ultra-carpet-cleaning-solutions

The 30 Largest Healthcare Deals of 2018: Who Got the Lowest Valuations?

Mon, 11 Feb 2019 20:50:40 GMT

We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The lowest reported price to EBITDA multiples (10x or lower, sorted alphabetically) are listed below.

Aurora Diagnostics: Sonic Healthcare Limited announced it entered into an agreement to acquire Aurora Diagnostics, one of the leading providers of anatomical pathology services in the U.S., in December. Aurora is a frequent acquirer of hospital-based pathology groups and their associated independent laboratories, having accumulated 220 pathologists and 32 practices as of the announcement date.

BrightSpring Health Services: Louisville-based BrightSpring Health Services and PharMerica Corp, a KKR portfolio company, agreed to merge in December as well. Similar to Civitas below, BrightSpring (FKA ResCare) is a national provider of home- and community-based health and human services to complex populations, and is primarily funded by local and state governments.

Civitas Solutions: Publicly-traded Civitas Solutions agreed to be acquired by funds managed by Centerbridge Partners. Civitas, which primarily operates under the National MENTOR name, is a leading national provider of home- and community-based health and human services to individuals with intellectual, developmental, physical or behavioral disabilities and other special needs. In most of its markets the primary payer is local and state governments, which Moody's cites as a significant source of business risk.

Envision Healthcare: Envision, a national provider of physician and ambulatory surgery services, was acquired by global investment firm KKR. The acquisition occurred amid controversy surrounding the company's out-of-network billing practices.

Express Scripts: Cigna Corp. acquired Express Scripts , creating one of the biggest providers of pharmacy benefits and insurance plans in the United States. Express Scripts' inclusion on this list is almost exclusively due to the loss of Anthem, Coventry, and Catamaran as clients. Eliminating the income included in the historical results related to these transitioning clients results in a more robust 12.5x multiple.

LifePoint: Hospitals, with their high capital investment requirements, make up the remainder of this list. The 68-hospital LifePoint Health and RCCH HealthCare Partners, which is owned by private equity firm Apollo Global Management, merged in 2018 , creating one of the largest healthcare providers in the country.

Mission Health: Mission Health, a six-hospital non-profit health system in western North Carolina, was acquired by HCA .

Oklahoma University Medical Center: OUMC, a large academic health system based in Oklahoma City, was sold by HCA to OU Medicine.

See who got the highest valuations here.

The 30 Largest Healthcare Deals of 2018: Who Got the Highest Valuations?

Tue, 08 Jan 2019 21:57:15 GMT

We ranked the 30 largest healthcare services and information technology deals of 2018, according to our database, by valuation multiple. The highest reported price to EBITDA multiples (15x or higher, sorted alphabetically) were as follows:

Ability Network: Ability Network, which was acquired by publicly-traded HIT roll-up Inovalon, provides a variety of cloud-based software and data analytics services through a SaaS model that simplifies administrative and clinical tasks for more than 44,000 acute, post-acute, and ambulatory care providers. Ability’s large and diverse customer base was a major attraction, as reports suggest that Inovalon viewed the acquisition as a way to expand the reach of its existing products.

Athenahealth: This deal is the result of a much publicized, two-year battle between an activist investment group and management. Upon completion of the acquisition, which is expected to close in the first quarter of 2019, Veritas and Evergreen plan to combine Athenahealth with Virence Health, the former value-based care group of GE Healthcare that was also acquired by Veritas earlier this year. Athenahealth provides a suite of cloud-based software and services to healthcare providers to manage medical records, revenue cycle, patient engagement, care coordination, and population health.

Center for Autism and Related Disorders: CARD, which was acquired by Blackstone, offers center, school, and home-based behavioral therapy nationwide to children and adults diagnosed with autism. The company provides services through a workforce of behavior analysts and behavior technicians, proprietary software, and an evidence-based, individualized approach. According to an article published by Autism research organization Spectrum, changes to U.S. federal and state laws now compel insurance companies to reimburse autism treatments, which has made the field much more attractive to investors in recent years.

Cotiviti Holdings: Cotiviti, a publicly-traded provider of payment accuracy and analytics-driven solutions focused primarily on the healthcare industry, was acquired by Verscend Technologies, a portfolio company of Veritas Capital. Veritas had an extremely busy year as the buyer in three of the 30 largest reported healthcare deals (Cotiviti, Athenahealth, and Virence).

Halo Pharma: Halo is a pharmaceutical finished dosage form contract development and manufacturing organization that was majority owned by funds managed by the private investment firm SK Capital Partners prior to being acquired by Cambrex. The acquisition expands Cambrex’s CDMO capabilities into finished dosage, while also increasing its customer base, as Halo is currently engaged in more than 100 product development projects for over 70 customers.

MatrixCare Holdings : Publicly-traded ResMed acquired privately-held MatrixCare , a SaaS-based provider of long-term post-acute care software, serving more than 15,000 providers across skilled nursing, life plan communities, senior living and private duty. These care settings are complementary to ResMed’s current offerings in home medical equipment, home health and hospice (Brightree and HEALTHCAREfirst).

MedRisk: The Carlyle Group acquired a majority stake in MedRisk while former investor TA Associates exited as part of the transaction. MedRisk manages workers compensation claims for physical therapy, occupational therapy and chiropractic services, focusing on providing patients quicker access to higher quality, lower cost care through a national network of accredited providers. According to a report published by Moody’s, MedRisk presents a strong value proposition to its payor clients and network providers, which has led to robust organic growth, and enjoys a national presence with no significant geographic concentrations. MedRisk currently works with 17 of the top 20 workers’ compensation insurance carriers and 8 of the top 10 workers’ compensation third party administrators.

Sound Inpatient Physicians: German dialysis specialist Fresenius Medical Care sold its majority interest in hospital-based physician group Sound Inpatient Physicians to a consortium led by Summit Partners and Optum. FMC said the investment enabled it to gain important insight into value-based care programs in the U.S. According to a report published by Moody’s , Sound’s success is strongly linked to its performance in the BPCI initiative and is better aligned with hospitals and payers than many other physician staffing companies - not least of which is its relationship with United.

Vetcor Holdings: VetCor is one of the largest operators of veterinary hospitals in the U.S., managing 272 locations across 28 states and employing approximately 900 veterinarians. Oak Hill Capital Partners led the transaction alongside significant new investment from existing shareholders Harvest Partners, Cressey & Company, and the VetCor management team. According to a report published by Moody’s, VetCor has significant recurring revenue, a proven ability to successfully integrate acquisitions, and benefits from favorable long-term trends in the pet care sector which lead to same-store sales growth in the low- to mid-single digit percent range. The pet care industry also benefits from the lack of reimbursement and regulatory risk when compared to healthcare providers.

See who got the lowest valuations here .

The 30 Largest Healthcare Deals of 2018: Who Got the Highest Valuations?

Tue, 08 Jan 2019 20:38:30 GMT

Ability Network: Ability Network, which was acquired by publicly-traded HIT roll-up Inovalon, provides a variety of cloud-based software and data analytics services through a SaaS model that simplifies administrative and clinical tasks for more than 44,000 acute, post-acute, and ambulatory care providers. Ability’s large and diverse customer base was a major attraction, as reports suggest that Inovalon viewed the acquisition as a way to expand the reach of its existing products.

Athenahealth: This deal is the result of a much publicized, two-year battle between an activist investment group and management. Upon completion of the acquisition, which is expected to close in the first quarter of 2019, Veritas and Evergreen plan to combine Athenahealth with Virence Health, the former value-based care group of GE Healthcare that was also acquired by Veritas earlier this year. Athenahealth provides a suite of cloud-based software and services to healthcare providers to manage medical records, revenue cycle, patient engagement, care coordination, and population health.

Center for Autism and Related Disorders: CARD, which was acquired by Blackstone, offers center, school, and home-based behavioral therapy nationwide to children and adults diagnosed with autism. The company provides services through a workforce of behavior analysts and behavior technicians, proprietary software, and an evidence-based, individualized approach. Accor ding to a n article published by Autism research organization Spectrum, changes to U.S. federal and state laws now compel insurance companies to reimburse autism treatments, which has made the field much more attractive to investors in recent years.

Cotiviti Holdings: Cotiviti, a publicly-traded provider of payment accuracy and analytics-driven solutions focused primarily on the healthcare industry, was acquired by Verscend Technologies , a portfolio company of Veritas Capital. Veritas had an extremely busy year as the buyer in three of the 30 largest reported healthcare deals (Cotiviti, Athenahealth, and Virence).

Halo Pharma: Halo is a pharmaceutical finished dosage form contract development and manufacturing organization that was majority owned by funds managed by the private investment firm SK Capital Partners prior to being acquired by Cambrex. The acquisition expands Cambrex’s CDMO capabilities into finished dosage, while also increasing its customer base, as Halo is currently engaged in more than 100 product development projects for over 70 customers.

MatrixCare Holdings: Publicly-traded ResMed acquired privately-held MatrixCare , a SaaS-based provider of long-term post-acute care software, serving more than 15,000 providers across skilled nursing, life plan communities, senior living and private duty. These care settings are complementary to ResMed’s current offerings in home medical equipment, home health and hospice (Brightree and HEALTHCAREfirst).

MedRisk: The Carlyle Group acquired a majority stake in MedRisk while former investor TA Associates exited as part of the transaction. MedRisk manages workers compensation claims for physical therapy, occupational therapy and chiropractic services, focusing on providing patients quicker access to higher quality, lower cost care through a national network of accredited providers. According to a report published by Moody’s , MedRisk presents a strong value proposition to its payor clients and network providers, which has led to robust organic growth, and enjoys a national presence with no significant geographic concentrations. MedRisk currently works with 17 of the top 20 workers’ compensation insurance carriers and 8 of the top 10 workers’ compensation third party administrators.

Sound Inpatient Physicians: German dialysis specialist Fresenius Medical Care sold its majority interest in hospital-based physician group Sound Inpatient Physicians to a consortium led by Summit Partners and Optum. FMC said the investment enabled it to gain important insight into value-based care programs in the U.S. According to a report published by Moody’s , Sound’s success is strongly linked to its performance in the BPCI initiative and is better aligned with hospitals and payers than many other physician staffing companies - not least of which is its relationship with United.

Vetcor Holdings: VetCor is one of the largest operators of veterinary hospitals in the U.S., managing 272 locations across 28 states and employing approximately 900 veterinarians. Oak Hill Capital Partners led the transaction alongside significant new investment from existing shareholders Harvest Partners, Cressey & Company, and the VetCor management team. According to a report published by Moody’s , VetCor has significant recurring revenue, a proven ability to successfully integrate acquisitions, and benefits from favorable long-term trends in the pet care sector which lead to same-store sales growth in the low- to mid-single digit percent range. The pet care industry also benefits from the lack of reimbursement and regulatory risk when compared to healthcare providers.

See who got the lowest valuations h er e .

Top 10 Most Valuable Intangible Assets in Healthcare Services

Thu, 03 Jan 2019 22:24:17 GMT

Healthcare services organizations rely on a variety of intangible assets to create business value, including patient and customer relationships, medical records, trade names, assembled workforce, licenses and certifications, non-compete clauses, proprietary technology, software, and others. Market data related to the value of these types of assets is scarce since they’re rarely sold separately, and when they are, the financial terms are seldom disclosed publicly.

One important public source of market data for many of these intangible assets are the valuations prepared for purposes of creating a post-transaction balance sheet in a business combination (aka a purchase price allocation). This type of analysis involves allocating the purchase consideration from a merger or acquisition to the individual asset categories, including identifiable intangible assets.

We maintain a database of intangible asset valuations from publicly available purchase accounting, including the relative value of each identified intangible asset of the acquired organization.

The following is a list of the top 10 most valuable intangible assets from our database, by industry segment, as a percentage of the business enterprise value. Per FASB, certain intangible assets, such as assembled workforce, are not recognized separately from goodwill in a business combination, and therefore have been excluded. Customer and patient relationships are typically not transferable on an individual basis, and have also been excluded.

ACO/IPA/PHO Provider Networks: According to the sample in our database, at the median, over half of the value of an ACO, IPA, or PHO was attributed to its provider network.
Hospital-Based Physician Group Facility Contracts: Hospital-based physician groups such as hospitalists, emergency physicians, anesthesiologists, and pathologists derive much of their value from their contracts and relationships with their facility partners.
Radiation Oncology Certificates of Need: With only three radiation oncology CONs in our database, the sample size is small, but nearly 40% of the business enterprise value was attributed to the CON in these deals, at the median. This is significantly higher than the relative CON values for other segments such as IRFs, ASCs, or home health agencies.

