Abstract
Physician compensation plans are critical to the success of a physician group or may lead to the demise of the group. Essential components of the development and implementation of a successful physician compensation plan include: strategic planning, physician understanding and buy-in, appropriate incentives, objective performance measurement, and a specific funding source or mechanism. There are two basic philosophies to consider for use: the market-based model and the net economic contribution model. Advantages and disadvantages of each are discussed. Methods of incorporating these multiple aspects into a single plan are described.