Hi, this is Dr. Noel Lloyd for Five Star Management.
Not long ago I did a webinar for Dynamic Chiropractic entitled Launch Your Associate Into Instant Success & Profit! And we got a ton of questions from that particular webinar and we printed them all out, and you know what? The predominate question was, how should I pay an associate? What’s the base? What’s the percentage? How does it all work together?
And what I’m gonna do in this short video, is give you my 3-point strategy for paying associates that supports long-term, win-win, associate relationships.
So, congratulations! You’ve gotten busy enough to get an associate, but you want to make sure that you pay the associate correctly. You need some help, just the way you want it, you also want to be able to get some freedom, have the associate cover the practice if you want to take some time off, and then also make the extra income that an associate should produce for your practice.
But, how do I pay the associate?
I pay in a 3-step formula and I want to share that with you.
Step number 1 is first what I call a base salary and I’m just going to write base right here. And the base salary is going to come to them either monthly or biweekly and that’s the money that you pay them for subsistence or what I would call survival plus. If the base is too large, it will actually demotivate the associate and if the base is too small, they can’t live or exist in your particular area.
Now, a base is going to vary wildly. If you’re in Manhattan, downtown New York City, you’re going to have to have a higher base than if you’re in Utah, in one of the smaller communities outside of Salt Lake City. If you’re in the Midwest, where the standard of living means that you can get an apartment, and transportation, and food for less money than a large metropolitan area, those bases are going to vary. So you have to know what the base is in your area.
Now, the way that you find that out would be checking some of the other competing ads that are in the journals or in the job boards where the associate ads are posted. Also in your base, you may include health insurance, I do. You also may include either part or all of the malpractice insurance, I cover half in mine and then you also may include paid vacation and associates start to accrue vacation points in my practice after the 8th month.
So, there is a base salary and the base salary can have also insurance and can also have paid vacation. So, that’s the first piece: The Base.
So, we have a base salary, but the base isn’t going to produce a real good long-term relationship and that’s when we get to the second piece and that’s what I call the bonus.
Now the bonus is typically a percentage of the work that they do, that you collect, and they get a percentage of the work that they do, that you collect, and that goes to them. A percentage of that goes to them. I want to give a better definition of that. They get a percentage of the work that they do on new patients that they recruit and bring in the office and take care of and that you collect on.
Let me tell you why I define it that way. You can have an associate actually competing with you in your practice for patient care. You’ve hired this associate, they have a base salary, they’re getting a bonus, and they know that if I get a percentage of patients that I take care of, I’m going to dive in and take care of as many people as I possibly can.
I’ve actually had doctors tell me that they’ve got patients that their associates are competing with them for. They’re not going out and getting their own patients and I said, well that’s the way that you set up the bonus. You set up the bonus incorrectly.
So, the bonus, to be set up correctly, I believe needs to be a percentage of the patients that they bring in, that they actually render care on, and that they collect the money on.
So now the percentage can vary, but I typically want to have a model where my associate, at a reasonable volume, can be paid $70,000-$100,000, eventually over a period of time, if the bonus is right.
And also, if the bonus is right, the base disappears. Here’s what I mean by that. If the associate is super successful and doing a very very good job, then they’re bringing in lots of new patients, and they’re rendering care, and you’re collecting, and their actual bonus will overshadow the base, and the base goes away altogether. So this is what’s called a bonus against a base system.
So, we’ve got the base, we’ve got the bonus, but you know what, there is also a question that I’m sure you’re asking yourself. Well, how does the associate actually get their new patients? Now, that’s in number three that I’ll cover next.
So the third part of the training that I want to talk about is what I call the boost and the boost is success training. Let me ask you a little bit about the money that you’ve spent on success training. I’ve talked to doctors that have told me that on coaches and training and seminars and systems, they’ve paid well over $100,000.
Think also about how much that training has earned you. For many people that I know, for instance in Five Star Management, I’ve seen people go from collecting a third of a million to collecting a million and a third. That’s a full million-dollar increase and that’s an increase that happened over a period of about four or five years. And lots of doctors that I coach have increased by $200,000 year after year after year after year.
So the boost or success training is extremely valuable. The way that you pay your associate is with a base, against a bonus, and you’re going to provide a boost or success training.
Now, in your ad you need to offer success training, you need to find an associate who values success training, and then you need to make sure that you do success training. But what areas should I train as far as success is concerned?
I want them to hit bonus as quickly as possible so I’m going to train on how to get new patients. And if I train on how to get new patients, they get into bonus as quickly as possible, the base disappears, they’re actually making me more money than they’re costing me, and they’re learning like crazy.
Now there was a question, in fact I’ve got it right here on the table. Well, what happens if you train them so well and learn how to get their own new patients they’ll just leave?
You know, here’s my experience. Nobody really feels like they’re well cared for in a good relationship, that’s a win-win associatship, if you’re keeping secrets from them. And so I want associates to come and stay and work with me for a long time. But first I want them to be as successful as possible. And then I want that doctor to get into bonus.
Now, I work backwards from the money and here’s what I mean by that. I have a game plan to help my associates get up to a certain patient volume with their bonus where they actually make $100,000 a year. And that’s a 83-33-83 a month. And if they do that, trust me, I’ll do fine in the process.
And so my boost or training or way I train the associate is to really, really work on new patient marketing, great day 1, great day 2, and also retention.
So, let me recap here. Number 1, they get a base. That’s what I call survival plus; enough to eat and keep a roof over their head. Number 2, they have a bonus and a bonus that motivates, but also a bonus that doesn’t hurt my practice, a bonus that motivates them to build their own practice.
And then finally a boost, and by the way, in this boost process where I am training them in all areas of practice success, we build this great relationship. My experience is that the doctors, who’ve been the most successful with me, have stayed with me a long, long time. I’ve also experienced this from other clients telling me that when they kept things from their associate, the associate felt discouraged and they weren’t doing good in training and they moved on.
So, base, bonus, and boost. That’s how I do it.
This is Dr. Noel Lloyd for Five Star Management and I hope that helps.