Overhead Analysis in a Surgical Practice: A Brief Communication

Abstract

Evaluating overhead is an essential part of any business, including that of the surgeon. By examining each component of overhead, the surgeon will have a better grasp of the profitability of his or her practice. The overhead discussed in this article includes health insurance, overtime, supply costs, rent, advertising and marketing, telephone costs, and malpractice insurance. While the importance of evaluating and controlling overhead in a business is well understood, few know that overhead increases do not always imply increased expenses. National standards have been provided by the Medical Group Management Association. One method of evaluating overhead is to calculate the amount spent in terms of percent of net revenue. Net revenue includes income from patients, from interest, and from insurers less refunds. Another way for surgeons to evaluate their practice is to calculate income and expenses for two years, then calculate the variance between the two years and the percentage of variance to see where they stand.