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[cgcrz8]

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Guys, wanted to get your opinion. Isn't overhead generally 50% of collections? Is that reasonable? I work in a private practice office (no ASC) getting paid $250,000 but am bringing in $800-900,000. They say I need to bring in 1.2 million to be profitable and cover my salary. What am I missing?? Am I getting screwed over?

BTW, I read the threads daily and want to thank all you experienced guys for advice and wisdom.

 

[SommeRiver]

They using KY or crunchy peanut butter?

 

[Laryngospasm]

50% overhead is a a general rule. How is your contract set up? This is one of the problems with going pp right out of training. You don’t know how to have the contract set up so they don’t screw you. And you will also likely find it impossible to get the REAL numbers.. especially if a shady business manager is involved.

 

[gdub25]

There’s not enough information here to tell if you’re getting screwed. Anyone that comes on this board and says that you are is just showing how little they actually know about running a practice. Overhead is generally considered a percentage of collections however it takes a set amount of overhead as a baseline before you can even run a practice. Baseline overhead may be $30,000 a month but if you’re only seeing five patients a day your overhead percentage will be really high. Alternatively, if you’re paying that baseline $30,000 a month and seeing 50 patients a day Overhead is generally considered a percentage of collections however it takes a set amount of overhead as a baseline before you can even run a practice. Baseline overhead may be $30,000 a month but if you’re only seeing five patients a day your overhead percentage will be really high. Alternatively, if you’re paying that baseline $30,000 a month and seeing 50 patients a day you’d have an incredibly low overhead percentage. One possibility is that you are in a practice that is expecting you to be a lot busier than you actually are and currently you’re just not reaching the potential that they planned on. Either you get busier and faster which in turn will allow you to collect more or they have to start cutting staff and costs.

 

[willabeast]

Guys, wanted to get your opinion. Isn't overhead generally 50% of collections? Is that reasonable? I work in a private practice office (no ASC) getting paid $250,000 but am bringing in $800-900,000. They say I need to bring in 1.2 million to be profitable and cover my salary. What am I missing?? Am I getting screwed over?

BTW, I read the threads daily and want to thank all you experienced guys for advice and wisdom.

What is your average % collection rate? The higher your collection rate the lower the overhead. I used to do Medicaid cases that my billing secretary told me were compensated so poorly it was not worth the time to try and collect the money from the State.

 

[lobelsteve]

Salary 250k. Benefits, added expenses max another 150k.
400k bringing in 900k You make your bosses a half million per year.

 

[gdub25]

Shaking my head, unbelievable.

This guy is not making his boss anywhere near $500k. Young guys come to this board to learn and get valuable information so that they can go out and make educated decisions about how to get a job. I learned a lot of what I know from reading discussions on this form. I think we all have a responsibility to not throw out guesses or assumptions on stuff that we really aren’t sure about.

Any private practice guys want to throw out how much their overhead is on a per doctor amount? Bet there won’t be many that are less than $250-300k a year. I think I might start a new thread just for this.

 

[PMR2008]

Private practice for 8 years now. Ranges from 40-60%. Depends on the procedures, location, staff who have multiple skills, volume etc. Really lean practices can reach the 35% mark but unlikely to be lower. Hospital practices can easily be more than 60%.

 

[Agast]

They should show you what your expenses are. Any practice that cannot generate a balance sheet showing the breakdown of costs is cooking the books or lying to you, they have to file taxes based on all that stuff. Our CFO gives us a monthly balance sheet and I can see my overhead is around 50-60%.

 

[TIVAndy]

Salary 250k. Benefits, added expenses max another 150k.
400k bringing in 900k You make your bosses a half million per year.

a lot of PP do not have good benefits (although medical coverage alone is expensive though)

OP, i think 50% overhead is reasonable although that can vary. cutting overhead is better time spent than seeing more patients for a practice in general.

 

[Ronin1]

The answer is of course it depends. If you look at the op as a new hire over 4 years. Let’s say his share of the overhead including salary costs,rent, employees,etc is 50k a month. That’s 2.4 million over 4 years. With building a patient base over first two years he may well be in the red until years 3-4.

