One of the strangest parts of modern medicine is that after all the years we spend training, sacrificing, and building highly specialized skills, many of us eventually sit down across from an administrator and get told what we are “worth.”

As physicians, we are used to dealing with data, evidence, and objective measures. So when compensation gets framed in terms like “fair market value” or benchmarks, it can feel like there is a clear, correct answer. A number that is grounded in reality and not really open for debate.

But if you have been through one of these conversations, you probably know it doesn’t feel that simple.

Because while compensation is often presented as objective, the process behind it is anything but. And the more I have seen physicians navigate contracts and renegotiations, the more I have realized that fair market value is often treated like a hard rule when it is really just an estimate built on imperfect data and interpretation.

This is something I’ve spent more time digging into recently, and Contract Diagnostics helped inform parts of this post based on their experience reviewing physician compensation data.

Understanding that difference can change how you approach your career in a meaningful way.

What fair market value is actually based on

At a basic level, fair market value is meant to represent what a willing employer would reasonably pay a willing physician for their services in a given market.

That sounds straightforward. But when you look under the hood, the way FMV is actually calculated is much less clean.

Most organizations rely on some combination of three approaches.

The first is a cost approach. This looks at what it would cost to replace you, including recruiting expenses, lost revenue during a vacancy, and coverage gaps.

The second is a market approach. This uses compensation surveys to compare what “similar” physicians are earning.

The third is an income approach. This tries to tie your compensation to the revenue you generate, often through metrics like wRVUs or collections.

On paper, this seems reasonable.

But the reality is that each of these approaches is filled with assumptions. And those assumptions are often shaped by the employer’s priorities.

You are not a building. You are not a spreadsheet. You are a physician with a specific skill set, working in a specific environment, under specific demands. Trying to reduce that to a single number is where things start to break down.

Why FMV is not a fixed or “legal” number

One of the most common things physicians hear is some version of this:

“We can’t pay more than fair market value. It wouldn’t be commercially reasonable. It might even be illegal.”

That sounds serious enough that most physicians stop the conversation right there.

But this is where it is important to slow down.

There is no universal FMV number. There is no federal table that says exactly what each physician should be paid. There is no single threshold where compensation suddenly becomes illegal.

What exists instead are interpretations.

Employers use survey data, internal analyses, and consultant opinions to create a range that they feel is defensible under Stark and Anti-Kickback regulations. That range typically has a floor and a ceiling, not a single exact number.

So when someone presents FMV as a hard cap, what they are really presenting is their interpretation of what is reasonable within that range.

That does not mean you can ask for anything. But it does mean the conversation is more flexible than it is often made to seem.

The hidden problem with compensation benchmarks

Most physicians are familiar with names like MGMA, AMGA, or SullivanCotter. These datasets are often treated as the gold standard for compensation.

And to be fair, they are useful.

But they are far from perfect.

For one, they are often based on a relatively small percentage of the total physician workforce. Even large surveys may only capture a fraction of physician groups, and those groups are not randomly selected. There is inherent bias in who responds.

Second, the data is lagging. A survey released this year is often reporting compensation from one or even two years prior. In a rapidly changing environment with inflation, reimbursement shifts, and staffing shortages, that lag matters.

Third, the data is generalized. It may tell you what a median orthopedic surgeon earns, but it does not tell you what someone in your exact situation should earn. It does not account for your call schedule, your case mix, your staffing support, or how hard your role is to fill.

And finally, different datasets can show very different numbers.

MGMA often reports higher compensation ranges. AMGA and SullivanCotter may trend lower. Self-reported platforms like Medscape or Doximity introduce even more variability because they lack detailed context.

So when an employer says, “This is the benchmark,” the natural follow-up question is: which benchmark, and why that one?

But most physicians don’t actually have access to that level of personalized data.

Why the structure of your compensation matters more than the number

One of the biggest mistakes I see physicians make is focusing almost entirely on base salary.

It makes sense. It is the easiest number to compare.

But in many cases, the structure of your compensation matters more than the starting number.

For example, if you are on a wRVU model, what is your conversion factor? Is it competitive? How does it change over time? Are there thresholds where it increases?

What about bonuses? Are they tied to productivity, quality metrics, or both? Are they realistically achievable, or are they structured in a way that makes them unlikely to pay out?

What about call? Is it compensated separately? If not, how is that factored into your overall compensation?

And then there are the less obvious pieces. Signing bonuses, retention bonuses, CME allowances, PTO, non-compete clauses, and even staffing support can all materially change the value of a contract.

Two jobs with the same base salary can end up being very different financially once you account for these factors.

Why higher pay does not always mean higher satisfaction

This is something that becomes clearer the longer you practice.

Some of the highest earning specialties report surprisingly lower satisfaction with their compensation. When you look closer, it is often tied to workload, call burden, administrative overhead, and burnout.

On the other hand, specialties with more moderate compensation sometimes report higher satisfaction because of better schedules, more autonomy, or more predictable workflows.

Location plays a role as well. A higher salary in a high cost of living urban area may not go as far as a lower salary in a more affordable region. Physicians in certain regions consistently report higher satisfaction not because they are earning the most, but because their compensation aligns better with their lifestyle and workload.

So while compensation matters, the context around that compensation matters just as much.

Why your individual situation matters more than any dataset

At the end of the day, no dataset can fully capture your situation.

Your value is shaped by your productivity, your skill set, your willingness to take on certain responsibilities, and how critical your role is within a system. It is also shaped by the specifics of the job itself.

The challenge is that none of those factors automatically get reflected in an initial offer. Systems are built to standardize compensation. But physicians are not standardized. And if you don’t actively bring those details into the conversation, they often get overlooked.

Is the hospital struggling to recruit? Are you covering multiple sites? Is there a staffing shortage? Are you taking on additional call or administrative duties?

These are the kinds of details that should influence compensation.

But they only influence it if they are part of the conversation.

This is why going into a negotiation with only a percentile number in mind is limiting. It does not tell your story. And in many cases, your story is where the real leverage exists.

What physicians should actually do with FMV

So what should you do when FMV comes up?

The first step is to reframe it in your mind. Instead of seeing it as a fixed answer, see it as one data point in a larger conversation.

Then start asking questions.

How was this number determined? What datasets were used? How recent is the data? How does this account for call burden, staffing, or productivity? How often is compensation reviewed and adjusted?

These are not confrontational questions. They are reasonable questions.

The goal is not to argue for the sake of arguing. The goal is to understand the structure behind the offer and whether it actually reflects the role you are stepping into.

It is also important to look beyond base salary.

A lot of the real value in a contract is in the details. Conversion factors, bonus structures, call compensation, signing incentives, retention bonuses, CME, PTO, and even non-compete clauses can all significantly impact both your income and your quality of life.

This is where many physicians leave money and flexibility on the table without realizing it.

And more importantly, this is where you can align a contract with your long term goals rather than just accepting a number that looks reasonable on the surface.

The bigger takeaway

Fair market value is a useful concept.

But it is not a final answer.

It is an estimate built on data that is often incomplete, delayed, and generalized. It can provide a framework, but it cannot define your worth on its own.

As physicians, we spend years learning how to evaluate complex systems and make decisions with incomplete information.

Compensation is no different.

The goal is not to ignore FMV. The goal is to understand it well enough that it does not limit you.

Because if you rely on a single number to define your value, you are almost certainly leaving something on the table.

What do you think? Have you ever been told a compensation number was “fair market value” in a way that shut down the conversation? Let me know in the comments below.