Staff Raises? Seriously?

Jeffrey J. Denning


UnCommon Sense 

In This Article


Physician incomes are flattening, and even falling. So it's understandable that they resist giving raises to staff. In fact, some physicians are even seeking methods to cut employee pay. Sometimes it may seem like the physicians are working for the employees. Payroll, insurance premiums, payroll taxes, uniform allowances -- the stress has some physicians feeling like a gerbil on a wheel.

Except for the simplest of psychiatric or hospital-based practices, employees are essential to the success of the business. Keeping them happy and productive, therefore, is crucial. And all employees, regardless of work performance, have come to expect raises as part of the formula for happiness and productivity in the workplace.

What's Going on Here?

In most industries, staff long ago stopped receiving large raises. However, physicians kept giving staff significant raises long after overall wage inflation was arrested. Medical office employees got used to these regular increases and came to expect them as an article of faith.

Many physicians continued to give raises because of an unwillingness to upset what has become an expected benefit of working in a small, close-knit business. The tradition of the annual raise, unrelated to job performance, has resulted in some grossly overpaid employees. Practice expenses go up each year. Because the compensation package of your staff is one of the few costs you control, you might be tempted to use this account to balance the ledger and keep your own income on track. However, employees sell their labor much the same way your other vendors do: The price is periodically negotiated. That most staff is fairly passive in the process doesn't change the equation much. Increases in malpractice insurance premiums are not contingent on your ability or willingness to pay. And it would be a big mistake to consider dropping your coverage because your reimbursements have been cut. It's the American way to pay the market price for goods and services.

What can physicians and office managers do to better address this subject?

What Not to Do

There are a few things that don't work. Don't try to play on the staff's sympathy for your economic woes. They will not believe that a physician is worse off than they are.

Don't complain about how hard you have to work just to break even. Lots of physicians have to see more patients to maintain their personal incomes these days. Managed care makes more work for everyone in the practice while reducing reimbursement.

If the doctor sees the patients, so do the employees, and this is hardly their fault (or responsibility). Partners share in income and losses. Subliminally asking your employees to share in the losses when they don't share in the profits won't wash for long.