Clarifying Staff Costs

July 1, 2006

In the March 2006 issue of Physicians Practice, in the "Dodging Bullets" article, consultant Elizabeth Woodcock made the statement that staff payroll should be between 18 percent and 22 percent of total revenue. Does staff payroll include the office manager's salary, or are we talking about support staff only? Second, does "revenue" refer to gross or net?

Question: In the March 2006 issue of Physicians Practice, in the "Dodging Bullets" article, consultant Elizabeth Woodcock made the statement that staff payroll should be between 18 percent and 22 percent of total revenue. Does staff payroll include the office manager's salary, or are we talking about support staff only? Second, does "revenue" refer to gross or net?

Answer: That range does include the office manager's salary, and the reference is to net revenue - what you actually brought in the door, not what you billed out.

Of course, the exact percentage would vary by specialty. The medical Group Management Association publishes survey data that breaks this down and gives details for your specialty (www.mgma.com).