensation may not support fair market value.
2. Be careful when paying a physician a certain amount per wRVU. Use of wRVUs to measure provider productivity is common. Some people often mistakenly assume that if a physician’s work RVU volume falls within a certain percentile, they can apply the corresponding published percentile compensation per work RVU data and set a compensation level that is consistent with FMV. If you use compensation-per-wRVU above the median, your resulting compensation will likely exceed fair market value. For example, a cardiologist who generates 11,800 wRVUs annually would put him/her at the MGMA 75th percentile of productivity. Multiplying the 75th percentile of compensation per wRVU ($79.06) by the physician’s actual work RVUs produces compensation of nearly $933,000. This amount is 27% more than the 75th percentile compensation benchmark, and not consistent with FMV standards.
3. Don’t assume the 90th percentile compensation cannot be FMV. After all, the survey participants reported this data and we have no reason to believe it is not accurate or untruthful. However, it is worth noting that there is no assurance that the actual compensation being paid to a physician is consistent with FMV. But, if a physician’s productivity is thoroughly analyzed with respect to hours worked, WRVUs, professional collections and the metrics are within or near the 90th percentile, then there is a highly defensible case to pay that physician at the 90th percentile.
4. Finally, don’t rely on just one survey. Depending on the specialty and the survey respondents, there could be a very small number of participant responses for a particular category. Therefore, it is always a good idea to refer to multiple surveys. The larger the sample size and the more data points analyzed, the stronger case you have that your conclusion is representative of the “market”. Plus, there is regulatory guidance suggesting other sources should be considered. The Stark Law recommends that multiple, objective surveys are considered when determining the FMV of physician compensation.