Physician compensation management is a collective multibillion dollar expense for health systems, and one of the least visible. Despite the scale of the spend, most systems still lack a single, real-time view of cost, capacity, and incentives across their physician enterprise. The median subsidy per employed physician reached $315,358 in the fourth quarter of 2025, according to Kaufman Hall’s Physician Flash Report, up 4% since 2023, and hospital labor now accounts for 56% of total expenses, over $900B a year, according to the American Hospital Association. Leaders can point to what is going out the door. Far fewer can point to why.
Part of it is structural. HRSA projects a shortage of up to 140,000 providers over the next decade, so every provider a health system loses to burnout, misalignment, or a competing offer is harder and more expensive to replace than it used to be.
It’s also a matter of how the day gets spent. Physicians spend approximately 50% of their office day on EHR and desk work, more time than they spend with patients, according to the Time and Motion Study published in Annals of Internal Medicine. Manual compensation reconciliation and contract lookups add another layer on top, pulling time away from either the exam room or the physician’s own evening.
This is compounded by subsidies climbing without a clear line to performance. Kaufman Hall’s data shows provider productivity has grown 7% since 2023 while reimbursement has fallen. MGMA’s research on the productivity paradox shows hospital-employed physicians may see fewer patients than private-practice peers yet log higher wRVUs, a disconnect that is difficult to diagnose without visibility into how compensation design, coding, and revenue cycle data connect to what a physician is actually paid.
None of these are separate problems. Compensation, contracts, benchmarking, and compliance data all live inside systems, such as EHRs and ERPs, that were built to document what has already happened, not to help a leader decide what to do next. Bolting on another dashboard does not close that gap. It just adds one more place data has to be reconciled by hand.
Hallmark built its Physician Enterprise, one of the core suites within Healthcare’s Workforce Operating System, to close that gap. It sits alongside and above the systems an organization already runs, automates the compensation and contracting work that used to happen by hand, and continuously optimizes for cost, capacity, and incentives.
David Kruse, Hallmark’s Vice President of Physician Enterprise, makes the case that most health systems have not materially redesigned their physician compensation programs in the past decade, even as the workforce, care delivery models, and regulatory environment have shifted. That gap shows up in the numbers too: in a Becker’s Healthcare roundtable Hallmark hosted with Summit Health and Acuvance Coker, only 16% of attendees felt very confident their organization was ready for compensation modernization, while 29% said they were not very confident and 10% weren’t sure.
That uncertainty is usually less about ambition and more about knowing where to start. The shape a Physician Enterprise operating layer takes depends on each system’s particular gaps and priorities. Below are four places it tends to show up first.
Manually executed compensation plans are where most of the risk and rework live. Hallmark’s Compensation Automation turns complex, manually executed compensation plans into reliable, automated workflows, pulling data directly from systems of record to calculate payments and giving physicians clear, self-service visibility into how they’re paid. The result is errors eliminated and dramatically less manual reconciliation.
That automation runs on contracts that are just as centralized. Hallmark’s Contract Management stores and standardizes contract terms across the enterprise and links each agreement to its associated compensation plans and benchmarks. Physician contract management moves from static documents to living, data-driven assets, a meaningful reason Hallmark’s Physician Enterprise clients see compensation errors reduced by more than 80%.
Many survey-based benchmarks are 12 to 18 months old, and fair market value (FMV) review is hard to do consistently when the underlying data lives in five different places. Hallmark’s Real-Time Benchmarking draws on more than 60,000 embedded physician and APP benchmarks, including the health system’s own compensation, so organizations can compare compensation, performance, and associated ratios against peers and segment by specialty, site, employment model, or cohort. Leaders gain a living picture of competitiveness and performance, not a point-in-time PDF.
Hallmark’s Compliance Management supports the physician compensation compliance program with one source of truth, automatically identifying outliers that exceed predetermined guardrails related to FMV review, prospectively forecasting compensation models against benchmarks before they’re implemented to assess reasonableness, and tracking approvals for easier auditing.
Compensation plans should reinforce a health system’s access, quality, and growth priorities, but few leaders can say with confidence that they do across the organization. With Hallmark, health systems can harmonize incentives across employed, affiliated, and contracted providers and surface where incentives are driving the wrong behaviors or unintended friction. Physicians gain transparency into how they’re performing through a mobile application designed for quick access on the go.
Hallmark’s Modeling and Forecasting allow leaders to model, test, and refine future compensation strategies before deploying them and project the financial impact at the provider, service line, and system level. Instead of debating hypotheticals, leaders can evaluate data-backed options and move forward with confidence.
Physician interest in locums work has grown as more clinicians seek flexibility outside traditional employment models. Hallmark’s vendor-neutral Locum Tenens solution centralizes management for a single source of truth across requests, vendors, rates, and performance. Health systems can build a locums bench for greater provider flexibility and coverage, compare market rates and track locums spend across the enterprise by specialty and market, and track locums productivity and performance against their employed group. They may also manage onboarding and compliance with centralized “name clear” guardrails and medical staff credentialing status tracking.
Locums should be more than a temporary staffing solution. Hallmark helps health systems move beyond managing placements to evaluate agency performance and identify opportunities to strengthen the provider workforce, turning locums spend into actionable workforce intelligence. The result is greater flexibility in provider coverage, stronger administrative oversight via centralized management, and reduced burnout and increased retention for employed providers through a strategic investment in locums.
Hallmark’s Physician Enterprise already manages more than $10B in physician compensation through its Workforce Operating System. Much of the rest of the industry is still running this work through spreadsheets. What separates the systems that get ahead is whether contracting, compensation, benchmarking, and compliance stay siloed, or come together into one technology layer that gives every leader the same picture, the difference between reactive decisions and resilient operations.
Paired with Flexible Workforce, Hallmark’s Physician Enterprise suite gives leaders one place to act instead of several to reconcile, reducing attrition risk and building a workforce that stays engaged. Explore recent client stories or learn more about Healthcare’s Workforce Operating System to see how it fits within your organization.
