Feeling the squeeze in today's competitive healthcare market? As a clinic owner, you know attracting and retaining top talent is crucial for any clinic's success. After all, your clinic thrives on its people. But are you offering a compensation model that keeps your staff motivated and engaged?
Effective compensation not only boosts morale and productivity but can also drive revenue. So, is it time to evaluate your clinic's compensation model? Leveraging data and insights from your EMR software, particularly on staff performance and productivity, can be instrumental in crafting a compensation model that truly rewards and motivates your team. Let's explore how to create a competitive compensation model that attracts and retains the best healthcare professionals while keeping your clinic financially healthy.
Simple compensation rules that maximize clinic performance
Designing a compensation model requires balancing staff needs and business goals. For your staff members, it's crucial to have a model with simple rules, transparency, and a clear path to progression (i.e., how one can make more money). This type of model translates to higher morale, increased engagement, and, ultimately, better patient care. From a business standpoint, a competitive compensation model not only draws in and retains top talent but also guarantees profitability and fosters growth.
Simple rules mean the model follows only a few criteria to determine compensation. For example:
- Experience: Number of years since graduation
- Loyalty: Number of years at the clinic
That’s it. As you’ll see in the following table, you can create levels within each criterion, each with a different compensation value. And, within each level, you can establish a range. Always create a model with ranges, allowing room for negotiation and change over time. By establishing a transparent model that clearly outlines these factors and their corresponding compensation ranges, you will empower staff to understand their earning potential and foster trust.
In this example, the splits provided in the table assume the staff member is a contractor.
You can also set some qualification ‘gates’ for the criteria. For example, you must be full-time to receive these compensation rates. Part-time staff have lower ranges and do not receive the loyalty criteria (number of years at the company).
Incentives are not one-size-fits-all. You may notice there are no criteria for the clinician taking courses or achieving certifications. While this example uses experience and loyalty, other models might consider additional criteria like performance metrics or relevant certifications. The key is to choose factors that align with your clinic's goals and staff roles.
Incentive vs Bonus
Now that the simple rules have been established around compensation, you still want to provide your staff with an opportunity to make more money. As an owner, I want to pay the best. I want people to be able to provide for their family and then some. Giving people the opportunity to provide for their families and make investments for their future is one of the best parts of being an owner. This is where an incentive model comes into play.
But first, we must make sure we are clear on the difference between a bonus and an incentive.
Bonuses: A bonus is discretionary, like a holiday bonus and is often tied to company performance (e.g., exceeding revenue targets). While bonuses can be a nice surprise, they don't directly impact day-to-day behaviour. The staff member may or may not have the opportunity to contribute to achieving the bonus. A simple example is if the business hits a certain revenue or profitability mark, then the ownership can decide to give out bonuses and determine the denominations by role as they see fit. It’s not explicitly detailed anywhere because it is up to the company to decide.
Incentives: An incentive, on the other hand, is transactional by nature and clear-cut. Staff members directly influence their earnings by achieving specific goals (e.g. exceeding patient satisfaction scores). For example, say you are a baseball player. If you hit 40 home runs, you get $1M. If you hit 50, you get $3M. If you hit 60, you get $10M. In this case, the staff member has direct control over hitting or not hitting home runs. And, the levels of incentive are clearly stated.
Clinic Example: Imagine a physiotherapist receiving a bonus if the clinic hits a specific monthly revenue target. This bonus might be a nice motivator, but it doesn't directly influence the therapist's daily actions.
However, with an incentive model, the therapist could earn a commission for each new patient they convert after a consultation. This directly ties the therapist's effort to their income, fostering a more proactive approach to patient acquisition.
What should you create an incentive for? Solve a business challenge or opportunity
You do not want to incentivize people for things that are already a part of their role. I’ve worked with clinic owners who want to incentivize phone answer rates and (new patient) booking rates. I would not recommend that. To me, achieving 90-95% answer rates and 70-80+% booking rates is part of the job. If you could achieve those targets with the support and training from the company then you probably shouldn’t be in the role.
