Physician Contract Glossary · Compensation
Formula Compensation
Formula compensation is any pay model where your income is computed from a defined formula rather than a flat salary.
Formula compensation is the umbrella for every pay model that calculates your income from inputs rather than handing you a fixed number. The inputs are usually wRVUs, collections, or a blend, often with a base plus a production bonus above a threshold. The formula decides how stable your income is, how much upside you have, and how aligned your incentives are with the practice. Two contracts with the same headline salary can pay wildly differently once you run the formula.
Ask the practice to run the formula against last year's actual numbers for a physician in your role. Headline figures are marketing; the formula applied to real volume is the truth.
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