By Dana Jacoby
When your pay structure works against your care model, everyone loses
Provider compensation is one of the biggest levers in healthcare… and one of the easiest to get wrong. It doesn’t matter how good your strategy is on paper: if the pay model underneath it isn’t aligned, progress stalls, frustration builds, and performance suffers.
Misalignment often hides in plain sight. Below, we unpack the risks that sneak in when provider compensation doesn’t match your clinical goals, business strategy, or evolving care model.
✗ Volume-based pay in a value-based world
Many physician groups are still using productivity-based incentives in a healthcare landscape that’s increasingly focused on outcomes. The result? Mixed signals.
Doctors are told to improve care coordination, reduce unnecessary testing, and spend more time with complex patients—but their pay is tied to volume. It’s hard to lean into value when your income depends on throughput.
✗ Burnout and attrition you didn’t see coming
Misaligned models can quietly contribute to provider burnout. If the compensation formula rewards overwork, penalises team-based care, or ignores cognitive load (e.g. managing chronic care or complex social needs), providers feel squeezed.
Over time, that erodes morale and retention, even if your rates look competitive on paper. Alignment isn’t just about pay levels; it’s about fairness and fit.
✗ Undermining team-based care
Modern care delivery is rarely a solo act. But when only physicians are incentivised, and support roles like care coordinators or APPs are left out, collaboration stalls.
A good model rewards the whole team, not just individual productivity. Misalignment can breed resentment, siloed workflows, and missed opportunities to improve patient experience.
✗ Financial blind spots at leadership level
Leadership often assumes that a comp model is working if providers aren’t complaining loudly. But that’s a risky blind spot. Misaligned models can mask underperformance, distort ROI on clinical initiatives, or inflate labor costs without improving outcomes.
Regularly reviewing and stress-testing your model ensures that it’s doing what you think it is.
✗ Resistance to change
If your comp model doesn’t evolve with your organisation, it will eventually become a barrier to innovation. New service lines, technology, scheduling models—these all require provider buy-in. If change feels like a threat to income, resistance is guaranteed.
Alignment builds trust. And trust clears the path for growth.
The takeaway: pay should reinforce, not resist
Compensation isn’t just a finance issue, it’s a cultural one. It tells your providers what really matters. When the model aligns with strategy, everything moves more smoothly. When it doesn’t, friction creeps in—quietly, then all at once.
At Vector Medical Group, we work with physician organisations to build comp models that support care, strategy, and sustainability. Because in healthcare, how you pay is how you lead.