Practice Management
Compensation & Motivation
Thomas E. Catanzaro, DVM, MHA, FACHE
Diplomate, American College of Healthcare Executives
Introduction
The traditionally preferred method for compensat-
ing employed veterinarians appears to be similar to the
methods used to set the paraprofessional staff salaries.
Get the labor for as cheap as possible and then ask for
110 percent commitment by the individual. I don’t know
why we do it to ourselves, but it appears the rule, not the
exception. The greatly debated “mega-study”, July 15,
1999, JAVMA, did nothing to help this situation. I per-
sonally believe the reports we see in the media make us
victims of statistical inaccuracies rather than observers
of national trends. But then, after visiting about 1300
veterinary hospitals, my view is probably slanted. I only
visit the hospitals which want to change and do better.
This discussion is designed to spark your interest in catch-
ing up with the emerging trends of tomorrow rather than
keeping up with the habits of yesterday.
Recognition Plans
The American College of Healthcare Executives, in
recurring surveys of healthcare delivery staff in the United
States, shows that respect, responsibility, and recogni-
tion are the primary motivator (the 3Rs of staff reten-
tion). The recognition can be fiscal, material, or verbal,
but it must be honest, timely, and meaningful. There are
many levels to consider, so let’s look at some of the alter-
natives available.
Paraprofessional Salaries: In the most simplistic
of terms, it needs to be calibrated to the community wage
and salary standards. My recommendation is to hire the
unskilled/untrained at a wage competitive with the local
McDonald’s, give moderate raises at the end of non-pro-
ductive orientation (3 to 4 weeks), and again at the end
of the 90-day introductory hire period, when they are
“allowed to join the team” based on team fit, competen-
cies, and productivity. Some even add small raises each
quarter of the first year to recognize their learning curve,
and eventually reach the equivalent of a local Penneys
Reprinted with permission from “Proceedings, 7th International
Veterinary Emergency and Critical Care Symposium, Orlando, FL.
Sept. 7-10, 2000”
Address reprint requests to:
Dr. Tom Catanzaro, Vet Practice Consultants
1217 Washington St.
Golden, CO 80401
PAGE 62 • JOURNAL OF VETERINARY EMERGENCY AND CRITICAL CARE • VOL. 11, NO. 1 • MARCH, 2001
or Sears department assistant manager by the end of the
first year of employment. After the first year, the employ-
ment anniversary is the merit pay evaluation time, based
on quarterly performance planning (see Chapter 6, “Build-
ing The Successful Veterinary Practice: Programs & Pro-
cedures”, Volume 2). The team leaders should reach the
salary level of full department managers.
The New Graduate: Most veterinary schools will no
longer give details about the new graduates. Rather, they
will verify graduation occurred on a specific date and the
student was in good standing. The salary offered varies
by community, not school of graduation. The new gradu-
ate is expected to generate a gross of $200,000 to
$250,000 the first year, dependent on practice philoso-
phy, scope of services, and client/patient mix as well as
personal ability and confidence. Since most speciality
practices realize only a 15 percent to 25 percent net profit
(companion animal general practices are about half of
this rate), after Return On Investment, rent, and appro-
priate clinical salaries for the owners, the new graduate
should expect about 20 percent of the gross generated,
or a salary of about $40,000 to $50,000, plus benefits,
the first year. If there is a board qualified specialist, they
start at about 25% of their expected productivity. A per-
formance pay for production in excess of 20% personal
production per month can be added.
The Second Year Veterinarian: This is a professional
with a track record that can be verified, and a person
who knows what they are capable of producing in a given
practice situation. While a salary addition of $5000 is
about average for each year of employment (up to six
years), this is the time that a productivity percentage
should be offered in lieu of salary. In general practice,
twenty percent of the previous year’s production is a good
starting point for negotiations; in specialty practices, 25
percent is not unusual. Percentages higher than these
percentages should be based on additional duties that
take the doctor “off line” from production, such as in-
ventory advisor, staff training, community public rela-
tions, or other functions which are directed by the prac-
tice and reduce the productivity opportunities. If any em-
ployed doctor desires more take-home money than what
the budget allows, a reciprocal reduction of the benefit
package is an alternative.
