A client asked me this regarding evaluating his associates’ production… end of year time. I have consulted for hundreds of hospitals of all types over the last 15 years and this is the formula that works well over time both for clinics and my internal infrastructure as well. Simple rules of thumb to maintain $ balance and not have it be at the forefront of practice… $ should be a side effect and if it isnt then internal disruption occurs,,, either the associates are greedy or non productive or most of all missing diagnoses for lack of looking for the issue and shotgunning tx instead of prescribing well thought out testing… and lots of sonograms of course for dx efficiency:)
This was my response on a production:salary ratio to follow for overall general solid economic health of a practice:
4:1 for rock star associate, 3:1 is solid, 2.5:1 needs to bring something else to the plate to make up for the lack if 3:1.
So a 100k salary should produce at least 300k in revenue if out > 1 year. A new grad with aptitude go with 2.5:1 as end first year target pace…prorated monthly. But anyone out > 1 year should be at least 2.5:1 pace but knows that good medicine only concept puts them at > 3:1
Otherwise they are missing diagnoses from lack of workup.. the $ is just side effect.
4:1 can be a gouger or just good solid thorough medicine and dx efficiency. You are the judge of that and of course th elatter is what you want for practice health. usually good owners are > 4:1 and if an associate is 4:1 consistently then consider a solid long term equity plan in the practice to reward this 4:1 and more over bad things happen down the line if you don’t.
> 3:1 should have a bonus program… builds equity in your practice as well.
Comments
There are so many variables
There are so many variables to make a blanket statement. I really don’t know of any practices in my area that would pay 3:1 or 2.5:1 anymore. 4:1 is also pressing it. So much depends upon the benefit package. Many practices are now also paying lower commission on certain medications – ie heartworm and OTC topical medications.
Most of my associates get 21% on services and 10% on OTC medications. I also give 10% on prescription diets sold at the time of the exam.
Benefits can amount to 4% of their salaray- not including the paractice share of social security.
All my full time associates get a base salary and commission above what is needed to cover the base salary.
A full time associate should be able to produce 450,000 in revenues for the practice to generated that 4:1 ratio (which includes benefits).
Time out of school is not a factor in my practice. Productivity is productivity.
None of my full time associates works more than 4 days in a week- giving them plenty of time off.
Just my 2 cents
There are so many variables
There are so many variables to make a blanket statement. I really don’t know of any practices in my area that would pay 3:1 or 2.5:1 anymore. 4:1 is also pressing it. So much depends upon the benefit package. Many practices are now also paying lower commission on certain medications – ie heartworm and OTC topical medications.
Most of my associates get 21% on services and 10% on OTC medications. I also give 10% on prescription diets sold at the time of the exam.
Benefits can amount to 4% of their salaray- not including the paractice share of social security.
All my full time associates get a base salary and commission above what is needed to cover the base salary.
A full time associate should be able to produce 450,000 in revenues for the practice to generated that 4:1 ratio (which includes benefits).
Time out of school is not a factor in my practice. Productivity is productivity.
None of my full time associates works more than 4 days in a week- giving them plenty of time off.
Just my 2 cents
Randy I don’t think I
Randy I don’t think I explained myself well enough.
The 3:1 rule it if you pay the associate with all the benfits and so forth no matter how you get there and the end of the year the associate makes 100k then he/she should be producing 300k.
If the associate has special skills like US and efficient surgery, excellent client and employee skills…and makes 130k then 390k of revenue production would be the measure if the associate is viable.
If they produce 4:1 production/salary ratio then that’s a solid associate that can be groomed for parntership or other benefits to keep him/her around.
Make more sense?
Randy I don’t think I
Randy I don’t think I explained myself well enough.
The 3:1 rule it if you pay the associate with all the benfits and so forth no matter how you get there and the end of the year the associate makes 100k then he/she should be producing 300k.
If the associate has special skills like US and efficient surgery, excellent client and employee skills…and makes 130k then 390k of revenue production would be the measure if the associate is viable.
If they produce 4:1 production/salary ratio then that’s a solid associate that can be groomed for parntership or other benefits to keep him/her around.
Make more sense?
Yes. I understand now.
Yes. I understand now.
Yes. I understand now.
Yes. I understand now.