Understanding Physician Compensation Structures

The Physician Compensation Landscape

Physician compensation is complex and varies significantly by specialty, geography, practice setting, and experience level. Understanding these dynamics is essential for creating competitive offers that attract quality candidates.

Compensation Models

1. Salary-Based (Fixed Compensation)

How it works: Physicians receive a fixed annual salary regardless of productivity.

Pros:
- Predictable income for physicians
- Easier budgeting for employers
- May encourage quality over quantity
- Less administrative overhead

Cons:
- May not incentivize high performers
- Can lead to productivity concerns
- Less flexibility for physicians who want to earn more

Best for: Academic settings, hospitals prioritizing work-life balance, early-career positions

2. Productivity-Based (RVU or Collections)

How it works: Compensation tied directly to work performed, typically measured in Relative Value Units (RVUs) or collections.

Pros:
- Rewards high performers
- Aligns physician and practice incentives
- Can attract ambitious physicians

Cons:
- Income unpredictability
- May incentivize volume over quality
- Complex to administer and explain

Best for: Private practices, high-volume settings, experienced physicians

3. Hybrid Models

How it works: Base salary plus productivity bonuses or quality incentives.

Pros:
- Balances security and incentive
- Flexibility in design
- Can incorporate quality metrics

Cons:
- More complex to structure
- Requires clear communication
- Administrative burden

Best for: Most employed physician positions, health systems transitioning to value-based care

Key Compensation Components

Base Salary

Market data sources for benchmarking:
- MGMA (Medical Group Management Association) surveys
- AMGA (American Medical Group Association) data
- Specialty society compensation reports
- Regional recruitment firm data

Factors affecting base salary:
- Specialty (surgical vs. primary care)
- Geographic location (urban vs. rural)
- Practice setting (academic vs. private)
- Experience level
- Call requirements
- Administrative duties

Signing Bonuses

Common ranges by specialty:
- Primary Care: $10,000 - $50,000
- Hospitalist: $20,000 - $75,000
- Specialty: $25,000 - $100,000+
- Surgical subspecialties: $50,000 - $150,000+

Structuring sign-on bonuses:
- Typical repayment periods: 2-3 years
- Pro-rata forgiveness vs. cliff vesting
- Clear repayment terms in contract

Production Incentives

RVU-based incentives:
- Threshold RVUs before bonus kicks in
- Per-RVU rate above threshold
- Annual vs. quarterly payouts
- wRVU vs. total RVU considerations

Quality incentives:
- Patient satisfaction scores
- Quality metrics (HEDIS, MIPS)
- Citizenship/engagement measures
- Documentation quality

Benefits Package

Standard benefits:
- Health insurance (employee + family)
- Retirement plans (401k/403b with match)
- Malpractice insurance (occurrence vs. claims-made)
- Disability insurance (short and long-term)
- Life insurance

Physician-specific benefits:
- CME allowance ($3,000 - $10,000+ annually)
- CME time off (1-2 weeks)
- Licensure and DEA fees
- Medical society dues
- Board certification/recertification costs

Differentiating benefits:
- Student loan repayment assistance
- Relocation allowance
- Housing assistance
- Sabbatical programs
- Spouse career assistance

Geographic Compensation Variations

High-Cost Markets

Urban areas often pay less due to:
- Physician supply
- Quality of life appeal
- Academic opportunities
- Spousal employment options

Rural and Underserved Areas

Typically offer premium compensation:
- 10-25% salary premium
- Larger signing bonuses
- Loan repayment programs (NHSC, state programs)
- More comprehensive relocation packages

Specialty Compensation Benchmarks

Primary Care

• Family Medicine: $230,000 - $280,000
• Internal Medicine: $240,000 - $300,000
• Pediatrics: $220,000 - $270,000

Hospital-Based

• Hospitalist: $280,000 - $350,000
• Emergency Medicine: $320,000 - $400,000
• Intensivist: $350,000 - $450,000

Surgical

• General Surgery: $380,000 - $500,000
• Orthopedic Surgery: $500,000 - $700,000
• Neurosurgery: $600,000 - $900,000

Note: Ranges are approximate and vary by region and setting.

Creating Competitive Offers

Research the Market

1. Use multiple data sources for benchmarking
2. Consider regional variations
3. Factor in cost of living
4. Understand candidate expectations

Total Compensation View

Present offers showing total value:
- Base salary
- Expected incentive/bonus
- Benefits valuation
- CME and professional development
- Loan repayment programs

Flexibility Matters

Modern physicians value:
- Schedule flexibility
- Part-time options
- Work-from-home days (where applicable)
- Sabbatical opportunities

Next Steps

Need help structuring competitive compensation? Contact us to discuss your recruitment strategy.