Simplify your compensation approach

No payment trend has eased the struggle to find a fair and equitable compensation method, and determining what's fair and equitable depends on who's doing the judging. For any group, the best advice is to keep it simple.

The differences between practices prevent any formula from becoming the "one-size-fits-all" standard. But still, the similarities between most practices' revenues and expenses lead to some broad principles and model formulas adaptable almost across the board.

Charge expenses against revenues with these three costs in mind:

1. Direct expense—includes cost over which the practice has the most control (books, subscriptions, educational materials, etc.).
2. Variable costs—expenses that rise and fall with production fit in this category (billing department salaries and benefits, for example).
3. Equal costs—some business expenses, like rent and debt service, don't correspond directly to changes in patient volume.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.