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Salary or Percentage Pay for Private Practice

Discussion in 'Practice Management' started by DrDpm22, Aug 9, 2006.

  1. DrDpm22

    DrDpm22 Welcome New Poster

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    Hello Everyone! Newly graduate just wondering what is the advantage/disadvantage for salary vs percentage pay if planning to work with associate in private practice. What should I expect or look out for in this situation. All comments appreciated.
  2. Craig Payne

    Craig Payne Moderator

    Both methods have advantages for the employee and employer with no clear favourite.

    - for employee, the advantage is that you can make more money if you are prepared to put the work in and are good at your job; the disadvantage is that if the work is not there, you do not get paid much
    - for the employer, the advantage is that its a good way to motivate the employee; they do not have to pay them if they are not generating revenue and bringing patients in; do not have to pay holiday pay etc; the disadvantage is that they could end up paying a huge amount of money (which is not bad as they will be making it); another disadvantage is motivating the employee to do things that are not directly related to patient care and generating revenue (theoretically they not paying for this); there is also the ethical risk of employees 'over-servicing' patients to generate income

    - the advantage to employee is that you get paid every week (probably less than on a %, as the employer is carrying the risk of a quiet time in business and not the employee); holiday pay and other benefits is also probably included; pay will generally be less than a % if you good at your job, BUT may be more than the % if you not good at your job; a fixed salary at least lets you know what you will get from week to week (and can budget accordingly), whereas a % will vary
    - for the employer they have a fixed amount they know they have to pay; the disavantages is holiday entitlements have to be covered and a salary is not as motivating for an employee; they will probably have to pay less under a salary than a % as they taking the financial risk of quiet periods

    As the end of the day, I see no definitive answer - it has to match the employers and employee profiles and also the "risk" either party is willing to take -- also keep in mind that the legal requirements of either situation will vary in different jurisdictions.

    In my wifes clinic we pay a very low salary with a small % on top of that - its covers the advantages and disadvantages of both systems for both the employer and employee. The way its set up is that the salary + % means they can get a very good income if they are good at what they do and are motivated to put the work in. Its also means a new graduate has the potential to earn more than me :mad: .... if they want to ;)
  3. DrDpm22

    DrDpm22 Welcome New Poster

    ^ ^ Thank you...that was very helpful
  4. rodneycheng

    rodneycheng Welcome New Poster

    I think the Percentage Pay is good for yong peopleļ¼
  5. markleigh

    markleigh Active Member

    Is it wrong for me to ask Craig what percentage arrangement he has with his staff. I understand if that is confidential & apologise for any offense.
  6. Craig Payne

    Craig Payne Moderator

    Its varied. Depends on negotiation. Can be 10% and has been as high as 50% -- base salary is obviously adjusted to reflect this. It all depends on the "risk profile" and which party is willing to take on the greater risk (and get the remuneration for taking on the risk)
  7. MKF

    MKF Welcome New Poster

    Hello Craig,
    Thanks for your initial post, I found it extremely interesting. Regarding your answer of percentage fees, I'm not sure in which direction you meant. Do you mean you pay the associate anything from 10% up to 50%, and therefore you, as the practise owner, takes anything from 90% down to 50%? Or the other way around?

    I'd really like to get an idea what percentage the average UK practise pays to associates, do you know if this information is available anywhere, maybe from SOCAP?

    Looking at a clinic's outgoings before a patient even comes through the door, (clinic rental or mortgage, capital equipment & maintenance, web design, hosting and management, advertising & promotion, phone rental and calls, insurances, reception staff, cleaning staff and consumables, admin staff costs, plus practise owners management time etc. etc.) then adding on top of these upfront costs the cost of consumables, the actual cost to the practise is very high. How then do you decide on an percentage for the fee sharing which will be totally fair to both the practise owner and the associate so as to ensure a happy working relationship therby giving your patients the best possible care and attention?