CON Valuation: Where's the Market Data?

Fri, 14 Dec 2018 21:40:00 GMT

For those of you who’ve been involved in a transaction where the only asset transferred is a certificate of need, you’ve probably found that market data is scarce for CON-only deals.

One potential data source we’ve spent some time reviewing recently is the 10-Ks and Qs filed by publicly-traded surgery center companies with the SEC. We found some useful tidbits of information in Surgical Care Affiliates’ filings for 2015 and 2016 (SCA was acquired in early 2017). SEC filings are often a great source of information, but sometimes you need to squint to find what you’re looking for.

Source of the Data

During this time period, SCA disclosed the enterprise value for each acquisition they made. They also reported an intangible asset on their balance for the acquired CON for each center that was acquired in a CON state. These values reflect an appraiser’s opinion of the contributory “fair value” of the CON to the overall acquired enterprise, not necessarily the value of the CON on a stand-alone basis. When market data is scarce, sometimes you have to be creative.

Unfortunately, SCA didn’t disclose the CON value for each deal, they disclosed the aggregate amount for the year-to-date period each quarter, so you can only calculate the aggregate amount recognized in each quarter. For many quarters, SCA only made one acquisition in a CON state, which makes things easy. For quarters where multiple ASCs with CONs were acquired, we think it’s reasonable to allocate the CON value recognized for the quarter to each center based on enterprise value.

Findings

Using this methodology, the fair value attributed to the CONs ranged from $514k to $925k at the 25th and 75th percentiles, respectively. When stated as a percentage of each ASCs enterprise value, the CON value measurements ranged from 3.01% to 7.01% of the total enterprise at the 25th and 75th percentiles.

Again, this market data relates to the appraiser’s opinion of the contributory value of the CON asset to the acquired enterprise, not necessarily the fair market value of a CON without an operating business attached.

Let us know if you have any questions about valuing certificate of needs or any other healthcare industry intangible asset.

CON Laws, Scope of Practice Restrictions, and Provider Non-Compete Clauses Targeted in New Trump Adm

Tue, 04 Dec 2018 21:45:28 GMT

On Monday, December 3, 2018, the Department of Health and Human Services (HHS) – in collaboration with the Departments of the Treasury and Labor, the Federal Trade Commission, and several offices within the White House – released a report detailing recommendations for improving choice and competition in the healthcare industry. The report identifies areas where the Administration believes federal and state rules restrict choice and competition. It also identifies actions the states or the federal government can take to significantly improve the American health care system.

Per the report, considerations that Congress and the states should make include:

Scrutinize horizontal and vertical integration by providers
Eliminate rigid collaboration and supervision requirements between non-physician providers and physicians
Repeal or weaken Certificate of Need (CON) laws
Make it easier for physicians and healthcare providers to practice in multiple states
Allow physicians with training from certain foreign medical residency training programs to forgo completing an American residency program
Amend the Federal Trade Commission Act to extend the FTC’s jurisdiction to nonprofit healthcare entities to prevent unfair methods of competition
Scrutinize restrictive covenants such as non-compete clauses with providers
Repeal the physician self-referral law that limited physician-owned hospitals

For more details regarding the Administration’s findings and recommendations, read the full 119-page report here . A summary of the recommendations starts on page 107.

Valuation Trends: Healthcare Services Valuation Multiples

Mon, 26 Nov 2018 21:14:42 GMT

One of the questions we get asked a lot is how valuations have changed over time. While we usually answer this question with only anecdotal evidence, here we’ve tried to answer it with data.

There are a couple of issues with doing this type of analysis:

Finding a large enough sample for each year
Ensuring the relative comparability of the sample used from year to year
Where possible, adjusting for other key factors that influence the valuation multiples, such as size

In order to address issues 1 and 2, we put together a broad sample of transactions involving capital-light outpatient healthcare service providers. These consist of providers of home-based services (home health and hospice), office-base professional services (physician practices, physical therapy, DSOs), and the more capital-light specialty outpatient facilities (ASCs, endoscopy, dialysis - excluding imaging and radiation therapy). To address issue 3, we also “size-adjusted” the multiples from each year using a regression equation, as explained here.

Using the regression equation from the sample for each year, the corresponding multiples at different sizes (in terms of EBITDA) are presented below.

The valuation multiples from larger platform deals increased significantly between 2012 and 2015, corresponding with an increase in private equity interest in the sector.
On the low end of the spectrum, the size-adjusted multiples remained relatively consistent with some random year-to-year fluctuation likely due to sample size, before increasing significantly so far in 2018, which may be early evidence of the impact of tax reform.

Which Healthcare Services Segments Have the Highest Margins?

Mon, 19 Nov 2018 21:22:07 GMT

One of the many benefits of tracking healthcare transactions closely and maintaining a very large database of deals where we can get reliable price to EBITDA and revenue multiples is that it provides insight into profit margins for segments where other financial benchmarking information is sparse.

Starting with this sample of healthcare transactions where financial terms were disclosed publicly, we eliminated general acute care hospitals and physician practices since they typically generate low or negative margins, at least once compensation is normalized. We then narrowed the list further to only include segments where the data is robust enough to be reliable.

It’s important to note that there's significant variation in certain segments, like inpatient addiction, for example, based on different payer strategies and operating models. It’s also important to remember that the sample consists of companies that were attractive enough to be acquired, and where financial details related to the transaction were made public through one source or another, so there could be some upward bias.

Highest Margin Segments

Endoscopy centers had the highest average EBITDA margins by far, followed by a group in the 26-32% range that includes inpatient addiction treatment, surgery centers, and the more capital-intensive outpatient facilities like imaging and radiation therapy centers.

Lowest Margin Segments

On the low end were inpatient psychiatric and long-term acute care facilities, and “capital light” segments like physical therapy, home health, and occupational medicine, where investors can earn solid returns on capital despite lower margins.

Valuing ACOs: Weighing the Probability of Shared Savings

Fri, 16 Nov 2018 21:30:39 GMT

The most important component of a valuation of an accountable care organization (or other multi-provider network that relies on risk-based shared savings models) is the revenue forecast, which involves “probability-adjusting” future shared savings payments in some manner.

Under the Medicare Shared Savings Program (MSSP), an ACO that meets its minimum savings rate (MSR) is entitled to a percentage of the total savings below its financial benchmark, which typically amounts to millions of dollars annually. Meanwhile, an ACO that misses its MSR by $1 gets nothing. Some ACO’s assume downside risk, meaning they have accepted the very real possibility of generating negative revenue in any given year. This structure makes ACOs very different from other healthcare organizations and forces the valuator to make probability adjustments when projecting the ACO’s future shared savings revenue.

BFMV has developed a calculator for probability-adjusting ACO revenue that factors in a normal level of fluctuation in health expenditures for a typical ACO population. Instead of getting into the theory behind the calculator, which we’ll cover in a future post (hint: it’s an option pricing model), here are a few scenarios to help explain how the calculator works.

Scenarios

1) The first scenario is a two-sided ACO model where there’s no MSR (MSR of 0%), which is basically the NextGen ACO model (despite the name, it’s the simplest model). We have also assumed that both the base case projected medical expenditures and the financial benchmark are the same ($10,000). In this scenario, the probability-adjusted upside ($180) is identical to the downside (-$180), so the probability-adjusted revenue is zero.

2) If we add an MSR of 2% to the same scenario, the upside, again, is almost identical to the downside, although both are lower due to some probability of the savings rate falling within the risk corridor where none of the savings/loss is shared.

3) Next, if we switch to a one-sided Track 1 MSSP model with a 50% sharing rate, the results look much better ($80), because the possibility of downside loss is eliminated. Note that this figure is fairly similar to the average annual shared savings per beneficiary across the entire MSSP, which has been in the $80-90 range historically.

4) Where it gets interesting is if you change the base case estimate of actual expenditures for the ACO's attributed population. If your ACO is confident it can reduce expenditures by 2.0% against the benchmark ($9,800) as a base case scenario (still subject to a normal level of annual fluctuation), the probability-adjusted shared savings look quite a bit better, for obvious reasons.

5) However, the optimal option at that point, from a purely-quantitative risk-agnostic standpoint, is to convert to the NextGen model described in scenario 1 where you assume two-sided risk, eliminate the MSR, and receive 100% of the savings or loss. In this scenario, there's still a significant chance of realizing a loss in any given year (32.7%), but the probability-adjusted upside ($295) far outweighs the downside risk (-$95), and the net probability-adjusted ACO revenue is quite a bit higher than in the Track 1 model (scenario 4).

Utility

While the calculator was developed to value ACOs, which we’ve done for a variety of purposes such as mergers and acquisitions, joint ventures, minority investor buy-in/buy-out, and even tax purposes, we think it also may have some utility for ACO executives deciding which of the various financial models to select.

We’re happy to share the model with anyone, just email me at whamilton@buckheadfmv.com and I’ll send you a copy. We also welcome any questions or feedback.

CMS Makes Assessing Provider Market Saturation Easier with a New Interactive Database

Wed, 31 Oct 2018 20:10:00 GMT

CMS' offers a helpful online tool that shows provider market saturation levels at the national-, state-, and county-levels for the following health services:

Ambulance (Emergency, Non-Emergency, Emergency & Non-Emergency)
Cardiac Rehabilitation Programs
Chiropractic Services
Clinical Laboratory (Billing Independently)
Federally Qualified Health Centers
Home Health Independent Diagnostic Testing Facilities (Part A and Part B)
Hospice
Long-Term Care Hospitals
Ophthalmology
Physical and Occupational Therapy
Preventive Health Services
Psychotherapy
Skilled Nursing Facilities

The tool allows user to choose three search criteria: reference period, metric, and health service area (listed above). Reference periods are 12-month periods dating back to 10/1/14. The most recent data reflects the 12-months ending 9/30/2017.

The metrics that can be chosen are:
Number of Fee-for-Service Beneficiaries
Number of Providers
Average Number of Users per Provider
Percentage of Users out of FFS Beneficiaries
Number of Users
Average Number of Providers per County
Number of Dual Eligible Users
Percentage of Dual Eligible Users out of Total Users
Percentage of Dual Eligible Users out of Dual Eligible FFS Beneficiaries
Total Payments

After the user chooses the reference period, metric, and health service area (listed above), the tool generates an interactive, color-coded map with the data. Below is a look at the market saturation map for hospice providers, on a national basis, from October 1, 2016 through September 30, 2017.

Once a national map is generated, users can click on the relevant state, and then the relevant county, to get more specific data. (Below is a glimpse of the hospice provider market saturation data available for Georgia.)

Market saturation data are based on claims data instead of the provider’s practice address. A provider is defined as “serving a county” if, during the 12-month reference period, the provider had paid claims for more than ten beneficiaries located in a county.A provider is defined as “serving a state” if that provider serves any county in the state.

The tool is being used by CMS to monitor and manage market saturation as a means to help prevent potential fraud, waste, and abuse. CMS hopes the data will also be used to assist health care providers in making informed decisions about their service locations and the beneficiary population they serve.

We believe the interactive tool can be helpful to business appraisers, as the data provide insight regarding competitive risks and growth opportunities for businesses in the listed health service areas.

The tool is available through the CMS website at: https://data.cms.gov/market-saturation . Future releases may include additional health service areas.

$11.5m Sightline Health Settlement: What Can We Learn?

Mon, 17 Sep 2018 19:36:08 GMT

mailto:whamilton@buckheadfmw.com Earlier this year, radiation therapy provider SightLine Health reached a $11.5m settlement with the DOJ in a lawsuit alleging it knowingly violated the federal physician self-referral and anti-kickback laws.

Financial Arrangement

According to the complaint, SightLine’s operating model was to build a radiation therapy center in a new market, and “syndicate” ownership of the center among referring physicians (primarily urologists). Sightline would keep 20% ownership of the JV entity and receive a management fee of $30,000 per month. The referring physicians would individually purchase the remaining 80%, split among 8 to 10 physician-investors who each invested approximately $100,000. The centers were leased to radiation therapists who billed and collected on a global basis and made rent payments to the JV entity for use of the space that allegedly varied based on the volume and value of referrals.

Allegations

The complaint alleges that 1) Sightline violated the Anti-Kickback Statute (“AKS”) by offering physicians the ability to profit, virtually risk-free, in a way that takes into account the volume and value of their referrals to the clinic; 2) the physician-investors violated the AKS by accepting remuneration from Sightline to refer patients; and 3) the physician-investors violated the Stark Law by referring designated health services to centers in which they have an ownership interest.

Potential FMV Issues

Although FMV issues aren’t specifically addressed in the complaint; there may be reason to assume that the plaintiff felt the physician's investments were not made at an FMV price.

