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
Published overhead figures by specialty: dental runs about 60 to 65 percent of collections (ZenOne, citing Overjet's 2025 national median of about 62 percent), physical therapy about 80 percent of net revenue at U.S. Physical Therapy (FY2025 10-K), and dermatology about 73 to 75 percent (FTI Consulting). MGMA's full cost survey by specialty sits behind its paid DataDive product. 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. Compute yours with the overhead ratio calculator.
From Sorso
Look at the software stack first when you audit overhead: overlapping tools still billing monthly from signups nobody revisited are the easiest cost to cut, and a proper monthly accounting review should catch them.
Sources
- MGMA Cost Survey (annual cost-of-operations benchmarks)
- APTA Physical Therapy Economic Data
- ADA Health Policy Institute — Dental Practice Economics
- MGMA Cost Survey (cited, not independently fetchable -- behind DataDive)
- ZenOne, Dental practice overhead benchmarks (citing Overjet's 2025 national median)
- U.S. Physical Therapy, Inc. FY2025 Form 10-K (operating costs 80.8% of net revenue)
- FTI Consulting, Dermatology: Looking Good (operating expenses 72.9% to 75.1% of net revenue)
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Founder of Sorso and a CFA charterholder. Before Sorso, Stan spent 19 years in corporate finance at institutions including UniCredit and Société Générale — managing a $450M loan portfolio and making senior partner at a major mezzanine lender by 29 — then built a fractional CFO firm exclusively for outpatient healthcare clinics.
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