Beyond the Benchmarks – Data is the Best Defense

Hospitals across the nation are increasingly turning to call coverage compensation arrangements as a means of providing vital medical services and remaining compliant with federal law.  While the number and complexity of these agreements have grown, many healthcare organizations are entering into such contracts despite uncertainty that the terms are both legally defensible and financially prudent.

Why is it so important for these agreements to be specific and supported by data?

Healthcare systems are under more pressure and scrutiny than ever before in paying for call.  The threat of harsh penalties ranges from large fines to the loss of Medicare status if even a single contract fails to meet complicated and strict governmental regulations.  The uncertainty and high stakes involved have prompted the Office of Inspector General to release three opinions on call coverage in the past several years, sending a message to hospitals that the fair market value (FMV) of call coverage services must take into account a broad set of factors that benchmarks alone cannot fully provide.  Failure to do so can result in investigation and possibly civil and criminal penalties, even when the transgressions are seemingly minor or unintentional.

Proactive hospital administrators should explore methods to protect themselves as they enter into the business arrangements necessary to continue providing the critical services their communities require.  And while most health systems rely on legal counsel in drafting agreements to ensure the documents are appropriately protective and binding to the parties involved, the terms of the contracts themselves demand an additional level of analysis by a qualified expert with an understanding of both regional and national trends.  This additional insight helps ensure that payments do not exceed FMV and are commercially reasonable.

Our next post in the series will focus on national median payments and FMV.

If you’d like to know more now, read the Diagnostic available on our Web site.

This entry was posted in Call Coverage, Fair Market Value, Legislative & Regulatory Issues, Physician Compensation and tagged , , , , , , by Adam Klein. Bookmark the permalink.

About Adam Klein

Adam is the head of ECG’s Valuation Services practice. Since 1997, he has conducted valuations and appraisals of business enterprises, physician and executive compensation arrangements, accountable care funds flow arrangements, and capital and intangible assets, as well as conducted economic damages assessments, for taxable and tax-exempt entities. His valuation studies are presented in a manner that allows parties to clearly understand how and why conclusions were reached so that they are best able to achieve fair and defensible agreements. He has conducted industry-leading research on drivers of physician compensation and speaks regularly on a variety of healthcare valuation topics. Adam is a Certified Valuation Analyst (CVA) with the National Association of Certified Valuators and Analysts, a member of the American Society of Appraisers, and qualified by the Institute of Business Appraisers to perform business appraisal reviews. He received a master of business administration degree from the UCLA Anderson School of Management and a bachelor of arts degree in econometrics from the University of Massachusetts Amherst.

4 thoughts on “Beyond the Benchmarks – Data is the Best Defense

  1. Pingback: Beyond the Benchmarks – Choose your Methodology Wisely | ECG Management Consultants, Inc.

  2. Pingback: Beyond the Benchmarks – Surveys Are a Piece of the Puzzle | ECG Management Consultants, Inc.

  3. Pingback: Beyond the Benchmarks – Lifestyle Considerations | ECG Management Consultants, Inc.

  4. Pingback: Call Coverage and the Road Ahead | ECG Management Consultants, Inc.

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