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An Overview of Various Physician Assistant Compensation Models

compensation financial independence pa profession pa-c Jun 19, 2022

Did you know that as a PA, there are several different ways that you can be compensated? Your income may not be as clearcut as getting paid via hourly pay or via a salary. Let’s review the various compensation models that physician assistants can get paid as well as some of the pros and cons, so that you have at least somewhat of an understanding of these options when you are interviewing for PA jobs as a new grad or throughout your PA career! 

Additionally, I’m going to share which types of compensation models that I have experienced over my almost 7 years of practicing as a PA, along with some detailed income numbers, simply because I think sharing income information is helpful for other PAs, and I don’t think it’s done enough. However, income is clearly based on so many factors including the following: years of experience as a PA, medical specialty, state and even city or county within a state, as well as total compensation package including benefits. 

You Can Get Paid via an Hourly Rate 

Depending on what type of patient care experience (PCE) and healthcare experience (HCE) that you had prior to PA school, you very likely were paid on an hourly rate, so this type of compensation likely seems very straightforward and intuitive. When you are paid on an hourly rate, you are paid strictly based on the time that you are working while at your job. To some, this type of compensation can be appealing with the thought process of, “If I’m at work, I want to be paid for the time that I’m spending there, including the time it takes to complete my charting!” 

I am paid via this compensation model for my retail medicine / walk-in side job as a PA, which has clinic locations at several local Hy-vee grocery stores. In this role, I am the only provider and only employee on site for the shift. This means that I am responsible for checking the patients in, taking their insurance card, rooming them, checking their vitals, completing the entire visit / assessment, collecting and running any tests (we only have a few labs we can run), and providing vaccinations. Additionally, we as providers are answering the phone calls (which often leads to some triage, recommending that patients instead go to an urgent care that has more testing capabilities such as expanded labs and imaging options) along with cleaning the clinic. I enjoy being paid hourly for this role because I usually clock in a few minutes early to “open up” the clinic and run through the opening checklist, and clock out a few minutes late to “shut down” the clinic and clean everything or wrap up charting if needed. 

The more traditional urgent care employees through our system also get paid hourly. Again, it’s nice to get paid for the time that you spend there; however, keep in mind that in urgent care, it’s often “feast or famine”, which means that some shifts can be slower, while others can be absolutely crazy busy with how many patients you have to see. It does sound as though there is some type of bonus for them based on patient volume (which will be further discussed in a bit), though that it is hard to meet, so most would consider themselves being compensated by hourly pay. Hourly compensation can seem more burdensome on those days that you are “swamped” with patients since you’re getting compensated only for the same amount of time as your other shifts, but for a lot more work. However, on the other hand, if you do not have many patients for that shift, hourly pay can be nice! 

You Can Get Paid via a Salary 

Many PAs, especially newly graduated PAs, are compensated on the salary model. Some PAs enjoy this type of pay while thinking, “At least I know what my income is going to be every year!” 

When you’re paid a salary, that is the total amount that your paychecks will add up to every year. This can take the pressure off of you and the guesswork when it comes to your compensation that other models can create that we are going to discuss in a moment. It likely would be easier to “budget” if you know what your monthly income will be based on your salary! 

Another benefit of earning a salary is that you often get true PTO (paid time off) as part of your benefits package. This means that if you take a day off, you are paid for that day. Some compensation models do not offer true PTO depending on your employer. 

A drawback of being compensated via a salary is that sometimes, you are working longer than your scheduled “hours” as a PA, while not getting compensated for those extra hours. You likely know if you’re a practicing PA or a PA student on rotations that many of your days do not “end on time”. I really believe that this is specialty-dependent, but also somewhat dependent on the provider with how efficient they can be in completing their work and charting. Regardless, we can all agree that it’s a complete drag if you are scheduled to be “done” at 5pm, but really you’re wrapping up seeing patients and charting until 6pm or 6:30pm, but not getting compensated any for this extra time! However, one of my former PA classmates shared that he has had a salary position that actually paid him any OT after 40 hours as time and a half. Other former PA classmates have shared that they have had salary roles where they rarely have to work their full scheduled hours in a day, and could often leave work to head home early! Clearly these examples sound like excellent salary positions, but I just want to caution you that some salary positions often have PAs working 1 – 2 hours after their scheduled end time. I believe that work-life balance is meant to be found along the journey to financial independence. 

