The Whole Veterinarian
Is it impossible for veterinarians to aim for more balance? The Whole Veterinarian podcast helps to share experiences and start a dialogue about how we can grow as people and professionals. As a female equine solo practitioner, mother and business owner, I've seen the challenges that face us. I want veterinarians to learn to be happier, healthier, wealthier and more grateful for the lives that they've created. Together, let’s learn how to develop a life we love.
The Whole Veterinarian
VET TRUCK CONFIDENTIAL: Balancing Veterinary Compensation: When Culture and Financials Collide
Communication and transparency are key when heading into a salary negotiation. We sat down to map the real landscape of equine veterinary compensation—what each pay model actually means, how the math works, and where the friction hides. From straight salary to ProSal to base plus production, we break down risk, reward, and the psychology that drives your choices.
You’ll hear the practical benchmarks owners use to keep a practice healthy—like total compensation packages landing around 25–35% of an associate’s billed revenue—and why your production percentage only matters if you know what’s included. We push hard on negative accrual and explain why tying base stability to short-term production shortfalls is a morale and retention killer.
We try our best to address the “true paid time off” concept by clarifying what you are paid (your base and benefits) versus what changes (bonus opportunity), and why prorating thresholds effectively shifts risk back to the practice. Then we turn to benefits and culture: why a capable technician is an efficiency engine, how pre-tax benefits stretch dollars farther than payroll, and which creative perks actually improve your day-to-day—AI transcription, on-the-road meals, student loan stipends, even rural med-evac memberships.
If you’re negotiating a new role or a renewal, you’ll walk away with the right questions: What revenue is realistic in year one and year three? What’s counted in production? Is this role replacing demand or creating it? How will the practice fill my book? And if you’re already near the top of the compensation-to-production range, consider schedule design, support staff, and pricing before chasing another point of percentage.
Let’s make compensation clearer, fairer, and more sustainable—for associates and practices. If this helped, share it with a colleague, and then tell us: what part of all of this still feels confusing to you? What perspective or ideas did we miss?
RESOURCES:
-Understanding Associate Compensation Webinar
-Some other great compensation podcast episodes from Veterinary Financial Podcast
-AAEP Compensation Resources (Compensation Study, Fee Survey, Benefits Calculator)
-The Psychology of Money by Morgan Housel
-AAEP Practice Culture Resources (Benefits survey, Reward and Recognition Survey)
-"How Much Practice Financial Information Should I Share With My Team?" from Care Credit and Dr. Andy Cameron
Send a text and let me know what you think about the episode!
Connect with Stacey or find more from www.thewholeveterinarian.com!
IG @thewholeveterinarian
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Thank you for your time and support!
Welcome to the Whole Veterinarian Podcast. My name is Dr. Stacey Cordivano, and I hope that this is a place where we can all learn to be happier, healthier, wealthier, and more grateful for the lives that we've created. In this series, Vet Truck Confidential, I am joined by Dr. Misty Gray and Dr. Kelly Zeytoonian, and we have a more casual discussion on topics that are relatable to us as Equine Veterinarians. As always, thank you for your time and for listening, and we hope you enjoy today's episode. Welcome to the absolute longest podcast that Vet Truck Confidential has ever recorded, and it may even be the longest podcast that the whole veterinarian has ever produced, which is why it took me 12 years to get this edited and published. Anyway, we are here to talk about lots of different things regarding compensation today. We go around and around. It felt like we couldn't leave anything out because they're all so tied intimately together. This one is going to ruffle your feather in one way or another. I think we equally ruffled feathers of owners and associates fairly. We do realize that we have our own perspectives and there is a perspective out there that we're missing. So our goal from this podcast is to really encourage discussion. So reach out with your thoughts about what we've covered, things that bothered you, things that didn't land correctly. I'm hoping that everything we shared is factual. We tried our best to fact check and not generalize too much, except where generalizations were actually beneficial. Um, I have one sticking point still that I can't wrap my head around, and you'll hear us talk about it, but it's this idea of quote unquote true paid time off. It comes up a lot because I am in a veterinary mom's group where it gets discussed often as what people should be asking for. I did work prior to recording this. After we recorded this, I posted on three additional posts that were talking about it, asking for examples and formulas and what people are doing. And every time I either don't get a response or the math isn't mathing. So if you have a way of looking at this that is different than what we talk about, which is production bonus versus time off, please let me know. I'd love to expand my thought process on this. I think you kind of hear us come to a conclusion in this, but that is one area that I just feel like I don't have some information or something that people are talking about. And I wish I had it because I'd really love to see the other side of it. Okay, so enough of me talking because there's already a lot of me talking. You may have to break this one up into chunks. We hope this is helpful. Our goal is really to, you know, share as much knowledge and experience as we have, but again, we understand we don't have it all, and we would love to continue the conversation, whether that's in a phone call, at coffee or drinks at AAEP, wherever that place may be. Shoot us a message. We're super available. I'll put all of our contact information in the show notes. There's also going to be a ton of resources list in the show notes that we have mentioned in the episode. So check it out. One last thing. Decade one is going to be starting a new cohort in January of 2026 for anyone in equine veterinary medicine. So if you're looking for a place for community and for some education on business and leadership, please check it out. Join us. We would love to have you. The more the merrier. It's decadeonevet.com. Thanks and let us know what you think. Hope you enjoy. Okay, we're back for another episode of Vet Truck Confidential. Hi, ladies. Hello. Hey. We've got some disclaimers at the beginning of this episode. We want to talk about compensation. We specifically recently had a question in our decade one group about how to go into a meeting talking about next year's compensation and contracts and et cetera. And we want to dive further into that. And Kelly also recently gave a presentation for Hilltop Bio talking about equine veterinary compensation with a lot of statistics and numbers. So we will also put the link to that recording in the show notes because we're not really going to tackle that. We are going to tackle the messier side of this. And we are trying our best not to sound like old grumpy practice owners. I want everyone who's listening to know that from the get-go. We all are practice owners now, but have been associates in our life. And our ultimate goal is to have everyone happy working together. But you're going to hear probably a back and forth and just be prepared for that and continue to think generous thoughts of us, even if we say things that may get your insides riled up potentially. Hopefully, not too much. We'll see. I don't know where this is exactly going to be. Oh boy. That's never a good thing for Kelly. Um, Misty, thoughts before we start?
Misty Gray:Yes. I think this can be this can be complicated. And I think like so we're coming at this because we have followed some discourse on the various like Facebook groups. Some of those are small animals, some of those are equine only, some of those are like mom or parent focused. And even at the SEPS meetings, there's just there are a lot of opinions and a lot of, I think, sides to this, and a lot of like it's gonna be different for people based on what your values are, you know, like if you're valuing time versus the paycheck and what your particular stressors are. So it's I think it's complicated. And so you probably will hear us we're gonna be open and honest with one another and just say the questions because probably somewhere somebody else is also thinking this. And sometimes it helps to have someone else be devil's advocate. Um, so just remember we're not the devil. Um, so I don't when Stacy and I were starting to talk about this before we hopped on here. I had to take a big step back. It's like, okay, wait a second. Before we get in here, we need to remember that at the center of all of this, you have a practice, and the practice has to exist. Like the practice has to be profitable because in order for all of us to be happy, it has to continue to do its job. The business has to do its job, right? Right. A business has to make money, a business has to look to the future. It benefits the associates to have a healthy business. So there's that side of it. On the other side of it are the associates, right? The owner's gonna look out for the business. Then on the other side of that, you have associates and employees, and they are gonna look more towards themselves. Like you're gonna look out and protect yourself, but the practice has to be still be profitable in order for the associate to have the job, right? So, in order for the associate to win, the practice, the practice still has to be profitable. In order for the practice to win, the associate still has to have a quality of life that keeps them happy and engaged within the practice. Otherwise, they go someplace else. So it is two units working next to one another, and like the right balance that gets struck has a practice that's profitable and doing well, and an associate that has the quality of life that they need or determine, right?
Stacey Cordivano:Yeah, and caveat, like that is also how any negotiation should work, regardless if it's your compensation structure or buying into a practice or any part of your life. Like you want to be going into a negotiation with a partner who like you both have interests, maybe slightly different interests, but like with a common goal of coming to an agreement that is good for everybody. It may not be perfect for everybody, but it's like good for everybody.
Misty Gray:Right. Because if the balance shifts too far in either direction, too far to the practice or too far to the associate, someone pays the price for that. And depending on who's paying the price, I mean, like that that that impacts the whole shebang. Like no one does well long term.
