I’ve had a few comments on social media about bonus and commission and it got me thinking: what’s the difference between a bonus and a commission? If your bonus is based on revenue, either percent of payments or workRVU does that make it a commission?

What is a Bonus

Simply put, a bonus is something given above and beyond your base salary. There can be an hourly rate that is set or an annual salary. Typically I’ve seen hourly rates for Physician Assistants in urgent care or ER settings; in other clinic or hospital based positions you might be given an annual salary.

Definition of bonus:

something in addition to what is expected or strictly due: such asa:  money or an equivalent given in addition to an employee’s usual compensation

Merriam-Webster

Beyond the annual salary or hourly rate many jobs offer a bonus. The bonus can be based on quality or quantity. At my current position we get an end of year bonus based on our annual review and staff surveys. The survey includes things like how our patients like us, how are we to work with, etc. They are scored and based on the score you get a certain bonus amount.

There are different ways to calculate quantity; usually this is based on workRVU or percent of payments. I’ve also seen bonus calculated based off number of patient visits. No matter how it is calculated you’re getting a portion of the payment that was received.

What is a Commission

When you look at the definition of commission it is when you get a portion of the payment – “a fee paid to an agent or employee for transacting a piece of business or performing as service”.  The example from Merriam-Webster is commission on car sales. Commissions are usually related to sales.

Definition of commission:

a fee paid to an agent or employee for transacting a piece of business or performing a service; especially :  a percentage of the money received from a total paid to the agent responsible for the business He gets a commission for each car he sells.

Merriam-Webster

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The Difference Between Commission and Bonus

The biggest difference between a bonus based on the amount you bring in compared to commission is the sales aspect. As a PA you are providing a service and you get paid for that. If your bonus is based on workRVU or percent of payments you are getting paid for the work you are doing. You are not selling products to a client (patient) and getting a portion of those sales. There are laws against getting kick-backs (commissions) from pharmaceutical and medical supply companies and is a totally different topic.

If you take away all the billing personal and insurance personal at the most basic level of the business of medicine, you have a provider who provides a service to the patient and is paid accordingly. If this were a single physician they would be taking home all the money after overhead that he is paid for providing the service.

Now add in billing personal, marketing personal, other clinic staff, etc. Your overhead is much more but still there is someone providing a service and getting paid for that service. If a PA does not get a portion of that in the form of a bonus that money is still going somewhere…CEO salary, profit sharing, administration, equipment, etc.

Having a bonus based on the amount of money you’re bringing in from the services you provide is a fair way to be compensated. It is a fair way for the company to pay you and should be a fair way for you to get paid. If you’re not getting a bonus based on the work you’re doing your base salary should be high enough to account for this. Figure out what your collections are and what your overhead is and negotiate a fare base salary.

Bonus and commissions are very closely related and could possibly be considered the same thing. As a medical provider I’d argue that our bonus is not a commission as we are not selling anything. We provide a service and get reimbursed based on the complication of the service that we provide and we should look at the bonus as being compensated for all the hard work that we do.

What do you think? Is a bonus based on payments the same as a commission? Is that a fair way to be compensated? Don’t forget to comment below the original post, sign up to receive future posts by email and share with your friends!