The Experienced Veterinarian: Since a quality prac-
titioner should be able to produce a gross of $250,000 to
$600,000 per year, a straight percentage usually has a
productivity ceiling higher than salary ceilings. Salaries
for employed veterinarians in general practice usually
hit a ceiling at about $65,000 to $75,000, but depending
on the local cost of living, have gone up to $95,000 in
some isolated community areas. In certain areas of the
country (e.g., Southern California or the Northeast), the
minimum personal productivity needs to exceed $350,000
per FTE doctor, and the salary base is equally inflated.
After this level of salaried or percentage income, mul-
tiple methods of profit sharing become the key methods
to increase personal liquidity for an individual veteri-
narian.
Bonus Plans: The term “bonus” denotes a gift. But
in practice, every dollar is earned. I prefer the term “rec-
ognition pay”, to ensure the owner(s) remember that the
performance came before the cash flow. In salaried em-
ployees, it is easy to set the monthly expectation of gross
income (as we did with the new graduate) and provide a
percentage of all income earned beyond that target as a
quarterly productivity recognition. In the 1990s, innova-
tion was needed, such as: inventory management team
being paid 20 percent of the savings below 13 percent
cost of goods sold; receptionists rewarded by setting the
critical performance point at 80 percent appointment log
fill, and then giving them 20 percent of all income over
that target point; nutritional counselors sharing 20 per-
cent of the nutritional product sales growth over a pro-
grammed growth rate; or the behavior counselors get-
ting 20 percent of their time charges. Other “benefits”
for professionals will include sabbaticals and extended
continuing education experiences, as well as profit-shar-
ing, retained earnings programs, or flexible spending
accounts.
Methods of Motivation
Fiscal compensation is a motivation factor, but it is
not the entire story. Compensation must include recogni-
tion for extra hours (often called compensatory time),
acknowledgment of the extra effort to please a client, or
that sacrifice for the good of the practice healthcare de-
livery team. These are motivation methods as well as
compensation factors, and they must be considered inter
-linked.
The best methods of motivation/compensation has
been eluding us for eons, but recently, I have seen prac-
tices getting that long-needed “flash of understanding”.
The premise of the topic assumes veterinarians and their
staff need motivating yet that is not specifically the case.
While I was with AAHA, I visited 20 to 30 practices each
month and professional motivation was not the issue;
we have a caring profession! The real issue is how to get
all the veterinarians and the practice team to go in the
same direction at the same time.
One method I find very useful is to graph the proce-
dure goals (not dollar goals), using monthly dots to track
progress against an annual target line. For example, the
JOURNAL OF VETERINARY EMERGENCY AND CRITICAL CARE • VOL. 11, NO. 1 • MARCH, 2001 • PAGE 63
practice should know by their program-based budget pro-
cess how many I.V. TKO (to keep open) procedures they
do per number of anesthetic procedures. It is not difficult
to convert this data into a target line on a chart and track
the daily activities in a cumulative fashion. This chart
should be posted in the break area for easy daily refer-
ence. When the daily plot line starts to go below the tar-
get line, the team needs to discuss the philosophy, work
harder at being patient advocates, and when it is above
the line, they are on a “reward” track, such as a team
dinner at the end of those months when they finish above
the target. The families also deserve compensation dur-
ing those busy months, and every third “team dinner”
becomes a family outing of some sort. The graphing sys-
tem can be used for new clients, pain management pro-
grams, fecal exams conducted, oxygen therapy returns,
dental prophys booked, or a host of other interest fac-
tors. Be careful not to overwhelm your staff with too many
procedure programs (or graphs) at one time.
