Valuing Physician On-Call Compensation

Abstract

Physicians are becoming reluctant to provide emergency on-call availability without direct compensation from the hospital because of increasing patient visits and a growing proportion of uninsured patients. Accurately valuing on-call compensation is required to insure regulatory compliance and to control the economic exposure to the hospital. Failure to arrange for appropriate physician coverage can give rise to material fines under EMTALA. In establishing the fair market value (FMV) of compensation arrangements, a market approach is generally preferable. However, reliable market data frequently is unavailable. Instead, an analytical approach can be used to establish an objective measure of the value of on-call services relative to a physician’s work time. Then, factors that are unique to the hospital can be considered, along with market data, to reach a final determination of the FMV. In light of the regulatory implications, the financial impact to the hospital and the significant judgment required in arriving at FMV, the use of an independent expert is frequently advisable.