Reimbursement math, Stark law enforcement and a push for pay transparency are colliding to change how physicians get paid this year.
Here are five things to know about the forces behind physician compensation in 2026.
1. Physicians are working more and taking home relatively less.
Provider productivity, measured in work relative value units per full-time equivalent, is up 7% since 2023, but compensation rose only 6% and reimbursement — net patient revenue per provider wRVU — fell 1%, according to Kaufman Hall’s fourth-quarter 2025 Physician Flash Report, which draws on data from more than 200,000 employed physicians and advanced practice providers across more than 100 specialties.
The median subsidy per physician reached $315,358 in the fourth quarter of 2025, up 4% since 2023, and labor expenses now account for 84.4% of total physician practice costs. Advanced practice providers make up 40.7% of the provider workforce, up from prior years, as systems lean on them to meet demand. Assuming a median hospital operating margin of 1.3%, Kaufman Hall estimates physicians would need to generate roughly $17 million in downstream revenue to offset a median subsidy of $236,290 per provider.
“Providers are working more but are being paid less for their work,” Matthew Bates, managing director and physician enterprise service line leader at Kaufman Hall, said in a Feb. 10 release. “Patient demand is up, yet reimbursement is falling.”
2. CMS raised 2026 pay rates, but physicians aren’t feeling it.
The 2026 physician fee schedule set conversion factors of $33.57 for qualifying participants in advanced alternative payment models, a 3.77% increase, and $33.40 for everyone else, a 3.26% increase. Median total cash compensation still rose more sharply in 2025 than it has in a decade, per VMG Health and SullivanCotter’s 2025 Physician Compensation and Productivity Survey, driven by clinician shortages and persistent supply-demand imbalances. Yet only 48% of physicians say they personally feel fairly compensated, the lowest share in a decade, and about 6 in 10 say physicians as a group are underpaid — more than said so about their own pay specifically. Sixty-three percent said they’d take a pay cut for better work-life balance.
3. Specialty pay is splitting in different directions.
Medscape’s 2026 “Return to Normalization” report, based on a survey of 5,916 physicians across more than 29 specialties, found average pay up 3% overall even as seven specialties saw cuts: psychiatry and allergy and immunology each fell 3%; oncology and hematology and pulmonary medicine each fell 2%; and dermatology, nephrology, and physical medicine and rehabilitation each fell 1%. Dermatology, pulmonary medicine and oncology have now posted pay declines for two straight years. Meanwhile, SullivanCotter’s 2025 survey found adult medical specialties up 7.5% year over year, primary care compounding a 21.8% gain over five years, and productivity growth concentrated in adult medical, pediatric surgical and adult surgical specialties (3.4%, 2.4% and 2%, respectively). Regionally, physicians in the Midwest reported the highest average salary, at $385,000, followed by the South ($375,000), West ($369,000) and North ($363,000).
4. Stark law enforcement is testing whether fair-market-value pay is enough.
2024 was a record year for enforcement: seven major Stark law indictments contributed to 979 qui tam lawsuits, with False Claims Act settlements and judgments totaling $2.92 billion by the federal government’s fiscal year-end. The current test case is Chattanooga, Tenn.-based Erlanger Health System, which must defend two False Claims Act lawsuits after a federal judge denied its bids to dismiss them in March 2026. Erlanger has said it is “extremely comfortable” with its compensation processes because outside consultants set pay at fair market value — but the case proceeding anyway signals that a fair-market-value opinion, long treated as a safe harbor, won’t automatically shield a compensation arrangement from Department of Justice scrutiny.
5. Independent practices are itemizing pay to compete.
At Goldsboro, N.C.-based Southeastern Medical Oncology Center, which partnered with Nashville, Tenn.-based OneOncology about a year and a half ago while keeping its own business operations, leadership has stopped presenting job offers as a single base salary figure.
“We used to just tell them what their base salary was, and that used to be what everybody went through,” Nagesh Jayaram, MD, told Becker’s about the practice’s old approach. Now SMOC itemizes the value of insurance coverage, vacation time and other benefits that hospital systems tend to fold into one advertised number. “I think it’s really the kind of ancillary services that you do. How do you capture all those service lines? I think that’s one of the biggest things that gets lost with compensation,” Dr. Jayaram said. “The true compensation that you get to your hand may be a lot lower than what the hospital system shows.”
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