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How Do I Determine The Practice Operating Overhead Rate?


Shows how much it costs to run your practice in relation to revenues generated.

Why is This KPI Important?

As Pediatricians manage their practices, they need to track the amount of money it costs to provide their services. Due to seasonality, $30,000 in one month may not be enough money to cover all the expenses of another. Therefore, this KPI provides guidance by comparing the expenses for a period of time along with the expenses incurred. Most practices usually run this KPI without any provider compensation included in the Total Operating Cost. 

The goal of this metric is to figure out how much it costs to provide care for a child BEFORE provider compensation.  As such, be mindful to remove all salary/bonus/benefit costs for providers when entering the "Total Practice Operating Cost" in the calculator.

PMI Recommended Frequency to Run This KPI:



Total Operating Costs / Total Revenue Generated

Show the Math:

$400,000 / $690,000 = 57.97%

How Should I Track It?

This KPI can be tracked using an Excel spreadsheet by Practice and/or Department if you categorize expenses properly.

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