I’m Dr. Hassan, a Board-Certified Physiatrist and Independent Practice Owner. I help physiatrists start and grow their own profitable practices so they can achieve financial independence and live without limits.
When considering any job or potential practice, one of the most significant factors that will impact your revenue is overhead. By definition, overhead is the cost of doing business. It comes in various forms, including but certainly not limited to:
- electronic medical record (EMR)
- hiring your staff and providing compensation packages (e.g., insurance and retirement accounts)
- scheduling software
- equipment for procedural based practices (e.g., ultrasound and a c-arm for radiographic studies)
- billing services
- the actual building if you’re brick and mortar (e.g., electricity, gas, water, rent, sewage, landscaping, repairs and maintenance, insurance, etc.)
- accounting fees
- legal fees
- supplies (e.g., gloves, blood pressure cuffs, etc.)
- phone bills and internet service
- travel expenditures
Often, the overhead costs are not explicitly expressed.
You have to cover the overhead for the particular practice that you’re joining, the employee position you’re taking, or your practice in general. However, when costs are hidden, you don’t know exactly how much overhead is being inadvertently taken out of your profit.
These hidden costs will eat into your salary, effectively decreasing your compensation. You want to compare the overhead costs for each opportunity that’s presented and how those costs are going to impact your compensation. Ideally, you want to pick the one with the least amount of overhead. That way, you keep as much revenue and profits in your pocket as opposed to paying that out.
The Medical Group Management Association (MGMA) is a great resource that may have information regarding overhead for a practice or just general estimated costs of overhead. I advise overhead costs under 15% and really scrutinizing the benefits of anything over 30%. Sometimes it’s worth it (i.e., benefits, bonuses, exclusive educational training), but most times, it’s not.
Even in academic practices or employee positions, there’s a huge overhead cost that may not necessarily be brought to your attention upfront. You’re still responsible for it, though; it still impacts your compensation. By researching other practices that are similar (or practices in general) and tracking the overhead costs for each opportunity, you can compare and see which one is the best in terms of the lowest overhead. If offered a contract, take a deep dive into it and have it reviewed by a healthcare attorney.
In the event of an unexpected tragedy incurring a loss of income, you want as little debt as possible. Coronavirus’s essential lesson was that physicians should be careful not to settle for a false sense of security. Anything can happen. As the saying goes, “Hope for the best and prepare for the worst.” Minimizing overhead costs is a great way to position yourself to financially survive sudden changes proactively.
Are you a rehab doctor who’s ready to start your journey to financial freedom? Sign up for a FREE 15-minute Strategy Session today: https://calendly.com/hassan-akinbiyi/15min
I’m Dr. Hassan, a Board-Certified Physiatrist and Independent Practice Owner. I help physiatrists start and grow their own profitable practices so they can achieve financial independence and live without limits. Follow me on social media @DrHassanRehab.