Compensation Arrangements With Rock Star Physicians: Key Legal and Fair Market Value Considerations

Description

Certain physicians are renowned locally, regionally, nationally, or internationally for their specialty areas and/or services. These physicians, sometimes known by the colloquial term "rock stars," may be in demand not only for their clinical services but also for their influence and leadership of other physicians and their ability to attract patients, donors, and research dollars.

Compensation for rock star physicians' services can pose challenging legal and valuation questions for hospitals and other healthcare providers that contract for the rock stars' services. As with other physicians, compensation arrangements with rock star physicians may need to comply with an exception to the Stark law and/or with the prohibitions in the federal Anti-Kickback Statute, as well as with the various state laws that regulate the type, purpose, process, and amount of compensation that may be permissible.

Since many rock star physicians are academic physicians who hold appointments at academic medical centers and teaching hospitals that are not-for-profit, tax-exempt, and/or tax-supported, there are sometimes additional legal concerns related to the obligations and restriction on the payor of the compensation under tax-exemption or public financing laws. For all these reasons, ensuring that rock star physicians' compensation arrangements are reasonable and at fair market value is generally imperative. Yet, given their unusual qualifications and lack of comparability to other physicians, establishing reasonableness and FMV can be a challenge.

Listen as our authoritative panel of healthcare counsel discusses the processes and criteria for identifying rock star physicians. The panel will examine Stark Law, FMV, and commercial reasonableness considerations. The panel will offer best practices for structuring rock star physician compensation arrangements.