By Terri Ross

When I work with APX clients or speak at various plastic surgery conferences, one of the top pain points that comes up repeatedly is compensation. There is a lot of frustration and confusion around utilizing the most effective compensation strategies within your plastic surgery practice. Here are key questions to ask yourself about your current compensation strategy as you read through this information:

  • How did you develop your current compensation plan? 
  • What prompted you to create your pay structure this way?
  • Is your compensation structure legal and compliant?
  • Does your current pay structure reward behavior? And if it does, which behaviors is it designed to reward?
  • Does it fit into the goals of your practice? Or are you trying to make your financial plan work around your compensation system?

The Purpose of Your Compensation Structure

Before you set goals, it is important to understand the why behind them. Ask yourself, “What do I want my compensation structure to reward? What behaviors do I want my team to exude, and what behaviors do I want my team to work on and improve at?

In general, your compensation structure should:

  • Grow the practice: Write down what that looks like for you. What are you going to reward compensation-wise to help grow? Is your current structure meeting the goals you set? For example, maybe a big goal is to increase your hourly revenue or add more patients to the schedule.
  • Encourage skill development: Plastic surgery is a competitive arena – skill level is very important to achieve optimal results, which is your best sales tool. Write down what skills you may need your team to further develop.
  • Promote “team thinking” over “me thinking”: This is where transparency comes into play. You want to establish a healthy and team-oriented work environment. Setting overall goals and financial numbers for the entire practice to hit can help foster team thinking and encourage everyone to do their part.

The Five Non-Negotiables for Compensation Structure

1. Sustainable. It must be sustainable for the practice based on:

  • Length of time open (If you are a brand-new practice without a positive cash flow, your bonus system will be different than a practice that has been open for many years.)
  • Fixed overhead (If you are in New York City or Los Angeles, your overhead is higher than in smaller cities.)
  • Projected profit (If established, does it fit within your financial plan?)
  • Fall within industry benchmarks. 

2. A controllable expense. For a financially healthy practice, you must have a compensation system that allows you to budget and assure future profit.

3. Legally compliant. Your compensation plan cannot have a per-patient reward. It can’t be based on value (or dollar amount) or a volume (number of patients) as that is not legal. Of course, you should consult an attorney and review the laws in your state, but it is not legal to pay primarily commission in a plastic surgery practice. 

4. Reward skill and behavior. Your compensation strategy must:

  • Align with performance reviews.
  • Encourage growth and increase in productivity. For example, increasing revenue per hour by developing treatment plans that enhance surgical results for better patient outcomes.
  • Reward new skills and certifications: This could be taking a training course or learning a new technique or procedure.
  • Reward achievement of goals: When your bonus system is tied to a goal, that’s where the bonus compensation kicks in. 

5. Must provide clear guidelines for individual growth. 

  • Set pay guidelines based on identified criteria.
  • Create a career path within the practice. Yes, it’s exciting to hire new employees, but you must ask yourself this question first: Do you have a clear, written career path to showcase how they can grow within your practice? Remember: Employees want a career and a place they can stay. You want them to be happy with their compensation, so you need to tie your pay structure to the career development path. 
  • Manage and develop employees. This is time-consuming, albeit critical. 
  • Communicate regularly with employees on their progress and revenue goals.
  • Estastablish clearly defined goals, as well as a bonus system. 

Three Strategies for Compensation Structure

There are three key strategies for compensation structure: determining base pay, determining pay increases, and creating a bonus structure.

1. Determining base pay.

  • Salary vs. hourly: This is a simple choice, but there may be various factors involved. For example, if you have an employee who is likely to come early and stay until 7 at night and work a lot of overtime, you may choose to pay a salary to avoid racking up unplanned overtime. You can also compensate hourly, with flexibility for overtime, if you are cognizant of how much overtime is allowable.  
  • Aligns with credentials: It’s important to determine which credentials you value most in your practice. You can pull pay scales for your market, based on credentials, for a general guideline or good starting point. For example, if you have a medical spa in addition to your plastic surgery practice, you might hire a nurse practitioner who performs several non-surgical services and has six to seven years of experience. If so, you’ll want to compensate him/her based on their credentials at a higher base rate with a productivity bonus. 
  • Aligns with the market: Your compensation must align with the cost of doing business in your area. For example, the cost of doing business in Manhattan versus a small town is very different.

2. Determining pay increases.

Creating a broadband pay structure clearly shows a current or new employee how they can increase their base pay. For new hires, specifically, this sets a career path plan on how they can grow with your practice. Your broadband pay structure should:

  • Communicate what is expected to get an increase in base pay (i.e, attending a conference or sales trailing or secondary-level courses).
  • Outline that raises will be given annually at either anniversary date or start of new fiscal year or calendar year (which you determine).
  • Align with practice’s current financial reality. 
  • Align with key productivity indicators and benchmarks (i.e., an increase in revenue per hour over the previous year).

3. Creating a bonus structure.

Bonuses are in addition to base pay or salary increases. Bonus structures should:

  • Have a minimum productivity level based on a cap you created considering your practice’s financial reality. 
  • Be based on hitting a goal you determine when creating your annual budget—you can tweak as you go along—or a certain amount of gross profit.
  • Be measurable and easy to understand and communicate to employees.
  • Be thoughtful in setting goals appropriate for each role within your practice, not just revenue-generating providers.  
  • Align goals with roles by focusing on areas each employee impacts within your practice—for instance, front desk/scheduling goals for lead conversions, retail sales, rebooking, and building patient loyalty memberships if you have a medspa. Also, patient care coordinator positions focused on conversion goals are important to the growth and success of the practice.  

I hope you found this information helpful. If you have any questions, my team and I at APX Platform are always here to help. We have a full financial course within APX that provides a deep dive into compensation strategies.

Terri Ross is a world-renowned practice management expert, thought leader, and international speaker in the medical aesthetic industry.
 She is also the founder and co-CEO of APX Platform. Join APX Platform‘s Aesthetic Insights Facebook Group here for ongoing content and interaction with the team, or email them at [email protected]