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Figure percentage compensation

November 1, 2012

There's a quick way to calculate compensation for veterinarians who bring new clients to a practice.

Q: I came to a new practice and brought a plethora of new clients. How can I determine what compensation percentage is appropriate?

Denise Tumblin, CPA, a Veterinary Economics Editorial Advisory Board member and president and owner of Wutchiett Tumblin and Associates in Columbus, Ohio, says there are several factors to consider.

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First, Tumblin says you should find out whether the compensation percentage is blended (one percentage for all services and medical products) or split-rate (different percentages for services and medical products). Other factors to consider include the staff-to-doctor ratio and your status as an employee or an independent contractor.

"If you're an employee of the practice, a reasonable blended compensation percentage with a 1:1 staff-to-doctor ratio would be 25 percent to 26 percent," Tumblin says. "As the staff-to-doctor ratio rises, the compensation percentage drops."

For example, with a 4:1 ratio, Tumblin says the compensation percentage would be 20 percent to 21 percent. If you're an independent contractor and pay your own taxes and benefits, a reasonable rate would be 2 percent to 3 percent higher.

If you receive a split-rate compensation percentage, Tumblin says with a 1:1 staff ratio, the doctor compensation for medical services should be between 27 percent and 31 percent and the product percentage should be between 4 percent and 10 percent. Again, an independent contractor should add 2 percent to 3 percent.

Make sure to consider all these factors when determining a reasonable number that fits you and your new practice.

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