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5 FMV Myths Debunked

11/20/2017  |  By: Josh Brummett, CPA/ABV, CFF, Shareholder, Healthcare Valuation Services

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LBMC’s Healthcare Compensation Valuation team helps strengthen an organization’s compliance program by delivering Fair Market Value (FMV) opinions which combine a detailed understanding of complex financial and regulatory matters with an ability to analyze substantial financial and operational information. Each valuation analyzes the arrangement to determine Fair Market Value (FMV) compensation with consideration of the cost, income and market approaches.

Here are 5 common fair market value myths to look out for:

  1. One Market Survey is Enough.

    • Fact: Using multiple, objective, independently published compensation surveys generally creates a more defensible conclusion and is recommended by the government. Source: The Stark Law.

  2. The Median is Always FMV.

    • Fact: The best representation of FMV is specific, comparable market data and is unique to each set of facts and circumstances.  Half of physicians in the surveys make less than median.

  3. Market Survey Compensation only includes Clinical Work.

    • Fact: Reported compensation varies from survey to survey and often includes all forms of compensation (e.g., call, administrative, quality, bonuses, etc.).  It is critical to perform a compensation stacking analysis which consider all payments for all services.

  4. Higher wRVUs means Higher Compensation per wRVU Rate

    • Fact: Market survey data has shown that busier physicians with higher wRVUs often have lower comp per wRVU rates. Source: Benchmark data by quartile of production.

  5. Regional Data is Best

    • Fact: Regional data can vary widely from year to year based on the number and type of respondents. Therefore, it may not be comparable for a physician in a particular market.

Don’t get fooled by these and many other FMV myths. For help moving your organization from fiction to fact, contact the LBMC Healthcare Compensation Valuation team. Josh Brummett at 615.309.2226 or jbrummett@lbmc.com or visit www.LBMC.com/Compval.

Posted in: Advisory, Healthcare
Tagged with: Healthcare