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Okay this is Medical Economics 101. Today we’re going to talk about overhead. It is big-box medicine versus an ideal clinic. This is my true life story.
My Overhead—Before and After
When I worked at a big-box medical clinic my overhead was 74%. Then I opened my own ideal clinic and my overhead was 7%. What does that mean for you? Well, here comes a patient who is bringing you $100 for a medical visit. And guess how much you get to keep if your overhead is 74%? Seventy-four dollars goes out the window and you get to keep (before tax) we’re talking $26. Here’s your income for seeing one patient at the big-box clinic: $26. How does that sound? But if you see the same patient at your ideal clinic, you’ll end up with a nice income of $93. What do you prefer—$93 or $26 income? So that’s one way of looking at overhead.
How Many Days I Worked Yearly To Pay Overhead
Another way of looking at overhead is kind of how it destroys your personal life. And the way I was able to figure that out is I multiplied my overhead by the number of days I worked each year in my contract, which I believe was 193 days back at the big-box clinic. Which meant that I worked 143 days for free just to pay my overhead every year. Now I can pay my yearly overhead in 11 half days. Awesome! Right? So much better for your personal lifestyle. They promise you everything at these big-box clinics. You’re going to have time for climbing mountains and enjoying the scenery. Come on! You’re going to be exhausted because you’re not going to have any time for yourself because you’re working for free and you’re only getting $26 per patient—or less.
How Many Patient I Saw Yearly To Pay Overhead
So then I wanted to figure out how many patients I had to see per year just to pay my overhead. So I took my days needed to work for overhead which is 11 half days at my ideal clinic and I multiplied that by the average number of patients that I saw per half day (8 patients) which is 88. So with 88 patients I’m able to pay my yearly overhead and it’s pretty outrageous but back at the big-box clinic I was seeing like 28-30 patients per day at 143 days per year working just to pay overhead equals 4004 patients that you will see for free every year just to pay your overhead.
I was being totally screwed! What a rip-off!
This is Medical Economics 101. This is exactly what most doctors don’t know and they get in serious trouble working for really crappy organizations and wondering why they’re so miserable.
The deal is (let me put this another way) for the $93 over here that you’re earning basically from seeing this one patient in order to earn that same amount of money at the big-box clinic you’d need to see four patients! So it gets kind of tiring at the end of the day after working four times as hard to make just the same money at the big-box clinic as you could make in your own ideal practice.
So I’m going to leave this up to you. And you decide what would work better for you. You want to take another job, another crappy job at a big-box clinic or do you want to live happily ever after in your own office?
Medical Economics 101. This is Dr. Pamela Wible.
** YOU MUST KNOW YOUR OVERHEAD **
1) Percent Overhead (% OH = Overhead/Total Revenue)
My Big-Box Clinic %OH: 74%
My Ideal Clinic %OH: 7%
2) DNW (Days Needed To Work) For Overhead (DNW = % OH x Days Worked Yearly)
My Big-Box Clinic DNW: 143 days
My Ideal Clinic DNW: 11 half days
3) NNT (Numbers Needed To Treat) For Overhead (NNT = DNW x avg pts per day)
My Big-Box Clinic NNT: 4004
My Ideal Clinic NNT: 88
If patient pays (or insurance reimburses) $100 per visit:
My Big-Box Clinic Income: $26
My Ideal Clinic Income: $93
What are your overhead numbers?
I earn more than triple per patient in my ideal clinic. You can too.
I’d have to see 3.5 big-box patients to make the income from one patient in my own clinic. Now I’m earning more than triple the income per big-box patient just seeing ONE patient in my own clinic. Can YOU replicate this? YES! I know docs who pay 85% overhead at big-box clinics so they’re getting paid just $15 per patient! Even if they only reduce their overhead to 55% in their ideal clinic, they’d still triple their income per patient.
Want to triple your income per patient? Contact Dr. Wible for your free guide.
Pamela Wible, M.D., is the founder of the Ideal Medical Care Movement and is a “liberator of physicians from treadmill medicine.” She hosts physician retreats to help docs launch their dream clinics.
There are a number of things that this does not explain or account for that I’m curious about:
1. Do you take Medic-Aid or Medi-Care?
2. These are certainly impressive numbers, but what constitutes your overhead costs? I’m assuming that you’re including malpractice, office setup and rental/mortgage costs. But what about administrative costs? How do you handle billing?
Thanks for your advocacy in this area! I’m a 4th year medical student and so am very interested in the plus and minus side of future career choices!
Answers are all in a document I am happy to send you with my financial numbers and overhead breakdown. Briefly:
1. I take all-comers and never have turned anyone away for lack of money since opening the community clinic 12 years ago.
That being said, please read this: https://www.idealmedicalcare.org/blog/i-love-old-people-but-i-will-not-accept-medicare/
2. Overhead costs are rent (was $280 and now $450 per month), malpractice insurance (ranges from $1000 – $4000 per year – see more details here: https://www.idealmedicalcare.org/blog/how-i-got-86-off-my-malpractice-insurance-and-you-can-too/ ) and supplies which are like $500 per year. No staff. Here’s how I opened the clinic for < $3000: https://www.idealmedicalcare.org/blog/open-your-clinic-for-3000-or-less-i-did-heres-how/
3.When you get rid of the administrators you have no admin costs. I have everything streamlined with technology. I do billing with a free online clearinghouse.
Hope this helps! Happy to send you a 10-page document with more details. Reach out via contact page.
I share your info with as many young physicians as I Can. I too had to leave the hamster wheel of office practice after 20+ years. I love your approach to office practice. I believe older doctors did not mind their office because the overhead did not keep them in bondage. It certainly seems to hold too many in a crappy place now and burnout is huge. Thanks for sharing your ideas!
“Burnout” is a misdiagnosis. This is abuse: https://www.idealmedicalcare.org/blog/youre-not-burned-out-youve-been-abused/
And nowhere do you discuss any benefits to patients or even how to keep patients with such large charges. Clearly doctors have no interest in patients as human beings and only interest in their bottom line.
A sad article.
Actually 40% savings when cutting out the middle man and decreasing overhead. This article is geared for physicians and other health professionals and not meant for patients. The benefits to patients are immense. Not only cost savings but longer visits (30-90 minutes) without wait times and same day appointments. I’ve never turned anyone away for lack of money since 2005. It’s a win-win situation for all (except maybe administrators in large health systems).