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, or roughly $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.
Part of it is how much of the day gets swallowed by paperwork instead of patients. 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.
And part of it is that subsidies keep 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 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 a health system already runs, automates the compensation and contracting work that used to happen by hand, and continuously optimizes for cost, capacity, and incentives, so leaders finally see what they are paying, why, and whether it is working.
David Kruse, Hallmark’s Vice President of Physician Enterprise, makes the case that most health systems have not meaningfully redesigned their physician compensation programs in a decade, even as care delivery models, workforce composition, and regulatory expectations 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 and Contract Management turn complex, manually executed compensation plans into automated workflows, pull data directly from systems of record to calculate payments, and link agreements to associated compensation plans and benchmarks. Contract terms are stored and standardized across the enterprise and key dates, obligations, and renegotiation triggers are tracked automatically. That connection, one data model rather than multiple systems that must be integrated, is what turns reactive reconciliation into a program leaders can actually govern, and it is 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 data from more than 60,000 embedded physician and APP records, including the health system’s own compensation, while its Compliance Management automatically identifies outliers that exceed predetermined guardrails related to FMV review and tracks approvals for auditing. Both move from a periodic scramble to a standing part of how compensation is administered.
Compensation plans should reinforce a health system’s access, quality, and growth priorities, but few leaders can say with confidence that they do across employed, affiliated, and contracted providers. Hallmark’s Modeling and Forecasting capabilities let leaders run what-if scenarios on new plans before deploying them and project the financial impact at the provider, service line, and system level, so leaders evaluate data-backed options instead of debating hypotheticals, and physicians gain transparency into how they are paid and how they are performing.
Physicians reported changing jobs to work locums assignments at nearly double the rate they did two years earlier, 44% in 2024 compared with 28% in 2022, according to CHG Healthcare’s 2024 survey. Hallmark’s vendor-neutral Locum Tenens capability centralizes management of requests, vendors, rates, and performance so systems can build a locums bench for greater provider flexibility, compare market rates and track locums spend across the enterprise by specialty and market, and manage onboarding and compliance with centralized “name clear” guardrails. Systems can also track locums productivity and performance against their employed group. That flexibility protects the employed physicians who would otherwise absorb every uncovered shift themselves, a direct lever for easing burnout and supporting retention.
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 view Healthcare’s Workforce Operating System to see how it fits within your organization.
