Physician compensation is complex, with a wide variety of compensation models determining how salaries for physicians and advanced practice providers (APPs) are set. Given the intricacies involved, we're covering this topic in a multi-part series.
In Part 1, we'll review the various compensation models available, including some historical context, and explore how they differ by specialty, and practice type. In future posts, we'll delve deeper into specific comp models. All the data in this post comes directly from the anonymous physician salaries data on Marit. For detailed insights into specific salary details for your specialty, location, or practice type - please explore the anonymized individual physician salaries on Marit.
Why understanding compensation models is important?
It's important to understand how health system economics work. Employers need revenue to pay their employees, and this revenue is generated primarily through physician billing for patient visits and procedures. Simply put, the more revenue physicians generate, the more hospitals can afford to compensate them. According to a 2019 survey by Merritt Hawkins, physicians across various specialties generate an average of approximately $2.4 million annually for their affiliated hospitals. This revenue doesn't just cover physician salaries - it also pays for facility expenses, medical equipment, administrative and support staff, insurance, technology investments, and other operational costs. While maximizing revenue isn't the only objective (as hospitals also focus on serving diverse communities and maintaining high-quality care), it's undeniably a critical factor. Therefore, any discussion or negotiation about higher compensation should directly consider your role in helping the organization generate higher revenues.
What are the different Physician Compensation Models?
As with almost everything with healthcare, compensation models are complicated. There are pros and cons to every single model, and most models in practice are combination models! Let's review them -
Salary Model with Bonuses
This one's straightforward. You receive a fixed annual salary, regardless of how many patients you see, the revenue generated, or hours worked. It's by far the most popular compensation model.
66% of salaries on Physician salaries on Marit are on salary with bonus model. Most (>60%) of these salaries include a bonus or additional income component as well.
🩺 Most commonly seen in Hospitalist salaries, Pathologist salaries, Pediatrician salaries, Radiologist salaries, Preventative Medicine salaries, Hematologist salaries, etc.
🏥 Most commonly seen at: All practice types, but especially popular at Military & Government, and Community & Public Health Systems
Pros: Simple, offers financial stability and consistency. Often includes bonuses for exceeding productivity targets or achieving quality metrics.
Cons: Total compensation typically lower than pure productivity-based models, offering limited financial upside.
Hourly / Shift-Based Compensation Model
Same as salary -Hourly model is basically paid on a per hour worked basis. For Full-Time roles, this is commonly seen in shift-based specialties, and is the predominant comp model for Locum Tenen salaries and PRN physician salaries
8% of all full-time physician salaries on Marit are hourly based
🩺 Most commonly seen in Emergency Medicine salaries, Urgent care salaries, and to some degree in Pulmonologist salaries, Hospitalist salaries, Hematologist salaries, etc.
🏥 Most commonly seen at: Private medical groups and Corporate, Pharma and Consulting organizations
Pros: Offers scheduling flexibility and significant upside for physicians who can take on extra shifts or longer hours. Pay tends to be slightly higher compared to salaried roles working similar weekly hours.
Cons: Pay is directly tied to hours worked. If you're unable to work enough hours in a given month, you'll earn less.
wRVU (aka Productivity) Based Compensation Model
The Work Relative Value Unit (wRVU) is a standardized measure assigned to every service or procedure a physician performs, based on the typical time, skill, and intensity required. Each CPT billing code has an associated RVU value. Under a wRVU compensation plan, your income is directly linked to the total RVUs you accumulate, typically calculated quarterly or annually.
In this productivity-focused model, employers pay physicians a specific dollar amount per wRVU, known as the "conversion factor." For example, if your contract pays $45 per wRVU and you log 5,000 wRVUs in a year, your productivity-based pay would be $225,000. Often, there are minimum thresholds established, with higher conversion factors for surpassing them. e.g., $45 per wRVU for the first 5,000; $50 for wRVUs beyond that.
13% of all salaries on Marit are pure productivity based
🩺 Most commonly seen in Orthopedic Surgeon salaries, Urologist salaries, Neurosurgeon salaries, Hematologist Oncologist salaries, Dermatologist salaries, among others
🏥 Most commonly seen at Hospitals and Health Systems.
Pros: This model incentivizes physicians to be productive since every patient encounter or procedure adds to total wRVUs. Providers have more direct control over their income - the harder or more effectively they work (including performing more complex, high-RVU procedures), the more they can earn. It aligns physician interest with employer interest - since they bill more with more wRVUs. Physicians on a collections based model tend to get higher total compensation on an average.
Notably, wRVU compensation is typically not impacted by the payer mix or collections - e.g., a Medicaid patient generates the same RVUs as a privately insured patient for the same service, so the physician’s RVU earnings are decoupled from low reimbursements.
Cons: wRVU models can encourage volume over quality, incentivizing doing more procedures or upcoding visits rather than spending time on each case. Also, many important tasks that are critical to delivering high quality care – e.g. patient phone calls, care coordination, teaching, or administrative duties may carry no wRVUs.
