1. Forgetting to do your homework
Don’t create guidelines without understanding your organization’s needs and situation. Your market, as well as your organization’s demographics, can play a big role in physician compensation. Some key questions to ask are:
- How large is your organization?
- How many and what type of contracts do you have?
- What is the profile of your medical staff and physician market?
- Are you a trauma center, tertiary, or academic medical center?
- What other demographic, market, regional, or organizational factors influence your physician transactions and how?
2. Neglecting to set goals
Every FMV policy needs goals and objectives. Otherwise, there’s not much reason to have a policy. Obviously, every FMV policy should strive to negotiate fair, compliant arrangements and it should also be a top priority to follow federal and state guidelines/regulations.
FMV policies can also achieve other objectives such as:
- Mitigating risk
- Creating administrative efficiencies
- Reducing approval time
- Standardizing payments
- Lowering or moderating costs
3. Not securing resources that support your team and facilitate compliance
If your staff doesn’t have the resources it needs to execute the FMV process, or if the process is cumbersome or time-intensive, you are setting the organization up for failure. Many resources are available to facilitate the FMV process.
Many organizations use a market survey or surveys as their primary resource for the FMV process. Market data is essential to determining physician compensation regardless of the process used to document FMV. Having access to high-quality surveys helps organizations make informed decisions, and it doesn’t hurt that surveys are also cost-effective. As many as 80% (and for some organizations even more) of physician compensation arrangements fall comfortably within market rates, and some survey companies offer tools to document comparisons.
Having a consulting firm you trust for particularly complicated arrangements also can help; scrambling to secure a valuation consultant at the last minute can be expensive and frustrating.
4. Not involving and securing buy-in from stakeholders in designing the FMV process
Seeking input and feedback from stakeholders as you develop new policies will facilitate adoption of policies that are efficient to implement and reflect market realities. Involving the executive team and medical staff leaders is best practice, and board approval should be required for changes in compliance policies and physician compensation design.
If you engage only senior leadership in this process, you risk leaving out key team members who are responsible for workflow and documentation. Contract administrators often enact the FMV process daily; their opinion for how to streamline policies and structure guidelines should be considered and taken seriously.
5. Setting the wrong rate thresholds for your organization
When considering what contract payment thresholds should be used in your policy, consider the risk tolerance of your organization relative to the profile of your market and organization. Higher benchmark thresholds may be appropriate for certain organizations, but they can be risky for many. It should also be noted that recent OIG guidance states that compensation below the 25th percentile may be appropriate for some positions and/or organizations. An initial evaluation of how current payment rates compare to benchmarks is an important first step in setting an effective FMV policy and process.
For example, if your policy is set to allow approval of contracts up to the 75th percentile of survey market rates, and current rates are closer to the median, you may end up with rates creeping up if administrators or physicians think there is a de facto ability to raise rates.
On the flip side, if the median is your threshold and regional market or organization conditions frequently require higher rates, your FMV process may take longer to collect the required information for exceptions, and you may not have the staffing resources to support it.
6. Not communicating the FMV policy effectively
Communicating the new policy needs to happen quickly, and frequently. It is crucial to be transparent and clear when you share the steps of the new process or when new staff or physicians join your team. Ensure that people have access to all resources that are needed to execute the process, including technology, market data, consultants, etc. If you feel like you are repeating yourself, or “overcommunicating”, you are probably doing it right.
Instead of simply emailing the new policy to stakeholders, consider holding a meeting either in person or virtually. Taking the attendees step by step through the new process and resolving any immediate questions or issues is best practice, particularly in multi-facility organizations.
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