Today's Veterinary Business

FEB 2019

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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56 Today's Veterinary Business Leadership First of all, the article did not accurately depict ProSal and how it is supposed to be used, because there is no carry forward in the ProSal method of compen- sation. Regardless of this, I think any associate's salary needs to be dependent upon production. You simply cannot pay a veterinarian and not take into consideration his or her production. That would be financially irresponsible. Even when associates are paid a salary, their salary normally is predicated on their previous year's production or anticipation of their production. Further, the assertion that production-based compensation causes a veterinarian to oversell or overcharge services is not true. My firm works with hundreds of associate veterinarians all over the country and seldom, if ever, do I hear of this problem. When I do, it is normally an indication of a bigger issue such as a lack of professionalism, a poor work ethic or the veterinarian's immaturity. The method of compensation only made these personality issues come to the surface quicker, but again, these instances are rare. I talk about ProSal when I conduct seminars. Overwhelmingly, practice owners who pay their asso- ciates using this method of compen- sation report that both the owner and the associate are happy with ProSal and see it as fair. While ProSal is common, it is misunderstood and, many times, those who say they are using it actually are not. Instead, they are using a modified ProSal. Back to Basics Having been the first to write about it, I have been called the "father" of ProSal. So, let's make sure we truly understand the ProSal compensa- tion method and how it should be applied in your practice. ProSal is a combination of a guaranteed base of compensation and a percentage of production. It is not base plus production; that would be something else. Again, ProSal is a guaranteed base. How- ever, associates are paid a percent- age of their production. I will show you exactly how this works later in this article. Another misinterpretation of ProSal is that some practices pay associates a low guaranteed base. This is not the correct protocol un- der ProSal. Instead, the guaranteed base should be close to what you would normally pay the associate if she were on a salary basis, and it should be a competitive wage (based on their previous year's pro- duction or anticipated production). The percentage we pay an associate under ProSal ranges from 18 to 25 percent. What determines the percentage is the cost of ben- efits afforded the doctors. These benefits might include health in - surance, professional dues, licenses, continuing education and retire- ment plans. Any incremental cost needs to be calculated, added to the guaranteed base, and divided by the real production or anticipat- ed production of the associate. The total compensation package cannot exceed 25 percent of the doctor's production. This number is written in stone. If you take into account all the costs of running a veterinary hospital — rent, utilities, support staff costs, inventory — when you pay asso- ciate doctors 25 percent of their production, do you know what will be left to you as the owner? The An article recently published in this journal ["A Prescription for Change," October/November 2018] declared that it is time to do away with production-based compensation and "all its ills." The article went on to proclaim that production-based compensation is no longer viable as a means of compensation for associate veterinarians. I could not disagree more. By Mark Opperman, CVPM Leadership PRACTICE SMARTER answer in most practices is normal- ly 10 to 15 percent. If you were to exceed 25 percent of production compensation for your associates, you would then eat into that very small profit margin. So, you can pay an associate 18 percent and provide a few sig- nificant benefits, or you can pay 22 to 23 percent with fewer benefits. The total cost of employment cannot exceed 25 percent of that doctor's production. What Is Production? Production is defined as fees charged and collected for services the doctor is formally involved in. So, a veterinarian must have some involvement with the service to get credit for it. As an example, a doc- tor seeing a patient in the outpa- tient clinic might do an exam, vac- cination, fecal test and heartworm check and dispense flea control or heartworm medication. The doctor would receive credit for all those products and services because she was involved in their delivery. On the other hand, if the client came back a week or month later and purchased additional flea con- trol or heartworm medication over the counter, the doctor would not get credit since she was not involved in the delivery of the product. I normally complete a docu- ment called "Credit for Work Done" that enumerates everything the doctor does and does not get cred- it for. I incorporate the list into the employment contract so that there is no misunderstanding. Under ProSal, your associate will be paid twice a month. A com- mon mistake is that some owners pay associates every other week, or 26 times a year. When using the ProSal method of compensation, you should pay your associate only 24 times a year. You don't need new payroll periods to accomplish this. The first payroll of each month for your other employees will be when your doctors get their first check and the last payroll of the month will be when your doctors get their second check. For the two months of the year that have an additional Pro on ProSal Production-based compensation, when implemented correctly, is a win-win for the veterinarian and the practice owner.

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