Welcome! I am so excited to make this very first blog post on my very first blog! Today I want to jump right in. I promised to talk about the things you REALLY want to know and that we will do. Let’s start by talking about one of the very first things you will have to decide when you begin your career as a nurse practitioner (NP)…
Should you work as a salaried or contracted employee? BIG DECISION! And both have pros and cons. I am going to tell you EVERYTHING you need to know to make the best decision for you.
Let’s start with working as a contracted employee. Contracted NPs own their own business and through the business provide a service (patient care) to a facility in return for a certain amount of money. Pros: You are your own boss. You set your hours (to a certain extent), you get paid based off your production, and typically you make more money than a salaried employee. I know what you are thinking… “Freedom? Flexibility? More money? Sign me up! I see no cons!” HOLD ON THERE! Let’s talk cons because there are plenty. Cons: You ONLY get paid based off production. This means your pay may vary greatly month to month. You think often about how much you bill and hope insurance is paying on time. You are concerned with patients paying their bills. Your income will eventually hit a semi-reliable amount if you work at a good office and maintain a steady patient flow, but it will still probably vary a couple thousand month to month. That brings up another con: Concerns over patient flow. What happens when another provider gets hired at your practice or for whatever reason your patient flow slows down? It happens. Just like any other industry you have good months and slow months. Also, you are responsible for building your practice. So, the first several months your pay may be very low until you build up a good patient base (this took me about 6-9 months). Another con: You pay for your own insurance, continuing education, license renewal, malpractice insurance, AND you have to manage your own taxes. TAXES???? Doing my taxes gives me SERIOUS anxiety every year AND it’s expensive to pay someone to do your taxes. So, yes you are free, flexible, and can make more money as a contracted NP BUUUUT you worry about your billing, pay for all your own licensing things, and the worst part… TAXES… *shivers*…
Now let’s talk about being salaried. Salaried is like hitting the easy button. Everything is set up in a nice little package and wrapped with a beautiful bow. Pros: You know exactly what you will make, you will be offered insurance, you have paid time off, the facility will likely contribute to the cost of your continuing education, pay for license renewal, credential you with insurance companies, AND BEST OF ALL your taxes will be super easy because you are an employee. You hand a tax guy your W-2 and VOILA – taxes done. Now let’s talk cons… You will likely be a full time employee (Monday through Friday 9-5), you have to request time off and you are only allowed a specific amount, you will likely be offered MUCH LESS per hour (like 50% less… eeeek), and you are not getting paid off production (meaning your employer can ask you to do as much or as little as they want and you see no difference in your pay). So, less freedom, lower pay, less flexibility… BUT SILVER LINING – you don’t have to worry about the business side of the NP world.
Let’s talk about the compensation piece of this in more detail. Contracted employees are usually paid a percentage of what is COLLECTED (not billed, COLLECTED). A typical percentage split in my area is 60/40. 60% of collections go to the NP and 40% goes to the collaborating physician for overhead and supervision fees. I have heard rumors of places offering 70/30 and even 80/20 but I have not met anyone personally who received this offer. Another common arrangement is getting paid a set amount per patient seen. I have never heard an amount offered that was anywhere near fair in this type of arrangement. It is usually an offer of less than 50% of what you would actually collect per patient you see. Commercial insurance companies reimburse $75-$100 for a follow up psychiatry visit roughly. You can calculate what compensation would look like hourly/daily based on how many patients you plan to see ([$ collected per visit x # patients seen per day] – 40% to overhead and collaboration fees = daily compensation). Salaried psychiatric NPs in my area are typically offered around $100,000-$130,000. This averages out to about $48-$62 per hour. Once you add in PTO and an allowance for CEs, malpractice insurance, and license renewals it would raise the value of your hourly rate by a few dollars.
So, which option is better? It depends on what matters most to you. My biggest piece of advice: KNOW YOUR VALUE! Research what insurance is reimbursing for services you provide and be sure you are getting appropriately compensated for the work you do. Many, many facilities and physicians are offering crazy low ball numbers to NPs and they keep doing this because WE KEEP ACCEPTING IT! Stand your ground. Recognize what you have to offer. Recognize the monetary value you bring to a practice. Don’t be afraid to negotiate. Yes, we are nurses because we love taking care of patients, we love educating, we love seeing our patients thrive, but those values do not conflict with being business savvy. YOU CAN BE BOTH!
Let me know in the comments how your negotiation went to get your NP job. Are you contracted or salaried? What do you like or dislike about the compensation structure of your current position? If you have any questions or suggestions for a future post please let me know! Thanks for joining!