How do you structure compensation for an associate physician in a private practice?

There are three dominant compensation models for associate physicians in private practice, and most real-world deals are hybrids. The first is straight salary, often used during the first 12 to 24 months when an associate is ramping their patient panel and the practice wants to absorb production volatility. Salary is simple and predictable, but it caps upside and creates a productivity disincentive once the associate is established. The second is pure productivity, typically calculated as a percentage of personal collections (commonly in the 30 to 45 percent range, with specialty-specific norms) or as dollars per wRVU using a conversion factor benchmarked to MGMA data. Pure productivity rewards top performers but can be harsh for new associates who have not built a panel. The third, and most common in mature practices, is base plus productivity bonus: a guaranteed salary up to a defined production threshold, then a share of collections or wRVUs above that threshold. The threshold is usually set so that the base compensation roughly equals the production share at the associate's expected steady-state volume. Whichever structure you choose, the contract has to address eight things explicitly. Benefits load (typically 20 to 30 percent of base for health, retirement match, malpractice tail, CME stipend, paid time off, license and DEA fees). Call coverage expectations and call pay if applicable. Restrictive covenants, including geographic scope, duration (12 to 24 months is typical), and any buyout language. Ancillary revenue treatment: does the associate share in lab, imaging, in-office procedures, or only professional fees. Partnership track timing, criteria, and buy-in mechanics (covered separately under partnership buy-ins). Termination provisions, including the dreaded without-cause clause and the malpractice tail responsibility. Productivity ramp guarantees during the build-up period. And tax treatment, typically W-2 employee status, though 1099 independent contractor arrangements still exist in some specialties and create their own complications. The single most common mistake practice owners make is overpaying base salary relative to the production the associate can realistically generate in year one. Underwrite the role to honest specialty production benchmarks and your local payer mix, not aspirations.