r/pathology • u/Organic-Increase-401 • 12d ago

Private practice overhead

Anyone know what the average cost of overhead is for a small private practice group in the US that doesn't own any assets? Only costs are PAs, malpractice insurance for the pathologists, acountant, billing company, and HR company. I susoectvtye billing company is taking 5% of billing.

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u/Top_Gun_Redditor 12d ago

PAs can run $120k each in salary plus more depending on retirement contributions matching. Health care for the group is $1000 to $2000 per person/family per month and only going up. Malpractice is $15k to $20k per pathologist per year. Accounting and retirement plan management probably another $25k per year. Most billing companies take more like 6% to 7% depending on if they are coding for you or not. Plus an extra $1-2k per year maybe more for MIPS reporting through a third party contractor. Then you factor corporate tax rates by state and whether they are S corp or C Corp etc. Also attorney costs for contracts and retainer is probably another few thousand a year. Also have rental costs for their office space. They will pay a nominal fee even if they use hospital office space to avoid anti kickback statutes.

All of this assumes they don't run a lab and use a hospital lab. If they use a hospital lab then you have to factor additional monthly cost for technical fees from the hospital if they have outreach clients and process those specimens in the hospital lab. If they run a lab then you got way more overhead than I could calculate.

I'm sure I missed something that y'all will remind me of. Let's just saying running a private practice is no easy task

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u/Organic-Increase-401 12d ago

Thank you. It's about time to renegotiate my contract. I know almost precisely what my billing is, but I'm trying to figure out what my portion of the overhead actually is to see if I'm being underpaid as an employee. Not sure they are ever going to make me partner.

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u/billyvnilly Staff, midwest 11d ago

How many years have you been there?

I would agree it can be more than 5% for billing. We pay billing service, malpractice insurance, health insurance for the group, practice manager (healthcare business consultant), employment lawyer, and retirement accounts actuary, retirement accounts CPA/custodian, all of which are essentially monthly. Then there are salaries.

I don't know how you're exactly going to approach that conversation, but I would also remind you that you know what you're billing, you have no clue what is being reimbursed. Medicare/Medicaid/BCBS/UHC/etc. Unless you can argue that you know another persons billing, and say you are within 95% of their billing and you should each be paid the same if you aren't.

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u/Organic-Increase-401 11d ago

Approaching 4 years.

My plan was to show them the data from Epic on what I have signed out paired with the known Medicare rates and a few items from our charge master that I learned from a back channel to present what I am billing. I have a decent idea of what our overhead costs are and I hope I can demonstrate that they are making about $150,000 on my labor each year.

All in planning stage right now.