Relative Value Units (RVUs) were established as a means to value services based on the physician resources required. RVUs are established for the following 3 categories of resources:

Physician Work: The physician’s individual effort in providing a service, which includes time, technical difficulty of the procedure, severity of patient’s condition, and the physical and mental effort required to provide the service. 

Practice Expense: There are direct and indirect practice resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies, and medical equipment. Indirect expenses include physician practice overhead and all other expenses.

Professional Liability Insurance: Insurance to protect a physician against professional liability.

When a physician signs an employment agreement with a hospital, the physician agrees to re-assigning all payment for services rendered to the hospital, so an employed physician may be unaware of RVUs. However. RVUs are also used as a means of tracking productivity in employment agreements.