The Four Tier compensation formula at work
Here's how the three owners of practice are paid.
Jun 01, 2010
The beauty of this method? Differences among owners are reflected in the compensation formula. Dr. Senior is semiretired but still owns a majority of stock in the practice, so he's being compensated fairly. Dr. New is working full time and is the most productive but only owns 10 percent of the stock, and he's also being compensated fairly. Dr. Middle spends some of her time managing the practice in addition to seeing clients and is being paid fairly for her activities. If more partnerships adopted this method of compensation, I believe there would be fewer partnership "divorces" and many more happy partners.