Straight salary is the most common compensation scheme in veterinary medicine. It provides a reliable, constant paycheck that isn’t dependent on how many patients you see or how many services or products you sell. However, it also can mean you won’t see a direct financial return for being highly productive.

Production-based compensation schemes take the employee’s productivity into account. In this sense, production is the revenue an associate veterinarian generates through their delivery of services and sale of products.

Straight production

Associate veterinarians paid solely on a production (or commission) basis—with no base salary—typically earn 18-21% (not to exceed 25%) of their production within a given time period, plus benefits. The percentage paid for product sales is generally lower than that for professional services. Importantly, there is no guarantee of a minimum paycheck, which helps explain why straight production is the least popular compensation option among associates, according to the AVMA’s annual Census of Veterinarians. Only 3% of associates with 15 or fewer years of experience are paid in this manner, increasing to 10% for associates with over 30 years of experience.

One advantage: you have control over your earning potential, in that the more productive you are, the more you make. This mode of pay favors experienced, efficient associates and those who are skilled at marketing products and services.

The drawbacks: taking time off can translate to less pay, as can factors outside your control, like competition from other staff/practices and poor practice management. Plus, production-based models have the potential to encourage bill padding and case hoarding. Along these lines, some experts suggest that production-based pay can harm practice culture by essentially prioritizing individual performance over teamwork, supporting a mentality of every person for themselves. If you do choose to be compensated based on production, you can protect your best interests by asking for an amount based on the number of days worked, rather than the total number of days in a pay period.   

Production-salary combinations

A combination of production and salary (or ProSal) is the second most common form of compensation. This is the mode of pay for 44% of early-career veterinarians, declining to 16% for veterinarians with more than 30 years of experience. By the original ProSal scheme developed by Mark Opperman, associate veterinarians receive a guaranteed base salary (distributed evenly throughout the year) plus a certain percentage of their production. Per Opperman, the base salary should be a realistic amount and not a “lowball” number. Payments are then made twice each month:

• The first paycheck is a fixed amount (guaranteed base salary divided by 24), minus payroll deductions.
• The second paycheck is the promised percentage of last month’s production, minus the fixed amount of the first paycheck as well as payroll deductions. The amount of this check therefore varies from month to month.

If, at the end of the year, you haven’t yet received your full guaranteed base salary, you would then be owed any difference.

Other salary-production combinations, referred to differently by different sources, include the following:

• Guaranteed base salary plus commission (percentage of additional sales) or bonuses (a set amount) once certain targets are met.
• A consistent salary, plus the potential to earn a percentage of production above a target baseline. In some cases, a system called negative accrual may be used, requiring that any production amount below the target baseline is tracked on a monthly or quarterly basis, and future paychecks are docked accordingly or shortfalls are repaid by the employee.   

Aside from the negative accrual option, these production-based schemes guarantee a certain level of income to mitigate some of the downsides of straight production and straight salary, such as penalizing time off or disincentivizing high producers, respectively.

Some experts recommend avoiding negative accrual altogether.  

How to decide?
When considering any compensation package involving both salary and production, first ensure you understand the terms that dictate precisely how you’ll be paid.

Another compensation plan used in veterinary practice is to pay veterinarians on an hourly, daily, or half-day basis. This method typically pertains to veterinarians temporarily filling in for a permanent staff member (locum work), providing extra help with caseloads as needed, or perhaps performing part-time work.

Positions paid on an hourly or daily basis have their advantages, often including the ability to set your own schedule and work-life rhythm and a higher hourly rate than that of part- or full-time veterinarians. Even so, an important consideration is that this compensation may not include benefits, such as health, life, and liability insurance. And, if income tax isn’t withheld from your paychecks, you’ll need to set aside a certain amount on a regular basis to cover what you owe on tax day.

Employers often use sign-on bonuses to attract candidates. Five-figure bonuses have become common, and some positions offer $100,000 or more on top of the candidate’s negotiated compensation.

These bonuses are certainly tempting, and may push you toward accepting one job over another, but there’s typically at least one “catch” to keep in mind.

• Retention period: Employers usually require that new hires stay with the practice for a certain minimum period (e.g., 1 to 3 years), and leaving sooner could require repayment of some or all of the sign-on bonus.
• Income tax: Unless structured as a loan (with repayment forgiven after the retention period), sign-on bonuses are considered supplemental income, and are subject to tax withholdings. This means the amount you’ll actually receive will be much less than expected, and it may be distributed over several pay checks. Even worse, the employer may fail to withhold sufficient taxes on the bonus, in which case you’ll get a nasty shock come tax day. If structured as a loan to be forgiven at the end of a certain period, the bonus must be reported as debt forgiveness income when that period expires. This means the taxes will still be payable, just at some point in the future.

Something else to keep in mind: sign-on bonuses aren’t limited to money. They can also take the shape of other types of benefits, such as stock options or additional vacation time. If you're offered stock options, consider consulting an accountant about the tax implications.