Most medical groups have a two-level physician engagement/compensation structure: owners and non-owners. They also tend to have a ladder to ownership status along which physicians advance to the top rank. In some groups, all it takes is time; unless someone goes off the deep end, his or her partnership status is just a few years away.
But it doesn’t have to be this way.
In other professional firm settings, practices have outgrown that type of model. Instead, they’ve adopted multi-level variants.
For example:
- An initial level of “contract providers,” professionals who are specifically designated as not being on the ladder to ownership.
- Other professionals begin on the ladder as salaried or production-based employees.
- If, and as, they advance through the ranks, their compensation increases. However, inherent in this system is the fact that a significant percentage of individuals will be culled from the ranks.
- Even after advancing on that basis, not all of the senior employees will be invited to become actual owners. Many will be given titles that indicate senior status but which have no, and perhaps no hopes of, ownership interest, for example, the somewhat humorous law firm title “non-equity partner.” Non-equity “partners” receive more compensation than other non-owners.
- Last, there are true equity partners or shareholders who in addition to draws or other distributions, whether set up as salary or as production-based payments, are also entitled to a share of the entity’s profits.
Just because every other medical group in your community or even your specialty is structured using a two-level model doesn’t mean that you are prohibited from exploring another design.
In fact, compensation plans must be matched to a medical group’s culture and to its overall business strategy. An updated compensation plan can be merged with a redesign of your practice’s advancement track and with its strategic goals.
Let’s talk about it.
