HIRING A PA - ANSWERS to your SALARY Questions

In my efforts to help you hire a PA, and to answer your questions concerning salaries, I submit this item I wrote for just such purposes. Thought MOST of it was written in 2003, the analysis part is still applicable.

     After personally conducting 2 salary surveys and talking to many many derm PAs, I have compiled some observations.  So few PAs respond to salary surveys that I felt publishing an average salary of only those PAs would not be representative of the estimated 1200 derm PAs nationwide today (2007).  However, you can see from the comments below, theorizing on the WIDE income variations ($65K yearly to > $200K yearly in 2007), that how much you pay your PA has little to do with what the national average derm PA salary is.  But, I am told by dermatologists that this analysis below was very helpful in their understanding of derm PA salaries.  I am not a PA, and none of the statements below can be guaranteed; again, they are just my observations.

    Just as it would be difficult for you to tell me the average salary of all dermatologists, I also discovered that there really is no such thing as an average salary of all derm PAs, because, just as with dermatologists,  IT ALL DEPENDS ON WHAT THEY DO!  And more importantly, it depends on how valuable a PA is, or can be, and how much profit they are making, or will make, for your practice.  If you don't know their billings AND collections (and some supervising physicians don't have any idea), then you need to get those figures from your clinic administrator.  Then subtract the PA's salary, expenses, benefit package and your bad debt percentage to calculate the net profit. 

     I would like to add here, that including overhead as an "expense" of the PA would not be fair.  This is an item usually shared among the derm PARTNERS, not a PA employee) (overhead being such things as electricity) -- expenses that you would pay for even if the PA were not on board.  For example, if you had to hire an additional billings clerk because of the new PA, AND you would fire him/her if the PA left, then yes, that is a "PA expense."  The PA's medical assistant's salary, if he/she is devoted only to the PA, is a "PA expense," and so on.  Dividing the overhead expenses among you and your derm partners AND the PA is not fair, I feel, since the PA does not get the same share of income as you and your other partners. 

     The BOTTOM LINE concerning salaries is NOT what the average salary is, but that I see many PA's with one year of dermatology experience generating charges of AT LEAST twice their salary; with about 3 years experience, ABOUT 4-5 TIMES HIS/HER SALARY, and the very-experienced derm PA as high as 6-7 TIMES his/her salary.  A few PA's generate even more. Factoring in all the expenses related to the PA's remuneration (salary + benefits + CME allowance + vacation + nurse + bad-debt expense + malpractice insurance), any PA should still produce a net profit to his/her supervising dermatologist.  This must not to be taken as a guaranteed statement, of course--it is only the result of a survey of respondents.  As of 2002, I see several dermatologists hiring a 2nd and 3rd PA?  Why?  Because they have obviously been very pleased with the arrangement! 

     My 2000 Salary Survey showed an unusually wide variation in PA incomes--salaries plus bonuses.  The lowest is $40K per year and the highest is $250K yearly.  The billings of those two PAs varies as much, as well.  These observations are made:

     New PA graduates should not be assumed as being paid the lowest--they are not necessarily new to medicine-virtually all had prior medical experience, some several years of it; some had derm experience as a medical assistant, for example, or were already experienced in lasers when hired.  Some PAs already had a PhD.  Thus, salaries that seem high for a new PA graduate (>$100K) have a reason.  New graduates seem to all start out with at least $50K yearly, depending on geographic region. 

   PAs in plastics (5%) are not surveyed because their salaries are very high and create unreal statistics.  Plastics is not really "derm".

   PAs hired by Mohs surgeons have "high" salaries, not because of what the PA bills (usually zero), but because their supervising doc can almost double his own surgeries/production with a PA assisting.  The same is true for straight clinical practices--when a PA comes on board, not only does he/she make a profit for the practice, but the supervising doc's OWN production increases after the training period.*

   PAs who do all cosmetics, seeing only full-pay patients, have very high salaries.  PAs generating the highest billings/profits will usually be the highest paid also, though there are exceptions.  THAT is the simple way you determine what salary to pay your PA--based on the profit they generate. 

   PAs teaching in academics (derm) usually have lower salaries since they don't have a full-patient load each day, so their salaries in the survey distort statistics. 

   PA salaries in HMO's (I'd estimate only 5% of all derm PAs!) are lower than in private practices. PAs in HMOs are, as usual, supervised by dermatologists. 

   It is noted that salaries for female PAs are lower than for males and I also observe that more male PAs have medical assistants than females.  PAs who have a medical assistant are more efficient and can generate more billings (about 20% more) than those without a medical assistant. 

   Salaries on the west coast are generally higher than on the east coast.   Salaries in the New England states GENERALLY seem to be the lowest nationwide, and California the highest, although there are exceptions!  Florida has by far the largest number of derm PAs, followed by California and Texas.  Likewise jobs for PAs in those states are plentiful.  Derm NPs are rare, but there are several in FL.  Derm NPs can, after being trained by a dermatologist, set up their own independent practice.  However, PAs CANNOT, by law, (nor would the WANT to) practice independently.

   I COULD add up all salaries and divide by the number of PAs who reported a salary amount(not all did), and come up with an average income, but again, it would represent very few derm PAs. It seems that those who make the larger salaries do not want to report such in surveys.  So it would mean nothing.  It STILL would NOT tell a prospective employer how much they should pay THEIR derm PA.  Again, THE very simple way you determine what salary to pay your PA is based on the profit they generate. 

