Robust physician compensation governance structures are fundamental to maintaining compliance!
By adhering to clearly defined policies and oversight mechanisms, health care organizations can ensure alignment with federal regulatory standards, including the Stark Law and Anti-Kickback Statute. Failure to identify and remediate compliance vulnerabilities—such as improperly structured compensation arrangements or insufficient documentation—can expose an organization to significant legal, financial, and reputational risk.
Best Practices in Physician Compensation Governance
1. Build and Maintain a Compensation Firewall
Separate strategic financial planning from physician compensation negotiations
2. Empower and Educate the Board
Ensure the board understands the compensation governance model and can question management
3. Audit Regularly and Document Thoroughly
Perform periodic audits and maintain comprehensive documentation
4. Standardize and Enforce Consistent Compensation Models
Apply uniform, market-based compensation models across the organization
5. Foster a Culture of Transparency
Promote open communication about compliance policies
Common Pitfalls in Physician Compensation Governance
1. Factoring in Referrals
Avoid basing compensation on the volume or value of referrals
2. FMV Opinion Shopping
Do not seek multiple valuations in pursuit of a desired FMV outcome
3. Ignoring Valuation Guidance
Do not disregard third-party valuator advice without proper justification
4. Inadequate Follow-Through by Management
Revisit pro forma assumptions and commitments made to the board
5. Informal Communication About Referrals
Avoid casual or suggestive language regarding referrals in written communications
We can help you ensure that physician compensation is compliant with FMV and commercial reasonableness standards.
For more than 30 years, SullivanCotter has helped hospitals, health systems and medical groups effectively manage complex regulatory risk from their financial relationships with both employed and independent physicians. With our unique combination of industry expertise, regulatory insight and market-leading physician compensation data, we work with organizations to mitigate risk through an array of comprehensive fair market value and commercial reasonableness assessments as well as advisory support.
