As a business owner, your life would be a whole lot easier if there were set-in-stone rules for determining what’s fair when it comes to employee compensation. Unfortunately, there are not—which is why it’s so important to create compensation packages that not only fall within or exceed local averages, but also feel good for your practice and your employees. After all, everyone in your practice is working toward the same goals: a thriving business and satisfied patients. And having happy, motivated, and fairly compensated employees across your practice can have an enormous impact on your company’s success—just ask WebPT President Heidi Jannenga, who attributes much of WebPT’s prosperity to hiring great people and creating a culture that brings out their best. With that in mind, here are five things every private practice owner should consider when determining fair compensation (peppered with plenty of Jannenga’s own words of wisdom):

Retention, Please: Why Patient Dropout is Killing Rehab Therapy Practices— and How to Stop It - Regular BannerRetention, Please: Why Patient Dropout is Killing Rehab Therapy Practices— and How to Stop It - Small Banner

1. Do your research.

Use your resources.

There are plenty of places to look online as you’re investigating appropriate compensation for each role in your practice—websites such as Randstad, PayScale, and Indeed as well as our very own salary guides (the physical therapist salary guide, the occupational therapy salary guide, and the speech-language pathologist salary guide). All of these resources take both experience and geographic location into consideration when formulating average salaries. These should give you great foundational knowledge about what’s fair for each role in your location. Beyond that, Jannenga recommends querying fellow private practice owners and directors in your region to see what they’re paying. “This will help you understand competitive going rates,” she said.

Maintain detailed job descriptions.

As this American Medical Association article points out, it’s also a good idea to have a well-researched, well-written, and up-to-date job description in place for every position, as this will help you better understand the necessary qualifications, experience, and responsibilities associated with each role. Ron Seifert, executive compensation practice leader for the Hay Group healthcare practice, says that practice managers and directors "really need to think about the roles and responsibilities of the various team members. Not all jobs are designed and created equal. Not every person delivers or meets expectations in the same way.” And all this factors into determining fair compensation.

2. Consider the benefits.

Don’t leave out health insurance and PTO.

Fair compensation includes more than a good salary; it also includes benefits such as health insurance, paid time off (PTO), and continuing education opportunities. While Jannenga knows that the benefits you’re able to offer are obviously dependent on what you can afford as a company, she says health care coverage and vacation time are two “must-haves.” That’s why, from the very beginning, she made it a point to offer health insurance and three weeks of PTO to all WebPT employees. “We listened to what was important to our employees,” she said. “Benefits represent your culture; they’re a statement of how much you value your employees and what you stand for as a company.”

Add in some perks.

Offering competitive benefits is important—and according to Jannenga, that’s especially true for millennials, who often seek out employment opportunities that come with extra perks. If your practice has the financial capacity to do so, consider offering benefits that go beyond the basics. For example, WebPT has a casual work environment and ping pong tables for inter-departmental battles. The company also provides team-building opportunities, hosts company-wide social events, and offers pet insurance to go along with its dog-friendly office policy. While that may not be practical for a therapy clinic, there are other possibilities. For example, as a clinic director, Jannenga paid for her staff’s APTA dues and continuing education units—and that was in addition to providing standard health, dental, vision, life, and disability insurance. “To me, a good benefit package satisfies the needs of your employees and puts your company at a competitive advantage to other similar companies in your market,” Jannenga said.

3. Create a range.

Set levels based on experience, education, and cultural fit.

To those responsible for determining fair compensation rates, Jannenga recommends using the averages garnered from research and factoring in the value of the available benefits to create a salary range for each job role. That way, there’s consistency for everyone who’s performing a similar job function. Then, when you’re putting together an offer for a potential new hire, you can use his or her experience level, education, and cultural fit to determine an appropriate number within the range. Jannenga always factors in the growth potential for each new-hire. “It’s difficult to start someone at the top of the salary band—especially if you expect them to stay with the company for a long period of time,” she said. “That’s why it’s important to discuss career goals and growth plans prior to making an initial offer.”

Decide how you’ll handle transparency.

In recent years, there’s been a lot of buzz about salary transparency—specifically, whether it’s a good idea to make employee salary numbers transparent. While companies like Buffer have successfully made this level of transparency a part of their culture, Jannenga believes that salary ranges and bonus programs—not individual salaries—should be transparent. This ensures that everyone understands the company’s goals and values without divulging information that some employees would prefer to keep confidential.

4. Calculate an initial offer.

Screen for the basics first—then factor in emotional intelligence.

So, what factors does Jannenga use when calculating where within a salary range a particular candidate’s initial offer should fall? “It greatly depends on the position and job role,” she said. “For example, managerial and leadership roles should be vetted differently than staff roles. I like to screen first for the basics—for a physical therapist, that would include education, clinical knowledge, continuing education credits, licensure, work history, and specialization.” From there, Jannenga focuses on emotional intelligence: “How do they think? How do they go about solving problems? How well do they communicate? How well do they mesh with the current team? And how well does the team accept them?” She believes these last two questions are crucial, which is why she recommends performing team interviews. “All factors are weighed more or less equally,” Jannenga said. “However, I always push for cultural fit to be the highest priority.”

