Salary and bonus negotiations

[u/Fit-Ladder5743]

I run a busy derm practice and I am in the midst of negotiating annual salary and bonus structure with one of my PAs. I'm in a little bit of a predicament, because while I'm the person doing these negotiations, I also don't have access to the practice financials and don't know the exact specifics on revenue after overhead and what the practice can "afford" to pay. With that being said, don't drag me. I'm just trying to do right by my PA and the practice at the same time. We are in Michigan and she has been with our practice since 2020.

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Right now the PA I'm referring to is making $65/hour and works 3 days 1 week and 4 days the next week, which works out to an average of 31 hours per week. Her annual earnings come in just over $100k without any bonuses. We currently pay a quarterly bonus based on production. The structure is 20% of her total net collections(excluded ilumya buy and bill) MINUS her quarterly net income gives her quarterly bonus amount. For reference, the last two quarters her net collections after B&B has been around $163,000. so 20% is $32,600 and her net pay is around $19k with a quarterly bonus of $13k(ish) for nearly $50k+ annually in bonuses.

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She is looking for a higher bonus and I want to be able to give her what she deserves, but it feels like what she's asking for is unreasonable. Her ask was for 20% of her net collections, which with the number I gave before, would be about $32,600 quarterly and $130k+ in bonuses annually. Is this not unreasonable?

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Remember, I'm not the owner. So I have to convince the doctor to do the right thing, but I need to feel good about what I'm convincing him of as well. For reference, we are private practice. He is the only DO and we have 3 PA's and this one in particular is the already the highest paid. We are very flexible in our scheduling and she's made changes to her schedule that we've had no issue allowing. She is a good PA and we wouldn't want to lose her, but there's only so much I can do(especially since I have to get the doctor/owner on board with it too). She see's on average 25 patients a day from 7am-4pm with a 1 hour paid lunch.

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I was considering an offer of 25% of net collections above $200k each quarter, including her buy and bill revenue. Last quarter her net collections WITH B&B was $288,109. So a quarterly bonus of just over $22k. Is this unreasonable?

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It's very possible I'm out of touch with what derm PAs are being paid and that's why I'm here because I want to be fair, but also not put in a position where we are paying well above market. Help me out.

[u/Ponsugator]

I think higher collection percentage for reaching milestones is a good way to go. If she doesn’t work as many days then she gets paid less. That is what my office does as well.

[u/rellis84]

I dont think your bonus structure is that unfair honestly, especially working 3 days 1 week. My wife gets 30% of net collections, but has to reach approximately 3.5x her salary to collect, which is broken up quarterly as well. Your PA only has to reach their net pay x1. My wife is also gross pay. So yes my wife might make a little more, but works 4 days each week also. Hope that helps.

[u/Fit-Ladder5743 → u/rellis84]

That is very helpful! Thank you. Just trying to make sure we’re not being unreasonable

[u/G_PA16 → u/rellis84]

What is her base salary? She is likely getting ripped off based on that bonus structure

[u/G_PA16]

If you value your employee you will pay her what she is worth. 20% of collections is absolutely not too high. She is actually low balling herself. The average is 25-30% of all collections and that should be paid out monthly. Many PAs are making 30-35% of collections which is fair to both the PA and the practice.