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R - E + S: Subsidize hospital-employed physicians to reap the benefits of the private practice compensation model

In nearly all private practices, the compensation model starts with the basic algebraic equation, "R - E = C" (revenue/collections minus expenses/overhead equals the total compensation pool). However, in a hospital-employed setting and some private groups employing physicians (nonpartners), the formula and incentive model takes on an additional variable, changing to "R - E + S = C," in which "S" represents subsidies required to make the formula work. In other words, the formula tries to emulate a private practice compensation formula, but because of factors inherent in hospital employment settings, it is simply not possible without a subsidy.