It would be so simple if practice owners could open a fortune cookie for each one of their employees and find the method by which to fairly compensate them. While there are commonly accepted methods of compensation, their implementation in veterinary practices varies because different entrepreneurs have different business goals. Also, “fairness” is a relative term that introduces variability into an equation that might otherwise be consistent from practice to practice. This article describes the factors that practice owners should consider when determining compensation for veterinarians and paraprofessional staff.
Below is a table that provides a snapshot of current key indicators available for small animal companion practices. It is not meant to be all-inclusive, but rather to provide some guidelines that enable managers to take the practice’s compensation pulse. They can then determine if the practice is on track for the next year or needs to perform some diagnostics to prevent a fiscal derailment.
Many periodicals and books discuss the factors one should consider in establishing a compensation policy for veterinarians. Of particular importance is the question of whether compensation should consist of a fixed salary, a percentage of the revenue generated by the veterinarian and collected by the practice (i.e., commission-based), or a combination of the two. If a commission-based component is present, it is also important to consider how the revenue figure will be calculated. Will it be limited to revenues generated from professional services, or will it include revenues generated from items like over-the-counter medications and foods? Percentages can also vary in relation to the magnitude of the revenue number that is generated. Implementing compensation systems in practice requires attention to the details of production calculation and timing of payment. The key to remember is there is NO one size fits all when determining the appropriate compensation for veterinary and non-veterinary staff. There are numerous factors that go into assessing the actual method used for compensation, which often requires the assistance of an advisor.
National starting salary information is generally published annually in the Journal of the AVMA. (See: Employment, starting salaries, and educational indebtedness of year-2013 graduates of US veterinary medical colleges, October 1, 2013, Vol. 243, No. 7, Pages 983-987; Employment of male and female graduates of US veterinary medical colleges, JAVMA October 1, 2011, Vol. 239, No. 7, Pages 953-957.) See also the latest biennial edition of the American Animal Hospital Association’s Compensation and Benefits-An In-Depth Look and the AVMA’s Economic Report on Veterinarians and Veterinary Practices (Wise, J., Center for Information Management, AVMA, Shaumberg, IL (Tel: 847-925-8070). Two periodicals, Veterinary Economics and Veterinary Hospital Management Association Newsletter, also regularly publish helpful articles. In addition, Wutchiett Tumblin and Veterinary Economics published Benchmarks 2019 Well Managed Practices.
Paraprofessionals are often compensated on an hourly basis and the industry has yet to develop widely adopted performance-based compensation models. Paraprofessionals generally report low job satisfaction and high turnover rates. In the 2016 NAVTA Demographic Survey, 38% of veterinary technicians left the practice due to insufficient pay, 20% due to lack of respect from an employer, 20% from burnout and 14% because of the lack of benefits. Full time technicians reported a salary between $15-20 per hour, while part-time technicians reported $14-16 per hour. After taxes, even the well-paid veterinary technicians are only slightly above what is considered the poverty line for a family of four in the United States ($24,300).
According to the United States Bureau of Labor Statistics, the median pay for veterinary technicians was $16.55 per hour in 2018. By comparison, a JAVMA published study on Jan. 1, 2016 of certified veterinary technician specialists reported that the weighted mean pay rate in 2013 was $23.50 per hour.
In AAHA’s 2020 Compensation & Benefits survey, average veterinary employee turnover was 23%. Turnover was 32.5% for receptionists, 23.4% for veterinary technicians, 10.3% for managers, 16% for associate veterinarians, and 32.9% for all other staff. To compare with the national workforce, Compdata’s Annual Compensation Survey showed that national average turnover was 15.9% in 2010 and 19.3% in 2018. The chart above can be helpful to calculate a practice’s turnover expenses. Turnover is a pervasive and expensive problem that can be mitigated by learning how to properly motivate employees.