Understanding Physician Compensation Models and Methods


Today’s physician compensation models are like the healthcare industry: highly dynamic and complicated. Many doctors find it challenging to assess how the compensation package of their first job will align with their personal and professional priorities.

Let’s review some of the approaches involved in compensation packages.

Value-based Measures.

As the healthcare industry shifts toward value-based outcomes, physician compensation is gravitating toward similar value-based measures. Compensation is no longer driven exclusively by patient volume and the number of procedures performed. It is a product of many factors including cost of care, patient experience, quality of care, coordination of care, and productivity.  Typically, productivity remains the largest single element impacting physician compensation. But, it is important to recognize value-based factors, which now comprise up to 20% of total compensation.


Introduced in the early 1990’s, Relative Value Units (RVUs) have become more significant in determining everything from physician compensation to medical practice buyouts and consolidations. In general terms, the physician’s component of the RVU accounts for: time; technical skill and effort; mental effort and judgment; and stress to provide a service. You can read more about RVUs here.

Practices are using work RVUs and a practice-specific conversion factor to determine compensation. Another typical approach is predicated on using a base salary plus a bonus calculation based on the number of RVUs generated.


As if compensation packages weren’t complicated enough, organizations are utilizing an approach referred to as stacking. This is an arrangement where physicians are performing multiple roles and being compensated individually for each. For example, a hospitalist has a full-time schedule where they are in the facility every other week. During the off-weeks, the hospitalist works shifts in the critical care unit, and also puts in 10 hours a week as the medical director of the hospitalist program.  By the time all of those responsibilities are accounted for, the hospitalist’s total compensation package is greater but more complex.

More Compensation Components.

Compensation begins with but doesn’t end with a base salary.  Most employers combine an agreed upon salary with variable components that affect total compensation. You need to determine – and be comfortable with – how much of your pay will be based on your individual performance, organizational performance and other factors like patient satisfaction. It is fair to ask how those variables have affected compensation in recent years – and why.

Potential employers routinely offer first-year incentives, such as signing bonuses, student loan repayments, and reimbursement for relocation, licensing and board certification. Looking further ahead, there may be opportunities to earn more by taking on supervision of advanced practitioners, precepting medical students, or serving as a medical director. Depending on your tolerance for risk, negotiating ownership shares is another way to potentially benefit financially from the future growth and performance of a practice.

How Location Affects Physician Compensation.

Geographic region and market size significantly influence compensation and how far your income will stretch. So, it is important to adjust for the cost of living in dollars and assess the location with your lifestyle expectations in mind.

Work schedules, after-hours activities, vacation coverage, and weekend shifts influence work/life balance. It’s important to know what a future employer expects, and how they assist physicians in managing stress, avoiding burnout and cultivating career satisfaction.

With all of the complicating factors contributing to compensation, physicians have to do their homework to determine which opportunity offers a fair package, a satisfying work environment, strong cultural fit with the organization and a happy life outside of work.

Today’s physician compensation models are like the healthcare industry: highly dynamic and increasingly complicated.  Many doctors find it challenging to assess how the compensation package of their first job will align with their personal and professional priorities.  As a resource for physicians, Jackson Physician Search has introduced a newly updated physician compensation resource center includes an interactive calculator that enables you to:

  • Easily access customized physician compensation data
  • Drill down by specialty, state, and type of location
  • Get instant results and have your report emailed to you

If you have any further questions about how physician compensation works, please connect with our recruiters for information and guidance.

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You can watch the recording of JPS Recruiters Live: Deciphering Physician Compensation on our Facebook page. (24 mins.)

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Resident’s Job Prep Guide: Countdown to Landing the Right One


Resident’s Job Preparation Guide: Countdown to Landing the Right One

You’ve been working hard through medical school and residency. The culmination of your lifelong dream and years of hard work is fast approaching – with yet another challenge: finding your first job as a practicing physician and laying the foundation for a successful career.

If your first job will start next summer, then the clock is already ticking on your job search. We have compiled a list of the critical things you should be doing in the coming months to make sure you aren’t forced to “settle” when it comes to your first job.

