Benchmarking has long served as the foundation for evaluating provider compensation. Survey data provides an essential, historical market-trend reference point and supports defensibility in fair market value (FMV) analyses. However, benchmark data alone does not always capture the full complexity of provider compensation, particularly in rural markets. 

In these environments, unique factors, such as provider scarcity, geographic isolation, and access-driven priorities, introduce challenges that extend well beyond traditional, percentile-based frameworks. 

Limitations of Benchmarking in Rural Markets

While benchmarking remains a critical tool, it has inherent limitations. Survey data is retrospective, standardized, and often lacks the granularity needed to reflect real-time market conditions. 

In rural settings, several important factors may not be fully captured in survey benchmarks, including: 

  • Provider shortages and recruitment difficulties 
  • Expanded scope of practice or multi-role responsibilities 
  • Call coverage intensity and frequency 
  • Geographic isolation and limited local support infrastructure 

For example, a call rotation where one out of three providers covers call at a time may appear manageable in benchmarking data. In practice, however, even lower patient volumes can result in significant burden due to limited staffing alternatives and broader coverage expectations. 

A Persistent & Growing Provider Workforce Shortage

Many rural areas are designated as Primary Care Health Professional Shortage Areas (HPSAs). As of 2025, these areas serve approximately 92M people in need of healthcare.

While about 20% of Americans live in rural regions, only approximately 9% of the nation’s physicians practice there. 

Additionally, projections indicate a nationwide shortage of roughly 141,160 full-time equivalent (FTE) physicians by 2038, with non–metropolitan areas experiencing shortages greater than those in metropolitan regions.

Recruitment & Retention Challenges in Rural Markets

Barriers to recruitment and retention in rural areas include concerns about limited earning potential, economic hardship, income disparities, high unemployment, and scarce employment opportunities. These factors influence the financial incentives for healthcare professionals, particularly practice owners. Moreover, on-call and coverage demands in rural settings often exceed those in metropolitan areas, increasing the risk of an unbalanced lifestyle and burnout.  

Rural healthcare facilities must manage limited provider availability across extensive geographic areas, a smaller patient base, and seasonal demand, thereby straining operations. Provider scarcity also forces many to serve as sole-source specialists. High levels of provider burnout and turnover can result in high costs, including service disruptions, coverage gaps, and diminished community trust. Furthermore, community health outcomes are becoming more central to service line strategy and performance evaluation. Fortunately, grants and other funding opportunities can often alleviate some of these financial challenges. 

Implications for Rural Provider Compensation Strategy

Taken together, these dynamics directly shape provider compensation structures in rural markets. Nonprofit operating environments, demanding call requirements, ongoing provider shortages, and increased burnout risks collectively exert upward pressure on compensation that traditional benchmarking surveys may not fully capture.

Consequently, relying exclusively on percentile-based compensation frameworks could result in structures that are neither competitive nor sustainable in rural markets.  

To effectively address these challenges, contextual compensation strategies are the best approach. Contextual compensation involves normalizing and interpreting survey data to reflect specific market conditions and supporting justified deviations from standard benchmarks when recruitment difficulties, provider scarcity, or community needs warrant them. In this framework, benchmarks should be seen as guidance rather than strict standards. 

However, ongoing reassessment is essential for effectively capturing rural markets. Factors such as provider departures, hospital closures, shifting call coverage requirements, and heightened competition from regional health systems and private equity–backed platforms are consistently impacting the analysis context. Therefore, the most effective compensation strategies involve regular market analysis, specialty-specific evaluations, and proactive retention initiatives, which support continuous physician engagement and help maintain community access to care.  

Conclusion

Overall, compensation should be assessed holistically—considering all components of the overall package, including salary, guarantees, productivity incentives, call coverage, and administrative duties—to ensure total compensation aligns with the provider’s responsibilities. In many rural settings, upward compensation adjustments are both anticipated and essential to attract and retain physicians who are vital to maintaining access to care. Above all, financial considerations associated with these arrangements should be evaluated through the lens of commercial reasonableness, with a focus on ensuring access, continuity of care, and positive community health outcomes. 

Rural provider compensation requires a clear understanding of market realities, workforce dynamics, and regulatory consideration. Reach out to VMG Health’s Compensation Valuation Practice for tailored compensation strategies that support your organization’s—and your community’s—needs.

References

  1. Current Programs and Incentives to Overcome Rural Physician Shortages in the United States: A Narrative Review. (2023). Journal of General Internal Medicine. https://doi.org/10.1007/s11606-023-08122-6 
  1. State of the U.S. Health Care Workforce, 2025. (2025). Health Resources and Services Administration. chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://bhw.hrsa.gov/sites/default/files/bureau-health-workforce/data-research/State-of-US-Health-Care-Workforce-2025.pdf 
  1. Pender, J., Kuhns, M., Yu, C., Larson, J., Huck, S. (2023). Rural America at a glance, 2023 edition (Economic Information Bulletin No. 251). U.S. Department of Agriculture, Economic Research Service.  
  1. Schuldt, R., & Jinnett, K. (2024). Barriers to accessing specialty care in the United States: a patient perspective. BMC health services research, 24(1), 1549. https://doi.org/10.1186/s12913-024-11921-0 

https://ers.usda.gov/sites/default/files/_laserfiche/publications/106139/EIB-251.pdf 

  1. Blackburn, B., Chan, T., Cherot, E., Freeman, R. B., Hu, X., Matt, E. & Rhodes, C. A. (2023). Beyond Burnout: from Measuring to Forecasting. NBER Working Paper No. 30895. https://doi.org/10.3386/w30895