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Physicians and Hospitals Law Institute ● February 5-7, 2014

EE. What Do "Rockstars" Make? Legal Issues in Recruiting and Retaining Best of Breed Physicians Andrea M. Ferrari Manager HealthCare Appraisers, Inc. Delray Beach, FL Vivian M. Gallo Deputy General Counsel Shands Healthcare Gaineville, FL Lawrence W. Vernaglia Foley & Lardner LLP Boston, MA

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What Do “Rockstars” Make?

Issues in Recruiting and Compensating Best of Breed Physicians

AHLA Physicians and Hospitals Law Institute

February 2014

Andrea M. Ferrari, Esq., MPH, Manager, HealthCare Appraisers, Inc.

Vivian Gallo, Esq., Deputy General Counsel, UF Health Shands

Lawrence Vernaglia, Esq., MPH, Partner, Foley & Lardner, LLP

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Disclaimers: (We are lawyers, after all)This slide deck and the associated Toolkit:_______________________________________________________________________

Will not be covered in their entirety in the course of this presentation; many items have been included only for general reference, and to provide context for the interactive discussion that we have planned.

Do not contain legal advice.

Are not an opinion of the fair market value, advisability or legality of any agreements, arrangements or activities.

Are not a one-size-fits-all prescription or “how to” guide for legally permissible activity.

Are a collection of general thoughts and ideas, meant to provide general guidance for identifying and addressing issues in recruitment and retention of rockstar physicians.

Use a spelling of “rockstar” that we know does not appear in the dictionary (think of it as a “defined term”).

May include statements or ideas that are controversial and not espoused by colleagues or employers.

Are the result of collaborative effort of your panelists, taking into consideration their past and present experience, and input from others.

Are for colleagues of a variety of different health law knowledge and experience levels (beginner to advanced).

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What Makes a Physician a Rockstar? Are there Objective Criteria?

There is a “how to” book…

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Some docs apparently advertise and “drink” in their Rockstar status…

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Does being the bassist for a band like Guns N’ Roses count?

(a la Stephen Harris, who may be delivering babies at a hospital near you…)

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Oncologists by day, in a touring band by night…

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What Makes a Physician a Rockstar? Are there Objective Criteria? (Are These Docs Rockstars?)

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Pediatric Cardiothoracic Surgeon• Within the field, “everybody knows his name.”• 50+ published peer reviewed articles• In the past, a frequent speaker at conferences• 20+ citations of his publications in work of others• Has his own Wikipedia entry• Holds 2 patents• His work is the subject of a documentary-style TV show• In demand as a speaker and consultant

Neuro-Ortho Spine Surgeon• Uncommon dual specialization• 144 page CV that includes 150+ published peer

reviewed articles and 50+ invited presentations• Many past academic leadership appointments

Orthopedic Surgeon Who Specializes in a Rare Procedure• One of a very limited number of physicians who

performs this procedure• Developed the prevailing techniques for the procedure• Attracts patients from all over the world • No academic appointment, but is frequently an invited

speaker in his focus area

Highly Sought Breast Surgeon• Name recognition among both patients and fellow

physicians• Published multiple books that are read by laypeople as

well as other medical professionals• Frequent speaker who is in demand for her name

recognition


The Rockstar Criteria Spectrum

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Less Objective More Objective

The Potter Stewart test: “I know it when I see it”

Formal checklist, scoring sheet or other instrument to measure indications of accomplishment, influence and renown

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What Makes a Physician a Rockstar? Are there Objective Criteria?Potential Criteria

_______________________________________________________________

Specialized training and/or certifications

History of peer reviewed publications

Frequent citation of physician’s publications

See Medline, Researchgate.net, Scholar.google.com

Prior academic and leadership appointments

Invited presentations

Extensive research experience and funding history

Media Coverage

Television

Print

Relevant internet coverage - e.g. Google, Wikipedia9

Common Recruitment and Compensation Arrangements for Rockstar Physicians – General Structures

Employment

_____________________________________________________ Common Employers of Record

Hospital

Hospital foundation

Academic institution (e.g. medical school)

Faculty practice plan

Friendly PC

Captive medical group

Concurrent employment/common paymaster?

