PTO 150 | Compensation Programs

 

A lot of people follow one compensation model their whole life, that changing it would be difficult. But not everyone wants to follow guaranteed salaries and occasional bonuses. Especially in the PT industry, people want some control of their salaries. Jason Wambold believes that giving people the power of choice would help them achieve a lot. The Cofounder and Physical Therapist of OnusOne, Jason is leading the charge to bring compensation models up to date in the PT industry. Join Nathan Shields and Jason Wambold as they examine what people want when it comes to compensation. Learn how to balance the risk and reward of production to satisfy both the employees and the owners.

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Salaries Vs Incentive Programs - What Your Employees Actually Want With Jason Wambold, PT Of OnusOne

I have Jason Wambold of Onus-One. Jason's going to talk to us a little bit about what he's doing now as a Physical Therapist and Owner of Onus-One. Jason, thanks for coming on. I appreciate it.

You're welcome. Thanks for having me, Nathan.

You've had an article in IMPACT Magazine about different compensation models for physical therapists. This is something that I'm dealing with in talking to my coaching clients as they're trying to recruit and incentivize their therapists to be more productive. Compensation is one of those ways to incentivize them. You've got some great strategies. I'm excited to bring you on and talk about that. First, share with the audience a little bit about your professional story and what got you to where you are.

The early part of my career was similar to most. I am a physical therapist, and when I started my career, I obviously had a lot of student debt, as many young graduates do. I was excited to start my clinical career and felt very fulfilled clinically and professionally, but I was struggling financially. I couldn't quite understand why there wasn't more earning potential given the value that I brought to the marketplace and to my patients. Not just me, but physical therapists in general. That struggle persisted.

Fast forward later on in my career, where I was in positions of management and leadership and overseeing clinics and teams, I was on the other side of that trying to grapple with how do we provide earning opportunity and potential for our employees without jeopardizing the viability of the company or the practice. It always seemed that either one or the other was suffering, and we could never seem to get that in balance. After years of being a little bit frustrated by that first on the employee therapist's side and on the employer manager/leader side, we started to look at this and look at the marketplace to see if there was anything that could help us to bridge that gap and there wasn't. We decided to go down the road of building something ourselves, and that's what brings us to where we are now.

I love how you recognize both perspectives. As an employee, I want to have greater earning potential as an employer like, “We got to remember our profit margins.” This doesn't come free. You want to provide that opportunity for the employees, especially the providers, physical therapist PTA's, etc., but there has to be a meeting of the minds. From the leadership perspective, you're thinking, “We've got to help them understand.” From the employee's perspective, they're like, “I don't feel like I'm valued. No matter how much you talk about purpose and values, I still need to make ends meet and pay off my student loans.” It's great that you got to this point to develop a company like OnusOne to help people with compensation models. Tell us a little bit about what you're seeing that in the industry now and where compensation models are changing nowadays? What are employers and employees looking at?

There are some major shifts happening right now in the industry across the country, unlike anything that we've ever seen. Let's put COVID aside for a second. That's another conversation entirely. Even without that, now that we're moving thankfully back to some degree of normalcy, the process of becoming a physical therapist is more expensive than it has ever been in the history of our profession. That's number one. Number two is reimbursement is continuing to decline. You have graduates coming into the marketplace not even necessarily expecting to earn a certain amount but needing to earn a certain amount to make ends meet because they have so much debt. Simultaneously, the revenue that they're generating for services rendered is lower than it was a few years ago through no fault of their own. This creates a point of critical mass.

We're at the point right now where historically, practice owners felt that they had to essentially roll out the red carpet for employees and give them whatever they wanted in order to get a therapist in the door. If they tell me that they need to make X, I have to be able to pay them that even if paying them results in me losing money as a practice or as an owner or jeopardizing the financial viability of the company in order to get licenses in the door. That's what I have to do. What's changing now is that we're seeing practices essentially get to the point of critical mass where these owners are saying, “I can't do this anymore. There's no room left for me to keep giving more without tying it some way to production or relative value revenue brought into the practice.”

