DQ 3-2
DQ 3-2 responses
1.
Because more than half of physicians are employed by hospitals or large market hospital delivery systems, Medicaid/Medicare and other large insurance companies play a huge role in physician compensation. This is because of the way healthcare insurance is structured today, where so many benchmarks, standards, and quality measures are used to pay out hospitals. "...the Internal Revenue Service describes fair market value as the negotiated agreement to terms between a willing buyer and a willing seller under conditions of no duress and where each party has full knowledge of relevant facts" (Collins, 2019). The pro of obtaining fair market analysis for physician compensation is the logic of it. It is realistic for a physician to expect compensation to be based on the market and national standards. It is the way of our healthcare delivery system. I will expect the same as I enter the workforce as a nurse practitioner. The con to this practice for physician compensation is that it is unfair, and in fact unlawful, to compensate physicians' based on their abilities to bring in patients and referrals. It is unlawful to put value on patients in terms of the compensation they will bring the hospital, and indirectly, they physicians who provide medical services to them. Because fair market analysis information is so public and well studied, it is acceptable to use these rates and statistics to negotitiate physician salaries. Obviously, depending on the hospital/medical institution, it will affect how physicians are compensated, and employment contracts can vary greatly. Still, there is no reason to not consider national benchmarks in the process.
Collins, H. MGMA. (2019). How fair is fair market value when it comes to physician compensation? Retrieved from:
https://www.mgma.com/resouces/financial-management/how-fair-is-fair-market-value-when-it-comes-to-phy
2
The federal government continues to focus on the relationships between hospitals and physicians specially in physician compensation. This trend is going to continue making it crucial for health care organizations to utilize proper estimation techniques when calculating physician compensation. Compensation models have become less complex, but it is important for evaluating practice opportunities. For many physicians who are choosing their first practice opportunity, picking a compensation plan usually is not likely an option. Compensation models are made for most medical groups, large managed care organizations, and hospitals. There are several pros and cons according to Grand Canyon University 2010 which as follows:
Pros:
1. The effective date of the contract interpreted as the date it begins to take effect.
2. Expected monetary compensation, if indicated, and the specifics of how it will be billed and paid.
3. Specific statements as to what each party is expected to do, how they will do it, and what each party is responsible for.
Cons:
1. Effective end date of the contract, as written out in the original contract.
2. Early termination by mutual consent of parties, as agreed to in writing by both parties.
3. Early termination by one party, not for cause.
Aspects of physician compensation arrangements involves a fair market value analysis. The fair market value amount of any compensation arrangement must be determined by an analysis that reflects the arrangement. The amount of compensation is negotiated by the parties.
3.
“Fair market value is, the price at which the property or service would change hands between a willing buyer and a willing seller, neither being under a compulsion to buy or sell and both having reasonable knowledge of the relevant facts” (Oelrich, 2012, p.2). The idea of fair market value on physician wages isn't a new concept, however facilities continue to struggle with what the term fair market value really means and how they can best apply it to physician compensation. Facilities need to assess what type of physician they are looking to hire as this will be a starting point for them to review what is considered fair compensation. Comparing to the national standard isn't the only way to determine base compensation. Again, it’s a starting point, however, things such as location and cost of living need to be assessed as well. There is no way that a facility in Rural Wisconsin could pay a primary care physician the same wage that a primary care physician in Chicago is making. Taking into consideration how much the physician would have to pay to live in Chicago would have to be a factor of the overall negotiations.
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