Fair Market Value Compensation for Private Practice Physicians Providing Resident Preceptorship Services

BFMV works with hospitals that compensate private practices for resident preceptorship during specialty rotations in affiliated community-based residency programs. Resident rotations are structured to provide comprehensive training across a variety of specialties. Internal medicine residents, for example, rotate through core areas such as general medicine wards, intensive care units (ICUs), and ambulatory clinics, as well as subspecialty areas like cardiology, neurology, or oncology.

A private practice resident preceptorship provides hands-on training, where residents work under the guidance of experienced private practice physicians affiliated with the program. During rotations, the preceptor physician sees patients and performs procedures in their regular practice setting. In some programs, residents will shadow, ask questions, and assist with documentation histories. In other programs, the residents may be more involved. However, in general, it is expected that the resident’s presence means slower throughput and less revenue (or work RVUs) for the private practitioner.  

Hospitals often compensate private practice physicians who serve as preceptors to residents. Our experience is that compensation is generally structured as a per-rotation payment. In comparison to what private practitioners may command in other settings, these amounts are typically conservative, reflecting academic physician compensation benchmarks, which are generally lower than those for private practice.

Despite being relatively conservative, the payments are significant when it comes to healthcare-related laws and regulations, and must meet the fair market value standard. To help our clients, BFMV has developed a framework for determining fair market value compensation for private practice residency preceptorship. Using the framework, we can create a methodology tailored to our client’s situation that considers 1) the specific specialty or subspecialty of the preceptor physician; 2) the number of residents and their experience levels in each rotation; 3) the mix of services and relative acuity of patients being treated by the preceptor physician during these rotations; and 4) the mix of clinical (hands-on training) versus didactic hours during the rotation.

If you’re interested in developing a fair market value methodology for private practice residency preceptorship compensation or a fair market value opinion for these types of services, reach out to us at ddevine@buckheadfmv.com.