RVUs are also heavily a function of how efficiently a practice runs, type and acuity of patient population, whether there is APP support, etc. - all of which are beyond the physician's control
Net Collections (Percent-of-Collections) Model
A collections-based compensation model means a physician’s income is tied to the actual revenue collected for their services. In essence, the practice tracks how much money (after insurance adjustments and patient payments) came in, and the physician is paid a percentage of that amount. For example, an independent practitioner might earn 40–60% of their net collections, with the remainder covering overhead and profit. Some contracts term this “eat what you treat” highlighting that you earn based on what you personally bring.
3% of all salaries on Marit are pure collections based
🩺 Most commonly seen in Orthopedic Surgeon salaries, Dermatologist salaries, Ophthalmologist salaries, Plastic surgeon salaries, Podiatrist salaries, among others
🏥 Most commonly seen at Outpatient centers, private medical groups, and self-employed practice types
Pros: Like wRVU model, this model rewards productivity and efficiency – every billable service contributes to your pay. It also aligns physician incentives with the business -there is motivation to code accurately, ensure bills are collected, and be more mindful of payer mix. Physicians in this model have a clear view of how their work translates to income and may feel a sense of ownership in keeping the financials strong. Physicians on a collections based model tend to get higher total compensation on an average.
Cons: Income under a collections model is highly dependent on factors beyond the physician’s direct control - insurance contracts, reimbursement rates, and most importantly payer mix. A heavy Medicaid or Medicare population will significantly drive reimbursement rates down.
Another downside is that physicians bear the risk of payor denials or lower collections rate.
Net Income / Profit-Sharing Model
A net income model typically applies to group practices or partnerships. In this model, the practice’s profits (total revenue minus expenses) are distributed among the physicians, often either equally or according to a predetermined formula. It’s similar to collections-based compensation, but it accounts for the overhead costs first. For instance, a group practice might deduct all operating expenses (staff salaries, rent, malpractice insurance, etc.), and whatever net income remains is split among the doctors. The split can be equal shares (more on that next) or proportional to each physician’s contributed revenue. If proportional, it basically mimics a collections model except you only earn on profits after expenses.
5% of all physician salaries on Marit are Net income based
🩺 Most commonly seen in Orthopedic Surgeon salaries, Dermatologist salaries, Ophthalmologist salaries, Podiatrist salaries, Oncologist salaries, Anesthesiologist salaries, among others
🏥 Most commonly seen at Private medical groups, and self-employed practice types
Pros: When structured with transparency, profit-sharing gives physicians an ownership mindset. They have incentive not only to be productive, but also to control costs and practice efficiently. There is also unlimited upside potential: if the practice does extremely well, there’s no artificial cap (unlike some employed positions where bonuses might max out. Physicians on this model tend to earn some of the highest total compensation contracts seen on Marit.
Cons: Income can fluctuate based on practice expenses and external economics. Changing reimbursement dynamics and insurance contracts can create significant volatility in year over year changes.
Equal Shares Model
An Equal Shares compensation model is a specific type of profit-sharing where all physicians share the remaining income equally, regardless of individual productivity. Common in some small private practices or democratic groups, this structure pools all revenues (after expenses) and then divides the pot evenly among the physician partners. Junior physicians typically aren’t immediately part of equal share distributions until they make partner (often, new hires get a salary or lower share for a few years).
1% of all physician salaries on Marit are equal shares
🩺 Most commonly seen in Plastic Surgeon salaries, Radiologist salaries, Radiation Oncologist salaries, Anesthesiologist salaries, among others
🏥 Most commonly seen at Private medical groups, and self-employed practice types
Pros: Equal shares are simple and promote a true sense of partnership. They presume all doctors contribute equally in different ways – one might see more patients while another spends more time on admin or quality improvement, and in the end everyone receives the same compensation. It may encourage senior doctors to mentor juniors without fear of losing income.
Cons: The obvious downside is that high producers may feel penalized. Essentially, this model sacrifices individual reward for the sake of equity – which works well only in smaller groups with strong culture and trust.
Academic Hybrid Model
Academic medical centers often use a hybrid model to compensate physician faculty. Typically, academic physicians receive a base salary (often lower than private sector peers) that covers their expected duties in clinical care, teaching, and perhaps research. On top of that, there may be incentives or bonuses for clinical productivity (often wRVU-based) and for academic achievements (like research grants obtained, publications, or teaching excellence). Some institutions even use “educational value units” for teaching or have grant incentive programs.