Stacey Cordivano:Okay. Any other disclaimers, Kelly, before we start?
Kelly Zeytoonian:We're gonna speak in generalizations, and every practice is different, the way that it's structured, um, the percentages of costs for each different category that we might allude to very briefly. And again, if you want to really know more details, go to the Hilltop Bio webinar that we did. We I break that all down for you. Um, so if you're hearing this and saying, well, that wouldn't work for my practice because of X, Y, or Z, that's okay. And if you want to talk about it offline, happy to entertain those conversations. This is the type of conversations and support that I love doing for our practice. So just yeah, we're speaking in generalization. So if something doesn't quite jive with your practice, okay, no problem.
Misty Gray:Yeah, everything's product. Feel free to come to whatever social platform you're listening to or email us and toss out your scenario, give us another perspective to look at.
Stacey Cordivano:Yeah, definitely. I mean, right? We are three owners sitting here. That's not a widespread uh perspective.
Misty Gray:So I'm trying to be very open-minded. I mean, that's our yeah, right. Like that's we're coming from this trying to look at some different ideas that have been tossed out there. So let's try to figure them out.
Stacey Cordivano:Okay, so speaking of some generalizations, first, like maybe let's define how people are paid, right? Because I think potentially there's some confusion. Straight salary, maybe less confusion, probably becoming less common. Do you guys agree to be paid straight salary?
Kelly Zeytoonian:I haven't seen any employment agreements come across my email that I've been asked to review that are straight compensation in the last three years, I think.
Stacey Cordivano:Okay. Then there's a term that was coined called ProSal, which is similar to a term called base plus production. I think the caveat with ProSal is that there's negative accrual, which we are all learning to be very afraid of. So negative accrual would mean you don't technically have that guaranteed base because you, if you don't produce enough to make it to that base, you will be making up for it as you roll forward. I think that's you may as well just call that production in my mind. Agreed. I yeah, I it is a little bit like, why does that exist? Um so then there's one which I think is becoming much more common, which is base plus production. So you have a guaranteed base throughout the whole entire year that you will make no matter if you fall short of production or not, that's in your contract. I have agreed to pay you that base. If you hit a certain number, which we can go into in a minute because it'll be determined by your production percentage, you will make bonus money on top of that for doing extra work than what is potentially estimated, right? Like your base salary is, I mean, Kelly, do you agree? Like kind of an estimation of what you will bring in that year, produce as a vet?
Kelly Zeytoonian:It can be that, or it can be, you know, what other individuals within the practice are also paid, you know, kind of what is you could say industry standard for your geographic region. That can be a little bit hard to gauge those numbers, right? Like we have the AAP compensation studies and we know what average salaries are, um, depending upon types of clinics. Um, but but yeah, like our ours is established by kind of what the standard rate of pay in our geographical region is. Okay.
Stacey Cordivano:So the reason this came up recently is because someone asked in our group how to go into her compensation meeting and get more money. And we kind of circled around about things like benefits and time off. And there was a response from someone that said, Well, if I ask for more time off, I'm actually just making less money if I take that time off. So I think that's kind of where we should circle for a little bit to just like work through what is paid time off and like, are we doing it? I think there's this like idea out there, certainly in some of the Facebook groups, that it's not true paid time off. If there's not recalibrations done, if you are out there and you don't know what your percentage production is if you're on a base plus production salary, or if you don't know how much you're making in gross production per month or per year, those are numbers you have to have before you're going to be able to like dive into this. But Kelly, can you give like kind of a range of production numbers and how that equates to a salary plus compensation and how that relates to a practice's financial structure?
Misty Gray:Before we do that, can we take just one second for people that are, I don't know, more visual, like maybe I am. So of the three, maybe this is like basic, but of the three structures people tend to use, there are pros and cons or benefits and whatever to each of those. And I think you do have to kind of take that into account and keep that in your mind as you're choosing what path you're gonna do and also trying to decide how to shift, like what the risks and the benefits are. So ladies currently have a little salary, very little risk. Your benefit is that you know exactly how much you're gonna take home. It's a super easy calculation. If you're a planner and you want to know how your year is gonna look without much fluctuation or change, that's the way to go. The risk that with that is that you could have made more. Like maybe the practice is gonna make more money off of you, then you know, the balance shift could shift towards the practice.
Kelly Zeytoonian:Yeah, if you're paid on salary and another associate leaves the practice and now you've picked up their books and their caseload on top of your own caseload, but you're making the same amount of money, you could be working double time for the same amount of pay.
Misty Gray:Yeah. So that's the risk. You could have made more. You know, the flip side to that is the practice could do terrible. And they've guaranteed the economy could crash, nobody's taking their pets in for appointments, and um, you're still guaranteed that pay, right?
Stacey Cordivano:So and you're not worried about like the minutiae of what we're about to talk to you about, I guess.
Misty Gray:Yeah, and you're not worried about who took what call and whether or not somebody's seeing more sports medicine or profitable calls while you do reproach, right? Like it takes the concern of that out. And you know, for some people that's a big that counts, that counts as a big benefit. The peer production is the you know, the risk is that you could not make what you want to make for the year because you couldn't get the appointments, you're gonna have to hustle, you're probably gonna watch the schedule a whole lot more closely. It can increase, I think, this feeling of competitiveness or comparison, which can be really draining to be both but the benefit is that you could, you know, make bank. I mean, you could, you you could, and and any work that you do, you can feel like you have choice and responsibility to that. Like I'm choosing this and I see the direct payout for it. Um, and there have been periods of time in my life where that sounded really appealing to me. You know, the flip side is that if I did not want to go or I felt like I was choosing a different priority, I don't have to feel guilty. The practice isn't paying me for work I'm not doing. Um, you know, like I am earning in accordance with direct accordance to the work that I do. That feels good.
Kelly Zeytoonian:A downside to that is if you are paid strictly on production, it is harder to prove your compensation structure and guaranteed compensation. So if you're looking to get a loan, buy a home, buy a new car, what you are making is kind of it is absolutely less guaranteed. So banks frown upon that. And so it is harder to gain support from the bank or you know, get get funding from the bank when you're strictly paid on production.
Stacey Cordivano:So the the result of those two pros and cons is what this base plus production like came from, I would have to imagine, right? Like you're guaranteed a base. And from my reading, it's generally like 80 to 85 percent of maybe what you're expected to make or what you've made in the past year as like a safe number. So you can count on that as your monthly income. And then whatever you produce over that, you if you work harder, you're getting a bonus on that. And I've always seen it as like a very fair for both. Yep. Okay, so then let's go back. Kelly, give a little bit of like average numbers, maybe common numbers of percentages that people are getting paid, how that translates to like what you would have to produce, and then how that affects the practice finances or like where that number comes into play for the practice financial.
Kelly Zeytoonian:Okay, so I'll try to do like a cliff note version. So on average, uh, when you compare salary or I should say, like take-home pay to revenue produced by the associate, and add in benefits that the associate receives, the range typically is between 25 to 35% of total revenue billed. So you add up all of my salary, my benefits, continuing education, uniform, pay time off, health insurance, et cetera. Add all those values up, divide it by what I have billed for the year. It should be in that 25 to 35% range. Why should it be in that 25 to 35% range? Because I need the other 65 to 75% for the practice to pay for the cost of goods that it actually took for me to produce that revenue, for the salary and benefits of the technician who drives in the truck with me on a daily basis and supports me producing that revenue, the vehicle and the gas that drive me around and get me to my appointments, the expense of the clinic where I return to at the end of the day and restock my inventory, um, the payroll tax, attorneys, accountants, credit card fees, credit card fees, front desk admin who schedule my appointments, all of those things behind the scenes. There's a cost associated with me producing that money. And I, as a partner, associate, owner, whatever in this practice can't take every last penny that I've billed. Otherwise, there will not be a technician for me. There will not be additional inventory ready to restock my truck. There won't be somebody answering the desk and scheduling my appointments for me. Um, I will have to accept everything in cash or credit card, or not credit card, cash or check because I can't pay the 3% credit card fees. Um, so that's that's why we say that 25 to 35, it leaves a healthy amount to cover all of the additional supportive expenses that allow me to go out into the field and practice veterinary medicine and produce said revenue.
Stacey Cordivano:Okay. I'm gonna hear practice owners push back and say that it has been standard 25. Maybe I think Marsha Henge a couple of years ago updated that to 28 as a safe percentage. And where are we getting the up to 35 from?
