The Unknowns in Your Salary Plan Could Cost You

Metrics. Quality incentives. Productivity targets. RVUs. Physician compensation plans are more complex than ever, and what you don’t know could hurt your bottom line.“Many physicians don’t fully understand all the details of the variables in their compensation plan,” said David J. Zetter, a medical practice management consultant and president of Zetter Healthcare, based in Mechanicsburg, Pennsylvania. “As a result, they may wind up earning less than they expected, become disenchanted, and ultimately leave the job.”Today’s most popular compensation plans blend various combinations of base salary, productivity targets, and quality incentives.“Problems can arise if the plan’s goal metrics or benchmarks are old or inaccurate, if physicians can’t learn how they’re doing compared to their goal, or if the contracts don’t account for hurdles that are beyond the physicians’ control,” said Jessica Minesinger, CEO of Surgical Compensation and Consulting, and independent consultant for the Medical Group Management Association (MGMA). Here’s what doctors should watch out for in the most widely used compensation plans:Salary Plus ProductivityPhysicians receive a base salary plus incentives or bonuses for productivity. Productivity may be measured by work relative value units (wRVUs), patient volume, or revenue collected. But several factors can prevent doctors from achieving their productivity goals: Job obstacles that use up clinical work time: “There are obstacles to productivity that may have nothing to do with the physician and are out of the doctor’s control,” said Minesinger. “These unexpected issues are not taken into account when measuring productivity for bonus eligibility. “For example, I have surgeons who can’t get operating room block time, or they can’t get CRNAs or anesthesiologists for procedures because those providers are in short supply. So, the doctors may not be able to operate for some amount of time due to that situation, which they can’t control.” Physicians in rural hospitals, for example, may handle case management that would be a social worker’s job in a larger facility — so both doctor and administrators should have a realistic view of what that physician is doing and not just assume it’s all clinical time, Minesinger said. Serving on a committee, managing employees, or even driving to different locations all eat into productive clinical time, said Minesinger. “You need to discuss how much time it takes and discuss whether you need your FTE (full-time equivalent) or RVUs target adjusted.”Productivity-RVU issues: “Hospitals and health systems love doing RVU compensation packages,” said Zetter. “That can be a massive problem because not all RVUs are compensated.” Zetter explained that in specialties such as orthopedics, cardiology, ob/gyn, and others, many services can be bundled together and not all services are reimbursed when performed together. “Additionally, many insurers only pay 100% on the first procedure, 50% on the second, and 25% on the third billed at the same time, and some don’t even pay this,” said Zetter. Productivity incentives may also include a threshold that you must reach in order to receive any incentives. Minesinger advised physicians to understand how benchmarks for RVU productivity are set. “You need to make sure the benchmarks of your RVU productivity are based on current data,” she said. “MGMA data showed a trend that many specialties were stagnant or showed reductions in work RVUs. But part of this is because advanced practice providers (APPs) now share in RVU generation and credit. “If you only look at RVUs, you may think this physician’s productivity has declined,” said Minesinger. “But his productivity and number of procedures haven’t changed; just the number of RVUs has changed because of sharing credit for RVUs.” Base salary issues: Base salary is a key element in many compensation models, so it’s crucial to make sure the amount is appropriate for your specialty, type of organization, region, and other benchmarks. “For compensation plans that include a base salary, look at where that salary benchmarks against others in your specialty. And is the base salary guaranteed, or are there any clawback provisions if you don’t hit a certain benchmark?” asked Minesinger. If you’re a resident or new physician, beware of what could happen in the third year of your contract, warned Minesinger. “Often new physicians or residents getting their first jobs are offered a contract that has a guaranteed base salary. However, the guaranteed compensation is only for year one and two,” said Minesinger. “By year three, you flip into a productivity model or hybrid model. Physicians end up taking unexpected pay cuts and it comes as a real shock to them.” Salary Plus Productivity Plus Quality IncentivesQuality measures are now included in about 50% of healthcare organizations’ compensation plans, according to a study by MGMA. Quality measures can encompass clinical processes, patient outcomes, and efficiency/safety.But the doctor will be in a jam if he or she can’t have any control over their quality