Regulatory as well as financial concerns are driving the need to address the issue of health systems losing money on acquired physician practices. Significant losses lead the government to believe that hospitals are paying for referrals, a violation of the Stark Law that can trigger large monetary penalties. A key issue in these enforcement actions is the measurement of the fair market value of physician compensation. A series of articles by Timothy Smith (TS Healthcare Consulting LLC) examines losses in health system physician practices. Smith points out that, according to cost and revenue data from the Medical Group Management Association (MGMA), nearly all health systems lose money on their physician practices—but nearly all physician-owned practices break even or make a profit. Why the disparity and what are the implications for health systems incurring such losses? The reasons are multiple and complex, and “we have to stop looking for a simple answer or a one-size-fits-all answer” because they do not exist, says Smith. He also did a podcast for MGMA Insider on this issue. Smith is co-author with Mark O. Dietrich of the BVR/AHLA Guide to Valuing Physician Compensation and Healthcare Service Arrangements, 2nd edition, which debunks the current “survey says” paradigm and provides the foundation for a completely new standard for the fair market value of physician clinical compensation.