What Are You Worth? The Basics of Business in Health Care
Your career has been focused on patient care—but are you selling yourself short in the process? Here’s an introduction to the practical realities of the health carebusiness (yes, it’s a business) and how you can calculate your value to your practice … and maybe negotiate better compensation.
OVERHEAD, OR IN OVER YOUR HEAD?
Now you have a better understanding of what your worth is to a practice. But what does it cost a practice to employ you? What’s your practice’s overhead?
Overhead includes the cost of processing claims; salaries and benefits; physician collaboration, if needed; rent, utilities, insurance, and depreciation. Overhead rates can range from 20% to 50%—meaning, if you generate $225,000 in revenue, it costs $45,000 to $112,500 to employ you. That leaves $112,500 (with higher overhead) to $180,000 (with lower overhead) for your salary. This revenue generation is an average: Many clinicians generate more than $225,000, while new graduates often generate less.
But in addition to generating more revenue, it can be beneficial to examine what you can do to help decrease the practice overhead. Because the bulk of overhead costs is salary, consider how many full-time-equivalent employees are needed to support you. Some NPs and PAs work with a full-time medical assistant or nurse, while others function very efficiently without one.
While providers like Dana and Kelsey can’t control what their practices pay for rent, utilities, or staffing, they can suggest improvements. Suggestions about scheduling, decreasing no-show rates, and improving recalls, immunization rates, and follow-up visits can all help increase revenue by decreasing day-to-day operating costs.
CONCLUSION
Most NPs and PAs went into their profession to help people—but that altruistic goal doesn’t mean you have to undervalue your own worth. Understanding the basic business of health care can help you negotiate your salary, maximize your income, and create new revenue models for patient care. While this may seem daunting to anyone who went to nursing or medical school, there are great resources to help you educate yourself on the essentials of health care business (see box).
Understanding the infrastructure of the health care system will help NPs and PAs become leaders who can impact health care change. These basic business skills are necessary to ensure fair and full compensation for the roles they play.
