By Yuval Lirov, PhD, Dave Macolino, and Kevin McGovern, DPT
â€œSo, why donâ€™t we move all of my staff on commission?â€ asked Peter.
â€œThatâ€™s the right business approach,â€ responded Alicia, â€œexcept most people do not have self-confidence and productivity to work on pure commission. For instance, would your biller agree to work on 100% commission of your insurance collections? Most likely, she wouldn’t, because she needs to pay her mortgage and other fixed costs and she cannot make her income dependent on your patient flow and the insurance companies. She expects a steady check regardless of your revenue, which depends on her performance. Actually, do you have ways to measure her performance? If you discovered under-performance, what would you do?â€
â€œToday, I pay her regardless of her or my practice performance. Thatâ€™s not a healthy relationship,â€ lamented Peter, â€œItâ€™s hurting the business.â€
â€œThe good news is that, like Katherineâ€™s office, there are companies that work on commission-only arrangement,â€ said Alicia, â€œoutsourcing your physical therapy billing would make more sense because a specialized billing company would have processes to manage their employee performance, including correct incentive methods. Actually, if you talk to an outsourcing company, always ask them how do they compensate their employees? Are they all on commission? If not, then you will end up with the same problem with even less control.â€
â€œActually, no matter how big or small my physical therapy practice is, all of its parts must work together to succeed. If administrative staff allows too many cancellations and doesnâ€™t help with referrals, patient visits will suffer and the revenue will decline,â€ said Peter.
â€œA Pay- for-Performance pay scale rewards the staff who produce and penalizes those who donâ€™t. As a practice owner, I am always on Pay-for-Performance pay scale. You pay yourself less when the companyâ€™s revenue is down. Why shouldnâ€™t the staffâ€™s income be on the same path? Tomorrow, I will change my compensation setup for my employees,â€ Peter sounded really excited.
â€œSlow down, Peter,â€ said Alicia. â€œBefore you make any changes, review them with a Human Resource and Compliance specialist to get sound advice,â€ warned Alicia. â€œWe donâ€™t need a lawsuit because we missed a legal requirement to make the changes we want.â€
What do you think? Is Alicia right in her reasoning?
Do you know of a PT-specific staffing system that could make Aliciaâ€™s and Peterâ€™s dreams come true?