5 Things You Need to Know about Your Bonus Structure
…Before You Sign an Employment Agreement
The promise of a bonus can sound enticing if you’re looking for a nurse practitioner job. But, before you sign an employment agreement lured by bonus potential or build a bonus into your budget, there are a few things to consider. Don’t get caught at the end of the next quarter expecting a big payday only to receive your standard check.
Many employers offer bonuses as a performance incentive. But, I find that employers tend to leave bonus structure language vague, talk about bonuses in lofty terms or sometimes never plan to pay out a bonus at all. In my first nurse practitioner job, for example, I was excited that my new employer offered bonus potential up to $25K per year. Always a hard worker, I expected to earn at least a significant chunk of that potential. But, then none of the NPs or PAs including myself were paid any bonus at all while I worked at that particular clinic. I’ve spoken with a number of nurse practitioner who have experienced similar scenarios. So, before you sign an employment contract and start budgeting, it’s important to understand the following things about your facility’s bonus structure.
1. Understand How Your Bonus is Calculated
It sounds intuitive, but too many nurse practitioners neglect to drill down to the specifics of how a bonus is calculated. If the bonus is a percentage of the practice’s profits, are these final numbers released to employees or is the employer on the honor system here? If your bonus is paid on productivity, what objective productivity statistics are being measured? How are these productivity stats shared with you? How do these statistics translate into an exact dollar amount?
2. Understand the RVU System
Most employers basing nurse practitioners’ bonuses on productivity use the RVU system to do so. This is a model by which Medicare and other payers reimburse medical providers for services rendered based on a given numerical value assigned to each service type (you can learn more about RVUs in this post and this post).
The RVU system is complex and can be difficult to track and understand. Make sure you’re familiar with the basics of this system and how exactly your bonus will be calculated based on the RVUs you generate.
3. Know When Your Bonus is Paid
It sounds simple, but its important to understand when your bonus will be paid, particularly if a bonus makes up a substantial portion of your salary. Is your bonus paid annually? Quarterly? Or, can you expect to receive a monthly pay-out based on your productivity?
4. Ask for Historic Stats
If you’re interviewing for a nurse practitioner job with bonus potential, ask your prospective employer “How much was the NP who received the highest bonus paid last year? What was the lowest bonus a nurse practitioner received last year?”. This way you get a range of how substantial a bonus nurse practitioners in that particular workplace are actually paid. If you shadow a NP as part of your interview process, you can also inquire about the likelihood of receiving a bonus (also ask yourself this question and you’ll get a raise).
5. Decision Making Process
If your practice seems to have a nebulous bonus structure that falls along the lines of “we look at the company’s profits for the quarter then make a decision…”, ask if there is a written decision making process related to bonus payments. If the company doesn’t have a written protocol related to bonus pay-outs, your best bet is not to expect one at all. A number of healthcare facilities promise the possibility of a bonus but lack a specific structure related to this form of compensation, of course leaving nurse practitioners frustrated.
The bottom line is if you don’t understand these things about your bonus structure or if your employer cannot explain them to you, you should not expect to receive a bonus. Sure, your employer might follow through. But, they might not. Unless your bonus structure is very clearly defined, in writing and calculated in your employment agreement, you’re on shaky ground when it comes to the promise of a payout.
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