How to determine fair wages, benefits for medical practice staff

A column about keeping your practice in good health

By — Posted Aug. 30, 2010.

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As the health system reform law is implemented, and as the demand for medical services increases, medical practices are expected to step up their hiring. That, coupled with salary reviews that often fall toward the end of the calendar year, will have many physicians contemplating matters of employee pay.

Fair compensation should not be the only factor physicians consider when determining salary and benefits, according to experts. Practices must determine a figure that ensures employee retention and offers flexibility to allow for future raises.

"This is important, because you're investing in them for the long haul," said Kim Kruger, practice manager of Auburn Family Health Center in Auburn, Neb. "It's expensive to train and get things established. You don't want to do that very often."

Experts suggest following several steps when determining an initial compensation package and a range of possible raises. These include assessing data, benchmarking salaries and benefits, and defining job requirements and goals.

Practice managers "really need to think about the roles and responsibilities of the various team members," said Ron Seifert, executive compensation practice leader for the health care practice at the Hay Group in Philadelphia. "Not all jobs are designed and created equal. Not every person delivers or meets expectations in the same way." (See correction)

Before salary and benefits are determined, experts advocate that practice managers step back and write job descriptions. These should be more than a job title and a list of duties and goals for a position. This should be the main tool that will be used in conjunction with benchmarking in data to determine a salary.

"Before they even get to the point of setting salaries, they really need good job descriptions in place," said Jess Orrick, a practice management consultant and owner of Orrick Associates in Newton Centre, Mass.

The next step is to assign a salary range to a job description by assessing the benchmarking data available from various consulting firms and professional organizations.

For example, the 2010 salary survey released July 20 by the Professional Assn. of Health Care Office Management found that practice managers in the Northeast earned an average of $72,465, not including benefits, but this number went down to $63,604 for those doing the job in the western part of the U.S.

Compensation for medical office staff varied by type of physician. Receptionists in family physician/general practices made about $24,308 a year, but this went up to $36,021 for those working in orthopedics practices.

Degrees and years of experience also may affect how much a staffer is paid.

Experts caution not to set the initial salary too high. This can reduce future raises, negatively affecting an employee's motivation to perform well.

"If a salary is really off-target and that employee is getting way too much money, you have a problem, because you have to hold the salary at that point," said Joan Rissmiller, practice manager at Bausch and Jones Eye Associates in Allentown, Pa. "They can get very disappointed if they do not get an increase as the years go by."

Compensation should not be set too low, because this makes it more likely that employees will find another job. Job mobility decreased during the recession, but it is expected to increase when the economy improves. This can be particularly problematic for hard-to-fill positions, such as nurses.

"If you don't set salaries appropriately, turnover will eat you alive," said Milan P. Yager, president and CEO of the National Assn. of Professional Employer Organizations.

Significant salary differences among people doing essentially the same job can create conflict in the office if this information leaks out.

Medical practices also should think about the benefits they offer. Benefits are generally 30% of a compensation package. According to the survey by the Professional Assn. of Health Care Office Management, 91% of practices provided employees with health insurance, but only 41% supplied disability coverage. Less-common benefits include cell phones, gasoline allowances, parking spaces and memberships to a warehouse club, such as Costco.

To make it more likely that employees will recognize the value of their benefits as well as their salaries, practice managers recommend issuing annual statements documenting the cost of paid time off, health insurance and other perks. This can take time but can come from data pulled from W-2s and bills charging for benefits. Those who do this say it's worth it.

"Staff place a lot of emphasis on the salary alone, so we issue an end-of-the-year benefits statement outlining what it takes to keep them here: taxes, their time off, holiday pay, profit sharing," said Rissmiller, whose practice has two physicians and 10 employees. "In a small practice, I know what everything costs, and all the information is readily available."

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