I don't know how professional game companies do it. One option would be to put you physics on a separate thread, but that brings up all sorts of sync issues with your event handling and rendering.

Other options are different physics for objects in view (i.e more detailed) and simple physcs for those out of view. Take collision detection, do you really need pixel perfect or full 3d mesh collisions on objects not in view? or can you get away with only doing details collisions in screen where it matters.

Anyone else got any thoughts?