- Administrative Costs:
- Billing and Coding (4–7%): EM groups rely heavily on accurate coding due to complex ED visit levels. Outsourcing billing services costs 4–7% of collections (MGMA data, 2021). In-house billing (common in smaller groups) may reduce this to 3–5%, but staff salaries offset savings. Assume 5% of revenue.
- Practice Management (5–10%): Includes a practice manager (~$80K–$120K/year), billing staff, and HR functions (e.g., scheduling, payroll). For a 5-physician group generating $5M, 1–2 full-time staff cost ~$200K/year, or 4% of revenue. Additional costs for IT (EHR licenses, scheduling software) and accounting/legal fees add ~2–4%. Assume 7% total.
- Medical Director Stipend (2–4%): Many EM groups pay a physician to serve as medical director, handling hospital relations and quality assurance. Stipends range from $50K–$200K/year, depending on group size and hours. For a $5M group, assume $100K, or 2% of revenue.
- Eliminated Costs: No receptionists (ED clerks are hospital staff), no office rent, no utilities. This eliminates ~5–10% of overhead typical for outpatient practices (e.g., MGMA reports rent at 5–7% for primary care).
- Total Administrative: ~14–16% (5% billing + 7% management + 3% director stipend), down from the original 20–30% estimate, reflecting the leaner hospital-based model.
- Malpractice Insurance (5–10%):
- Unchanged from prior estimate. EM premiums range from $15K–$30K/year per physician (Medscape 2019, adjusted to ~$20K–$35K in 2025 for inflation). For a 5-physician group, $100K–$175K total, or 5–7% of $5M revenue in moderate-risk states (e.g., TX, CA). High-litigation states (e.g., NY, FL) may hit 8–10%. Hospital subsidies or group policies often lower costs. Assume 7%, consistent with your high-income context.
- Other Operational Expenses:
- Credentialing and Compliance (1–2%): Costs for physician licensing, hospital privileging, and compliance (e.g., HIPAA, CMS audits) are minimal but necessary. Assume $50K/year for a 5-physician group, or 1% of $5M revenue.
- Recruiting and Training (1–2%): EM groups face turnover (especially in high-burnout settings), incurring costs for job postings, locum tenens, or onboarding. Assume $50K/year, or 1%.
- Supplies and Miscellaneous (1–2%): Minimal, as the hospital provides most ED supplies (e.g., monitors, medications). Costs may include group-specific software or CME allowances. Assume 1%.
- Total Operational: ~3–5%, down from 10–15%, as hospital-based EM groups have fewer direct expenses.
That's from the AI. I know some of that will be wrong like they probably aren't paying for a full salary practice manager or HR personnel, etc.. and you are probably outsourcing the billing but is that super far off? I don't know anything about running a practice... I guess the EHR costs would be paid by the hospital along with the licenses, etc.. Probably aren't paying for locums docs as well. Maybe it's way off.
I love AI but it’s broken here. It’s not smart enough to parse out EM vs others.
I’ll help you with some real numbers. Billing and coding is $7-9/chart. I know some are cheaper and I know a handful above that range. I will say simply driving this number down may not be great as some of the “cheap” companies code crappily and it is a case of penny wise and pound foolish.
Practice management at 5-10% is rich. I would tighten it to 4-7% (after hospital portion for medical directors). I include medical director money in practice management. I did a deep dive with a large national RCM and I got data (blinded) from a bunch of their practices. 3-6% was the range. Much depends on the size of the group but that was the range for groups similar in size to mine.
Note for med mal they are assuming $5m in revenue for 5 docs.. insane.. but med mal is roughly 20k in most states. Im sure in some it is more.. but a good rough estimate is $5-$6 per patient.
For “Other” RCM companies cover the “costs” of credentialing.
Recruiting and training. - I would argue this falls under admin in small groups the president or medical director does this.. in larger groups you may have a doc who is doing HR or something similar.
Supplies - we dont have this cost.
In a lean group your med mal + admin + RCM should be 15% or less not 30%.
Now let’s assume a few things. Patient collections are 200/pt. Paid out in salary would be about 170. Thats a group with either strong contracts or a good payer mix. You can have one or the other to get to $200.. if you have both you are probably closer to 250+.
So again, 170/pt.
Docs see 2.2pph thats 374..
Let’s assume that an MLP sees 1.5pph.. Their income plus benefits is 110/hr. That is 255 / hour in revenue and 145/hr in extra to pay the docs.
Let’s assume there are 2 docs working at the same time so that adds $70/hr to each doc. voila you are at 444/hr.
This is a post AI example. I will assure you that my numbers are pretty real on the expense side.
