Physician Contract Glossary · Regulatory & Compliance
Fair Market Value
Fair market value is the price a willing buyer and seller would agree to with full knowledge, and physician compensation must meet it to satisfy federal law.
Fair market value is the price an arm's-length willing buyer and willing seller would agree on, each with reasonable knowledge of the facts. It runs through physician contracts because Stark and Anti-Kickback both require that compensation, buy-ins, and rentals sit at fair market value, not be inflated to reward referrals. Independent valuations are used to set buy-in prices, benchmark pay, and price practice sales.
Recognize that fair market value language is protecting the legality of your pay, not capping it arbitrarily. When buying into a practice, insist on an independent valuation rather than a number the sellers set themselves.
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