Professional Motivation
Professional motivation is that inner drive to make
better diagnostic judgements or to develop more effec-
tive treatment plans. Professional motivation is pride in
relieving pain, mediating suffering, or helping a client
through a tough pet illness. The key rules in client re-
lations in emergency or critical care situations has
always been: allow no pain, allow no puking, and al-
low clients to feed their pet on a regular basis. It has
nothing to do with internal marketing, personnel man-
agement, time effectiveness, cost efficiency, or other rou-
tine practice management concerns. To get an owner,
employed veterinarian, and staff going in the same di-
rection as the practice requires certain basic actions:
1. In a quiet and unhurried time, make a genuine veteri-
narian-to-staff effort to share the practice philosophy and
core values, as well as business goals and objectives.
2. Insure everyone understands that the team effort to-
ward practice’s mission focus (goals and objectives) takes
precedent over individual bias and whims.
3. Develop measurements for progress that can be deter-
mined and reward the achievements with accolades (and
possibly a bonus if profit was involved). The long-term
progression toward a practice goal will probably involve
a greater fiscal commitment by the practice, and more
cooperation than described in the three steps above, es-
pecially if the senior owner wants to reduce his/her per-
sonal hours at the facility. When this is the situation, it
will require more innovation . . . maybe after the first 32
months of employment the “recognition” monies will be
mediated or capped, but a new plan for “scheduling” re-
wards become available. It doesn’t have to be enormous,
maybe only a three-day break more often, a short paid
sabbatical of one month, a special continuing education
adventure with an exotic location, or similar “pre-tax”
benefits.
Hot Buttons
The real secret to motivate any employee is to find
the “hot button” — that idea or wish that excites the
heart and mind of the employee. Play to that need. If the
veterinarian believes surgery skills could be improved,
find a special course, maybe even an orthopedic course
in Switzerland, and build toward that goal for six to
twelve months. Other practice goals may not be that easy.
If you want the veterinarian to sell more dog food, you
may need to rethink your plan. All you may need is to
get more internal referrals from the veterinarian to one
of your nurse technicians who really believes in quality
diets. It is easier to redefine the problem than try and
solve one that doesn’t actually exist.
Hot buttons may become the owner’s commitment
to the employed veterinarian or to the future of the prac-
tice itself. Remember our compensation discussions: if a
doctor deserves 20 percent of their personal production,
and is expected to produce in excess of $300,000 based
on the practice’s history, why do practices ask a debt-
ladened doctor to work for $42,000? It is critical that the
immediate needs be identified and addressed, especially
if the veterinarian or staff member is trying to support a
family; future potentials are nice, but do not pay the credi-
tor. Is there a real commitment to providing quality time
for the staff member or employed veterinarian to pursue
outside interests like a family or even hobbies? The ap-
propriate “hot buttons” for each veterinarian or para-
professional on the staff varies and some have many,
others only one. The secret to motivation is your skill in
finding that element and playing to it during professional
development efforts.
Putting It All Together
It must be reiterated that compensation is only one
recognition method. In most healthcare worker surveys,
money was always in the top six motivators, but never
made it to number one in ANY staff survey. Money is a
motivator at first, but then it becomes expected. That is
why unions have had such a great time reducing the cost
effectiveness of American industry, more money is needed
each year regardless of the ability of the public to pay for
the product.
The compensation/motivation key, of course, is that
any decisions made relating to personal behavior must
be voluntary. The need for change may be pointed out by
someone else, but the target person must genuinely ac-
cept it if any permanent change is to be accomplished.
The most striking and long-lasting changes in personal-
ity or performance are those where the individual sees
them as important for his or her own personal growth.
There are some typical actions that most all successful
managers use to encourage employees to improve their
performance. They try to:
PAGE 64 • JOURNAL OF VETERINARY EMERGENCY AND CRITICAL CARE • VOL. 11, NO. 1 • MARCH, 2001
• Avoid passing on anxieties, emotions, and doubts
to the staff.
• Disagree, but don’t make them wrong; beware of
damning, hostile, or cynical words.
• Be sensitive to the needs of their staff without ap-
pearing to be paternal.
• Be forceful without being domineering; have clear
and stable expectations.
• Hear their caring intentions BEFORE you respond.
• Compliment people with specifics and without ex-
aggerating.
The gist of current management thinking is that be-
havioral changes must be established in individual terms.