The process of becoming a physical therapist is more expensive than it has ever been in the history of the profession. Click To Tweet

You are already starting to see practices trying to come up with their own models to address this issue. For that reason, when we talk to practices that are interested in making a change, many of them have already been thinking about these concepts, but some of them are not quite sure how to go about it. It would be very difficult to find a practice owner across the country who would say, “Changing and reforming compensation structures in the rehab industry is a bad idea.” Everybody agrees we have to do it. We're ten years behind every other healthcare profession that has already long since switched compensation structure. For whatever reason, we as the physical therapy industry are lagging behind. We all realize it. We're not quite sure what to do about it.

What are some of the issues that owners are coming up against in switching over to a compensation model that does not strictly salary and with a few bonuses here and there? What are some of those pain points?

The main issue is if you've got people in your company who are already used to getting a full salary and some sort of a bonus model, converting those people over to other types of models where there's a risk-reward type situation, that's a challenge. We always talk about the science and art of reforming compensation models. The science math party fun part. Let's crunch the numbers, look at spreadsheets, and create the models. The art is the hard part. That's where you have to deliver the message effectively to the employees that are used to being guaranteed a full salary and may no longer have that opportunity. On top of that, there are three primary reasons. If we understand that practice owners and executives all agree that we need to do something, the question is, why don't they do something?

There are three reasons why. This would be in the order of frequency. The first is fear. I'm worried that if I make this change, I'm going to lose all my therapists and not be able to replace them. The second is lack of time. Time poverty is a real thing in the rehab industry. If you're trying to keep your head above water, the last thing you're interested in doing is completely revamping your compensation structure for your entire team. Even if you know how and you're not afraid to do it, there are only so many hours in the day. We struggle with that as an industry. The third is knowledge. There are a lot of practice owners, typically smaller practices out there, who agree that we need to do something, but they're not even sure where to start. It’s paralysis by analysis, “Where do I even start? I'm not going to start at all.”

I can see that from my perspective. I could crunch numbers and have a little bit of faith in this new compensation model. Some people might feel like, “I can do the numbers, and I have the time to put it in,” but it comes down to the fear. “How are my numbers going to do what they say they're going to do? Am I making promises I can't fulfill? Is that going to, in turn, come across poorly? Am I going to lose confidence? I'm ultimately going to lose that provider?” That does come down to that fear. You talked about bringing that to the table. How does an owner overcome that? What would you say to them?

There are very specific strategies that you'll need to employ in order to overcome that fear factor. If we think about the workforce nowadays and what they want, by and large, this is a generalization, but it's accurate enough that it's worth mentioning. The workforce of rehab professionals wants freedom, flexibility, and choice. They don't want to be told this is how many patients you have to treat, how to treat, how many hours they have to work, and what continuing education courses are worth going to and which ones aren't. They want a lot of that freedom and flexibility. To the extent that you can give them flexibility, that will help to overcome any fear that your existing staff may have about moving to different types of models.

PTO 150 | Compensation Programs
Compensation Programs: If you've got people in your company who are used to getting a full salary, converting them over to other types of models where there's a risk-reward type is hard.

 

Here's a concrete example. Rather than changing your entire compensation structure from one approach to another, why not change it from one approach to three different approaches. For example, letting your therapist choose from a menu of compensation models and pick the method that is most appropriate for them. A new grad may pick one type of model, but a twenty-year veteran may pick another type of model if you take that one step further, what if you allowed them to change plans annually, almost like re-enrolling in a new health care plan. That way, your providers and therapists are not feeling locked into this new model. They're getting the sense that, “I have now more choice than I did before. While it's true I don't anymore have a fully guaranteed salary of X number of dollars to show up, what I do have is all these different options now. It's empowering to me as a therapist to choose the plan that is the best fit for me.” That's one approach that we recommend.

