Part 1 & 2 — Understanding Overhead, Profit, and Hiring ROI
Most private practice owners are working hard… but still not keeping as much as they should.
You’re not alone.
Many doctors hire, expand, and invest in marketing — only to discover that “being busy” doesn’t necessarily mean being profitable.
This two-part podcast series, The Math of a Profitable Practice, walks you through the numbers that truly drive success.
Part 1: The Break-Even Myth — “Busy” Doesn’t Mean Profitable
If you don’t know how many patients you need to see today just to cover your expenses, you’re guessing your way through business ownership.
Let’s change that.
🔹 What “Overhead” Really Means
Think of overhead as everything you must pay to open your doors — even if not a single patient walks in tomorrow.
Overhead includes:
- Rent and utilities
- Non-provider staff (front desk, billers, MAs not dedicated to a provider)
- Software, EMR, and tech subscriptions
- Insurance, legal, and admin fees
These are fixed costs. You pay them every month no matter what.
Overhead does NOT include:
- Physician salaries or bonuses
- Medical supplies and lab costs used per patient
- Credit card or clearinghouse fees
Those are variable costs — they fluctuate with how many patients you see and physicians you hire.
🔹 Overhead in Real Life: Riverside Medical Example
Let’s use the case study we had in the podcast. Riverside Medical is a 5-provider internal medicine and urgent care practice that collects about $4 million a year.
Their total overhead is $2.4 million — about 60% of revenue, which is very typical for medical practices.
So each physician’s share of overhead is roughly $480,000 a year.
That’s the cost to keep their part of the operation running — before paying themselves a dollar.
🔹 Step 1: Find Your Break-Even
To figure out your break-even, you first need to know how much profit you make per patient after paying for variable costs like labs, vaccines, and supplies.
Let’s say the average collected amount per visit is $150, and variable costs (supplies, tests, etc.) are $10 per visit.
That leaves $140 per patient available to cover:
- Overhead
- Physician compensation
- Owner profit
🧮 Step 2: How Many Patients to Cover Overhead
Each physician owes about $480,000 in overhead annually.
$480,000 ÷ $140 per visit = 3,428 visits/year
Divide that by 240 clinic days = ≈14 patients/day
✅ So each physician must see about 14 patients per day just to cover overhead.
🧮 Step 3: How Many to Cover Compensation
Now add in the physician’s total compensation — salary, benefits, and malpractice — let’s say $250,000.
$250,000 ÷ $140 per visit = 1,786 visits/year, or ≈7 patients/day.
✅ So it takes 7 more patients/day to pay their salary.
🧮 Step 4: The True Break-Even
Combine the two:
$480,000 + $250,000 = $730,000 total burden.
$730,000 ÷ $140 per visit = 5,214 visits/year, or ≈22 patients/day.
✅ 14 patients/day covers overhead
✅ 7 covers salary
✅ 22/day covers both — that’s true break-even.
Everything after 22 patients/day is profit.
Part 2: Can Your Physicians Actually Pay for Themselves?
This is the question that separates busy practices from profitable ones.
If a physician consistently sees fewer than 22 patients/day in this model — they’re costing the business money.
If they average 25+? They’re generating profit.
That’s the math behind hiring confidently — not emotionally.
🔹 Three Smart Ways to Pay Providers
Once you know your true numbers, compensation becomes a strategy — not a guess.
1. Straight Salary
Simple, predictable, but risky for the owner if productivity is low.
2. Base + Productivity Bonus
The most common model in private practice.
- The base covers break-even (in this case, $250K).
- The bonus is paid only after profit is created.
3. Pure Revenue Share
Physician keeps a percentage of collections after covering overhead — perfect for entrepreneurial doctors and zero-risk for the owner.
Turning Data Into Strategy
Once you know your true break-even and per-patient profit, your growth strategy becomes math — not hope.
You can calculate:
- Exactly how many new patients you need
- What each marketing dollar should produce
- When it’s time to hire — and when it’s not
That’s how the best private practices scale sustainably.
Key Takeaways
✅ Overhead = cost to open the doors — rent, staff, tech.
✅ Variable costs = per-patient supplies and labs.
✅ Physician compensation = comes after those costs are covered.
✅ Each provider should know their true break-even (in this case, ~22 patients/day).
✅ Data replaces guessing — and turns owners into confident CEOs.
🎧 Listen & Learn
🎙️ Episode 125 — How Many Patients Do You Need Just to Keep the Lights On
🎙️ Episode 126 — Can Your Physicians Actually Pay for Themselves?
📥 Free Resource:
Eligibility & Billing Verification Checklist
Because profitable practices don’t guess — they calculate.
