In recent years, concierge medicine has evolved from a niche private practice model into a broader strategic offering increasingly adopted by hospitals, health systems, and large physician organizations. Traditionally associated with independent physicians serving smaller patient panels in exchange for annual or monthly membership fees, concierge medicine is increasingly becoming part of physician employment models as healthcare organizations respond to changing patient expectations, physician workforce pressures, and competitive market dynamics. As healthcare organizations expand into concierge medicine, structuring compensation arrangements to appropriately align physician incentives, organizational objectives, patient expectations, and regulatory considerations will be paramount.

This article explores key considerations associated with structuring physician compensation arrangements in concierge medicine employment models. Furthermore, we will examine common concierge model structures, operational and valuation considerations, and practical frameworks that hospitals, health systems, and medical groups may use when designing compensation arrangements intended to support both strategic objectives and defensible compensation outcomes.

Defining the Concierge Medicine Model Under Employment Arrangements

Concierge Medicine Versus Traditional Fee-For-Service Employment Models

At its core, concierge medicine is a healthcare delivery model in which patients pay a recurring fee for enhanced services and improved access to care, with such fee often referred to as a subscription or membership fee. Depending on the structure of the program, these services may include same-day appointments, extended office visits, 24/7 physician availability, enhanced care coordination, preventive health management, and more personalized patient interaction. While some concierge models operate outside of traditional insurance reimbursement systems (typically referred to as “direct primary care”), many continue to bill payors for covered clinical services while separately charging patients for amenities not covered by traditional insurance and access‑related benefits.

There are several distinctions between concierge medicine and traditional fee-for-service practices beyond just the source of revenue. Table 1 outlines how these two models differ across several operational, financial, and strategic measures.

Table 1 – Comparison of Fee-For-Service and Concierge Practices

These distinctions point to a single theme: the concierge model trades the volume orientation of fee-for-service for a structure focused around the physician‑patient relationship. This shift changes nearly every operating assumption, from how revenue is earned and how productivity is measured to the risks an employer assumes and the strategic reasons for offering the program. These structural differences are taking shape against a market that is growing quickly and consolidating into larger, organization‑based practices.

Concierge Medicine Market Insights

According to Grand View Research, the U.S. concierge medicine market generated $7.35 billion in revenue in 2024 and is projected to reach $13.23 billion by 2030. Notably, group ownership accounted for the majority of market revenue in 2024, indicating a shift toward health system‑affiliated and multi‑physician practice models. This trend suggests that concierge medicine is becoming more integrated within broader healthcare delivery systems rather than remaining limited to standalone physician practices.

Additionally, Grand View Research notes that the shortage of primary care physicians in the U.S. and physician burnout have further led to the increase in concierge medicine practices. While primary care physicians in a fee-for-service model may see 20 or more patients in a day, primary care physicians operating in a concierge practice may typically see less than 10 patients per day. Primary care holds the largest portion of the U.S. concierge medicine revenue market, with an anticipated compound annual growth rate of 10.78% over a five‑year forecasted period through 2030.

As concierge medicine becomes more deeply embedded within health systems and larger physician organizations, the question of how to fairly compensate employed physicians becomes increasingly important. Membership revenue, smaller patient panels, and heightened service expectations all complicate the productivity‑based compensation models that most employers have historically relied upon.

Designing Compensation Structures for Employed Concierge Physicians

Designing a compensation model for employed concierge physicians requires balancing the unique economics of the concierge practice with established fair market value (FMV) principles. Unlike traditional fee-for-service arrangements, concierge medicine introduces recurring membership fee revenue, reduces patient panel size, and often shifts physician effort toward enhanced access, preventive care, and patient engagement. As a result, compensation models should recognize the value created by the concierge practice while remaining grounded in objective market evidence.

One common approach is to compensate physicians via a base salary for an interim transition period as they grow the number of members in their practice. As the base salary is really intended to replace compensation from the traditional fee-for-service practice, such base salaries should be rooted within national physician compensation surveys. These surveys continue to provide relevant benchmarks as concierge physicians generally perform the same clinical services as their traditional counterparts, albeit for a smaller patient panel and with a different care delivery model. Consequently, survey data often serves as the foundation for establishing a physician’s compensation opportunity, while adjustments may be warranted to reflect the unique expectations and operational characteristics of the concierge practice.

Health systems may also incorporate incentive compensation that recognizes the financial performance of the concierge practice. Membership fee revenue is a distinguishing feature of the model and can provide a stable, recurring source of income independent of traditional reimbursement. However, rather than compensating physicians solely based on membership fees or collections, organizations should evaluate the total profitability of the physician’s practice, considering both membership fees and professional service revenue alongside the direct and indirect costs of operating the practice. Incentive opportunities tied to practice profitability can encourage physicians to support sustainable growth while maintaining an appropriate focus on quality, patient experience, and operational efficiency.

Although traditional fee-for-service practices may not be profitable, the very nature of concierge practices would necessitate a profit for the hospital or health system that sponsors such practice. In an independent concierge practice, the physician would be at risk for all expenses but would have the opportunity for upside once the practice was able to secure a sizable membership panel and subscription fee. When the health system or hospital (or any third party) is at risk for the initial losses incurred by the new practice (i.e., during the initial period when the physician may receive a base salary), such entities should anticipate a reasonable rate of return as would be expected in many other business models.