I have been paid via salary a few times over the past several years of practicing as a PA. The first time was during my first job right out of PA school, which was a family medicine / walk-in clinic that also had a large amount of rheumatologic and internal medicine (IM) patients since the supervising physician (SP) was a rheumatologist. I was paid a salary of approximately $85,000 in 2014. For this first job, I had a rotation at the clinic during PA school, and the owner of the clinic who was my (SP) hired myself and two other new PAs right out of PA school (one was actually one of my classmates!). He hired us as he had a couple of other PAs transitioning on to other jobs, and we got hired under his company right before he was bought out by a large local health system. We knew that the buyout transition was going to be occurring shortly after we started. 

The second time that I was paid a salary was when I switched to a different family medicine clinic closer to home within the same health system, and I was paid a salary of $110,000. With this transition, the system / clinic usually paid their providers a salary for their first year of being at that location as your patient practice built up, before transitioning to compensation via wRVUs, which will be discussed next. 

The third time that I have been paid a salary is with my current role. In early 2021, I transitioned out of family medicine to outpatient psychiatry, and the company told me that they pretty much pay their APPs (advanced care providers = PAs and NPs) based on salary, mostly because of the somewhat large percentage of psychiatric patients that no-show their appointments. However, I have heard that there is at least one APP that has worked for the company for several years that is compensated via wRVUs. 

You Can Get Paid via Straight RVUs (wRVUs)

I have mentioned wRVUs already, and if you’ve never heard of these or if you’re still a Pre-PA or PA-S, you may be saying, “Huh?” This is one of the most complicated and frankly somewhat confusing compensation models that PAs can be paid through, but it certainly has some benefits, in addition to a few disadvantages. 

Work Relative Value Units (wRVUs) are added over the year of a PA’s employment, thus determining the PA’s compensation based on these. Total RVU is actually calculated based on work RVU of the provider plus practice expenses and insurance, but for simplicity’s sake going forward, I’m going to use RVUs going forward instead of wRVUs when discussing a PA’s compensation. Many physicians are paid on RVUs as well. 

So how does a PA get compensated with RVUs? Well, for each type of visit and / or procedure that is completed, an RVU amount is assigned based on the CPT code(s) used and entered for the visit. Then, given how many patients you see in a day (or week, month, year, etc.), the RVUs all get added up over that timeframe. Each RVU is assigned a certain dollar amount, so your compensation would be how many RVUs you have x the dollar amount (value) of one RVU = your pay! Oof, that was complicated to explain! 

If you’re still with me, you may be asking what are some pros and cons of this compensation model? The first benefit that can be a benefit for both the PA and the employer is that this model is based a productivity model: the more productive / busy you are as a PA, the more you will be paid. This can be seen as an incentive for many PAs because they may have the thought, “The harder I work, the more I earn!” For example, if your day is an extremely busy day of seeing many patients, and you have to stay a bit later past your scheduled end time, you can tell yourself, “Well, at least I’m getting paid for all of these visits!” 

Additionally, the CPT codes that are submitted after each visit are higher for more complicated patient visits, and there can often be more than one code submitted for each visit. For example, if you are working as a PA in family medicine, you could potentially see a patient who would like a preventative physical completed, plus discuss multiple new concerns, plus have an abscess that needs an I&D (incision and drainage). (Of note, many providers may choose to address the concerns / abscess, and recommend the patient return for their physical another day; however, this example is hypothetical and could occur.) If that visit occurs, the PA can bill for the preventive physical, and split-bill (meaning add on a charge) for the multiple new concerns, PLUS submit a code / enter a charge for the procedure after completing the I&D. So again, with this complicated visit with several items, you would earn for the total amount of RVUs that this visit generated, which very likely would be more than an hourly rate or salary amount for that time spent for the visit. 

I was compensated via only RVUs for the 3.5 years I worked at my last job after that first year salary pay once I switched to the family medicine clinic closer to home within the same health system. Most years, the dollar amount that each RVU equaled increased, and my patient panel increased over the years as well causing busier days, which meant my income increased every year. During my final year, my compensation was approximately $155,000. Yes, it’s wild to think that my income increased from around $85,000 to around $155,000 within the course of 6.5 years of practicing as a PA! 

The first drawback to being paid via an RVU model may have already dawned on some of you: if your patients do not show up for their scheduled visits (which are called no-shows), then you are not earning any money whatsoever during that time. 

