Medical Practice Overhead Benchmarks: How Does Your Practice Compare?

Every practice owner knows their overhead is high. Few know whether it is high for their specialty, high for their staffing model, or simply unmanaged. Benchmarks settle the argument.

Key Takeaways

1. Primary care overhead has clustered around 60 percent of revenue for decades, while procedural specialties often run 40 to 50 percent.
2. Staffing is the largest overhead component by far, but the long-standing MGMA data show high-performing practices employ more staff per physician, not fewer.
3. Overhead percentage has two levers, and growing revenue usually moves the ratio faster than cutting costs.
4. Benchmark your ratio annually and review the underlying line items monthly, because overhead drifts quietly and compounds.

Ask a physician owner what their medical practice overhead percentage is and you will usually get one of two answers: a number they have not verified in a year, or a sigh. Overhead is the most discussed and least managed figure in private practice. It determines what you take home, what you can pay staff, and whether growth plans pencil out. Yet most owners cannot say whether their ratio is normal for their specialty or thirty points out of line.

The benchmarks exist. They have been stable for a long time. And measuring your practice against them is a one-afternoon exercise that changes the quality of every financial conversation that follows.

What Is a Normal Medical Practice Overhead Percentage?

Start with the long-standing reference point. MGMA’s Cost Survey for Single-Specialty Practices, as reported in AAFP’s Family Practice Management, put median operating expenses in family medicine at 59.74 percent of total revenue. That figure comes from a 2009 report, but it has held up as the durable rule of thumb: overhead in a typical primary care practice runs around 60 percent of revenue.

Current guidance points the same direction. GetPracticeHelp, a practice management advisory firm, benchmarks typical practices today at 60 to 70 percent of revenue on overhead, with primary care generally in the 55 to 65 percent range and procedural and surgical specialties often achieving 40 to 50 percent because higher revenue per procedure spreads fixed costs further. The specialty gap matters: a dermatology group at 58 percent overhead and a family medicine group at 58 percent overhead are in very different positions. Compare against your own specialty or the comparison is noise.

Direction of travel matters too. MGMA reported that practice operating costs continued rising into 2025, keeping cost control at the top of practice leaders’ concerns. A ratio that was healthy three years ago may be quietly eroding under wage inflation, supply costs, and flat reimbursement.

Where the Money Actually Goes

The AAFP analysis of the MGMA cost data breaks the 60 percent into its working parts, and the hierarchy has not changed:

• Support staff salaries: roughly 26 percent of revenue. Staff payroll excluding benefits generally runs 22 to 26 percent of revenue in family medicine. This is the largest single component and the one owners most often mismanage in both directions.
• Benefits: another 5 to 6 percent. Staff health insurance plus retirement plans combined typically run 3 to 6 percent of revenue.
• Building and occupancy: roughly 7 percent. Mostly fixed, which is why underused square footage is so corrosive.
• Everything else — supplies, malpractice, IT, billing costs, marketing — divides the remainder in smaller slices.

Here is the counterintuitive finding buried in that same data: MGMA figures cited by AAFP show practices employ on average 5.15 support staff and 0.28 nonphysician providers per full-time physician, and high-performing practices employ more staff than average, not fewer. Better-supported physicians see more patients and generate more revenue, which lowers the overhead percentage even as staffing cost rises in dollars. Cutting your way to a healthy ratio by running lean at the front desk is usually how practices end up with high overhead and burned-out physicians at the same time.

Three Traps That Skew the Comparison

Before you conclude your practice is over or under benchmark, check for the three errors that corrupt most self-assessments. First, owner compensation. Physician pay, family members on payroll at above-market rates, the practice-owned vehicle, and the retirement contributions that function as profit distribution all belong outside operating expenses. Leave them in and a healthy practice looks bloated; strip them inconsistently and a bloated practice looks healthy.

Second, the accounting basis. Benchmarks are built on collections, so compute your ratio against cash collections, not charges. A practice measuring expenses against gross charges will flatter itself badly, because charges include every contractual adjustment you will never collect.

Third, the single-year snapshot. One year of data cannot distinguish a trend from an event. A buildout, a payer recoupment, a maternity leave, or an EHR migration can distort a single year by several points in either direction. Run the ratio across three years before you diagnose anything, and annotate the anomalies so next year’s review does not rediscover them. The practices that get real value from benchmarking treat it as a longitudinal record, not an annual verdict.

The Denominator Problem

Overhead percentage is a fraction: operating expenses over revenue. Practices fixate on the numerator because expenses feel controllable and revenue feels like fate. In our experience the opposite is usually true. A practice at 68 percent overhead rarely got there through extravagant spending. It got there through a soft denominator: unfilled schedule slots, under-coded visits, aging receivables, denials nobody works, and payer contracts nobody has renegotiated. Fix revenue integrity and the ratio improves without a single layoff.

That is why an overhead review should always run both directions. On the expense side: staffing model against benchmarks, occupancy against utilization, vendor contracts against market. On the revenue side: charge capture, collections performance, payer mix, and schedule density. The ratio is a symptom. The diagnosis lives underneath it.

From the Field

A four-physician family medicine group in the Southeast came to Guidestone convinced they had a spending problem: overhead was running 69 percent of revenue and partner draws had fallen two years straight. The line-item review told a different story. Staffing and occupancy were near benchmark, but collections were leaking and two payer contracts had not been touched in six years. Guidestone rebuilt the revenue cycle workflow, renegotiated the two contracts, and tightened charge capture. Eighteen months later, overhead stood at 61 percent, almost entirely from revenue recovery rather than cuts, and partner compensation recovered with it.

How to Run the Comparison in Your Own Practice

This is a half-day exercise with your year-end P&L, done properly once and then maintained:

• Normalize the statement first. Pull physician compensation, owner perks, and one-time items out of operating expenses. Overhead benchmarks measure the cost of running the practice, not the cost of paying its owners.
• Compute total operating expenses as a percentage of collections, then compute each major category: staffing, benefits, occupancy, supplies, billing, malpractice.
• Compare category by category against your specialty’s benchmarks, not just the headline ratio. A normal total can hide one badly broken line.
• Flag anything more than three points off benchmark and investigate before acting. High staffing cost with high production may be your engine, not your problem.

Knowing Your Number Is the Job

An overhead ratio reviewed once a year at tax time is trivia. Reviewed monthly against budget, it becomes a management instrument, and the practices that treat it that way are the ones whose ratios hold while costs rise around them. That discipline is the actual product of financial oversight, whether it comes from a strong administrator, a sharp accountant, or a fractional CFO who has run this playbook across dozens of practices. If nobody in your practice can state your overhead percentage, its trend, and the two line items driving that trend, the benchmark comparison is not your problem. The absence of anyone accountable for it is.

Sources

1. AAFP Family Practice Management, “The Cost of Running a Practice” (MGMA Cost Survey data) — https://www.aafp.org/pubs/fpm/issues/2010/0300/p38.html
2. GetPracticeHelp, Medical Practice Overhead Costs guide — https://www.getpracticehelp.com/blog/medical-practice-overhead-costs/
3. MGMA Stat, “Medical Practice Operating Costs Are Still Rising in 2025” — https://www.mgma.com/mgma-stat/medical-practice-operating-costs-are-still-rising-in-2025-heres-how-to-control-them