Kelly Zeytoonian:We are getting up to 35 from a shift in the supply of equine practitioners and the need to raise our base salaries and get them closer to a livable wage that allows these newer graduates who have hundreds of thousands of dollars worth of debt, enough money to actually cover their day-to-day expenses and to come into equine medicine. And so the practices that I'm seeing that are successfully hiring new associates are paying a higher-based salary, or they're providing additional benefits, or they're making sure that there is actually a technician driving around in the car with the veterinarian on a daily basis. And so they are taking away a bit of the profitability potentially of the practice by giving more to the associates to support them staying in equine medicine. Right. It's basic like supply and demand economics. Um, we've got to pay a little bit more when the demand is so high.
Stacey Cordivano:Okay. So that's where you're like, that's where that number, it's in the 2025 report, but 2024 senior survey, equine bets, $96,000 starting salary for those graduates. Yep. Okay. So that's what the total cost of an associate or or really an owner, like their salary takes up of the practices total gross revenue. What numbers should people be looking at for their specific production bonus percentage as a part of that? And now I like if you really want to know the details, like that's a consultation with Kelly and she goes over those exact numbers. But like, you know, I think historically maybe people were making like 18%. I think certainly numbers have come up in that department, right? I guess along with the trend and the entire thing coming up.
Kelly Zeytoonian:But yeah, right. And so that again, that's where everyone is different. And the numbers I quoted you, that 25 to 35 is a reflection of the associate's total revenue, not the practice's total revenue.
Stacey Cordivano:Sorry. Yeah, sorry.
Kelly Zeytoonian:Yeah, just to be just to want to clarify. Yeah, the practice's total revenue is and as a reflection of overall payroll is closer to like 45%. Um that includes staff, including everyone, staff veterinarians. So back to the question at hand, which I totally have lost.
Stacey Cordivano:Oh, what per like so if someone's going into a contract negotiation? My first thought is if you can't necessarily up your base pay, maybe up your production percentage, ask for an increase. Like if you're only getting 18%, that seems like very antiquated. Yes. Why not ask for 22% of production?
Kelly Zeytoonian:100%. Absolutely. Why not ask for it? I would.
Misty Gray:Is there any risk to the practice to increasing someone's percent production? Like what pushback would the associate get? Could they expect from an owner? Like, what's the impact on the practice?
Kelly Zeytoonian:Yeah. If so, if it's a practice that's running on very tight margins, low profitability, giving a practitioner an additional, what did we just say, two to four percent will impact the profitability of the clinic? And that in turn could mean that that additional technician that they were thinking about hiring, they don't really feel like they have the cash flow for. That new X-ray machine, because they were going to replace the one that's 10 years old and super heavy and still wired, there's not the cash flow to cover that because now that additional percentage has gone toward the associate pay. That's, I mean, that's what it comes down to. It comes down to profitability of the practice. I'll also say when we think about that 18, you know, to 20% or whatever you're thinking about, you really need to also drill down to is it 18% of only services, of services and medications, of only daytime fees? You know, like what does that percentage entail? Because every clinic is going to be different in what they define as revenue that is eligible for production. As an example, I pull out anything that does not have an appropriate margin or an appropriate markup, I pull that out of production. So um, tallow services. I don't upcharge my cremation fees and I don't upcharge my like specialty consultations, radiology reports. I don't upcharge those by enough to give that production to a veterinarian. So they're not being paid a percentage of the cremation fee. So that would be the first question that I would be asking before I even talk about the percentage that I'm going to negotiate is what is included, or it might be easier to say what is excluded from those production numbers. Some clinics do a lower percentage, as an example, for medications, because we are now fighting the Chewies and Valley vets and farm vets of the world. And it's really difficult to price our products high enough to actually not lose money if we are then paying the credit card fees and the holding costs and the associate production on those medications. So those numbers need to be understood before you then go and say, give me a higher percentage. Because if the clinic is saying it's every single thing that you bill, one, we should I talk to that owner because they're not, they're losing money. They're losing money somewhere. But that 18% is going to go a lot further than say 20 or 22% at a clinic that's only paying you that amount for your services. Yeah.
Stacey Cordivano:The other thing to consider is with a higher percentage, you need to gross less annually to start making your production. With a let me think, I just did the math. I actually have never done this before, and we can cut this out. If you divide 100,000 by 18, someone has to make 555,000 to earn to earn more. To earn product to start earning their production. Yes.
Kelly Zeytoonian:Yep.
Stacey Cordivano:Versus someone who's making 20% production, they only have to earn $500,000. True. Fair. Yep.
Misty Gray:Yeah. So you'll start with that for a minute because that one I was doing like renegotiating my own contract back when I was an associate. Like that weighed on me. Like, how do I know? Like, is it worth it if I have to earn more to actually make them cut off? Is it all gonna balance out in the wash anyway? Like, is that gonna look the same? Is that gonna hurt me if I can't get up that high?
Kelly Zeytoonian:It's always gonna be better to have a higher percentage. Yeah.
Stacey Cordivano:It's actually gonna be easier to start making production if you have a higher percentage.
Misty Gray:I think where that question is to earn more in order to reach the threshold.
Stacey Cordivano:No. You have to earn less. Less. What you will have to earn more for is if you up your base salary. Correct. Okay. So one alternative to all of this, right, is to ask for an increase in your base salary and then you worry less and count less on a production check. Yep. Okay. What have we left out of this part of the side?
Misty Gray:Wait, just go back for a second and do the math for me because you were starting to say, like, oh, I just did the math and whatever. Yeah, yeah.
Stacey Cordivano:So if you if your base salary is $100,000 and you are paid 18% of production, you will have to make $555,000 or you will have to bill $550,000 a year to start then making production on anything above and beyond $555,000. If you are paid $100,000, same salary, and you make 20%, you will start making production on anything over $500,000 billed.
Misty Gray:Oh, I see.
Kelly Zeytoonian:Yeah, because you're earning a larger piece of the pie.
Stacey Cordivano:But if you upped your base salary to $125,000 and you kept your 18% salary, you'd have to earn almost $700,000 before you started making production. And if you went to 20%, you'd still have to earn $625,000 versus the $500,000 before you saw a dime of production.
Kelly Zeytoonian:So then it comes down to I mean, it's how do you how are you financially motivated? Are you an individual? Who would rather just have the consistency and the regular cash flow and earn, you know, earn your $125,000 base month over month over month and be okay when the practice owner comes to you and says, you know, here's your check for $500 that you earn as a bonus, right? Because we we call it production, but like I think it's better to think of it as it's a bonus, right? It's you've gone above and beyond and you build above the expectations to meet the needs of paying your bills and the practice being profitable beyond that. Here's your bonus for that. Whereas if you are at a base salary of 100,000, you get to the end of the year, and here's your check for $20,000. Yeah, I'm I'm not doing math. People don't that check me on.
Stacey Cordivano:And also, like I'm doing running production as if you were making it on every single service, which is clearly not the case, as Kelly just said. But like we have to compare apples to apples.
Kelly Zeytoonian:So, like psychologically, are you an individual who is content to just have that check and to have that steady cash flow? Or are you an individual who is going to feel a need that like it's been a strong year? Um, you felt like you've put a lot of effort in and you want to see that check for that bonus at the end of the year. Right.
Stacey Cordivano:Or alternatively, are you someone, maybe Missy, this applies to you, that feels guilty not saying yes to every single thing if you have a really high base. If you had a lower base, you could say, you know what? Like, I know I'm gonna be just at my production and I can say no to this extra thing and not worry about it. There is a lot of psychology to this. Probably here's a good um plug for the book, The Psychology of Money, by Morgan Hazel.
Kelly Zeytoonian:But yeah, what are you driven by? That's a really important question, you know, because again, the goal, as you all started off saying in the beginning, is how do we find a work environment that sets everyone up for success and for prolonged growth, if growth is what you want, or at least like prolonged comfort, safety, sustainability, sustainable. Yeah, I was trying not to use the word sustainability, but here we are. Um hard to get away from that word. That prolonged relationship, you know, and yes, the money is important, but also the psychology of how you earn that money is important.
Stacey Cordivano:And yeah, sorry to cut you off. And the psychology of the practice owner also comes into play here. If they are risk averse, they are not gonna say, sure, here's the highest base salary I've ever offered to anybody, right? I mean, that was me when I hired an associate. I wasn't really ready to hire an associate, I was willing to give up a lot of my work, but I didn't have a very high base salary, but I gave her 23% of production because if she was gonna hustle, I was happy to give her the money for that hard work. I just couldn't guarantee it until later, as we grew a little bit. You know what I mean?