Another disadvantage can be that you may not have true PTO. When I was paid only on RVUs, if I was not working, I was not generating RVUs, therefore, I was not getting paid. During that job, I had 24 days of “time off” that included vacation, sick days, and CME, in addition to every major holiday off. I also worked four 10 hour days, so I had one weekday off every week in addition to every weekend off. (As a side note, if you can work four days, DO IT! It’s amazing, truly. I use that weekday for self-care, hobbies, side hustles, podcasting, blogging, chores, errands, meeting up with friends, etc.) During that job, my “time off” days (which were separate from my scheduled one day off during the week) were use it or lose it, meaning that they didn’t roll over to the next year. Some providers at my clinic did not take all of their days off because they wanted to earn more and didn’t want to have time off. I on the other hand, took every. single. day. off. that. I. could. This is because I absolutely love to travel, spend time up at my husband’s family’s cabin, go on fishing trips, and it was important to have days off for my mental well-being. Additionally, it was a bummer if I really had to use one of those days as a sick day, as of course I would way rather have used it on a trip somewhere.

An RVU model can be difficult for several specialties that PAs practice in, especially surgical subspecialties. This is because it is the surgeon who typically submits the coding for the procedure, so it can be difficult for organizations to track RVUs for the PAs that are scrubbed in as well. Many follow up clinic visits that PAs do with patients after their procedure is considered to be under the “global period” from the procedure, meaning that there really isn’t any RVUs that can be billed for that visit. 

Another drawback for being paid on RVU model is that your pay can be somewhat uncertain for the year, because again, it is based on the amount of patients that you see as well as the complexity of the visits. This can be difficult if you’re try to stick with a strict monthly budget. How my previous employer compensated us was that we would choose a “draw amount”, which was almost like a base salary that we wanted our paychecks to be. They suggested that we draw between about 85% – 95% of what our past 6 months of RVU “salary” calculated out to be. Then, every quarter, we would get our “bonus” of the excess amount. This really wasn’t a true “bonus”, but rather, what the company owed us for our earned RVUs over the past 3 months. I chose to have a conservative draw, because then I felt reassured that I would for sure not be short of what they were paying me, and my husband and I looked forward to those larger “bonuses” quarterly. If providers were “short” RVUs from the draw they had selected, then the employer would work with them to adjust the draw, or sometimes the provider may “owe” the employer an extra few shifts. So if this method is used at your workplace and they allow you select a draw, then you know what your paychecks will be, which allows you to be able to budget at least based on that amount. 

When I first had to transition from salary to being compensated by only RVUs, I was admittedly a bit nervous due to the uncertainty. My employer at the time, though, had been compensating many APPs and physicians for several years under this model, so when they required each of use to switch after a year, it really did work out to our favor. I wanted to review this because I think so many PAs, both new graduated and seasoned alike, are frankly a bit terrified of this model. However, it really can benefit you depending on the situation!

You Can Get Paid via a Base Salary + an wRVU Bonus Structure 

Some employers choose to compensate PAs by providing a base salary, meaning that the PAs will earn that salary no matter what for the year, in addition to a bonus that is calculated based on the RVUs for the year. Although I have never been paid under this method, it does seem somewhat appealing as it seems to combine the “certainty” of having a salary, in addition to the “motivation” of having a productivity bonus. Again, the more patients and more complex cases you see, your income would be higher. 

You Can Get Paid via a Base Salary + a Different Type of Incentive Bonus 

Some employers will provide a base salary, but the bonus is based on different incentives than RVUs. For example, I’ve heard of some PAs getting bonuses for seeing a higher volume of patients than a certain threshold (which is different from a bonus based on RVU as the CPT code / complexity of the case has nothing to do with it, but rather, it is only based on the number of patients). I have also heard of some partial bonuses being provided based on patient outcomes and / or patient satisfaction. For example, PAs could be provided bonuses based on how few uncontrolled diabetic or hypertensive patients that they have on their panel, or by how patients “score” the visit with the PA afterwards. 

You Can Get Paid as a 1099 Independent Contractor 

Some PA job positions will be independent contractor positions where you are technically not an employee employed by an employer, but rather, are self-employed. These positions may seem a bit confusing or intimidating as you would be responsible to find a great tax professional that can help guide you with which business structure you should form, taking out quarterly taxes, and figuring out what can be tax deductible. Additionally, you're responsible for your own benefits and insurances such as retirement accounts to invest in, medical insurance, malpractice, etc. Remember, to cover for these things, you likely should be compensated more than a regular W2 position, whether is a high hourly number as an independent contractor, or as a percentage of collections, meaning that you would keep a certain percentage of whatever amount of money is collected by the workplace for the work that you billed for. 

The pros of being compensated as an independent contractor can seem to outweigh the cons in many situations. If you'd like to hear more from a PA-C that has been compensated as a 1099 independent contractor while working as a locum tenens PA, take a listen to episodes 58 and 59 of the PA the FI Way podcast! 

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