Compensation Models in Healthcare: Understanding RVUs and Beyond

For healthcare professionals, how you are paid can be just as important as how much you are paid. Compensation models not only influence your income, but also your workload, autonomy, and even patient care. In today’s healthcare landscape, most organizations use one of a few common structures—each with its own benefits and drawbacks.

The RVU Model (Relative Value Units)

RVU-based pay has become one of the most common systems, particularly in hospital or large group settings.

• How it works: Each service you provide is assigned a value based on complexity, time, and resources. Your compensation is tied to the total RVUs you generate, sometimes with a base salary plus an RVU bonus.

• Pros:

  • Direct link between productivity and pay

  • Predictable and standardized across specialties

  • Attractive for highly productive physicians

• Cons:

  • Can incentivize volume over quality

  • Less rewarding for physicians in lower-volume or more time-intensive specialties (e.g., primary care, psychiatry)

  • May create pressure to see more patients than is comfortable

Salary-Based Compensation

Some healthcare systems, particularly academic centers and large nonprofits, prefer a straight salary model.

• How it works: Physicians and staff receive a fixed annual salary, often tied to experience and specialty.

• Pros:

  • Predictable, stable income

  • Focus on patient care without productivity pressure

  • Supports team-based care models

• Cons:

  • Limited incentive for high productivity

  • May feel less competitive compared to peers in RVU-heavy systems

Hourly or Shift-Based Pay

Common among hospitalists, emergency medicine, and locum tenens roles.

• How it works: Compensation is tied to hours worked or shifts covered, regardless of patient volume.

• Pros:

  • Clear correlation between time worked and pay

  • Flexible for physicians wanting more control over schedules

• Cons:

  • No incentive for efficiency or seeing higher patient loads

  • Potential burnout if financial goals require excessive hours

Capitation / Value-Based Models

Less common but growing under healthcare reform initiatives.

• How it works: Providers are paid a fixed amount per patient (per month or per year) regardless of how many services are delivered. Pay may also be tied to quality metrics like patient outcomes, readmission rates, or preventive care measures.

• Pros:

  • Incentivizes prevention and long-term patient health

  • Can reduce unnecessary procedures

  • Aligns with patient-centered care goals

• Cons:

  • Financial risk shifts to providers if patient needs exceed expected costs

  • Requires robust data systems to track quality metrics

  • Difficult to implement in smaller practices

Hybrid Models

Many systems are moving toward blended compensation structures—for example, a base salary plus RVU bonuses, or a combination of productivity pay and quality incentives. These aim to balance the stability of salary with the motivation of performance pay.

Key Questions for Healthcare Workers

When evaluating a compensation model, consider:

• Does it reward productivity, quality, or time—and which matters most to you?

• How stable is the income stream under this model?

• Does it align with your work-life balance goals?

• Will it encourage the kind of patient care you want to provide?

Takeaway

There’s no one-size-fits-all solution. An RVU-heavy contract may be ideal for a highly efficient specialist, while a salary-based model might better suit someone in primary care who values predictable hours and income. Understanding the mechanics of each compensation model can help you make better career choices—and negotiate more effectively.