Kelly Zeytoonian:Yeah. My biggest piece of advice for people when they're trying to come up with these numbers, you know, for a practice owner, if you're listening, come up with a base salary that, as Stacy said, you know, kind of reflects what business you think is going to be there and available for a new associate to you know, new hire to take on. Um, that's comfortable from a cash flow first perspective for the clinic, and then build your benefits and everything around that. And for an associate, know what it is you need to be earning on a monthly basis to cover the cost of living where you are, cover any of your student loans, car loans, rental fees, homeownership fees, you know, et cetera. Like you've got to show up knowing those numbers because I can also tell you that 96,000 average salary here in California is going to look different from $96,000 in Mississippi or Alabama. Shout out to anybody listening to us from the lower eastern quadrant. Like it the cost of living is just so different that that has to be taken into consideration when you think about those bases.
Misty Gray:I think you also have to consider, too, that your priorities change over time. Like what I needed when I first started out, what gave me comfort was different. And then after five to 10 years in practice, when I was hustling and I felt like I was working these crazy long hours and like um I didn't have kids yet, newly married, my husband was also working long hours. Like that was the hustle time. I liked having the extra motivator of the performance bonus because I did not mind saying yes to all of this, but it felt really good to know, like, sure, I'm gonna get out of bed right now and go take this, of course, because I'm gonna see a direct payment from this. Like, I'm gonna see this in a couple of paychecks. And then that shifted again once the kids came along to where, like, okay, wait a second, my priorities are different. I can't, like, I have to have an end of day. I need so I'm gonna shift it back more towards a comfortable salary that's not like I don't want to feel like I'm taking advantage of the practice because I want to be able to pay my bills, and then I want to be able to have the confidence to say no when I need to say no, to pick a different priority without feeling like somebody else is taking the hit for that. So it's okay for it to shift over time. Like I mean, every time you renegotiate.
Stacey Cordivano:Yeah. I just want to piggyback on a slight tangent on what Kelly was saying about picking a salary for new hires that you think they can produce. This is where a lot of people fall into the trap of hiring to help with emergency coverage and not having the business to do it. And me seeing multiple young equine graduates flounder because they don't have enough work to do, and then they are made to feel badly that they are not producing enough. That is a recipe for disaster and loss of not associates, but equine veterinarians to a different profession. So that's my soapbox rant on that. Like, please either give up work or work so hard that you have extra work when you're gonna hire someone so that we're not just expecting people new to the area or new to the profession to just drum up work out of nowhere.
Kelly Zeytoonian:Yeah, if you're if you're out there doing that, shame on you because you're doing everyone a disservice. And I'll stand behind that. Shame right. I mean, come on, we have a problem and we need to fix it. So there needs to be revenue. And this is the conversation and the calculations that I run through with people is here's the base that you're going to pay them. Here are the benefits you're going to pay them, here's the minimum break-even revenue that needs to not not that they need to produce, but that needs to be available for them to go out and earn and bill in order to just cover their costs. Right. And and that to me is, I think, a good expectation in the first year or two is can this person cover their costs? Do I have enough business that it's sort of a net neutral for the practice's financial health?
Stacey Cordivano:Yeah, I think that's really important. And it's also really important to distinguish that it's not that $500,000 number if it's the $100,000 salary.
Kelly Zeytoonian:It's not exactly. It's about very again, major generalization. It's about 35% above their salary and benefits.
Stacey Cordivano:That will be a net wash about 35%. Correct. So that's $135,000. Someone, if you can hand over $135,000 of vaccine appointments, you could potentially hire an associate.
Misty Gray:Is it common or frowned upon or rude or invited any of those options as someone who is an associate in a practice that's wanted to renegotiate? Is it common for them to ask or to be have an awareness of what the practice's health is? Like not just their own numbers, but like I guess I've I've heard some conversations around where like people get kind of in a negative mindset or like a toxic mindset where like I'm doing all of this work and the practice is making all this money off of me. And I think it's a hard, it's a bad place to feel like you're in. And like I think some transparency could help, like if there were more of these conversations between practice owners and associates. But is that inappropriate? Like, is it inappropriate for an associate to have that sort of knowledge about a practice?
Stacey Cordivano:No, I'm gonna say no, but it's also it's I'm just gonna say it's not common because I mean, I hear that it's not common in a lot of practice to even know your own personal numbers. So, like if you're not getting info on your own personal numbers, you're definitely not getting practice health from a holistic standpoint numbers. So, I mean, for me, it's a red flag if they're not willing to have that discussion with you, definitely about your own numbers, but let alone about the sort of practice health.
Kelly Zeytoonian:Yeah, here's a generic question that you could ask. What does an individual, what has an individual joining your practice with a similar skill level to mine, what have they earned in their first year out like joining your practice? What have they earned in their third year joining your practice? You know, what is what is the trajectory of billing on average? And an owner should be able to tell you, you know, an individual who's been on my team for three years is typically billing around X number of dollars a year. An individual that's been here in the first year is typically billing around this amount of revenue. And then the follow-up question to that is am I filling a position that is readily, you know, here and available with revenue ready to go, or is this an entirely new position with growth expectations? And if it's a new one with growth expectations, what are those growth expectations? And is that something that's going to be shared amongst the team? You know, what are the goals and plans for producing that additional revenue? If it's like, here's the keys to the truck and a pat on the back and good luck, okay. If you're a go-getter and you're very comfortable with that, cool. Um, you know, what I would like to see more of is well, we have these client education seminars built up, and we have this doctor who's actually working five days a week but wants to go down to four days a week. So that's going to be some revenue that's gets shifted your direction. You know, knowing how the practice owner or manager sees you fitting onto the team and sees where the revenue flow is going to come from is important. And maybe the the answer is not as important as like, have they thought about it? They haven't thought about it and there's no plan in place, and like you're kind of on your own. And again, maybe you're okay with that. Like you're a gunner, you can build, you're great with people, you're very confident in your skill set, you can go out there and do it. But if you're not, if you're, you know, more of like, I want to be assimilated onto the team and I want to be handheld a little bit, which is totally fine. And we know that new grads and newer grads are looking for mentorship as one of their primary top three factors. Yep. Then understanding that again comes back to the psychology and the overall long-term relationship and fit for you on the team.
Stacey Cordivano:Yeah, that's a bit falls into like culture fit. Totally talked about. But yeah. Misty, were you asking, like, can you go into an interview and be like, what percentage of your PL is uh veterinary and technician compensation? Like, does it fall in the 40%?
Misty Gray:No, I just think there's gotta be somewhere in the middle between knowing nothing, which is I think where many, if not most, um, associates fall, and knowing everything, which is you know, privilege information for the owner. And I just don't know, I don't know. Like, is that I guess I'm maybe it's my own proclivity to feel like I don't want to be, I don't want to step on toes and I don't want to seem like, you know, who does she think she is to be able to ask those sorts of questions. But I also think that some understanding sure would help some of the negative feelings that like it is very easy to fall into the trap and to look from the outside and say, like, I work at this huge practice, it looks like everybody's doing great, and it's on my back. I'm doing all the work, like we're and like I can barely make this. They should give me more, or they should whatever, just seems like maybe some better understanding.
Kelly Zeytoonian:Maybe a different way of asking the question that might not feel quite as direct to you could be something like what revenue level would a successful first year look like for you? Or what would you consider successful numbers from a revenue perspective for somebody new and joining your team? You because my answer is not going to be that this person is billing that $500,000. My answer is going to be I'm actually don't even want to worry about your revenue numbers this year. I want to see that the skills list that I have here for you and your growth as a veterinarian and your assimilation with our team is on track. And sure, we can talk about the numbers so you sort of know where you stand. But more important is that we're setting the foundation and the groundwork for you to continue growing, not plateau, because you get out there and I mean you do what I did, which was joined a practice, was paid well, and you know, had a very low base, but a good production number, and just gunned and worked on my days off and took every type of appointment and focused more on saying yes to going and doing vaccine appointments and quick add-ons versus going and joining my employer or one of the more seasoned associates to learn from them about more involved cases. So I was doing great and I was billing a lot, but I also was not growing as a veterinarian in a particularly exponential way, which you should grow exponentially as a veterinarian in your first couple of years out of practice.
