The Intake

Insights for those starting, managing, and growing independent healthcare practices

How to determine and budget compensation for new medical practice staff

Calculate competitive cash and total compensation for each medical staff salary at your practice in order to hire strong talent and set your budget.

Female physician looking at digital tablet with medical practice staff member.

At a Glance

  • Numerous factors influence the value and pay of a given position within the medical marketplace, such as licensing or certification requirements, education and knowledge prerequisites, and the availability of qualified candidates
  • Bonuses come in various forms, including sign-on, annual performance, location allowances, retention, and tuition forgiveness. They should be structured with certain stipulations, and agreements must be drafted legally, with both parties having a clear understanding of expectations
  • Benefits constitute around 30% of the total compensation package, encompassing health insurance, dental insurance, paid time off, retirement plans, and others. Most of these benefits are considered basic expectations of employment for physicians/providers

Unless you are fresh out of residency, you know there are several components to calculating compensation packages. Compensation isn’t just about base pay, but a complex blend of elements that includes bonuses, incentives, benefits, and calculable perks.

Knowing about these components is one thing, but applying them to ensure you pay your medical practice staff competitive market rates is another. Read on to learn more about current pay practices and how to offer genuinely competitive rates for your area.

How do I know what is considered competitive base salary?

Should a physician or office administrator be paid the same regardless of where they work? The basic answer is no.

Many factors determine how any given position is valued and paid within the marketplace. A few of the critical elements include:

  • Licensing or certification requirements
  • Education and knowledge requirements
  • The availability of qualified candidates

How a given position is valued within the marketplace doesn’t necessarily indicate how it is valued in terms of the practice’s success, but can indicate how challenging it will be to hire for it.

Cost of labor versus cost of living

The costs of living and labor are different measures that are tied together. 

For instance, hiring a medical billing specialist in San Francisco, CA costs more than hiring a medical billing specialist in Columbia, SC. It is more expensive to live in San Francisco than in Columbia, but the role is the same. The cost of labor for the job is based on job expectations. Once you establish that cost of labor, apply geographic differentials to that position’s monetary value to adjust for the variance in the expense of living in your area.

Finding local salary information

So, how do you find competitive salary rates for specific positions in your area? There are several avenues you can take to uncover this data.

One option is to buy salary survey results. Reputable salary surveys are compiled from numerous participants nationwide. These results are lagging data. However, they remain relevant because they provide a general pay range for each job (minimum, midpoint, and maximum). These surveys are available from multiple sources:

  • The American Medical Association and similar entities produce a bi-annual survey
  • Salary.com and Comphealth.com compile multiple reports for purchase. The inherent challenge with some of these surveys is that the parties that compile them offer recruiting services and therefore have a vested interest in the results.
  • Medical school career centers share relevant salary information

Review local job postings for your specific area. Looking at sites such as Indeed, LinkedIn, Comphealth, Monster, or Hire Velocity, among others, can indicate what others offer for similar positions.

Create or join a local network or roundtable. Learning from local physicians or medical administrators can provide valuable insight, both into others’ approaches to hiring and compensation and into the local challenges you may share. 

Base salary information by specialization

AMN Healthcare’s 2022 salary survey provided some interesting base salary results. These results test the perception that every position’s salary value increases year over year. Still, there is high-level information available about average general pay practice for experienced medical providers/practitioners.

Even though their positions are paid differently than a physician’s, your office administrative staff’s functions are critical to running things efficiently and smoothly. They’re your patients’ first impression of your practice and take the brunt of their frustrations. Indeed.com has provided the average annual salaries for 12 different jobs, some administrative in nature, others focused on medical staff functions.

Base salaries will account for the majority of your staff budget amounts. However, there are still more items to consider when planning a total compensation number.

Interpreting how to apply salary ranges to a candidate offer

A salary range spans the minimum to the maximum that a position might be compensated. Where an offer falls within a salary range generally indicates the experience, expertise, and training that a candidate brings to the job. An individual paid toward the minimum end of the salary range is likely new to the field or role and has much to learn. Midpoint earners are often competent in the position and contribute to the overall development of the practice. A staff member paid near the maximum end of the salary range brings extensive experience to the functioning of the practice and brings innovative ideas and skills.

