"How do I determine an appropriate salary for myPA?” This is a question that many doctors ask whenhiring a new Physician Assistant (PA) or when renegotiatingtheir current PA's contract. The answer is:it depends. There are a variety of factors that help determinean appropriate salary for a PA. Benefits such as health insurance,401(k), CME allowance, and malpractice insurance allrepresent a value to a compensation package and a cost tothe practice. On the other hand, PAs that attract their ownpatients, successfully market their practice, and contributeto practice management are often considered very valuableto their practice. So taking this all into consideration, howdo you calculate a fair salary for your PA?
The first thing to consider is that PA salaries can be calculatedutilizing a variety of different structures. There isno published template or right or wrong way to performthese calculations. The secret to success is determiningwhat feels right for you and your practice and then discussingthis openly with your PA to get an idea of what feelscomfortable for him/her. The most successful physician/PA relationships occur when both parties feel that they arecommunicating well and working together toward the sameprofessional goals both for themselves and the practice.
Common Salary Structures
There are three common salary structures for dermatologyPAs to consider:
The first structure, often for new grads or PAs withminimal experience, is a trial period with a base salary only.The trial period is generally six months to one year, anda common base salary for a full-time (35-40 hour/week)PA with minimal experience could range from $80,000 to$90,000 per year. This PA needs to spend time shadowingand learning from his/her Supervising Physician (SP). It isimportant to invest time training your PA early so that youcan build a foundation of trust and respect for the future.This time and money is well spent because you will haveconfidence in your PA's foundation of knowledge, whichwill allow you to spend more time focusing on your ownpatients, complicated issues, and/or surgeries. A new PA may receive some benefits including paid time off, healthinsurance, malpractice insurance, CME allowance, or 401(k).After the six-month-to-one-year trial period, the PA shouldbe very comfortable in the practice. This is when the PAcan become more valuable to the SP/practice because she/he can start to attract her/his own patient referrals and hasearned the trust of the support staff and community. Atthis time, it is common to renegotiate the PA's compensationto a salary + percentage based structure.
The base salary + percentage structure is the most commonstructure for PAs with moderate clinical experience.This formula can be structured in multiple ways. Oneexample is a base salary of $80,000 + 20-30 percent of collectionsafter the PA doubles their base salary in collectedrevenue. This system can be appealing for an SP becauseit allows the PA to “reimburse” the SP for their initial trialperiod salary, before rewarding the PA a commission fortheir increasing revenue. Here is an example, assuming aPA generated $350,000 in collected revenue:
The PA would receive a base salary of $80,000 per year.In addition, the PA would be paid 20 percent of hercollected revenue, after deducting $160,000 (doubleher base salary) from the total collected revenue.Assume her total collections are $350K: $350K - $160K= $190K. Twenty percent of $190K is $38,000. For thatfiscal year, that PA would earn a salary of $118,000.
These PAs generally have moderate experience, and itis customary for the PA to also receive a handful of paidbenefits. Each SP/PA team is unique, and both parties willhave to sit down and discuss which benefits are appropriate.With more benefits, it may be appropriate to lowerthe commission percentage a little, and with less benefitsthe percentage may increase. Another variation of thisstructure is adding tiered incentive steps to the percentageformula, where the PA's commission percentage wouldincrease as his/her collections increase. This is mutuallybeneficial for both parties and is a common structure thatrewards the PA as he/she grows in the practice.
PAs with over three years of experience often negotiatea salary based on straight percentage of collections. At thisstage of the PA's career, he/she should be experiencing a fullpatient schedule and should be generating significant revenuefor the practice. Experienced PAs usually attract theirown patient following and are able to practice without a lotof supervision from their SP, which frees up time for the SPto see their own patients, perform more surgeries, etc. Thenegotiated percentage can vary greatly and is influenced bymany factors. Benefits are usually the most influential factorin determining an appropriate percentage.
Straight percentage salaries usually range from 30 to 45percent of the PA's collected revenue. Table 1 illustratessome of the factors that can help determine where a PA fallsin the percentage range. This list provides only a few of themany factors that are involved when determining a straightpercentage salary. Try to place a value on both the practicebenefits costs and the “intangible” things that your PAbrings to the practice (administrative duties, staff oversight,staff/patient perception, etc.). Sometimes the intangible ismore valuable than the paid benefits. It is very important tochoose a percentage that is not only fair and beneficial toall parties, but that leaves room for growth as the PA establisheshimself/herself in the practice.
PAs that receive percentage-based salaries are generallypaid monthly and occasionally quarterly. It is important foran SP and a PA to have open communication when reviewingthe PA's monthly billing and collection patterns. SPsand PAs can become great partners when they can openlydiscuss any concerns with each other, and the PA can learnfrom the SP how to bill most effectively for the practice.PAs that are knowledgeable about their collections canbe strong assets to practices. It is in their best interest tomaintain their patient load, generate more revenue, and billeffectively in order to maximize their collections and salarypercentage.
A Wide Range
There is a wide range when it comes to dermatology PAsalaries, because there is a wide range of practice settingsthat utilize a PA. Physician Assistant salaries will behigher if their collections are high. This should mirror thepattern of the physician community. Similar to a Mohs surgeon who may have higher collections than a pediatricdermatologist, the same trend would hold true for a PAwho assists a Mohs surgeon, compared to a PA who practicesin pediatric dermatology. Full-time dermatology PAsalaries can range anywhere from $80,000 to $400,000 peryear depending on the PA's collections to the practice. Afull-time, experienced dermatology physician assistant cangenerate anywhere from $500,000 to $850,000 for theirpractice, per year. It is possible for PAs assisting in Mohsto generate an additional $1,000,000 for their practices byassisting their SP and allowing for more cases to be completedper day.
It is not customary for dermatology PAs to be paid hourlybecause they are able to bill and collect similar to an MDand should not be viewed the same as an employee, such asan RN or MA, who cannot generate their own income forthe practice. It is very easy for the billing office to create aseparate category to track a PA's billing and collections, eventhough PAs may or may not bill incident-to through theirSP. Please remember to have open discussions with your PAabout their billing and collection figures. This can be beneficialfor both the PA and SP as reimbursement levels maychange, or other factors influence the overall health of thepractice.
Dermatology PAs are increasing in numbers every year.They can be a huge asset to a struggling dermatologypractice. The relationship between a PA and his/her SP is aunique partnership based on trust and mutual respect. Itshould be a relationship where both parties feel comfortableand gain financial success together.
Katherine Wilkens, PA-C, MHIS, MPAP, ofCertified Physician Assistant Consulting, practicesdermatology in Northern California in a privatepractice. She serves as the clinical administrativemanager for three separate offices, located inSonoma, Santa Rosa, and St. Helena. Katherine has maintainedadditional clinical skills by continuing to work in theED. CertifiedPAConsulting.com.