Direct answer
What does this research show?
A useful financial benchmark for a healthcare practice must preserve practice type, specialty, payer model, provider mix, ownership, and location economics. Public Census evidence supports separate context for physician, dental, and other health-practitioner offices; it does not support one blended healthcare target. Provider productivity, denials, net collection rate, days in A/R, location contribution, owner compensation, margin, or cash reserves should be calculated from the practice's own reconciled records unless a truly comparable peer source is available.[1]
Key findings
What should an owner know first?
- Bennett calculation
For 2022 U.S. employer firms operating all year in the Census Bureau's $1M–$24.999M proxy bands, Bennett Financials calculated aggregate receipts per March employee of $200,202 for physician offices, $161,639 for dental offices, and $110,524 for other health-practitioner offices.[1]
- Bennett calculation
For U.S. employer firms operating throughout 2022 in the Census Bureau's $1 million–$24.999 million published receipts proxy bands, Bennett Financials calculated annual-payroll-to-receipts ratios of 41.1% for physician offices, 35.9% for dental offices, and 42.9% for other health-practitioner offices. Census payroll is not fully loaded labor and the categories should not be combined.[1][2]
- Bennett calculation
From Census's 2023 AIES estimates for U.S. private nonfarm employer firms of all sizes, Bennett Financials calculated patient out-of-pocket revenue shares of 7.2% for physician offices, 36.0% for dental offices, and 22.6% for other health-practitioner offices. These are national aggregate shares, not typical-practice payer mix.[3]
- Bennett operating target
As of September 2026, Bennett Financials uses 60% gross margin, 15% sales and marketing, and 15% G&A as a planning architecture for established U.S. healthcare practices with $1M–$20M of annual revenue, leaving a 30% operating-margin target. Reimbursement, clinical staffing, facility, supply, and ancillary-service economics can make a practice's feasible path materially different.
Which financial benchmarks matter most for a healthcare practice?
Begin with net patient revenue by provider, service, payer, and location. Reconcile that revenue to encounters or procedures, contractual adjustments, denials, refunds, and cash. Then measure provider and clinical-team capacity, contribution after directly caused clinical costs, fully loaded labor, location economics, operating expense, normalized owner compensation, receivable aging, and forecast liquidity. Do not benchmark unlike models. A physician group, dental practice, therapy clinic, optometry office, and mental-health practice can differ in visit length, provider leverage, supply use, equipment, facility intensity, payment rules, and cash-pay exposure. Even within one specialty, hospital ownership, ancillary services, capitation, procedure mix, and local wages can overwhelm a national percentage.
What does the Economic Census show for practice economics?
Selected healthcare offices in the Census firm-size proxy
Last verified
| Practice category | Firms | Receipts | Aggregate receipts per March employee | Payroll ÷ receipts |
|---|---|---|---|---|
| Physician offices (NAICS 6211) | 45,873 | $173.994B | $200,202 | 41.1% |
| Dental offices (NAICS 6212) | 45,796 | $101.351B | $161,639 | 35.9% |
| Other health-practitioner offices (NAICS 6213) | 21,362 | $55.557B | $110,524 | 42.9% |
The categories are separate populations, not components of a blended benchmark. NAICS 6213 includes materially different practices such as chiropractic, optometry, mental health, and physical, occupational, and speech therapy.[1]
Annual receipts are divided by employees on payroll during the pay period including March 12. Full- and part-time employees count equally; owners, partners, contractors, and leased or temporary workers are excluded from employment.[2]
The table is workforce context, not provider productivity. A practice with more assistants, hygienists, therapists, nurses, technicians, or centralized support can show lower receipts per employee while using team leverage productively. Replace the March headcount denominator internally with clinical FTE, provider clinical FTE, paid hours, or another denominator that matches the decision.
What does national payer-mix evidence show?
2023 revenue by type of payer
Last verified
| Practice category | Medicare FFS | Medicaid FFS | Private insurance | Patient out of pocket |
|---|---|---|---|---|
| Physician offices | 15.2% | 4.9% | 46.1% | 7.2% |
| Dental offices | 1.2% | 6.1% | 40.3% | 36.0% |
| Other health-practitioner offices | 10.2% | 6.1% | 32.2% | 22.6% |
These are selected payer categories and do not sum to 100% because the source table also reports additional payer types. Each percentage uses total category revenue, not the subtotal shown here, as its denominator.[3]
Medicare and Medicaid columns cover fee-for-service only. The private-insurance category includes Medicare and Medicaid managed-care plans; patient out of pocket includes deductibles and coinsurance paid by beneficiaries or their families.[3][5]
The survey covers employer firms of all sizes and tax statuses. Estimates are weighted and may include imputation; the healthcare sector's unit response rate was 62.0%, and revenue total-quantity response was 60% to under 70%.[4]
Payer share is exposure, not economics. For each payer and service, connect allowed amount, contractual adjustment, denial and rework, payment lag, patient responsibility, bad debt, and variable clinical cost. A large revenue share can be attractive or destructive depending on contribution, administrative burden, capacity consumed, and the practice's negotiating alternatives.
How should net patient revenue and collections be measured?
- Net patient revenue
- Amounts received or due after contractual adjustments and charity care, including capitation where applicable—not gross charges.[2]
- Net collection rate
- Collected patient-service cash divided by the matched collectible amount after contractual adjustments, with refunds, credits, and bad debt treated consistently.
- Days in accounts receivable
- Eligible ending receivables divided by average daily net patient-service revenue for a stated period, with credit balances and nonpatient items handled explicitly.
- Denial rate
- Denied claims divided by submitted claims under a stated count or dollar denominator; initial and final denials should not be mixed.