2% of all physician salaries on Marit are equal shares
🏥 Most commonly seen at Academic Institutions
While these are some of the most commonly seen Compensation models - there are dozens of other bespoke models we see on Marit. This is why it's so important to see individual anonymized physician salaries to get a true picture of each contract
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Prevalence of various compensation models
- Salary with Bonus (66% of physicians): This is the most prevalent compensation structure, offering a stable average total compensation of around $404k. Physicians in this category typically work around 45 hours per week, reporting a moderate satisfaction level (3.6★). It's widely seen across all specialties and practice types
- Hourly with Bonus (8% of physicians): Commonly adopted by shift-based specialties such as in Emergency Medicine (EM) salaries. Physicians in this model average a compensation of approximately $471k, with shorter average workweeks of around 39 hours. Despite fewer hours, EM shifts are highly intense, leading to a satisfaction rating of 3.6★
- Productivity-Based Models (16% of physicians): We combined both wRVU and collections-based models into this category. These models are prominent in procedural and surgical specialties. Physicians here earn an average of $522k, working around 45 hours weekly. The direct correlation between productivity and earnings results in strong satisfaction (3.7★)
- Partnership-Based Models (6% of physicians): We combined Net Income and Equal Shares models into this category. Yielding the highest average compensation of about $584k and the highest satisfaction score (4.0★). Physicians under this model typically commit to longer hours (46 hours per week), but benefit from greater autonomy and financial rewards, particularly common in private practices.
- Other Compensation Models (4% of physicians): This category includes academic hybrid models and the long tail of other models, with an average compensation of $462k. This categiry has slightly longer average workweek of 47 hours and report a satisfaction rating of 3.7★
How do Compensation Models vary by Practice Type
Different practice types employ different compensation models, each with its own advantages and implications on total compensation -
- Hospital & Health Systems: Primarily offer salary / hourly-based compensation models, and wRVU-productivity models.
- Private Medical Groups: Typically start physicians on stable salary arrangements, gradually moving towards collections and partnership based models as they grow their patient base and reputation. This model encourages productivity and offers substantial rewards for partnership.
- Government/Military: Predominantly use salary-based compensation models, which offer structured career paths, strong job security, and predictable income.
- Outpatient centers (e.g., ASCs) - employer a higher proportion of parnership based models - like net income or equal shares
How do Compensation Models vary by Specialty
Finally, the most important question - how do these models vary by specialty? There's a lot here, and its worth digging into this in it's own dedicated post, but here's a quick summary of how it varies by specialty.
Hospital-based specialties predominantly use salary and hourly compensation models, reflecting their structured work environments. 82% of contracts reported on Marit for these specialties are salary / hourly based, 6% productivity-based and 7% partnership-based.
Primary care and related specialties predominantly utilize salary-based models due to their predictable patient relationships and continuous care responsibilities, however, most of these contracts have some form of productivity bonuses included. Pure productivity based models are also on the rise. 78% of contracts reported on Marit for these specialties are salary/hourly based, 18% productivity-based, and 4% are partnership-based.
Medical specialties typically utilize a mix of compensation models - with the majority still being salary-based, but productivity based models are quite prevalent as well, as many of these specialties are procedure heavy. Approximately 63% of contracts are salary-based, 27% productivity-based, and 6% partnership-based.
Surgical specialties have the highest share of productivity-based models due to procedural volume, range of complexity, and higher reimbursement factors. Approximately 58% of contracts are salary-based, 30% are productivity-based, and 7% partnership-based.
Next week - we'll do a deep-dive into individual specialty categories and review compensation model mix for each. Meanwhile, here's a recap of key topics covered in this post.
What are the different physician compensation models?
The main physician compensation models are salary, hourly/shift-based, wRVU-based (productivity), net collections, net income/profit-sharing, equal shares, and academic hybrid models.
What is a wRVU in physician compensation?
A wRVU (work Relative Value Unit) measures physician workload based on service complexity. Physicians earn a specific dollar amount per accumulated wRVU.
How does the net collections model work?
Physicians earn a percentage of revenue collected from their services, after overhead expenses. Income varies based on payer mix and billing efficiency.
How are physician bonuses calculated?
Bonuses typically reward productivity (exceeding wRVU thresholds), meeting quality benchmarks, citizenship bonuses, etc. They are typically described in employment contracts with estimated ranges for each type
Which compensation model is best for new physicians?
It depends. Each model has its pros and cons as described above. A straight salary model offers stability for new physicians. However, productivity or net collections models may offer higher earning potential as they build experience and patient volume.
About the Data & Methodology
Marit's Data is different. It is -
Unique - since it captures the compensation data along with all the details that matter - bonuses, shifts, scheduls, benefits, and more
Comprehensive - Across all specialties and Professions (Physicians & APPs), Employer Types (large and small, including Self-employed, Academic & Non Academic), Job Types (Full Time, Part Time, PRNs and Locums) and Employment Types (W-2, 1099, K-1)
Current - Unlike other benchmarks that only update their data once a year, all salaries reflect the clinician’s current compensation, and all averages are updated in real-time as new salaries are added
All data in this report comes from anonymized salary contributions on Marit, as of Apr 18, 2025. Only verified salary reports approved by our moderation team are included
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Sources
1. https://ir.amnhealthcare.com/news-releases/news-release-details/survey-physicians-generate-average-24-million-year-hospital
