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Is There Really an Industry Standard for Calculating On-Call Compensation?
In February 2024, the U.S. Department of Justice (“DOJ”) joined a second whistleblower complaint against a former executive at Illinois-based Cardiac Imaging Inc. (“CII”), a mobile imaging company providing diagnostic cardiac positron emission tomography (“PET”) services. The allegations echo those addressed by the $85 million settlement reached in October 2023, which resolved alleged False Claims Act violations caused by excessive payments made to referring cardiologists by CII and its founder-owner-CEO. Both complaints were initially filed by a former billing manager employed by CII.
According to the complaint, CII operations transported converted semi-trailer trucks to the contracted physicians’ practices, and the scans were performed onboard while the physicians carried out their regular clinic schedules inside the facility. The physicians were contracted for providing “supervision services,” which the government compared to “on-call arrangements common in medicine,” stating that “the physicians were not required to be present for or involved in overseeing the scans and did not have to interrupt their ordinary practice of medicine.”
Specifically, the complaint went on to state, “…supervising CII’s scans amounted to an on-call arrangement, and industry standard is to value such arrangements at ten to fifteen percent of clinical compensation (emphasis added)…” Based on this assertion, the government alleged that CII paid over fair market value (“FMV”) for the contracted physicians’ supervision services.
BFMV was interested in testing if the government’s assertion of this “industry standard” holds up. We reviewed published median (50th percentile) total clinical compensation benchmarks and average, 25th, 50th, and 75th percentiles of published benchmarks for on-call compensation for twelve medical specialties[1].
For example, we considered that the national median benchmark of annual clinical compensation for orthopedic surgery is around $640,000. Assuming 2,000 annual hours worked, the equated hourly rate is $320 per hour. Ten to fifteen percent of this rate is $32 to $48 per hour. Compared to published hourly on-call compensation rates for orthopedic surgeons, this range overlaps with call rates corresponding to the 25th percentile to the median.
The other eleven specialties we looked into varied widely with regard to the degree of correspondence with the “ten to fifteen percent of clinical compensation” assertion. Across all twelve specialties, on average, 14% of the published benchmarks fell below, and 50% fell above the DOJ’s range. Only 36% of the published on-call benchmarks we reviewed fell within the range of the so-called industry standard.
Valuation Takeaway
Ultimately, our simple analysis shows that the published national benchmarks don’t support the ten to fifteen percent standard as an across-the-board stand-alone for FMV on-call compensation. Many contributing factors are at play in FMV determinations, including multi-layered aspects of physician call burden, location, and medical specialty. To reach supportable FMV, it’s important to have the fullest possible understanding of the circumstances surrounding each unique call arrangement.
The BFMV Physician Call Coverage Burden and Compensation Survey provides many helpful insights into benchmarking these arrangements and is currently in data collection for 2024. Through our direct-to-physician approach, we receive responses from physicians across a wide range of specialties, geographies, demographic settings, and employers. The survey includes unique on-call burden and compensation information, much of which is unavailable from other survey resources, including the following:
Compensation (hourly and per 24-hour shift)
Weekend/holiday differentials
Days on-call per month
Average phone call volume per 24-hour shift
Required in-person response time
Average in-person visits per shift
Other opportunities to generate income (professional billings, activation fees, productivity credit)
For more information check our Surveys page, purchase the 2023 survey here, or contact us.
BFMV is experienced in the valuation of professional healthcare service arrangements, including compensation for physicians and other advanced practice providers. Contact us for more information or assistance.
[1] Reviewed specialties include anesthesia, invasive/interventional cardiology, gastroenterology, general surgery, nephrology, neurosurgery, neurology, OBGYN, ophthalmology, orthopedic surgery, plastic surgery, and urology.
