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    Cristy Good
    Cristy Good, MPH, MBA, CPC, CMPE

    As staffing in medical practices continues to be a top challenge, Ask MGMA receives several questions around signing bonuses for positions other than providers.  

    Amid the Great Resignation, an MGMA Stat poll found that one-third of all medical practices added or expanded bonuses to recruit staff in 2021. Even with these efforts, nearly half of all practices (46%) said their recruiting and hiring efforts for nurse roles worsened in 2023. Practice human resources leaders and managers are trying to find creative ways to entice people to work in the industry while also retaining current staff. 

    Industry standards for retention and signing bonuses for healthcare positions outside of providers (e.g., nurses, allied health professionals, administrators and support staff) can vary depending on factors such as location, demand for specific roles and the size of the healthcare organization.  

    Let’s start by defining signing and retention bonuses, as well as offering examples of when and how they can be used strategically by an organization. 

    Signing bonuses 

    Signing bonuses are offered to attract new talent to the organization, particularly for hard-to-fill positions or to compete in a competitive job market. It's typically provided when making the initial job offer to a candidate. 

    Key benefits: 

    A hiring bonus can make job offers more appealing to highly qualified candidates, particularly in competitive job markets. It can expedite the hiring process as candidates may be more motivated to accept an offer with a bonus attached. If candidates need to relocate for the position, a signing bonus can help offset moving expenses. 

    In more detail: 

    Signing bonuses can vary widely based on factors such as the employee's qualifications and the demand for their role. They might range from a few thousand dollars to a percentage of the employee's first-year salary. They are typically offered to new hires, especially for roles with recruitment challenges and are usually paid in a lump sum shortly after the employee starts work. 

    Many organizations include a repayment clause that requires employees to refund a portion of the signing bonus if they leave within a specified timeframe, such as one year. Some signing bonuses come with conditions, such as requiring the employee to complete a certain orientation period or fulfill specific performance expectations. 

    Did you know? 

    MGMA DataDive Provider Compensation provides industry-leading benchmarks for signing and starting bonuses for advanced practice providers (APPs) and physicians? Learn more about this and other insights in the 2023 data report, Benchmarking for the Future of Your Physician & APP Workforce

    Retention bonuses 

    Retention bonuses are typically designed to incentivize employees to stay with the organization for a specified period, usually one to three years, thus reducing turnover and associated costs. It ensures continuity of care and maintains patient relationships, which can be crucial in healthcare settings. 

    Key benefits: 

    Retention bonuses can be an effective tool to retain valuable and experienced professionals, ensuring continuity of care and maintaining patient relationships, which can be crucial in healthcare setting. Other benefits may include enhanced employee morale and an edge in attracting and retaining top talent. 

    Details about: 

    They are often structured as lump-sum payments or distributed over several years. The amount of a retention bonus can vary widely based on the employee's role, seniority, and the organization's budget. Common ranges might be between 5% and 15% of the employee's annual salary. 

    Eligibility for retention bonuses should be clearly defined. It's common to offer them to employees in high-demand roles or those critical to the organization's success.  

    Organizations often distribute retention bonuses in installments, usually annually, to encourage longer-term commitment. To ensure employees stay for the entire retention period, some organizations include payback provisions that require employees to repay a portion of the bonus if they leave before the agreed-upon time. 

    Balancing both strategies 

    In a medical practice, hiring and retention bonuses can be valuable tools in managing your workforce effectively.  

    Assess which roles in your practice are the most critical and difficult to fill. Consider offering hiring bonuses for these roles to attract top talent.  

    Regularly analyze turnover rates to identify trends and potential areas for retention bonuses. If you notice a pattern of employees leaving, consider using retention bonuses strategically. The MGMA DataDive Practice Operations data set has benchmarks for turnover rates for most positions.  

    Use retention bonuses to incentivize employees to stay with the practice for several years, ensuring stability and continuity of care. Clearly communicate the bonus programs to employees, emphasizing the value the practice places on their contributions and well-being. 

    Develop a strategic approach to both hiring and retention bonuses. Create clear criteria for when and how each type of bonus will be offered. Be mindful of your practice's budget when implementing both types of bonuses. Ensure that they are sustainable and aligned with your financial goals. 

    Considerations for both bonuses 

    • Be aware of tax implications for both the practice and the employee. Consult with a tax advisor to structure the bonuses appropriately. 
    • Ensure that your bonus programs comply with labor laws and regulations. Seek legal counsel if necessary. 
    • Maintain records of bonus agreements, including the terms and conditions, to prevent misunderstandings. 
    • Carefully assess your practice's financial situation and budget for bonuses to avoid overextending resources. 
    • Apply bonuses consistently and fairly across the organization to maintain employee morale. 
    • Use bonuses as part of a broader retention strategy that includes other elements, such as professional development opportunities, recognition programs, and competitive compensation. 

    Hiring bonuses and retention bonuses can be effective tools for attracting and retaining talent in a medical practice. However, it's essential to use them thoughtfully, considering your practice's specific needs and financial capabilities. 

    Additional resources

    • "Shifting strategies to improve medical assistant recruitment and retention" (MGMA Stat)
    • "Don't Leave Me! Strategies for Medical Staff Retention" (FPM)
    • "Retention Bonus: Definition and How Retention Pay Works" (Investopedia)
    • "Learn What Retention Bonus Agreements Are and When to Use Them" (workhuman)
    • "Do Retention Bonuses Pay Off?" (Harvard Business Review)
    • "Sign-On Bonuses: The Reality of When and How to Use Them" (Robert Half)
    • "7 types of employee bonuses and how they work" (Payscale)

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