Compensating a board-certified veterinarian

I want to hire a veterinarian who's board-certified in internal medicine. How should I compensate this person? Should I pay based on production or a split rate, or should I rent space to the practitioner? If I pay based on production, would the percent be different than with a non-board-certified veterinarian?

"Your four choices in compensation methods for an associate who's board certified are a fixed base salary, a guaranteed base salary plus a percentage of production, a blended percentage of production, and the split-rate method," says Jennette Lawson, a consultant with Wutchiett Tumblin and Associates in Columbus, Ohio. "The split-rate method, which compensates the associate differently for medical services and medicine dispensed, may be more suitable than the blended percentage if more than 10 percent to 12 percent of medical revenue generated comes from dispensed medications. If you use the blended compensation method, a boarded specialist should receive between 24 percent and 28 percent of production," Lawson says.

Another option is to rent space to the specialist. "When you rent practice space to a specialist, he or she is essentially treated as a sole practitioner and not an employee," says Lawson. "You'd charge the specialist a fee for the fair market rent of the primary space used and the common areas, for equipment use, staff members' time, and for drugs and supplies. Space sharing can be challenging, so make sure you've discussed the issues thoroughly before selecting this option." She recommends considering how the staff members will work together, how their time will be allocated, and the priorities for resource allocation.

In the end, Lawson says that all of these options can work and even yield similar financial outcomes for the specialist. "The method you choose in the end will depend largely on the comfort level and experiences of both the owner and the specialist with the various approaches," Lawson says.