What to Consider When Setting a Concierge Physician Salary
If you came upon this article hoping it would tell you exactly how much to pay a new physician, let me apologize in advance. I can’t tell you how much to pay your doctors.
That fact is, there’s no simple, straightforward formula to determine a new concierge doctor’s salary. There’s no “conventional fee plus 10%” equation I can give you.
What I can give you, however, is an exercise in what to contemplate to help you get to a number that makes sense for your situation.
Why It’s Harder to Set a Concierge Doctor’s Salary
As you’re well aware, setting a new concierge doctor’s salary is much more complicated than paying someone to work a cash register for a set number of hours each day. It’s almost laughable to compare the two.
It’s also more complicated than searching for salary recommendations on hiring platforms like Glassdoor, Indeed, Doximity, or MGMA. Those places can provide you with compensation data and maybe a range of salaries, but it’s unlikely they’ll have much, if anything, on concierge practices.
Their focus will be on pay for physicians employed in fee-for-service practices that manage insurance-based patient panels of 2,000 to 3,000. All the details will be very black and white, like two weeks paid time off, set on-call schedules, and which weekends the doc has to cover. But that’s not the job you’re hiring people to do.
Even if I know nothing about your specific practice, I know it’s unique. There’s no set model across the board for concierge practices. So even if the range of salaries the aforementioned websites offer was based on concierge data, it wouldn’t be enough. Your practice is unique — the services you offer, your staffing model, your pricing model — and your compensation will be, too.
What to Consider When Setting a Concierge Doctor’s Salary
The uniqueness of each concierge medical practice makes a set number or formula impossible. But, while their responses will differ, every practice will have similar questions they need to consider before setting a new physician’s salary.
The following are four principles to contemplate as you prepare to hire a new concierge doctor and set their salary.
1. Equity Structure
When it comes to compensation, there’s a big difference between someone who comes in as an employee and someone you bring in as a partner and fellow entrepreneur. The key here is to know which type of position you’re looking to fill.
Employees
A concierge doctor coming in as an employee expects a base salary and a good day’s work. Yes, they’re willing to go above and beyond as a concierge physician, but they don’t want to get involved in the long-term strategy of building the business.
It’s the difference between someone who comes in to be “fed” and someone who comes in to “hunt.”
There’s absolutely nothing wrong with hiring doctors in this capacity if that’s what you need. They can be a huge asset. But these are not the physicians to offer equity to.
Partners and Peers
For physicians who want to be part of the fabric of your practice’s growth infrastructure, there should be upside in the way of equity. They’re coming in as partners and peers, and they should be able to invest into that.
Knowing from the start which role you’re looking to hire for makes an enormous difference here. If you want an employee but you’re giving away equity, you’re giving away equity too cheaply. If you’re looking for a partner and don’t roll equity into the conversation, you’ll find it challenging to hire the right people.
Analyzing what you actually want up front is essential to knowing what that equity consideration will look like.
Succession Planning
Then, you have further equity questions to contemplate. Let’s say you determine you’re looking for a partner. How do they fit into your growth plans? What potential future do they have with your practice?
For example, would they be willing to operate another location under your brand? Would they be interested in taking over your practice when you’re ready to transition into another role or retire? How will they fit into your succession plans?
All of this will play into how much equity your new concierge doctor earns and how quickly. And, of course, you can stay flexible. Maybe you hire a peer simply to work side by side with you in the practice, but after three years you realize they could be your successor. You can revisit the equity conversation at that point. Either way, starting with the end in mind is paramount for equity considerations.
2. Physician Characteristics
Experience
Some practices won’t consider new candidates until they’ve been practicing on their own for five or more years. Others welcome doctors straight out of residency.
Again, neither is right or wrong. What matters is that you take into account the particulars of your practice and the individual you’re considering.
Would you be willing to take someone right out of residency or someone with three years of experience if they seemed like the right fit? If so, you might not want to set a five-year experience requirement in the job description.
A concierge doctor who’s been running their own private practice for 10 years will have higher expectations for salary and overall compensation, but they’ll bring a lot of experience to the table. Those with less experience will probably accept a lower salary, but they will surely need more hand-holding fresh out of residency.