A new grad who's concerned about, number one, their capability to treat, and number two, the amount of student loans might appreciate the security of a salary and say, “I will agree to meet your minimum standard of productivity and push a little bit more. I don't want to worry about that. I want to work on my skills, improve, and gain confidence.” Whereas someone who knows their job and has a full tool belt of skills like, “Lay off my back. I want to kill it for four days straight and have a three-day weekend every week. I want to get paid well for it.” They can choose a different model if they're not stuck to the salary. Giving them those options represents your ability to work with those people in different scenarios.

If you ask the practice owners across the country the question, what is the most common question that someone that a prospective employee will ask in an interview? The number one question that is asked of people that you're interviewing is, “How many patients am I expected to treat if I work here?” They're coming to the interview with a number in mind. Let's say that number is twelve. If you say to them, “We expect that you see ten a day.” They're going to want to continue the interview process. If you say to them, “We expect that you see fourteen a day,” it's very possible that at that moment, they may say, “I'm not interested.” They've already shut down. They've already tuned out.

The beauty of offering choice and different types of models where the compensation is variable to their performance is that your answer to that question can be, “That's up to you. You decide how productive you'd like to be. You're going to be paid accordingly if you want to produce less. We have a place for you in our company as long as your KPIs in metrics checkout, and you're delivering high-quality, evidence-based care, but you happened to be delivering less of it. We have a place for you here. Just understand you're going to make less money, but that's your choice. Somebody else may be producing at a much higher level. As long as their KPIs are checking out and their quality of care is still at that same standard, they're going to make more.” A lot of times, in particular new grads, they think that quantity and quality of care are mutually exclusive. They can never co-exist, but that is largely a function of a lack of experience because we don't know what we don't know as a new grad.

Anything else you could say to those who are coming from this place of, “I want to make a change and I'm interested in making a change in my compensation models but don't know exactly where to start?” Anything else you can share with them?

You mentioned earlier about crunching the numbers and feeling pretty good about it, but that fear of, “What if I have it wrong?” You want to make sure you get your numbers right before you roll out new models. That sounds intuitive, but believe it or not, we've made that mistake a few times. We try very hard to never make it again because the fastest way to lose trust with your staff is to say, “We messed up the numbers. We have to change your compensation strategy.” The approach to that is, number one, take your time. Number two, before you've ever even mentioned what you're planning on doing with your staff, build your models, get them to the point where you think they're correct, and then run real historical data from your staff through your models to see if you've got it right. The numbers will tell you if you have it right or not.

If you think you've got these models built, you grab your performance data and run those numbers in the models and say, “I gave everybody a $30,000 raise and I didn't mean to.” You can go back to the drawing board and fix that before you have to pull $30,000 off the table from your staff. You want to crunch the numbers, use real data, analyze the data, make sure you've got your numbers right, make sure the plan is structured properly before you introduce them to your staff. That'll go a great way in making you feel better as an owner and certainly building trust with your staff.

That'd be powerful if an owner does that exercise that you're talking about. Crunches the numbers with past data and were able to approach an individual provider and say, “Based on last month's performance, according to your current model, you're making $4,500 a month whereas, with this incentivized model pay for production, you could've made $5,200 in the past month.” To bring those kinds of real numbers to the table after doing the full exercise would be powerful and give a lot of confidence to the owner to say, “Here is a model that could work for you if you're interested.”

It's a best practice rollout strategy that we highly recommend. We have to remember too that a lot of times, people might not be motivated by money. That might not be what they're after. They might not be interested in which plan pays me the most. They might be interested in this concept in general if it provides them some additional professional and personal freedom and flexibility. There are a lot of therapists out there that will trade higher salaries for a work environment that they feel good about, that treats them like a professional and gives them freedom and flexibility.

