Profits Went Up When We Switched How We Pay Our Doctors / APPs

People love consistency. Our theory was that if we offer a competitive pay for doctors or PAs with a big bonus option, that this would encourage people to work harder and make more money. Turns out, so far, this has been dead wrong.

Our Theory About Encouraging Higher Pay For Our Doctor or APP

Lets say that the average APP pay is 120,000 in our area. We thought that if we match that rate at $120,000 and offered an exponential bonus, that this would lead to a lot of providers wanting to bust their butt and make a lot of cash.

We made it so that if a PA/NP sees about 18-20 pts a day, that their quarterly bonus would be $3,000-$5,000 on top of their bonus. In our mind, making $140-150k a year to see 19 pts a day and be out by 5pm every day is a pretty sweet gig for most midlevel providers. Keep in mind that in our clinic many of these visits are lower level visits like UTI’s, colds, STI checks, etc.

I was wrong.

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So Far We Have Found The Exact Opposite

We pay our doctors and PAs their bonuses 6 weeks after end of a quarter. While our PAs were ramping up, we found that so far our PAs will not have any extra desire to see more patients for the extra money. They would much rather be out by 5pm every day and have that work life balance.

Even though we re-assured them, that they would almost always be out by 5pm, none of our PAs ever felt very motivated to see more patients with this model (except for one PA at the very end before she left our group).

We Switched To Flat Salary

If the going rate is $120k salary, we upped our rate to lets say $130k a year salary. We are now paying MORE than anyone around us for the same job.

However, we no longer have a bonus incentive.

We Don’t Give An Option With Number Of Patients Anymore

We stopped giving an option of number of patients they want to see during the day. Now, we just book at 19-20 pts per day with last patient at 3:40pm.

Every PA is out of the office by 4:30, every single day.

I ran the bonus metrics. With the old bonus metrics, our pay for our doctors or PAs would have made $6,500 bonus per quarter seeing 19 pts per day. This comes out to an extra $26,000 per year.

Now we pay them only $10,000 more without the bonus.

Security Matters

Everyone is happy. They are making more salary than their peers in our area. We are making more profit with the new contract.

I Hardly Could Believe It

I’ve had to rerun the numbers multiple times, but keep getting the same answers.

We as a company make more money with our higher flat salary contract compared to our bonus contract.

This makes sense as a business where I was compensating the APPs for taking some risk off my plate by paying them a lower salary. This meant that they kept more profits in their pocket when the passed the threshold of their salary.

Now that I’m taking 100% of the finanical risk with their salary and employment, it only makes sense that I am compensated better for that inherent risks.

Maybe We Just Haven’t Found The Right Employee Yet

Not everyone is motivated by sales or metrics. Everyone has different goals in life, and thats cool.

The way I always thought about it in my mind, if I’m going be at work 8 to 5, I’m going work my butt off since every contract I’ve ever had was essentially incentive-based. I am going to make as much money as possible while I’m working. Many people value leaving predictability, and are not financially motivated. Thats cool. There is a lot more to life than money.

However, I always thought that salary plus bonus was the way to go. It hasn’t worked out for us. If we told people they could get a $7,000 bonus per quarter, but only got $6,000 per quarter, they are not motivated. They are deflated because they feel like we underdelivered on our promise.

Here we are paying over market rate and not underdelivering on any promises.

We Want Happy Employees

I really want happy employees. Not everyone is motivated by money, and that’s fine. I’m happy that all of our employees seem to be happy with the new flat salary contracts and I can’t believe how this has worked out so well for us financially. We want to pay our doctors well, and I’m glad they feel well compensated.