FMV and Commercial Reasonableness Considerations

Compensation arrangements between hospitals, health systems, and employed physicians generally must be consistent with FMV and commercially reasonable, particularly where referrals for federally reimbursable services may be implicated. While these principles apply broadly to physician employment arrangements, concierge medicine models introduce unique considerations due to the presence of membership fee revenue, reduced patient panel sizes, and enhanced service expectations.

From an FMV perspective, physician compensation should reflect the value of the physician’s personally performed services rather than the broader economics of the concierge program. Membership fees often support administrative infrastructure, care coordination resources, technology platforms, and other operational expenses in addition to physician services. As a result, compensation methodologies based solely on a percentage of membership fee collections may not appropriately reflect FMV. Furthermore, because concierge physicians often maintain smaller patient panels and generate lower traditional productivity metrics while providing greater accessibility and non‑billable services, organizations should carefully evaluate how market compensation benchmarks are applied and whether adjustments are necessary to account for the unique attributes of the model.

Commercial reasonableness focuses on whether the arrangement makes sense as a business matter in light of the organization’s legitimate operational and strategic objectives. In the concierge setting, organizations should consider the purpose of the program, expected patient population, anticipated financial performance, and the physician’s role within the model. Compensation should not be justified by anticipated downstream referrals or ancillary revenue, and organizations should ensure physicians are not compensated twice for services covered by both membership fees and traditional reimbursement. Incentive structures tied to quality, patient experience, access, or retention objectives, which may be justified in a fee-for-service model, may also be appropriate in the concierge setting when carefully designed and supported. However, organizations should recognize that such metrics may effectively be valued indirectly based on the number of members who continue to enroll in the subscription‑based concierge model.

Finally, thorough documentation remains essential. Organizations should maintain clear support for the physician’s duties, time commitments, compensation methodology, benchmark data, and any adjustments made to reflect the concierge model. Well‑supported FMV and commercial reasonableness analyses can strengthen the defensibility of the arrangement and help mitigate regulatory risk.

Common Pitfalls

Paying Physicians a Percentage of Membership Fees Without Analyzing Duties and Economics

A common challenge in concierge medicine compensation design is directly tying physician compensation to membership fee collections without adequately evaluating the physician’s actual responsibilities or the broader economics of the program. Accordingly, organizations should ensure compensation reflects the physician’s personally performed services, time commitments, and the operational realities of the arrangement rather than relying solely on membership revenue as the basis for compensation.

Managing Expectations

Concierge medicine models can create heightened expectations for both physicians and patients. Patients often expect expanded physician availability, rapid communication, enhanced care coordination, and a highly personalized experience in exchange for membership fees. Physicians may anticipate improved work‑life balance, reduced administrative burden, or compensation increases associated with the concierge model. Organizations should clearly define service expectations, panel size assumptions, physician responsibilities, and operational support resources at the outset to avoid misalignment between program goals and day-to-day realities.

Operational Adjustments

Transitioning from a traditional fee-for-service model to a concierge model frequently requires significant operational changes. Reduced patient panels, longer appointment times, enhanced communication expectations, and increased care coordination responsibilities may necessitate modifications to staffing models, workflows, technology infrastructure, and patient onboarding processes. Organizations that underestimate these operational adjustments may encounter challenges related to physician efficiency, patient satisfaction, and overall program sustainability. Successful concierge programs typically require thoughtful operational planning in addition to compensation redesign.

Legal and Regulatory Challenges

Concierge medicine arrangements may present unique legal and regulatory considerations, particularly when membership fees are layered alongside traditional reimbursement models. Organizations should carefully evaluate FMV and commercial reasonableness considerations, ensure compensation is appropriately tied to personally performed services, and clearly distinguish between covered clinical services and non‑covered concierge amenities. Additionally, incentive structures should be designed carefully to avoid creating arrangements that could be perceived as rewarding referral generation or improperly tying compensation to downstream financial performance. Thorough documentation and legal review remain important components of any concierge medicine compensation strategy.

Conclusion

As concierge medicine continues to expand, healthcare organizations are increasingly evaluating how to structure compensation models that align physician incentives with the unique operational realities of membership‑based care. Successfully designing these arrangements requires organizations to move beyond a one‑size‑fits‑all compensation approach and instead consider physician duties, program economics, patient expectations, and FMV and commercial reasonableness considerations within the context of the specific concierge model being implemented.

When structured appropriately, concierge medicine arrangements can offer meaningful benefits for both health systems and physicians alike. For organizations, these programs may support patient retention, physician recruitment, market differentiation, and enhanced patient satisfaction. For physicians, concierge models may provide greater flexibility, improved physician‑patient relationships, reduced administrative burden, and a more sustainable practice environment. However, because these arrangements frequently involve nuanced compensation, operational, and regulatory considerations, careful planning and documentation remain vital. As healthcare organizations continue to explore concierge and membership‑based care strategies, experienced valuation and advisory support can help ensure compensation arrangements are structured in a manner that is both operationally effective and defensible.

1. “U.S. Concierge Medicine Market (2025 - 2030),” Grand View Research, February 2025.
2. “Concierge Medicine Market,” market.us, July 2025.