What overhead percentage is normal for a medical practice?

Most private medical practices spend somewhere around 60% of their revenue on overhead. That figure comes from the Medical Group Management Association (MGMA) and has been the standard reference point for years. Where your practice should land depends heavily on your specialty.

Primary care and family medicine usually run close to that 60% mark. One older MGMA report put the family medicine median at about 59.7%. These practices see a high volume of patients at relatively low reimbursement per visit, so it takes a lot of staff and space to bring in each dollar. Procedural and surgical specialties often run lower, roughly 40% to 50%. A single procedure brings in far more revenue than an office visit, and that spreads rent, equipment, and staff costs across a bigger base.

Overhead means every operating cost of the practice except provider compensation. Staff wages and benefits are usually the biggest piece, followed by rent, medical supplies, malpractice insurance, billing and software, and equipment. Calculate the percentage against collections, meaning money actually received, not gross charges. Using charges will make your overhead look much better than it really is.

A few things commonly throw the number off. Owners who take some pay as draws need to make sure none of it lands in operating expenses. Practices that rent their building from a separate entity owned by the doctor may be paying above or below market rent, which shifts cost between the two sets of books. Nurse practitioner and physician assistant pay can be treated as provider cost or staff cost depending on the benchmark, so check how your comparison source handles it and match that.

Consistency matters more than anything else here. Comparing yourself to a benchmark only works if your expenses are classified the same way every month. If medical supplies sometimes land in office expense, or a billing service fee gets coded to professional fees one month and software the next, your overhead percentage will move around for reasons that have nothing to do with how the practice is running. Revenue has to be right too. For practices that bill insurance, we check that what the billing system reports as collected actually reached the bank, because a gap there distorts every ratio built on revenue. Reliable monthly bookkeeping is what makes the number worth looking at.

For current figures by specialty and practice size, MGMA publishes benchmarks through its DataDive product. Many specialty societies also share survey data with their members.

If your overhead is well above the typical range for your specialty, start with staffing cost per provider and with collections. Support staff that grew faster than patient volume, or denied claims that never get reworked, will push the percentage up quickly. Baker’s Bookkeeping & Tax Services provides medical practice bookkeeping and tax services nationwide, and a clean, consistently coded expense report is usually the first step toward knowing where your practice actually stands.