Doing some back-of-the-envelope math, the physicians received an 80% interest in a JV entity for a total investment of between $800,000 and $1m, implying a total equity value of $1m to $1.25m. This, of course, is well shy of the cost to build a radiation therapy center with IMRT capabilities – a linear accelerator costs $2.5m to $3m itself, not including buildout. What we don’t know is if financing was used to acquire the facility and equipment – if it was, $1m to $1.25m of equity could theoretically be consistent with FMV.

Another potential FMV issue with the arrangement is that the complaint alleges the physician-investors were offered financing for the $100,000 investment at a 4.5% interest rate, with only the future profits of the venture pledged as collateral. According to the complaint, the investment was typically repaid with center profits within the first year. As a result, the complaint argues that the physicians took on very little financial risk, if any, while receiving significant remuneration.

What Can We Learn?

Since the case settled prior to trial, a lot of key information is unavailable. However, the complaint does include some specifics about the operating model and financial arrangement that provide clues that there may have been FMV-related issues that led to the significant settlement payment, including the investment amounts paid by the physician-investors and the related financing arrangements.

Review the complaint yourself here.

Have a joint venture you'd like reviewed from an FMV perspective? Contact us

Healthcare Industry Cost of Capital: Does it Vary by Segment?

Mon, 10 Sep 2018 19:42:37 GMT

One of the things we track closely is fairness opinions that get filed with the SEC when a public company gets taken private. It's always interesting to see the revenue and adjusted EBITDA projections prepared by management, as well as the comps used in the market approach section. Also interesting, and of relevance to anyone who develops a discount rate on occasion, is the cost of capital used by the bankers who prepare the analyses.

We keep a database of key information from and links to fairness opinions. We've sliced and diced the data a bit to see what factors seem to impact the cost of capital selected by the preparers the most (technical note - these represent midpoints of the range for each company, and exclude unprofitable and development stage companies). Keep in mind these are publicly-traded companies being taken private, so think large, diversified corporations.

Pharmacy came in the lowest, which was primarily due to the fact that one of the three data points was CVS, which is both the largest and had the lowest selected cost of capital. Tied for highest were medical transportation and specialty outpatient facilities, which may be is influenced by three older deals with high cost of capital estimates. The two more recent specialty outpatient deals actually had cost of capital estimates of 7.0% and 7.5% respectively.

Overall, there isn't much spread between segments, and the outliers seem to be explained better by other factors. Size, for example, clearly has a significant impact. We've previously discussed discussed the impact of size on valuation using a different data set.

Even timing may have a larger impact, as cost of capital estimates have decreased over the past several years.

Shoot us an email if you want to take a look at the full workbook.

ACO Results for Performance Year 2017: Top 4 Insights

Mon, 03 Sep 2018 19:49:45 GMT

CMS released performance year 2017 results in August for the Medicare Shared Savings Program (MSSP). It was definitely a big year for ACOs. The following is a list of key insights from this year’s data file.

The ACO Success Rate Increased

The percentage of ACOs that are successful is probably the most cited statistic related to the program. In PY 2017, 162 out of 472 ACOs in the MSSP beat their minimum savings rate (MSR) and achieved shared savings, representing a success rate of over 34 percent. This represents an acceleration of the improvements in previous years. There was an even larger jump in the ACO success rate when measured by total beneficiaries (i.e. the percentage of beneficiaries in a “successful” ACO), indicating that larger ACOs had more success in PY 2017.

CMS Turned a Big Profit

For the first time ever, CMS clearly turned a profit in PY 2017 to the tune of about $314 million. A lot of time is spent discussing the total “gain” from the program, which is usually cited as the gain generated by successful ACOs. This measure excludes ACOs with higher costs than their benchmark. What matters to CMS is the total aggregate expenditure relative to the total aggregate benchmark, less the amount shared with ACOs.

It's worth noting that the CMS Office of the Actuary estimates that this simple approach understates the true impact of the program by as much as 60% due to spillover effect on non-assigned beneficiaries.

ACOs Performed About the Same On Average

Despite the dramatic increase in success rate and improvement to the CMS bottom line, ACOs themselves actually performed about the same in terms of generating revenue. Total shared savings was $781m in PY 2017, or $86.82 per beneficiary, which was actually a slight decrease from PY 2016. The decline was due to a decrease in shared savings per beneficiary attributable to successful ACOs, meaning ACOs who exceeded their MSR did so by less (and a lower percentage of the total gain was shared by CMS as well, although this had less of an impact). These factors were off-set by the significant increase in the number of successful ACOs.

Older ACOs Continue to Perform Better

For the first time, the 2013 cohort almost matched their 2012 counterparts in terms of shared savings per beneficiary.
Like the 2013 cohort before them, the 2014 group’s performance declined in its fourth year in the program, as the benchmark reset at the beginning of a new contract.
The 2015 cohort’s performance actually declined in year 3, after both the 2013 and 2014 vintages showed significant improvement in their third year.
The 2016 cohort showed significant improvement in year 2, continuing a well-established trend.
The new 2017 ACOs performed in line with previous new groups, on average, and significantly better than the unusually slow starting 2016 cohort.

Feel free to reach out if you have questions about the data or want to discuss any ACO-related valuation issues.

Size-Adjusting Healthcare Services Market Multiples

Mon, 27 Aug 2018 19:10:40 GMT

As we wrote last week, larger healthcare services companies generally fetch higher valuation multiples – i.e. the purchase price represents a larger multiple of the EBITDA generated by the business. We presented a chart that includes data from health services transactions, and compares the valuation multiple to the size of the business acquired. Here’s the same chart limited to only home-based service businesses.

This week, we’ve also included the regression equation from the data that describes the relationship between size and valuation multiple (top right corner of the chart). This is the equation for the line that runs through the data set, and can be used to develop size-adjusted valuation multiples that represent “market” for the industry segment at various sizes, according to the sample. The table below includes market multiples from this sample at various sizes.

These size-adjusted market multiples are a starting point and a reasonableness check. Each business has different growth opportunities and risk factors, particularly in an industry as complex as healthcare. Factors such as diversity and sustainability of referral sources, out-of-network billing practices, regulatory risks, and capital intensity, among others, can all have a significant impact in specific situations.

What are Healthcare Services “Platform” Companies and Why are They Worth More?

Mon, 20 Aug 2018 19:18:29 GMT

One of the things we often discuss with our clients is the impact of the size of a healthcare services organization on its valuation. Generally larger companies are considered less risky, which leads to higher multiples and lower discount rates - and therefore higher valuations. The primary reason larger companies are considered less risky is they are more diversified in terms geography and/or services provided. For outpatient and home-based health services businesses, this typically means more locations. Smaller companies are more susceptible to major changes in operational performance due to external factors, like increased local competition or regulatory changes.

Many larger companies also have talented business development teams with track records of high growth, often through acquisition, with strong returns on capital - which also leads to higher valuations. These companies are referred to as “platforms” because they’ve established a repeatable operating model, have the internal resources to grow by sourcing and negotiating deals, and have a history of successfully integrating acquisitions.

The general concept of a platform is to buy 20 small shops at 5x EBITDA and then sell your large, multi-location platform for 10x.

The chart below includes data from over 200 transactions since 2010 involving outpatient and home-based health services businesses, and compares the valuation multiple to the size of the business acquired (size measured in terms of EBITDA). The transactions involving companies that generated EBITDA less than $5 million generally occurred in the 4x to 7x range, with a few exceptions, while the platforms generally range from 7x to 15x.

Occasionally, we’ll hear someone use a platform as a comp when putting a number on a “mom and pop,” or vice versa. Our strong recommendation is to either limit your pool of comparable transactions to those of similar size, or to “size-adjust” the multiple you use. We’ll be writing more about making size adjustments shortly.

Commercial Reasonableness and Physician Employment Arrangements: Two Points of View

Sat, 28 Jul 2018 19:05:06 GMT

A common assignment for a health care valuation consultant is to review a proposed employment agreement between a hospital (employer) and a physician (employee) and determine whether the compensation described in the agreement is consistent with fair market value (FMV). In addition to reviewing the agreement from an FMV perspective, valuation consultants are often asked to assess whether the proposed arrangement is commercially reasonable.

These reviews are very important components of a hospital’s compliance efforts. Hospitals are employing physicians on an ever increasing basis. The Stark laws require that the compensation hospitals pay to employed physicians is FMV and is part of a commercially reasonable agreement. These are separate and distinct determinations for the valuation consultant to make, because employment compensation that meets the FMV standard may not necessarily be part of a commercially reasonable agreement, and vice versa.

Determining the FMV of a physician’s services presents its own challenges, but there appears to be even more uncertainty and inconsistency in the health care valuation industry related to commercial reasonableness opinions. Part of the challenge is the limited guidance that has been provided by the Centers for Medicare and Medicaid Services (CMS) regarding the definition of “commercially reasonable” and what constitutes a commercially reasonable arrangement for physician services.

Below is a summary of the guidance that appears in the Stark regulations:

We are interpreting “commercially reasonable” to mean that an arrangement appears to be a sensible, prudent business agreement from the perspective of the particular parties involved, even in the absence of any potential referrals.(1)
With respect to determining what is “commercially reasonable,” any reasonable method of valuation is acceptable, and the determination should be based upon the specific business in which the parties are involved, not business in general.(2)
In the absence of referrals, an arrangement will be considered “commercially reasonable” if the arrangement would make commercial sense when 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.(3)

Without a safe harbor or universally accepted methodology available, the valuation consultant—using generally accepted approaches to valuation—must find a logical approach to determine what is commercially reasonable and then support his/her findings. A good starting point when reviewing a physician employment arrangement is to find out the purpose of the arrangement (i.e., Why is the physician being employed?) and evaluate the commercial reasonableness of the arrangement with that purpose in mind.

For example, one way to determine commercial reasonableness is to look at a physician employment arrangement as a financial investment and decide whether or not, in the absence of referrals, it is a good one. This approach works if the primary purpose of the arrangement is to produce financial returns for the hospital employer. In this scenario, benefits from the arrangement must exceed costs for a “go” versus a “no go” investment decision. The analysis consists of projecting professional collections, operating expenses, and physician expenses and then determining whether the professional services of the physician generate positive cash flows for the hospital. It is easy to argue that a rate of return in excess of the hospital’s minimum acceptable return on an investment (i.e., its hurdle rate) would make the employment arrangement commercially reasonable. The problem with this approach is that market research data indicate that the “profitable” hospital-owned physician practice is a rarity. The Medical Group Management Association (MGMA) 2018 Cost and Revenue Survey shows that the median net income/ loss for a hospital-owned family practice is a loss of $118,645 per full time (FTE) physician. For hospital-owned internal medicine practices, the median loss is $168,239 per FTE physician; for hospital-owned multi-specialty practices, the median loss is $201,703 per FTE physician. Considering this data alone, hospitals should not expect meaningful financial returns when employing physicians. Understandably, it is difficult to prove that these arrangements are commercially reasonable when analyzing them from a purely financial investment perspective.(4)

A second way to determine commercial reasonableness is to look at a physician employment arrangement and determine whether or not it constitutes a good and necessary expense for the hospital. This approach is especially appropriate if the rationale for the employment arrangement is that it helps the hospital meet the IRS’s community benefit standard for tax-exempt status or maintain compliance with other laws. An argument can be made that the employment arrangement, viewed as an expense, makes commercial sense and is a necessary cost of doing business, if the arrangement accomplishes one of these goals at a cost that is less than or consistent with other alternatives (e.g., entering into professional services arrangements with private practice physicians or recruiting new physicians to a start-up practice).

For example, the Patient Protection and Affordable Care Act (PPACA), enacted in 2010, requires that tax-exempt hospitals conduct a community health needs assessment (CHNA) every three years and adopt an implementation strategy to meet the identified community health needs.(5) These assessments often identify any community shortages of primary care physicians and specialists who accept Medicare, Medicaid, and uninsured patients and find solutions for addressing those shortages. Accordingly, fair market value compensation paid to a physician under a hospital employment arrangement may also be commercially reasonable—even if the physician’s medical practice generates a financial loss—if that arrangement helps secure or improve access to care for the Medicare, Medicaid, and uninsured populations. This may also be true for situations in which an existing non-employed community physician (1) is a roadblock to recruitment in his/her specialty, (2) won’t participate in succession planning for his/her practice, and/or (3) will not cooperate with hospital initiatives (such as quality reporting, etc.). In these cases, it may be commercially reasonable to employ the community physician (assuming that he/she will comply as a result of employment), even though the medical practice won’t generate a profit.

