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.

 

[Sanman]

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!

Positive feedback is great, it keeps you employed. It doesn't mean you are getting a raise. Last time you had the leverage of other offers. What do you have this time?

As asked previously, How are your billables? No shows? Cash or insurance based payout at the practice? From an owner's perspective, you might be the greatest employee ever. However, if a mediocre employee costs 20% less, you may not be worth the trouble. If it is cash based and you have a local rep, you may have some pull.

I was the best employee ever at one of my jobs. The problem with that is my boss did not make anymore money from that and he had a maximum percentage he was willing to pay because he did not care about quality. Up to you to figure out what makes the practice more money and how underpaid you are compared to the market.

 

[mypointlesspov]

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.

Thank you, this is all extremely helpful.

We don't take insurance, cash pay only. We last increased our fee about two years ago from what I recall.

I imagine I make the practice quite a lot of money because I have one of the bigger case loads and do tons of testing. I also do outreach (and am compensated for that to some extent). I'm certified in two highly sought after modalities so people call specifically for me at times. I'm good with client retention and have actually had a sweep of clients coming back to me after a few years in the past few months.

I did the math and would be satisfied with a 7% raise, so $10/hr mainly to keep up with inflation.

Not sure if a partnership kind of deal would be feasible but I guess it doesn't hurt to ask. We don't get vacation days and I can schedule whenever I want. We do get an extra $20/hour (so 12% for me) above 18 client hours per week. And we pretty much get to design our offices as we want so thankfully that's not an issue either.

I do get a lot of free CEs and stuff from professional organizations so it's true I'm probably not taking advantage of that as best as I can, but one of the caveats to this was that I'd have to present on CEs for a lunch and learn and I'd... rather not. But this perk and my licensing fees paid aren't common in my area which is why I consider them generous.

The raises are typically done in dollar amounts, not percentages so I apologize for any undue confusion that may have caused. In total, I've received four raises totaling about $38 which all occurred during my first two years at the practice.

Or practice manager is my boss's spouse so I feel a little weird asking but I think there's a way for me to pull my billable hours in our EHR in my own. I'll have to check.

Positive feedback is great, it keeps you employed. It doesn't mean you are getting a raise. Last time you had the leverage of other offers. What do you have this time?

As asked previously, How are your billables? No shows? Cash or insurance based payout at the practice? From an owner's perspective, you might be the greatest employee ever. However, if a mediocre employee costs 20% less, you may not be worth the trouble. If it is cash based and you have a local rep, you may have some pull.

I was the best employee ever at one of my jobs. The problem with that is my boss did not make anymore money from that and he had a maximum percentage he was willing to pay because he did not care about quality. Up to you to figure out what makes the practice more money and how underpaid you are compared to the market.

Yes, cash based and I'm somewhat known in the community through my work at the practice, my participation on a committee of our state board, and fellowship program I participated in. Our practice is known nationally for providing high quality services and kind of being a (successful) last resort for people with a specific presenting problem. I likely make more than most of my colleagues because of the raise I received two years ago and bits of information I've gotten here and there which is also part of my hesitation. I've talked to people at and looked at job listings for other practices and the max hourly rates there are comparable to what I make now.

 

[Sanman]

Thank you, this is all extremely helpful.

We don't take insurance, cash pay only. We last increased our fee about two years ago from what I recall.

I imagine I make the practice quite a lot of money because I have one of the bigger case loads and do tons of testing. I also do outreach (and am compensated for that to some extent). I'm certified in two highly sought after modalities so people call specifically for me at times. I'm good with client retention and have actually had a sweep of clients coming back to me after a few years in the past few months.

I did the math and would be satisfied with a 7% raise, so $10/hr mainly to keep up with inflation.

Not sure if a partnership kind of deal would be feasible but I guess it doesn't hurt to ask. We don't get vacation days and I can schedule whenever I want. We do get an extra $20/hour (so 12% for me) above 18 client hours per week. And we pretty much get to design our offices as we want so thankfully that's not an issue either.

