The way nurse practitioners are paid can pretty much be described as a complicated mess. Some NPs are compensated on a flat, salaried basis. Other NPs are hourly employees. Some nurse practitioners are paid based on productivity, and yet other NPs have a blended compensation structure comprised of multiple forms of compensation.
If you are early in your nurse practitioner career, you may not have a good grasp of the concept of productivity in medicine. Essentially, compensation based on productivity works similarly to the way salespeople are paid commissions on what they sell. In the healthcare world, the more a productivity points, known as RVUs (here’s some RVU background), a provider racks up, the larger his or her paycheck. The provider takes a cut of each item that he or she bills. These items may include patient visits, diagnostic tests, and procedures to name a few. The idea behind productivity based compensation is that it incentivizes providers to work harder, and rewards those who do so.
Walking in to a productivity based agreement with an employer doesn’t necessarily mean you will earn more or less than you would in a salaried arrangement. Accepting a nurse practitioner position with productivity based compensation, however, has some significant implications. This type of arrangement, for example, can mean working within a competitive practice culture and additional stress regarding your paycheck.
If you are a nurse practitioner, what’s the likelihood that you’ll work on a productivity based compensation structure? There’s little data regarding NPs and compensation specifics. The 2013 Advanced Practice Clinical Compensation and Pay Practices Survey by the American Medical Group Association, however, does give some insight. Here are the findings from the survey:
The majority of nurse practitioners, 52 percent, are paid with a traditional salary. 16 percent of NPs are employed on an hourly bases. The remainder of nurse practitioners are compensated on an incentive, or productivity, basis. Just one percent of NPs receive productivity based compensation alone, while 26 percent have a blended, salary plus incentive, agreement.
While the majority of nurse practitioners are paid on a clear cut hourly or salaried basis, there remains a good chance that as an NP you will work within an incentive based compensation agreement at some point in your career. It’s imperative that nurse practitioners understand the difference between compensation structures in order to effectively evaluate and negotiate employment agreements, as well as understand employer’s expectations.
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