In any of these situations, quantifying and documenting the community benefits stemming from the physician employment arrangement and any uncompensated care the employed physician provides could be instrumental in the hospital’s efforts to maintain a tax-exempt status and could show that the arrangement is a commercially reasonable expense. Supporting documentation for the commercial reasonableness review would include analyses of the external market factors (e.g., a national or regional physician shortage, physician compensation benchmarks, recruitment offers being made to comparable physicians) that help defend the amount of compensation paid to the employed physician and show that more cost efficient alternatives were not readily available.

Another example of a physician employment arrangement that may be commercially reasonable (from the expense perspective, not the financial investment perspective) is one that does not produce a profit (from a medical practice standpoint), but does help the hospital-employer comply with the Emergency Medical Treatment and Active Labor Act (EMTALA). It stands to reason that if an employed physician’s professional services generate a loss for the medical practice, his employment arrangement could still be considered commercially reasonable, if his employment resulted in emergency coverage for a new specialty and/or reduced on-call payments to independent contractors by a substantial amount. Further evidence of commercial reasonableness would include data showing that the quality, consistency, and/or reliability of call coverage improved because of the employment arrangement.

To conclude, the commercial reasonableness of a hospital/physician employment arrangement can be determined from at least two different points of view: one in which the arrangement is viewed as a financial investment or one in which it is viewed as an expense. If the arrangement is viewed as a financial investment, it would need to produce some minimum rate of return to be deemed commercially reasonable. If the arrangement is viewed as an expense or a cost of doing business, it would need to be proven necessary and would need to be comparably priced or less costly than acceptable alternatives to be considered commercially reasonable.

These are just two examples of ways in which health care valuation consultants can assess commercial reasonableness. As previously noted, CMS has indicated that any reasonable method of valuation is acceptable, thus implying that there are many other valid approaches, including those that seek to quantify the value of the community benefit (such as increased access to quality care) that can come from hospital/physician employment arrangements. Regardless of the approach used, a commercial reasonableness analysis requires an understanding of the purpose of the arrangement being reviewed; acknowledgement of the relevant facts and circumstances of the situation; and an appreciation of the unique requirements and needs of the hospital, the physician, and the community involved.

Federal Register / Vol. 63, No. 6 / Friday, January 9, 1998 / Proposed Rules
Federal Register / Vol. 66, No. 3 / Thursday, January 4, 2001 / Rules and Regulations
Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Rules and Regulations
Medical Group Management Association, 2018 Cost and Revenue Survey
U.S. House of Representatives, 111th Congress, 2d Session PRINT 111–1, Compilation of Patient Protection and Affordable Care Act, U.S. House of Representatives, May 2010

This article was originally published in the July 2011 (Volume 13 Number 7) issue of Compliance Today. It has been updated to reflect 2018 data.

Study Shows Increased Rates for Physician Staffing Services

Sun, 03 Jun 2018 18:57:10 GMT

According to our review of current GSA price lists, the average cost of a locum tenens physician is approximately $1,700 per day compared to approximately $1,600 per day in 2016. This includes an 8-hour shift plus being on-call until the next shift begins. (Rates vary significantly based on physician specialty.) The $1,700 per diem does not include travel or lodging expenses.

These and many more findings are published in the 2018 Cost of Physician Staffing Services: Hourly Rates for On-Site Work and On-Call Coverage, which is available on BuckheadFMV.com here. (We would like to share the report with you. Send an email to jweinbloom@buckheadfmv.com if you would like a free copy.)

The study focuses on rates included in government contracts with 93 different physician staffing firms across the country. The data reflects 75 physician specialties and allied health positions and includes hourly rates for on-site services and hourly rates for after-hours on-call services and weekend on-call services. The summary below provides a nice overview; however, if you want the details, send us an email.

Hospice Valuation: Trends, Value Drivers, and Physician Compensation

Thu, 12 Apr 2018 18:51:12 GMT

This afternoon, Will Hamilton and I hosted a BVR webinar on hospice-related valuations. Hospice is a growing segment in the healthcare industry and a hot area for M&A activity. During the webinar we discussed some of the underlying fundamentals that make hospice such an interesting area for investors. We also discussed valuation methodologies for hospice businesses and current multiples for players in the hospice arena.

Separate from the business valuation discussion, we also talked about some of the service/compensation valuation issues that are present in the hospice industry. Specifically, we addressed physician compensation in the hospice setting – which is a focal point for many appraisers in the compliance arena.

If you're interested in hospice valuation issues, please download the slide deck here . Also, you can purchase an audio copy of the webinar on BVR's website here .

Hospital and Cardiology Group Settle Allegations of Improper Medical Director Payments

Thu, 15 Mar 2018 18:39:59 GMT

On March 7, 2018, the Department of Justice announced that a hospital and a physician group will pay $20.75 million to settle allegations of kickbacks and Stark Law violations. The case started with a qui tam lawsuit filed by Dr. Tullio Emanuele, a cardiologist once employed by the group.[1] In an amended complaint filed November 30, 2012, Dr. Emanuele alleged that his former employer, Medicor, a private practice of cardiologists and internal medicine physicians, entered into sham medical directorship agreements with Hamot Medical Center.[2]

At the time of Dr. Emanuele’s employment, Medicor was the exclusive provider of cardiology services at Hamot, a tertiary care facility, regional referral hub, and Level II Trauma Center located in Erie, Pennsylvania. In the late 1990’s/early 2000’s, Medicor considered merging with other cardiology groups in the community and aligning with Hamot’s cross town rival. Hamot responded by offering an expanded relationship to Medicor and forming the Hamot Heart and Vascular Institute. Instead of having an ownership interest in the institute, the group was given the opportunity to co-lead the institute through various medical directorship arrangements.

In 2005, there were six medical directorship agreements between Medicor and Hamot. Compensation for these agreements was about $33,750 monthly or $405,000 annually. The agreements included Medical Supervision and Direction of:

Clinical Cardiovascular Services ($6,250 monthly)
Rehab/Restorative Cardiovascular Services ($4,166 monthly)
Regional Affiliate Hospital Cardiovascular Services ($5,000 monthly)
Non-Invasive Cardiovascular Lab Services ($6,666.66 monthly)
Cardiac Catheterization Lab Services – ($6,666.66 monthly)
Direction of Electrophysiology Services ($5,000 monthly)

During his employment with the group from 2001 to 2005, Dr. Emanuele was assigned one of the medical directorships. He complained that the medical directorships were improper because:

The contracts did not specify particular services to be performed; they only referenced a vague description of duties that were “more in the nature of guidelines or aspirational goals”.
The group, nor the hospital, maintained time cards or other billing records to document the services that were provided. A group administrator did fill out pre-prepared time study forms during the year – but the information was not accurate.
Dr. Emanuele’s agreement required him to provide at least 400 hours of service per year in return for $75,000 in compensation. However, he actually only provided about 10 hours of service per month. Therefore, the group was paid more than fair market value.
Given the size of the hospital and the scope of services being provided (number of beds, catheterization labs covered, services provided, etc.), there was no need for the six different medical directorships. Therefore, the arrangements were not commercially reasonable.
No consideration was given as to whether or not Dr. Emanuele had the qualifications to provide the medical directorship services at the facility. He was never interviewed or evaluated for the position by the hospital. Moreover, the medical directorship positions were not advertised nationally or even regionally to determine who was to fill the positions.
No one ever audited the contracts or the effort provided by the medical directors. The medical director stipends were paid whether the services were performed or not.

In a March 15, 2017, the U.S. District Court for the Western District of Pennsylvania found that two medical directorships between Medicor and Hamot violated the Stark Law. (Interestingly, these two arrangements were not part of the six identified by Dr. Emanuele.) The basis of the decision was that there were never any formalized, signed documents related to these two arrangements for the Chairman of Cardiovascular Medicine and Surgery and the Director of the Women’s Heart Health Program. Therefore, the court found that these two arrangements did not meet the in-writing requirements of the fair market value or personal services exceptions. The court also found that the six agreements included in Dr. Emanuele’s complaint did indeed meet the in-writing requirements. Even though the six contracts lapsed at times, there was enough documentation to meet the requirements.

The parties entered into settlement discussions sometime after the court’s rulings were unsuccessfully challenged in the later part of 2017. The DOJ’s March 7, 2018 press release indicates that the settlement resolves allegations that from 1999 to 2010 Hamot paid $2 million per year under 12 physician and administrative services arrangements which were created to secure Medicor patient referrals. According to the release, Hamot allegedly had no legitimate need for the services for which they were contracted, and in some instances the services either were duplicative or were not performed. The press release also indicated that, while Dr. Emanuele was awarded $6,017,500 as part of the settlement, the False Claims Acts claims resolved by the settlement are allegations only, and there has been no determination of liability.

The settlement shows the importance of formalizing medical director agreements with physicians and ensuring that compensation is commercially reasonable and fair market value. Moreover, it is not enough to set hourly rates at fair market level.(Based on our review, it does not appear that the implied hourly rate of $187.50 in Dr. Emanuele’s agreement was an issue.) It is also important to monitor and examine arrangements to ensure physicians are paid only for services actually provided – and that physician services are only purchased when a legitimate business purpose, not related to referrals, exists for buying them.

[1] United States ex rel. Emanuele v. Medicor Associates, Inc. et al., Civil Action No. 10-cv-00245-JFC (W.D. Pa.).

[2] Hamot is now affiliated with the University of Pittsburgh Medical Center (UPMC)

What to Do When You Need to Double Check wRVUs

Mon, 12 Mar 2018 18:45:53 GMT

Work RVUs (wRVUs) are commonly used to measure physician productivity. Under many physician compensation plans, physicians are paid a specific dollar amount for each wRVU generated. Since a significant amount of money may be tied to wRVUs – it is important that employers calculate them correctly and have confidence that wRVU totals accurately reflect the amount of work done by their physicians.

We recommend periodically testing wRVU inputs and related data to help make sure physicians are paid appropriately. See the graphic for a summary of tests/analyses that can be done to assess whether the wRVU calculations being used to compensate physicians at your organization are appropriate.

Physician-Hospital Marketing Agreements: Don’t Let Billboards and Brochures Land You in Hot Water

Mon, 22 Jan 2018 19:30:59 GMT

In two recent cases, hospitals that provided marketing services to physicians for less than fair market value faced allegations they had violated the False Claims Act, the Anti-Kickback Statute, and the Stark Law. In both situations, the hospitals settled with the government and ended up paying millions of dollars.

In December 2017, Pine Medical Center in Dallas, Texas paid a $7.5 million settlement over allegations that it provided kickbacks to physicians in the form of free marketing services. Former members of the hospital’s marketing department claimed that the hospital paid to advertise physician practices in magazines and newspapers and on billboards, radio, and television. The hospital also allegedly paid for website services, brochures, business cards, and promotional lunches on behalf of physicians. Per the complaint, the hospital was not featured in any of the ads, so the advertisements weren’t a joint marketing effort – their purpose was to induce physicians to send referrals to the hospital.

Earlier in 2017, Pacific Alliance Medical Center in Los Angeles agreed to pay $42 million to settle alleged false claims violations arising from improper payments to physicians. The suit was brought by a former Senior Manager of Physician Integration for the hospital. Included in the lawsuit were allegations that under various marketing agreements, PAMC would provide physicians and practices with free marketing services in return for patient referrals. The marketing services targeted Medicare and Medi-Cal patients and included radio and television ads, door hangers for physician offices, patient transportation, and marketers who would hand out flyers to pregnant women at WIC Nutrition stores and seniors at the Social Security office. Under some arrangements, PAMC would split the cost of marketing with a practice. Under other arrangements, it paid for all the marketing costs. The amount the hospital spent on the services ranged from $4,000 to $18,000 per month per physician or clinic. The complaint held that the purpose of the marketing benefit was to induce referrals to the hospital and that referral volume was considered when determining whether marketing benefits would be offered to a physician or clinic.

As these cases clearly show, hospitals need to be very cautious about providing marketing services (or any other services or products of value) to independent physicians. If a hospital wishes to provide marketing services to physicians, it should, at a minimum:

Make sure physician eligibility for receiving the marketing services, and the amount of services the physician ultimately receives, are in no way tied to the physician’s current or potential referral volume.
Ensure that there is a commercially reasonable basis (not related to referral volume) for providing the marketing services. For example, the hospital may generate a profit on the marketing services it provides; or, the hospital may benefit from a co-marketing effort with the physician or practice.
Determine the fair market value of the marketing services provided to physicians and document repayment by the physicians. If the marketing services are being provided under the non-monetary compensation exception – track the value of the services relative to the annual limit.