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Common Recruitment and Compensation Arrangements for Rockstar Physicians – General Structures

Services Arrangements Other Than or in Addition to Employment:

_____________________________________________________ Professional services arrangement

Practice support (e.g. income guarantee agreement)

Medical director/administrative services/program leader agreement (e.g. Quality Director agreement)

Clinical/didactic teaching agreement

On-call coverage agreement

Research/investigator agreement

Consulting/speaking agreement

Combinations of the above11

Common Recruitment and Compensation Arrangements for Physicians – General Structures Examples of Common Physician Compensation Models

___________________________________________________________

Fixed annual compensation with or without annual or other periodic bonus such as:

productivity bonus (based on services performed personally)

quality bonus (upon achievement of specific quality goals)

patient satisfaction bonus (upon achievement of specific patient survey targets), and/or

cost savings/efficiency bonus (based on simultaneous cost savings and achievement of quality goals)

Annual productivity compensation (based on $$ per relative value unit)

Hourly compensation for services performed and documented, with or without holdback and bonus compensation for achievement of specific goals

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Common Recruitment and Compensation Arrangements for Physicians – General Structures Examples of Common Physician Compensation Models (cont’d)

_____________________________________________________________

Fee for service compensation:

Fixed dollar amount per service rendered, based on applicable CPT Code; or

Percentage of Medicare allowable amount per service rendered

Stipend per service or unit of service (e.g. fixed amount per speaking engagement)

Incentive compensation through a clinically integrated network, hospital-wide quality or efficiency program, or other hospital-physician alignment initiative

Certain combinations of the compensation structures listed above

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Common Recruitment and Compensation Arrangements for Rockstar Physicians – Considerations for Designing and Structuring Arrangements Physician Self-referral Law (“Stark”) Considerations

______________________________________________________ Stark prohibits a physician from making referrals for designated health

services (“DHS”) payable by Medicare to an entity with which the physician (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies.

Definition of DHS includes inpatient and outpatient hospital services

Definition of referral is any “request by a physician for the item or service, including the request by a physician for a consultation with another physician (and any test or procedure ordered by, or to be performed by (or under the supervision of) that other physician.”

When a hospital recruits a rockstar physician, that physician will probably be making DHS referrals to the hospital; if so, a Stark exception must apply

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Common Recruitment and Compensation Arrangements for Rockstar Physicians -Considerations for Designing and Structuring Arrangements Potentially Applicable Stark Exceptions for Compensation

Arrangements (examples only- not an exhaustive list)

____________________________________________________________________

Academic Medical Centers (“AMC”) Exception

Bona Fide Employment Exception

Personal Services Exception (including physician incentive plan provisions)

Recruitment Exception

Fair Market Value Compensation Exception

Indirect Compensation Arrangements Exception

_______________________________________ All have a requirement that compensation not take into account the volume or value of

referrals by the referring physician

All but one (recruitment) have an explicit requirement regarding fair market value

Several explicitly require that the arrangement be commercially reasonable

Other exceptions (personal services, AMC) implicitly require commercial reasonableness 15

Common Recruitment and Compensation Arrangements for Rockstar Physicians -Considerations for Designing and Structuring Arrangements

Federal Antikickback Statute (“AKS”) Considerations

________________________________________________________ AKS is a criminal statute with provisions for civil monetary penalties

AKS prohibits any individual or entity from purposefully offering, paying, soliciting or receiving any remuneration, including any kickback, bribe or rebate, directly or indirectly, in cash or in kind, for:

referring an individual to a person for the furnishing, or arranging for the furnishing, of any item or service covered in whole or in part by a Federal health care program; or

purchasing, leasing, ordering or arranging for any item or service that is covered in whole or in part by a Federal healthcare program.