Start with Research. The following steps should be accomplished before the Fall of 2017, with much of it being able to be accomplished with over the course of a few focused weekends.

  • Create a Game Plan –With your family or significant other, decide what the personal and professional “must haves” are in your first position. Are there locations that will be ruled out right off the bat? Are you looking to start in a large organization, or would you prefer a smaller practice? What are your financial needs? How much flexibility do you have in any of the above decisions? Do you have “nice to haves” that are not deal-breakers? Document your thoughts and prioritize what is important to you and your loved ones. Clear criteria and a rational decision-making process will help you identify the right opportunity.
  • Talk to Colleagues and Mentors – The best way to gather information about finding your first job is by speaking with people who have been through it. The more information you have, the better you will be able to discern what makes sense in your situation.
  • Keep an Open Mind about Location – The most obvious place may not end up being the perfect place for you, your family or your practice. Stay true to the criteria in your game plan, but think outside the box. The location that may not seem to be the most apparent choice, may actually check most of those boxes.
  • Consider Cost of Living – Do you have a firm idea of what you want to earn? Be sure that you are also putting the cost of living into that equation. Big numbers can grab your attention, but how far will it stretch when housing, taxes and other budget busters are factored in?
  • Talk to Recruiters – Professional recruiters, such as Jackson Physician Search can be invaluable in sharing their experience and knowledge to help you identify opportunities. They can provide insights into various practice and compensation models, as well as incentive trends. Best of all, they have contacts nationwide to keep you informed of the latest developments in your prime target locations.

Acing the Interview Process (Start in September). Now that you have done all of the legwork and created a game plan, it is time to start lining up interviews. This process should be started no later than September or October because of the length of time it takes to get everything on the schedule, especially with the holiday’s right around the corner. There are some key things to keep in mind before scheduling your first interview.

  • References and Letters of Recommendation – One of the biggest mistakes new physician’s make when preparing for the interview process is to wait until the last minute to determine who is going to be a reference or provide a letter of recommendation. If you truly want quality people to provide you with documentation espousing your virtues, then it will take some time.
  • Prepare Your Resume – As a new physician, you are still in resume territory versus putting together a Curriculum Vitae (CV) which stands for life’s work. By the time you are applying for that department head position, you will have enough life’s work to put into an extensive CV, for now, a resume will suffice in most cases. Make sure you have someone dutifully proofread your resume several times. Nothing puts your resume into the circular file faster than spelling and grammar mishaps.

The Home Stretch (Start in January). As the calendar flips to 2018 and the holiday rush subsides, you should be in a position where you are fielding offers and determining what opportunities make the most sense for you.

  • Examine offer letters and preliminary contracts carefully – The excitement of receiving an offer letter from your first choice opportunity is no reason to accept it sight unseen. You are in a competitive environment and should treat your skills and education as valuable assets. Be aware that an offer will most likely have an expiration within about two weeks. That is standard in the industry. It keeps the process on track and is fair to both the organization and the candidate. Preliminary contracts are negotiable, and if you plan to have a lawyer review it, make those arrangements in advance and focus only on the variables that are up for negotiation. You don’t want to become caught in “analysis paralysis.”This stage of the process is another one that is much easier when you are working with a recruiter. Given that they already know the organization and community, they can help you better understand the components of the offer, help in the negotiation process and provide perspective on how well the opportunity fits your interests and your family’s needs

Licensing and Credentials. Once you have accepted your first job, the last thing you want to encounter is a delay in licensing and credentialing process. All too often, a physician’s start date slip due to delays in acquiring the proper licensing. Keep in mind that in some states the process can take three months or more. Ask questions to be clear on what is expected of you in this process, watch closely for the paperwork that will arrive, and adhere to deadlines.

Your final year of training will fly by and end with a flurry of activity. Make sure you pace yourself so you can strategically pursue – and carefully choose – your first job as a physician.

Connect with us for help as you launch your career.



