In the latest discussion from NatRevMD, we tackled an important question for growing medical practices: should you hire a Nurse Practitioner (NP)? If you’re considering taking this step, this post is for you. We’ll explore how to build a strong business case for adding an NP to your team and ensure the decision aligns with your practice’s goals.
Why Consider Hiring a Nurse Practitioner?
Nurse Practitioners bring a wealth of expertise and flexibility to medical practices. They are skilled in managing routine follow-ups, chronic disease care, and acute visits, allowing physicians to focus on more complex cases. Beyond clinical contributions, NPs can help:
- Expand Patient Capacity: Shorten wait times and reduce appointment delays.
- Increase Revenue: See additional patients and add services like chronic care management.
- Boost Patient Satisfaction: More providers mean better access and happier patients.
But how do you know if bringing on an NP is the right decision for your practice?
It’s also worth noting that this framework can be applied to hiring any mid-level provider or even another physician. Whether you’re considering a Physician Assistant (PA), an additional doctor, or an NP, the same principles apply. This topic came up recently with a client question, which inspired us to address it here.
Questions to Ask Before Hiring
Here are five key questions to guide your decision:
- Is our current patient volume exceeding provider capacity?
- Are patients experiencing long wait times or delays in appointments?
- Are there specific services or patient populations we’re not addressing effectively?
- What is the projected revenue increase from adding a new provider?
- How will adding a provider impact our overhead and existing team dynamics?
Answering these questions will help you determine if hiring an NP aligns with your practice’s operational and financial goals.
Building the Financial Case
The financial implications of hiring an NP are a critical piece of the puzzle. Here’s a step-by-step approach to calculating costs and benefits:
- Estimate Revenue Potential:
- An NP can typically see 15 patients per day. At an average reimbursement of $100 per visit, this equals $1,500 daily or $375,000 annually (assuming 250 working days).
- Calculate Costs:
- Salary: $120,000 annually (average for Year 1).
- Benefits: 25% of salary, or $30,000.
- Overhead: Consider office space, supplies, and EHR costs.
- Assess Profitability:
- If the NP generates $375,000 in revenue and total costs are $200,000, the net contribution is $175,000.
Compensation Models for NPs
A well-designed compensation plan ensures your NP feels valued while incentivizing productivity. Here are three models to consider:
- Straight Salary:
- Simple and predictable.
- Example: $120,000 annually.
- Transition Model:
- Year 1: Straight salary of $120,000.
- Year 2+: Lower salary ($90,000) + 15% of gross revenue exceeding $200,000.
- Example: If the NP generates $350,000, they’d earn $90,000 + $22,500 in incentives = $112,500 total.
- Percentage of Gross Revenue:
- Lower base salary ($70,000) + 15–25% of gross revenue.
- Encourages high performance while aligning incentives.
Key Data Points to Gather
Before finalizing your decision, pull together these three critical data points:
- Patient Volume Trends: Average daily patient numbers and growth over the past year.
- Revenue Metrics: Current revenue per provider and reimbursement trends.
- Operational Costs: Detailed breakdown of practice overhead to evaluate affordability.
The Importance of Business Cases
Understanding how to build a business case is a vital skill for any practice leader. Essentially, a business case asks you to assess your current state, envision your future goals, and map out the financial and operational steps to get there. It’s about seeing the big picture and understanding the details that drive success along the way.
For example, in this scenario, the business case doesn’t just answer whether hiring an NP is possible. It also evaluates how that decision aligns with your financial health, team dynamics, and patient care priorities. This methodical approach ensures you’re not just making a decision—you’re making an informed decision.
Final Thoughts
Hiring an NP can be a transformative step for your practice, but it requires careful planning and analysis. By asking the right questions, gathering key data, and structuring a competitive compensation package, you can ensure the decision benefits both your team and your patients.
Whether you’re considering a mid-level provider or another physician, the lessons here apply across the board. The ability to build and evaluate business cases is critical for sustaining long-term growth and ensuring your practice is set up for success.
For a deeper dive into this topic, including practical examples and tips, listen to our full podcast episode here. It’s packed with insights to help you make an informed decision.
Have you recently hired an NP or are you considering it? Share your thoughts and experiences in the comments below. We’d love to hear from you!