Misty Gray:Okay, but what about for the associate that's five or six years in? And they're so they're looking to renegotiate their contract or to uh follow up, you know, at an annual meeting or something. Is it different for them? Can they because to me that feels like you understand the practice culture a little bit better, or you've been there, you're established, you kind of know what your workload is, and now you just kind of want more information about where you fit in to how the practice is doing, I guess, and like what is reasonable to negotiate.
Kelly Zeytoonian:Yeah, like that is where you run your numbers. And for anybody out there who is not getting regular updates on what they are producing, you should be asking for that. And the practice or practice manager should be giving that to you. Happily, happily giving. Happily giving to you, right? Happily giving to you. So you you take your total billing and then take your salary and any ER fees, additional benefits, CE money, IRA contributions, health insurance, vision, blah, blah, blah. Add all those benefits up. There's a great chart from AAP's compensation committee to add all that up to see what your total compensation package is, divide that by your total revenue. And, you know, where do you fall in that range of you know, 25 to 35 percent that that I quoted? Are you at 20%? Well, then you've got some great room for negotiating an increase in you know your base salary or in your percentage again, back to kind of how you mentally like to earn your money. If you're at the 28% range, 29, 30, 35, 37 range, like I would encourage you to be pretty comfortable with where you currently stand.
Stacey Cordivano:And if you want to make more money, either raise prices or bill more. Right. Right. That's kind of the option there, right?
Kelly Zeytoonian:Like totally. Or, you know, or you're like, gosh, I'm kind of at the high end of that percentage range, but something here needs to change. I'm working five days a week. I'm doing well in those days, but I actually think that I could work four days a week and bill the same exact amount. I would like to negotiate to work a four-day work week. Add an hour to each of my other days, and I'm gonna work that much more efficiently in those four days and I'm gonna earn the same amount of money, but now I have an extra day off. Right. Like negotiations are not just about the financial, like the salary number. They're about the benefits and they're about what your work schedule looks like as well. So if you're falling within that range, especially on the higher end of the range from a financial perspective, then I'm gonna be talking to you about tweaking different things about your practice life that might also support your well-being and overall happiness.
Stacey Cordivano:That's a good segue into this idea that like paid time off, does it exist on base plus production? Does it exist at all? You know, because that was in the question, my first thought was like, Well, do you get enough time off? Would you like more? And the pushback was if I get more time off or if I take more time off, I'll make less money. And like I think if your base is set appropriately, like that's not the case, right? You're you're getting your base. You're not producing for that two weeks or so. Yeah. So where does that fall?
Kelly Zeytoonian:Yeah. Okay. So here's my quick response. And yes, it's coming from the side of being an owner, but I think it's just like understanding the numbers is there's a give and take for everything, right? We're on a seesaw here with uh associates on one side with the practice and the financials of the practice on the other side. And if you take more time off, there is the potential that you are going to feel less because you're working fewer days, right? Um, that's that's the worst case scenario. And if that's the case, then there's less revenue. So then if we play that same game of dividing your benefits by your total revenue, that number drops. It means your percentage earned on that 25 to 35% scale is going to go higher. It's gonna go higher on that spectrum. And that's okay to a certain point for a practice, but if it goes too far, the pendulum swings too far and your percentage goes too high, the practice is potentially suffering because they are now less profitable, don't have the money to reinvest in, you know, new hires, new equipment, et cetera. So there has to be that balance. And that's where I think having a base salary that reflects, you know, this kind of standard or average revenue that's expected of an associate of that level for the year, and also honors uh the basic funding that is needed on a monthly basis to cover expenses and live comfortably in the area. Then I'm a little bit like, who cares how much time off you take? But understand that like your base salary is still going to get paid. But what we were calling production, which I like to better call a bonus, like you can't have your cake and eat it too all the time. So it's okay to want to take more time off, but you do have to understand that there's the seesaw effect of you might not earn as high of a bonus at the end of those bonus calculations because you've taken that time off. But you've reinvigorated yourself, you've gone on a great vacation, you've spent time with a sick family member, and you've still earned your base salary guaranteed to cover your expenses and live comfortably.
Stacey Cordivano:Yeah. And you're still getting your benefits paid for you.
Kelly Zeytoonian:And you're still getting your benefits that entire time.
Misty Gray:But Stacey, you had read some commentary that that's not always how it's being done, right?
Stacey Cordivano:Yeah, I dove into the small animal forums just to see, like, I wanted to make sure I wasn't being crotchety and old, and like if you didn't work, you didn't earn it, you know, because I I mean, I'm the same way. Like, I I think we both have unlimited time off policies, but that's assuming you're gonna work hard when you're here, and you are not gonna get that extra bonus of your on top of your base if you take enough time off and aren't here to work that much. And you know, it works with the on-call scheduling and stuff. So, yeah, I started diving into small animal discussions, and it seems as though people feel that true paid time off would be also sort of calibrating that number that you need to hit before you start making production based on how much time you take off. So, like that $500,000 that you need to hit if you're on a hundred thousand dollar salary gets adjusted down for the weeks that you took off, kind of like as a way to be like, there wasn't an opportunity to earn that money because they weren't here. So it would like go to four, I don't know, I did the math, it would go to like 493. That like after you hit 493, you'd be making that production.
Misty Gray:Would that be within the month that the time away, or is that across well, this is where it all gets like nitty-gritty, right?
Stacey Cordivano:Because it depends how often you're paying out production bonuses. Kelly and I both do it annually, so that would all wash out.
Kelly Zeytoonian:So if it's for let's just play that game, if it's 493 instead of 500, then start at the very beginning of this calculation.
Misty Gray:Stay, don't just jump to the 493, walk through where that calculation was taken from.
Stacey Cordivano:Yeah, so if if you make 500,000 if you sorry, sorry, if you bill 500,000, that's you billing about 9600 a week for 52 weeks. So if you took one of those weeks off, you'd prorate that 500 to 493 something, 300 and something, 380.
Kelly Zeytoonian:So there's a $7,000 difference of when you start to earn the production. So $7,000 times the 20% that we're saying we're paying that person at a hundred thousand dollar base. That's an extra fourteen hundred dollars in the associate's pocket, which is significant, which is significant. I mean so that makes their salary go to one it'd be no base, so base salary of a hundred thousand being paid 20% bonus above anything that they bill above $500,000, right? But you've said anything billed above $493,000 by prorating it. That means at the end of the day they earn an extra fourteen hundred dollars per week that they take off.
Misty Gray:And then that paid out in the bonus check at the end of whenever that happens, or yeah, it would be because it would be paid out because you're basically lowering the bar.
Kelly Zeytoonian:The threshold. Yeah. Yeah, you're moving the goal line in.
Misty Gray:All right, and so from a negotiation standpoint, all of your negotiations would happen on the front end. Like I want to earn a hundred thousand dollar salary, I want to get a 20% commission. Yes, associate. We agree to that. Now I also want seven days paid time off. Okay. So now we calculate that out. Because Kelly, you were saying earlier that that might like that would look like you actually earned a higher percentage.
Kelly Zeytoonian:You would be going to get a higher daily rate. So this is where this is.
Misty Gray:Like, how is that different? I just sometimes it feels like we're all just like shifting the same piece of money around. Like, how is that different than just saying instead of 20%, I will give you 21%, and I don't want to think about all the bits and bobs. But then that same person a year later can say, Well, but that I didn't get real paid time off.
Kelly Zeytoonian:Like, isn't the it is real paid? So this is where people, and again, everybody's structure is a little bit different, but it is paid time off if you walk away and go on a two-week vacation and you are still getting a paycheck for your base salary. It is paid time off. You're not working, you're still getting a paycheck direct deposited into your account. You still have your health insurance while you're on vacation. If you have health insurance provided by your practice, which about 50% do, maybe a little less, if I remember the study. Yeah, I think 40%. You're still having a 401k contribution. If you have a 401k contribution, the practice is still paying their workers' compensation on your behalf during that time frame. They've still covered your PLIT coverage for that time. So, like this, I want to like scream from the rafters. Can you all tell that I'm getting a little bit more animated right now? My hands are shaking for those of us listening. It is still paid time off. Unless somebody puts a stop on your checks while you are away and you are not paid that amount then, then you are still being paid during that time and you are still earning your base salary.
Misty Gray:So then how do you counteract? This is obviously Kelly, the practice owner, talking, and we're trying to be stay open-minded about these other people. There's a big subset of people feel differently about that. So, how do we just say I respectfully disagree? Or do we say it's still paid time off? Is there potential to have more money paid time off?
