Financial pressures, workforce shifts and changing expectations are reshaping physician compensation models nationwide.
Here are 10 physician compensation pay trends to know, drawn from recent data provided by VMG Health and SullivanCotter’s 2025 “Physician Compensation and Productivity Survey.”
1. Medicare reimbursement cuts shaping pay structure
For the fifth consecutive year, CMS has cut the Medicare conversion factor by 2.83% in 2025, a 10% decline since 2020.
With over $1 trillion in federal healthcare spending cuts planned through 2034, many health systems are facing tighter margins and rising uncertainty around Medicaid, ACA eligibility and programs like 340B. According to VMG Health, these shifts underscore the need for compensation models that can withstand volatility and reward adaptability.
2. Physician pay growth accelerates sharply in 2025
SullivanCotter found that median total cash compensation — base salary plus incentives — rose more sharply than it has in a decade, driven by clinician shortages and persistent supply-demand imbalances.
Adult medical specialties saw the largest year-over-year gain at 7.5%. Over five years, primary care specialties have led with a 21.8% total increase.
3. Productivity is stabilizing
After several years of COVID-19 pandemic-related swings, SullivanCotter found that productivity has largely stabilized, with work relative value units increasing about 1.5% overall year over year.
Adult medical, pediatric surgical and adult surgical specialties saw the greatest productivity growth at 3.4%, 2.4% and 2%, respectively. Compensation per wRVU ratios have normalized, indicating that pay gains are now being driven by market pressure rather than output.
4. Generational shifts changing pay preferences
Younger physicians are increasingly prioritizing financial security and work-life balance over volume-based risk.
“Often younger physicians don’t want to be at risk relative to production or the amount of volume they can generate,” Mark Ryberg, physician workforce practice leader at SullivanCotter, said in an Oct. 15 release. “They’re prioritizing security in the form of base salaries.”
This generational change is prompting organizations to rebalance compensation plans with larger guaranteed components and reduced incentive volatility, according to the report.
5. Incentives evolve beyond wRVUs
While base salary and wRVUs remain the foundation of most plans, SullivanCotter reports growing use of other metrics and benefits. For example, 75% of organizations now include productivity and patient experience measures, and outcomes-based metrics increased 4.6% year over year. Additionally, 90% and 52% of survey respondents reported using sign-on bonuses and student loan repayment, respectively, as recruitment incentives.
Organizations are increasingly blending guaranteed pay with performance-based incentives to balance stability and motivation.
6. Aging workforce accelerate shortage and shift pay structures
According to VMG Health, 20% of practicing physicians are 65 or older and another 22% are between 55 and 64, driving a projected shortage of up to 86,000 physicians by 2036.
From 2018 to 2022, physician salaries rose an average of 5% annually, yet nearly half of physicians report feeling underpaid. To maintain coverage, hospitals are turning to advanced practice providers, with 63% of medical groups adding new APP roles in 2024, according to data from the Medical Group Management Association.
7. Total compensation now includes quality of life
According to VMG Health, hospitals are increasingly offering childcare, enhanced paid time off, flexible scheduling and wellness programs to attract and retain physicians.
For many providers, these perks are becoming just as important as traditional pay and bonuses — 63% of physicians would take a pay cut for work-life balance, according to a Medscape survey published in January.
8. Hospital subsidy dependence is rising, especially in anesthesia
Declining reimbursement, workforce shortages and new regulations like the No Surprises Act have driven up hospital subsidy demands, according to VMG Health.
Hospitals report subsidy requests doubling or more in some specialties compared to current agreements, with anesthesiology and radiology under the greatest strain.
Anesthesiology is affected by aging providers, workforce shortages and anesthesia conversion factor cuts, while radiology is facing eroding reimbursement, higher overhead and costly night coverage.
VMG Health advises hospitals to assess workforce trends, coverage requirements and to link subsidies to measurable performance outcomes.
9. Alignment models continue to evolve
According to VMG Health, while employment remains dominant, alternative alignment structures are growing, including professional services agreements, management services agreements, and co-management or joint venture models. Additionally, value-based enterprises are emerging as overlays across all models.
10. Compensation increasingly tied to growth
Compensation is increasingly tied to organizational goals like access, volume and care coordination, VMG Health reported. New models are embedding growth-oriented incentives such as new patient visit bonuses to expand panels, subspecialty access stipends for high-demand areas and after-hours clinic pay to extend access without new full-time equivalents.
