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5 Ongoing Operating Expenses of a Medical Office in 2023

What are the ongoing operating expenses of a medical office? How do you reduce your expenses in a medical office business? Here is everything you need to know. 

At some point in their careers, most medical providers face the option of starting their own practice.  Private practice has long been an attractive option for many physicians. It generally allows for higher earning potential, autonomy in staffing and managing the business, and control over how patients are seen and treated.

Private practice physicians can also decide which insurance carriers to work with, which computer systems to use, and the location of the office.

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Running a private practice, however, doesn’t come cheap. It takes hard work, dedication, and unfortunately – a lot of expenses. Like with any other business, it is necessary to be aware of all the costs you will be incurring so you can plan accordingly.

It is also not new that a growing number of physicians are forgoing private practice opportunities for salaried positions. Many doctors, especially those just starting their career, prefer the stability of an employed arrangement — consistent pay checks, conservative hours, and an established patient base.

Have it in mind there are so many operational expenses to consider when running a private medical practice. You have to spend money to make money, but in order to maximize your profitability; you need to keep the medical office operating expenses under control before they eat your practice alive.

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What are the Ongoing Operating Expenses of a Medical Office?

  1. Specialist and Staff Salaries

Medical offices hire healthcare practitioners with expertise in treating particular types of illnesses. Doctors, nurses, and other healthcare staff all have varying salary requirements, making salaries and wages a major budgeting concern. Note that a state licensed medical office manager will command a salary of between $35,000 and $75,000 or more.

If you do not want to handle advertising efforts, a marketing director will be required. Also, expect to pay such a professional between $40,000 and $70,000 per year. Nursing staff will likely demand a salary in the range of $30,000 to $50,000.

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Administrative staff will cost between $10 and $15 per hour. Kitchen/food prep staff will cost between $10 and $12 per hour.

  1. Utilities

Have it in mind that the cost of utilities depend on the size of the medical office. In general, utilities cost a couple of hundred dollars per month. Medical supplies and bedding must be replaced as time progresses. Plan to spend at least $500-$1,000 per month for these supplies and adjust your budget accordingly as you get a better gauge of your clientele’s needs and demands.

  1. Insurance

Just as with licenses and permits, a medical office is expected to maintain insurance in order to operate safely and lawfully. Business Insurance protects the financial wellbeing of the medical office in the event of a loss. There are several types of insurance policies created for businesses with different risks.

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Expect to allot about 9 percent of sales to liability insurance, property taxes, and other legal bills. (Operators of multiple facilities have an edge here as they can spread their insurance costs over a larger pool of patients.)

  1. Medications and Treatments

Have it in mind that medications are among the most costly items to provide patients in a medical office. Patients will come with conditions that require treatments that must be administered on a regular basis. Other treatments, such as regular therapy and wound care, also require consideration when preparing a budget.

Insurance carriers cover some of these expenses, but not everything patients need for specialty care is covered under federal or personal health plans.

  1. Meals and Entertainment

Depending on your scope of services, overnight patients in medical offices may require nutritious meals and varying forms of entertainment to maintain a positive mind. Note that for many specialty care patients, restricted diets and nutritional supplements are imperative to preserve their health.

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Meals are an expense that must be budgeted for carefully, and headcount is one of the variables used to approximate recurring expenses.

Entertainment in the form of games, movies, and special events also is factored into budgets. Expect to spend several thousand dollars per month on sustenance for your patients, at least 15 percent of your medical office income (Excessive turnover drives those percentages higher.)