Physician Compensation Targeted by the Department of Justice

healthcare business change in ownershipBy: Jeff Cohen

The DOJ reported on August 5th a settlement with a South Carolina hospital concerning physician compensation.  Though certainly not the first or the biggest case of its kind (e.g. note the Halifax Hospital and North Broward Hospital District cases, which generated settlements of over $100M and $60M respectively), it’s attention grabbing nonetheless.

The SC case was brought by a whistleblower, a neurologist formerly employed by the hospital.  The doctor alleged that the seven year employment agreements violated Stark and the Anti Kickback Statute because the compensation was more than what was legally permissible and was also based in part on ancillary services ordered by the employed doctors.  Seasoned readers will understand that the concept of “fair market value” (FMV) is at the heart of regulatory compliance and also that compensation surveys of organizations like the Medical Group Management Association (MGMA) are important guides in term of what is/is not FMV.  In the SC hospital case, compensation met or exceeded the top 10% of similarly qualified physicians in the area, which is very interestingly noted by the DOJ (because some of the comp levels were still within the MGMA surveys).  In other words, the trend here is for the Feds to push back against comp levels on the high end of the FMV spectrum. Continue reading

Creating the Ideal ACO

The current fixation on Accountable Care Organizations (ACOs) is causing an enormous amount of two things:  (1) talking, and (2) inactivity.  Yes, the concept of delivering care in a manner that reduces or at least controls costs is important and interesting.  Yet, the marketplace is replete with people and businesses that have adopted a wait and see approach, which is really no approach at all.  Businesses and people who will thrive (especially in dynamic times) are those who, as always, take a lesson from sharks:  swim ahead or drown.

            So what about ACOs?  What the best “thing”?  How do you make one?  First, you have to do away with the focus on ACOs, since they are more of a concept than a thing.  Focusing on ACOs as a thing merely paralyzes the viewer because they are, by definition, not subject to such limitations.  What is clear, however, is what they’re supposed to do:  reduce costs and improve quality in a demonstrable way.  How do you do that?  Easy…squeeze the toothpaste tube backwards.

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