AND WHAT THEY GENERATE DEPENDS ON:

It depends on what the PA DOES (only acne and warts or lots of surgeries?) 
It depends on geographic location. 
It depends on how many pts per day the MD/DO ALLOWS the PA to see (average is 28-29 pts per day).  Does the PA have restricted or unrestricted access to patients?  While state laws vary somewhat, they usually allow the PA do to anything the MD delegates/will take responsibility for.  One can train the PA to do anything they are capable of, all under state guidelines, of course, especially if the PA is industrious and eager to learn; nothing prevents the PA from acquiring skills in the areas of dermatology the supervisor chooses to train him/her in.
It depends on how many surgical procedures the PA does or if they are doing
lasers and/or cosmetics and/or MOHs. 
It depends on the number of Medicare pts the PA sees. 
It depends on if the PA has a devoted medical assistant and how much paperwork the PA must do/dictation time. 
It depends on how many hours the PA puts in each day. 
It depends on how newly graduated the PA is/how long the PA was practicing medicine before going into derm. 
It depends on the PA's surgical abilities-they learn suturing in PA school, but some go into a 1-year surgical residency after PA school---those PAs can start producing a profit for the practice immediately.
It depends even on the Appointments Clerk's attitude toward PAs and how aggressive he/she is in offering the PA's services (usually sooner) to patients making appointments.
And it even depends on the PA's sex; and on and on. 

    Regarding PAs who make >$100,000 yearly--I noted the number of patients they see per day is over 35, and how much they generated in billings for the practice was over $400K.  EVERY employer NEEDS to know how much money the PA generates in billings, AND in net collections, and what their expenses are.  THAT's how you determine a fair percentage.

   Typically, high-salaried PAs do LOTS of surgeries, probably live on the west coast, are most likely to be male, don't see MANY managed care/medicare pts, mostly full-pay pts, likely are doing lots of cosmetics and/or Mohs, and have a devoted medical assistant, etc. 

    So you see, it is really impossible to say that the AVERAGE DERM PA SALARY is "$XXXX".  You can't point to a region and say I will pay you "$XXXX" based on what other derm PAs make in this region--not without knowing all
the 10 listed factors above for each of those OTHER PAs.   The salary simply depends on how much the doc thinks the PA is worth NOW and if he/she believes the PA will be a valuable INVESTMENT in 3 years, if not sooner--NOT on what PAs are already making in your region.  You must look at the list of items above; what determines salary is, simply put: pts per day, procedures per week, and, thus, billings/profit generated.

   As of a 2000 survey, there were an estimated 400 derm PAs in the United States, growing at the rate of 12 per month; I'd estimate approximately 700-800 by 2003.  Of all PAs who specialize in dermatololgy, 98% of them are supervised by a dermatologist.

   Let me point out that this is not a scientific/publishable study.
 
 

    I believe a win-win situation exists when a production bonus is paid.  Production bonuses make sound financial sense for both the practice and the PA.  Bonuses were usually given in a wide variety of ways, the most popular example being a percentage of production (billings or net receipts) over the PA's cost to the practice. Higher income-producing PA's (practices usually high in cosmetic content) earn larger bonuses. 

A bonus may be figured HYPOTHETICALLY as thus: 

(note: a $50,000 base salary would be the LOWEST end of the salary range, but is used here for easy mental calculation:) 

   The bonus should be in ever-increasing percentage amounts to reward the PA for increasing production and to keep the PA in the practice.  It might be 20% of the first year's NET, increasing by 3-5% each year to whatever percentage
everyone is comfortable with.

     I am told by PAs that these profit figures are very conservative figures.  New grad PAs usually START at $50-70,000.  Most derm PAs tell me they generate much larger billings than $200,000 a year; also keep in mind that cosmetic fee-for-service practices have a very low bad-debt ratio.
 
 

     A word about Managed Care:  While PA's hired to do only managed care patients may generate lower production (and may not stay in that type job long), KEEP IN MIND that, while the PA may be seeing low-paying patients, Medicare patients, Managed Care patients, etc., with low billings, this FREES the dermatologist UP to see the full-pay patients and thus INCREASES THE MD's/DO's PRODUCTION.  He/she is also freed up to see the patient problems that demand his/her level of expertise and it frees him/her to do the surgeries and cosmetic procedures THAT GENERATE HIGHER CHARGES.  The same is true for Mohs surgeons-their own production goes up when they hire a PA to do closures, etc., even though the "Mohs" PA does not bill as PAs usually do. 
 
 

    Even though the training period may produce no income for the practice if the PA is a new graduate, one need not be concerned because the PA will usually cover their own expenses by the end of the very first year; therefore, income "lost" during the training phase is "made up."  After that first year, there should always be profit.  Of course, these statements must NOT be taken as a "guarantee," but talking to any of the dermatologists on my "Referral" list mentioned below will assure that there is little to worry about and demonstrate the great advantages concerning the financial aspects of hiring and training a PA.

    In hiring a new PA graduate, one must have the vision to "look down the road" 3 years from now, when he/she should become quite an asset to the practice.  And let us not forget the change in "quality of life" for the doctor and his staff, something many are seeking; and no longer losing patients because of long waiting periods for appointments--a direct benefit to the patient who might see an FP instead if they feel they can't wait!

    Dermatology PAs are the ANSWER to the dermatologists' dilemma of how to cut down on patients' waiting time. 
 
 

     For FIRST-HAND salary information, dermatologists may contact one of their own colleagues on my Referral List (ask for it) and ask your questions of THEM.  What better source of information than "straight from the horses mouth"! 
 
 

    I have drawn up a SAMPLE contract for derm PAs, one being quite thorough and a second sample being less formal and much shorter. Ask for them by e-mail, so you can easily edit/change the wording to suit your practice situation.