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Rev Up Physician Recruiting with the Right Benefits, Incentives and Perks


Whether you are recruiting physicians to a metropolitan area, where they can choose among plenty of practice opportunities, or to an underserved area, it’s important to think both strategically and creatively about what your organization can offer to recruit physicians who will fit.

As you map out your physician recruiting strategy, think of your total package as you might a car:

Base compensation is the basic chassis, engine and wheels. You need to know you have a sound and competitive starting point. Resources abound such as our physician salary calculator, and studies of compensation ranges by region published from MGMA, AMGA, Medscape. 

Benefits also need to be competitive, at minimum. Just as every car has a dashboard, seats and interior, benefits are required, but can vary widely in quality, value and appeal.

Incentives and bonuses are the fuel. Offer the right incentive that drives the candidate toward “yes.” Once they are on board, incentives also help keep physicians aligned with your practice’s goals. Bonuses are the “reward” for getting to the desired destination.

Perks are the accessories. To operate safely or comfortably, you don’t need fancy exteriors, luxury interior finishes or a sophisticated stereo, GPS and entertainment system. But such added features capture the attention of buyers, appealing to them at an emotional level. If you know what is important to the candidate, the perks you offer can make all the difference.

All of the above are levers that can be “pressed” at every stage of your physician’s career cycle, starting with recruitment and extending through your retention strategy. But, be aware: benefits and incentives that were once unique can become expected, and then no longer differentiate your organization. The key is to listen to your physicians and keep an eye on trends to stay ahead of the curve – and your competition.

Competitive Physician Benefits Package

When recruiting, the foundation of a competitive offer is a strong basic benefits package. Physician benefits that have come to be expected (and usually subsidized) include medical and dental insurance, short- and long-term disability insurance, life insurance, paid time off, qualified retirement, CME/professional dues and malpractice coverage. Basic benefits should be appropriate to the position, uniform and available to everyone who is doing similar work or is at the same level in the organization.

Enhanced benefits have evolved to attract new physicians and keep seasoned physicians in practice longer. The use of EMRs, nurse triage centers and other technologies that support remote work can be positioned as a benefit to support a flexible work schedule, generous paid time off and partially paid sabbaticals.

Incentives and Bonuses

Incentives can be offered to candidates to encourage them to accept your position. They can also be built into your retention plan. Pre-paid incentives should come with the contingency for repayment if the physician doesn’t fulfill their obligation:

  • Stipend while training
  • Student loan repayment
  • Relocation subsidy
  • Payment for signing, commencing, and achieving retention milestone

A bonus is a payment which is backward-looking, when the individual or group achieves pre-determined goals. These are usually based on productivity, quality, patient satisfaction and cost criteria. They should be uncomplicated in design, simple to administer, and reasonable to achieve.


Perks come into play once you have established a competitive compensation and benefits package. Perks serve to creatively engage physicians to enhance their work/life balance, integrate them and their families into the community. Perks can appeal to a special hobby or interest that will help them refresh and refuel to avoid burnout.

For example, concierge services make day-to-day life more livable. They can facilitate the move by assisting physicians and their families with housing, childcare and school enrollment, and by connecting them to resources for hobbies, religious communities and civic activities. Private banking services, low-interest loans or club memberships are also attractive to new physicians.

Helping physicians stay productive and focused on patient care can enhance their satisfaction. Some hospitals and clinics in remote areas offer air transport or driver services so that physicians are using their time productively rather than wasting time in transit.

A growing trend is to recruit a “clinical scribe” from within the local community to enter EMR data during the exam, while the physician focuses on the patient – not their tablet. At a modest cost, this can improve the new physician’s productivity and compliance. Equally important, they can help the physician engage one-to-one with their patients and create a bridge to the community to transition quickly from “newcomer” to “hometown doctor.”

Be Creative, but Stay Out of the Fast Lane

Be careful in how you tailor a package for a particular candidate, and always be mindful of the legal and tax-related implications. Benefits, incentives, bonuses and perks can seem interchangeable, so it’s important to be clear and consistent. Don’t assume the candidate understands the terms in the way you intend.