Personal bad habits are what block progress. Part of es-
tablishing firm objectives and measurements with any
employee is jointly determining how changes will be ad-
vantageous. Nothing helps your staff over the hurdles
like a clear reminder of the monetary recognition ben-
efits that can result from quality healthcare delivery pro-
grams. Getting feedback from others on changes is the
best way to gauge the results of your efforts. It helps
answer these questions:
• Is improvement taking place?
• If not, why not?
• If so, to what extent?
• What remains to be done?
• Have I done all I can do to help them achieve the
change(s)?
Especially at first, the feedback you receive from the
above questions is likely to be unpleasant. It may even
be painful. But being able to take criticism is a sign of
managerial and leadership strength. Only by accepting
the unflattering comments can you improve the perceived
deficiencies. And only by addressing the perceptions can
you gain the confidence and trust of your staff in their
worth. People become motivated when they know they
have exceeded expectations. The team will motivate its
members.
Veterinarian Compensation Alternatives
1. Call the closest veterinary school and obtain the aver-
age starting salaries. Add $5000 per year of experience
as a practicing veterinarian in the specialty of your prac-
tice.
2. Ask the veterinarian for a history of personal wages,
verify the data, then set the practice wage accordingly.
3. Do a community survey and ensure that you are pay-
ing for what you want. You will get what you pay for in
most every case.
4. Offer a set wage for six months, to allow both veteri-
narians to determine professional compatibility. After six
months, truthfully determine if there can be a profes-
sional relationship. If so, at the six month point, shift to
a percentage of gross individual production in lieu of set
wage (start at about 19 percent, adding 0.5 percent each
year for five years). If the new associate wishes to have a
higher income, reduce the benefits. An associate with-
out an equity investment should not take away more than
23 percent (benefits plus income programs) of what they
produce clinically in most practices.
a. Some practices use separate travel sheets for each
professional and paraprofessional and combine the
activities at the computer summary level. This al-
lows easy tracking.
b. A few practices feel that “it will all even out”, so a
single travel sheet is used per patient and the admit-
ting veterinarian gets credit.
c. The more progressive, multi-veterinarian, comput-
erized practices are looking at a percentage of the
inpatient booking for outpatient veterinarians and a
percentage of what is actually done (inpatient or
outpatient) as a combined income source, with
shorter “scheduled” work weeks. So, extra hours give
the individual veterinarian an extra opportunity to
earn extra income.
d. Shift differentials have become common with prac-
tices that offer evening, Sunday, or emergency ser-
vices.
e. Benefits are not always money, and in fact, are
often shorter work weeks. Many veterinarians prefer
a three 12/13-hour day program when there are as-
JOURNAL OF VETERINARY EMERGENCY AND CRITICAL CARE • VOL. 11, NO. 1 • MARCH, 2001 • PAGE 65
sociates to allow four days away from the practice
every week. If the associate’s work week is M - W -
Th, or Tu - F - Sa, they will always be off “yesterday
or tomorrow.”
f. Two part-time veterinarians may be easier to find
than one full-time practitioner.
g. Sabbaticals are another form of benefit, after four
to five years of employment (gone for 4 to 12 weeks
but maintained on base salary).
5. The sum of all recognition/management fees should
stay less than ten percent of gross; consultant, CPA, and
lawyers included. An office manager/hospital adminis-
trator usually earns 3 to 3.5 percent of the gross, leaving
a few percent for those who volunteer to take on some
management responsibilities. This is where exceeding the
annual cash budget in income, or saving on expenses
can be rewarded with a healthy 20 percent of savings or
excess income, if the person has direct control and effect
on the outcome(s).
6. Specialists working within a practice should earn no
more than 30 percent of what they bring into the prac-
tice, to ensure all the overhead is paid for appropriately.
7. The above concepts could be mixed and matched, and
compensation programs are developed daily to meet the
unique needs of the veterinarians. When in doubt, use a
national veterinary practice management consultant to
discuss common pitfalls in the compensation programs,
or emerging trends in the profession.