Compensation concepts

Your group's compensation formula may be its most jealously guarded sacred cow. Whether sensible or not, it continues in place as long as members don't object. And your members will likely not object as long as the pot of available income keeps growing. Despite the possible upheaval, it's time to reconsider partner pay. These five basic principles form the foundation of any income division format you design:

• Group members must trust the income division process and the people implementing it
• The formula must be reasonably simple and clearly understood
• The formula must provide some equity, although each member may not necessarily be treated equally
• Include proper incentive to work for the growth of the group, and promote practice goals
• The members must offer fair evaluations of each other and the practice's needs

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.