They may be perfectly fine making $5,000 less. There are others who are not okay with that. The key is to let the therapists figure that out. Give them choices. Let them pick the plan that is best suited for them. We, as owners, have to be careful not to project what we think our therapists want onto them. That's the beauty of giving them a choice because they're going to make those choices based on their personal viewpoint of where they're at their point, personally and professionally. That may be a very different point than we're at as an owner or a manager.

As you've been working on OnusOne and implementing that and helping physical therapy owners implement this into their practices, have there been some unforeseen results either for the positive or the negative after breaking these out?

A lot of times, we think as owners that we know our staff. Let's say you roll out three models, and one of them is very conservative. It has a relatively high guaranteed base and a little bit of performance-based pay opportunity. You can think of that as a 90/10 plan, 90% guarantee, 10% risk/reward. Conversely, you go in the other direction and offer a 50/50 plan, a very low base that you cannot live off of, and then high-performance pay earning potential. These two models, the way they would fit together is if you had two people, one on one model and one on the other in the same clinic, they were performing at exactly the same level, same caseload, same productivity.

The person that chose the 50/50 model would be making more money total than the person that chose the 90/10 model. That's the way we typically put these together. In terms of unexpected results, a lot of times, those people in our company that we say, “They're going to take that 50/50 model. We know for sure that their risk tolerance and confidence are going for the 50/50.” A lot of times, they'll go for the 90/10 and completely surprise us. Conversely, that person that you're thinking is never going to go for a 50/50 model. They're going to want maximum security. That may be the first person in line who says, “I want that 50/50 plan.”

A lot of times, we think we know what our team wants, and they may surprise us. The other thing is over time, what they want might change. The longer we do this, the longer we realize how powerful it is to give a choice to your staff. If I have five roommates, I can go with the 50/50 plan, but if I have a house and two dogs and a couple of kids in school, maybe one in college, I may or may not be interested in the 50/50 plan, depending on my life circumstances. You'll see your employees change every year from one plan to the next based on their life circumstances in a way that we may not have been able to predict.

Have you seen the implementation of different compensation models or at least the choice and the flexibility you're alluding to that change our culture within the clinics? Do you see a different vibe or culture?

Yes. There are a couple of primary objections that we typically prepare practices to overcome as it relates to how their employees will react. There are three primary objections. I don't even want to call it objections. Maybe concerns would be the best way to phrase it. The number one concern raised by staff therapists when you introduce OnusOne is, “I don't like this model because it will incentivize care of poor quality.” We are incentivizing the quantity, not the quality of care. That is a very understandable knee-jerk reaction for someone who hasn't thought it through. The reality is the opposite is what occurs among those individuals that are enrolled in this one.

We talk a lot about mandatory versus optional enrollment. We always recommend mandatory enrollment because if you don't make it mandatory, you may very well end up with two competing cultures in your practice. The people that are enrolled in OnusOne care about cancellations. The people that are not enrolled might not quite care as much. If you have a snow day in your practice, the people not enrolled in OnusOne are high-fiving each other going home early. The people enrolled are on the phone with their patients rescheduling them later in the week. That is something that we've observed over time that is very interesting. It happens automatically when you roll this out.

Most business owners think they knew their staff. They really don't. Click To Tweet

When you say OnusOne, you mean at least picking one of the three compensation models and not taking a straight salary. Is that what you mean by that?

Yes. It doesn't even need to be our company. If you choose to put some a model together yourself. In the article that I wrote in IMPACT, we're not talking about OnusOne. We're talking about concepts. Whether you choose to have us help you put these concepts together or do it yourself regardless, those are the typical changes in professional behavior that you'll see when you eliminate a full guaranteed salary concept.

The same people who might say, “I question the quality of care,” are the same people who are excited when people cancel or could be. I don't want to label them as such, but they could be the same. There's a dichotomy there, and you want to make it appropriate when you're saying as an owner, “These patients need to come in 2 to 3 times a week in order to get better.” We're not talking numbers in the clinic and the bottom line of financials for them to see objective results. They have to come in for care. Yet, you're excited when they go home and you're done in a half-day, that doesn't jive. When they have some skin in the game, then it's easier for them to follow through on that and make sure that their patients are getting the care that they need.