If you only have a mean number and want to develop a reasonable salary range, a 50% spread is appropriate in today’s marketplace for salaried, professional-level jobs, and 40% is generally used for administrative or hourly functions.

A 50% spread is appropriate in today’s marketplace for salaried, professional-level jobs. ”

What types of bonuses should I consider, and who should be eligible?

Planning for bonuses and incentives can be challenging in a medical office environment. Most bonuses are offered up-front as part of the physician/provider hiring process. However, others, such as the quality of service bonus, may be earned by most staff members annually or in an effort to retain staff.

These bonuses are often given in terms of the following:

  • Commencement or sign-on bonus: $32,636 on average, regardless of specialty
  • Annual performance bonus: for physicians/providers, an average of $27,000 regardless of specialty; for administrative office staff, an average of up to 5% of base salary is typically budgeted for optional performance bonuses
  • Physician/provider location allowance: an average of $10,718
  • Retention bonus: These vary and are specific to local market conditions and competitiveness
  • Tuition forgiveness bonus: an average of $80,923

As with any well-structured bonus or incentive program, these should not be considered a guarantee but an enticement or reward.

Different ways to structure bonuses

With the exception of annual performance bonuses, most bonuses have stipulations attached to ensure the practice and recipient receive fair compensation for the amount in question.

Below are examples of how physician/provider bonuses may be structured:

  • Sign-on, relocation, and retention bonuses: a 1-year employment commitment is expected. Should the recipient leave before the 12-month expectation, a prorated sign-on bonus amount will be repaid.
  • Tuition forgiveness bonus: This varies depending on the amount of loan forgiveness offered to the recipient. These may be given in equal 2 or 3-year amounts with the expectation of an additional 12-month completion of employment. It also may be structured as an up-front 1-time payment with the expectation of a prorated return payment should they terminate their employment before completing an expected 3-years of performance.

Have your legal counsel draft these agreements to ensure they comply with your local, state, and national compliance standards. Additionally, both parties must sign these agreements to ensure everyone understands the expectations attached to the associated compensation amounts.

Total cash compensation

A total cash compensation picture evolves when base salary is combined with eligible bonuses and incentives. A 2022 compensation survey published by Medscape.com evaluated annual salaries for physicians and medical specialists. Another relevant source of up-to-date information can be found at MGMA.

What benefits are part of a total compensation package?

On average, benefits account for approximately 30% of a total compensation package. This figure includes components such as:

  • Health insurance
  • Dental insurance
  • Paid time off
  • Group malpractice/liability insurance coverage
  • Retirement plan option(s)
  • Continuing medical education allowance
  • Disability insurance
  • Life insurance
  • Travel stipends

Physicians/providers in today’s marketplace consider most of these benefits a basic expectation of employment.

Are there benefits that aren’t calculated in the total compensation?

You can offer several benefits to improve morale and job satisfaction. Some examples include:

  • Flexible schedules
  • Staff celebrations and parties
  • Well-being programs or discounts at local partner establishments
  • Staff lounges 

The above optional perks can lift your practice above others when it comes to employee satisfaction and retention.

You’re ready to make decisions about your compensation budget

Determining optimal medical staff compensation and benefits can be challenging. Employers and employees face multiple variables, including local and regional competition, as well as practice and individual needs.

It is safe to say that the medical marketplace and characteristics of medical staff compensation and benefits are under constant change and evolution. Practices must balance their needs with their finances.

Creating your staffing budget based on the experience level you need for a position and working within the salary range with those parameters in mind will set up your practice to offer the competitive compensation required to attract and retain skilled medical staff.

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Karmin Gentili

Karmin Gentili has been a freelance writer and editor since 2016. She has over 25 years of experience in corporate HR and compliance consulting. She has worked to further elevate her skills by pursuing and receiving multiple certifications, including copywriting, video scriptwriting, effective content positioning, case study writing, and SEO. Her love of writing motivates her to use those skills to develop content for the medical field that ensures others can work toward achieving their goals.

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Drew Sutton

Dr. Drew Sutton is a board-certified ENT physician. He has vast experience in treating all aspects of ENT, with particular interests in disorders of the ear and nasal and sinus disease. During his career, he started and managed an independent, single-specialty medical practice in a large metropolitan area.

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