I do get a lot of free CEs and stuff from professional organizations so it's true I'm probably not taking advantage of that as best as I can, but one of the caveats to this was that I'd have to present on CEs for a lunch and learn and I'd... rather not. But this perk and my licensing fees paid aren't common in my area which is why I consider them generous.

The raises are typically done in dollar amounts, not percentages so I apologize for any undue confusion that may have caused. In total, I've received four raises totaling about $38 which all occurred during my first two years at the practice.

Or practice manager is my boss's spouse so I feel a little weird asking but I think there's a way for me to pull my billable hours in our EHR in my own. I'll have to check.


Yes, cash based and I'm somewhat known in the community through my work at the practice, my participation on a committee of our state board, and fellowship program I participated in. Our practice is known nationally for providing high quality services and kind of being a (successful) last resort for people with a specific presenting problem. I likely make more than most of my colleagues because of the raise I received two years ago and bits of information I've gotten here and there which is also part of my hesitation. I've talked to people at and looked at job listings for other practices and the max hourly rates there are comparable to what I make now.

The raises are done in dollar amounts because they are fixed compared to percentages which will go up (hence the reason you have to come back to the negotiating table).

If you guys are cash only that makes the math much easier (assuming you accept a flate rate).

At some point you are likely going to have to weigh staying with minimal to no raises vs going out on your own because you will simply cost too much as an employee. No wrong answer, just need to decide what makes you happier. Personally, I wanted ownership over what I had created and the reputation I had made.

 

[PsyDr]

I did the math and would be satisfied with a 7% raise, so $10/hr mainly to keep up with inflation.

So you ask for $12, and have some room to negotiate down. Keep in mind, they can raise your hourly price $15 with no effect on their bottom line.

Not sure if a partnership kind of deal would be feasible but I guess it doesn't hurt to ask. ...

Outside of asking for unreasonable things like banging the owner's spouse, it doesn't hurt to ask for anything.

"I am really happy here. I imagine you're thinking about retiring one day. I know that it is really hard to sell psychology practices, because the potential liabilities from other clinician, and the depreciation from the practice name once you retire, impacts the valuation. Would you be open to doing something similar to medical practices, and offering a 1% partnership per year? No? That's okay. I just thought it might be something that could benefit us both down the line."

We do get an extra $20/hour (so 12% for me) above 18 client hours per week.

Ask for $22.50 Why not?

"Would you be open to increasing my hourly cost by $5, and my compensation to $22/hr for every patient I see above 18/week? I think a $5 raise would keep us in line with the going rate, and ensure we maintain some prestige through our price point."

And we pretty much get to design our offices as we want so thankfully that's not an issue either.

Yeah, I'm saying that you ask for a STIPEND to decorate your new office (e.g., "Would you let me pick out the new sofa for my new office? We and I both have a vested interest in attracting YAVIS patients").

Or practice manager is my boss's spouse so I feel a little weird asking but I think there's a way for me to pull my billable hours in our EHR in my own. I'll have to check.

My BEST advice for you:

You MUST overcome your "weird feelings" about discussing money. This is a purely transactional exchange. If everything is fair, there is no reason for anyone to feel weird. If you brought in $400k, I would be proud AF to pay you 75%. I would be bragging to everyone I know about how awesome of a deal it is to have you. I would also be going out of my way to make sure you were happy AF, so I wouldn't lose $100k in free money.

And before you say that this is not realistic: during the busy time of the year, my first psychology boss literally brought in massage therapists at lunch for us. My dentist and my PCP both take their staffs to the beach each year.

 

[Therapist4Chnge]

I have given this advice to many friends, but you need to channel your best inner middle-aged white guy at a Fortune 100 company energy. No topic you don't feel confident speaking on, and no topic off limits because you went through MULTIPLE HR training seminars about communication in the workplace.

I'm only half kidding, but seriously, it can help. Also, the most important thing to know is how much $ you produce for your job, and then you can get a rough estimate on overhead and you can more openly negotiate fair compensation. You'll never get something if you don't ask, so ask from an informed position, and only after you've crunched the numbers and know what kind of margin they are enjoying.