9 Factors Affecting Your NP Paycheck That are Out of Your Control

Are you negotiating your salary? Or, perhaps you're frustrated with your current nurse practitioner compensation? You can certainly take your payday woes out on your boss, but a better first step is to understand the economics behind your salary. It took me a number of years working as a nurse practitioner before I truly appreciated the effects of these often behind the scenes factors. 

The politics, bureaucracy and lack of transparency in healthcare can be downright frustrating. And, as a nurse practitioner, these healthcare trends are difficult to have much influence over. Understanding the inner workings of healthcare economics, however, may help increase satisfaction with your current position or hone your negotiation skills as you look for a new one. As you think about your nurse practitioner compensation, consider how these nine factors affect your pay. 

1. Local Reimbursement Trends

The price your clinic or hospital publishes for a patient visit, procedure or service is generally not (never in most cases) what the facility actually collects. Rather, the facility you work for has negotiated reimbursement rates with insurance companies. Some facilities fare better in these negotiations reaping higher reimbursement rates from payers while others collect far less. The amount of healthcare available in your area (level of competition), specialty, clinical outcomes and the size of your facility are all factors that play in to your facility's ability to negotiate favorable rates with insurance companies. If your employer has negotiated favorable rates with payers, you're likely to earn more as a nurse practitioner. 

2. Payer Mix

Similar to the first factor affecting your NP salary, the types of insurance accepted at your clinic and the insurance held by patients most likely to present to your facility affect your employer's bottomline and therefore your salary. If your clinic caters to Medicaid patients you'll earn less. Medicaid is notorious for its low reimbursement rates. If your clinic is popular among privately insured patients, you'll probably earn more. 

3. Revenue Sources

Not only are you reimbursed for patient visits as a nurse practitioner, ancillary services such as imaging studies, labs and procedures increase the amount you bill and in turn the amount of revenue collected by your employer. Clinics and hospitals that maximize their ability to provide such ancillary services typically have higher revenues. Working for a facility with limited capacity for such services may translate to a lower salary. Employment with a facility that provides a greater number of ancillary services may pad your paycheck. Clinics that see patients for cash pay procedures like botox and other cosmetic procedures reap even higher profits than those relying on reimbursement from insurers. Pro tip: Learn to perform procedures and other revenue generators for your facility to boost your nurse practitioner salary.

4. Hospital Ownership 

The economics of working for a hospital or hospital owned practice are much different than those of working in a private practice. In general, salaries for nurse practitioners employed in the hospital setting or for a hospital are higher than those for NPs working in private practice (again, this is a generalization). Hospitals carry more weight than private practices when it comes to negotiating with insurance companies. They also offer a wider array of services keeping revenue for care in-house. 

Along the same lines, the economics of academic medical centers are different than those of non-academic medical centers. Many academic medical centers rely on government funding and may have more stringent guidelines for compensation. Management of dollars and cents varies depending on the academic facility so you'll need to do your due diligence in your area for a better understanding abut what NP comp looks like at these institutions. 

5. Specialty and Group Type 

Nurse practitioners trained in a specialty typically earn more than those working in primary care, pediatrics or a general practice. This often relates back to the scope of services provided (procedures and specialized testing bring in more revenue to the practice) and reimbursement rates for such services. Working for a multi-specialy group vs. a single specialty group also influences nurse practitioner salaries. If you're a specialty NP working in a multi-specilaty group that consists of a number of very high earning specialties, you might earn more than you would typically expect as the group all shares from the profits of high collectors. In contrast, if you're a specialty NP working in a multi-specilaty group with a heavier emphasis on lower earning specialists or primary care providers, your paycheck might be less than expected as lower earning specialties don't collect as much for the group and revenues in multi-specialty groups are shared (as least to some extent).  

6. Regional Healthcare Landscape

If you're a regular MidlevelU reader, you're probably tired of hearing me talk about scope of practice laws, but they really do have an impact on your salary and employment opportunities. Nurse practitioners practicing in states that allow greater practice freedoms typically earn more than their more restricted counterparts. A greater scope of practices means you can bill for a larger number of services and that your facility spends less on supervision-related overhead. 

7. Employer's Competency/Success 

Some employers do a fantastic job of attracting patients while others suffer from ineffective marketing, a poor reputation, or other characteristics leading to low patient volumes. While you can control the quality of care you provide as a nurse practitioner, you may not be able to make up for mistakes made by your employer. If your clinic or hospital isn't busy, you're probably not going to bring home top dollar. 

8. Local Job Market 

The job market in your area is a major factor in driving up or down your NP salary. For example, Nashville, TN where I live and work is oversaturated with nurse practitioners given that it is a desirable place to live with a number of NP programs churning out graduates. So, NP salaries are lower. Nurse practitioners working in locations where the job market is more competitive, such as rural New Mexico, earn more, especially taking cost of living into account. 

9. Malpractice Trends 

There are a number of other seemingly small factors that can affect your pay as a NP. Malpractice insurance, to name one, can be a significant cost for your employer. If you practice in a specialty or region where malpractice insurance premiums are high, your employer may reduce salaries to outweigh the cost. 

Overall, you likely don't have much influence over these nine factors in your workplace. But, you can keep them in mind to help you negotiate a fair salary or when you look for new nurse practitioner employment to better your chances of receiving higher compensation, if that's your goal.