Follow the four C’s:

  • Competitive base salary
  • Clearly defined and firmly aligned with your organization’s goals
  • Compliant with physician fair market value standards and non-discrimination laws
  • Communicated effectively

Be strategic in how you position your differentiators in your recruitment outreach and in negotiations. Sullivan Cotter Associates, a consulting firm specializing in physician compensation, advises that you create a “total compensation statement.” A simple summary of a physician’s individual benefits and what they cost can be a very powerful communication device, and it can highlight the real value of the benefits that may otherwise be taken for granted.

A Function for Every Part

Just as in a car, each part of your compensation package has a function. Building the right package will depend on your recruiting goals and what will appeal to the type of physician who will fit well in your practice and community. Just like “Mater” in the movie “Cars,” you’ll both want to say: “I knew it! I ‘knowed’ I made a good choice!”

Looking for best practices on how your benefits package can improve your recruitment success? See our Guide to Physician Recruitment or connect with us for more insight.

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Ask How You Will Earn… Before How Much


If you are looking for your first practice opportunity or simply looking for your next practice opportunity, your top considerations are likely to be location and practice setting, both of which influence your compensation.  But, one thing you may not think to consider upfront is how you will earn that compensation.  So, before you ask how much you will earn, you may want to explore and better understand another basic question: “What is the physician compensation model?”

Compensation varies widely and makes it difficult to compare opportunities because it depends on many things, like, whether you become a partner in a small private practice, join a large multi-specialty group or choose hospital employment in a large metropolitan area, small city or rural community. You can see the differences in compensation first hand by using our Physician Salary Calculator.

Those variables aside, to know whether your total monetary compensation, as a physician in your specialty, will be fair and competitive, you first need to align your expectations and needs with what the practice requires and provides.

Physician Practice Work Allocation

In most practices, a physician’s total work hours are allocated as Billable Clinical, Administrative, and Teaching/Research, according to the Medical Group Management Association which produces industry standard benchmarks.

Billable Clinical: This is the time you will spend in direct patient care and consultation, individually or in a team care setting, where a patient bill is generated or a fee-for-service equivalent charge is recorded.

It may be defined as hours per day or sessions per week.

Administrative: Administrative efforts include medical directorships as well as other administrative duties, such as participating in hospital or clinic initiatives or continuing medical education.

For example, family physicians work approximately 50 hours per week, according to the American Academy of Family Physicians (AAFP). “The equivalent of 36 to 40 hours, are devoted to patient visits and activities related to them. The remainder is spent on administrative time and outside activities such as hospital committee work and CME.”

Teaching/Research: If the practice includes an academic component, you will also want to know how much of your “teaching time” involves supervising residents where billable patient care is not provided, such as doing research, lecturing or tutoring.

You may receive compensation for non-billable activities, but you should first understand what they entail, if they are required and then determine if they are activities you would want to invest time in.

After-hours Impact on Physician Compensation

Medicine is a 24/7 profession, so it is important to understand what is expected, and what is paid, after hours. Many innovations have evolved to help physicians address patient needs remotely, including mobile EMRs, nurse-triage services, telemedicine and partnering with hospitalists for after-hours admissions and care for your patients in the hospital.

However, all of those services come at a cost. So, it is important to understand how that cost is shared by the physicians, as well as how these services measurably increase your productivity, quality of care and patient satisfaction – all of which will influence your total earnings in our value-based healthcare economy.

Achieving Balance and Equity

Balancing (and being paid for) clinical and administrative time is arguably the biggest challenge faced by medical practices and physicians today. Administrative work that proves frustrating and time-consuming is the top source of physician burnout.

Before joining a practice, ask probing questions and arrange to shadow physicians and their teams for a week or more, if you can. It will reveal a great deal about how you will actually spend your time. It’s the one thing no one can make more of.

Contact us for more information about compensation trends for the location and practice setting you are interested in.

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Confused by Complicated Compensation Models?


As you complete training and prepare to enter your first medical practice opportunity, questions about compensation will begin to rise to the top of your list of concerns. Compensation models in medicine can be complicated and confusing. Not only are there many variables, but the hiring organization must also follow strict rules regulating the way your compensation package can be built in order to ensure fair market value.

