The Administrator’s Desk: Wanna Raise? You’ll Need to Make Your Case.

What’s that you say? The physicians in your practice don’t shower you with verbal accolades and merit-based raises on a regular basis?

Join the club.

In an industry in which private practices are struggling with shrinking profit margins and growing overhead expenses, guaranteed pay raises for upper-management positions are all but obsolete. Chances are that if you want more money, you’re going to have to fight for it.

Whether you’ve been on the job for many years or if you’re negotiating your wages for a new position, there are several steps you can take to secure the salary you seek.

Do your homework

First of all, says Peter Ronza, director of compensation and benefits for the University of St. Thomas in St. Paul, Minn., you’ll need to gather some numbers - call it ammunition if you like - to help you make your case. Determine what the services rendered by professionals in your position are worth in the marketplace, taking into account geography, years of experience, and any credentials you may possess. “One common mistake managers make is they get overly emotional when asking for a raise,” says Ronza, who also works as an independent benefits consultant for his healthcare clients. “You need to have some objective data that justifies why it is you actually deserve what you’re asking for.”

The Medical Group Management Association’s “2006 Compensation Survey Based on 2005 Data” reports that the median annual total compensation (including bonuses and benefits) for administrators at practices with six or fewer physicians is $77,000. Their counterparts at practices with seven to 25 physicians earn a median $101,791, while administrators at healthcare networks with 26 or more physicians earn $133,126.

The Bureau of Labor Statistics reports that the median annual compensation of medical and health services managers (which include healthcare executives at group practices) was $67,430 in May 2004, the most recent year for which government data are available. Local recruiting firms, medical societies, and informal discussions with your peers can help you determine salary figures that more accurately reflect your circumstances and local market.

Next, you’ll need to benchmark your own performance, says Cynthia Dunn, FACMPE, a healthcare consultant for MGMA. Determine how efficient your office is at collecting accounts receivable (A/R) and spotting patterns of payer delays. If you’ve reduced the number of days your practice’s claims remain in A/R (which ultimately increases your physician boss’s compensation), be sure to make him aware of it.

Dunn says you can easily quantify how your practice stacks up to national averages by benchmarking your number of days in accounts receivable, overhead costs, and net collection averages with the numbers in MGMA’s 2006 “Performance and Practices of Successful Medical Groups” survey.

Other quality indicators, including employee and patient satisfaction, are also important to a practice’s bottom line. Dunn notes that many administrators use their IT consultants to create short patient surveys on their practices’ Web sites. Alternatively, sites like www.surveymonkey.com allow you to create online surveys for free. Many practices print the link to those surveys on their business cards. “Some go so far as to provide access to a computer in their reception room so patients can complete the survey,” says Dunn. “It’s very important that you benchmark more than just the performance numbers.”

Finally, you’ll need to complete a thorough self-evaluation, highlighting any cost savings you’ve achieved for the practice as well as any additional benefits you’ve brought to the office.

“You should be able to show the physicians, who rely on you for budget advice, how they can afford the raise you’re asking for,” says Lori Wyvill, CMM, practice manager for Allergy, Asthma & Clinical Pharmacology in Houston. “You can show them that you’ve saved them money here and here, and that you’ve brought in X amount of additional income, so with the extra money the practice has, they can afford this raise.”

Use finesse

When you make your case for your raise, remain professional and nonconfrontational. Tell your physician bosses that you’re happy with your position and with your colleagues. “If you go in acting like you’re the greatest thing since sliced bread and the place couldn’t run without you, you’re likely to get nothing,” says Ronza.

At the same time, Ronza advises leaving your haggling skills at the door. Wheeling and dealing may be standard procedure at car dealerships, but Ronza says it’s off-putting in a professional setting. “This isn’t a collective bargaining session,” he explains. “If you break out some number that’s completely out of line with the market reality, your board is going to be shell-shocked at your cockiness. It’s insulting.”

That said, Wyvill insists that it never hurts to ask for slightly more than you expect to get - within reason: “You have to keep the number realistic, of course, but you also have to give yourself some room to negotiate.”

Using market research, performance indicators, and a running list of your personal accomplishments, you should be able to quantify the pay raise you feel you deserve. In fact, says Wyvill, physicians expect you to do so. “It doesn’t get you very far when you say, ‘I want a raise,’” she explains. “They want to know how much you’re looking for, either a dollar amount or a percentage increase.”

If you fail to secure the higher wages you feel you deserve, ask for a review in three to six months and, if you don’t have one already, obtain a letter of agreement between you and your employer that lists your job title, responsibilities, and compensation. “You don’t necessarily need a contract,” says Dunn, “just a written document that outlines what everyone’s expectations are. That requires the physicians to think about what they’re asking you to do for their practice, and it takes the assumptions out of the picture.”

And it gives you a new benchmark by which to measure your performance the next time you ask for a raise.

Finally, when making your case for higher pay, don’t forget to consider your total compensation package - including benefits. If your healthcare premiums went up last year by 8 percent, for example, suggest that your practice pick up that expense rather than splitting it 50/50, which employers often do. Or propose a more generous employer match for your retirement contributions.

“Employees tend to forget about benefits and concentrate only on their actual pay, but they can get a lot of kick on the benefits side too,” says Ronza. “If you’re asking for more anyway, look at your benefits and determine if there’s something there that needs to be brought up to par as well.”

Shelly K. Schwartz is a freelance writer in Maplewood, N.J., who has covered personal finance, technology, and healthcare for 12 years. Her work has appeared on CNNMoney.com, Bankrate.com, and Healthy Family magazine. She can be reached via editor@physicianspractice.com.

This article originally appeared in the April 2007 issue of Physicians Practice.