Stacey Cordivano:Do we say I think people are saying, like, I want to earn my potential bonus of what I would have earned? I think that's what people are saying by saying that.
Kelly Zeytoonian:Correct. I mean, let's liken this here. Let's just let's get out of veterinary medicine for a minute.
Stacey Cordivano:Yeah.
Kelly Zeytoonian:I work at a clothing store and I am paid a minimum wage, and then I am paid a bonus on any sales that I make. I'm also given seven days of pay time off. So say I make $100 a day. So that math is really easy. I make $100 a day. I'm gonna take off those seven days. Usually when I'm working, I am billing enough that I make an extra $50 a day. So when I'm working, I'm making $150 a day because of what I sell. When I go on vacation, that's like somebody saying, I haven't sold anything, but I still want to make $150 a day instead of I want to make my $700. That would be my base for those seven days off. So you're now asking the Macy's, Nordstrom, wherever, to come up with this extra $50 a day when they don't have revenue to reflect that additional bonus pay.
Misty Gray:Well, but in that argument, they also don't have revenue to pay your base hourly rate either.
Kelly Zeytoonian:They don't. That's they don't, you're absolutely right.
Stacey Cordivano:That's the risk that they've taken as an owner.
Kelly Zeytoonian:That is the benefit that they're offering out to their employees, right? Is this paid time off? So the workaround in my mind is advocate for a higher base salary. If the time off is really like the thing that is dragging you down and getting paid for it. And, you know, if you're an individual who is typically making $50,000 in bonuses at the end of the year, as an example, negotiate for your salary to go up by, you know, $20,000. And then you're earning more, even when you're away, but the practice isn't completely absorbing the full risk. Because what if last year you took two weeks off and still made a $50,000 bonus? You now negotiate this increase in your pay, but you decide to take six weeks off. The practice is potentially taking a hit for you taking that time off, right? So there needs it's just a checks and balance. It's that seesaw I said. Does that make sense?
Stacey Cordivano:Yeah, it does. To me, it does. I still feel like I mean, if you read in the Deviat Moms, there's lots of pushback on it. But I and I would love to hear.
Misty Gray:I wonder if some of it is this there is a difference. It's perception based to some degree. Now I I can hear I'm trying I am trying to make the argument on the other side. Like I'm trying to say, like to argue myself. So I'm gonna say it is perception-based. Well it's not because my paycheck is less. So that's not perception, that's real. My paycheck is less. And some of what the people the the people some of what the direct commentary is is that I'm losing money by going on vacation. Like I that to me feels like you're not losing money.
Stacey Cordivano:If you're doing a year over year comparison and you didn't take vacation last year, and you did take vacation this year, you will have made less money. But yes, you're still not losing. Yeah, it's an opportunity cost. That's what it is. That's how it needs to be looked at. Yeah. Is the opportunity to get away, go somewhere, spend even more money at that place. Worth it to you. To me, yes. But uh not everyone's gonna say that.
Kelly Zeytoonian:And let me let me just just to confuse everybody and add one more layer. Everything that we've just said does not apply if there is a true negative accrual to an individual's base salary.
Stacey Cordivano:I wanted to get to that because I think some of this comes from that uh people not understanding what they're on.
Kelly Zeytoonian:Negative accrual. If somebody's base salary is actually being compromised by what their daily billing is, then there are a million jobs out there find veterinarian and get to a different practice. Because no one should live, I think, with their base salary, their ability to make that standard level of living. That should not be compromised. Because in my mind, there's a component of a veterinarian is being paid to show up and be available and share their experience and share their skills. That's 50% of it. The other 50% of it is a practice is well run and managed in a way that provides and blows business their direction in order for them to earn that money, right? So negative accrual to the base salary of an individual is just a recipe for a ton of angst, a ton of financial instability for an individual, and is wholly sided toward uh the practice. And that's that to me is a flaw.
Misty Gray:I don't think I understand what negative accrual is.
Stacey Cordivano:Okay. I saw a contract, not that I was reviewing it, I was just helping someone because she was really confused why she owed a practice money when she decided to leave. She owed them money because she had negative accrual built into her contract. And so her months thus far, she had been paid a quote unquote base salary that hadn't met the number. And so they made her write them a check. And FYI, this was like three years ago. So it still exists, guys. That is why you should always have a lawyer review your contract and specifically ask about that. Like that's not what we are saying as base plus compensation, like base plus production compensation. That is in all reality, it's just production, but they call it pro cell. I think most people call it.
Misty Gray:That still doesn't explain to me what negative accrual is.
Kelly Zeytoonian:I can tell that it's bad, but can you tell me in like a definition? Depends on the practice. But yeah, I'm speaking what we're speaking about right now is a contract or an employment agreement that basically says if you don't earn this amount of money, if you don't bill this much in revenue, you owe money back to the practice.
Misty Gray:So your base salary is $100,000 and you have to bill $500,000 in a year.
Kelly Zeytoonian:If you're being paid 20% revenue, throw that in there.
Misty Gray:Okay, so then you would divide that $500,000 up per month, which is what?
Stacey Cordivano:$41,666.
Misty Gray:Okay, so you have to bill forty-two thousand dollars a month in order to substantiate what they have said is your base salary. So if you only bill thirty thousand dollars this month, that means next month you have to bill fifty thousand dollars before you have earned $54,000.
Stacey Cordivano:Yeah, before your considered back at zero. And if you don't, then it keeps on rolling. Um, this is actually hilarious. So you know how Google does the AI overview answer now. So I Googled negative accrual definition, and it says it is a compensation system, often in production-based roles like veterinary medicine, uh, where a shortfall in an employee's earned production compared to their guaranteed draw or base salary results in a deficit that must be repaid from future earnings.
Misty Gray:I was under the impression that negative accrual only impacted your bonus pay? Your production. Yeah, like your bonus pay.
Kelly Zeytoonian:And see, this is where I'm like WTF practice managers and owners, you've got to be paying associates an appropriate amount that is a fair wage for them to be there and physically available to do their job. And it is your job to bring the revenue to support them.
Stacey Cordivano:Yeah, that's interesting. This was the second um vet recently added to a satellite location, and that's why she left. She wasn't busy enough. And the argument saw the writing on the wall that the deficit was just getting bigger and bigger.
Misty Gray:And the argument from the practice side to put that in is that you they hired someone that isn't earning their keep. Their keep. Quote unquote, but like not really if you use Kelly's number. Well, and then I think Kelly's argument to that is that you do not hire an associate unless you are confident you can like there is a layout for the practice, a liability for the practice to take on to say we want this associate and we want to support you during this period of time. Like it's not penalty.
Kelly Zeytoonian:Yeah, absolutely. Like you've got you've got to start somewhere, and everyone's taking a chance and a risk. That individual who's joining a startup clinic is taking the risk of doing their very best and committing a year plus of time to develop business for a clinic. And, you know, they're risking not making the living that they need to make in order to do it. The practice is taking the risk of investing in equipment, materials, additional staffing, marketing theoretically, um, to help this person succeed. So there's a risk on both sides, but you know, it's it's it's expensive to add somebody new, it's expensive to add all the equipment, uh, it's expensive to replace somebody. I think we determined it's a comparable to a year's salary and costs to retrain a new hire. But on the other side of it, for the associate, it's expensive to move and relocate. And you're if it doesn't work out, you could be a couple years behind on establishing yourself and establishing a client base. And I don't know about what what you all have experienced, but in my experience, it takes till year three to really see an associate hit their stride and get a following and really start to be kind of billing substantially.
Stacey Cordivano:Let's just talk a little bit about like that other five percent. So benefits like how can we get creative? How can you use that in your negotiations? What does it look like from an owner perspective? I love benefits.
Misty Gray:Is the technician considered a benefit? Is what having a technician is that considered a benefit? I know some practice owners feel like it's a I mean, like it it obviously is an added benefit, but like from a financial perspective, does that count against does it?
Stacey Cordivano:Yeah, that's where like the definition of intangible and tangible benefits.
Misty Gray:Does it count against an associate to have a technician?
