by Mark Spurlin, CPA
In the complex landscape of physician compensation, benchmark data has served as one of the most commonly used tools for evaluating fair market value (FMV). While surveys published by the AMGA, MGMA, and SCA (i.e. the “Big Three”) are well-known, there are numerous other sources of data available. Considering alternative sources of data can help you to obtain a more accurate analysis of the value of your physician practice. In this blog, we will explore some of these alternative sources of data that can potentially be used in physician compensation analyses, as well as highlight some considerations for their use.
- Professional Associations/Societies: Professional associations and societies, such as the Society of Hospital Medicine and the American Association of Medical Colleges, play a vital role in collecting and analyzing physician compensation data. These organizations often conduct surveys or collaborate with other entities to gather comprehensive data that reflects the specific needs and challenges faced by physicians in different specialties. The advantage of utilizing data from professional associations lies in their expertise and focus on specific areas of medicine and often report metrics that align more closely with the unique aspects of each specialty.
- Recruiters/Consulting Firms: Recruiters and consulting firms, such as ECG, Merritt Hawkins, and Gallagher, are deeply involved in physician recruitment and contract negotiations. As a result, they possess valuable insights into current market trends and compensation structures. These entities have access to vast networks and databases, allowing them to gather compensation data from healthcare organizations that may not participate in the larger surveys. However, it is important to consider potential biases that may exist, sources of data, statistical significance, etc.
- Web-Based Databases: The advent of the internet has led to the creation of web-based databases that provide physician compensation information. Websites such as Salary.com, Indeed.com, Doximity.com, Medscape.com, and Gasworks.com offer searchable databases with user-submitted salary data, job postings, and surveys. While these platforms can provide a wealth of information, it is essential to exercise caution when relying on self-reported data. Factors such as sample size, response bias, and data validation need to be considered to ensure the accuracy and reliability of the information obtained.
- Public Data: Publicly available data sources, such as government/VA contracts, Bureau of Labor Statistics (BLS) reports, and state contract databases, can serve as additional references for physician compensation. However, it is essential to recognize the limitations of these data sources, as they may not capture the full breadth of physician compensation arrangements.
In the preamble commentary of the new Stark regulations CMS states, “Consulting salary schedules or other hypothetical data is an appropriate starting point in the determination of fair market value, and in many cases, it may be all that is required.” So while benchmark survey data is often at least a starting point for evaluating physician compensation, it’s not necessarily the be-all and end-all. To achieve the best results with a good sense of accuracy for your physician practice, it is vital to critically evaluate the quality of the data, consider the credibility of the sources, evaluate comparability, and recognize any potential biases.
Selecting the appropriate benchmark data to use to evaluate your physician practice can be quite complex. However, following the recommendations of trusted professionals will prevent you from selecting the wrong data and making mistakes. At Root Valuation, we help physician leaders successfully navigate business and employment transactions to that their value is fully realized. If you have any questions about what benchmark data is most suitable to value your practice and hot it can best serve you , speak with Mark Spurlin at 720.458.3766 or contact us at info@rootvaluation.com.