Physicians and surgeons held about 661,400 jobs in 2008; approximately 12 percent were self-employed. About 53 percent of wage–and-salary physicians and surgeons worked in offices of physicians, and 19 percent were employed by hospitals. Others practiced in Federal, State, and local governments, educational services, and outpatient care centers.

According to 2007 data from the American Medical Association (AMA), 32 percent of physicians in patient care were in primary care, but not in a subspecialty of primary care.

Physicians heading into the job market for the first time or eyeing a career move in 2007 will find plentiful opportunities and attractive compensation packages regardless of their specialty or preferred setting. Demand for specialists and primary care physicians is high in many regions, especially in non-urban areas. That demand is translating into substantial signing bonuses, generous education loan repayment, and other competitive benefits — especially among large groups and health systems.

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The employment picture is bright across the board. Even primary care, in which flat incomes and reimbursement produced a challenging practice environment in the recent past, is experiencing gains. Incomes for family practice physicians, internists, and pediatricians increased in 2005 and 2006, and the Centers for Medicare and Medicaid Services recently modified the Resource Based Relative Value Scale to attach a higher relative value unit (a measure of the physician work component) to most office-consultation services. The latter will increase Medicare reimbursement to most primary care physicians, industry experts concur.

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As the health care-delivery landscape changes, so do physician-compensation systems and practice models. For example, as costs increase and concerns about cost-effective care intensify, annual bonuses are undergoing modification. Community practice bonuses have typically been based on collections. Yet increasingly, they are being based on RVUs, the recruiting firms report. Quality-based bonuses — particularly for improved management of chronic conditions — are also on the rise. At Kaiser’s TPMG, for example, physicians can earn up to 10 percent of their annual salary in an incentive payment that is based half on quality and half on service (measured by patient satisfaction).

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Fees shown in this report series represent fee-for-service (FFS) payments reported by states for state-administered Medicaid programs only. Nationally, the majority of children enrolled in Medicaid programs are enrolled in managed care plans, which may or may not benchmark provider payment rates to fees shown in this report. In fact, payment levels are known to vary widely between state-administered plans and managed care plans in some states. As examples, some of New York State's Medicaid managed care plans reportedly pay substantially higher than its state-administered FFS plan, whereas the opposite has been observed in Hawaii.

Earnings of physicians and surgeons are among the highest of any occupation. According to the Medical Group Management Association's Physician Compensation and Production Survey, median total compensation for physicians varied by their type of practice. In 2008, physicians practicing primary care had total median annual compensation of $186,044, and physicians practicing in medical specialties earned total median annual compensation of $339,738.

Self-employed physicians—those who own or are part owners of their medical practice—generally have higher median incomes than salaried physicians. Earnings vary according to number of years in practice, geographic region, hours worked, skill, personality, and professional reputation.