Ophthalmology Business

MAY 2013

Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.

Issue link: http://digital.ophthalmologybusiness.org/i/130662

Contents of this Issue

Navigation

Page 21 of 22

continued from page 20 accordingly. If you are replacing a retiring/departing administrator, it may help to have her define her job and estimate the percent of time she spend in each area. See the sidebar on the previous page for a job description I put together for a client. Autonomy Once the position has been defined, you must decide how much autonomy/authority you will give an administrator to perform the necessary functions. I have seen administrators leave practices because, while they were held accountable, they were not given the authority to freely perform. It is a very hard thing to cede control of your business to another. The success or failure of an administrator often lies in how much control the owners grant and how much they maintain for themselves. It sometimes helps to define the administrator's decision parameters accordingly: The administrator will be responsible for directing the day-today activities of the practice with the following restrictions: 1. There shall be no hiring or firing of any staff without consent of the shareholders. 2. No agreements, contracts, or obligations can be made on behalf of the practice without the consent of the shareholders. 3. No decisions involving an aggregate dollar amount of five thousand dollars ($5,000.00) can be made without the consent of the shareholders. 4. The administrator shall schedule and lead once a month meetings with the shareholders to keep them apprised as to any decisions made or pending regarding the practice. 22 Compensation Compensation for administrators can vary greatly depending on their responsibilities and the makeup of the practice (i.e., Does the practice have an optical dispensary? An ASC? Multiple locations?). An office manager position can pay in the $40$50K range, the administrator level position can pay $60K-$100K+, and a CEO level position can range from $100K-$150K+. In addition to base pay, some will have a bonus plan. There are many ways to approach a management level bonus plan. I am leery of basing it only on growth in collections or on profits. For one client, we designed the following: 1. Bonus pool. The bonus pool shall equal one percent of the adjusted annual gross collections of the corporation. 2. Adjusted gross collections. Adjusted gross collections shall be determined on a cash basis and is the sum off all collections minus write-offs, adjustments, cost of goods sold, refunds, etc. a. The calculations shall be made by the corporation's regular accountant in good faith, employing consistently applied accounting and valuation methods, and such determination shall be final and binding. 3. Bonus payout. The bonus pool shall be paid out accordingly: a. Part 1: Part 1 represents twenty five percent (25%) of the bonus pool. Part 1 is earned and paid if the corporation's adjusted gross collections exceed the adjusted gross collections of the previous fiscal year. b. Part 2: Part 2 represents twenty five percent (25%) of the bonus Ophthalmology Business eZine • May 2013 pool. Part 2 is earned and paid if employee receives a rating of "good" or "great" during a written performance review by the corporation's owners. c. Part 3: Part 3 represents twenty five percent (25%) of the bonus pool. Part 3 is earned and paid if the corporation is not found in violation of any laws, statutes, medical practice guidelines, rules or regulations, etc. d. Part 4: Part 4 represents twenty five percent (25%) of the bonus pool. Part 4 is earned and paid if for nine (9) of the fiscal year's twelve (12) months, the corporation reached monthly goals of patient volume and procedures performed. 4 Bonus payout. Any bonus monies earned shall be paid within sixty (60) days after the end of the fiscal year. Summary It takes a large amount of trust to turn control of your business over to another. The first step in creating trust is having confidence in the person you hire. That confidence will come from hiring the right person, and hiring the right person begins with a clear idea of your needs and the skill set necessary to fill them. OB Mr. Ruden is a Certified Valuation Analyst, MedPro Consulting & Marketing Services, Scottsdale, Ariz. He can be contacted at 602-274-1668 or bruden@medprocms.com.

Articles in this issue

Links on this page

Archives of this issue

view archives of Ophthalmology Business - MAY 2013