Physician compensation benchmarks like those from the Medical Group Management Association (MGMA) or the American Medical Group Associations) AMGA are commonly used in the healthcare industry. Organizations lean on them for compliance with fair market value (FMV), to remain competitive in recruitment, and because they offer an easy, “objective” tool for setting pay formulas. However, this reliance can create serious financial blind spots.
Please see Podcast here.
On this week’s podcast, we speak with Stu Schaff, founder and principal of The Best Practice, who shares why over-relying on physician compensation benchmarks is a mistake organizations can’t afford to make.
The problem with benchmarks
Schaff cautions that survey data is inherently limited: it’s backward-looking, based on voluntary and self-reported information, and cannot reflect the unique circumstances of any single organization. He urges leaders to understand that benchmarks are a helpful tool—not a compensation strategy.
A smarter, balanced approach
Instead of defaulting to benchmark formulas, Schaff recommends a more nuanced strategy. Survey reports should be used as just one input, alongside internal financial realities, historical pay patterns, internal equity, and broader market signals. He advocates for regular compensation reviews and a holistic understanding of each group’s unique situation.
Key Takeaways
- Rethink your reliance on benchmarks.
- Read the introductory sections of survey reports to understand their context.
- Use benchmarks to validate—not define—compensation models.
Check out this week’s podcast to hear our entire conversation here.
