Physician Compensation in Private Practice

Response to Physician Compensation in Private Practice & Regulations Discussion

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Response to Physician Compensation in Private Practice & Regulations Discussion

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“Fair market value is the price at which a willing buyer and a willing seller, neither of whom is under any obligation to buy or sell, and both of whom have a reasonable understanding of the relevant facts, would exchange the property or service” (Oelrich, 2012, p.2). The concept of fair market value for physician salary isn’t new; nonetheless, facilities continue to struggle with defining what the word “fair market value” implies and how to apply it to physician remuneration.

Facilities should evaluate the type of physician they want to hire as a starting point for determining what is considered fair compensation. Comparing to the national average isn’t the only technique to figure out your starting salary. Again, this is a beginning point; however, other factors such as location and cost of living must be considered. My hospital in rural Wisconsin could never afford to pay a primary care physician the same salary as a primary care physician in Chicago. The amount of money the physician would have to pay to reside in Chicago would have to be factored into the total talks.

Our hospital considers fair market value, but that isn’t always the starting salary for a physician. When negotiating a physician contract, our CEO considers a number of factors. For the first two years of their contract, our physicians often get a base rate plus an incentive guarantee. After that, they are paid their base salary, but their bonuses are depending on their performance. Most of the new physicians we hire are paid based on their wives. They normally have a defined number of wRVUs that they must complete each year as part of their base income, and then they are paid a specific amount for each wRVU that exceeds that threshold. This makes doctors accountable for being able to collect greater compensation.

Reference:

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W.L. Oelrich Jr. (2012). What do you need to know about fair market value compensation? Briefing for PYA leaders. 1-13 Demystifying-fair-market-value-compensation-what-do-you-need-to-know.html https://docplayer.net/7337384

Response to Physician Compensation in Private Practice & Regulations Discussion

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