Compensation Arrangements With “Rock Star” Physicians: Key Legal and Fair Market Value Considerations for Defensibility

This CLE course will guide healthcare counsel on physician compensation arrangements for uniquely experienced and/or highly productive physicians whose compensation plans or amounts are justifiably “outside the box.” The panel will offer perspectives on identifying so called "rockstar" physicians and will examine federal and state legal and regulatory considerations for employing and contracting for the services of these physicians, including Stark Law, fair market value (FMV), and commercial reasonableness considerations. The panel will offer best practices for compensation arrangements in light of the increased potential for legal and regulatory scrutiny. 

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

Appropriate compensation for these physicians' services can pose challenging legal and valuation questions for hospitals, life sciences companies and other healthcare providers that contract for their services. As with other physicians, compensation arrangements with these 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 such 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 restrictions on the payor of the compensation under tax-exemption or public financing laws. 

For all these reasons, ensuring that rockstar physicians' compensation arrangements are reasonable and at fair market value is generally imperative. Yet, given the physicians’ unusual qualifications and lack of comparability to other physicians, establishing reasonableness and FMV can be a challenge. For purposes of look-back transactional due diligence, audits or investigations, appropriate documentation can be pivotal.

Listen as our authoritative panel examines the applicable federal and state laws and their impact on FMV and commercial reasonableness considerations. The panel will offer an overview of considerations for issue spotting, and for structuring and documenting so called “rockstar” physician compensation arrangements.