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GCU Physician Compensation Private Practice & Regulations Response Discussion

respond to the following post as a peer.

Hello class,

“Fair market value is, the price at which the property or service would change hands between a willing buyer and a willing seller, neither being under a compulsion to buy or sell and both having reasonable knowledge of the relevant facts” (Oelrich, 2012, p.2). The idea of fair market value on physician wages isn’t a new concept; however facilities continue to struggle with what the term fair market value really means and how they can best apply it to physician compensation.

Facilities need to assess what type of physician they are looking to hire as this will be a starting point for them to review what is considered fair compensation. Comparing to the national standard isn’t the only way to determine base compensation. Again, it’s a starting point, however, things such as location and cost of living need to be assessed as well. There is no way that my facility in Rural Wisconsin could pay a primary care physician the same wage that a primary care physician in Chicago was making. Taking into consideration how much the physician would have to pay to live in Chicago would have to be a factor of the overall negotiations.

Our facility looks at fair market value, but that isn’t necessarily the base rate the physician gets paid. Our CEO, looks at various items when negotiating a physician contract. Typically, our physicians receive a base rate plus an incentive guarantee for the first two years of their contract. After that, they are paid their base rate, but then their incentives are paid based on there work. Most new physicians that we hire, have an incentive based of their wRVU’s. There is usually a set amount of wRVU’s they have to perform each year as part of their base salary and then they receive a specified dollar amount for each wRVU over that threshold. This holds the physicians accountable to being able to received additional money.


Oelrich Jr. W.L. (2012). Demystifying fair market value compensation: what do you need to know?. PYAleadersip briefing. 1-13 Demystifying-fair-market-value-compensation-what-do-you-need-to-know.html


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