Compensation Considerations: Compensation Structure

When evaluating an employment agreement, one of the main considerations is the type of compensation model the practice, organization, or healthcare system uses. 

The compensation structure is of great importance to you for several reasons. The structure proposed directly impacts your income and financial stability. It determines the amount of money you will earn, which is crucial for meeting personal financial obligations like living expenses, student loans, and other financial goals. It is also important because it impacts your work-life balance by influencing factors such as your work load, call coverage, and compensation for any extra time you work. Understanding how the compensation structure aligns with your desired work-life balance and whether it supports a sustainable and healthy professional life is essential. 

The structure should be clear enough for you to understand without needing to be a mathematician, but should also be specific enough that you have an ability to track your income as needed. It should be fair and equitable, ensuring that you are being appropriately compensated and rewarded for your skills, experience, and contributions to the employer. It should take into account factors like market rates, your specialty, and the quality of the care you are delivering. 

Your compensation model should help maintain employee satisfaction and motivation. Part of that is having a well-designed structure that incentivizes you to perform at your best, not just when you first start out but years down the line. That is why models that tie compensation to productivity, quality outcomes, or patient satisfaction can encourage you to deliver high-quality care, improve your efficiency, and achieve targets or benchmarks. 

When choosing a compensation model, employers should consider how competitive and attractive of a package they are providing, as they are essential for attracting and retaining talented healthcare professionals. This is especially true for over-saturated markets, because in highly competitive markets, employers know that you have many options to choose from. As an employee, you will also care to consider whether the compensation model includes provisions for your professional development and career growth. It benefits both sides for you to enhance your skills, pursue additional trainings, and take on leadership roles within the organization. 

Employment contracts for healthcare workers come in many different forms, such as:

  • Salary model: In this model, you receive a fixed salary regardless of the number of patients seen or procedures performed. The salary may be based on factors such as your experience, specialty, and geographic location. This model provides both stability and a predictable outcome.
  • Productivity-based model: This model compensates you based your productivity or output, and it can be structured in a few different ways. It takes into account different performance metrics, such as fee-for-service, RVUs, or collections/productions-based models.
  • Salary plus bonus model: This hybrid option combined both a base salary with an opportunity to earn additional bonuses based on performance metrics, such as productivity, patient satisfactions, quality outcomes, or meeting specific targets. Typically, the bonus structure is individual but there are circumstances that justify a team-based bonus-structure as well.
  • Partnership/ownership model: In some cases, you may have the opportunity to become a partner or owner in a practice or healthcare organization. In this case, the specifics would likely be laid out in a separate legal agreement, but it would encompass how you will receive a share of profits or dividends based on your ownership stake.
  • Capitation model: This model is often seen in managed care organizations or health maintenance organizations. Here, you receive a fixed monthly payment per enrolled patient, regardless of what services you provide. The goal of this is to provide comprehensive care to your patients while the employer manages costs.


A compelling compensation structure can be a decisive factor into your decision to accept a job offer or not. A clear and transparent compensation structure ensures that you understand how your performance, productivity, and other factors contribute to your compensation, and how well that aligns with your personal and professional goals. Evaluating and understanding this can foster a positive and open relationship between you and the employer.