How to Use a Compensation Levels Document

Last week we reviewed the pros and cons of comp structures for nurse practitioners and physician assistants including the innovative compensation levels system . Today, we’ll discuss the compensation levels document in a bit more detail. For those of you thinking about implementing the system in your hospital or clinic, here’s a little F.A.Q.

What is a compensation levels document? 

A compensation levels document transparently outlines the salaries for nurse practitioners and physician assistants in your facility. Compensation ‘levels’ are clearly defined by what it takes to be an exceptional provider in your facility. The document takes into account years of experience, clinical scope of practice and professional skill level essentially tying performance to salary level, but not in the sense that productivity-based pay is structured for NPs and PAs.

Why should I think about implementing this compensation structure?

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An innovative levels-based compensation structure transparently outlines your expectations as an employer and pairs these expectations with a specific compensation.

Greater flexibility. No longer are you tied to reinforcing productivity-based metrics alone, with a compensation levels document you have complete control to name the result-getting activities you want to focus on in your facility. Who doesn’t want greater control over reward for performance?

Transparent expectations. Transparent expectations also increase employee-employer trust creating a more positive workplace culture and decreasing tension about compensation (not to mention improving recruitment and retention efforts). Job dissatisfaction almost always starts out with lack of clarity about expectations and a levels-based compensation structure eliminates this uncertainty.

Gives career direction. Finally, a levels-based comp structure gives nurse practitioners and physician assistants a path for upward mobility in an often stagnant role. Direction in one’s career is helpful and motivating. Why not give providers more to strive for than just the patient-after-patient cycle?

What outcomes should I expect to see as a result?

Traditional productivity-based compensation structures reward providers who generate higher revenue for the practice, usually through seeing higher patient volumes. While this can be a helpful motivation tool, there may be some performance related behaviors you’d like to enforce that aren’t tied directly to revenue or RVUs, such as patient satisfaction or taking the time to onboard a new provider. Not to mention, productivity-based pay comes with several downsides. The complexity of the structure means compensation is not transparent and lead to mistrust between the employer and the provider. It may give you as an employer less flexibility with staffing and management structure.

A compensation levels document, however, mitigates these downsides and clearly shows what result-generating activities providers should focus on to be A-players in your practice. You should see a renewed focus on the behaviors that are important to you.

What are the steps to creating my own compensation levels document?

You can download a sample compensation levels document here to help out with the process.

Step 1: Brainstorm 

Think through the competencies and result-getting activities you want the nurse practitioners in your practice to focus on. This may be increasing patient volume or patient satisfaction. It may be more along the lines of EHR competency or completing charting in a timely manner. Think about everything that currently annoys you in your management of providers in your practice. Add these things to the list of what it takes to be an A-player in your facility. Another approach you can take if you are a smaller company is to imagine you have a practice with 20 advanced practice providers of varying abilities. What are the best ways to segment them?

Consider the following factors in your brainstorm:

  • Patient volume
  • Patient satisfaction
  • Procedural/clinical skills
  • Amount of support required
  • Adherence to systems/processes/guidelines
  • Non-clinical responsibilities (ex. management, marketing)
  • Professionalism

Step 2: Narrow Your List 

You probably have a substantial list at this point. In fact, your list may be so long that it’s impractical to share with the providers in your practice. So, this is where you decide what is most important to you. Look through your list of competencies. Select those that are the biggest priority to you in each category.

Step 3: Place Competencies into the Levels Document 

Using the sample levels document as a guide, segment the competencies from your brainstorm into 5 to 7 different levels for both Clinical Scope of Practice and Professional Skill. Items like “treats patients without assistance/input from supervising physician” tend to fall under scope of practice while “completes charts within 24 hours of the patient encounter” are more professional in nature. Competencies should be placed into the levels such that the more basic are in level 1 and the more advanced skills are in levels 5-7. Refine the requirements to reach each level so they are clear and measurable. You want an objective guide when it comes to nurse practitioner compensation for your practice.

Step 4: Assign compensation to each level 

Whether you plan to pay on an hourly or salaried basis, assign a compensation dollar amount to each level. This is what the NP can expect to earn by performing to the associated standards. You may want to use your company compensation history and current comp rates or specialty/geographic data as a guideline.

Step 5: Calculate compensation

To use the compensation levels document, take the average of clinical skill and professional scope. Then, calculate the individual’s years of experience. Using the grid at the top of the compensation document, determine the individual’s corresponding compensation. You will want to schedule regular feedback sessions to update NPs on their progress moving to the next level and will need to formally evaluate if a compensation change is warranted each year.

We’re happy to be a resource as you consider making changes to the comp structure for advanced practice providers in your practice. Feel free to reach out to with questions.


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