The guide for public hospital salary reform jointly developed by four associated ministries focuses the public hospital reform on physician compensation. This article reviews the literature and summarizes physician compensation research in three aspects：special characteristics of medical care，physician organizational structure，and methods on payment incentive. The special characteristics of medical care makes self-employment as the mainstream of physicians’organization form. However，the relationship among government，hospital and physician is increasingly close when medical care gradually becomes public responsibility and both providers and patients are facing the challenge of limited resource. Regardless of the organizational form，a performance evaluation lead by the society and value improvement is the common goal of health system management. The main problem in physician payment incentive mechanism is high cost and low benefit driven by profit seeking incentive in public hospitals. To transfer from profit driven to performance evaluation，the government must reform the financing structure for public hospitals and enhance collaboration among the departments of health，finance，pricing and health insurance.