Physicians are typically paid based on their output/productivity, such as wRVUs or professional collections. Similarly, the nature of the sales profession is that the more you sell, the more earn… i.e. commissions! Unfortunately, that’s not the case for a lab sales professional. One would think that a lab salesperson who sells $1m of lab services should earn the same compensation as a tractor salesperson who sells $1M of tractors, correct? NO! Not according to EKRA. EKRA disallows commission-based compensation structures. There’s no shortage of frustration here; I’ve heard plenty of gripes about the way this law is written.
First of all, just because a lab salesperson left his/her current lab-employer to take a job at a competing lab making $100k per month doesn’t mean that’s FMV. An appraiser cannot rely on anecdotal data such as this. I’m not aware of any compensation survey data for lab sales professionals. Even if it did exist, I’d be hard-pressed to rely on it. There have been numerous enforcement actions against labs, and it seems like I read a press release from the DOJ involving a lab at least once per month. So, what’s the best approach or methodology to arrive at an FMV compensation for a lab salesperson within the confines of EKRA? Generally speaking, an entry-level lab salesperson with “typical entry-level qualifications of a medical sales professional” should earn a similar compensation as an entry-level medical sales professional. The same goes for a top-producing lab salesperson and a top-level medical professional. It’s logical and sensical that a lab salesperson would have similar skills, industry knowledge, and experience as a medical salesperson.
At HVG, we’ve been able to locate a rather robust salary survey for various types of medical sales professionals with multiple stratification. We believe this is a highly defensible method of calculating the FMV compensation for a lab sales professional. Let me know if we can help you.