Understanding how compensation models work in dermatology is an important component of a successful job search. What variables turn a “good” offer into a “great” offer? The goal of this article is to discuss some of the different compensation models that exist to help you find the right fit for your career.
Fixed compensation models
There are three types of fixed compensation models: guaranteed salary, academic salary, and fixed hourly or per patient rate. Many jobs will offer some component of a guaranteed salary for some or all of the contract. In this model, you make the same amount regardless of how many patients you see. Usually there is a required hour commitment, such as 32 hours of patient-facing time per week.
An academic salary model is similar to the model above, however academic salaries may vary based on academic rank, research, and teaching responsibilities. Often academic positions will have less patient-facing hours to allow for these research and teaching endeavors.
A fixed hourly or per patient rate is exactly how it sounds: you make a set rate per hour or per patient. These models are particularly common with locum positions.
Productivity based compensation models
A common model in private practice is compensation as a percentage of collections, in which you collect a fixed percent of all of your insurance collections. If your rate is 40%, and you collect $800,000 for a given year, you make $320,000.
Similar to the above model, percentage of production provides a percent of the production instead of the final collection amount. There are many different ways to define what “production” is, so do your research to ensure that the model is fair for you.
Relative value unit (RVU)-based collections is a very common model in hospital-based practices. Each office visit and procedure has a set RVU amount, which is standardized. Each institution assigns a reimbursement amount per RVU, and this will change based on the institution. If your rate is $60 per RVU, and you generate 6000 RVUs in a year, you make $360,000.
Tiered collections are variances seen in both of the above models. You can make 40% of collections up to $800,000, then make 45% of collections thereafter. These are meant to incentivize you to see more patients because your take-home pay will increase as you generate more income.
Hybrid models are popular in private practice and often have a 1-2-year salary guarantee prior to switching to a productivity-based structure. Within the guaranteed years, there may be an incentive to convert to a productivity model once you exceed a set amount in annual collections.
Other Considerations
Ownership/partnership models will vary based on the type of ownership structure. Often there is a set time period prior to an offer of ownership (1-3 years is common). Becoming a partner usually requires you to financially commit to the practice. This may be in the form of a lump sum payment to buy into the practice, or it may be with salary deferral (taking less salary in the first few years until you become a partner). Once a partner, you will likely make some percentage of the practice’s overall profit. Not every partner may be equal, and your rates may be lower than the founding and longtime partners.
Midlevel supervision requirements vary based on the state and what guidelines may exist. NP and PA provider supervision may be an expectation for you as part of your contract or it may be an option to earn more money. If you are compensated for your oversight, that could be in the form of a fixed annual amount, or a percentage of their collections (similar to the collections-based models above). Look into what legal responsibilities and liabilities you have regarding oversight in your state prior to agreeing to it.
There are many different nuances to these collection models, and what is being offered will vary dramatically based on location and practice type. The best thing that you can do is to look into as many opportunities as possible within your region to determine what the going rates are, which will ultimately allow you to identify the above average opportunities.
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