Accounting for acupuncture

Q. A part-time associate who's certified in acupuncture wants to be paid up to 80 percent of our practice's acupuncture income. She's willing to work extra hours and receive commission only for the acupuncture. Is this reasonable?

"There isn't really a standard percentage for this kind of arrangement, but 80 percent of the revenue is too high," says Dr. Karen E. Felsted, CVPM, MS, CPA, a consultant with Gatto McFerson in Santa Monica, Calif. Acupuncture is more time-consuming than conventional medicine (compared with the revenue it brings in), yet it consumes just as many practice resources. For example, if a doctor spends 30 minutes with an acupuncture patient, the practice won't take in as much revenue as it would in 30 minutes with an annual exam patient because of heartworm tests, fecals, bloodwork, vaccines—the ancillary service revenue in addition to the exam fee. And you still have to pay the overhead associated with the visit.

Dr. Karen E. Felsted

"So if the associate is using the practice's space, receptionists, technicians, and so on, you as the owner have to make enough money to cover that—and 20 percent won't do it," Dr. Felsted says. The first thing to look at is technician usage: If the doctor ties up a technician, then her percentage will be much less than it would be if she didn't. Also think about whether she'll be using exam room space that you could be using otherwise. And if you paid for her training, you should certainly make a return on it.

Some consultants say the percentage for acupuncture should be no more than it is for regular services (20 percent to 22 percent) because of slimmer profit margins—but others differ. "Come to a middle-ground agreement depending on the specific resources this associate will be using," Dr. Felsted says.