According to the Medical Group Management Association compensation survey, a 50% or more salary-based compensation plan with added incentive payments is the most common plan, and it becomes more common every year. Production-based compensation has been on a downward trend over the last four years, yet is still prevalent as the second most common compensation plan.

Asking the right questions about the factors that influence compensation will enable you to negotiate a package that is fair and in alignment with your professional and lifestyle priorities.

Three Types of Questions

We asked experienced physician recruiters to share the top three questions you should ask. Their recommendations fell into these categories.

Structure: Ask how the model works. Specifically, find out what production, quality and patient satisfaction metrics you must achieve to earn an incentive bonus.

Understand the payor mix, which is important if your compensation will be based on charges, collections or any revenue.

Malpractice insurance is expensive, so explore that topic, too. Employee agreements should state whether or not coverage is provided and who is paying for it.

Incentives: You may have opportunities to benefit from incentives outside your direct compensation. Ask about receiving a stipend while still in training and student loan repayment options. Find out if there are bonuses related to signing, commencing practice or achieving retention milestones.

You may also be compensated with an hourly or daily stipend for taking call or for serving in a medical director capacity.

Transparency: Your prospective employer should be able to explain how their compensation models work and provide a worst- and best-case scenario for your first and subsequent years.

It is “fair game” to ask to review the practice financials. You may also ask how much current physicians are making and how long it took them to ramp up to that level.

To ensure that there are clear expectations on both sides, decisions related to your compensation and benefits should be written into your employment agreement. If practice leadership changes, or should the memory of your negotiations fade over time, you will have supporting documentation of what you were promised.

Resources are Available

“Apples to apples” compensation comparisons are challenging, so consult a recruiter or other trusted resources to better understand all the factors that will influence your total compensation picture.

Check out the 15 questions these Jackson Physician Search recruiters recommend asking. Visit our online physician salary calculator, or visit Doximity’s own Salary Map.


Send us your questions – we’ll ask the experts and poll your peers for answers!

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Becker’s Hospital Review– More than 359,000 clinicians will participate in four of CMS’ alternative payment models in 2017, the agency said Wednesday.

CMS said the numbers demonstrate providers’ commitment to a healthcare system that pays for the quality of care delivered to patients. Under the Medicare Access and CHIP Reauthorization Act, APMs that require providers to bear more than nominal risk will qualify as “advanced.” Clinicians participating in advanced APMs can earn a lump sum bonus of up to 5 percent on Medicare payments…Read More>>


Compensation Concerns? Top Three Questions to Ask


Compensation models in medicine can be complicated and confusing. So whether you are a new physician emerging from training, or making a change after years in practice, you share a common concern: What should I expect to earn in my new practice?

While a myriad of factors and choices influence your total package, we can help you ask the right questions to negotiate a package that is fair and aligned with your professional and lifestyle priorities.

Let’s start by asking experienced recruiters: What three questions with regard to physician compensation do you think all physician candidates should ask their prospective employer?

Christen Wrensen, Regional Vice President of Recruiting

  1. Earning potential based on worst- and best-case scenario and previous provider performance (years 1, 3, 5, 10)?
  2. What is the wRVU threshold and dollars paid per wRVU?
  3. How is compensation based after the initial salary guarantee?

Carly Clem, Regional Vice President of Recruiting

  1. What is my guaranteed base salary?
  2. How long is the guarantee?
  3. What type of production model is in addition to my base salary?

Scott Whitlow, Director of Recruiting

  1. What are other physicians earning?  Regardless of specialty, how are other medical staff members doing compared with benchmarks for the rest of the country?
  2. What is the payor mix?  This is especially important if the incentive/productivity structure is based on charges, collections, or any revenue.
  3. What other incentives are available, i.e. sign-on, commencement, anniversary bonuses, student loan repayment, tail coverage if applicable, etc.

Check out the Jackson Physician Search physician salary calculator for average compensation by specialty and search for new practice opportunities.

Questions? Contact us to talk with a recruiter about compensation trends.

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