October 1996 Bulletin

Are you paying your staff fair wages?

How to balance salaries and need for economical practice

by Robert B. Connelly

Robert B. Connelly is a practice management consultant with The Health Care Group, a national medical practice consultation firm based in Plymouth Meeting, Pa.

Your staff plays an important role in your practice, from scheduling to patient preparation and education, to billing, coding and collections. They are your public relations agents and they generally take care of the office so you can focus on providing excellent orthopaedic services to your patients.

By paying staff salaries that are as high as they must be, you can help ensure practice success. However, in these tough economic times, you also must control your costs. This balancing act is often difficult, because you must walk a fine line stretched between paying salaries that are high enough to attract and retain good employees while running an efficient and economical practice.

One way to make sure you are paying the optimal staff salaries is to compare your salaries to industry standards. These standards will help you determine what a fair wage should be.

Generally, there is not much staff salary fluctuation from one specialty to the next. For the most part, the range of salaries, for example, for an office manager, are the same whether yours is an orthopaedic, ophthalmology or cardiology practice. Of course, not every practice is staffed the same way and not every job description is standardized, so variances do occur, even among employees with the same job title.

Over the past few years, as managed care has become increasingly dominant, payers have ratcheted down physician payments. Practice owners are now reconsidering the salaries they are paying their staff employees, especially if staff salaries are substantially higher than normal, or perceived as such. Remember that your salaries must remain competitive.

Control your expenses

To control your staff salary expenses, survey your practice to determine exactly what every employee is doing and compare your data to your formal job descriptions. If you do not have formal job descriptions, generate them based on what your employees do now and what you want them to do. Next, establish a salary range for every practice position, based on the responsibilities and demands of the job and industry norms. If necessary, restructure your practice based on what your staff should be doing.

Consider the changes managed care has made or will make to your practice when you redesign your jobs. It may be necessary to redesign staff positions and redefine staff responsibilities to compensate for the additional requirements managed care companies demand. If managed care penetration into your practice has grown substantially, but your job responsibilities have remained the same, your overall efficiency may suffer.

Staff salaries and benefits represent a huge percentage of practice costs, second only to physician compensation. If some employees are not contributing as much as you might want or expect them to contribute to your practice's success, dismissal may seem to be an easy answer to cost control, but think twice about making that extreme decision.

Remember that you spent considerable resources to find, hire and train your employees. If you simply let them go, you lose that investment, and firing people damages office morale. Consider the functions that must be performed and redesign your jobs. Assess whether or not any employees are expected to do too much or too little work, compared to practice needs. As possible, reassign personnel to do the work under your revised job descriptions.

Do the job right

It will be difficult-or impossible-for the practice's physician owners to try to make these changes without personal bias and with cold objectivity. Even the initial analysis might be difficult for physicians to perform, especially as the task is time-consuming and would probably interfere with patient care.

Delegate this responsibility to your office manager or practice administrator. Typically, the non-physician head of the practice's administrative staff knows all of the practice employees and knows, or at least has an working instinct, for what work needs to be done and who should be doing it.

Of course, performing this type of analysis solely on instinct or "feel" can produce poor results. In larger orthopaedic practices and clinics, administrators with advanced training and extensive experience in handling large numbers of employees have the necessary formal training.

If your manager or administrator does not have this training and experience, hire an outside consultant to work with your manager or administrator to evaluate your practice, write your job descriptions, assess your current personnel and project your current and future needs.

Have the consultant handle the restructuring and restaffing of your practice, especially the personnel changes, and also determine if there are any other "money leaks" in your practice that can be sealed without juggling personnel. For example, you may be paying too much for malpractice insurance, you may be able to renegotiate your office lease, or you may be paying far too much for supplies. Evaluate all practice expenses and possible alternatives to reduce your overhead costs.

Personnel evaluation

Annually evaluate the performance of every employee, and make sure everyone understands how the evaluation process works. Be frank and fair. Establish a range of salary increases, for example, 0 percent to 6 percent, with an average of 3 percent. Award raises on merit. Giving every employee the same 3.4 percent raise encourages poor performers and discourages harder-working employees.

When you plan your annual budget, include your raises. Consider the amount of money your practice paid in salary raises each year for the past few years, practice growth and employee expectations. Remember that it is important to retain good employees; an annual pay raise that is fair and in line with industry standards will help.

Make sure every employee knows what he or she must do to obtain the highest increase. At annual review time, citing specific incidents and indicators, explain to each individual why he or she received the increase you determined. Explain what must be done to receive a higher raise.

Ask each employee if he or she is comfortable with the job, challenged or overwhelmed.

Allow the employee to have a say in the matter. Listen to each employee; he or she may give you valuable information about the job structure, business systems or employee chemistry. He or she may be aware of a very real problem that you simply have not detected.

Base staff raises on incentives, so your practice rewards what you need your employees to do and expect them to do in the first place. Hold your employees accountable for their own job performance and evaluate them objectively. In so doing, you eliminate confusion and limit opportunities for dissension.

© 1996 The Health Care Group

Staff salary ranges

Less than 2 years service 2-5 years service More than 5 years service
Position Low Avg. High Low Avg. High Low Avg. High
Executive Dir.1 $27,000 $49,000 $87,500 $26,000 $50,155 $106,000 $20,000 $52,123 $106,000
Office Mgr. 1 $18,000 $31,041 $49,600 $15,000 $30,512 $52,000 $14,400 $34,981 $88,400
Billing Coord. 2 $6.25 $11.67 $20.67 $7.25 $11.62 $18.02 $7.50 $13.52 $22.11
Bookkeeper 2 $7.00 $11.04 $15.60 $8.03 $12.78 $23.28 $8.50 $14.06 $25.00
CRNA 2 $12.40 $28.96 $34.00 $29.00 $32.30 $35.50 $10.50 $32.14 $51.75
File Clerk 2 $4.35 $6.53 $11.14 $4.72 $7.78 $12.05 $5.30 $8.63 $14.00
Lab Tech. 2 $7.00 $10.80 $20.00 $6.50 $12.08 $23.74 $6.65 $13.53 $26.00
Medical Assist. 2 $5.50 $8.89 $16.90 $6.00 $9.56 $19.97 $6.75 $11.36 $25.88
Physician Assist. 2 $16.82 $21.47 $33.65 $16.00 $23.50 $32.50 $19.25 $24.81 $34.88
Receptionist 2 $4.35 $8.32 $15.00 $5.50 $8.88 $16.63 $5.70 $10.41 $20.19
Regist. Nurse 2 $7.00 $14.40 $43.26 $7.00 $14.55 $33.00 $9.25 $15.56 $34.61
X-ray Tech. 2 $9.00 $12.31 $19.80 $8.75 $13.05 $23.01 $7.50 $15.06 $36.88

Note: These are national averages; figures may vary significantly by region.

1 = annual

2 = per hour

Source: 1996 Staff Salary Survey, ©The Health Care Group

'96 salary hikes put at 2.5%-5.1%

The 1996 range of salary increases for all medical staff positions is expected to be 2.51 percent to 5.13 percent, according to data from the 1996 Staff Salary Survey which is published annually by The Health Care Group®. The survey's anticipated 1995 range of salary increases for all staff positions was 2.7 percent to 5.2 percent.

U. S. industries increased salaries by 2.9 percent in the first quarter of 1995, according to the Bureau of Labor Statistics; this is the same increase that was documented for the year ending December 31, 1994.

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