Therapists, especially young ones, need to understand that's what's good for the patient is good for the business. You put the patient first, then your business. The numbers will take care of themselves. Another thing that we struggle with as new grads. Not always, but in many cases. Our perception is that we are only responsible for caring for the people that show up that day. The reality is we have a caseload of people that we're responsible to care for regardless of whether they show up or not. If somebody is under your care and they're repeatedly canceling, you have a professional responsibility to care for that person. A lot of times, therapists don't understand that. Maybe they hadn't been taught that effectively in their clinical rotations. Managing cancellations is part of delivering high-quality care, and if you do that effectively, the numbers are going to take care of themselves.

Compensation Programs: There are three reasons why practice owners are not trying new models: fear, lack of time, and knowledge.

 

Anything else you want to share about switching to compensation models and helping owners overcome that hurdle or mindset shift to consider a situation like this?

There are a couple of components that you want to consider. The first would be the timing of rolling this out. You want to make a change, roll out new plans and hit the go button when you anticipate that your clinic is ramping up and getting busier. You don't want to hit the go button at your slowest time of the year because your therapist might panic. What goes along with that is how long of a runway you provide for your staff or what we call a grace period? The longer the grace period, the easier the transition will be for your staff. Let's say your company tends to get busier on April 1st. January 1 would be a good time to introduce new models and tell your staff, “We're not going to start paying you according to these models. We're giving you access to the models so that you can understand how they work, learn how the calculations are performed.” You have between January 1 and April 1st to learn how everything works. Ask your questions, change your behaviors, and we're going to go live on April 1st.

You wouldn't want to go live on January 1 because most practices, not all, but most tend to be slower. That's when deductibles are resetting, and people are trying to pay off their holiday bills, but then when you get to April, everybody's thinking about the summer. They want their knee replaced so they can enjoy the summer. That's where volumes tend to tick up quickly. That's where you want to hit the go button so that everybody fully gives themselves a raise right when they go live with the system. Timing is very important.

Do you have some people who go through that ramp-up stage and hit the go button and excited and feel like, “It doesn't work for me? I'm not aligned anymore with the company. They’re going in the direction I don't like.” Do you see that sometimes? Is that a legitimate fear that owners could possibly see?

Yes. There are a lot of reasons why you might introduce these types of models, use our system, or however you choose to do it. One of them could be to weed your employee garden. Let's say you've got people who are not necessarily doing anything that is a terminable offense, but they're not the type of person you want in your company for whatever reason. One way to take care of that is to have them exit themselves from your company after you introduce these models. The attrition rate for practices that introduce these models where we have been involved is under 5%. It's very unlikely that you're going to lose staff if you follow the best practice guidelines. However, 5% is not 0%, so it does mean you could lose a person or two, or if you're a larger company, it would be more than that. Almost invariably, those are the people that you've been trying to figure out how to get off your bus anyway. They did you a favor because it's a lot easier for them to exit themselves than you trying to figure out how to get them off your bus.

As you start by introducing structure and some accountability, and this is a form of accountability because it affects them financially, and not financially, but also in terms of standardized policies and procedures, some people tend to weed themselves out and tap out.

That's very true.

Jason, thanks so much for sharing so much awesome information. Is there anything else you want to share before we wrap things up?

One thing you want to consider as a practice owner or executive is if you're going in this direction, what is your intent? It's not always to improve the bottom line. That could certainly be part of it. If you're a practice that is struggling with your profitability and you feel your salary cost is out of control, this would be a way to address that, but that's only one option. Another option would be maybe you're worn out as a practice owner and tired of the daily grind of managing people, and you want less leadership headaches, but you're happy with your profitability. You want more freedom as an owner. That is an appropriate reason to go down this road. Even if you're happy financially with where you're at, you feel good at that point in your career. That might be a reason to do it.