    Then beyond the actual costs, how do you address the fact that an associate may be busy all day, or may have just a couple of patients per session, therefore one associate may bring you a profit and another make you a loss. Also, one associate may have recently qualified, and another have years of experience, or could have further qualifications or special experience. How do you ensure that you make it fair across all associates and ensure that you keep your practise bottom line healthy and thereby protect your associates work possibilities?

    I'd really appreciate your thoughts Craig and of course any associates or practise owners out there so that we see a representation of different thoughts.

    Practice Manager
  8. Heather J Bassett

    Heather J Bassett Well-Known Member

    Welcome DrDPM22, I notice you have been a member since 2006? Join the club! :)
    Over the years I have tried both methods of employment.
    Some jobs have a set contract but like Craig & Mimi, each position is negotiated.
    Definietly depends on the circumstances...... I mentor a TEAM and this means that it is the client's interest is taken into account... when they are available... If a Team member is late or away we can reschedule and adapt without the concerns of a Team members hip pocket. It also depends on the support and mentoring that you recieve and require and the time that takes. For those who are young, knowing what your pay packet is at the end of the week can be a definitive advantage. Budgeting can be essential for some? :-0
    Try to match your needs with the "bosses" needs to see if it is right for you.. In the early days it may not all be just about the $?
    Taking on a new graduate is hard work if you are going to mentor them and pick up the pieces. If you are left to your own devices,, different work and stress for the both.
    If it matchs it is fantastic,,, if not....... (a disaster) :)

    Either way good luck and enjoy...
    Good Luck

  9. healthyfeet

    healthyfeet Active Member

    What percentage do private clinics pay their podiatry associates generally?
  10. antipodean

    antipodean Active Member

    The percentages vary the lowest end of the threshold is 40% of turnover and I have not heard of associates earning over 60% of turnover (in podiatry anyway).
    In Australia it does no harm for practice principles and associates alike to familiarise themselves with The Australian Taxation Office view on service agreements the closest comparable write up is with dental.
    Happy Audits
  11. JenniferC

    JenniferC Member

    Do these same percentages of turnover apply when you are contracting to a GP and supplying your own instruments and equipment?
  12. Zac

    Zac Active Member

    When you are paying an associate 40%, you as the principal ain't making much money.
  13. antipodean

    antipodean Active Member

    Hi Jennifer, in my opinion it would be considered unusual, im not sure what the contracting arrangement is but it's your stock, and equipment is the patient base all internal referrals?
    Doctors wanting to support a podiatrist establish in a medical clinic will often start on a percentage of turnover basis until patient loads grow with the option of moving to a flat sessional facility hire as a pod practice is established. I would expect all stock and equipment to be provided if working on a percentage basis.
  14. thekwie

    thekwie Active Member

    Hum, Zac, I suppose that depends on how much the associate pulls through the door...

    As a contractor on a percentage, I am aware that I well and truly pay for myself, plus receptionists/consumables etc...and there are a lot of other associate contractors just as busy as I am...if I've already paid the costs, all of their income goes to...
    Last edited: Feb 25, 2016
  15. Zac

    Zac Active Member

    You might be correct (in your case) but the average associate has no idea the cost of running a business.
  16. Ian Drakard

    Ian Drakard Active Member

    .....or the hassle :craig:
  17. Podminded

    Podminded Member

    hey all,

    does anyone here use the health-professionals-and-support-services-award-ma000027-pay-guide%20(1).pdf to help work out a fair % split?

    I have been offered a casual saturday shift (as a contractor, not employee) comprising of about 6 shifts mostly 3 hr. I have seen the bookings and they are back to back 20min appt for the entire shift.

    I was first offered 40%, but i thought that was too little, particularly considering its a casual saturday. So they then offered $60 per hr and referred me to the above document which states the minimum wage in my situation is 54.88 per hr (which assumes im an employee and also getting 9.5% super)

    appts are 20min $70 or $60 for concession

    Can i have thoughts about a fair % split or hourly rate -

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