Consider sharing risks and rewards.

There also may be opportunities to share the risk and reward of the company’s success via a performance-aligned bonus structure. “When a candidate is hungry and truly wants to join you and your company, he or she usually won’t hesitate to make this work,” she said. “I believe that it also shows confidence in the candidate’s skills. Plus, it can help with budgeting and remaining within the pre-set salary range, because rewards for a job well done come in the form of bonuses.” Furthermore, if things don’t end up working out with the new hire, Jannenga says this arrangement leaves the company better off than it would have been had the employee received a higher starting salary. “We don’t make many bad hires at WebPT, but when it happens, the financial burden is big,” she said. “Bringing someone on at the top of the salary range who doesn’t work out can be very painful.” Still, in this post, compliance expert Tom Ambury urges private practice owners who are considering implementing a pay-for-performance (PFP) compensation program to do their homework: “Pay-for-performance programs can be extremely complicated, and if you offer such a program to your employees, I definitely recommend that you have the program reviewed by an experienced health law attorney,” he writes. “That said, the pay-for-performance trend is quickly catching on across the entire healthcare industry, and implementing some type of PFP structure in your practice could put you ahead of the curve.” To learn more about the legality of performance-based employee incentive programs in rehab therapy practices, read Ambury’s full article here.

5. Be ready to negotiate.

Expect a counteroffer.

Whatever number you land on for your initial offer, be ready to negotiate, because you may very well receive a counteroffer from the candidate. Jannenga believes that the objective criteria you established when creating the salary range will help you know your limits—including what you’re willing to negotiate on and what you’re not—so you can immediately identify requests that are simply unrealistic for your practice to accept.

Remember that negotiation is a good thing.

According to Jannenga, you can tell a lot about a candidate based on his or her approach to negotiation, including “how much research they’re willing to do on the market, how they approach asking for what they want, and how confident they are about what they bring to table.” And Jannenga is the first to admit that she pushes people to negotiate—especially women, who can be reticent to ask for more even when they deserve it. “And salary is not the only thing that is negotiable,” Jannenga said. “Sometimes benefits can be worth even more—things such as continuing education, licensure coverage, and extended PTO. But if you don’t ask, you’ll never know what’s possible.”

6. Ensure you’re being above board.

Know the new FLSA rules.

"According to CEDR, on November 22, 2016, a US District Court judge issued a preliminary injunction that prevents the Department of Labor from implementing this change. At least for the time being, the current minimum salary requirement for exempt employees will remain at $23,660. To read the court's decision in full, click here."

The Fair Labor Standards Act (FLSA) recently updated its overtime exemption rules. As of December 1, 2016, all employees who have exempt status—and therefore aren’t eligible to receive overtime pay—must make at least $47,476 a year ($913/week). That’s an increase of almost $24,000 from the current $23,660-a-year threshold. So, what does that mean for you? Before December of this year, you should take a look at your payroll and make sure that all new non-exempt positions are budgeted with this update in mind. Furthermore, you must be sure that every current employee with exempt status is earning at least this amount. If you find someone who isn’t, you have two options: you can either increase his or her pay to meet this mark or change his or her status. As a note, this number cannot be prorated. So, if you have a part-time front-office person or medical biller who you’ve deemed to be exempt, you still must pay him or her at least this amount of money, regardless of how many hours that person works for you. Or, you must to switch the person to non-exempt status, which requires hour-tracking and overtime pay when applicable.

Figure out which—if any—employee statuses you should change.

To help you determine which route will work out better for you, CEDR HR Solutions created a calculator that you can access here. However, this decision should be based on more than just the numbers. In a webinar CEDR hosted earlier this month, the company’s co-founder and CEO Paul Edwards, along with senior counsel Ali Edwards, suggested considering the practical applications of changing someone’s status. Not only will you need to communicate the change to the employee in a clear and emphatic way, but you also must ensure everything is documented (you can download CEDR’s sample status change-letter here) as well as determine how you’ll minimize the cost of overtime. According to the CEDR team, you cannot tell your employees to get the same amount of work done in less time, which means you may need to reassign responsibilities and/or hire new staff members. You also must set strict guidelines that prohibit working off-the-clock.

Beware of the DOL.

According to CEDR’s Edwards and Edwards, the Department of Labor (DOL)—which is the arm of the federal government that oversees the FLSA—is on the hunt for companies that are improperly classifying their employees, and the healthcare industry is in the DOL crosshairs. After all, healthcare providers rarely learn these rules in school—which means that as far as the DOL is concerned, it’ll be open season. That means now is the perfect time to perform an internal audit to ensure that you’re adhering to all federal and state employee regulations (in the case of conflicting regulations, employers are required to adhere to the ones that favor the employee). Remember, an internal audit will be a lot less painful than one performed by the DOL. Apparently, they can be worse than those performed by the IRS.

No matter what compensation package you land on initially, it’s important to schedule regular reviews to celebrate successes, discuss opportunities for improvement, set professional and personal goals, and recalibrate salary and benefit packages to align with employee growth and market inflation. This will ensure you’re continually compensating your team members for all of their hard work in a way that’s fair for everyone involved.

