In Russia, as in all countries, physicians are and will continue to be central actors in health sector reform and in health sector resource allocation decisions. How they are recognized and rewarded for their work will therefore dramatically influence the ultimate success of reforms and health sector expenditure patterns. Much of the debate in Russia and many of the articles in this special edition of the Journal are focused on creative ways to move money from purchasers to provider institutions. There has not been enough discussion nor analysis of how money needs to move within institutions to individual physicians and managers as a means to influence their behavior. A new approach to base and merit pay is needed. This article explores conceptual and practical dimensions of alternate ways to compensate physicians as clinicians and managers. New forms of recognition and types of rewards will be summarized. Managerial skills and systems needed to support such new methods will also be highlighted.