What does a fair production model formula look like?

[Medman2737]

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I just posted this as a response to another thread, but now I think this deserves its own.

If your compensation was productivity driven and you had the opportunity to devise your own formula/bonus structure, what would it look like and why structure it this way?

Examples:
Low base . . . with lower threshold for bonus to kick in, say at $600K of collections?

Higher base salary for cushion and then very profitable at a higher set point . . .eg. 70% of collections after 1 million.

No base at all and just keep a percentage of total collections . . . keep 40% of everything collected.

How would you structure your "perfect" productivity formula?

 

[runfastnow]

Lowest base salary/production hurdle possible to cover my monthly expenses (mortgage, student loans, food, etc.).

Then kick in to as much of an advantageous bonus structure as possible (52%+ of collections).

Then make sure you're busy.

 

[drusso]

I just posted this as a response to another thread, but now I think this deserves its own.

If your compensation was productivity driven and you had the opportunity to devise your own formula/bonus structure, what would it look like and why structure it this way?

Examples:
Low base . . . with lower threshold for bonus to kick in, say at $600K of collections?

Higher base salary for cushion and then very profitable at a higher set point . . .eg. 70% of collections after 1 million.

No base at all and just keep a percentage of total collections . . . keep 40% of everything collected.

How would you structure your "perfect" productivity formula?

Personal professional fee collections (Hands work/gross collections). Cash in the till.
- Direct costs (med mal, salary, retirement, health insurnace, PTO, CME, etc)
- Pro-rata allocation of fixed costs (rent, utilities, IT, purchased business services, debt service, etc)
- Variable allocation of indirect costs based upon % collections. If you bring in 18% of the practice revenue, you pay 18% of the variable costs
--------------------------------------------------
= Net collections

This is the number you're bargaining with. Go back to the COO and say, "After I pay for myself and pay my portion of the operating expenses that allow me to pay myself, how much of what's left over do you think an honest person deserves to keep?"

After he reattaches his dropped jaw, be prepared to argue tooth and nail over what counts as direct, fixed, and variable costs.

His answer to that single question is all the information you need to know about whether you can do business with this group.