The Faculty Practice Plan
Where Teaching, Research, and Patient Care Collide
A cardiologist at a major teaching hospital has a split appointment: 50% clinical time (seeing patients), 30% research (running a clinical trial on a new heart failure drug), and 20% teaching (supervising cardiology fellows). Her salary comes from three sources: clinical revenue from the patients she sees, an NIH research grant, and medical school funds.
The entity that manages all of this — collecting the clinical revenue, allocating the research funds, distributing the teaching compensation — is the faculty practice plan.
What It Is
A faculty practice plan is the organized physician group associated with an academic medical center and medical school. Faculty physicians hold joint appointments: they’re both medical school faculty and clinical providers.
The practice plan is the entity through which clinical revenues are collected and distributed. It may be structured as a single multi-specialty group (like Virginia Mason) or as a federation of departmental practice plans (common at large AMCs where each department — surgery, medicine, pediatrics — runs its own practice).
Why It Exists
Academic medicine operates on a three-legged stool: clinical care, education, and research. The faculty practice plan exists to manage the complex economics of paying physicians who split their time across these activities.
Here’s the key mechanism: the “dean’s tax.” A portion of clinical revenue (often 5–15%) is redirected to fund the medical school’s educational and research missions. This means clinical physicians in academic medicine effectively subsidize the institution’s other missions with their patient care earnings.
How It’s Organized
The faculty practice plan sits at the intersection of three power centers: the medical school (university), the hospital/health system, and the clinical departments. It’s typically a separate legal entity — a 501(c)(3) nonprofit or professional corporation.
A cardiologist’s reporting relationships might include: the department chair (clinical), a division chief (academic), a medical school dean (teaching), and a research institute director (grants). This matrix governance is complex by design — it reflects the multiple missions each physician serves.
The Tradeoffs
The upside is prestige and purpose. Access to cutting-edge care, clinical trials, and the intellectual stimulation of academic medicine. A pipeline of trainees who become future colleagues and referral sources.
The downside is economics. Dean’s tax reduces take-home pay. Compensation is often 15–30% below private-practice market rates for the same specialty. Teaching and research time reduces clinical productivity (RVUs). The governance complexity can be frustrating for physicians who just want to see patients.
The Bottom Line
The faculty practice plan is the least understood organizational model in medicine, but it’s the economic engine of academic healthcare. It funds medical education, enables research, and delivers the most complex clinical care. The tradeoff is that physicians in this model accept lower compensation and higher complexity in exchange for the academic mission. That trade has gotten harder as private-practice and employed salaries have risen.