AMA: Blended physician compensation model prevails

Most physicians receive a stable salary for their work, but productivity still factors into total compensation for over half of doctors, according to a new report.

On Friday, the American Medical Association (AMA) released the latest AMA Physician Practice Benchmark Survey, a biennial, nationally representative study that tracks changes in physician practice arrangements and payment methodologies. The latest survey polled 3,500 physicians who provided at least 20 hours of patient care a week, completed residency and were not employed by the federal government.

The survey revealed that 70.5% of physicians received a salary in 2024, the latest year for which the AMA had complete data. However, most physicians -- 55.0% -- also indicated their productivity factored into their total compensation package.

This blended physician compensation model is popular. About 60.8% of physician respondents reported two or more payment factors, such as salary and productivity. Other common forms of compensation included bonuses (39.0% of physicians) and practice financial performance (27.9%).

More physicians received pay through the blended model compared to a decade ago when about 51.0% of physicians did. Most ways of paying physicians also increased since then, with salary and bonuses growing in prevalence by 9 percentage points and productivity by 2 percentage points.

Compensation based on practice financial performance was the only compensation method to decrease over the decade, by 4 percentage points.

Notably, AMA reported that, over the period, physicians were less likely to be solely compensated on the basis of productivity, with a 5 percentage-point decrease. They were also less likely to be compensated based on practice financial performance (4 percentage-point decrease) and, modestly, salary (2 percentage-point decrease).

Understanding how physicians get paid is important to identifying their behavior, the AMA explained.

"There is a conceptual tradeoff between salary-based and productivity-based compensation models. Salary offers financial stability and security for physicians, typically with defined expectations regarding workload," the study explained. "Productivity metrics (such as RVUs) are, by contrast, considered to be objective measures of physician performance but introduce variability in compensation as payment is linked to the quantity and complexity of care delivered, which can create both an upside and downside for physician compensation."

The popular blended compensation model, therefore, suggests that more physicians are benefiting from a stable salary with the potential for a modest boost through productivity, AMA added.

However, this blended model comes at a time when the healthcare industry is shifting from volume-based to value-based reimbursement. Currently, only about 45% of healthcare payments are tied to these alternative payment models, according to the latest data from America's Health Insurance Plans.

Jacqueline LaPointe is a graduate of Brandeis University and King's College London. She has been writing about healthcare finance and revenue cycle management since 2016.