Defining/setting compensation for employees/staff

1. Using Benchmark Surveys as Tools to Create YourUsing Benchmark Surveys as Tools to Create Your
Practice Staff Compensation PlanPractice Staff Compensation Plan
Jan Krause FACMPEJan Krause FACMPE

2. Why Benchmark StaffWhy Benchmark Staff
Compensation?Compensation?
keep it fairkeep it fair
 Managing overall staffing costsManaging overall staffing costs
 Obtaining maximum cost benefit fromObtaining maximum cost benefit from
investment in staffinvestment in staff
 To offer competitive compensation and benefitsTo offer competitive compensation and benefits
for staff recruitment and retentionfor staff recruitment and retention
 To fully understand the localized geographicTo fully understand the localized geographic
market influencesmarket influences

3. External Benchmarking SourcesExternal Benchmarking Sources
 Publishing organizationPublishing organization: How is the organization’s expertise in: How is the organization’s expertise in
surveys rated, and how widely used is the information?surveys rated, and how widely used is the information?
 MethodologyMethodology: How were the data collected, and what was the: How were the data collected, and what was the
response rate?response rate?
 Definition of terms: DoesDefinition of terms: Does the survey define the statistics usedthe survey define the statistics used
and explain how they are calculated?and explain how they are calculated?
 Publication datePublication date: How current are the data?: How current are the data?
 Participant baseParticipant base: What practices are included? Are hospital: What practices are included? Are hospital
systems included?systems included?

4. Internal BenchmarkingInternal Benchmarking
 Link compensation directly to the strategy of the practiceLink compensation directly to the strategy of the practice

5. Compensation RangeCompensation Range
 Compensation ranges are commonly used to manageCompensation ranges are commonly used to manage
payroll costs and to provide an objective method ofpayroll costs and to provide an objective method of
determining individual pay levelsdetermining individual pay levels
 A compensation range defines the minimum andA compensation range defines the minimum and
maximum rate the practice will pay for a particular jobmaximum rate the practice will pay for a particular job

6. Job EvaluationJob Evaluation
 What is the overall worth of this job to the practice?What is the overall worth of this job to the practice?
 A practice’s job evaluation structure must:A practice’s job evaluation structure must:
 Cover all positionsCover all positions
 Be perceived as consistent and internally equitableBe perceived as consistent and internally equitable

Be competitive in the marketBe competitive in the market

7. Benchmark JobBenchmark Job
 A standard job that is easy to identify, common to mostA standard job that is easy to identify, common to most
practices, is relatively stable in job content, and can bepractices, is relatively stable in job content, and can be
described in clear and concise terminologydescribed in clear and concise terminology
 Examples of benchmark jobsExamples of benchmark jobs
 Medical assistantsMedical assistants
 Licensed practical nursesLicensed practical nurses
 Registered nursesRegistered nurses

8. Look at the 2011 Colorado MGMALook at the 2011 Colorado MGMA
SurveySurvey
All Colorado – Hourly
Medical Assistant
CountCount MeanMean
StdStd
DeviatioDeviatio
nn
25th25th
%tile%tile MedianMedian
75th75th
%tile%tile
AllAll 493493
Years inYears in
PracticePractice
1 and under1 and under 197197
2 to 52 to 5 177177
6 to 106 to 10 6666
11 and over11 and over 3333
GeographicGeographic
AreaArea
Colorado Springs &Colorado Springs &
PuebloPueblo
126126
Denver metroDenver metro 221221
NorthernNorthern 115115
Western (mountain)Western (mountain) 3131

9. Relative Value FormulaRelative Value Formula
1. Determine benchmark job position.
3. To determine Relative Value for any other job position, divide the median
for the benchmark position.
1. Benchmark position is Medical Assistant.
3. Relative Value for Registered Nurse is 1.75, computed by dividing median
Value ($25.88) by
Medical Assistant ($14.79)
..
2. Assign Relative Value of 1.00 to benchmark position
2. Relative Value for Medical Assistant is 1.00 and median compensation is
$14.79

10. Relative Value Formula AppliedRelative Value Formula Applied
Median Relative
Job Description $ Per Hour Value
Benchmark job position is Medical Assistant
Registered Nurse $ 25.88 1.75
Medical Assistant $ 14.79 1.00
Billing Coder $ 16.92 1.14
Billing Clerk $ 14.85 1.00

11. Compensation RangesCompensation Ranges
Based on Practice Strategic
Goals
In General…
•Nonexempt positions – 40%
•Exempt positions – 50%
•Executive positions – 60%
Per Hour
10.00$
11.00$
12.00$
13.00$
$
15.00$
16.00$
17.00$
18.00$
19.00$
Billing
MACoderClerk

12. What if Jobs are Out of Range?What if Jobs are Out of Range?
 Red Circle RatesRed Circle Rates
 Instead of raising the employee’s base pay when increases areInstead of raising the employee’s base pay when increases are

13. What if Jobs are Out of Range?What if Jobs are Out of Range?
 Green Circle RatesGreen Circle Rates
Green circle rates are equally as problematic as red circle rates in that

14.  Open communication with the employeeOpen communication with the employee
enhances trustenhances trust
 Understanding the practice’s limitations forUnderstanding the practice’s limitations for
that job position is taking a proactivethat job position is taking a proactive
stancestance
 Discussing in advance the limitations ofDiscussing in advance the limitations of
the position can avert instances of inflatedthe position can avert instances of inflated
compensationcompensation

15. Real Time Payroll & Accounting Reports Wherever YouReal Time Payroll & Accounting Reports Wherever You
AreAre
4155 E Jewell Ave
Suite 1000
Denver, CO 80222-4505
P: 303-691-5090
F: 303-766-0232
Jan Krause FACMPE