A physician compensation plan is one of the clearest statements a medical group makes about what work it values, what risk it will share, and how it expects physicians to practice. The main models are salary, productivity (work RVUs or collections), revenue-less-expense, equal share, panel-based, and hybrid designs that blend them.

To start, a work RVU (wRVU) is Medicare’s standardized measure of the physician effort a service requires — the time, skill and intensity behind it, independent of what the practice actually collects. A routine office visit might be worth roughly 1.5 wRVUs and a complex procedure several times that. Adding up a physician’s wRVUs over a year gives a payer-neutral measure of how much work they did, which is why so many production-based plans pay a set dollar amount per wRVU rather than per dollar billed.

The formula used should help the group recruit and retain physicians, align pay with performance, and protect the economics needed to run the practice. Those aims become harder when physician supply is tight, reimbursement changes, team-based care expands, and payer contracts reward outcomes that traditional production formulas may not capture.^1,2