Another reason might be you're considering selling and you're concerned that your EBITDA isn't strong enough and you don't think you're going to get the multiple that you're after. That's another reason to introduce these models because it will strengthen your EBITDA and you'll look more attractive on paper if you're interested in selling. The difference there is you're selling on your terms, not selling because you're backed into a corner. You've painted yourself into a corner and you don't have any other option other than to sell. That's a very different situation. Think about why you might be interested in going down this road, and don't lose sight of that as you go through the process.

If people wanted to get in touch and learn more about OnusOne and what you do, how would they do that?

If they're interested in getting information in general, they could email us at Info@Onus-One.com. If you've got a question for me directly, regardless of whether you're interested in OnusOne or not, if you're working on doing this on your own and you want to bounce some ideas, I'm happy to do that. We want to try to get information out. What we're trying to do is change the landscape for the better for all parties involved. That's our goal as an organization. If you'd like to contact me, you can email me directly at JWambold@Onus-One.com.

Can you share with the audience before we finish up what OnusOne does in terms of helping owners with compensation models?

What's good for the patient is good for the business. Click To Tweet

We have a software program that manages this entire process. It gives your employees a portal where they can see their pay structures, the different plans that are available to them, how much they're earning, perhaps more importantly, how much they're not earning. Maybe what they're leaving on the table, and what they could achieve if they produce a little bit more. We can customize models depending on what people are interested in, whether it's units, minutes, RVUs or visits, revenue share models, actual versus predicted. We have a six-step implementation process that we go through with every practice to build these models. Our system sits in between their EMR and their payroll system. Data comes in from the EMR system into our system, we convert that information from EMR into payroll data, and they export it when they're ready to pay their employees, so they know how much to pay them.

Considering those in the audience that might be a little bit strained already in terms of time, does this add a lot of time and in typical payroll period for an owner to figure this all out, or is this done without their involvement?

They have some decisions to make about what they'd like to offer. If they're not sure, we can help them decide.

PTO 150 | Compensation Programs
Compensation Programs: Roll out new plans when you anticipate that your clinic is ramping up and getting busier. You don't want to hit the go button at your slowest time of the year.

 

That's on the upfront. You'll walk them through that process, how they want a bonus, and give them some standardized models?

Yes, but in terms of workflow on a weekly basis, if you're a practice that has 500 therapists, it will take you five minutes to download what you need into our system and to pull the data out on the other end to run payroll. It tends to very oftentimes save time, in particular for the small practice that's trying to do this manually.

Thank you so much for sharing the insight. Very much a conversation and a practice that needs to be implemented many years ago. That's the standard for the physical therapy world. We’re usually a decade or two behind.

Unfortunately, yes.

Thank you so much for taking the time. I appreciate it.

It’s my pleasure, Nathan. Good talking with you.

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About Jason Wambold

PTO 150 | Compensation ProgramsJason graduated from Gordon College in 1996 with a Bachelors degree in Kinesiology. He earned his Bachelors/Masters degrees in Physical Therapy from Thomas Jefferson University in 1999. Jason has 23 years of leadership experience in the rehab industry. He served as a membership committee volunteer for the NYPTA, and regularly lectures at local PT programs focusing on professionalism and fiscal responsibility.

Jason has recently begun to consult with newly developing physical therapy programs who desire to introduce curriculum content which will better prepare future therapists to excel under alternative compensation models. In 2016 he cofounded OnusOne, an online employee compensation portal system that is currently being utilized in practices in 31 states. Jason is an internationally recognized expert in best practice design and implementation of alternative employee compensation models, and he regularly speaks on the topic at national, state, and regional conferences.

He has authored 2 separate articles for Impact magazine between 2020-21, and is a regular guest contributor to various podcasts both in the US and abroad.

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