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Frequently asked questions

The business side of medicine
  1. I am paying approximately 30% overhead on my practice. Is this normal?
  2. How much revenue should I be generating in my practice?
  3. What do I need to consider when hiring staff?
  4. Should I require new employees to sign an employment contract before they join my practice team?
  5. What is the optimal physician-to-employee ratio in a typical practice?
  6. Do I need a physicians’ or associates’ agreement for my group practice?

  1. I am paying approximately 30% overhead on my practice. Is this normal?

    Most family practices, as well as the vast majority of specialty practices, have overhead rates between 25% and 40%. However, rates vary significantly depending on the type and location of the practice, and can go from less than 10% to 70%. Typically, staffing and occupancy costs are the two largest expenses and normally account for the overhead variances among practices.


  2. How much revenue should I be generating in my practice?

    Most provincial health ministries, departments and medical associations have useful data on fees paid to all groups of physicians and surgeons that can help you answer this question.


  3. What do I need to consider when hiring staff?

    Our PMC module 14 on staffing and human resources issues will help you develop the skills to manage your office staff. It will also provide you with a greater appreciation of the challenges you face as an employer.


  4. Should I require new employees to sign an employment contract before they join my practice team?

    Yes. It is extremely important to outline the responsibilities of each party in a formal employment contract. We also recommend that this contract is drafted or reviewed by your lawyer. Some of the common clauses we recommend include:

    • start date
    • hours of work
    • rate of pay
    • fringe benefits
    • probationary period
    • confidentiality policy
    • required notice by either party, the employee or you, to terminate the employment contract. (Note: If you wish you terminate employment, the period cannot be less than the period prescribed by employment or labour standards legislation in your province or territory.)

  5. What is the optimal physician-to-employee ratio in a typical practice?

    There are numerous factors that must be considered, such as:

    • type of practice (an anesthesiologist may have very little or no need for support staff, whereas a large radiology practice with a significant non-hospital practice may have up to five support staff for each radiologist)
    • services outsourced (typing, billing, IT support)
    • services or tasks delegated by the physician may require an RN or LPN

  6. Do I need a physicians’ or associates’ agreement for my group practice?

    Yes. Entering into a business relationship of any type should always be accompanied by a formal, written contract, which has been vetted with legal counsel. The contract should include cost-sharing arrangements and "what if" scenarios.