An important and perhaps counterintuitive point here is to not tie your new concierge doctor’s salary to pricing that’s specific to them. In other words, don’t charge X to see you or another experienced physician and set your new physician’s price at X minus 20%. If you do, by perception alone you instantly devalue the care your new physician provides.
What’s more, if you want to reduce your panel size down the road, this sort of structure makes it impossible to maintain your financial metrics. For these reasons, it’s best to decouple the amount you charge for new concierge doctors’ services from their salaries.
It’s possible that a less experienced, employee-level doctor may see that you’re paying them X while charging patients X plus some percentage for their services, and wonder why they’re not earning more. Be prepared to have conversations with them about two things: 1) your tangible costs they can measure, and 2) the risks you take as an entrepreneur that cannot be quantified.
Tangible costs are things like your expenses for overhead, marketing, building costs, finding patients to fill their panel, and more. The risks? The risks are virtually impossible to measure in full.
Over time, what you pay a physician and what you charge for their services should grow closer together. It’s not because of how much you charge for their services, but because some of the expenses on your side will decrease as their experience and patient panel grow.
Panel
Is the person you’re hiring someone you’ll be feeding, or will they be feeding themselves?
In other words, is the physician you’re hiring bringing patients with them, or will you need to fill up their panel? If you need to fill it, do you have an existing waitlist to pull from, or will you need to go out and find those patients?
Think back to how much time and how many marketing dollars it took to fill up your own panel, or that of another one of your doctors. This will give you a good idea of the expense and time involved in bringing on a physician without an existing panel, and how that will affect compensation.
Relocation
If you’re recruiting a physician from outside your immediate market, you’ll likely want to offer to cover their relocation expenses. But an extra $25K to move someone across the country is a major outlay, and you’ll need to factor it into their compensation.
Perhaps (internally) view their first year of salary as prorated to compensate for those moving costs, and then provide a bonus in year two that bumps them back up to the salary target.
3. Benefit Structure
It’s helpful to think about a new concierge doctor’s salary in light of their full compensation package. You incur expenses on all the benefits that come alongside salary, whether they’re traditional retirement offerings or more modern perks.
Are you offering a 401k? Are you matching the 401k? What about insurance? Will you contribute to a match HSA? Do you offer dependent care? PTO? What about perks like time and funds dedicated for CME? We’ve even heard of employers offering laundry services. There are so many opportunities to wrap benefits into your total compensation package to make your practice feel concierge, even to your employees.
Bonuses are another major consideration. You might structure your compensation to include cash bonuses for holidays, performance, and/or employment anniversaries. Or, if your new physician will be buying equity, you might offer an option for them to contribute toward equity purchases over time with a reduced salary.
4. Legal Matters
Finally, consider what legal matters you’ll become involved in for a new physician.
Does your practice plan to pay their malpractice premiums? Or will your new hire pay their own? Do you have a vendor that provides reduced payments for concierge practices?
As you grow and add physicians to your practice, you may need to consider key person insurance. If you become incapable of working tomorrow, how will your practice and all your employees be affected? Will any of your new physicians evolve to be of similar importance to your practice?
Non-compete clauses are another legal matter you may run into. Do you plan to include one in a new concierge doctor’s contract? Then their salary may need to be a bit higher to compensate for it.
Or, does your potential new hire have a non-compete with a former practice or hospital? There are often ways around that, but it should still be taken into consideration. If their non-compete already makes the candidate feel queasy about leaving, they’ll be even less likely to do so for a low salary.
Get All Your Stakeholders on the Same Page
The list above is in no way comprehensive, but it should provide some good starting points to help you think through compensation in the context of your practice’s specifics.
I encourage you to sit down and think through each item. If you have other stakeholders involved in the compensation question, whether they weigh in on your new concierge doctor’s salary, benefits, or equity, bring them into this conversation. You can even share this article with your partners, your CFO, and your legal team to get everyone on the same page.
ROAMD is an international network of membership-based medical practices, coming together to learn, grow, and thrive.
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