To establish the fair market value of marketing services, most appraisers will use some rendition of the cost approach. (The market approach may also be used; however, good market data may be difficult to obtain.) The cost approach involves valuing each component to the service separately and then aggregating the results to determine fair market value. In this process, it is important that all component costs are identified and that indirect costs, like marketing department overhead, are properly allocated. Once this is done, a markup on those costs should also be considered. As previously noted, generating a profit on marketing services helps show that there is a legitimate business reason, not related to referrals, for the hospital to provide the services to physicians in the first place. The amount of markup may be influenced by many different factors such as profit margins for advertising and marketing firms that provide similar services or the hospital’s hurdle rate for new projects.

In summary, as the two cases point out, the provision of marketing services to independent physicians should be approached with caution. It is important to remember that there should always be a solid business rationale – other than referrals – for a hospital to be providing marketing services to independent physicians. Also, if marketing services are going to be provided, it is critical that the physicians pay fair market value for the services they receive.

[1] The Non-Monetary Compensation Exception at 42 CFR 411.357(k) sets forth the exception to the physician self-referral law for certain non-monetary compensation (items or services). Under the exception, the compensation limit is adjusted each calendar year to the nearest whole dollar by the increase in the Consumer Price Index-Urban All Item (CPI-U) for the 12-month period ending the preceding September 30. For the 2018 calendar year, the compensation limit is $407. The exception requires that all the following conditions are satisfied:

(i) The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician.

(ii) The compensation may not be solicited by the physician or the physician's practice (including employees and staff members).

(iii) The compensation arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act) or any Federal or State law or regulation governing billing or claims submission.

Whistleblower Suit Spotlights Standards of Care and Time Element for Physician Services

Tue, 17 Oct 2017 18:22:38 GMT

When it comes to determining fair market value compensation for physicians, the time element related to physician services should be considered. For most physician procedures, there is a standard of care that requires the rendering physician to spend a certain amount of time performing the service. While highly productive physicians are greatly appreciated, physicians should not be incentivized to see too many patients in too short of a time frame. Physicians serving too many patients per unit of time may be providing (perceived or real) substandard care.

Last week, the U.S. Department of Justice announced a nearly $1.6 million settlement related to alleged upcoding and substandard care at an endoscopy center in Houston (link) . The whistleblower, an endoscopic nurse serving as the center’s clinical director, felt surgeons at the center were shortchanging patients and insurers by not taking enough time to perform the complete colonoscopies for which they were billed. According to the complaint, colonoscopies include an insertion and a withdrawal phase – the first takes approximately 8 minutes and the latter takes at least 6 minutes or longer to properly perform. The nurse performed her own time studies and found that out of the 74 cases she studied, 60 had withdrawal times of less than 6 minutes. Moreover, she found that 31 of the 74 cases had withdrawal times of less than 2 minutes. Patient files also lacked physician notation and photo-documentation that the physicians had gone far enough to reach the required landmarks – and there was no proof that the physicians had performed the examinations necessary to observe lesions, polyps, and (possible) cancer. The nurse also complained that the physicians did not take time between patients and procedures to change their soiled operating gowns or wash their hands, which can be extremely dangerous. Furthermore, rooms and equipment were not being cleaned and disinfected properly between the 30 to 40 patients being seen per day. The nurse felt that the substandard care made the procedures performed at the center either worthless or, at best, of diminished value – and felt they should not have been reimbursed by Medicare.

There are several resources that employers and consultants can use to study physician throughput, and help ensure ample time is being spent on procedures. For example, Centers for Medicare & Medicaid Services (CMS) publishes physician time estimates for each medical procedure reimbursed under the Medicare Physician Fee Schedule. The 2017 estimates can be found on the CMS website. Additionally, the National Ambulatory Medical Care Survey (NAMCS) provides statistics on time spent with physicians in ambulatory settings, by physician specialty. And, the National Hospital Ambulatory Medical Care Survey (NHAMCS) provides statistics on average surgical duration for selected procedures. (Per NHAMCS data, the average surgical time for a colonoscopy is 14 minutes.)

The Market Approach and Management Fees: Using Comparable Data from Other Industries to Value Health

Thu, 28 Sep 2017 18:02:10 GMT

Read our new infographic on management fees in the healthcare industry.

Click here to download

Anesthesiology Stipends in Georgia - 2017 Update

Fri, 08 Sep 2017 18:07:06 GMT

Many hospitals in Georgia, and across the country, provide financial support to anesthesiology groups. For the past two years, BuckheadFMV has conducted a study of anesthesia stipends paid by non-profit hospitals in Georgia. The infographic below ( pdf link ) compares the results of our 2017 findings to our 2016 findings. As shown in the infographic, on an overall basis, the median anesthesiology stipend paid by the hospitals included in our study was just over $1.31 million per year, slightly below the 2016 median stipend of $1.37 million. On a per bed basis, however, we found that stipends increased by more than 6% from $5,849 to $6,223.

Valuing the Physician Hour - Converting Annual Compensation Data to Hourly Rates

Tue, 01 Aug 2017 17:56:42 GMT

There are many situations where it makes sense to pay physicians on an hourly basis for services provided. Hourly compensation arrangements work well when a relatively short or a definitive amount of time is being compensated. They also are appropriate for arrangements when physician time, instead of physician output or production, is the valuable resource.

Typical Hourly Compensation Arrangements

Medical Directorships

Medical directorships lend themselves well to hourly compensation arrangements. Medical director duties are generally part-time. Physicians in these roles are typically required to track their time on an hourly basis, and the number of hours compensated under medical director agreements are routinely capped.

Shift Work

Physicians who work fixed-hour shifts are often paid on an hourly basis. For example, emergency medicine physicians typically do not work a standard 40-hour work week, and they generally do not receive paid-time off in their contracted arrangements. Instead, they typically work a series of shifts that are 8 to 12-hours long, then are off for several days. Employers commonly compensate these physicians only for actual work hours.

Coverage Arrangements

Hourly rates are ordinarily paid when physicians are contracted to provide temporary coverage for a hospital unit or medical clinic. For example, a medical group may hire a locum tenens physician to fill in for a vacationing physician. The medical group bills and collects for the services provided to patients by the locum tenens physician. The locum is paid an hourly rate for the time spent seeing patients and covering the practice.

Labor Regulations

Physicians are in a special class that allows employers the option of paying them a salary or an hourly rate without having to meet federal overtime requirements. Physicians have to be actually practicing medicine for this to work. There are some limitations. In California, for example, the physician must be paid a minimum rate of $77.15 per hour, as of January 1, 2017, to meet the exemption criteria. California Labor Code Section 515.6

The Annual Hours Assumption is Significant

By and large, physician compensation survey data is gathered and published in terms of annual dollar amounts. Surveys reporting annual compensation generally do not provide data (or sufficient data) regarding the number of hours being worked by the responding physicians. The onus of determining the most appropriate hours assumption is on the user -- and the decision is an important one.

For example, a survey may only specify that its annual physician compensation data reflects full-time, employed physicians working in primarily clinical roles. Based on several different studies, full-time employed physicians generally work an average of 40 to 60 hours per week. Multiplying the midpoint of 50 hours by 46 weeks per year, for example, calculates out to 2,300 hours worked per year.

This seems simple enough, but many employers define a standard work year as 2,080 hours (i.e., 40 hours per week for 52 weeks) and compensate only on that basis. Moreover, if physicians receive 6 weeks of vacation, holiday and sick pay, the employer may view only 1,840 of the “compensated hours” as being actual work hours.

Under these circumstances, if the employer wants to pay a physician hourly, a decision must be made as to whether annual compensation data should be converted using a 2,300, 2,080, or 1,840-hour year.

The impact of an 1,840 to 2,300 range in denominators is obviously very significant when it comes to the resulting hourly rate calculations. A physician paid $163 per hour makes $1,956 for a 12-shift. That is 25% more than a physician making $130 per hour and $1,560 per 12-hour shift. As shown in the graph, both hourly rates can be derived from a $300,000 annual compensation statistic.

Guidance for Converting Annual Compensation to Hourly Rates

The National Standard

Per the Office of Personnel Management , for the purpose of calculating the hourly rates of pay for Federal civilian employees, the national standard in the United States is 2,087 hours per year. Prior to 1984, the divisor was 2,080, which assumes a 52-week year and a 40-hour workweek. However, a General Accounting Office study in 1981 study showed that, because some years have 366 days, over a 28-year period (the time it takes for the calendar to repeat itself), there are an average of 2,087 work hours per calendar year.

While the physician archetype is that of a sleep deprived professional working “long, irregular, and overnight hours,” on average, physicians work about the same number of hours as other full-time employees. Gallup data from 2013 and 2014 Work and Education Polls show that full-time adult workers in the United States work an average of 47 hours per week. Nearly 40% say they work at least 50 hours per week. This matches data from recent studies on physician work and lifestyles which show most physicians work 40 to 60 hours per week.

If physicians put in the same number of hours as other full-time employees, it makes sense that the national standard of 2,087 hours per year can be used to convert annual physician compensation data to hourly rates. It is important to note that many employers provide their employees with some amount of paid time off. So, a 2,087 denominator may result in too low of an hourly rate when working with certain specialists like emergency medicine physicians, who typically do not receive paid time off.

Stark Phase II

In 2004, CMS published Phase II of the federal physician self-referral prohibition (the Stark Law). Phase II created a ‘‘safe harbor’’ provision in the definition of ‘‘fair market value’’ at §411.351 for hourly payments to physicians for their personal services. The safe harbor consisted of two methodologies for calculating hourly rates that would be deemed ‘‘fair market value’’ for purposes of section 1877 of the Act.

One of the methodologies called for averaging the 50th percentile national compensation level for physicians in the same specialty, using at least four of six specified salary surveys, and dividing the result by 2,000 hours to establish an hourly rate. If the relevant physician specialty did not appear in one of the recognized surveys, the parties were required to use the survey’s reported compensation for general practice in order to be within the safe harbor based on this method.

The safe harbor methodology identified 2,000 hours as the appropriate denominator for determining an hourly rate. The safe harbor was repealed in 2007 when the Phase III regulations were issued. However, the approach and the 2,000 hours standard are still commonly used by many participants in the healthcare industry.

Specialty-Specific Studies and Surveys

In certain cases, a denominator tailored to the subject position may be developed by reviewing data from studies that provide more granular, specialty-specific information regarding standard work hours. These benchmarks are sometimes produced by societies or associations in connection with compensation studies or practice profiles conducted for their specialties.

Examples of specialty-specific studies and surveys include:

Society of Hospital Medicine, State of Hospital Medicine Survey

American Academy of Orthopaedic Surgeons, Orthopaedic Census Report

College of American Pathologists, CAP Practice Characteristics Study

American Academy of Family Physicians, Practice Profile Survey

American Academy of Dermatology, Dermatology Practice Profile Survey

ACEP/Daniel Stern, Emergency Medicine Compensation & Benefit Surveys (Discontinued in 2016)

Best Practices and Important Considerations to Make When Calculating Hourly Rates

Given the impact the annual hours assumption has on a calculated hourly rate, the following practices are prudent when converting annual compensation to hourly equivalents.

1. Assess the numerator to ensure physicians responding to the survey are providing services comparable to the ones being valued. Not all services have the same value, even when they are performed by the same physician. The same hourly rate may be used to compensate physicians for both administrative and clinical work only when the rate paid for clinical work is fair market value for the clinical work performed and the rate paid for administrative work is fair market value for the administrative work performed. CMS has noted in Phase III comments that the fair market value of administrative services may differ from the fair market value of clinical services.

2. Ensure that the annual physician compensation data reflects compensation for full-time equivalents. If the data does not reflect full-time work, adjust the denominator appropriately.

3. Consider whether the position being evaluated offers compensated holiday, vacation, and/or sick days (i.e., PTO). If physicians will be paid only for actual hours worked, consider a denominator that reflects actual work hours for a full-time physician.

4. Research how many hours physicians in the specialty typically work in a year. Determine if the denominator needs to reflect lower or higher-than-standard work hours.

5. Check the calculated results against data from available sources reporting rates on an hourly basis. These most commonly include surveys for medical director/administrative services. There are also surveys for locum physicians that work on a fee-for-time basis (see Buckhead FMV's 2017 Cost of Physician Staffing Services) , although care must be taken to appropriately interpret the services and resources being purchased in these arrangements.

6. Often there is no clearly best divisor. In the absence of reliable, specialty-specific data, using a 2,000 hours denominator, consistent with the rescinded Stark safe harbor, may be an appraiser's best option when converting annual physician compensation data to an hourly rate . With all matters involving physician compensation, however, the appropriate FMV conclusion will be dependent on the specific facts and circumstances of the individual arrangement at-hand.

