Establishing an understanding of the operating costs of a medical practice can be difficult

An absolute requirement of useful business plans for medical practices is a detailed understanding of the expenses involved in operating that medical practice and how the costs:

  1. Impact on the profitability of the business and;
  2. Change over time.

The major expenses in medical practice include real estate, staff, training, utilities, software, accreditation and insurances. All of these costs increase overtime and this inevitable change should be factored into the business plan, so that profitability does not gradually dwindle.

One example where the true cost of business is often underestimated is the price of medical secretaries. Calculating the price of a secretary on the basis of $25 per hour ($50,000 per year) is misleading. When recruitment fees, superannuation (9.5%), leave cover, supervision and training, insurance and entitlements are considered this cost is more like $75,000 per year.

To help doctors understand the changing landscape of costs and impacts on profitability.

Avant Practice Solutions will shortly publish our own Price of Practice Index. This measure will form part of the resources we use to help doctors with their pricing strategy, business planning and project management.

The Price of Practice Index is based on data from medical commercial real estate prices, market data on medical administration salaries, and the cost of medical consumables, medical practice software, insurance, utilities and medical registration. The Index tracks the base costs for operating medical practices in Australia. The Index is produced monthly and analysis will be provided on a quarterly basis.

Employment CostsAnnual Costs
Wages ($25 per hour)$50,000+
Personal Leave$1,923+
Annual Leave (20 days p.a.)$5,320+
Public Holidays (11 days p.a.)$2,115+
Long-service Leave$900+
Staff Training and Supervision$4,000++
Professional Development$$$$$
Screen and Interviewing$2,000+
Payroll Tax$2,400+

* Estimates reflecting typical costs to illustrate only.

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This article is not comprehensive and does not constitute legal or medical advice. You should seek legal or other professional advice before relying on its content, and practise proper clinical decision making with regard to the individual circumstances. Persons implementing any recommendations contained in this article must exercise their own independent skill or judgement or seek appropriate professional advice relevant to their own particular practice. Compliance with any recommendations will not in any way guarantee discharge of the duty of care owed to patients and others coming into contact with the health professional or practice. Avant is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published. © Avant Mutual Group Limited 2023.

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