Independent Healthcare Practice Owners: Are You Underpaying Your Employees?

Compensation concerns in the healthcare field have been an industry-wide issue for some time, even pre-dating the COVID-19 pandemic in the United States.

According to a Brookings analysis of U.S. Bureau of Labor Statistics’ Occupational Employment Statistics and the U.S. Census Bureau’s Current Population Survey, median wages in health care support, service and direct care jobs fell well short of a living wage and far lower than the median pay of doctors and nurses. Home health and personal care workers earn even less, resulting in some workers living below the poverty line and relying on some sort of public assistance. The pinch has impacted doctors and nurses as well.

Practices and facilities, both large and small, have been impacted, as underpaid, essential, and often-times frontline employees look for new opportunities to be fairly paid for their increasingly risky work, or leave the profession altogether. The pandemic has exacerbated the problem and left many healthcare practice leaders searching for guidance, as they struggle to sustain their staff and stay financially viable into the future.

The compensation conundrum for private practices

For operators of independent or private healthcare practices, the situation may be even more problematic, as they face the threat of losing staff to bigger hospitals and systems that have deeper pockets to attract their people. As such, it’s critical that practice operators are on top of the compensation landscape in their industry, and particularly in their local region.

“You want to be able to keep your talent,” said Rhoda Beaird, whose healthcare team provides accounting and financial consulting services to entrepreneurs within a variety of areas, most notably medical and dental practices. “We’re seeing staffing issues at a variety of practices. When you lose people, more work gets thrown to those left behind and then they can get frustrated and follow suit. Healthcare has been one of the industries hit the hardest. We’re seeing this at every level – from front desk receptionists to top-ranking administrators at the C-level, and those directly in contact with patients. If someone can get a nurse a few dollars more an hour, they have an advantage.”

Questions operators should be asking

The compensation challenge can be especially tough for independent practices located in rural settings (where the quantity of candidates may be sparser) or if they’re located close to a larger hospital or system. These larger locations become instant competition for smaller, private practices, as they can often offer greater salaries and potentially bigger benefits, with a bigger pool of resources to draw from.

According to Beaird, there are certain questions that private healthcare practice operators should be asking themselves to be sure they’re in the “right ballpark” in terms of compensation and lessening the risk of losing their staff to competition. Some basic questions include:

• How does your practice compare to other groups in your area?
• Is your nursing staff properly compensated?
• How will you handle the threat of losing staff to big hospitals that have unlimited funds to pique the interest of your people?
• Is there room in your budget to increase pay for some employees?
• How do your benefits compare?

“As a starting point, it’s important to understand what you’re paying employees versus industry benchmarks if you have access to those statistics,” said Beaird. “But then also, are you listening to your employees, hearing the water cooler talk, identifying concerns during your review process? If there are comparisons happening or any grumbling, then you know you potentially have an issue that needs to be addressed.”

Simple solutions to set things right

If your practice is already seeing the negative side effects of this compensation issue, and you’re unable to increase salaries significantly,  Partner Chris Schultz suggests taking another look at your benefits package to see if there’s room for any meaningful upgrades.

“Can you increase vacation time, work-life balance or offer flexible schedules or paid leave to ease the physical toll put on employees and avoid burnout,” Schultz asks. “There are a variety of things that don’t necessarily have a hard dollar amount that may be extremely valuable to an employee. It’s important that you understand the market, but you must also be willing to get creative and think outside the box.”

Working with an experienced, outside counselor that can independently review your strategy and data versus the market and provide recommendations back can be invaluable.

“A SWOT analysis can identify if there’s an issue and what it may be. We’ve also done comp studies for clients to help them better understand the landscape,” said Schultz. “They’ve been well-received not just by practice leaders but also their staff, that the company cared enough to go out and have this study done.”

How can we help?

We have deep knowledge of the challenges faced by medical practice leaders and their management teams because the firm understands the provider and payor environment. Our team of CPAs includes seasoned professionals who have served within healthcare organizations at the operations and C-suite level.