Fair Market Value - Physician Contract Glossary

Fair Market Value

Definition

The reasonable worth of compensation or benefits, not inflated or reduced for kickbacks.

Examples in Context

“All physician compensation is determined at fair market value per independent valuation.”

“Employer shall pay Physician an annual salary consistent with fair market value standards as determined by a third-party valuation firm.”

Implications for Physicians

• Ensures compliance with laws like Anti-Kickback and Stark.
• Protects you and the employer from regulatory scrutiny.

Negotiation Tips

• Request data or third-party reports used to determine pay ranges.
• Compare multiple surveys (e.g., MGMA, AMGA) for a balanced view.
• Ask for written documentation explaining the fair market value determination.

Red Flags and Pitfalls

• Overstated pay might attract government investigations.
• Underpayment can limit earning potential.
• Ambiguous or undocumented fair market value calculations.

Related Terms

• Stark Law
• Anti-Kickback Statute
• Compensation Structure

FAQs

• What is the best way to confirm my pay meets fair market value?
  • Request the employer’s valuation report or third-party analysis.
• How can I tell if my salary is above fair market value?
  • Compare your offer against MGMA, AMGA, or SullivanCotter benchmarks.
• What happens if my salary is above fair market value?
  • Significantly higher pay may raise compliance concerns under Stark and Anti-Kickback laws.
• Can fair market value vary by location?
  • Yes, geographic factors heavily influence fair market value due to cost-of-living differences and regional demand.

Legal Disclaimer

The information provided in this glossary is for educational and informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, this content is intended to help physicians better understand common contract terms and does not replace professional legal guidance.

For personalized advice regarding your employment contract or other legal concerns, we strongly recommend consulting with a qualified attorney who specializes in physician employment contracts.

You can find experienced legal professionals through our Physician Contract Lawyer Directory.