This is the third article in this series, “The Right Tools for Negotiating Your Salary.” The first article highlights the value you have simply by being a PT or a PTA. The second article shows you how to find multiple sources that will help you decide what you deserve to be paid. This final article in this series gives some tips and strategies for the actual negotiation.
As a new physical therapy graduate, it is possible that this is the first time that you have ever had to negotiate your salary. If that is the case, read on! Even if physical therapy is a second career for you, this article will still have information that you need – especially if your previous career was not in health care.
The business of health care is unique. In any other industry, a business creates a product or service and sells it for a maximum profit. In health care, profits are limited by what an insurance company will reimburse for a product or service. This may be a bit of an oversimplification, however, it is important to note that there will always be a ceiling on physical therapy salaries that is dictated by the reimbursement level.
Let’s look at an example. If an insurance company reimburses a physical therapy evaluation for $100, and the patient pays a $30 co-pay, the clinic will make $130 in that one hour. Of course, part of that $130 will go toward overhead (i.e., paying for equipment, supplies, maintenance, rent, utilities, front office staff, etc.). If the overhead eats up roughly 50% of that $130, that leaves only $70 per hour for salaries, benefits and any profits.
Most employees realize the cost to the employer when it comes to salary. Many, however, fail to recognize that benefits, including paid time off, health insurance, and retirement plans, are also eating into the bottom line. Benefits tend to add about 30% or so to the cost of a salary. So, if the employer is paying a PT $80,000 per year, they are also shelling out another $24,000 per year for benefits – that’s $50 per hour of the $70 they have left over after paying overhead expenses.
So, in the first two articles, you discovered your worth as a physical therapy professional. But that was only half of the story, because no employer is going to negotiate a higher salary unless you can prove that you’re worth it. Keep in mind that when you negotiate a higher salary, you are essentially asking the employer to give up some profitability in order to hire you.
So what’s a new grad to do? The first thing is to frame your negotiation in terms of your value weighed against what you are going to cost. Is your value that you have a specialized certification, like yoga, pilates or tai chi? Use this to your advantage by indicating to a potential employer that you can increase their profits by offering add-on services that the patient or client will pay the clinic directly for, rather than going through the reimbursement system. Direct pay clients is a growing trend in physical therapy, getting clinics away from the health care model and the limitation of profits that goes along with it.
As a new graduate, you won’t have a patient or physician following … yet. But, did you put together a project in physical therapy school that highlighted one of your interests? Perhaps you provided a balance (or any other) program to seniors at a local community center (or other patient group). Talk to the employer about your interest in building a balance program in their clinic, and how the favorable response you got from your school project makes you confident that you can duplicate that success and bring in more clients.
Finally, be creative – especially if the employer thinks you’re worth it, but just doesn’t have the means to pay you what you want. Ask for other benefits like continuing education reimbursement, additional time off, or even a management track position.
For more, read our Salary Negotiation Do’s and Don’ts.