Raises in Private Practice?

[mypointlesspov]

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Hello everyone,

For those in PP or who own PPs - how often do you get/give raises? I've gotten about four raises in the time I've been here: the first was a raise of about 6% after my first year. Two were for $5/hr each because we increased our hourly rate for clients and because my boss ended the referral bonus for direct referrals and just gave everyone extra.

My last raise was a little over two years ago and it was pretty substantial as I approached my boss stating I had several other offers on the table but wanted to remain at the practice. With inflation and such I've been gearing up to talk to my boss about my compensation again. I get regular positive feedback from clients and my boss alike so I feel confident enough in my skillset to believe I deserve it (hooray for professional self-esteem!)

My only big hesitation is that we're moving to a much nicer office soonish and even though that technically shouldn't have anything to do with my compensation, I'm finding myself hesitant to ask. I'm a W2 employee and I take home 60% of the hourly rate if that helps. Where might a person in my position top out, so to speak? I've heard of 70/30 splits but typically only in 1099 positions.

Thank you everyone!

 

[WisNeuro]

All depends on what the billing structure and your benefits are. These vary pretty wildly across practices, so someone may be getting a 70% split, but have ****ty benefits. Another could have 60% and awesome benefits, and from a compensation standpoint, be doing better than the 70% split. You really have to look at your overall compensation as opposed to purely looking at salary to get a good comparison.

 

[mypointlesspov]

All depends on what the billing structure and your benefits are. These vary pretty wildly across practices, so someone may be getting a 70% split, but have ****ty benefits. Another could have 60% and awesome benefits, and from a compensation standpoint, be doing better than the 70% split. You really have to look at your overall compensation as opposed to purely looking at salary to get a good comparison.

Thus, my hesitancy to ask. I have solid benefits (health care funds, CEs, licensing fees, 401K contribution) so I'm not sure if it's appropriate to ask for above 60%.

 

[PsyDr]

A. Business
1) You can't approach business like a clinical situation. The ONLY metric that matters in this situation is the dollars you bring in. This is a purely monetary issue. You get paid a percent of what you bring in. It doesn't matter if your clinical skills are amazing, or if they like you, or you're a snappy dresser. If you bring in $400k/yr, then they can easily give you 75%. If you bring in $40k/yr, they can't afford to give you 50%.

2) If they just locked themselves into a new office lease, they need you. This is the prime situation to ask for more.

3) Approach this negotiation like buying a car. Do some math, and determine what you want. Do some market research, and determine what people are getting paid. Now figure out how to make your proposal work for them. The worst they can say is "no". "Boss, I'd like to increase my compensation to 65%. The average psychologist in our city makes 65%, and I'd like to adjust my income in line with the average. When I looked at the numbers, BCBS has increased their rates from $99 to $105 and I had 1000hrs of billable time. That means you grossed just under $40k from me. My proposed raise would gross $42k/yr for you." Then they'll bring up all the minor things like the $1500/yr in CEs and licensing. But this doesn't matter because it is baked into their numbers from last year. "Yeah, isn't it great that I found a way to increase your income without increasing your costs?". Then they'll say something about why you deserve more money. The best response is, "For the same reasons as you". Basically just have an answer ready for every reason why they don't want to pay you more.

4) There are a ton of non-income compensation things you can ask for. Some ideas:
a. make you a partner, over time. Say 1% per year.
b. extra vacation days
c. flexible schedule
d. tiered percentages, where you get 60% for the first (insert number) hrs, and 75% for anything above that target.
e. When they build out the new office, you get to pick some furniture or something.


5) Many of the benefits you listed are not that generous.
a. 401k- their plan likely REQUIRES them to contribute for every employee (i.e., proportionality and safe harbor stuff). It's a pretty common requirement in 401ks, that is supposed to prevent owners from using the corporate 401k as a private tax dodge. So it's probably not a, "jeez, they are so nice".
b. Determine the dollar amount for the CE fund and the licensing funds. I'd be shocked if it's over $1500. Let's assume you're making $100k, and another 5% would raise that to $105k. Now the business proposition is "do you sacrifice $5k for $1.5k?" . It just doesn't make sense.

6) There's some funkiness going on here.
a. Many private insurances increase pay on an annual basis, so you should be getting an increase in take home without changing your percentages. And then you are mixing hourly rates and percentages. Can you ask your office manager for a print out of your billable hours?
b. I'm not sure that a W2 can be compensated on a percentage.
c. I really don't understand this combination of getting $X raise per hour, but then X% for something else.

 

[WisNeuro]

b. I'm not sure that a W2 can be compensated on a percentage.

They can, it's similar to a commission type structure, but the employer has to guarantee that they are making minimum wage for that jurisdiction.