Kelly Zeytoonian:I don't think it should because I do think that it makes them safer, it allows them to produce more revenue. And there's a study, it's a bit older, it was one of the AAP AVMA economic reports that showed that veterinarians working in practices with additional support team had exponential growth in their earning potential, which makes like makes total sense, right? If you, as a veterinarian, are able to spend your waking and working hours doing the job that only you can do, then you are going to be able to bill more in that time. Versus if you're spending half of your day driving, setting up equipment, making phone calls to schedule appointments, you're billing less hours. So to me, it's it's an intangible benefit, as Stacey said. I don't think that veterinarians should be like docked financially for actually having a technician with them. I haven't seen that come across my books, like that they have to pay a percentage to have a tech. I haven't seen that, but if there's somebody that is experiencing that, please do tell us. Because I have, I have. Okay. That to me is just sort of like a win-win for everybody, but y'all know that's another one of my soapboxes is technicians and technician utilization. So yeah. Um different subject. Yeah, different subject. But I love benefits. I love finding non-salaried benefits to build into a compensation package because of taxes. If I can pay for somebody's health insurance, it is tax deductible for me. It's an expense. So I would rather have more expenses on my account versus higher payroll, because that payroll for let's say, you know, $1,000 of health insurance versus $1,000 of payroll, the health insurance is that $1,000 and it's marked off as an expense on my books. The $1,000 of added compensation to somebody's salary is actually costing the practice $1,100 by the time that I pay payroll taxes, get docked for workers' compensation percentage on top of that, salary, et cetera. So my money goes further by paying my employees as much as possible in their benefits.
Stacey Cordivano:And if you are an associate, you should also like benefits because if you're on an income-driven repayment plan, your salary will look lower and you will pay less in taxes overall.
Kelly Zeytoonian:Yeah. You're also having lower gross pay, so lower taxation for your employment. So yeah, your paycheck might be a little bit less, but the total number at the end of the year that is taken out for taxes is going to be less than if you had been paid all of your benefits as just an added yeah.
Stacey Cordivano:So, like instead of offering health insurance and gym membership, and what are some of them creative things? Student loan repayment. I could write you a $15,000 check, but you'd be taxed on all of that versus being taxed on none of it.
Kelly Zeytoonian:Right. So here's $15,000 that goes to pay all these things, or here's $15,000 in your paycheck, which by the way, here comes I don't know, 50% of it if you're in the state of California.
Stacey Cordivano:Yes, I am.
Kelly Zeytoonian:So that's a great way to negotiate and create kind of a win-win from a financial perspective for both the associate and the owner.
Misty Gray:That's interesting to hear because I I did talk to a local practice owner probably in the last year. It wasn't super recently, but he was really struggling to hire somebody. And what he he was lamenting that he felt like he had a good package and he paid a lot of money into benefits, but that everyone that was interviewing said outright they would rather have the increased money. They would grab the money and not the benefits.
Stacey Cordivano:I don't think he's incorrect in that. I think people hear that a lot. And the compensation subcommittee from the task force that AAP had on um sustainability initiative focused a lot on educating about that. I think there were several podcasts. That is why they created that fillable benefits analysis sheet so you could compare one offer to another. I mean, it's it's hard to understand all the benefit of it. Like if someone is offering you $100,000 with pretty crappy benefits or $85,000 with a huge compensation package, like that one probably is better, but like you wouldn't know until you plugged it all exactly in. It's also for him would be beneficial to have used the survey that the practice culture committee created, which was asking what benefits were important to people and trying to create. Now, granted, in a huge practice, it's probably harder, but like trying to create more personalized packages for each employee to you know make them feel most appreciated. And you know, offering me a student loan payment when I don't have student loans isn't helpful. You can't have this sort of like copy and paste package. I think it has to be tailored as much as possible.
Kelly Zeytoonian:Yeah, but do you know there is some legality to like if I offer health insurance, I have to offer it to all individuals within the practice, or depending upon how you create the rules within like a particular department. So like in but someone can decline. I mean, they can decline, but somebody that comes to me and says, I have health insurance with my partner. I don't, I'm going to decline this. Give me back the $500 a month that you contribute. My response is it's more expensive for me to give you that $500 a month. So I'm going to give you a lesser percentage as compensation addition to your salary.
Stacey Cordivano:Could you think you could find $500 and a different benefit for them, like a gym membership?
Kelly Zeytoonian:If it was if that's something that they would want, that's a pretty hefty gym. Well, sure. I'm just, you know, yes. But yeah, absolutely. That would be great. Yeah.
Stacey Cordivano:I mean, that's just a way to use those resources to I hear what that person is saying because I think that's common. People just want a really high salary, and that's something to investigate.
Misty Gray:Well, and that is easy to understand. You're a if you're an associate, you got a million things going on and you're juggling, moving, and a schedule, and that this, and you don't know the cost of living. And like it's very easy to understand. I have a hundred thousand dollars to work with. Like that's that's easy to understand, whereas it's complicated to spend the time to figure out how your benefits are.
Stacey Cordivano:Well, so yeah, same thing with like these production numbers. Like, that's more complicated, it's more nebulous, it's not guaranteed, but in theory, trying to up your, you know, in a lot of ways. Um, I did ask the sustainability and eat my practice seminar alumni for some creative benefits ideas. Some are intangible, dogs, and some kids can come to work. One said, I know it's not really a benefit, but we are charging for telehealth appointments now, and the vets are paid on that, and they are not offering free advice anymore. Yeah, those were kind of the intangible, but some of the tangible ones, this was really cool. Um, they live in a rural area, and helicopter medical transfer service is the only option for like trauma care to get to the a nearest big hospital. So they paid for that, like membership to that. I thought that was really cool. Costco membership, that's actually kind of brilliant. All food on the road is covered. If you are in the truck, the practice is providing food.
Misty Gray:Um that's a big benefit. I saw that one and I thought that sure would be nice.
Stacey Cordivano:Yeah. Subscription to an AI medical transcription service. I think that should be a requirement at this point in life. Um, yeah, student loan repayment stipend, gym membership.
Kelly Zeytoonian:Great. I love all of those.
Stacey Cordivano:Yeah. If you have creative ones that you've worked into your contract, let us know. We'll keep sharing. Please, yeah. Um, okay. Thoughts on what we've covered so far. And then there were a couple of questions that were asked of Kelly that she didn't get to at her talk. So I want to hit those. Misty, you're good at seeing what we've missed. I don't think we've missed anything. Okay, we've been talking a long time. Okay. Oh, one question that was asked that is similar to that legal question. And I said I did not know of any, and I didn't actually check with a lawyer. But as far as offering certain benefits, is a requirement to offer them equally. But like people can have different compensation packages, right? Like, there's no law that you know of that everyone has to be paid 22%. Correct. Okay. I didn't think so.
Misty Gray:Yeah, I don't think so. But can one of you speak on is it allowed to penalize an employee for discussing their compensation? Oh no, that just recently federal federal law are allowed to. Does it matter if it's written into a contract that you signed? That's definitely written into contracts that I have seen and participated in before.
Stacey Cordivano:Okay, I'm just gonna jump in here with a post-production note. The vague thing I'm referring to here is actually the National Labor Relations Act. It protects the right of most private sector employees to discuss wages with their coworkers. It means co-workers and employees have the right to talk about how much they're paid, ask questions about compensation, and disclose their salaries to each other. The basics of this is that employers cannot prohibit or retaliate against employees for discussing pay. And it says this right applies even if there's a company policy against it, because that policy is generally illegal. That being said, if you talk to 10 lawyers, I don't know how many different answers you'd get, but the basis is if it is in your contract and you've signed your contract, technically federal law should trump anything you've signed. That being said, you could have to still pay to fight it. It's a little bit like a non-compete. It may not be upheld in court, but you would still have to potentially pay a lawyer to fight it for you, which no one wants to do. So, bottom line, make sure it's not in your contract. When you're in negotiations, you can tell them that it's a federal law that makes that illegal. So you should have a lot of backing behind you to be able to support that. Again, we say it in other places in this podcast, but whenever you're signing a contract, it's probably worth the couple hundred dollars to have an attorney review it. If you need recommendations, reach out to us. We have a couple that work in the veterinary space and we are happy to send you their contact information. Thanks. Carry on. Okay. Potentially, this person is not paying on a base plus production. Maybe they're all on salary. I'm interested in a simpler way to reward associates based on total monthly production, such as profit sharing plans.
Kelly Zeytoonian:There are a number of different profit sharing plans. There's formal plans and informal plans. I think the the one that I, you know, comes to my mind is like 401k safe harbor profit sharing situations. Um, and that you're like, you really need to be guided by the director of those accounts to kind of sort that out. And um, that is again a scenario where if you offer it to one, you often have to offer it to all to legally meet the requirements. Like there's there's quite a bit of checks and balances with those safe harbor accounts. The more informal way of doing it is like your end-of-year bonus, as an example, or your mid-year bonus. If the practice is profitable, you can look at the profitability and give a percentage of that to all of your employees, your high earners. Like there's nothing stopping a practice owner from passing on, you know, some of those earnings to their associates in the form of cash or a new piece of equipment that they've been asking for for a long time, or you know, other means. I think having the associates kind of involved in that process can really go a long way.
