Blog Post

4 Things to Consider When Restructuring Your Clinic’s Compensation Plan

Thinking about adopting a value-based compensation plan in your practice? Make sure you check these boxes first.

Breanne Krager
5 min read
January 21, 2021
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Since the pandemic hit, clinics nationwide have searched for ways to replenish diminished revenues resulting from languishing patient volume and shrinking reimbursements. One strategy getting some attention from clinic leaders: scrapping traditional “fixed” salary plans in favor of an alternative model that compensates staff therapists based on the value they deliver—and protects practices against future revenue losses.

You might be thinking, “Isn’t that a bit drastic?” According to Jason Wambold, co-founder and managing partner of OnusOne—a web-based system that designs, installs, and governs shared-risk employee compensation models—it’s actually the way of the future. In this blog post, Wambold explains:

  • why the “fixed-salary-plus-bonus” model will eventually become obsolete;
  • how pursuing an alternative compensation plan can benefit your employees and your practice; and
  • why there is no better time than the present to make the switch. 

So, if you’re leaning toward restructuring the compensation plan in your clinic, here are some considerations for making the transition as seamless as possible.

1. You have options.

There’s no one universal alternative compensation plan, and selecting the right model for your practice means evaluating your clinic’s goals, workflows, patient volume, and therapist comfort levels. We suggest opening this conversation up to your therapists, offering them the opportunity to weigh in on the model you ultimately adopt. Here is a quick refresher on two popular models rising in the ranks for small- to medium-sized outpatient practices:

Fixed-Pay, Performance-Based Hybrid Plans

A great choice for teams that have members on opposite ends of the risk spectrum, this plan offers both a guaranteed salary and performance-based compensation to each therapist. The best part: Individual therapists can determine what percentage of their pay comes from each bucket. A 90/10 model (90% guaranteed pay and 10% performance-based pay) may be a sound choice for more risk-averse therapists, whereas those who are more risk-tolerant may opt for a smaller base salary—or eliminate it altogether. 

Revenue-Sharing Plans

Also known as risk-sharing or profit-sharing plans, this model scraps base pay altogether. Each therapist receives a percentage of the expected revenue from that therapist’s monthly—or quarterly—billing (based on current reimbursement fee schedules). The risks may be higher with this plan, but so, too, are the rewards.

Check out this blog post to dig a little deeper into each of these models.

2. Employee buy-in won’t be automatic.

Revenue-sharing and performance-based compensation plans are foreign concepts to many rehab therapists. And as with any change, you’ll likely encounter some resistance. To help make staff members more comfortable with the transition, be upfront about why you’re considering this change and how it will benefit them, the practice, and most importantly, their patients. 

Some points to incorporate in these conversations include:

  • Alternative compensation models are fair and equitable to therapists and clinic owners alike, providing greater autonomy and flexibility. 
  • This transition will empower therapists to take ownership of their practice, and it will reward them for delivering stellar clinical care and high patient satisfaction rates.
  • These plans can help PTs gain a firmer grip on the economics of running a practice, a better understanding of where their salary dollars come from, and a heightened awareness of current healthcare reimbursement issues.

Additionally, be sure to fully explain the compensation options you’re currently considering—and how each model measures and rewards therapist productivity and performance. 

Creating a forum—by hosting a listening session or creating an anonymous survey, for example—where employees can voice their opinions before any changes go into effect will go a long way in getting your team on board. Plus, their perspectives may bring important considerations to the forefront. 


3. How you measure productivity matters.

Regardless of which plan you choose, performance-based pay will come into play at some point. So, taking the time to determine how you will measure your staff’s performance and productivity is very important, as these metrics should ultimately drive your clinic’s success. Consider your clinic’s long-term goals, and think critically about which production units directly impact those objectives. Common productivity measurements include:

  • total visits,
  • total billed units, and
  • total reimbursable units.

Of course, having a great technology partner to track these measurements is important, too.

You can also use these performance metrics to build a bonus structure within a compensation plan. For example, once a therapist exceeds monthly goals, you can make that clinician eligible to achieve financial rewards beyond base pay.

4. Transparency is key.

Providing therapists with accurate information on your clinic’s fee schedule, revenue trends, and major carrier reimbursement rates—including those from Medicare and Medicaid—is critical to getting them comfortable with the new compensation plan. No one likes to feel as if the wool has pulled over their eyes—and a transparent look into the factors impacting both revenue and expenses can bring this transition full circle for your team.

We recommend keeping a spreadsheet—accessible to each therapist and updated quarterly, at minimum—that presents a summary of the therapist’s cost to the company (e.g. salary, medical benefits, PTO, employment taxes, federal contributions, professional liability insurance, continuing education, and other fringe benefits). To complete the picture, be sure to include current reimbursement fee schedules along with the average discount your clinic takes on charges.

The biggest thing to remember is that nontraditional compensation models represent a significant departure from what most therapists are used to. Allow them time to review your plan and evaluate the potential impact to their earnings. Being transparent, organized, and open to feedback will go a long way in finding a plan that works in alignment with your clinic’s goals as well as your therapists’.

Have questions about restructuring your clinic’s compensation plan? Leave them below, and we’ll do our best to find the answers.

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