 

[lobelsteve]

The answer is of course it depends. If you look at the op as a new hire over 4 years. Let’s say his share of the overhead including salary costs,rent, employees,etc is 50k a month. That’s 2.4 million over 4 years. With building a patient base over first two years he may well be in the red until years 3-4.

They pay 250. He brings in 850.

600k in overhead after salary? Robbing him blind.

 

[gdub25]

Ronin1 is the only one here who freaking has a clue!!!!!

Rent = roughly $25/sqft/year

MAs = $15/hr + benefits, payroll tax, Medicare tax, etc... basically 1.5-1.75x salary for a leach one per year.

Front desk, referral person, medical records, accounting, billing, prior auth, schedulers....all 1.5-1.75 their salary to get yearly costs.

Then throw in medical supplies, malpractice insurance, property liability insurance, office supplies, EMR, building maintenance, legal consulting fees, phones, internet, computer software leases, printer leases, ...it adds up.

Many of the overhead costs are going to be stable like rent, staff, utilities, EMR. There is going to be a set baseline overhead number to overcome so talking about overhead as a percentage of collections is t a very good way to look at it for this guy.

For example, in terms of real dollars and not percentage of collections...A new doctor costs me roughly $900k a year. That’s just what it costs to pay them, rent for the space they use, staff for them, etc. Our practice has gone through this 5 times now, the numbers don’t change. Could be done cheaper but this would be at the detriment of having enough staff to see any kind of volume or moving injections out of the clinic to a facility. SO, the OP would be barely breaking even in our practice, NOT MAKING ME A FORTUNE.

 

[gdub25]

They pay 250. He brings in 850.

600k in overhead after salary? Robbing him blind.

Steve, I respect you and agree with the majority of your posts. I think with this matter however you’re just guessing here and it’s detrimental to others who will be looking at this now and later on. It creates confusion. If you were running a private practice and had different real world numbers then you’d be giving perspective rather than creating white noise.

I don’t get involved too much with the evidence based medicine discussions, you clearly know more than I do and are the authority there. We can’t all know everything.

 

[Agast]

Steve, I respect you and agree with the majority of your posts. I think with this matter however you’re just guessing here and it’s detrimental to others who will be looking at this now and later on. It creates confusion. If you were running a private practice and had different real world numbers then you’d be giving perspective rather than creating white noise.

I don’t get involved too much with the evidence based medicine discussions, you clearly know more than I do and are the authority there. We can’t all know everything.

I think some background information is needed. We can surmise he's been working there for over a year. Some of the overhead costs should be shared costs, unless they built out a whole new office location that needs dedicated staffing. The information provided indicates that collecting $800-900k is not even covering the current overhead if he's not getting any bonuses. If that's true, the owner or practice manager is not a very good business person. I collect less than that and earn more.

 

[Ducttape]

I thought Steve did run a private practice previously....

 

[Pain Applicant1]

I'm in private practice and have been since graduating fellowship 10 years ago. I built it from the ground up and have at one time or another done all the duties I expect from my staff, from billing to cleaning toilets. I'm doing pretty well financially and I believe my overhead hovers around 20%. The way I see, doctors start way at the top so never learn to do the lower-skilled jobs. Without this experience, they either get hosed such as through poor billing practices (common) or have to hire more people than necessary to accomplish tasks. With this experience, systems can be set up so these lower-skilled duties become more efficiently managed. It's the exact same thing in construction. If you don't understand the skills needed to build out a property you're going to get taken advantage of and waste money on managing things that you don't have experience managing.

 

[Laryngospasm]

Keep in mind these numbers can be manipulated in the practice owners favor. I know this because I have been through it. Very hard to get real numbers that are not biased.. The real numbers I.e what percent of those costs are relative to YOU and how that is assigned such as rent, advertising etc

 

[lobelsteve]

I thought Steve did run a private practice previously....

Just one of the docs getting screwed like the guy above. Twice.

If you have the costs of a doc whose salary is 250k at 900k: Get with folks here. You are not good at business. Fixed and variable expenses. Got it.

 

[au bon pain]

I'm in private practice and have been since graduating fellowship 10 years ago. I built it from the ground up and have at one time or another done all the duties I expect from my staff, from billing to cleaning toilets. I'm doing pretty well financially and I believe my overhead hovers around 20%. The way I see, doctors start way at the top so never learn to do the lower-skilled jobs. Without this experience, they either get hosed such as through poor billing practices (common) or have to hire more people than necessary to accomplish tasks. With this experience, systems can be set up so these lower-skilled duties become more efficiently managed. It's the exact same thing in construction. If you don't understand the skills needed to build out a property you're going to get taken advantage of and waste money on managing things that you don't have experience managing.

Can you give some examples of how you keep overhead to 20%? That’s the lowest % I’ve ever heard of.

 

[PMR2008]

I'm in private practice and have been since graduating fellowship 10 years ago. I built it from the ground up and have at one time or another done all the duties I expect from my staff, from billing to cleaning toilets. I'm doing pretty well financially and I believe my overhead hovers around 20%. The way I see, doctors start way at the top so never learn to do the lower-skilled jobs. Without this experience, they either get hosed such as through poor billing practices (common) or have to hire more people than necessary to accomplish tasks. With this experience, systems can be set up so these lower-skilled duties become more efficiently managed. It's the exact same thing in construction. If you don't understand the skills needed to build out a property you're going to get taken advantage of and waste money on managing things that you don't have experience managing.

20% is insanely low. Are you including billing into this?

 

[drusso]

Guys, wanted to get your opinion. Isn't overhead generally 50% of collections? Is that reasonable? I work in a private practice office (no ASC) getting paid $250,000 but am bringing in $800-900,000. They say I need to bring in 1.2 million to be profitable and cover my salary. What am I missing?? Am I getting screwed over?

BTW, I read the threads daily and want to thank all you experienced guys for advice and wisdom.

First of all, Mazel Tov! Those are great collection numbers! You should be proud of those collection numbers.

Second, you should ask for more transparency into the operational side of the business in order to learn where you can trim the fat. Every dollar of overhead you cut goes to your bottom line. Like my grandmother used to say, "It's not what you earn, it's what you keep!" In private practice there is no SOS and no RVU's dropping from the sky. Your hustle and hard work stand on its own merit!

 

[Pain Applicant1]

I think the better approach is to go through your balance sheet, identify your major liabilities, and work to reduce them. I imagine that employees and rent are the biggest expense. I have one employee and own the building I'm in. My medical practice pays rent to my commercial real estate company but even with the rent calculation included, my overhead is probably still around 20%. Billing is another expense so I do a hybrid through Athena. I'm pretty fluent in billing and used to do it entirely on my own until I thoroughly learned it. I switched to Athena because it's a hybrid system where we share responsibilities and they get to keep only a low percentage of what I collect. I've cut down other expenses in other ways too. For example, instead of paying someone to shampoo the carpets once a month for a few hundred dollars, I just bought a carpet shampooer and pay someone by the hour. I pay her more than she would get paid elsewhere and I pay her less than I would pay the company to do it. Win-win. Expenses like malpractice and supplies I don't really have much control of. I'm happy to tell you about any other expenses if you have specific questions.

 

[SommeRiver]

Ronin1 is the only one here who freaking has a clue!!!!!

Rent = roughly $25/sqft/year

MAs = $15/hr + benefits, payroll tax, Medicare tax, etc... basically 1.5-1.75x salary for a leach one per year.

Front desk, referral person, medical records, accounting, billing, prior auth, schedulers....all 1.5-1.75 their salary to get yearly costs.

Then throw in medical supplies, malpractice insurance, property liability insurance, office supplies, EMR, building maintenance, legal consulting fees, phones, internet, computer software leases, printer leases, ...it adds up.

Many of the overhead costs are going to be stable like rent, staff, utilities, EMR. There is going to be a set baseline overhead number to overcome so talking about overhead as a percentage of collections is t a very good way to look at it for this guy.

For example, in terms of real dollars and not percentage of collections...A new doctor costs me roughly $900k a year. That’s just what it costs to pay them, rent for the space they use, staff for them, etc. Our practice has gone through this 5 times now, the numbers don’t change. Could be done cheaper but this would be at the detriment of having enough staff to see any kind of volume or moving injections out of the clinic to a facility. SO, the OP would be barely breaking even in our practice, NOT MAKING ME A FORTUNE.

I know nothing about business.

...but don't you hire tons of support staff and pay scribes and run procedures simultaneous to your clinic?

I do not see one physician costing you 900k. That is absurd. Maybe you have too much real estate or too many staff members.

I don’t know, but 900k being your cost of one doctor seems way inappropriate to me.

 

[Pain Applicant1]

To use examples from a quote above, this is how I keep my overhead down

Rent - I own the building
MA Front desk, referral person, medical records, prior auth, schedulers - one person does all of this and helps with my fluoro. If a pt calls they know to leave a message
accounting split between my accountant and me
billing split between athena and me
medical supplies, malpractice insurance, property liability insurance I have no control of
office supplies Dollar Tree
EMR Practice Fusion, used to be free and is now nominal
building maintenance yours truly
legal consulting fees, yours truly
phones, internet no control of
computer software leases use open source
printer leases I would never lease, it's a rip-off, much better to run the printer into the ground and buy a new one

 

[drusso]

To use examples from a quote above, this is how I keep my overhead down

Rent - I own the building
MA Front desk, referral person, medical records, prior auth, schedulers - one person does all of this and helps with my fluoro. If a pt calls they know to leave a message
accounting split between my accountant and me
billing split between athena and me
medical supplies, malpractice insurance, property liability insurance I have no control of
office supplies Dollar Tree
EMR Practice Fusion, used to be free and is now nominal
building maintenance yours truly
legal consulting fees, yours truly
phones, internet no control of
computer software leases use open source
printer leases I would never lease, it's a rip-off, much better to run the printer into the ground and buy a new one

Awesome. I admire you.

 

[paindoctor2014]

Mine is around 43%. Fluctuates

 

[Vandalia]

Guys, wanted to get your opinion. Isn't overhead generally 50% of collections? Is that reasonable? I work in a private practice office (no ASC) getting paid $250,000 but am bringing in $800-900,000. They say I need to bring in 1.2 million to be profitable and cover my salary. What am I missing?? Am I getting screwed over?

BTW, I read the threads daily and want to thank all you experienced guys for advice and wisdom.

Let me ask the obvious question because of the clear disconnect and the limited history of posts from this individual here: When you say "bringing in" do you really mean collections or actual adjusted billing?

The other issue is where you are at in your career. If you are in year 3, and the practice lost $350K paying you that $250K plus benefits for two years, I can understand how you are in effect repaying what amount to a loan. $500K would be mafia-level loan sharking, but that may explain some of the difference.

However, if you truly mean actual "money in hand" collections, and there is nothing going on with respect to the repayment of a salary guarantee, or they gave you a $300K loan up-front to buy a house, or something crazy like that, then the number are very suspicious.

As an aside, it may be a regional thing, but pain management practices around here seem to have a lot of facility overhead. The guy I had see my wife sees people in five locations, with three of them stand-alone buildings that are only used for 1/2 day a week. At most. Not even leased out to anyone else. I shudder to think what his overhead is. For some reason, that seems to be par for the course around here, and seems to be unique for pain medicine. Again, I don't know if it is purely a regional issue.

 

[SommeRiver]

My practice has over 10 locations, with a few being very slow and unnecessary (IMO). I'm employed with salary, bonuses, and ASC shares. The partners in my group are paying overheads of over 70%, which is much higher than mine...

 

[Vandalia]

To use examples from a quote above, this is how I keep my overhead down

Rent - I own the building
MA Front desk, referral person, medical records, prior auth, schedulers - one person does all of this and helps with my fluoro. If a pt calls they know to leave a message
accounting split between my accountant and me
billing split between athena and me
medical supplies, malpractice insurance, property liability insurance I have no control of
office supplies Dollar Tree
EMR Practice Fusion, used to be free and is now nominal
building maintenance yours truly
legal consulting fees, yours truly
phones, internet no control of
computer software leases use open source
printer leases I would never lease, it's a rip-off, much better to run the printer into the ground and buy a new one

It sort of depends on how you calculate things.

What is your effective hourly salary?

If you multiply that by the time you spend doing building maintenance, billing, accounting, etc., I would wager that your effective overhead is actually pretty high.

It may cost me $500 to have my taxes done. But that is still far cheaper than what it effectively would cost me if you multiply my hourly rate times the number of hours it would take me. I am expensive, and doing taxes is work, not recreation.

 

[gdub25]

I know nothing about business.

...but don't you hire tons of support staff and pay scribes and run procedures simultaneous to your clinic?

I do not see one physician costing you 900k. That is absurd. Maybe you have too much real estate or too many staff members.

I don’t know, but 900k being your cost of one doctor seems way inappropriate to me.

Lots of different ways to run a practice/business. Staff is by far the most expensive piece of the overhead. It’s all about the balance of optimizing how much we need to spend to get the most efficient return. Correct, we have a lot of staff and scribes to do notes, etc, but if that affords me the doctor more time to practice medicine which in turn collects money then it’s worth it. $900k is appropriate to spend if it is covering staff, space, and supplies for the physician to collect 2 million. That would leave them $1mil in take home.

Pain Applicant1 has his overhead way low, which also a good model, but he almost assuredly doesn’t have the staff or space to see the amount of patients I do, and thus probably collects less overall. I spend more to collect more. His focus is on saving more by spending less. Both can work. We don’t know what model the OP is in. In my clinic, he’s still costing money, would have to cut staff and lean up or get busier.

 

[clubdeac]

I'm a simpleton but appears as though he's getting the shaft. If he collects 900k and is paid $250k, his overhead is 650k. Overhead = 72%. Idk but that seems pretty ridiculous to me. No?

 

[Laryngospasm]

Most likely paying for some of the overhead of the “partners”

 

[PMR2008]

To use examples from a quote above, this is how I keep my overhead down

Rent - I own the building
MA Front desk, referral person, medical records, prior auth, schedulers - one person does all of this and helps with my fluoro. If a pt calls they know to leave a message
accounting split between my accountant and me
billing split between athena and me
medical supplies, malpractice insurance, property liability insurance I have no control of
office supplies Dollar Tree
EMR Practice Fusion, used to be free and is now nominal
building maintenance yours truly
legal consulting fees, yours truly
phones, internet no control of
computer software leases use open source
printer leases I would never lease, it's a rip-off, much better to run the printer into the ground and buy a new one

Awesome
Similar setup so very achievable. I just calculated my overhead and I am between 25-30%. I also do a fair amount of cash procedures.
I should think about owning the building but not sure if I want to manage all the issues my current landlord has to deal with.

Rent - I pay rent but sublease the other rooms to a few other independent providers (Chiro, functional med and personal trainer/yoga instructor). End up paying $1000/month+$300 utilities.
MA front desk does all that you said but I have a nurse help as well. Might have to ditch the nurse long term but she has an wide network and just her referrals keep getting me new patients. Also I pay her $25/hour so not horrible
Billing -4.5%
EMR - Amazing charts - $2500/year
Everything else is very similar. I almost always have students and they do what a scribe would do and also assist with calls etc. In return I teach them the business of medicine.

When the setup that you and I have it is really difficult to have a very high volume clinic. But I have no intention of every practicing that way.

 

[callmeanesthesia]

Total expenses for me plus my PA (including my base salary of $200k - any profit above that is distributed separately) is about $90,000 a month. I’m just over 2 years in practice, bought in a few months ago. We are a large Ortho group with full admin support, on site x-day and MRI, building is rented from a separate real estate venture I have the option to buy in to. I have 2 MAs (one for me, one for PA) and a scribe.
So with all of that, my yearly expense is less than 1.2M. How much staffing and support do you have? High rent/high minimum wage area?

 

[Agast]

Total expenses for me plus my PA (including my base salary of $200k - any profit above that is distributed separately) is about $90,000 a month.

Is that a base salary for full time employment? What percentile MGMA are you in after bonuses, that seems like a very low-balled number. I know someone doing 4 days a week for an ortho group whose base is ~$220.

 

[Ducttape]

to the OP

please remember that what your employer is "paying" you is not just your salary. is he paying for malpractice, health insurance or matching retirement?

 

[lobelsteve]

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This is not rocket science. He is getting screwed. And some people here should be employed and not run a business, or they are also getting screwed by ignorance. Plus the extra 40 hours per week to run a business.

