Overhead ratio
The percentage of revenue consumed by operating expenses, everything except owner or provider compensation. It tells you how much of every dollar you collect goes to keeping the lights on versus paying yourself.
Why this matters for your clinic
Overhead is the silent killer of clinic profitability. Most owners focus on growing revenue, but if your overhead grows just as fast, you are running harder to stay in the same place. A $5M practice with 85% overhead leaves $750K for provider compensation. At 75% overhead, that is $1.25M. Same revenue, half a million dollar difference.
The dangerous thing about overhead is that it creeps. A new software subscription here, an extra admin hire there, rent increases that never get renegotiated. No single line item looks alarming, but together they quietly eat your margins. Monthly overhead tracking by category is the only way to catch it.
How to calculate
Total operating expenses / Total revenue = Overhead ratio
What good looks like
MGMA Cost Survey data, reported annually, places total cost of operations (excluding provider compensation) at roughly 55–65% of revenue for dental group practices, 75–85% for outpatient physical therapy, and 70–80% for primary care and most medical specialties. Your specific target depends on payer mix, real estate cost, and how you compensate providers. The number that matters is your trend line, not the industry average.
From Sorso
In the new engagements we onboard, the fastest overhead win is almost always software stack rationalization — most clinics have two or three overlapping tools billing monthly that no one has audited since the original signup.
Founder of Sorso. 18 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
Want to see how your practice measures up?
Take the 4-minute financial assessment. It is free, and it will show you where your practice is leaking money.