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Calculate compensation for medical directors

Physician Compensation & Recruitment, October 30, 2008

The most common way of determining medical directorship compensation is to develop fair market value (FMV) benchmarks for the agreement in question. Benchmark data typically includes publicly available survey results for the specific specialty and generally are at or below the compensation level paid to clinicians for equivalent work effort.

In some situations, there may not be enough publicly available data to develop a specialty-specific benchmark; therefore, it is possible to extrapolate the available data to develop a valid benchmark.

In these cases, it is important to rely on an independent, third-party, industry expert in hospital/physician relationships who has knowledge of the healthcare industry and laws to develop a benchmark that is appropriate and indisputable.

Once an appropriate benchmark is determined, a range of appropriate payments can be established based on the benchmark. In general, a proposed payment should satisfy FMV if the payment is within the range of the identified benchmark, which is generally considered to be less than the 75th percentile of the survey data. Special circumstances might exist at the hospital or within the specific market that might warrant a payment that is higher than the benchmark.

Remember that medical directorship agreements must adhere to the anti-kickback statute, Stark laws, and §501(c)(3) of the Internal Revenue Code.


This article was adapted from one that originally ran in Physician Compensation & Recruitment, a HealthLeaders Media publication.