PA Compensation and Bonus
A few weeks ago, I discussed bonuses based on workRVU and gave five different examples using workRVUs. Each instance had another base salary, the workRVU amount that a PA would have to reach to get a bonus, and the dollar amount per workRVU. Another way to calculate a bonus is from the percentage of collections. The bonus off collections is more straightforward, as you don’t need to understand what a workRVU is.
The practice should bill the services under the PA’s name for both types of bonuses. Also, it requires that the majority of the work that a PA does is a billable service. Much of the work for surgery PAs is part of a global fee, so significant work, such as pre-op and post-op visits, is not accounted for in billing. These visits should still be done and are an essential part of patient care; however, they will not be accounted for if you’re looking at billable visits completed by the PA.
Here is a real example from a PA in 2022. They were offered a $90,000 base salary and would be given a 12% bonus after net receipts of $200,000. Once the practice has received $200,000 in collections, then the PA would be able to receive their bonus.
We will look at this as an annual bonus to keep things simple. If the PA had $500,000 in payments, we would subtract the $200,000. We would have a remaining amount of $300,000. 12% of $300,000 would come out to $36,000, for total monetary compensation of $126,000.
The 12% in this example is lower than I’ve seen in the past. Usually, I would expect something in the range of 20-30% for this type of compensation package. However, we are not looking at the total package here. There could be things that this employer is offering, such as a significant retirement contribution or paying for healthcare for the family. Another factor could be the cost of overhead. The overhead cost is much greater in specific locations. Factors like leasing a building or utilities can have a vast range depending on the area in which you live.
When looking at the percentage of payments, it is essential to distinguish between the amount billed out and the amount paid. Often the amount billed out is much more significant than the amount paid. The amount billed out has no bearing on what is received by the practice. I often see people talking about the amount billed out, but the number of collections or amounts paid is the more important.
Whenever you’re looking at an offer with a bonus based on productivity, whether it is workRVU, percent of payments, or another way, it is necessary to know how productive you will be. Are you seeing patients every ten minutes? Or do you see one patient an hour? Who decides this? Is it the office manager? Can they guarantee you that you’ll see a certain number of patients in a day?
Bonus based on productivity is a fair way to be paid for the work you are completing however it is not always applicable to every type of practice. Specifically in practices where there are global payments and the work completed by a PA is not recorded under a billable visit. In these cases, it is essential to find a way to count these other types of visits. Also, for practices that do not have a consistent schedule or the one that does not keep the PA schedule full, these types of compensations packages might not be best. Although we like to look at the base salary, the bonus can account for a large part of a compensation package. It is also essential to look at the total benefits package whenever you’re evaluating a job offer.
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