An Overview of the Factors Impacting Physician Compensation

Physicians are some of the highest income earners in the U.S., but physician salaries vary depending on quite a few factors. According to the U.S. Bureau of Labor Statistics, the average median salary for physicians in 2019 was $208,000. Some make less and some make far more.

So what factors contribute to the disparity in physician salaries?

There are quite a few.

Here are the five main factors that impact a physician’s compensation.


The type of medicine you practice greatly affects how much money you can earn throughout your career. While the average physician salary hovers around $208k, physicians in certain specialties make significantly more per year.

Specialties that pay an average of $400,000 or more per year include:

  • Plastic surgeons
  • Orthopedic surgeons
  • Neurosurgeons
  • Cardiologists
  • Otolaryngologists
  • Urologists
  • Gastroenterologists
  • Dermatologists
  • Radiologists
  • Ophthalmologists
  • Oncologists
  • Anesthesiologists
  • General surgeons

One of the main reasons that these specialists earn so much more than others is the level of training and education required. The more specialized the field, the more training physicians need.

For example, while most physicians spend just three years in residency, plastic surgeons spend six years in residency, which is often followed by an additional year in a fellowship program. Neurosurgeons spend seven years in residency, sometimes followed by a fellowship of an additional two years.  

In general, the more highly specialized the area of medicine is, the more money physicians in those specialties earn.

Geographical Region

Where you practice medicine has a major effect on salary, but it has less to do with the cost of living than you might think.

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Hawaii, Massachusetts, California, and New York have the highest costs of living in the country, but physicians in those states don’t always earn the biggest salaries. In fact, some of the top-paying states have a far lower cost of living index.

States where physicians can earn top dollar include:

  • Kentucky
  • Missouri
  • Alabama
  • Tennessee
  • South Dakota

That’s because these states have a large shortage of physicians, and as the demand for physicians increases so does salary. There is no shortage of physicians who want to live and work in New York, California, or Massachusetts, so states that have a harder time attracting top medical talent have no choice but to pay more to recruit physicians to work in their region.

Years of Experience

The more experience you have under your belt, the higher your title and rank within a practice or hospital organization can be. If you work in a hospital, climbing the ranks from attending physician to department head or from department head to medical director comes with both increased responsibility and an increase in pay.

More experience may also give you the confidence as well as the financial ability to start your own practice or partner in a group practice with other physicians, both of which can increase your salary.

Type of Employer

Where you work is also a factor in how much you can earn. Physicians working in community health centers and academic institutions tend to earn the least, while those in single specialty group practices and solo practices tend to earn more.

Physicians in single-specialty groups often earn the highest salary.  One reason why is that single-specialty groups are in a better position to reduce operating costs than large multi-specialty groups or large hospital networks. Single specialty groups also tend to provide less Medicaid services, which means they earn more money for every patient they see.  

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Compensation Model

Physicians work under different compensation models, and how you earn your income affects how much income you can earn.

The most straightforward compensation model is the straight salary model. With this model, physicians earn a flat salary and have a minimum guarantee of income. Sometimes, physicians earn a straight salary plus bonuses or incentives.

Some physicians are paid based on productivity, earning a percentage of either the billings or collections received for the patients they’ve provided care to. This model encourages physicians to be more productive, and those that work harder or work longer hours earn more than those that work less.  

Other factors, such as taking on administrative duties or whether or not you’re paid for on-call hours, can also impact your salary.  

Read the Full Guide to On-call Pay for Physicians fromPhysicians Thrive to learn more about which physicians receive on-call pay and which ones do not.  

In Conclusion

Physician salaries range considerably depending on specialty, level of experience, region, compensation model, and employer. If you’re getting ready to sign a new employment contract or renew an existing one, do your research to make sure that the compensation detailed in your contract is on par with what you deserve. 


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