Medical Practice Management
Sep 27

Sample practice administrator bonus plan

I ran across this sample practice administrator bonus plan in one of the numerous listservs I subscribe to; I thought it was a pretty good one and thought you’d like to see it:

Part 1 – 1% of total practice collected revenue above the revenue target.  The revenue target is approximately 90% of what we agreed would be a good year.  The target is adjusted if necessary for special circumstances (such as physicians joining or leaving the practice).  If collected revenue is below the target, a negative bonus is possible (assuming I would even be employed).

Part 2 – 20% of the average partner’s compensation above the revenue target.  Again, the target is 90% of what the physician’s agreed would be a good year for them.  A negative bonus is possible.

Part 3 – a sliding scale based upon my annual review done by the Executive Committee.  The maximum is equivalent to 9% of my salary.  My review is done on a 1 to 5 scale.  There is no bonus if the rating is below 3.  At 3 I receive 60% of the maximum.  The percentage then increases by 2% for each 10th of a point above 3.  In the event that they do not complete a review the percentage is assumed to be 75% (this has not happened since we went to the bonus plan, but it happened at least every other year before that).

NOTE:  An important part of setting up the plan is establishing what a good year looks like.  It should be based on realistic expectations for your practice.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →