HRM 5300 Module 5 Market Pricing Medical Assistant Pay Example

Losing Medical Assistants by the Dollar: Market Pricing a Physician Group's Pay

Student Name

Master of Science in Management, Thomas Edison State University

HRM-5300: Human Resources Management

Mentor Name

Month Day, Year

Losing Medical Assistants by the Dollar: Market Pricing a Physician Group's Pay

The Case

Lakeview Physician Partners, a composite multispecialty group with 14 clinics in suburban Michigan, employs 210 medical assistants who room patients, take vital signs, update records and manage referrals. Annual turnover among them has reached 38 percent, and an average of 18 positions sit vacant, which forces physicians to see fewer patients each day. Exit interviews most often cite pay, with many leaving for hospital-based and outpatient center jobs. The group pays an average of $19.50 an hour, about $40,560 a year. The case asks whether pay is the problem, what pay level and structure the group should adopt, and whether the change is worth its cost.

Question 1: Is Pay the Problem?

Noe et al. (2015) describe pay level decisions as balancing labor market competition, which sets a floor, against product market competition, which sets a ceiling on what an employer can afford. Federal data show the labor market clearly. The median medical assistant earned $45,690 a year in May 2025, and medians were $45,520 in physicians' offices, $46,910 in hospitals and $48,560 in outpatient care centers; the lowest 10 percent earned under $36,050 (U.S. Bureau of Labor Statistics, 2026). The bureau projects 13 percent job growth for the occupation over the decade to 2035, well above the average for all jobs, so competition for these workers will not ease.

At $40,560, Lakeview pays about 11 percent below the median for physicians' offices and about 16 percent below outpatient centers, its main competitors for staff. Research supports taking employees at their word about pay. Rynes et al. (2004) showed that people tend to understate the importance of pay in surveys while their behavior, including job choices, shows pay to be a powerful motivator, especially for better performers. When exit interviews name pay, the real effect is probably larger.

Question 2: What Pay Level and Structure?

The group should adopt a policy of paying at the market median for physicians' offices, with room above it for skill and experience. A pay structure built on that policy would look like this.

The structure links pay to things the group values: retention through time-based steps, quality through certification and capability through competency checklists. Noe et al. (2015) note that pay structures should be internally consistent as well as externally competitive, so the steps should apply the same rules in every clinic.

Question 3: Is It Worth the Cost?

Moving the average rate from $19.50 to $22.00 costs $2.50 an hour for 210 employees working 2,080 hours, about $1.09 million a year, or about $1.18 million including payroll taxes. The benefits come from two sources. Fewer departures reduce recruiting and training costs, estimated at about $6,000 per departure; cutting turnover from 38 to 25 percent would mean about 27 fewer departures a year, saving roughly $165,000. Fewer vacancies restore patient visits: if vacancies fall from 18 to 6, and each vacancy reduces net revenue by about $90,000 a year through lost visits, the group gains about $1.08 million. Together the benefits of about $1.25 million exceed the cost.

Efficiency wage research supports the logic that paying above the minimum needed can improve outcomes. Cappelli and Chauvin (1991), comparing plants of one company, found that where the company's wages were higher relative to local alternatives, disciplinary dismissals were fewer, consistent with workers valuing jobs that pay more than they could earn elsewhere.

Recommendations and Trade-offs

Lakeview should implement the new structure when the new budget year begins, move every assistant to at least the new minimum and to a step reflecting tenure, introduce the certification differential and pay for certification exams, and track turnover, vacancies and patient visits quarterly. The trade-off is a fixed cost increase that is certain, while the benefits depend on turnover and vacancies falling as projected. If results lag after a year, the group should examine scheduling, workload and supervision, which also drive turnover, before adding more pay.

Communicating the Change

How the new structure is announced matters. Each medical assistant should receive a personal statement showing the new range, their step and the date of their next step increase, and managers should explain the competency checklist and certification support in team meetings. Clear communication helps employees see the structure as fair and gives them a reason to stay through the next step. Managers should also be ready to answer questions about how existing employees were placed on the new steps.

Conclusion

Lakeview pays its medical assistants well below the market, and its turnover and vacancies show the consequence. Matching the physicians' office median with a structured range and certification differential costs about $1.18 million a year, but the restored patient visits and lower turnover are likely to cover that cost.

References

Cappelli, P., & Chauvin, K. (1991). An interplant test of the efficiency wage hypothesis. Quarterly Journal of Economics, 106(3), 769-787. https://doi.org/10.2307/2937926

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2015). Human resource management: Gaining a competitive advantage (9th ed.). McGraw-Hill Education.

Rynes, S. L., Gerhart, B., & Minette, K. A. (2004). The importance of pay in employee motivation: Discrepancies between what people say and what they do. Human Resource Management, 43(4), 381-394. https://doi.org/10.1002/hrm.20031

U.S. Bureau of Labor Statistics. (2026). Medical assistants. In Occupational outlook handbook. U.S. Department of Labor.