- 50 -
the first instance, employment that was compensated with shares of
revenue (47 to 57.75 percent) that significantly exceeded the
median share of revenue (45.18 percent) devoted to physician
compensation in petitioners' specialties; a $35,000 "Physician
Access Bonus" for each SWMG physician, including petitioners;31 an
absence of restrictions on establishing a competing medical
practice in the event of cessation of employment with SMF; and
greater economic security in the managed care environment. Other
31 Petitioners strenuously argue that the "Physician Access
Bonuses" were consideration for the SWMG physicians' agreement to
maintain "open" practices; i.e., to accept new patients
notwithstanding existing patient loads. Accordingly, petitioners
contend, the "Physician Access Bonuses" could not have served as
consideration for the SWMG physicians' transfer of their medical
practice intangibles.
Petitioners' argument is unpersuasive. As with petitioners'
broader claim that no consideration was paid for their intangible
assets, the argument depends upon segregating elements of
consideration that were part of an integrated, and intensely
negotiated, agreement. The extensive and otherwise detailed
written agreements governing the transaction with SMF do not
mention any open practice requirement. Even if the transaction
documents had expressly allocated the $35,000 bonuses to the
physicians' agreements to maintain open practices, we would
remain unpersuaded, because there is no evidence in the record
that a $35,000 payment was customary for a physician-employee's
agreement to maintain an open practice. In fact, one SMF
official who testified conceded that no such bonuses had been
paid to other physician groups that affiliated with SMF, and the
Dutcher appraisal does not address the bonuses. Tellingly, when
the PSA was renegotiated to cover the period after its initial 2-
year term, there was no comparable provision for "Physician
Access Bonuses" to secure the SWMG physicians' open practice
commitments. After respondent noted this apparent inconsistency
on brief, petitioners offered no explanation to account for it.
Consequently, we find that the $35,000 "Physician Access Bonuses"
are not fully allocable to open practice agreements and instead
were part of the consideration package received by the SWMG
physicians in exchange for the transfer of their medical
practices.
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