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Common Recruitment and Compensation Arrangements for Rockstar Physicians Considerations for Designing and Structuring Arrangements


________________________________________________________ One Purpose Test (U.S. v. Greber, 760 F2.d 68 (1985))

Adopted by courts in 5 or more Federal circuits

Espoused by the OIG (advisory opinions, compliance guidance documents)

An arrangement is deemed to violate the AKS if even one purpose is to induce or reward referrals of Federal healthcare business

The one purpose test, coupled with the broad language of AKS, makes the universe of potentially illegal activity quite expansive

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Common Recruitment and Compensation Arrangements for Rockstar Physicians Considerations for Designing and Structuring Arrangements


______________________________________________________ One Purpose Test (cont’d)

2005 OIG Supplemental Compliance Program Guidance for Hospitals:

…neither a legitimate business purpose for the arrangement, nor a fair market value payment, will legitimize a payment if there is also an illegal purpose (i.e., inducing Federal health care program business).

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Common Recruitment and Compensation Arrangements for Rockstar Physicians -Considerations for Designing and Structuring Arrangements Federal Antikickback Statute (“AKS”) Considerations

______________________________________________________

□ Safe harbor” regulations define conduct that will not be treated as an offense under the AKS

□ Two of the three AKS safe harbors that are most likely to be applicable when recruiting rockstar physicians (bona fide employment safe harbor and personal services and management contracts safe harbor) require, among other requirements:

Compensation not take into account the volume or value of referrals or Federal health care program business generated by the physician; and

Compensation be fair market value

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Common Recruitment and Compensation Arrangements for Rockstar Physicians -Considerations for Designing and Structuring Arrangements Federal Antikickback Statute (“AKS”) Considerations

______________________________________________________

□ The recruitment safe harbor requires, among other requirements:

The payment or exchange of anything of value must not benefit, directly or indirectly, any person (other than the recruited practitioner) or entity in a position to make or influence referrals payable by a Federal healthcare program

may be interpreted as an implicit requirement of fair market value for payments that are made to an existing practice to allow recruitment of a physician

The amount or value of benefits may not vary with volume or value of referrals or other business generated

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Common Recruitment and Compensation Arrangements for Rockstar Physicians - Considerations for Designing and Structuring Arrangements


________________________________________________________ An arrangement that does not meet the requirements of a safe harbor is not a

violation of the AKS per se, and will be analyzed case by case

2005 OIG Supplemental Compliance Program Guidance for Hospitals -The general rule of thumb is that any remuneration flowing between hospitals andphysicians should be at fair market value for actual and necessary items furnished orservices rendered based upon an arm’s length transaction, and should not take intoaccount, directly or indirectly, the volume or value of any past or future referrals or otherbusiness generated between the parties. [] Arrangements under which hospitals: (1)provide physicians with items or services for free or less than fair market value; (2) relievephysicians financial obligations they would otherwise incur; or (iii) inflate compensation paidto physicians for items or services pose significant risk. In such circumstances, an inferencearises that the remuneration may be in exchange for generating business. 21

Common Recruitment and Compensation Arrangements for Rockstar Physicians - Considerations for Designing and Structuring Arrangements Internal Revenue Code (“IRC”) Considerations for 501(c)(3) Entities

______________________________________________________ Entities that are tax exempt under Sec. 501(c)(3) must operate exclusively

for tax exempt purposes and must not engage in compensation practices that will result in private inurement

General Guidelines:

Compensation to physicians should be fair market value for services provided.

Total compensation paid should be “reasonable” for the market, physician specialty and responsibilities.

IRC Sec. 162: “reasonable” compensation is the amount that would ordinarily be paid for like services by like enterprises under like circumstances.

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Post Affordable Care Act Reimbursement and Regulatory Changes

________________________________________________________ Shift from volume to value based payments

Hospital Inpatient Value Based Purchasing Program (“HIVBPP”)

Expanded Inpatient Quality Reporting Program (“IQRP”)

Physician Quality Reporting System (“PQRS”)

Hospital Readmissions Reduction Program (“HRRP”)

Medicare non-payment rules (for hospital acquired conditions (“HACs”), etc.)

Medicare Shared Savings Program (“MSSP”)

Private payors and state Medicaid programs using ACA/Medicare payment rules and incentive programs as a model

Increased hospital cost pressures and need for hospital-physician alignment

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Common Recruitment and Compensation Arrangements for Rockstar Physicians - Considerations for Designing and Structuring Arrangements Civil Monetary Penalties Law (“CMPL”) for Payments to Induce a

Reduction or Limitation in Services to Beneficiaries

_______________________________________________________ Sec. 1128A(b)(1): prohibits a hospital from knowingly making a payment

directly or indirectly to a physician as an inducement to reduce or limit services to Medicare or Medicaid beneficiaries under the physician’s care.

