Determining Fair Market Value for Orthopedics Medical Director and Clinical Co-Management Agreements
Client/Profile
A multi-hospital regional health system
Challenge/Situation
To determine the fair market value of two agreements between the health system and a large independent orthopedic group:
- A medical director services agreement related to improving the clinical quality and efficiency of inpatient orthopedic care in an orthopedic specialty hospital
- A clinical co-management service agreement pertaining to clinical orthopedic oversight and medical direction of other outpatient, physical therapy, occupational therapy, and athletic training services.
Process
Veralon consultants met with hospital administrative and medical leadership to understand the service arrangements and the scope of management services to be provided. Once roles and responsibilities were identified, we worked with hospital leadership to quantify effort levels for the services to be provided by over 18 physicians across 10 specialties, as well as non-physician executives.
We took into consideration a potential incentive payment for achievement of certain quality metrics.
Results
Veralon applied the related work effort estimates to published compensation benchmarks for the respective specialties. This analysis was used by the client to set compensation for each agreement that was reasonable and consistent with fair market value.