Calculating ProSal based on net versus gross production

Q: Currently, we are paying our doctors a base salary plus a 22 percent production bonus quarterly. While my boss thinks it's more fair to the company to calculate production based on net numbers rather than gross, we have another doctor who feels the opposite. Is there an industry standard on such things?
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May 12, 2014

First of all, if you are going to pay your associate on ProSal, it’s not a base salary plus 22 percent of production bonus on a quarterly basis. Instead, ProSal requires you pay your associate a percentage of his or her production (18 to 25 percent, depending on costs of employment), although it provides a guarantee base of compensation at the end of the year. Thus, with ProSal you pay your associate twice a month (not 26 times a year).

To figure out how the associate should be paid, you take 1/24 of the guaranteed base and pay that amount, less payroll deduction, on the first payroll of the month. For the second and last paycheck of the month, you would take the doctors’ production from the previous month, calculate the percentage you’re paying and then subtract the amount the associate got paid for the first of the month (the 1/24 of guaranteed base) and pay the balance he or she is due, less payroll deductions.

The second and final check of each month is not a guaranteed amount—it may be significantly more or significantly less than the first check. At the end of the year, if the associate does not make the guaranteed base, you would owe him or her the difference.

In regards to gross versus net, the associate should be paid their percentage on the gross because the cost of the service is already taken into account when determining the initial percentage.

Mark Opperman, CVPM, owns veterinary consulting firm VMC Inc. in Evergreen, Colo. Please send questions or comments to ve@advanstar.com.