What Is Fair Market Value (FMV) and Why It Matters in Your First Physician Contract
When residents and fellows review their first job offers, compensation numbers often take center stage. But how do you know if the salary you’re being offered is fair? That’s where Fair Market Value (FMV) comes in. FMV is more than just a number — it’s a benchmark that protects physicians and employers alike.
What Is Fair Market Value?
Fair Market Value (FMV) represents the compensation that would be paid to a physician for comparable services in a similar setting, free from any pressure or influence. In other words, it’s what other doctors in your specialty, location, and practice type are typically earning.
Why FMV Matters for New Physicians
- Ensures Fair Pay: FMV helps you confirm that your offer is competitive and aligned with industry standards.
- Regulatory Compliance: Hospitals and health systems must adhere to FMV guidelines to avoid legal issues under Stark Law and anti-kickback statutes.
- Negotiation Power: Knowing FMV gives you leverage when negotiating your contract.
How FMV Is Calculated
FMV is based on multiple factors, including:
- Specialty and subspecialty
- Geographic location
- Practice type (academic, private practice, hospital-employed)
- Workload expectations (RVUs, patient volume, call coverage)
- Data from national surveys such as MGMA, SullivanCotter, or AMGA
Red Flags Around FMV
- Offers significantly below FMV, which may indicate undervaluation.
- Offers far above FMV, which can raise compliance concerns and may come with hidden strings attached.
- Lack of transparency about how compensation was determined.
Questions to Ask Your Employer
- How was this compensation package determined?
- Which benchmarks or surveys were used to establish FMV?
- Does this offer include productivity expectations that align with FMV?
- How does this compare to regional and specialty-specific averages?
Using FMV to Protect Your Career
FMV isn’t just about money — it’s about ensuring your contract sets you up for long-term success without exposing you to risk. When reviewing your offer, compare it to FMV benchmarks and ask for clarification if the numbers don’t align.
Use our Physician Contract Checklist to make sure you’re asking the right questions. For more detailed analysis, ContractGuard MD can help highlight how your offer compares to industry standards and what that means for your future.
Frequently Asked Questions
What is a typical FMV range for new physicians?
It varies by specialty and location. Using national survey data like MGMA is the best way to determine benchmarks.
Can I negotiate above FMV?
Yes, but contracts that exceed FMV by a wide margin may create compliance issues for employers. Always clarify the reasoning behind unusually high offers.
Why does FMV matter for compliance?
Hospitals must pay within FMV to avoid Stark Law and anti-kickback violations. This protects both you and the employer.
How do I access FMV data?
Many surveys require subscriptions. Contract review services, consultants, or tools like ContractGuard MD can help you interpret FMV without the cost of full reports.
