Incentive programs take on a number of forms. It can be something as simple as, if we knock out this afternoon load of patients by 5 pm, drinks are on me. It can be a formalized program with rules and a very regimented distribution. But one that generated a lot of interest for our affiliates during the summer selling season was the summer production/contract contest. Essentially, each office had a set of tiered production goals. Depending on the level achieved, certain or all employees were eligible for a bonus. This was the contest that had people calling months before the start to get their goals to start preparing and strategizing to win. During the contest, we fielded regular requests for updates and additional support to help everyone achieve their goals. In sum, everyone was united in their focus on selling cases to qualified patients.
As mentioned in the last post, this is the time of year when patient demand is generally the highest so everyone in the office has the opportunity to make a real difference in the results. By contrast, during the holiday season, even the best conceived and executed plans may not make much of a difference. The potential demand simply is not there.
Here are some guidelines on setting up a plan of your own:
- Choose which of your employees will be allowed to participate. In some practices, only those involved in marketing and seeing new patients were allowed to participate. That may create some divisions in the office between the participators and the non-participators. One alternative which has been successful has been to include everyone, but distribute any bonus according to the level of effort put forth by each individual. That level can be judged by the owner.
- Set a time period. In a lot of cases, the time period is the meteorological summer months of June through August. Some go from June through October (to capture the increased demand in October as well). Whatever you choose, make sure it is at least 3 months long. Unusual things can happen that affect monthly results, but those unusual items tend to smooth out over at least a 3 month period.
- Set the goals for the program. Start with a baseline level of production. Usually, we recommend using the amount of production/new contract value from the same period of the prior year. So, if your want your contest to run from July through September of 2013, set your baseline as the total amount of production July through September of 2012. If you haven't been open for a full year, use the production amount from the prior 3 months (April through June in this example). Or, just set a baseline level based on what you think is fair, but if you set the goal based on actual prior production, the staff will have a better idea of what needs to be done to reach the goals. Once you have set the baseline levels, increase that amount by 10%. That will be level one. In other words, the participants will reach the level one goal if production increases by 10%. Level 2 will be achieved for an increase of 15% and level 3 will be achieved for an increase of 20%. Feel free to set the number of levels and percentage increases as you see fit, but I would recommend at least a 5% increase to reach level 1 and 3-5 levels total. One other important thing: the contract doesn't count unless the patient starts treatment. No accumulating a bunch of worthless paper. That just sucks money out of the practice.
- Set the reward for each level. Set a total bonus level at 10-20% of the total increase for each level achieved. This is best explained by an example. Let's assume that the baseline computed in the step above was $100,000. Let's also assume that we are giving a 10% bonus for 10% growth. So, if contracts reach $110,000, the total increase was $10,000 ($110,000 - $100,000). The 10% bonus amount would be $1,000 ($10,000 times 10%). Now, you may say that giving up $1,000 on $10,000 of production is expensive, especially if I have to distribute that reward right away and get paid by the patient over the term of treatment. This is a short term view. Consider this. If you are a practice with a 40% profit margin, that $10,000 of additional production will turn into $4,000 of profit over time. Deducting the $1,000 of incentive means that you are still putting an additional $3,000 in your pocket by the time treatment is completed. If things go great and you get an additional $30,000 of new contracts, you end up with an additional $9,000 in your pocket ($30,000 * 40% profit margin - $3,000 paid in incentives) over 3-4 months. That's not a bad thing at all.
- Distribute the reward. After the contest is done and you've had a chance to confirm the quality of the patients signed, it's time to pay up. The best way to distribute is in the form of a bonus check, but you may choose alternative methods like buying something of value for the staff or using the funds to throw a party. But, like with everything else, cash is king and that will get your staff the most motivated. As mentioned above, you should considering making the payout to all participants according to effort put forth as judged solely by you. Make sure to lay out beforehand that your judgment is final and is not subject to debate.
- Keep it simple. Don't waste a lot of time trying to parse out the source of the production. If the practice achieved a goal only because your best friend from college had 4 children that all started treatment during the contest, don't try to exclude those amounts. That leads to way too much confusion and debate. If the goal is achieved, the bonus gets paid. Simple as that. The participants are selected at the beginning. Define from the start whether or not employees hired during the contest period are included (unless it is a person heavily involved in marketing your practice, the recommendation is to exclude them).
- Keep it fresh. Regularly remind everyone in the practice of the goals and how the practice is doing in achieving those goals. When you discuss that, also discuss ways to ramp up the results so that you get to the maximum goal level. A number of practices will post thermometers and color them in on a weekly basis as production happens.
We hope you find this useful. Of course, we at MyPracticeEngine would be happy to assist you in setting up, monitoring and making all necessary reward computations. Cost? What cost? Contact us here.
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