Competitive Physician Compensation Models

Healthcare financial executives need to understand valuation methodology to ensure legal and regulatory compliance. When developing and reviewing their physician compensation programs, healthcare organizations should:

  • Understand the market data
  • Test outcomes of incentive plans for fair market value
  • Check total compensation for fair market value and reasonableness

Structuring competitive physician compensation arrangements can be a challenge for healthcare organizations trying to balance complex regulatory requirements against strategic business decisions, physician satisfaction concerns, and a highly competitive physician labor market. Many healthcare organizations are employing greater numbers of physicians to achieve physicianalignment and vertical integration. These organizations are increasingly faced with developing novel and more sophisticated physician compensation programs that will attract and retain physicians, often including productivity-based incentive compensation or rewards for high-quality outcomes. As healthcare organizations develop and review their physician compensationprograms, they should keep in mind the legal and regulatory framework that governs hospital payments to physicians as well as valuation concerns.

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