The Hospital contracted directly with the Group to provide on-call radiology and interventional radiology coverage services at the Hospital. The original contract stipulated that the Group would retain the collections from services rendered to patients while providing the coverage, but would not receive any additional compensation. The Hospital had begun to see an increase in patient volume during nighttime and weekend coverage, and the Group was beginning to experience burnout. To ensure continued coverage, the Hospital wanted to engage a third-party valuation firm to determine FMV for the services.
To determine FMV, VMG Health considered clinical compensation and on-call compensation survey data for the specialties, along with factors contributing to the burden of call. Specifically, these factors included, but were not limited to, reimbursement risk of the Group, historical and anticipated in-person response and phone call volumes, time spent attending to patients when called in, typical acuity of cases performed, and availability of other groups to provide the same level of coverage. Through conversations with the Hospital administration and the Group, VMG Health was able to identify key drivers of the burden of on-call coverage.
VMG Health determined the FMV compensation payable to the Group based on the burden of call and circumstance of the arrangement. Subsequently, VMG Health identified multiple options available to the Hospital for structuring the compensation. The analysis was used by the Hospital in negotiations with the Group to alleviate physician burnout and ensure continued coverage at the Hospital.
As part of a health system acquisition, the larger health system would inherit 100+ physician employment arrangements. The arrangements varied in compensation structure and services payments (clinical, call coverage, medical directorship, GME, etc.). The health system wanted to ensure the compensation arrangements were within existing internal threshold guidelines, and for arrangements falling outside of internal guidelines, they wished to obtain a fair market value (FMV) analysis.
VMG Health worked with the health system to understand the existing internal threshold guidelines to be applied to the arrangements. Subsequently, an in-depth analysis was conducted of each arrangement’s compensation, services, structure, and the physician’s productivity. For physician arrangements flagged as falling outside internal thresholds, a thorough review of all services and stacking was completed. The FMV analysis considered compensation and productivity data from numerous national surveys for the respective specialty, the physician’s projected production level, service mix, and work schedule under the arrangement. In addition, VMG Health held numerous meetings with the regional health system’s management and current physicians to understand the local market dynamics, economic factors, and practice operations. This information was used to derive the final FMV indications.
VMG Health condensed a vast amount of information and data into a comprehensible analysis to determine the physicians who were falling outside the system’s internal threshold guidelines. The list and subsequent clinical compensation FMV opinions were then used by the health system for regulatory and compliance purposes and to aid in contract negotiations following the successful acquisition.
The Hospital was looking to contract with a medical transport company (“Company”) for the provision of emergent ground transportation services to move Hospital patients from the Hospital’s FSED to the Hospital. The hospital was seeking a fair market value (FMV) analysis of the services from an independent third-party valuation firm with substantial experience in ambulance/medical transport arrangements. Typically, ambulance transportation fees are stated as a base rate plus a mileage rate per patient loaded mile due to the Medicare Ambulance Fee Schedule (AFS) payment structure. For ease of operation, the Hospital was proposing an all-in fixed fee per transport.
VMG Health assessed the interfacility fee by considering medical transport market reimbursement rates from industry research and market quotes for similar services. Additionally, VMG Health reviewed the Medicare AFS for reimbursement rates based on level of service transport (i.e. BLS, ALS, SCT, etc.) and mileage to build up the Medicare reimbursement. Using the totality of market data, VMG Health proposed an all-in fixed fee per transport inclusive of mileage between the FSED and Hospital.
VMG Health determined the FMV fixed fee per transport by considering the Medicare AFS and market research applicable to the subject transportation services. The deliverable was then used by the Hospital to support the proposed fixed fee per transport to be stated in the go-forward arrangement and for regulatory and compliance purposes.
To expand coverage to the Clinic, the Hospital planned to bill and collect for the professional services rendered by a pulmonary group (“Group”) that was already providing coverage to the main hospital. The Hospital would pay the Group a daily rate for the clinical services to include travel and lodging costs. The Hospital was seeking valuation services from an independent third-party valuation firm with extensive experience in hospital coverage arrangements to establish fair market value (“FMV”) compensation for the arrangement.
VMG Health conducted an FMV analysis of the coverage agreement by reviewing the proposed agreement terms, coverage schedule, and assessing the proposed compensation and travel costs. The analysis included a build-up of physician costs based on market compensation and benefits survey data. VMG Health also considered the physician full-time equivalents required to cover the Clinic based on a projected coverage schedule of twice per week, and benchmarking of productivity data. Lastly, the analysis included a provision for travel and lodging costs (airfare, rental car, per diem food, hotel stay, etc.).
VMG Health determined the FMV compensation for the Group’s provision of coverage services at the Clinic by considering the specific details, facts, and circumstances of the arrangement. The deliverable was then used by the Hospital and Clinic to aid in the successful contract negotiation process and for regulatory and compliance purposes.
The subject market had faced increased supply and demand issues with anesthesiology providers. Due to the low supply of available providers in the market, the Contractor would have to utilize locum tenens providers to supplement its employed providers and significantly increase staffing costs. Lastly, due to the implementation of the No Surprises Act and changes in the Medicare Physician Fee Schedule in recent years, reimbursement for anesthesiology services in the market has been negatively impacted.
VMG Health conducted an in-depth analysis of revenue, costs, and market data. Professional collections estimates were derived by using a benchmarking analysis based on provider staffing requirements, projected cases, and ASA unit volumes. Cost figures considered interviews and were calculated by reviewing compensation market survey data, analyzing the current locum tenens and recruitment expenditures, and applying an appropriate overhead allocation and profit margin. VMG Health also considered market survey data and VMG Health’s internal database of similar arrangements.
VMG Health determined the FMV compensation payable by the ASC to the Contractor for the physicians’ and CRNAs’ provision of clinical services. The ASC then used the deliverable to aid in the contract renewal negotiation process and it was also used for regulatory and compliance purposes. A professional services agreement was executed by and between the parties. This allowed the ASC to continue operations that utilized the current group of established providers and allowed the Contractor to cover rising costs while maintaining an appropriate margin.
The provider contracted directly with a physician group to provide dialysis medical director services to various provider-affiliated centers. The provider was seeking a fair market value analysis of the services prior to negotiating contract renewals to ensure compliance. In addition, the provider wanted to engage an independent third-party valuation firm with extensive experience surrounding dialysis arrangements and an understanding of the uniqueness of these arrangements. The medical director arrangements were provided to both dialysis centers along with skilled nursing facilities. In addition, the compensation structure was not hourly, but rather an annual stipend with 24/7 availability to meet the needs of the facilities.
VMG Health conducted a fair market value analysis of the dialysis medical director services consisting of cost and market approaches which included: an analysis of local market dynamics affecting physician compensation, a review of the current agreement, an analysis of both dialysis clinical compensation and medical director services compensation market survey data, dialysis medical director stipend market comparables data, a review of VMG Health’s internal database of similar arrangements, and a review of the unique experience, qualifications, and expertise of the physicians providing the services. In addition, VMG Health conducted an in-depth review of the job duties and interviewed the physicians to obtain a clear picture of the intricacies of the services and to determine the appropriate split of active hours (hours spent taking calls, advising, making decisions, etc.) and inactive hours (hours where the physicians were available to respond to calls but were not actively providing services). This information was used to derive the final fair market value indications.
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