Physician compensation isn’t always as straightforward as a simple paycheck. Many employment agreements use different structures — or a combination of them — to determine how you’ll get paid. Understanding the difference between a fixed salary, an RVU model, and productivity-based pay is essential before you sign any contract. A thorough physician contract review can help you evaluate whether the offer matches your expectations and protects your financial future.

Salary: predictable and simple, but sometimes limited.
A straight salary model offers stability. You know exactly what your income will be each pay period, regardless of how many patients you see or procedures you perform. This is common in hospital-employed positions, residency, and academic medicine. The downside? Salary models can sometimes be lower than productivity-based compensation in high-volume practices, and employers may build in performance expectations even when your pay isn’t tied to output.

RVU-based pay: common, but easy to misunderstand.
Relative Value Units (RVUs) are a way to measure physician productivity based on the complexity of services provided, rather than simply counting patients. In an RVU model, you earn a set dollar amount for each RVU you generate. While this system can reward hard work, it’s only fair if the conversion rate — the amount paid per RVU — is competitive and clearly defined. If your contract doesn’t specify how RVUs are calculated or if targets are unrealistic, you could end up earning less than expected.

Productivity or collections-based models: high potential, high risk.
In a pure productivity or collections-based model, your compensation is directly tied to the revenue you generate for the practice. This can be lucrative for busy physicians with an established patient base, but it’s risky if you’re joining a new or growing practice where volume isn’t guaranteed. These models also raise questions about overhead allocation, billing efficiency, and whether you’re compensated fairly for non-billable work such as administrative duties or call coverage.

Hybrid models: a mix of stability and performance incentives.
Many physician employment agreements use a combination of these approaches — for example, a guaranteed base salary plus a bonus tied to RVUs or collections. Hybrid models can provide financial security while still rewarding productivity, but they require careful review to ensure that bonus formulas are transparent and achievable.

Why contract review matters.
Compensation models can be complex, and small details make a big difference. Does your base salary decrease after a guaranteed period? Are RVU targets reasonable for your specialty? Does the productivity formula account for expenses outside your control? Having an attorney who focuses on physician employment agreements review your contract ensures you fully understand how you’ll be paid — and helps you avoid unpleasant surprises.

Before you sign your next physician employment agreement, make sure your compensation model truly works for you. Contact our physician contract review lawyer to evaluate your contract and confirm that your pay structure aligns with your career goals.