Measuring Staff Costs

July 1, 2005

We've seen benchmark data that says payroll should consume about 30 percent of a pediatric practice's revenue. When these percentages are tabulated, do they include benefits? Does that include vacation time or just insurance-type benefits?

Question: We've seen benchmark data that says payroll should consume about 30 percent of a pediatric practice's revenue. When these percentages are tabulated, do they include benefits? Does that include vacation time or just insurance-type benefits?

Answer: It depends on which benchmarks you are using - it's important to compare apples to apples.

The MGMA's Cost Survey found that for pediatric practices, median total support staff costs equal 27.08 percent of total medical revenue.

This includes benefits - defined as FICA, payroll taxes, employee health and life insurance, and retirement. It does not include paid vacation.

Don't include in the staff count revenue-producing staff such as nonphysician providers who see patients themselves and bill for it.