Resources for Physician Work Hour Data

AMA Insurance 2014 Work/Life Profiles of Today’s U.S. Physi cian

AMA Insurance, a subsidiary of the American Medical Association, conducted a survey of physicians age 30 to 69. There were 4,950 responses. Key Findings: More than half of the physicians surveyed (62%) reported typically working 40 to 60 hours per week. Eighteen percent (18%) work 61 to 80 hours, and 5% work more than 80 hours. The remaining 14% work fewer than 40 hours.

Medscape Physician Compensation Report 2017

Medscape’s 2017 report includes responses from more than 19,200 physicians. As a part of its annual compensation survey, Medscape asks physicians about their typical work hours. Key Findings: Fifty-three percent (53%) of physicians provide 30 to 45 hours of patient care each week. Another 33% provide patient care for 46 or more hours. In addition to patient care time, more than half (57%) of the respondents spend another 10 hours or more per week working on administrative tasks. In its specialty-specific reports, Medscape also provides hours data for physicians in 27 specialties.

The Physicians Foundation 2016 Survey of America’s Physicians: Practice Patterns & Perspectives

The 2016 Physicians Foundation report includes responses from more than 17,200 physicians regarding an array of questions on their practice patterns and perspectives on the industry. Key Findings: Overall, physicians reported working a total of 52.63 hours per week, on average, including both clinical and non-clinical duties. Roughly half (49%) reported working between 41 and 60 hours per week, and another 31% reported more than 60 hours. In terms of physicians’ non-clinical paperwork duties, the average time reported was 11.26 hours per week.

Annual Work Hours Across Physician Specialties

In July 2011, researchers published a research letter in the Archives of Internal Medicine on the relative annual work hours (including all clinical, administrative, and other professional duties) of physicians in 41 specialties.

AAMC Careers in Medicine Website

The Association of American Medical Colleges (“AAMC”) website provides users with information regarding the average hours worked per week by physicians in a range of specialties based on data from various sources. It requires a subscription for non-academic users.

Medscape Compensation Reports by Specialty

Medscape’s specialty-specific reports provide data on the number of hours physicians reported spending each week seeing patients, and separately on paperwork and administration. For 2017, Medscape published individual reports on 27 specialties.

An Ounce of Prevention is Worth A Pound of Cure

Fri, 14 Jul 2017 20:23:13 GMT

BuckheadFMV will present HIPAA Tips for Business Appraisers at the 2017 SECBA/IACVA annual meeting in Atlanta. The meeting will be held on October 21, 2017. The presentation will focus on what business appraisers need to know about recent enforcement actions; identifying protected health information ("PHI"); determining if a business associate agreement needs to be signed; and avoiding HIPAA violations.

Proxy wRVU for Oncology-Related Services in the Middle of Recent $34 Million Settlement

Fri, 19 May 2017 20:19:30 GMT

Proxy wRVUs need to be used with care. Many organizations utilize proxy wRVUs to compensate physicians for professional activities that are not recognized by the Medicare Physician Fee Schedule and do not have Work RVU values. In the case described below, the oncologists were credited with a proxy wRVU that, according to the plaintiff-relator, did not reflect the relative time and intensity associated with the service being provided.

On May 18, 2017, the Department of Justice (“DOJ”) announced a $34 million settlement with two Springfield, Missouri healthcare providers: Mercy Hospital Springfield (“Mercy Hospital”) and Mercy Clinic Springfield Communities (“Mercy Clinic”). According to the DOJ’s press release, the settlement resolved allegations that the providers submitted false claims to the Medicare Program for chemotherapy services rendered to patients referred by oncologists. Per the press release, the oncologists’ compensation formula improperly took into account the value of their referrals of patients to the infusion center operated by the Defendants. Link to DOJ press release.

The relator in this case was Viran Roger Holden, M.D., PhD. Dr. Holden is a medical oncologist who was employed by Mercy Clinic from 2005 until May 2015. According to the complaint filed by Dr. Holden on June 30, 2015, compensation paid to Mercy Clinic and its oncologists did not meet fair market value and commercial reasonableness requirements. Dr. Holden alleged in his complaint that the problematic compensation formula was implemented after Mercy Clinic transferred ownership of its infusion center to Mercy Hospital in 2009. The transfer was very beneficial to the system and resulted in $10 million more in infusion revenues each year.

Prior to the transfer, Mercy Clinic oncologists were paid under a collections-based compensation model. Before and after the transfer, they expressed concerns to Mercy Clinic and Mercy Hospital management that the transfer would lower physician incomes. Dr. Holden's complaint alleges that Management reassured the physicians that they would be made “whole”. Subsequent changes to the physician compensation plan included the addition of a new work RVU (“WRVU”) for drug administration in the hospital. The physicians were credited with this new WRVU each time they sent a patient to the infusion center for treatment.

According to Dr. Holden, the services covered by the new WRVU, drug administration in the hospital, required that the physicians be immediately available when patients were receiving infusion services. However, because the infusion center and the physicians’ practices were just down the hall from one another, the physicians never had to leave their practices to get credit for these services. Moreover, the new WRVU was 500% of the WRVU credited for in-clinic, active patient care services provided by the physicians. The complaint alleged that the new WRVU was not calculated based on physician work, clinical expense, or malpractice overhead, but rather was “solved for” by working backwards from a desired level of overall compensation.

A copy of the complaint is located here: United States ex rel. Viran Roger Holden v. Mercy Hospital Springfield f/k/a St. John 's Regional Health Center and Mercy Clinic Springfield Communities f/k/a/ St. John's Clinic, Inc.

When Physicians Change Practices, Their MIPS Payment Adjustments Go With Them

Thu, 27 Apr 2017 20:14:03 GMT

Under MIPS, physician employers will be held accountable for their new recruits' past performances.

The Merit-Based Incentive Payment System (MIPS) is a new program that will impact Medicare payments to physicians. (It will also impact physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse anesthetists participating in Medicare Part B.) Under MIPS, eligible clinicians will submit data to CMS and be scored based on four performance categories: quality, resource use, clinical practice improvement activities, and advancing care information. A physician’s composite MIPS score will determine whether his/her Medicare payments will be positively or negatively adjusted in a future year.

MIPS Adjustments are Made on 2-Year Old Data

MIPS scores reflect physician performance over a full calendar year. The deadline for submitting data is March 31st of the following year. Payment adjustments do not take effect until January 1st of the second year. This means that a physician’s 2017 MIPS score will impact his/her 2019 Medicare payments.

Eligible Physicians Who Do Not Report Data in 2017 Will Have Negative Adjustments in 2019

Payment adjustments don’t start until 2019. However, 2017 is the first year to submit data. CMS has made the process a little easier by not requiring a full year of data be submitted for 2017. However, before March 31, 2018, eligible clinicians are required to submit at least 90 continuous days of 2017 data. Not participating in the program (i.e., not submitting any data) for the 2017 transition year will result in a negative 4% payment adjustment.

MIPS Scores Go with the Physician…And So Do the Payment Adjustments

Payment adjustments under MIPS will be applied at the individual National Provider Identifier (NPI) level. (The NPI is a unique identifier for an individual clinician and does not change.) In other words, MIPS scores follow the physician. For example, if an eligible physician works in Practice A during the 2017 performance period, and then starts work in Practice B in 2019, the physician’s 2017 MIPS score for Practice A will determine the payment adjustments the physician receives in 2019, while working at Practice B.

That said, an entity hiring a physician must accept payment adjustments based on the new hire’s performance at his/her previous job. While employers will benefit from hiring physicians who have qualified for positive adjustments, they will be hurt by physicians who have qualified for negative ones.

It Doesn’t Matter if the Physician was Measured as an Individual or as Part of a Group – Performance Still Follows the NPI

The MIPS program allows eligible clinicians to report data as an individual or as a group – and have their payments adjusted based on either their individual or group scores. It doesn’t matter if group or individual data were submitted, MIPS scores still follow the physician.

How Much Can MIPS Adjustments Hurt or Help?

Numerous factors will impact MIPS adjustments – so precise calculations are impossible. However, we do know that MIPS adjustments start at +4% (maximum positive) and -4% (maximum negative) in 2019. The potential adjustment grows each year, reaching +9% to -9% by 2022. Since annual Medicare payments are in the hundreds of thousands of dollars for many physicians, the impact of MIPS adjustments may be very significant.

Start Asking Physician Candidates About Their MIPS Data Now

Now that we are well into 2017, the time has come for physician employers to consider the impact that MIPS will have on their physician recruitment programs. Even though payment adjustments don’t start until 2019, employers need to start asking physician candidates about their MIPS submissions. If a candidate is not set to submit 2017 data, there will be a negative adjustment in the physician’s future.

It is also very important for employers to understand that, because Medicare payments will be adjusted at the NPI-level, they will be held accountable for their recruits’ past performances. Organizations need to be prepared to deal with departing physicians who take their adjustments with them, and they also need to be knowledgeable about, and prepared to deal with, the MIPS scores that new physicians bring to their organizations.

For more information on MIPS and the impact it will have on physicians who change practices, see Pages 77329-77332 of the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models, Final Rule. https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/pdf/2016-25240.pdf

Valuing Physician-Performed NP & PA Supervisory Services

Sun, 19 Mar 2017 20:06:55 GMT

Medical practice owners have many reasons for wanting to add nurse practitioners (NPs) and physician assistants (PAs) to their staff. These providers help improve access to healthcare and can enhance the profitability of a medical practice. Although the country is moving toward autonomy and full practice authority for PAs and NPs, every state in the U.S. currently requires that PAs have some type of collaboration arrangement with a supervising physician. Many states require formal arrangements between NPs and supervising physicians, as well.

Getting a physician to supervise a PA or NP doesn’t seem like it should be an issue for a medical practice owner who employs physicians. However, depending on how her compensation arrangement is structured, an employed physician may have little financial motivation to supervise an NP or a PA. This is because employed physicians’ salaries and bonuses are often based solely on personal productivity – how many patients they see or how many wRVUs they personally generate determine their pay. Employed physicians don’t get credit for, or a percentage of, their nurse practitioners’ or assistants’ encounters or wRVUs.

Since there is real work to be done under a supervisory arrangement, and real legal and professional risk involved for the physician, many employers pay physicians stipends to supervise NPs or PAs. These stipends compensate physicians for the time and effort they spend personally providing supervision services, such as determining practice procedures and protocols; meeting and consulting with the NP or PA; chart reviews and sign-offs; and evaluating professional competency.

Market data show that these stipends often range between $5,000 and $15,000 per year. The information, however, is very limited and provides no insight into the state-by-state requirements for supervising arrangements or the different requirements for NPs versus PAs. Moreover, it doesn’t touch on the specific obligations insurers and organizational by-laws may place on supervising physicians.

Without better data, using a market approach is a one-size-fits-all valuation technique that doesn’t make much sense given the heterogeneity of supervisory arrangements across the country. For example, it is hard to say that a national range equally applies to supervisory stipends in states that require physicians to review 20% of a PA’s or NP’s charts and in states that require no such review.

Using a cost approach seems to hold more water than the market approach when it comes to NP/PA supervisory stipends. The cost approach involves breaking down the supervising physician’s responsibilities and duties into component activities and estimating the hours required (at this point, the appraiser can consider the various state, payer, and organizational requirements that apply). A fair market value hourly rate, given the physician specialty and the intensity/effort involved, is then applied to the hours. The aggregated amount is an indication of the value of the services. (See the infographic for more details.)

The cost approach is a more tailored and precise approach to valuing NP/PA supervisory services than the market approach. And, although there is more legwork involved, the findings may be enlightening – you many find a specific arrangement requires a lot more or a lot less physician work than you thought. On the other hand, you may find additional support for a stipend that is already being paid. Either way, the cost approach is a worthwhile exercise and something for physician employers and healthcare valuation experts to consider when valuing NP/PA supervisory services.

Physician Retention Bonuses: Paying Physicians to Stay Put

Thu, 16 Feb 2017 21:00:49 GMT

Retention bonuses are becoming more popular with employers both inside and outside of the healthcare industry. Retention bonuses are offered to high-in-demand, easily-poached employees for staying on the job for a certain period of time. Although they sometimes get confused with signing bonuses and forgivable loans, they are different—and therefore appraisers need to analyze them differently when conducting a fair market value determination.

BuckheadFMV conducted online research to determine how many physician employers are offering retention bonuses. We found that the military pays eligible physicians with at least 8 years of service between $12,000 and $60,000 per year for signing multiyear contracts. We also found that a small percentage of the thousands of online job postings in the private sector specifically mention a ‘retention bonus’. Bonuses ranged from $10,000 to $50,000 per year and varied based on length of service and physician specialty. Although they aren’t ubiquitous yet, from our viewpoint, retention bonuses seem to be a growing trend among hospitals that employ physicians.

