An Overview and a New Approach for Today’s Workforce
Considering a compensation model for your hospital employees can certainly become overwhelming as you research the different options and how to implement them—especially when everyone has a different opinion about what is “best.” You can read about the various options with a quick Google search, but why is it so difficult to choose one? Interestingly, we have a lot of data from the AVMA and other reputable sources on how veterinarians are currently compensated. However, we have no concrete data on how veterinarians actually want to be paid. As a profession, we are slow to change and reluctant to think outside the box when it comes to business methods.
Instead of compensating people based on what has been done in the past, we should ask veterinarians which methods they prefer, and build a corresponding model. I’d venture to say that today’s veterinarians are looking for something different than they were 20 years ago. A significant cultural shift is occurring in veterinary professionals, and it is critical to account for that as we plan for the future.
In this article, I will outline some important factors to consider when choosing a compensation model, summarize the most common approaches, and propose a new method that supports the values and goals of the changing workforce.
Factors to consider when choosing a compensation model
Before delving into the different compensation methods, consider the following core factors and questions:
- Ideal culture — What type of practice culture do you want? What are your hospital values? Do you want a veterinarian who focuses only on medicine, or who also contributes to a positive culture and teaching environment? Do you value teamwork over individual performance?
- Hospital system requirements — Does your practice software easily track individual production? Is your team able to learn and implement new protocols quickly and accurately?
- Simplicity and adaptability — Can associates easily monitor revenue details and ensure proper allocation of goods and services? Is the compensation model easy to understand and transparent? Can the model be adjusted to the changing needs of the hospital and veterinarians? Will it adapt to different PIMS?
- Burden of financial risk — Who carries the risk if the hospital is understaffed or poorly managed? Or, if a natural disaster or pandemic closes the hospital?
Once you’ve answered these questions, you will be better able to evaluate the various compensation models and decide which one is right for your practice.
Compensation models explained
The most well-known approaches to compensation include:
- Straight production — A percentage of production is paid out as compensation, with no guarantee of a minimum base pay. This model requires efficient and experienced veterinarians and an efficient and well-managed practice.
- Straight salary — A predetermined amount is paid out in regular intervals. With this model, management must ensure the hospital is efficient to secure adequate profit margins, and vets must understand the value of their expertise.
- Pro-Sal — Developed by Mark Opperman, this model guarantees a base salary that is paid out in monthly installments. Additionally, 18-25% of production above the base requirement is paid out in a second installment each month. The percentage paid depends on the total compensation package, with the total benefits and salary not to exceed 25% of the veterinarian’s total production.1 Pro-Sal requires trained staff, accurate PIMS and invoicing, and transparency. This model can, in certain environments, lead to a culture of individualism over teamwork.
- Base salary with commission or bonus — This model guarantees a base salary, plus commission (i.e., a percentage of additional sales) or bonus payments (i.e., a set amount) if certain targets are reached.
- Production-based compensation, with or without negative accrual —With this model, a consistent salary is paid, and there is potential to earn a percentage of production above the baseline. If the model includes negative accrual, any shortfall under the target baseline is tracked monthly or quarterly, and repayment or salary reduction may occur as a consequence. If negative accrual is not included, the shortfall is not technically recorded, although it is often reviewed “behind the scenes.”
- Hourly — A set amount is paid based on the hours worked. This model is commonly used to pay relief and seasonal veterinarians, and may be used with part-time veterinarians in some cases.
Each model has benefits and pitfalls. For example, the potential for bill-padding and case hoarding are significant pitfalls associated with production-based pay. Alternatively, an unwillingness to see emergency cases at the end of the day can be a pitfall of straight salary compensation. I would encourage you to understand what motivates your doctors and your team, and what type of culture you want to foster in the short and long term.
A new approach: The balanced teamwork model
Given the major culture shift within the veterinary profession that places more value on work-life balance, teamwork, and healthy workplaces, I’d like to propose a new model. It blends several approaches, and rewards individual and team contributions to hospital growth.
Using the balanced teamwork model, veterinarians receive a consistent base salary with bonuses based on individual and team performance metrics. The base salary should be a fair market individual salary. In addition, the entire veterinarian team has a combined revenue goal, with all vets accountable to reach the combined goal as a team, instead of an individual effort. Working together would minimize case hoarding while maximizing case sharing, collaboration, teamwork, and accountability for the entire hospital’s success. If one vet falls short, it then becomes a team effort to solve the problem and figure out the best way to support that veterinarian. In sports, we win and lose as a team. If a team member doesn’t pull their weight or contribute to team success, and correction efforts are unsuccessful, then replacement may be necessary. This model will also encourage a team approach to vacations and PTO. The vet team will better support each other’s time-off needs, and the system’s inherent reciprocity will cause less resentment when veterinarians have to cover for one another. This model requires trained staff, accurate PIMS and invoicing, transparency, and a focus on teamwork.
While this compensation method may not solve all the veterinary profession’s woes, I’d encourage you to push for alternative ideas and solutions to old business methods. Today is a new era of veterinarians and industry values—let’s embrace it, get creative, and work together to ensure the profession’s long-term sustainability.
1. Opperman, M. (2019, March 6). Prosal: A method to pay doctors-DVM360. DVM 360. Retrieved May 27, 2022, from https://www.dvm360.com/view/prosal-method-pay-doctors