Aesthetic Compensation can be confusing.

No one likes to talk about money.   Employers don’t.  Employees don’t.  It is uncomfortable, it is the unknown and sometimes it leads to a conversation where you really don’t know what to say or what anyone in the negotiation actually wants.   But that conversation is vital to establishing and maintaining a good employee/employer relationship over time.  

Understanding Cash Medicine

In therapeutic medicine, a provider sees a patient and is often able to bill an insurance provider or another paying entity for the visit with a patient.  Because ICD-10 codes are usually used to identify what is billed, there is a large revenue stream coming into a practice in spite of a provider’s experience or expertise.  

In aesthetic medicine, a provider must provide a service or sell a product to bring revenue into a practice, and the patient will be paying out of pocket for that service.    This impacts a practice in many ways and influences how employers think about compensation plans as well as how providers see patients.

1. Employers are often leery of hiring inexperienced injectors because they may bring little revenue to a practice in their first year, leaving a practice “upside down” comparing the cost of employing the provider vs.  the revenue they bring to a practice.  If a provider isn’t bringing in revenue, there is no money to pay that provider.

2. Providers – whether estheticians, injectors or service techs – must not only must have strong expertise in providing services but must also have strong sales and education skills to help patients understand the recommendation that will lead to the desired outcomes or results.  

3. The prices for aesthetic treatments and products are often expensive and this means that there can be a perception of high revenue attainment in a practice.  But the Cost of Goods (COGS) is extremely high for injectables and consumables.  Additionally, practice costs add up quickly because of the staff, customer service and ambiance expected in an aesthetic practice.  This leads to a very low profit margin in many clinics, yet employees may perceive the high revenue stream as profit.  

Because aesthetic medicine combines highly specialized patient care PLUS the challenges of retail and consumer choice, this can lead to a lot of misperceptions of what can make the practice more successful financially.   Insight into three areas can improve the teamwork and financial growth of a practice:

• Understanding clinic finances

• Creating appropriate provider compensation plans

• Set timeframes for performance and compensation discussions

Understanding Clinic Finances

Bruce Maller of BSM Consulting often told clients that he held quarterly business reviews with his employees so they could all have a strong understanding of where the business was financially.   This educated his employees as well as helped everyone to understand the challenges and successes of the business activity.    

Aesthetic practice owners can learn from this example and help employees understand the challenges of running a business.   When employees understand what percent of the total revenue goes to pay their compensation, the cost of devices, products and consumables, utilities and rent/mortgage, insurance and advertising, operations and marketing, their eyes may be opened to how much it actually costs to run the practice.  

Additionally, it is important to discuss practice and business goals in a group setting at various times so that the entire team is working toward common growth targets.   Many practices will create a bonus pool to be split among the entire team if these goals are met, providing a common objective and leading to teamwork.

Provider Compensation Plans

When the team has a better understanding of revenue and expenses, it is easier to discuss compensation plans.    But developing a provider compensation plan is still a subject that almost every employer struggles with, often because of the unknown about revenue that each provider will bring to the practice.  Remember, if there is no money coming in, there is no money to pay a provider!  

According to the TITAN Aesthetic Injector Compensation Report, the average injector in the United States has about 8 years of experience, brings in ~$850,000 annually in patient revenue and makes about $170,000.   Yet every injector has their own situation and compensation plan that is right for them, so employers will benefit by asking about compensation priorities.   Sometimes medical benefits are a driver, sometimes vacation time or scheduling flexibility is key and sometimes it is unlimited earning potential.  But whatever the plan, it has to be something that is a win-win for both the injector and the employer.  

When creating the plan, it is helpful to think about cash flow in the practice.  For example, if a PA injector is earning a salary of $100,000, the practice is paying that provider $8333/month (plus any other costs associated with the employee like insurance, taxes, vacation, benefits, etc).  To ensure that this expense is covered, an employer may ask a provider to bring in a certain amount of patient revenue before a bonus structure is applied.  In this example, the first $25,000-$30,000 in revenue that a provider brings to a practice only covers the cost of employing that injector.   Additional revenue OVER that threshold will then provide profit, so adding a commission or bonus AFTER that revenue threshold is met will help the business remain solvent while giving the injector clear goals for adding compensation.

Here are some tips that may help employers and providers better navigate compensation plans that are fair to a practice but also allow a provider’s revenue to grow as their skills and patient base increase.  Note:  This section focuses on plans for injectors, but the concepts can be applied to other providers as well.

Hiring Naïve Providers

While many employers are reluctant to hire naïve injectors, there is a shortage of experienced injectors in the current market and hiring a new injector who has invested in themselves for training and foundational knowledge can be a strong hire to support practice growth.

• New injectors can be a tremendous benefit to any practice.  They can build skills to fit practice expectations, they are motivated to learn, and they can provide services that more tenured providers sometimes don’t enjoy.  