Gainsharing and “gainsharing-like” compensation arrangements, as well as certain bonus, incentive and other efficiency-promoting compensation arrangements, may implicate the CMPL provisions.

Compensation in these arrangements should be fair market value for activities that are not reductions or limitations to services to Medicare or Medicaid beneficiaries under the physician’s care.

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Other Considerations:

______________________________________________________ Federal False Claims Act (the “magnifying glass” for Stark and AKS)

Qui tam actions have become much more common over the last several years

Treble damages add up quickly

State physician self-referral statutes (“mini-Stark" statutes)

State antikickback and fee splitting statutes

State law regarding corporate practice of medicine

Other state laws that may affect permissible types and models of compensation

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Just Some of the Recent Physician Compensation Activity in the News – Cautionary and Instructive (see attached Toolkit for further detail):

___________________________________________________________________

Tuomey (verdict for government on retrial)

Halifax (partial summary judgment in favor of government and relator)

All Children’s Health (denied motion to dismiss)

HMA/EmCare (unsealed, pending, government to join)

Covenant Medical Center (settlement)

Cooper Health System (settlement)

White Memorial Medical Center (settlement)

Compare all of the above to… Villafane

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U.S. ex rel. Villafane v. Sollinger, W.D. Ky. (2008) (“Villafane”)

______________________________________________________ Case focuses on claims related to AMC Stark exception and AKS

Both the Stark and AKS claims were dismissed by the trial court

The court applied what it called a “goal and purpose oriented perspective” rather than the “hypertechnical” perspective advocated by the plaintiff

The court was satisfied that “substantial academic and clinical services” were provided by physicians in supervising 100 residents per year, regardless of a lack of timekeeping

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Common Recruitment and Compensation Arrangements for Rockstar Physicians - Considerations for Designing and Structuring Arrangements Villafane (cont’d)

________________________________________________________In re the question of fair market value compensation, the court said:

In determining the fair market value of compensation paid by the AMC for physician teaching and administrative services, one need not take into consideration income derived from private practice.

The Chief of Staff salary, even though near or above the high of the range of compensation supported by surveys of other physicians of the specialty (neonatology) did not fail the test of FMV because:

The physician was at or near the top of his profession;

The physician had substantial responsibilities within the medical school that warranted higher compensation than peers; and

Comparing this top physician with physicians represented in general salary surveys is comparing “apples to oranges.” 28

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Analyzing Fair Market Value

What is “Fair Market Value”?

________________________________________________Stark: The term “fair market value” means the value in arm’s length transactions, consistent with the general market value…(42 USC §1395NN)

42 CFR §411.351 – For purposes of Stark, “general market value” means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as a result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement.

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________________________________________________42 CFR §411.351 – Usually, the fair market value price is the price at which bona fide sales have been consummated for assets of like type, quality or quantity in a particular market at the time of acquisition…

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___________________________________________AKS: No explicit definition of fair market value in AKS Many OIG publications are informative of how the government may

informally define fair market value for AKS purposes.

AKS guidance suggests a similar definition to the Stark definition – i.e., fair market value is the value in arm’s length transactions, when there is no tainting by the potential of the parties to the transaction to generate referrals or other business for the other party.

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___________________________________________1994- OIG Special Fraud Alert: “FMV must reflect an arm’s length transaction

which has not been adjusted to include the additional value which one or both of the parties has attributed to the referrals between them.”

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_______________________________________________ IRS: Cartwright definition- fair market value is the price at which property

would change hands between a willing buyer and willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of the relevant facts (United States v. Cartwright, 411 U.S. 546 (1973), quoting from Treas.Reg. Sec. 20.2031-1(b); also consistent with Rev. Rul. 59-60 (1959))

This definition is somewhat different than the Stark definition- hint: no mention of parties “not otherwise in a position to generate business for the other party.”