metrics, said Zetter. “In many cases, one variable is the patient, and if the patient is not compliant, everything goes right out the window,” said Zetter. “Many patients don’t do what the doctor says. The physician ends up relying on that patient, and that’s a variable that is unknown.”Physicians often are thwarted when they seek feedback about their performance on quality metrics. That prevents them from making a change or improving. “There are too many ACOs and IPAs (independent provider associations) that don’t share that information with their physicians,” said Zetter. “I’ve tried to request that data for clients when we’re negotiating a compensation package, and sometimes it’s like pulling teeth to get that data, and sometimes you never get it.”Added Minesinger, it’s important to know what data employers use in crafting compensation offers. At one academic medical center, new physicians were rejecting such offers. Upon pulling the benchmark data, Minesinger found that the center used an outdated compensation survey and incorrectly classified the position at too low a level. “Physician compensation had moved considerably in those 7 years, so every number they were working from was low before we even looked at the specifics,” she said. “Once we corrected both, total compensation across the department increased.” Hybrid Compensation ModelsHybrid models, which incorporate base salary and productivity and quality incentives, have become so popular because they offer physicians more choice, said Minesinger. “There are physicians from four generations practicing now, and they have very different priorities,” she said. “With hybrid plans, they’re more able to choose and negotiate for factors that mean the most to them." Zetter said a hybrid compensation plan might break down along these lines: Base salary: 60%Productivity bonus: 20%Quality bonus: 10%Patient satisfaction bonus: 5%Value-based care bonus: 5% “There could also be other variables contained in the agreement,” said Zetter. “All employment contracts come with productivity requirements that if not reached, compensation can be reduced.” Pure Salary or Pure Productivity?An MGMA survey showed that pure salary and pure productivity measures now compose less than 25% of current compensation models, compared to 44% in 2020. “A compensation package based on productivity can be effective because if the physician produces more collected revenue, the practice does better and the physician should do better,” said Zetter. “This model rewards those want to work hard to earn a lot of money. Those who want to work less and have a better quality of life will earn less money but they’ll get more time off.” Pure productivity is still favored by some well-established doctors, particularly those who do procedures. “They understand the market and absolutely want nothing more than a productivity-based compensation plan because it works for them,” said Minesinger.Advice for Physicians Considering Compensation Plans1. If the compensation package involves incentives for quality metrics, “You need to understand what the metric is and how and if you’re able to affect that metric,” said Zetter. “Make sure you fully understand it, not just have a vague comprehension. Ask pointed questions.” 2. Talk to physicians employed at that organization and find out their experiences with attaining the quality bonus. “Have they been able to meet the goals? Did they earn the bonus that company said they’d pay out? If not, what do they see as the stumbling block? Did the company actually follow through on what they promised?” said Zetter.3. Reexamine and renegotiate your contract every year, said Minesinger. “You should always be advocating for yourself. I see a lot of contracts that are, say, 3-year contracts and they auto-renew. Some physicians work with contracts that are 10 or 15 years old and the physicians have never seen a pay increase.”4. If you’re not sure which questions to ask about your compensation package or how to identify all the hidden elements that might affect your income, consider talking to a practice management consultant or compensation consultant. They can often point out elements that could negatively affect your income. 5. Do your homework. Find out the average compensation for your specialty plus the most recent benchmarks for quality and productivity in your specialty, work situations, and region. The MGMA offers this data. The Medscape Physician Compensation Report 2026 also provides useful information about physician salaries. Physicians should ask: which survey, or blend of surveys, does the organization use — MGMA, AMGA (American Medical Group Association), SullivanCotter, or AAMC for academic pay? How current is the survey year? And how often is compensation actually reviewed against it?Can You Negotiate a Better Package?Hospitals and health care organizations today are more amenable to negotiating parts of your compensation package, said Minesinger. “There’s a physician shortage across almost all specialties. There is more turnover and doctors are leaving jobs earlier. Employers would like to prevent that from happening.”