Stacey Cordivano:Yeah. Finding out what's important to your employees is like hugely beneficial in like guiding some of those decisions, I think. What are some different compensation strategies for transitioning from five days to four-day work week?
Kelly Zeytoonian:I would say continue paying the individual that wants to go from five days to four days the same exact amount as you are, because you're not going to see a blip in what they do. And in my experience, we actually were more strategic in our scheduling and more efficient in our days because it was only four days.
Stacey Cordivano:And I build more going to with the caveat that's probably helpful to have an as at least one assistant with that. Absolutely. Yeah.
Kelly Zeytoonian:You definitely need you definitely need help.
Stacey Cordivano:Is it common for other benefits, i.e., memberships continuing ed, to be paid directly by your practice or come out of your production? Oh, that didn't go where I thought it was going. Can you say that again? Yeah. Yeah. Is it common for other benefits, such as memberships, continuing education, etc., to be paid for directly by the practice or to come out of your production?
Kelly Zeytoonian:That's again, just comes down to like how your production is calculated. If you're earning, as an example, 30% of total revenue, then I could totally see and would not be shocked or appalled by seeing that like you earn 30% of revenue, but we subtract out your salary and benefits from that pay before paying out a bonus. Like that wouldn't be completely surprising to me, right?
Stacey Cordivano:Yeah. I was coming from it like that's not a real benefit, then if you're paying for it yourself out of your own salary.
Kelly Zeytoonian:But you don't have to come up with the pre or post-tax money for it. It's true, pre-tax. It's paid by the clinic, so you're not coming up with it up front. It's just being reduced from your bonus pay. And if you're getting paid 30% of your total revenue, then you're really on the high end of that scale already.
Stacey Cordivano:So again, you really need to find out your total compensation and compare it to your own personal annual production. Yep. Um, do you have any advice for relief veterinarian compensation? This is coming from a practice owner perspective.
Kelly Zeytoonian:Uh, yeah, I mean, speaking very generically, uh what I have seen is typically around 35% of total revenue billed is paid to that referring vet. Um, and they often will establish a minimum daily stipend. So it's either the minimum daily stipend or 35% of uh revenue, whichever is higher. Um, where does that 35% number come from? I gave you that scale of 25 to 35%, is sort of the standard for salary and benefits to be paid out to an associate. While your relief that is coming in and presumably are not earning any benefits, they're not a full-time employee with you. So they are covering all of those costs themselves. So by paying them that 35% of total revenue, it's a reflection of their ability to cover all of those additional benefits and costs, PLIT, insurance, et cetera, on their own.
Stacey Cordivano:And you're at the high end of it because it's a premium service that you correct. Yeah. Okay, that makes sense. Um, the last question I think we can probably all like pitch in on is does percentage-based production compensation help retain associates out of practice, or does it create toxic competition?
Misty Gray:It depends on the practice and the culture. And gosh, there are so many factors in that. I experienced it both ways. It was very much a mindset. I know that um a previous employer of mine felt very strongly that the percent commission, any sort of commission-based pay, created toxic competition between employees, but you can't argue against the rationale that, like, we're working hard and we want to make money. And that is an excellent way to pay out for extra above and beyond hard work. I think in that situation, he preferred to really focus on it being called a performance bonus. So he focused on a higher base salary and made it very clear to us as participating associates that we were going to be paid a salary that was generous. And then anything else was a performance bonus. I took that to heart, but there definitely was also stiff competition and um, you know, like phone calls to the scheduling staff of certain veterinarians monitoring other people's schedules and wanting to know why an appointment was just put on one doctor's schedule when they felt like it should have been theirs, um, or going on to other schedules and changing appointments from one vet back to themselves because they felt like it was theirs. And I mean, that's just that's fact, that's reality that happens. And I mean, like those appointments did impact each person's bottom line. So I don't know how you can't avoid that, right? I mean by not allowing it. You cannot allow the behavior, yes, but but the feeling of competition is like that's gonna exist. Yeah, maybe I mean, maybe that is what it's the take home that if that's the structure, the way that you mitigate that is to have a very strong management policy on that and and to enforce it so that those sorts of things don't happen.
Stacey Cordivano:But well, like strong management, but also like cultural buy-in that you guys are a team and that it's not five veterinarians working independently under one garage with inventory, right? Hiring for those values that would lend themselves toward collaboration versus competition.
Misty Gray:Like, I I can see both sides. I can see both sides of it. I know that there were arguments that were like, well, we're gonna give some of the like there was directives given to the scheduling staff that schedule vaccine appointments, for example, with newer hires. It's a great opportunity that's like low stress, get out there, meet some clients, become familiar, get to know the horses. But there were established veterinarians that did, I mean, they invested a ton of time in after hours, phone calls and hand holding and you know, whatever to these clients. And I felt like these easier bread and butter appointments were the ones that that was like their payout, their benefit, their bonus for all the extra after hours time that they put into developing those relationships. And like I I can see that argument too. So like it's true. Do you think there were too many veterinarians? Well, I will say, and and my boss at the time said this too no one ever is managing the schedule or complaining or pulling appointments when everybody's busy. Like when there's enough work to go around, nobody is engaging in that behavior because everybody's just busy. Um, it tended tended to be when times were slower or we have leaner months. So maybe, but then how do you how do you balance that? Because it's like feast or famine, right? Like that's I don't I don't know if that exists, Kelly, in your practice, but that definitely was something that happened with regularity. Either we were totally working ourselves to the bones, or we were sitting around feeling like how we're gonna pin bills. Uh, it just seemed one or the other.
Kelly Zeytoonian:I think this just comes down to like a cultural thing because that was what I experienced at my first practice when I was an associate. That feeling of like needing to fill your schedule and work on your day off to make that client happy so that they always called for you. And I mean, that was so unhealthy. And so I definitely the pendulum swung in the completely opposite direction when I started Starwood. And like they are Starwood clients, nobody holds their own books, nobody schedules their own appointments, it all goes through the office, and people again are paid an appropriate base salary, and nobody is meant to feel less valuable. Or whatever, if their day is not as full, right? Like they step in and they respond to the daytime emergency that comes in if their schedule is lighter that day, but they also can just go home if their day is done and they don't have appointments. And so it really like totally comes down to culture. I've had one or two cases where something's been pulled from one person's schedule and put onto another person's schedule, and that was very quickly nipped in the bud because that's not how we practice.
Misty Gray:Have you spoken candidly with your associates about how they feel about that? About not pulling the schedule thing, but like, do they feel would they tell you if they felt like they, you know, like they were upset that someone else was getting work that could generate more income for them?
Kelly Zeytoonian:I think, yeah. I mean, I I would hope so. I it's a very open practice and discussion, but that is one of the things that I talked about in my working interviews. Is like, this is how we operate. These are the expectations. It's great for a new person that's being hired on because they have equal opportunity to see individuals and you know safely get cases beyond, you know, the vaccine appointments type of thing. But it's it's something that people have to buy into and be interested in, right?
Stacey Cordivano:Like that's the caveat of like maybe doesn't fit for everybody.
Kelly Zeytoonian:Right. Like a gunner is not going to necessarily do great in this practice because it's going to be frowned upon for them to go out and be stepping on their cohort's toes and you know, trying to take business or working on their day off and stuff like that.
Misty Gray:We're like that behavior is not rewarded in your practice. In some practices, that that behavior is rewarded.
Kelly Zeytoonian:Like it's totally exactly and it's not it's not right or wrong, it's just not what the culture of Star Wars equine is.
Stacey Cordivano:Yeah, and that's where like when hiring, it's great to be like as transparent as you can about. I mean, not necessarily saying like we step on people's toes, but like we really value people who work really hard here and like asking those questions when you're going into a potential place to get a job, like find out about that. Like we're going back to culture, everything always goes back to culture, but like find out about that to make sure it's a good fit for you so that you can be successful and fulfilled. All right. That was a lot of talk on stuff. Well, is it so important though? It is, it is. Hopefully, people were able to take away some kind of ideas on numbers and how they fall, where they came up with, who decided they were important, and um use it for their next meeting with their employee or employer. So yeah, thanks for the time, ladies. Great, thank you. Good luck, everybody. Bye.
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