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NOW UPDATED FOR 2005! The most recent benchmarking data for Medical Specialists is now available, both in print and in downloadable PDF format, with your purchase of the Medical Specialists EBC Business Benchmarking Guide. (NOTE: 2005 updates not yet available in online HTML subscription version of this guide - please call EBC Sales Centre on 1 300 300 586 for further info.)
Balancing the need for proper servicing of patients against the commercial issues involved in practice management has always been a fine line in the medical profession. But it is clear that the usual business principles of productivity improvement and cost containment are as important here as anywhere else.
This can be achieved by mixing the number and type of personnel in a practice, and allocating roles according to the abilities and qualifications of each person. That way, the doctors' time is maximised to be able to deliver quality medical services. Just like other sectors, the amount of time that the principals can work will also influence the overall profits from the practice.
Survey Results
These are the results of a survey of medical specialists. These results should not be considered to be representative of all medical specialists in Australia. However, they will allow practice owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of practice performance and comparing them with benchmark performance levels currently being achieved by the sample of practices in this survey.
Most of the medical specialists in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Victoria, Tasmania or the Northern Territory in our sample.
Practices from metropolitan areas (CBD, suburbs and major regional cities) represented around 71% of the entire group. The rest were based in large towns (population over 20,000).
Around 83% of practices rented their premises and approximately 70% of those that rented were located in street-front premises.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 4th highest and 4th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 75% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income | $464,914 | $264,784 | $623,347 | | All Insurance | 3.52% | 1.74% | 5.83% | | Wages & Salaries (staff only, not
owners) | 14.07% | 7.64% | 22.59% | | Rent of Premises# | 3.56% | 3.56% | 6.32% | | Vehicle Operating Costs | 3.17% | 0.62% | 5.31% | | Other Depreciation, Lease and Hire Purchase | 3.42% | 0.64% | 6.16% | | Net Profit (bps)* | 60.04% | 44.99% | 76.04% | | Average Consultation Length (minutes) | 31 | 20 | 38 | | Average No. of Consultations per Doctor per
Week | 69 | 40 | 82 | | Opening Hours per Day | 7.9 | 7.0 | 9.0 |
# calculation
excludes those firms which own their own premises *(bps) before
principals' salaries and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your practice falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some practices reported some larger results for such items as:
- Accounting & Legal Fees of up 3.07%;
- Drugs, Supplies, Consumables, and Lab Fees of up to 4.60%;
- Interest, Bank Charges etc of up to 5.77%;
- Print/Post/Stationery of up to 3.53%;
- Professional Development Costs of up to 4.70%;
- Staff On Costs of up to 4.54%;
- Telephone & Fax of up to 3.50%;
- All Other Expenses of up to 9.75%.
To summarise this, larger practices had:
- Higher net profit per principal
- Lower overheads leading to higher net profit margins
- Lower staff costs in percentage terms, due to higher productivity per person and per doctor
- Lower levels of assets per person, where equity funded a lower proportion of those assets
- Principals who worked more hours.
The more profitable practices:
- Were larger, on average
- Had lower non-salary overhead costs, leading to higher net profit margins
- Had lower staff costs and higher personnel productivity
- Required less assets per person
- Had principals who worked more hours per year.
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