Instead, I like to focus incentives on solving business challenges or capitalizing on opportunities.
Reducing patient wait times: Incentivize staff for streamlining processes or exceeding appointment targets.
Boosting patient satisfaction: Reward staff for achieving high satisfaction scores or implementing positive feedback initiatives.
Enhancing preventive care: Encourage staff to promote preventive care services through targeted patient interactions, which will lead to increased revenue streams.
Love him or hate him, I love Elon Musk’s outlook on compensation,
“You get paid in direct proportion to the difficulty of the problems you solve.”
Let’s take an example. If I have a younger clinician struggling with caseload, I will incentivize another clinician to work with them for a quarter to get their caseload to a specific target. Of course, I have to provide a path to success, so I will detail how often they will meet with the younger therapist and give recommendations on how to train them, the areas to work on, etc. I will also meet with the senior and younger therapist regularly to offer my support and ensure they are on track each week.
Overall, I want them to hit the incentive. Why would I create an incentive that I didn’t think they could hit or want them to hit? To go back to the baseball example, I want the player to hit as many home runs as possible because I know more people buy tickets if there are more home runs. In the case of the younger therapist, I want the senior therapist to hit their incentive because that would mean the younger therapist wins, they are more busy and making more money. The senior therapist wins because they get the monetary incentive. And, the company wins because we also make more revenue from the younger therapist being more busy.
Creating Staff Incentives
Ready to design a winning incentive model? Here's how to get started:
- Identify Challenges & Opportunities: List your clinic's current challenges (e.g., reducing patient no-shows) and potential opportunities (e.g., increasing preventive care bookings).
- Design the Incentive Structure: Next, design the incentive math behind each business problem or opportunity. Be sure to include levels and ranges. Creating an incentive that is a ‘yes you hit’ or ‘no you didn’t achieve it’ can have the opposite effect when the staff member resents the incentive.
- Target Behaviours: Clearly define the specific actions you want to incentivize (e.g., reducing no-shows by 5% within a quarter). Utilize data from your EMR software to track and measure staff performance related to this behaviour. This allows for accurate evaluation and program effectiveness.
- Levels & Ranges: Establish achievable levels of performance with corresponding reward ranges. This provides a sense of progress and avoids the "all or nothing" feeling. (Example: Reduce no-shows by 2-4% = $50 bonus; 5-7% = $75 bonus; etc.)
- Stretch Goal: Include a challenging "stretch goal" with a significant reward to motivate high achievers.
- Set a Clear Timeline: Lastly, note that the incentive has a clear start and end date. Don’t leave incentives open-ended. Open-ended incentives create no urgency.
By following these steps and incorporating staff preferences, you can design an incentive program that motivates your team, tackles business challenges, and drives positive results for your clinic.
Last word
The incentives you offer should feel like the appetizer menu at a nice restaurant. Each quarter, the staff member can choose one incentive for the upcoming quarter. Or, they can choose not to have an incentive for that particular quarter.
A couple of questions that also come up frequently are:
- Should you pay an hourly rate to work on the incentive?
Yes, I like to pay a set number of hours to work on the incentive. But the hourly rate is lower than what they would make for that hour seeing patients.
- Does the staff member work on the incentive during their work hours?
Incentive work should be completed outside of regular clinical hours to ensure optimal patient care. Open communication regarding time expectations is key.
By implementing a competitive compensation model with a well-designed incentive program, you can create a win-win situation for your clinic and your staff. Attract and retain top talent, boost morale and productivity, and ultimately achieve sustainable business growth.
About Sanjeev
I'm Sanjeev, a mentor at Juvonno Campus with 15 years of experience in patient experience operations. Through innovative healthcare management strategies, I've helped clinics like Lifemark and Myodetox improve patient satisfaction and boost revenue. My MBA and data-driven approach ensure I deliver actionable insights to optimize clinic performance and elevate patient care.
