Introduction	It's Not Insurance Any More
	Introduction for Doctors	PPO or HMO - Both are BAD GUYS
	Doctors Are the GOOD GUYS	"Disincentives" to Good Care
	Doctors' Income	Business is Business
	The Effect on Doctors	What Can Be Done?
		Send E-MAIL to AustinTxMD	Compare Insurance	The Latest Bad News

			REALITY CHECK What Does It Cost to Run a Medical Office? Everyone understands that it costs money to operate any business, but most people (even new young doctors just starting their practices) have no idea what an enormous amount of money a Primary Care doctor must spend on overhead every year just to maintain his/her office and staff before taking home a dime of personal income. Here are some accurate overhead figures that determine a doctor's true take-home pay.
		. IF YOU THINK $206,600 IS TOO MUCH ANNUAL OVERHEAD, WHAT DO YOU SUGGEST I CUT OUT? Occasionally I get emails from doctors who tell me that the overhead figures I've been using in my analyses are too high. I suspect that the doctors who write these notes have never been in private practice (they're probably on salary somewhere); or else they've never sat down with their accountant and taken a hard look at everything that they're actually having to shell out in order to be able to maintain their office and practice. I have therefore commented on each item to point out that there is very little that might reasonably be cut out while continuing to maintain a busy practice load. My conclusion is that any small cuts I might be able to make in my overhead would be pretty insignificant and would reduce the quality of care I am able to deliver. .
	MEDICAL OFFICE OVERHEAD EXPENSE These are the actual values from my office for 1996 ...and we run a very efficient office. (obviously overhead costs have increased every year since 1996, but I don't have time to recalculate every page of this web site to reflect those increases.) COMMENTS: (What could I cut?) RENT 23,500 I could move to a smaller, cheaper office; but then I wouldn't have enough space to see all my patients efficiently. STAFF EXPENSE Staff Salaries (not doctor) 89,100 Perhaps I could cut staff salary expense; but that inevitably means less accessibility and service to our patients and more administrative duties the doctor will have to take on himself. Perhaps I could stop giving raises to my long-time, experienced employees or else fire them and employ new people with less experience/training whom we can hire more cheaply. Payroll Taxes (Employer's Contribution) 12,100 Staff Meetings / Lunches 600 I could stop paying for lunch meetings with my staff and make everyone pay for their own lunch. Classified Ads (hiring employees) 500 How could I find a new employee without advertising? ----------------------------- 102,300 INSURANCE Malpractice Insurance 4,100 A doctor would be a fool to "go bare" - besides, every managed care company requires malpractice insurance.. Disability Insurance 6,400 Without disability and overhead insurance, a doctor in solo practice would have no income whatsoever if he became disabled. Current premium cost is now actually much higher (click). Office Overhead Insurance 700 Worker's Comp. Insurance 700 Required by law Property Insurance 500 Necessary Umbrella Insurance 500 Necessary Note that I'm not even including the cost of employee health insurance because the cost is so high. ----------------------------- 12,900 OPERATING EXPENSE Payments on Loan to Purchase Equipment and/or Depreciation 12,000 Aging equipment must be replaced. Medical Supplies 14,700 Can't be cut much with a busy practice. Drugs 4,900 Ditto Medical Waste Pickup/Disposal 400 Required by law OSHA/CLIA Compliance Expense 1,100 Required by law Office Supplies 4,800 Can't be cut much with a busy practice. Computer Supplies 3,300 Can't be cut much with a busy practice. Computer Billing Service 2,400 Can't be cut much with a busy practice. Phone 5,000 Can't be cut much with a busy practice. We need all the phone equipment and lines we have to communicate with and about our patients. This figure also includes pager service. Postage 4,400 Can't be cut much with a busy practice. Subscriptions & Professional Dues 1,500 Membership in professional organizations is necessary/mandatory Medical Meetings (registration, travel, hotel, etc. 3,000 Required to maintain professional credentials. Auto Expense (payment, gas, repairs) 9,600 I guess I could drive a really old economy car. Property Tax 800 Required by law ----------------------------- 67,900 TOTAL OVERHEAD COSTS: $206,600 Over $17,200/month . Source: http://home.earthlink.net/~austintxmd