 

[callmeanesthesia]

Is that a base salary for full time employment? What percentile MGMA are you in after bonuses, that seems like a very low-balled number. I know someone doing 4 days a week for an ortho group whose base is ~$220.

Base was 300k. Dropped to 200 cause COVID. Also buy-in is a payout over time rather than a large upfront check. Any excess profit at the end of the month I can draw out as a bonus or apply to the buy-in debt to pay that down faster. It’s a very fair group structure - no senior/junior partners.

 

[Pain Applicant1]

It sort of depends on how you calculate things.

What is your effective hourly salary?

If you multiply that by the time you spend doing building maintenance, billing, accounting, etc., I would wager that your effective overhead is actually pretty high.

It may cost me $500 to have my taxes done. But that is still far cheaper than what it effectively would cost me if you multiply my hourly rate times the number of hours it would take me. I am expensive, and doing taxes is work, not recreation.

You would be correct but you're omitting one important detail, I enjoy building maintenance such as landscaping and pushing snow, so I don't really see it as work but more of a hobby. Accounting is not that enjoyable to me but really my part is limited to clicking a button to calculate the payroll costs. Sometimes during lunch, I change out of my scrubs and mow the lawn to my building. This way, I get some outdoor sun and activity during the day. This extracurricular stuff doesn't take that much time either way. If you have an accountant costing you only $500, please give me his or her name, lol.

 

[Pain Applicant1]

Pain Applicant1 has his overhead way low, which also a good model, but he almost assuredly doesn’t have the staff or space to see the amount of patients I do, and thus probably collects less overall. I spend more to collect more. His focus is on saving more by spending less. Both can work. We don’t know what model the OP is in. In my clinic, he’s still costing money, would have to cut staff and lean up or get busier.

I think you are probably right about this. I will say that I do average over 30 patients per day these days (I decreased my appt times over the past few weeks) so I think I run a pretty barebones practice. That's my whole lifestyle though, I like to live relatively simply, minimally, independently, and frugally although I always try (sometimes fail) to be generous with others. I don't think most people, at least in the US, would want to live the way I do. I guess I got lucky that my wife is similar lol.

 

[Pain Applicant1]

Awesome. I admire you.

Thank you, my friend 🙂 I appreciate that.

 

[Pain Applicant1]

When the setup that you and I have it is really difficult to have a very high volume clinic. But I have no intention of every practicing that way.

I'm not sure what would be considered very high volume but I 100% agree with you! I can honestly say that I do not necessarily want or need any more patients or any more money. I'll leave it for someone else to have. I feel that I have reached everything I need from a financial perspective and time is far more valuable to me at this point.

 

[Vandalia]

You would be correct but you're omitting one important detail, I enjoy building maintenance such as landscaping and pushing snow, so I don't really see it as work but more of a hobby. Accounting is not that enjoyable to me but really my part is limited to clicking a button to calculate the payroll costs. Sometimes during lunch, I change out of my scrubs and mow the lawn to my building. This way, I get some outdoor sun and activity during the day. This extracurricular stuff doesn't take that much time either way. If you have an accountant costing you only $500, please give me his or her name, lol.

That is different.

As for the $500, that is for a relatively simple tax return.

I also enjoy mowing. If you enjoy repairs, then that is more on the side of recreation as opposed to work. There are also some points in one's career, early on, when minimizing expenditures is important.

However, there is also a point where it is important to realize that your time is extremely valuable, and other people can do most work at less overall cost.

 

[Yo GabbaPentin]

Guys, wanted to get your opinion. Isn't overhead generally 50% of collections? Is that reasonable? I work in a private practice office (no ASC) getting paid $250,000 but am bringing in $800-900,000. They say I need to bring in 1.2 million to be profitable and cover my salary. What am I missing?? Am I getting screwed over?

BTW, I read the threads daily and want to thank all you experienced guys for advice and wisdom.

I’m going to respond to only one number. 250k. Why on earth would you settle for that? There are so many more jobs out there that pay sooo much more even to start out. Know your value. Don’t settle for CRNA pay!

This is coming from someone who made that same salary for 2 years before having a likely similar WTF moment.