Incentive Programs vs. Raises


Ways to retain and reward your staff.

By Michael Vacon, PT

When I started out as a physical therapist 25 years ago, I was very excited to embark on a career that would allow me to help people . . . and maybe even make up to $50,000 a year. I remember looking at the back of the old PT Bulletin and seeing all those glamorous jobs offering those “huge” salaries and thinking that someday, if I worked really hard, I would get there. My first job paid me $28,500 a year and I had one of the highest paying jobs from my graduating class. Boy, have things changed in the last 25 years. Back then, $30,000 a year was a good salary and $150 a visit for reimbursement was pretty normal. There was only one insurance offering that I can remember that had a copay ($3), so we never even thought to collect it. Now the starting salary for a new graduate doctor of physical therapy is closer to $65,000 (depending on your market), the average reimbursement is hovering around the $80 to $90 a visit range, and the average copay is somewhere between $20 to $30.

With all these big changes in payment from insurance companies and increases in salary, have there been any big changes in the way physical therapists are being paid? Are employees still expecting to get a 2 to 5 percent salary increase every year, just for being a good employee? Can you afford those employee raises each year as other costs continue to increase for health insurance, rent, and supplies while your payment stagnates or decreases? Your largest expense every month is most likely your employee costs, so how do you keep that in check and not turn over your entire team every few years as they seek other employment?

Knowing there is a ceiling on what we can pay, what are some alternatives to just a straight salary? Does your practice offer incentives to your team to help challenge them? Have you “gamified” your practice? Do you have a profit sharing plan? Do you have clear accountabilities set up so your team knows what success is? Knowing how to design a plan that can motivate your team and keep your bottom line healthy can be an important tool in retaining key employees and maximizing your business.

Before opening my practice, I spent a number of years working for a large corporate physical therapy company. People were locked into specific salary tracks based on years of experience, and annual raises were tied directly to the score of your annual review. Every employee expected to get the highest available score on their review so they would get the largest annual raise. The culture rewarded them for having another full year of experience under their belt, but not much more. There is value in experience, but should years of experience be the only way to increase your salary and is it the only way we should be measuring our employees? If you look at the actual earning potential of a physical therapist, it does not necessarily vary based on years of experience. A new graduate could easily see the same number of visits over a year as a physical therapist with 10 to 15 years of experience and therefore bring in the same amount of revenue. Should they not be paid the same? That would be a tough pill to swallow for a number of practices and therapists. What about moving to a mode where you compensate on measurable performance metrics?

Imagine a salary structure where every physical therapist, regardless of experience, starts at a much lower base rate, but then is incentivized on the actual profitability of the facility and their contribution to that success. Clinical staff who are your better producers make more; people who are producing less make less. Simple, right? Direct profit sharing at its finest. Team Movement for Life has moved in this direction, and they have a large amount of success to show for it. Their president shared the details of their “out of the box” approach. Basically, they have a base salary generally in the mid $50,000 to low $60,000 per year range and in addition, they can earn a percentage of the clinic’s profit for each patient treated over an average of 12 patients per day. The bonus is calculated monthly and is paid in the following month. For them, it is all about transparency. The team knows what the bottom line is each month and is focused on making sure that the clinic remains profitable. If the clinic is successful and makes a profit then so do they.

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Does your clinical team know what the bottom line is in your office, or do they think there is an endless well of money to draw from? Do you share this information with them? Are you comfortable doing so? John Vacovec, PT, owner of Physical Therapy and Sports Rehab Inc., decided that transparency was important for his entire team. After trying a few different methods to incentivize his team, he decided to keep it simple and just have a profit sharing plan across the board. He knew what the bottom line was for his practice to be profitable, so he established a monthly gross receivables goal for his team to hit. If the office exceeds this number, they get a share of every dollar over the goal. This is not limited only to his clinical team either . . . all employees in his office are rewarded for accomplishing the goal. That gives him a dedicated team, focused on success. They know that every visit means something to the bottom line of the practice. In turn, you see peer-to-peer accountability: Cancellations and no-shows go down, patient satisfaction goes up, and everyone benefits.

Maybe transparency of your profit margin is not comfortable for you. In that case, designing a plan to focus your team on key business metrics might be a way to go. Many years ago I started an incentive plan based on the key metrics I used to gauge how my business is doing. On a weekly basis, I measure and share the number of visits, number of new patients, the cancellation rate, average visits per referral, and the units per visit charged. Looking at these numbers on a daily, weekly, monthly, and annual basis gives a good “dashboard” of the practice and also helps me to see if there are any anomalies that need to be addressed. I developed benchmarks for all these metrics and incentivized my clinical staff on achieving them. My goal was to educate my team on important business metrics without focusing on a bottom line. I assumed that having targets to shoot for would be enough to motivate people to “win” by hitting those targets. I could not have been more wrong. Having too many metrics just confused people and in some cases made them focus on areas that were not really that important to what my end goal was . . . to motivate them to help make the business successful. In the end, I scrapped that program and went with something much simpler: I had them focus only on average visits per day. I was able to get the clinical team focused on what actually was important to help the practice grow and keep the bottom line healthy, while allowing them to share in some profit.

In speaking with Sturdy McKee, PT, MPT, CEO, of San Francisco Sport and Spine Physical Therapy, I learned that his team went through a similar issue. When he and his business partners started to implement incentive programs to motivate employees for success, they made the “mistake” of thinking that their employees were just like them and that they would be driven by what drove them. Very quickly they found out that this was not the case. What they decided to do was retool their program and ask the employees how they wanted to be compensated while sticking to, and building, a culture of accountability. This led them to develop a program that focuses on a few key metrics as well as core values and accountabilities for their team. Every employee knows exactly what the expectations are, and they also have the opportunity for small salary increases three times per year if they are meeting the trifecta of metrics, accountabilities, and company core values. They feel so strongly about their program that it is published on their company web page under their Careers section. Instead of just creating a team focused solely on numbers, they are creating a team that shares a strong belief system, and they have truly implemented an alternative to the basic review structure to help reward their best employees.

Our profession will continue to face challenges of increasing expenses and decreasing payment. We will need to learn to do more with less. Finding alternatives to the way we pay our employees can help us reward our key people and help keep our practices thriving. These are just some of the many ways that you can try something different. Consider implementing a creative system in your practice today!

Michael Vacon, PT, is the managing partner of Blue Hills Sports & Spine Rehabilitation in Massachusetts, which is part of the Pinnacle Rehabilitation Network. He is a PPS member and also a member of the Impact magazine editorial board. He can reached at

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