Given the significant dollars involved, it is important for employers with retention bonus programs to consider these payments when analyzing physician compensation for fair market value. It is also important to consider how the timing of retention bonus payments may impact the analysis. As noted in the infographic, retention bonuses are taxable compensation in the year payment is received. Employers may find that retention bonus payments made at intervals throughout the service period, rather than in a large upfront payment, make it easier to stay within the fair market value range.

What Do Medical Billing Services Cost?

Thu, 05 Jan 2017 22:20:48 GMT

Based on BuckheadFMV's review of GSA price lists, the average price charged to government agencies for medical billing services is 5.9% of collections. See our infographic for more details.

BuckheadFMV - 2016 In Review

Wed, 21 Dec 2016 22:15:47 GMT

Thank you to our clients, colleagues, and collaborators who contributed to a great 2016.

Consolidation Trends Impact Perfusion Services Appraisals

Fri, 04 Nov 2016 21:12:34 GMT

Hospital acquisitions of cardiothoracic surgery practices have changed the perfusion business. It used to be fairly common for private practice surgeons to employ the perfusion staff they work with in the operating room. However, as hospitals have bought out surgery groups and employed the surgeons, they have also taken perfusion in-house or outsourced it to private (not-physician-owned) perfusion companies. Based on classified ads being posted for vacant and new positions, it appears that hospitals and private perfusion companies are now doing most of the perfusionist hiring in this country.

As a result of this trend, opportunities to value perfusion services come along less frequently for appraisers than before. (Third-party FMV opinions for perfusion services are often requested by hospitals when the cardiothoracic surgery group has a financial interest in the perfusion provider.) When the opportunity does arise, an appraiser will be met with the same challenges that have always existed with these types of reviews - such as dealing with daunting medical terminology and inconsistent service offerings.

Overall, perfusion services agreements tend to be one of the more knotty types of agreements to review for FMV, and we believe the consolidation trend will make them knottier. First off, private vendors in this segment don't seem to publish pricing like vendors in certain other segments are starting to do. And, with more in-house arrangements, appraisers' proprietary transaction databases are drying up. Without good market data, appraisers valuing perfusion-related services will likely focus more heavily on cost or build-up methodologies that analyze and aggregate the value of component resources (labor costs, etc.).

Although a cost or build-up methodology is a reasonable approach, without market data it is hard for an appraiser to sanity-check his or her results. Plus, FMV determinations may be made without knowledge of or consideration for premiums and/or savings that vendors are passing on to their customers. All-in-all, perfusion definitely seems to be an area of the healthcare industry where consolidation has changed what appraisers are being asked to value and the valuation approaches that are being applied.

Determining the Fair Market Value of Early Commitment

Tue, 11 Oct 2016 21:05:30 GMT

As residents and fellows, physicians earn a small fraction of the money they will make in future years. According to the most recent Association of American Medical Colleges' Survey of Resident/Fellow Stipends and Benefits Report (2014-2015), residents and fellows earn averages of $51,586 in their first post-MD year and $67,236 in their eighth post-MD year.

Hospitals and other organizations that employ physicians realize that the residency/fellowship years are a great time to recruit. The candidate pool is large, and many residents and fellows are willing to commit early to an organization that provides financial support to them while they finish their training. These stipends seem especially reasonable if they help fill hard-to-fill vacancies on the medical staff, shorten the time these vacancies are left open, and/or lower the organization's over-all physician recruitment costs.

To date, most (if not all) of the major physician compensation surveys do not provide benchmarks for early commitment stipends. Further, at least one of the major surveys states that "stipends" should not be included when respondents submit signing bonus data to the survey. We also note that since early commitment stipends are paid prior to employment, in many situations, including them in first year compensation for benchmarking purposes may not be appropriate from a comparability standpoint.

Despite an apparent lack of benchmarks, these stipends are being paid across the country, and there is a need to assess them for fair market value. (The employment exception under the Stark Law requires compensation be fair market value.) One way to begin this process is to assess whether the amount being offered or paid is consistent with what other, similar organizations are offering/paying. A recent BuckheadFMV review of recruiter ads and online classifieds for physician services shows that the typical early commitment stipend is $1,500 to $2,500 per month. These stipends are available to physicians in their last 1 to 2 years of training. There was no significant difference between the amounts offered to physicians in different specialties.

In addition, as part of a fair market value review, we suggest adding together all pre-employment compensation (early commitment stipends, signing bonuses, etc.) and comparing the aggregate amount to signing bonus benchmarks. While the signing bonus data may not include early commitment stipends, in certain circumstances, the comparison may still be meaningful.

There are several physician compensation surveys, including the Medical Group Management Association (MGMA) survey, that include benchmarks for physician signing bonuses. Also, several physician recruiting firms, including Merritt Hawkins and Delta Physician Placement, publish reports (often online and free of charge) identifying the average signing bonus offered to physician candidates over an identified time period.

Hourly Rates for Emergency Medicine Physicians: The Denominator Issue

Tue, 16 Aug 2016 20:58:51 GMT

Emergency Medicine (EM) physicians are often paid an hourly rate for actual hours worked. Compared to other types of physicians, it is less common for them to receive paid-time-off (PTO) benefits. When determining a fair market value (FMV) hourly rate for EM physicians, annual compensation benchmarks from well-known physician compensation surveys can be converted to hourly rates. However, analysts and appraisers often default to a 2,000 or 2,080 hours-per-year denominator for these calculations, which may be inappropriate when it comes to EM physicians.

As shown in the infographic, based on a study of more than 1,000 online classified ads (200 of the ads included compensation terms), the average rate being offered to EM physicians across the country is $216 per hour. This finding is consistent with compensation statistics reported in well-known physician compensation surveys IF the survey data, expressed as a total annual compensation amount, is converted to an hourly rate using a denominator of between 1,584 and 1,728 hours. Using this denominator range, the analyst or appraiser is assuming EM physicians average fewer than 40 hours per week and do not receive paid vacation, sick, or holiday time, consistent with the terms found in the online classified ads. (Click on infographic for a PDF copy.)

The Silicon Valley Leadership Assessment Tool: Which Silicon Valley Character Are You?

Mon, 18 Jul 2016 20:54:15 GMT

Click on an image to download a PDF copy.

E&M Bell Curves Are Shifting Right - What Can Physician Employers Be Doing?

Wed, 13 Jul 2016 20:47:11 GMT

Based on a review of Medicare Part B data, physicians used more high-level evaluation and management (E/M) codes in 2014 than they did in 2009. This is not a new trend. In 2012, the OIG issued the results of a study showing that between 2001 and 2010, physicians increased their billing of higher level (i.e., more complex and expensive) E/M codes in all 15 visit types.

In light of the trends we are seeing, here are a few steps that physician employers can take to assess and reduce compliance risk.

1. Run distribution analyses on physician E/M codes. Compare the results to other physicians in the same specialty. ( Data can be downloaded from the CMS website. )

2. Given the OIG's interest in how coding practices have changed over time, compare physician distributions to current CMS data as well as to CMS data from several years back. ( Data back to 2008 is available on the CMS website. The 2012 OIG study provides data also provides a look at 2001 data.)

3. Compare physician Work RVUs to external benchmarks like the MGMA survey as well as to internal benchmarks. If Work RVUs look unusually high or low, there could be a coding issue or (more likely) the Work RVUs aren't being calculated properly.

4. Compare physician E/M coding distributions over time. Is there evidence that coding habits have changed?

5. Pay attention to the recommendations that the OIG had for CMS in the 2012 study: 1) continue to educate physicians on proper billing for E/M services; 2) review physicians' billing for E/M services; and 3) review physicians who bill higher level E/M codes for appropriate action.

Please contact us if you would like any help with these analyses.

Define "Compensation" Before Discussing It

Wed, 22 Jun 2016 20:40:36 GMT

Before discussing compensation with a future employer or with a candidate whom you want to employ, make sure both parties are using the same definition of the word "compensation". Compensation can mean gross pay or net pay. It may include bonus pay or it may exclude it. It may include only cash compensation or it may include benefits, too. A narrow definition of the term "compensation", will help you avoid any unnecessary confusion.

Click on image below for a larger view.

Physicians Should Care About Yelp Reviews

Tue, 07 Jun 2016 20:35:48 GMT

People put an incredible amount of trust in on-line rating systems. If an Airbnb host has a five-star rating, we expect that we can travel to the host’s home, go to sleep in one of his or her beds, and still be alive the next morning. Our trust grows as our actual experiences with products, services, and people correspond to what we read about them on the Internet.

If you can trust other Internet users to let you know if an Airbnb host is honorable - it makes sense that you can use their help with other sensitive choices like selecting a physician.

There are numerous websites or apps that allow patients to rate physicians, including Angie’s List , ZocDoc , and HealthGrades . However, Yelp really stands out as it allows users to post somewhat-anonymous rants, both good and bad, about businesses and business owners. Yelp wants its reviews to be “passionate and personal.” They ask for “a rich narrative, a wealth of detail, and a helpful tip or two for other consumers.” And, that is what they get.

According to Yelp, 21 million people used its app and 69 million people visited the site via mobile web during the first quarter of 2016. By the end of the quarter, Yelpers had written more than 102 million reviews. The number of Yelpers reviewing physicians varies around the country; but in large cities like New York, Los Angeles, Chicago, and Atlanta a physician can easily have over 100 unique reviews.

Yelp isn’t opt-in-only (Yelpers can add and then post reviews for previously unlisted businesses). Bad ratings can’t be removed by business owners, and better scores can’t be bought. All of this adds to the reliability of the reviews, according to Yelp. Yelp does provide information to business owners on how best to respond to a bad review, but physicians need to be cautious about what they post. (See the Washington Post’s article on why physicians may not want to respond publicly to patient complaints on Yelp.) The only consolation, it seems, for physicians concerned about being falsely accused of bad business practices or providing poor care is that the site uses an automated software to weed out fake reviews and unreliable reviewers.

I've spent a lot of time reading reviews of physicians on Yelp, and I’m pretty sure not all of them are fair. However, it’s not easy to discount a physician’s Yelp score when twenty reviewers give the same praise or identify the same problem.

As we move toward pay-for-performance and pay-for-quality compensation structures for physicians, I believe we can expect on-line reviews to play a role. Patient satisfaction survey results have long been incorporated into physician bonus programs. It makes sense that, at some point in the future, physicians’ bonuses will start being tied to how patients score them online. Whether or not we are ready for that now, physicians and physician practices all over the country need to be wary of their patients’ online feedback as more and more patients rely on this information when selecting a physician.

Hospitals...Consider Asking these Physician-Related Questions During Your Next Community Health Need

Fri, 27 May 2016 20:23:41 GMT

We are in the middle of CHNA season - the time that comes every three years when a large number of not-for-profit hospitals conduct and publish their Community Health Needs Assessments. (The Affordable Care Act added the CHNA requirement to the Internal Revenue Code in 2012, and many of the first CHNAs were published in 2013.)

As I read through the new CHNAs being posted to hospital websites around the country, I notice that some, but not all, discuss their community's physician situation in any detail. This is surprising because we constantly hear about the shortages of physicians and the high demand for physician services. It is also surprising because so many hospitals have difficulty recruiting physicians, and often have to pay very competitively to attract physicians to their communities.

One of the few stipulations that the IRS makes about the contents of a CHNA is that it must take into account input from community members and persons who serve the community. As a physician compensation consultant, it would be helpful to know what these people perceive the physician needs to be in their communities. This type of information can be helpful to us when we try to determine whether the compensation a hospital is paying to a physician is fair market value and commercially reasonable.

There is a lot of ground to cover in a CHNA, and the entire document cannot be focused on physician deficits. However, I have put together a short wish list of physician-related questions that I, and I'm sure others in similar roles, want to find when we read a hospital's CHNA report (see the infographic below). www.buckheadfmv.com

Buying Physician Practice Medical Records - The Buyer's Decision Process

Fri, 20 May 2016 20:16:17 GMT

It used to be fairly common to discuss the value of a medical practice on a per chart basis. The practice's entire value was divided by the number of patient charts on the shelves - and that's how it was marketed and sold to potential buyers.

In today's world, there seems to be a lot of indecision about whether or not a buyer should even pay for medical records. Unless limited by law or other regulations, a buyer should identify and pay for assets (at a fair market value rate) that it wants to own post transaction. Not itemizing and providing consideration for an asset may cause confusion and problems between a buyer and a seller (especially if the seller works for the buyer) after the sale.

