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. Part I of this article discusses the use of financial benchmarks while Part II explores how motivational theory can inform compensation decisions.
Benchmarks
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.
| Name of Key Indicator | Key Indicator | Comments | Where Found |
| Total revenue per doctor | Less than $500K 9%
$501K-$600K 35.7% $601K-$700K 19.4% $701K-$800K 16.4% $801K-$900K 4.5% $901K-$1M 7.5% More than $1M 7.5% |
Medical hours only. Calculated based on full-time equivalent of 40 hours per week. | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2016)
|
| Percentage of Gross Income for paraprofessional staff compensation | 20.7% (wages only)
.7% (retirement) 2.3% (payroll taxes) 23.7% (total cost)
|
Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015) | |
| Percentage of gross income for veterinary compensation including benefits, payroll taxes | 21% (blended rate) | Wages, benefits, payroll taxes | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015)
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| Name of Key Indicator | Key Indicator | Comments | Where Found |
| Average starting salary for veterinary associate | $72,229 (private practice)
|
With <1 year of experience (excludes benefits) | AVMA Report on Veterinary Markets (2016) |
| Average student debt | $142,394 | Range from $0-$300,000 | AVMA Report on Veterinary Markets (2016) |
| Average Amount of employee’s healthcare cost paid by a Well-Managed Practice | 60% | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015) | |
| Associate Compensation Ranges (%) by Practice Type:
Private Practices Specialists Independent Contractors |
16-22% 23-35% 25-30% |
Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015) | |
| Compensation Ranges for (Hourly Rate):
Hospital Administrator
Practice Manager
Receptionist
Credentialed Technician
Veterinary Assistant |
Median 75th Percentile
23 23.40
18.60-20 18.90-22.25
11.50-14.25 12.60-16.80
15-18 16-20
11.50-13.25 13-15 |
Median and 75th Percentile ranges as benchmark | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015) |
| On average, staff to doctor ratio | 4.7 | All staff members (manger, receptionist, credentialed tech, veterinary assistant, kennel/ward attendant) | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2016)
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| On average, Techs/Vet Assistant to doctor ratio | 2.6 | Credentialed technicians and veterinary assistants only | Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2016) |
| Average split rate for production (services/pharmacy products & therapeutic diets) | 88% Medical revenue
5% Therapeutic diet revenue 7% Other revenue |
Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2016) | |
| Debunking The Myths Of Base Salary And Production Percentages | Why Pro Sal can work for your practice | Each of the debunked myths gives practical tips to follow to include the links for dvm360.com (ProSal) and PayScale.com | Veterinary Economics March 2010 – Squashing Pro Sal Myths |
| Percentage of practices using compensation method for associates | Straight Salary – 26%
Base + Percent of Production – 49% Percent of Production – 25% |
Wutchiett Tumblin and Veterinary Economics – Benchmarks Well Managed Practices (2015) | |
| Total compensation worksheet | How you calculate your pay ranges affect your bottom line | DVM360 March 2010 – ProSal Total Compensation Worksheet | |
| Crediting doctor’s production | What should be credited to the doctor and what should be credited to the practice | DVM360 March 2010 – ProSal-Crediting Doctor’s ProductionDVM360 July 2005 – Giving Away a Fortune | |
| 2010 Veterinary Economics State of the Industry Study | Quantifies compensation methods, how satisfied are the owners, how happy are the associates | DVM360 August 2010 – Veterinary compensation conundrum |
Veterinary Compensation
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 2012-2016 Well Managed Practices.
Paraprofessional Compensation
There is a relative lack of literature addressing paraprofessional compensation. Paraprofessionals are often compensated on an hourly basis and the industry has yet to develop widely adopted performance-based compensation models. Because of their low pay, paraprofessionals generally report low job satisfaction and high turnover rates. In AAHA’s 2008 Compensation & Benefits survey, average veterinary employee turnover was 29.7%. In Veterinary Economics 2010 Benchmarks survey of Well Managed Practices, turnover was 26% for receptionists, 21% for assistants, and 44% for ward attendants. To compare with the national workforce, Compdata’s Annual Compensation Survey showed that national average turnover was 18.7% in 2008 and 15.9% in 2010. 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. Part II discusses the use of motivation to increase employee satisfaction and reduce turnover.
