Paying the Manager

May 1, 2005

We are a 4-physician group in Illinois, with a practice manager who oversees everything except bookkeeping. I would like to know the average salary for this position, and how to calculate performance bonuses.

Question: We are a 4-physician group in Illinois. We have a practice manager who oversees everything except our bookkeeper's work. I would like to know the average salary for this position in this size group in our area. Also, we'd like to provide performance bonuses to this employee. But how do we figure out how big a bonus to give her?

Answer: According to the Medical Group Management Association's "Management Compensation Survey: 2003 Report Based on 2002 Data," managers in practices with six and fewer physicians earn a median of $81,489.

The Health Care Group also publishes staff salary data. For the central U.S., it reports the average salary for someone with two to five years' experience as $57,624 and for more than five years' experience as $68,353.

Since these numbers are all over the map, they won't help much, I suspect, but that is the best there is unless your local medical society does a survey. You can also call around to some practices that you refer to or get referrals from and do an informal survey of your own.

As far as incentives, a profit-sharing plan would work nicely. She gets, say, 5 percent of her salary as a profit-sharing bonus payment at the end of the fiscal year if profits exceed a specified amount you agree on (higher than last year but not unreasonable).

This, I think, can be better than tying it to more specific measures like lower days in A/R, fewer denials, or lower overhead, because profit-sharing is tied only to what really matters and keeps the manager's eye on the bigger picture. No sense cutting overhead just to end up decreasing productivity, for example.

It also makes the manager a sort-of semi-partner, in that they share in profits the same way the partners do. I think that respect is important.