How do you calculate fair compensation in your practice? We’d love to hear your methods in the comment section below.

  • The State of Rehab Therapy in 2018 Image

    webinarJun 1, 2018

    The State of Rehab Therapy in 2018

    Falling reimbursements. Skyrocketing insurance premiums and copays. Crippling student loan debt. As a PT, OT, or SLP, sometimes it feels like it’s you against the world. After all, the challenges you face on a daily basis are many and complex. But, you’re not alone. In fact, we recently surveyed nearly 7,000 rehab therapy professionals on everything from payment rates and clinic budgets to education costs and salary, and we found some pretty strong—and surprising—trends. [video://]   Curious …

  • Are You Paying Your Rehab Therapy Clinic Staff Enough? Image

    articleAug 30, 2018 | 4 min. read

    Are You Paying Your Rehab Therapy Clinic Staff Enough?

    Every good boss wants to ensure that he or she is paying his or her employees enough—in most cases, more than enough—to cover the cost of living and prevent financial worry from getting in the way of job satisfaction. But with many rehab therapy students graduating with massive debt —and fee schedules on the decline—it can be difficult for a rehab therapy practice to properly pay staff and keep enough money in the practice to remain in …

  • The State of Rehab Therapy in 2018 Image

    downloadJun 28, 2018

    The State of Rehab Therapy in 2018

    To say that the healthcare industry is complex would be an understatement. While the advent of technology has made care more precise, efficient, and collaborative than ever before, it has also put greater pressure on providers to deliver high-value care at scale. After all, big data makes it possible to not only develop the most effective, evidence-based best practices for individual diagnoses, but also form evidence-based strategies for managing the health of populations. In the spirit of …

  • The 2018 Rehab Therapy Salary Report Image

    downloadAug 24, 2018

    The 2018 Rehab Therapy Salary Report

    While all the information we obtained in our 2018 annual industry survey was incredibly useful, the information regarding salary has been—as you might imagine—highly sought-after. After all, who doesn’t want to ensure they’re maximizing their earning potential? Thus, we decided to take all the data we collected about individual provider earnings and compile it into this stand-alone rehab therapy salary report. Enter your email below, and we’ll send you The 2018 Rehab Therapy Salary Report today, so …

  • Common Questions from Our 2018 State of Rehab Therapy Webinar Image

    articleJul 13, 2018 | 21 min. read

    Common Questions from Our 2018 State of Rehab Therapy Webinar

    Earlier this year, we surveyed nearly 7,000 PT, OT, and SLP professionals on the current state of the rehab therapy industry, asking questions on everything from salary and student loan debt to payer mix and patient dropout. We then compiled their responses into our comprehensive State of Rehab Therapy in 2018 report and hosted webinar during which Dr. Heidi Jannenga, PT, DPT, ATC/L, president and co-founder of WebPT, and Nancy Ham, WebPT CEO, offered their take on …

  • Optimization: Is Your Practice Lean? Image

    articleApr 4, 2016 | 6 min. read

    Optimization: Is Your Practice Lean?

    As a rehab therapist, you already expend a lot of energy on optimization—optimization of your patients’ physical, occupational, or speech capabilities, that is. You help your patients be their most perfect, most functional, and most effective selves. But what about your business? Are you working to ensure your practice is as perfect, functional, and effective as it could be? In other words, are you optimizing your clinic—or are there gaps that are frustrating patients and staff and …

  • Internet or In-Person: The Pros and Cons of Online CEU Courses Image

    articleNov 14, 2017 | 6 min. read

    Internet or In-Person: The Pros and Cons of Online CEU Courses

    If you’ve got a professional license, then continuing competency requirements in the form of continuing education units (CEUs) or contact hours are a fact of life—if you’d like to keep that license of yours, that is. Because so many professionals are required to complete CEUs—healthcare providers, psychologists, and lawyers, to name a few—the debate as to whether to take those courses online or in-person is alive and well. While there’s no across-the-board right answer as to which …

  • How to Manage Change in Your PT, OT, or SLP Practice Image

    articleSep 19, 2016 | 5 min. read

    How to Manage Change in Your PT, OT, or SLP Practice

    As the old saying goes, the only constant in life is change. Yes, it’s a bit cliché, but it’s true nonetheless. And for those working in the healthcare space—including private practice PTs, OTs, and SLPs—change is an especially prevalent aspect of day-to-day operations. After all, the whole point of all this healthcare reform hullaballoo is to change the manner in which providers deliver—and receive payment for—their services. So, whether they like it or not, practice leaders must …

  • Clean Break: How to Fire an Employee Image

    articleJul 27, 2016 | 11 min. read

    Clean Break: How to Fire an Employee

    There’s no easy way to let someone go—it’s a difficult conversation that no one actually wants to have—but at some point or another, every manager, director, and practice owner will have to figure out what to say when firing an employee. It’s an inevitable part of running a business. No matter how exceptional your hiring practices are, not every candidate you bring on board is going to end up being a perfect fit. Unfortunately, there’s no script …

Achieve greatness in practice with the ultimate EMR for PTs, OTs, and SLPs.