It’s completely reasonable to want a higher salary as a physician, and we need to bust through the propaganda that physicians shouldn’t be thinking about this. But to get there, it’s important to understand what drives physician compensation, and it’s not always what you might expect.
Volume, Not Seniority, Pays
Most early-career physicians assume that experience or clinical excellence will naturally lead to higher earnings over time. Unfortunately, that’s not how most compensation models work.
Whether you’ve been practicing for five minutes or fifteen years, most payors like Medicare, Medicaid, and commercial insurers do not pay more for experience alone. Reimbursement is typically the same for a given service, regardless of the physician’s skill, training, or outcomes. It’s a frustrating reality, but one we need to factor into how we think about compensation strategy.
In nearly every practice setting (hospital-employed, private practice, or academic), higher income is driven by higher volume. In other words, to get paid more, you usually need to do more volume, however that is measured and rewarded by the employer.
Base Salary Alone Won’t Get You There
Physicians earning in the top 5%-10% of their specialty are almost never doing so on base salary alone. For example, the top 5%-10% of adult outpatient psychiatrists are likely earning $500K or more in total salary. However, I have not seen an employment contract with a guaranteed minimum salary of $500K on day one.
Here’s how those employed physicians often increase their total salary:
- Hospital-employed physicians generate more work RVUs than their peers and negotiate above-average compensation per wRVU rates.
- Private practice physicians take on higher patient volumes and secure stronger collection percentages.
- Shift-based physicians (like hospitalists or ER doctors) often work more hours and negotiate higher hourly rates.
In all of these models, understanding the fine print of your compensation formula is essential. The compensation rate per RVU or collections percentage can make a major difference over time, especially when combined with sustained volume.
Rate Negotiation Matters, But So Does Structure
You can absolutely negotiate for a better rate, including higher compensation per wRVU, higher percentage of collections, or higher hourly pay, depending on your setting. That said, the structure of your compensation matters just as much as the numbers themselves.
A higher per-unit rate may not move the needle if it’s paired with an artificially low patient load, capped productivity credit, or a bonus model that resets frequently. The terms of the structure need to align with your ability to maximize that rate.
Align Compensation with Career Stage and Specialty
Your strategy for maximizing compensation should be grounded in the realities of your specialty and career stage.
If you’re early in your career and considering an initially lower-paying pre-ownership track in private practice, it’s critical to evaluate the long-term financial upside. Are you a surgeon and working toward equity ownership in a thriving ASC or other ancillaries? Will ownership offer a meaningful return that justifies the short-term sacrifice?
If you’re mid-career and producing above-average volume but still stuck at median pay, it may be time to renegotiate your rate or explore a more favorable compensation model.
And if you’re shift-based, your best opportunity may be negotiating for higher hourly pay and optimizing your schedule over time.
Exit Strategy Also Pays!
Being able to change jobs to another local option without uprooting your family and community can pay off. Many employers will want to protect their investment by limiting or eliminating local competition for your services. They often fear local competition from an employer that can offer more, potentially creating a cascade effect. If you have rough noncompete or nonsolicit clauses, it can be difficult to leverage the relationships and reputation you have built by pursuing another opportunity easily. Selling houses, spouses changing jobs, kids going to new schools… all of these can be part of your transition penalty.
Noncompete clauses are not the end of the story! Termination clauses can make the step-by-step process of transitioning jobs expensive, forcing you to select a new opportunity only if it offers a substantial increase in total salary. Malpractice tail coverage is a common miss in physician contract negotiations. If a physician in a particularly high-exposure specialty has a 5-figure or even 6-figure exposure that they must pay upon transition, this could be a very limiting element. Many compensation models have strings attached to signing bonuses, retention bonuses, and/or productivity pay that might mean losing another 5-figure or 6-figure amount during the transition.
When doing the math, many physicians realize they have a real problem and are dissuaded from pursuing that more attractive offer.
First Contract Physicians – Start Early and Consider Multiple Options!
We encourage physicians to start this process early, ideally 9 to 18 months before the end of training. This will give you time to compare offers, understand your options, and negotiate from a position of strength. Most of the lawyers in the firm are married to medicine, and all of our partners started their job search way early.
Locking in on one opportunity can be costly, and considering multiple options often pays off. Many employers are a bit cagey on the two big compensation issues – volume and per-unit compensation rates – and might be unwilling to discuss them until further into the negotiation process. These are often not in offer letters and might not even be in the contract, so getting the full picture might not be easy. They know that volume and per-unit rates are where the economics get real, and base salary + signing bonus is the bait. Sometimes, the base salary and signing bonus are uncorrelated with the total salary opportunity!
You’ll know better, especially if you’re targeting higher-end total compensation.
Get Educated Before You Negotiate
Every specialty, practice setting, and region has its own compensation norms. Understanding those benchmarks is the foundation for any meaningful negotiation.
At Michael Johnson Legal, we regularly help physicians understand and navigate the details of their compensation models. Whether it’s reviewing base pay, compensation per wRVU rates, bonus structure, or buy-in opportunities, we bring national and specialty-specific data to the table, so our clients can make informed decisions.
You don’t have to go into these negotiations alone. With the right preparation and legal insight, you can build a career path that supports both your clinical goals and your financial future.