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_______________________________________________ A hypothetical concept that may not perfectly match the value to the parties

of a particular transaction

May be different for a physician’s clinical services than the physician’s administrative services (see 72 Fed. Reg. 51016 (September 5, 2007) (Stark Phase III Final Regulations))

A distinct but often related concept to commercial reasonableness

Not necessarily established through: Earnest negotiations (see U.S. ex. rel. Kosenske v. Carlisle HMA, Inc.)

What a party has previously been paid (although this may be informative)

Opportunity cost or lost opportunity

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_______________________________________________ U.S. ex rel. Kosenske v. Carlisle HMA

…as a legal matter, a negotiated agreement between interested parties does not “by definition” reflect fair market value. To the contrary, the Stark Act is predicated on the recognition that, where one party is in a position to generate business for the other, negotiated agreements between such parties are often designed to disguise the payment of non-fair market value compensation.

Stark Phase I Preamble (66 Fed. Reg. 944) - Fair market value may be established “by any method that is commercially reasonable that provides evidence that compensation is comparable to what is ordinarily paid for the item or service in the location at issue, by parties in arm’s length transactions who are not in a position to refer to one another.”

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What is “Commercial Reasonableness”?________________________________________________________________

1998 Stark proposed rule:

“An arrangement is commercially reasonable if it appears to be a sensible, prudentbusiness agreement, from the perspective of the particular parties involved, even in the absence of any potential referrals.” (63 Fed. Reg., 1659, 1700 (Jan. 9, 1998))

2004 , Preamble to Stark Interim Phase II final rule (in response to a comment):

An arrangement will be considered commercially reasonable in the absence of referrals if the arrangement would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician (or family member or group practice) of similar scope and specialty, even if there were no potential DHS referrals. (69 Fed. Reg. 16054 (March 26, 2004))

Interpretive Summary: An arrangement should make business sense for the parties entering into it, regardless of any referrals or business to be generated between them. 36

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Analyzing Fair Market Value – The Daryl Johnson Risk Continuum (Adapted)_______________________________________________

No formal process

Payments based upon:

Physician “demands”

What “seems” right

Formal process, including documentation

Use of an appropriately qualified, experienced, independent valuator

Use of accepted valuation approaches

Selection and application of market data is documented to show a reasonable, logical, defensible conclusion of value

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More Risk Less Risk


CMS on Methods for Determining FMV:

___________________________________________ May use ”any commercially reasonable methodology” that fits with the Stark

definition of FMV, but:

“Reference to multiple, objective, independently published salary surveys remains a prudent practice for evaluation fair market value.”

“…the appropriate method for determining fair market value for the purposes of [Stark] will depend on the nature of the transaction, its location, and other factors…

although good faith reliance on an independent valuation (such as an appraisal) may be relevant to a party’s intent, it does not establish the ultimate issue of the accuracy of the value itself…”

(72 Fed. Reg. 51015 (September 5, 2007))38

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Anatomy of a Physician Rockstar Analysis(See Toolkit for Better Readability)

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Analyzing Fair Market ValueAccepted Approaches for Determining FMV:

__________________________________________________ Market Approach – compares the subject asset or arrangement to those that

have been sold/consummated Potential Fair Market Value Pitfall Question: Is the comparable asset transfer or arrangement

between parties in a position to refer or generate business for one another?

Cost Approach – quantifies the amount of money needed to replace the future service capability of an asset or arrangement

Potential Fair Market Value Pitfall Question: Can one reasonably replace the services being valued?

Income Approach – relies on conversion of anticipated future economic benefit to a single present amount

Potential Fair Market Value Pitfall Question: Will this approach result in compensation that reflects volume or value of referrals or other business generated?

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Sources of Data for Evaluating Fair Market Value:

________________________________________________________

Physician cash compensation surveys (a.k.a. physician “salary” surveys)

Examples of commonly utilized surveys, not specific to academic physicians (some heavily weighted with non-academic physicians):

Medical Group Management Association (“MGMA”)

American Medical Group Association (“AMGA”)

Sullivan Cotter and Associates (“SCA”)

Healthcare Compensation Service (“HCS”)

Towers Watson

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_________________________________________________

Some surveys are specific to academic physicians -examples:

MGMA’s academic physician survey

Association of American Medical Colleges (“AAMC”), Report on Medical School Faculty Salaries

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__________________________________________________________