• Starting new injectors in an “internship” program can be a good way to integrate them into a practice.   The new injector can sign a 3-month internship job offer.  During this time, the intern will learn everything about the clinic and will assist with a variety of tasks while also learning injection skills while being paid in the range of an MA.  At the end of the internship, the injector can transition into a permanent employee situation if both parties agree.

• Once the new injector is seeing patients on their own, create a threshold that they must hit before a bonus or commission structure kicks in.  This covers the cost of hiring the new injector yet also gives them incentive to build their skills and their patient base.

• If a new injector invested in training before being hire or as part of the internship program, provide a “surprise and delight” to them by giving them what they spent in a bonus on their first anniversary.  

• There should always be a forum for injectors to ask questions about compensation and to understand the compensation structure.   Many injectors feel uncertain about how their pay is calculated and this can lead to mistrust in an employment situation, so always ensure that the compensation plan is clear and understood by all parties.

Hiring Experienced Providers

The “holy grail” of hiring seems to be the experienced injector who will bring a patient base to a practice when they join. But this would be an unethical ask for an employer since they wouldn’t want an injector to leave their practice and take all of the patients to a new practice!   Yet often patients will follow a provider to a new practice, and it is because of the “brand” that this experienced injector has created.  But this conundrum often leads to unrealistic expectations in the hiring process for both employers and employees.  Here are some thoughts to ensure that bringing an experienced injector into a practice is a win-win for both parties.

• Experienced injectors often will bring their “brand” to your practice, and you should not expect them to give that up and transfer all of their patient loyalty to a new practice.  Discuss social media expectations, patient photo releases and consents prior to signing an employment offer.  Injectors work hard to build a patient base and often, that is why they are wanted, so they usually will want to continue doing what created success originally.

• Experienced injectors report that having an unlimited commission or bonus is more important than the hourly or salary they receive.   They have built strong practices and want to be compensated well for bringing high revenue numbers to a practice.  A compensation plan set up to reward this revenue will usually be appreciated by an experienced provider.  Ensure that the plan is clearly delineated regarding how the injector commission or bonus is paid and consider determining all bonus or commission on patient revenue brought in, not a version of “net”.  When there is easy transparency with how injectors are paid, everyone is happier.

• Training new injectors may be part of the job description for a tenured provider, but if this is expected, it needs to be discussed in the interview process so everyone is clear on the time involved, the training materials used and if additional compensation is earned by this activity.

• Non-compete clauses are almost never included for experienced injectors, but non-solicitation clauses are fine.   Good communication should keep a strong employee/employer relationship going, not a contractual clause restricting work options.   Create tenure bonuses instead to reward experienced injectors for staying with a practice.  In some situations, injectors are being offered equity in the practice and this can be a win-win financial arrangement for both the injector and the practice owner.

• Ensure that a generous CME allowance is included for experienced injectors.  Education is vital to remaining a strong clinician and attending conferences and training courses enhances the injector value to the practice as well.  Scheduling flexibility is also usually a priority for experienced injectors.  

Performance Reviews and Compensation Discussions

Providers are the life blood of the business and if providers leave, the revenue stream is negatively impacted.  Practices with great providers can have continued success when lines of communication are open.  For teams to be successful, everyone needs clearly identified goals and objectives.   Work these steps into your discussions going forward.

1. Everyone has individual goals for their career and employees are happier if they can express these goals and have a path for attainment.   Scheduling regular performance reviews is an integral part of this communication process and helps employers support employees in attaining professional goals.

2. Performance reviews can be verbal or written, but 1-1 communication lets both parties share thoughts, ask questions and set goals.    Use the Job Description as a template for measuring job competency and for measuring whether the employees are meeting or exceeding goals.  If an employee is exceeding what is outlined in the job description, it may be time for a new job description (perhaps with a compensation increase or new title!).

3. A performance review doesn’t have to include an increase in compensation.  Sometimes employees just need to be told “thank you” and know that their efforts are noticed and appreciated.  

4. Two-way communication is extremely important in any career.  Employers need to ask employees if they are happy and what could improve their job satisfaction.  Conversely, employees need to speak up and identify things that would make them happier on the job.   Communication has to come from both parties for long-term job satisfaction to be maintained. I

5. If compensation is discussed in an annual review, this should be an objective set up in advance of the meeting, not something that is sprung on an employer or employee.  Each party needs to know the revenue the provider brings to a practice and how that fits into the practice revenue stream as well as growth for that provider vs. the practice as a whole.  The compensation discussion should lead to a win-win agreement where both parties have the opportunity to make more money and should not be a “unless you do this, I’ll do this….” situation.

However finances are discussed in your practice, remember that owners and providers usually need each other to be successful, so positive and fact-based conversations will always lead to better outcomes than suspicion or lack of transparency.    

For more information on provider compensation, please see the TITAN Compensation report at https://titanaestheticrecruiting.com/product/2021-titan-aesthetic-injector-compensation-report-and-insights-guide/.

If you are an RN, NP or PA injector and would like to complete the Compensation Survey and receive a complimentary copy of the report, please watch the TITAN Aesthetic Instagram page or newsletter for the link when the next survey is fielded.

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