Just how valuable a medical record is depends on many different factors. From the buyer's standpoint, the value of a medical record is often related to the time and money he or she saves by having access to it. Many times, the buyer plans to convert the old system to a new system after the deal is done. But that doesn't mean the legacy system isn't valuable.

Needless to say, the decision process that a buyer uses to determine when and what it should pay for medical records can be complex, and old rules-of-thumb for medical records valuations are rarely applicable.

The infographic below summarizes some of the decisions that buyers have to make and the variables (paper versus electronic; cloud versus server; subscription versus perpetual license) that must be considered when determining the fair market value of medical records.

Change is Coming for Physician Compensation Data

Fri, 06 May 2016 20:11:25 GMT

Back in 2004, CMS provided the healthcare industry with two methodologies for calculating fair market value hourly rates for physician services.

First, CMS said that you could pay a physician less than or equal to the average hourly rate being paid to emergency room physicians in the relevant market, provided there were at least three hospitals in the market.

This methodology wasn’t used that often. Not many people had access to the specific market data that was needed for the calculation. And, if you could get the data, there were concerns about meeting the conditions necessary to fall within the antitrust safety zone.

Alternatively, CMS said that you could derive a fair market value hourly rate by using six specific national physician compensation surveys. To do this, you averaged the median for the specialty (or general practice) from at least four of the surveys. Since the benchmarks were for annual compensation, you converted them to an hourly rate by dividing by 2,000 hours.

The introduction of this safe harbor increased the healthcare industry’s reliance on compensation surveys. I’m sure sales skyrocketed for the surveys CMS identified in the regulations.

In 2007, CMS eliminated the safe harbor . There were too many complaints. One of the surveys had stopped being produced; one of the surveys was not being sold to the public; and the others were too expensive.

A lot has changed over the last ten years. Using multiple, objective, independently published salary surveys to evaluate and support fair market value for physician services has not. However, I believe there is going to be a significant change in how the healthcare industry gets physician compensation data.

One of the biggest reasons for this is that the compensation data that was too expensive ten years ago is even more expensive today. In 2004, it cost about $2,000 to buy the four surveys needed for the safe harbor calculation. Today, the same collection can cost a consulting firm nearly $50,000. This is a necessary expense for those of us who specialize in physician compensation. For others, it is no longer affordable.

Online information companies like Medscape are starting to fill in the hole. Medscape has surveyed physicians for several years now about how much they earn and how much they work. Summary results are available at no charge on the company’s website. If Medscape decides to release more details about the 19,200 physicians that respond to its survey , it could become one of the most relied upon resources for physician compensation data in the healthcare industry.

The internet provides a wealth of other quality data resources, too. Certain online databases actually provide more detail than the well-known physician compensation surveys – although the data can be hard to find, and it doesn’t always come in the neatest package. But no doubt, current market dynamics will change where and how the healthcare industry gets physician compensation data.

How Much Will MIPS Impact Physician Compensation?

Mon, 02 May 2016 19:46:11 GMT

The Merit-based Incentive Payment System (MIPS) is a new incentive program for physicians who care for Medicare patients. MIPS is specifically focused on physicians who do not participate in an ACO or another alternative payment model program. (A different incentive model has been introduced for those physicians.) Solo practitioners and small groups are included in the MIPS program.

Starting in 2019, the amount a physician is reimbursed for seeing Medicare patients will be adjusted either up or down based on his or her performance under MIPS.

Numerous factors will impact MIPS adjustments - so precise calculations of the potential impact are impossible. However, to get an idea of how much physician compensation (and not just Medicare reimbursement) will change because of MIPS, we compiled Medicare payment data and crunched some numbers. We included in our analysis a 50% practice expense margin estimate, understanding that expense margins vary among different practices and may be impacted by adjustments to reimbursement.

The results give us a basic understanding of what the potential impact of MIPS is on pre-tax compensation for private practice physicians with average-sized Medicare panels.

Based on the data and assumptions presented in the infographic below, we estimate that MIPS will increase or decrease a physician's compensation by $2,100 to $6,500 in 2019. The potential impact will grow each year, reaching $5,100 to $15,600 by 2022.

Importantly, some specialties see more Medicare beneficiaries than others and derive more practice revenue from Medicare than others. Our analysis focuses on six specific specialties (family practice, internal medicine, gastroenterology, general surgery, orthopedic surgery, and cardiology); other specialties may be impacted more or less than these six specialties.

Also to note, the analysis doesn't attempt to quantify the total upside potential or downside risk associated with MIPS. For example, there may be additional incentive dollars for physicians achieving exceptional scores on MIPS criteria. The ranges do not consider what happens to physician compensation if an exceptional performance bonus is earned. The analysis also doesn't consider any costs associated with MIPS, which may have a significant impact on physician compensation.

Asset Values: What Not to Overlook in a Medical Practice Valuation

Fri, 29 Apr 2016 19:38:23 GMT

I came across this picture of a typewriter on Facebook the other day. It had the following caption:

Does anyone else have this in their law firm or place of business? This is ridiculous. And my parents won't let me donate it or throw it away. #oldschool

I laughed because these old typewriters are in a lot of the medical practices I value. I also laughed because I would never dream of leaving a typewriter like this out of a fixed asset appraisal.

To the multi-million dollar health system buying a medical practice, this typewriter isn't a crucial asset. However to Dr. Bob or Dr. Susan who started the practice 25 or 30 years ago, it is a symbol of hard work. Including it in the fixed asset list, and giving it a proper appraisal, shows in a small way that the buyer appreciates the sweat equity that built the practice. Not to mention - these things still get used quite a bit.

I was pleased to read through the comments on the Facebook post and see that someone else had already schooled the poster with this:

That's not just a typewriter. That's an IBM Selectric. That machine is how work got done - every office in America had them or wanted them. Fantastic machine. Probably worth $200, depending on condition. A good secretary could do 75 words per minute on it. You won't need it often, but when you do, nothing else will do.

Exactly!

See our asset appraisal page at www.buckheadfmv.com

Asset Values: The $199,999 Telephone Number

Wed, 27 Apr 2016 18:49:15 GMT

How much is a telephone number worth? Well, the value of any asset depends on several different factors. It seems, however, that even without being assigned to a famous person or being associated with a profitable business, certain area codes and certain digits demand high prices. In my search for market data, I came across an online dealer of telephone numbers at phonenumberguy.com . The website makes the following promise:

We make things simple. You can buy a phone number, and then within days be using it on whatever phone you want. It sounds easy because it is easy.

Since you're wondering - phonenumberguy.com also promises that this is 100% legit.

On the site, phone numbers start at around $279. Currently, the highest priced number for sale is (929) 999-9999 for $199,999. This number has a New York City area code that covers The Bronx, Brooklyn, Staten Island, Queens, and parts of Manhattan. My Atlanta-area telephone number looks like it might be worth at least $379 just because it has a 404 prefix. (Unfortunately, my phone number also has the number one in it - so there go the vanity number opportunities.)

I'm by no means the first person to find this subject or market makers like PhoneNumberGuy interesting. In fact, The Washington Post did a very nice piece on the website and the practice of selling phone numbers just last year ( here's the link ).

I do want to make the point, however, that before dismissing business assets like phone numbers, etc. as having no value, take another look. You may be sitting on a (404) FOR-TUNE.

ddevine@buckheadfmv.com

The Top 3 Physician Compensation Questions From Hospice Providers

Tue, 26 Apr 2016 19:34:56 GMT

Many different factors make compensating hospice physicians challenging. First, hospices frequently contract with several different physicians for services. While each hospice has a medical director, it may also have physicians who provide back-up to the medical director, participate in interdisciplinary team meetings, conduct face-to-face encounters, etc. These physicians may provide just a few hours of service each week or each month to a hospice. These physicians may also have private practices and responsibilities beyond their contracted work with the hospice. As a result, getting them to document their time and submit time records can prove difficult. Hospices are often advised to pay physicians on an hourly basis instead of a monthly stipend. Thus, we are asked Question #1: How do we pay physicians an hourly rate if they won't document their time?

Question #2: What do we pay our medical director for being on-call 24/7? Hospices are required to make physician services routinely available to patients on a 24/7 basis. Hospice nurses are often on-call to deal with after-hour patient needs. However, an on-call physician will also take phone calls and be available for situations that require a physician. Therefore, hospices ask about the value of on-call time and how to compensate physicians for this burden.

Another frequent question relates to travel time. Hospices often contract with physicians to travel to patient homes and conduct the face-to-face encounters that are required by Medicare. These home visits may require a significant amount of physician travel time. Consequently, hospices frequently ask Question #3: How do we compensate physicians for all the drive time?

When a hospice client asks these questions, there are a few different options that we ask them to consider. If you have these or other hospice physician compensation questions, contact me at ddevine@buckheadfmv.com .

Chief Medical Officer (CMO) Compensation in Non-Profit Organizations

Mon, 25 Apr 2016 19:27:14 GMT

The title "Chief Medical Officer" appears to be far more commonplace today than it was a decade or so ago. Back then, organizations seemed to be less consistent in the titles they gave to their physician leaders. If nothing else, elevating top clinicians to the C-Suite, and letting seemingly equivalent titles like "VP of Medical Affairs" and "Physician in Chief" go by the wayside, makes compensation benchmarks for these physicians easier to find.

In our study of officers and employees in nonprofit organizations, BHA identified 642 physicians with the title of Chief Medical Officer (CMO). Median compensation for CMOs was $284,000 per year. Average compensation was $342,000 per year. We saw significant differences between salaries in smaller and larger organizations. Average CMO compensation was $220,000 in organizations with less than $20 million in annual income and $723,000 in organizations with more than $1 billion in annual income.

Our study also focused on compensation for Chief Medical Information Officers (CMIOs). A CMIO is a physician leader who has the responsibility of developing and implementing an organization's clinical information systems. We found twenty-six (26) physicians with the title of CMIO. These individuals had average compensation of just over $302,000 per year.

See the infographic below for more of our findings.

What Does it Cost to Fill Physician Vacancies with Locum Tenens?

Thu, 21 Apr 2016 19:17:52 GMT

According to our research, the average cost of a locum tenens physician is approximately $1,600 per day. This includes an 8-hour shift plus being on-call until the next shift begins. (Rates vary significantly based on physician specialty.) The $1,600 per diem does not include travel or lodging expenses.

These and many more findings are published in a report, Cost of Physician Staffing Services: Hourly Rates for On-Site Work and On-Call Coverage, which is available for sale on this website here. (We would like to share the report with you. So, please send me an email at ddevine@buckheadfmv.com if you would like a free copy.)

The study focuses on rates included in government contracts with 91 different physician staffing firms across the country. The data reflects 75 physician specialties and allied health positions and includes hourly rates for on-site services and hourly rates for after-hours on-call services and weekend on-call services. The summary below provides a nice overview; however, if you really want the details, send us an email.

When Valuing Pathology Services - A Little Legwork Goes a Long Way

Wed, 20 Apr 2016 19:11:49 GMT

After 20 years of providing valuation services, I’ve concluded that no two pathology services agreements are exactly alike. In one, the hospital is buying a basket of professional services from a pathology group. In another, the hospital is buying a different basket of professional services while also selling something to the group. It’s like a Rubik’s Cube with a zillion different possible combinations. As a result, when valuing pathology services, an appraiser must first figure out who is buying what basket from whom. The second step is to determine what exactly is in those baskets—especially the big basket marked “PART A SERVICES.”

To help keep things clear, I recommend that the valuation deliverable include a detailed summary describing the services being provided under the agreement. The summary should include information about who is providing the services, the time and effort involved, and any sources of reimbursement for the services. Download the infographic for more details.

Top-Tier Physician Compensation

Mon, 18 Apr 2016 19:09:49 GMT

Based on BuckheadFMV research, thousands of physicians in the United States individually earn more than $1 million each year. BuckheadFMV studied non-profit data for 745 of these top-tier physicians. The study shows that a top-tier physician is likely to be a surgical specialist and highly accomplished in his or her field. The study also shows that these physicians work in hundreds of different healthcare organizations and are fairly well dispersed across the country. For the large majority of top-tier physicians, annual compensation ranges between $1 million and $2 million.

Paying Physicians for Attending Meetings

Mon, 18 Apr 2016 18:56:07 GMT

Paying physicians for meeting attendance is becoming more common; however, it involves a significant amount of regulatory risk. The infographic discusses important considerations to make when paying physicians to participate on advisory boards and attend committee meetings.

Anesthesiology Stipends in Georgia

Mon, 18 Apr 2016 18:56:05 GMT

Many hospitals in Georgia, and across the country, provide financial support to anesthesiology groups. The infographic provides stipend benchmarks for 20 non-profit hospitals in Georgia. Benchmarks include average anesthesia stipends and the average stipend per bed.