Three ways to pay a clinician (and how to pick)
Most group practice owners didn't choose their compensation model. They copied whatever their first job used, or whatever a colleague mentioned, and never revisited it. That's an expensive thing to run on autopilot, because comp is usually your single biggest cost. And the model you pick doesn't just set that cost. It quietly shapes how a clinician spends their time.
There are three common ways to pay a clinician, and each one favors someone different.
A fee split pays the clinician a percentage of the revenue their sessions bring in, say 60% to them and 40% to the practice. Simple, and everyone understands it. Because their pay tracks the work that pays, it rewards efficiency: no reason to drag out notes or prep, since that time doesn't pay. The flip side is that the same incentive sits on the quality of those notes, so you watch it. Two more catches: a new clinician earns little while their caseload fills, and anything that doesn't bill, like intake coordination or supervising someone junior, has to be priced separately (service units, a slice of a billable hour) or it won't get done. Your share is whatever percentage you set, so the margin is a dial, not a given.
One decision hides inside "a percentage of revenue," and it only bites if you take insurance: a percentage of what, exactly? If the split is paid on what's billed, you pay the clinician's share even on claims that get denied, underpaid, or written off, and the practice eats the whole gap between billed and collected. If it's paid on what's collected, you both share that gap. For a private-pay practice the two are nearly the same number. For an insurance practice they are not, and the safe, standard answer is a split of collections. Whatever you choose, write the word "billed" or "collected" into the agreement, because "60%" alone is two different paychecks.
Commission pays an hourly rate for the work, often a lower rate for admin time and a higher one for clinical hours above some threshold. It's mostly the mirror image of a split. Because you're paying for hours, not just billings, the non-billable work a practice needs is easy to ask for and paid for by design, and it's natural to keep a ramping clinician whole by paying for non-clinical and training time while their caseload fills. The trade is less built-in pressure to be quick about notes and prep, since that time is on the clock too. It gives you more control over cost and rewards clinical volume, though it's harder to explain and to run.
Salary pays a fixed amount regardless of volume. Predictable for both sides, and the clinician gets a full paycheck from day one. The catch is the ramp: depending on how fast you can fill a caseload, it can take most of a year before a salaried clinician is net profitable, and that gap is on you. Once they're full it flips. The fixed cost spreads over more and more hours, so the more room their caseload cap leaves, the more it earns you.
One practical wrinkle on the split. You generally have to pay for the hours you require someone to work, so a pure pay-only-on-billings split doesn't quite hold once there's admin time, meetings, or required training in the mix. The common fix also smooths those lean early months: guarantee an hourly floor, paying the greater of the split or what their hours would earn at an hourly rate. In practice that floor usually only bites for the first cycle or two, until billings catch up. Wage rules, and how a clinician is classified, vary, so confirm yours with an employment attorney.
On pure cost, the three are closer than they look. At a given rate you can set a split percentage, a commission rate, or a salary to land on roughly the same margin. They behave differently as things move: a split's cost rises with the rate, commission's is flatter (though raise someone's rate and they'll usually expect their commission to follow), and salary's cost per clinical hour falls as they fill. But those are second-order next to what each one rewards. The cost you can dial in. The incentives you live with.
There's one more thing the model decides that you can't dial away: who carries the risk. A split pays a percentage of what they bring in, so a slow month or an empty slot costs the clinician too, not just you. Commission pays for the hours worked, so more of that risk shifts to you. Salary, you carry all of it: the paycheck is owed whether they saw twenty clients or five, and whether the money has landed yet or not. That isn't a clinician getting shortchanged on a split or overpaid on salary; it's the price of who absorbs the uncertainty, and it's why the same work can fairly pay differently across the three.
No single model is right. The best one depends on the clinician's billing rate, how full their schedule is, and the behavior the plan rewards. Paying a part-time clinician on salary, or a packed one on a fee split, is how margin leaks out without anyone deciding it should. And since you can tune any of them to a similar margin, the behavior is usually what should decide it.
Next time you make an offer, run it both ways before you sign. The model you reach for out of habit isn't always the one the numbers, or the work you need, point to.
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