Practice Profit and Expense Ideal Targets

How Much Should Health Practitioners Charge For A Consultation?

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How Much Does It Cost To See A Podiatrist / Physiotherapist / Dentist / Chiropractor / Osteopath …?

This is a question that a health practice receptionist has to field on the phone every day.

REMEMBER: The price of your consultations should always be based on the VALUE you provide for your clients.

Do NOT Calculate Your Consultation Fee According To What Anyone Else Charges

That said, you need to break down the cost to your practice for a treatment so you can make an informed decision about setting setting a price for your consultations.

How To Calculate The Cost Of Delivering Your Consultation

It’s important that you understand the real cost associated with delivering a consultation so you can be confident that there is something left over after paying for costs.

We work with health practitioners across many allied health disciplines, and we often see that the practice as a whole is operating at less than 5% net profit before paying tax.

You need to take into consideration the following when checking your pricing:

  • Cost of wages, tax and superannuation / pension contribution for you or the team member who conducts the consult … (Cost of delivery)
    • Best Practice Target: 40%
  • How much should be put aside to pay your support team.
    • Best Practice Target: 10%
  • The rest of the costs associated with running the business (for example: rent, accounting fees, telephone, electricity, internet, insurance, computers … etc)
    • Best Practice Target: 30%

Practice Profit and Expense Ideal Targets

The Profit Reality for Many Practices

If you calculate the percentage of turnover attributed to costs from the chart above, you’ll see that it adds up to 80% … and that would mean a 20% profit (before paying tax)

However, we often see:

  • Clinical wages heading towards 50%
  • Admin support costs heading towards 15%
  • Business running costs heading towards 35%

… and often it’s the practice principal who either funds this out of their own pocket, or ends up treating patients for an effective hourly rate that is less than minimum wage.

Set Your Price Correctly

If your overall practice profit is currently less than 20% of your overall turnover, (and particularly if it is less than 10%), you should ask yourself

  • Does my consultation price accurately reflect the VALUE I am providing to clients?
    (If not – it’s time to put up your prices)
  • Am I paying too much for the multitude of costs associated with running the practice?
    (If so – do you need it, and can you get a better deal?)

All the best
Blake