For the record, the median number of physicians in orthopaedic groups that responded to the survey was five. While the overhead ratio is indeed a valuable benchmark, there are several problems with applying it in a vacuum. Together, these expenses generally account for up to 80 percent of total expenses.
Practices differ, however.
As to what additional expenditures constitute overhead, Practice A, for example, may be very conservative whereas Practice B might incorporate everything from club dues to part or all of a family automobile. It's also a good bet that, if physicians in Practice B hear from physicians in Practice A about their overhead, the administrator of Practice B will be under pressure to make changes. The definition of overhead favored by most practice management consultants is only those expenses that allow the physician to practice medicine or which directly enhance his or her productivity. Under this definition, club dues would not be included, nor would costs connected with physicians' pension and profit sharing and associated management fees. Furthermore, offices located within the same area may serve very diverse patient bases, whose service expectations may differ greatly.