Factors to consider when reviewing cash compensation survey data:

Cash compensation surveys generally report aggregate annual cash compensation from all sources, including:

If applicable, ancillary revenue and owner income

Compensation received for medical practice

Compensation for medical director, on-call coverage, consulting, teaching and other services that are supplemental to regular medical practice

Any and all incentive compensation

Cash compensation amounts often do not include the value of employer paid benefits such as retirement contributions, cell phone and car allowances, CME and travel reimbursements, health, life and disability insurance, employer paid malpractice insurance etc. 43



___________________________________________________________


Surveyed physicians are not representative of all physicians- e.g. some subspecialists are not well represented in survey data

Among surveyed physicians, there is a possibility of a non-response bias – i.e., physicians who respond may have different compensation than those who do not respond

Surveys report prior year data, and may not account for recent changes in compensation trends

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_________________________________________________________


Most cash compensation surveys report 25th percentile to 90th

percentile compensation

up to 10% of physicians surveyed may make more than the highest reported value

AAMC Survey reports 25th percentile to 75th percentile compensation

up to 25% of physicians surveyed may make more than the highest reported value

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__________________________________________________________

Some data sources other than cash compensation surveys:

For physician administrative services –

MGMA Medical Directorship and On-Call Compensation Survey

Integrated Health Strategies’ Medical Director Survey

Caveats to relying on data from these surveys:

i. There is substantial variability in physician administrative duties and the surveys do not contain specific information regarding duties associated with each response = It is not always clear if you are making an “apples to apples” comparison.

ii. Survey data largely reflect compensation paid to physicians in a position to refer and generate business for the payor = data may be “tainted” for purposes of supporting conclusions of fair market value under the Stark definition.

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________________________________________________________

Data sources other than cash compensation surveys:

Compensation reported and searchable as a result of the “Sunshine” provisions of the ACA (same caveats as apply to medical director survey information, noted on previous slide)

Physician executive compensation surveys (e.g. Cejka Physician Executive Compensation Survey)

Form 990 data (same caveats as apply to medical director survey information, noted on previous slide)

Other publicly available data –

What does Atul Gawande earn?

What does Sanjay Gupta earn?

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Analyzing Fair Market ValueFactors in Selecting and Appropriately Utilizing Market Data to Determine FMV

_____________________________________________________1. Does the physician have characteristics of a rockstar physician?

See slide 7 for sample criteria; also, Sample Criteria Assessment Tool in attached Toolkit

How many?

How much weight should each characteristic have in a compensation analysis?

Use a checklist or scoring sheet, as included in our toolkit?

Ensures consistency in parameters for identifying rockstar qualities

Provides documentation to support judgments and conclusions regarding rockstar qualities

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Factors in Selecting and Appropriately Utilizing Market Data to Determine FMV

_____________________________________________________

2. What services/contributions will the physician provide?

Clinical services to serve the institution’s patients?

Related Questions:

Is clinical productivity the only or even best measure of the value of this physician’s clinical services?

Does the presence of the physician and his or her skills or experience enhance the ability of the institution to meet the medical needs of its patients, regardless of the volume or value of the referrals that the physician makes and/or services that the physician personally performs?

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_______________________________________________________

2. What services/value will the physician provide? (cont’d)

Teaching/training services to help a teaching institution meet its mission or obligations?

Related Questions:

Will the physician’s presence enhance the entity’s ability to attract other high caliber teaching physicians?

Will the physician uniquely enhance the experiences of students, residents and fellows in the institution’s training programs?

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_________________________________________________________


Department or program leadership?

Related Questions:

Is the physician unusually or uniquely qualified to lead a particular clinical department or program due to rare or unique knowledge, expertise or influence?

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___________________________________________________________


Research activities to advance the mission of the institution?

Related Questions:

Is the physician unusually qualified to carry out particular research objectives?

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________________________________________________________

3. What are the characteristics of the market in which the physicians services will be provided?

Market specific compensation trends

The prevalence of rockstars in the market

Reimbursement environment (may be a factor)

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_______________________________________________________

4. If there will be multiple, distinct compensation arrangements with the rockstar physician:

Does each arrangement make sense, even if the physician makes no referrals?

Is there any overlap between or among the services provided under each arrangement? Is that overlap reasonable? (i.e., does the physician separately perform services under each arrangement, without running out of hours during each day?)

Does each arrangement meet all the requirements of a Stark exception?

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_____________________________________________________

4. If there will be multiple, distinct compensation arrangements with the rockstar physician (cont’d):

Is aggregate compensation through all arrangements subject to a cap?

Is the amount of the cap reasonable in relation to the range of compensation reported for other physicians of the general specialty (see questions 1 through 3)?

If aggregate compensation is not subject to a cap, is the expected aggregate compensation reasonable based on the physician’s qualifications, scope of commercially reasonable duties, and compensation history?

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Hypothetical Fact Pattern for Discussion

Pediatric Cardiothoracic Surgeon Within his field, “everybody knows his name.”

50+ peer reviewed published articles

In the past, a frequent speaker at conferences

20+ citations of his publications in work of others

Has his own Wikipedia entry

Holds 2 patents

His work is the subject of a documentary style TV show

In demand as a speaker and consultant

The Board of a teaching hospital and tertiary referral center (“Hospital X”) wants to recruit this physician from a large AMC that is in the same state.

Hospital X has a large proportion of pediatric Medicaid patients, and (compared to other hospitals) a large proportion of pediatric Tricare patients (due to its proximity to a military base).

Hospital X wants the physician to lead a new program for treating congenital heart defects, and to enhance its residency program in pediatric surgery. Hospital X is in a region that attracts many foreign nationals, and plans to market the new congenital heart program internationally to self pay patients.

Physician’s total annual compensation in his current position as an AMC employee is above the 90th percentile reported by MGMA for pediatric cardiovascular surgeons nationally.

MGMA has only 12 respondents in the pediatric cardiovascular surgery category and does not report productivity data for this category of physician, due to small sample size.

MGMA has 700+ respondents in the general category of cardiothoracic surgery, and the 90th percentile value for this category is 40% lower than the 90th percentile value that MGMA reports for the pediatric cardiovascular surgery category (much lower than what the physician is currently earning).

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Neuro-Ortho Spine Surgeon Uncommon dual specialization

144 page CV that includes 150+ peer reviewed published articles and 50+ invited presentations

Many previous academic leadership appointments

Large non-academic hospital (“Hospital Y”) wants to recruit this physician to enhance its spine surgery program.

Hospital Y is a level I trauma center that receives many patients with orthopedic and spinal injuries.

Hospital Y has a large orthopedic surgery department, but shares many of its orthopedic surgeons with a neighboring hospital.

Hospital Y has had trouble mobilizing members of the orthopedic surgery staff to improve longstanding efficiency problems in its ORs, and to assist Hospital Y in achieving its goal of becoming a Center of Excellence in orthopedic surgery.

Hospital is subject to a CIA as a result of past allegations of non-Stark compliant payments to certain physicians.

Physician has stated that he will not come to Hospital Y unless guaranteed an increase in annual income of at least 25% over his current income, and unless he has all of his relocation costs covered. His current annual income is consistent with the 90th percentile for orthopedic spine surgeons as reported by MGMA, and just above the 90th percentile for neurosurgeons as reported by MGMA.

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International Quality Expert Internal medicine physician by training

In addition to MD, physician holds MPH and MBA degrees

Physician’s practice focus is hospitalist medicine

A widely recognized expert in healthcare quality, and in initiatives to improve it

Author of 50+ published peer reviewed articles on healthcare quality, as well as several books

A frequent speaker at conferences

Frequent contributor to periodicals and on news programs (for segments on healthcare quality)

100+ citations of her publications in work of others

Multi-hospital system (“System”) wants to recruit this physician to be its Director of Medical Quality.

In the Director of Medical Quality role, physician will have substantial administrative duties, but will also continue to be a clinician performing hospitalist services, since the physician desires to maintain clinical skills and not to just be an administrator (“No all-desk jobs,” she says).

Physician will be assigned to one of System’s hospitals for all her clinical duties, and will be the attending hospitalist for medical units at the hospital for approximately 5 days per month.

Physician’s historical annual compensation includes speaking fees and publishing royalties, and is approximately $1 million per year.

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