A monthly revenue-to-cash bridge should follow dates of service through charge capture, claim submission, adjudication, patient billing, remittance, payment posting, refund, and write-off. Age receivables by payer and patient responsibility, identify preventable denial causes, and match resubmissions to eventual cash. The public sources reviewed here provide no compatible numeric target for denial rate, net collection rate, or A/R days, so Bennett would use internal baselines, contracts, cohorts, and root-cause queues rather than an invented universal range.
How should provider productivity and location economics be calculated?
- Measure encounters, procedures, net patient revenue, and contribution per provider clinical FTE. Use wRVUs only where they describe the specialty and compensation decision; they are not interchangeable with cash, revenue, or margin.
- Separate schedule availability, booked capacity, completed visits, cancellations, documentation lag, coding, and collections. This distinguishes a demand constraint from a staffing, access, workflow, or reimbursement constraint.
- Build location contribution from location revenue less provider and clinical labor, supplies, occupancy, local administration, and other directly attributable costs. Show centralized costs separately before allocating them under a documented driver.
- Normalize owner-clinician and owner-manager compensation at a documented market rate before evaluating operating return. Distributions are a financing and ownership decision, not evidence that clinical labor was free.
How should labor and payment-model mix be interpreted?
Census payroll cannot set a staffing target because it excludes owner labor, employer-paid fringe, and contractors while combining clinical and administrative employees. Internally, map provider compensation, clinical support, billing, front desk, management, benefits, payroll taxes, and outsourced services to their operating purpose. Then compare fully loaded cost with net patient revenue and contribution generated at the provider, team, service, and location level.[2] Payment model also changes the operating equation. In the AMA's nationally representative 2024 physician survey, respondents who knew their practices' split estimated average revenue of 67.7% fee for service and 32.3% alternative payment methods. About one-fifth did not know the fee-for-service share and were excluded. The result is physician-reported, includes varied ownership and sizes, and describes model mix—not payer mix, payment adequacy, or profit.[6]
How should a healthcare practice use the Bennett 60/15/15 framework?
IRS tax data offers only adjacent context. Bennett calculated a 4.7% receipts-weighted pretax-profit ratio for physician-office corporate returns in tax year 2022; dental and other-practitioner income figures were suppressed. The physician result covers corporations of all sizes, uses tax definitions, and is not a median or operating-margin target.[7]
What should the practice review each month?
Close and reconcile net revenue, adjustments, cash, refunds, receivables, payroll, and owner transactions. Review volume, capacity, net revenue, contribution, and collection by provider, service, payer, and location; bridge actual results to forecast; and update a forward cash view for payroll, tax, debt, supplies, equipment, distributions, and planned hires. The review is complete when material variances have a root cause, accountable owner, action, and decision date.
Bennett Financials view
What do these findings mean operationally?
A healthcare P&L becomes useful when net patient revenue can be reconciled to clinical activity and then to cash. We would not accept gross charges as the revenue denominator, a total headcount as provider productivity, or one blended payer percentage as an explanation. The management model should show which provider, service, payer, and location created—or consumed—contribution and working capital.
Growth should be evaluated against constrained capacity and cash timing. Adding visits can reduce financial health if reimbursement fails to cover incremental clinical and administrative work, if denials consume the billing team, or if a new location adds fixed cost before demand matures. A deliberate investment can sit outside target temporarily when it is quantified, funded, time-bound, and reviewed against a stated operational return.
How was this analysis prepared?
Bennett Financials summed Census firm, receipts, payroll, and employment values across four published 2022 firm-revenue bands for NAICS 6211, 6212, and 6213 separately. Aggregate receipts per employee divides receipts by March employment; payroll share divides payroll by receipts. The proxy runs to $24.999 million because the top published band does not stop at $20 million.[1]
AIES payer shares divide each published 2023 payer-revenue estimate by total revenue for the same NAICS category. The analysis preserves Census definitions for fee-for-service, managed care, private insurance, and patient out-of-pocket revenue. AMA and IRS figures are labeled adjacent evidence because their populations and metrics do not match the target management-accounting question.[3][5][6][7]
What are the limitations?
No cited source supplies a representative $1M–$20M private-practice benchmark for provider-FTE or wRVU productivity, denial rate, net collection rate, A/R days, location contribution, fully loaded labor, owner compensation, marketing, G&A, operating margin, or cash reserves. Census data exclude nonemployers and do not control specialty, ownership, payer contracts, ancillary services, geography, or clinical FTE. Survey and tax-return evidence add sampling, self-report, imputation, and tax-definition boundaries.[1][4][6][7]
Questions this research answers
- What is a good profit margin for a healthcare practice?
- The public evidence reviewed here does not establish one comparable margin for $1M–$20M practices. Define net revenue and direct clinical costs, normalize owner labor, and compare like specialties, ownership models, services, payers, and locations. Bennett's 30% operating-margin target is a diagnostic destination within 60/15/15, not an industry average.
- Is receipts per employee the same as provider productivity?
- No. The Census calculation uses all paid employees counted around March 12, including full- and part-time staff equally, while excluding owners and contractors. Provider productivity needs a clinical denominator such as provider clinical FTE, encounters, procedures, or specialty-appropriate wRVUs.[2]
- Does out-of-pocket revenue mean the practice is cash pay?
- Not necessarily. Census includes deductibles and coinsurance paid by beneficiaries or their families in patient out-of-pocket revenue. The published category does not by itself identify a pure cash-pay segment.[5]
- Can the Census payroll percentage set a staffing budget?
- No. It excludes proprietor and partner compensation, employer fringe, contractors, and leased or temporary workers, and it combines clinical and administrative employees. Build a fully loaded internal labor view and connect each team to capacity, net revenue, contribution, access, or control.[2]
- Which healthcare metrics belong on a monthly scorecard?
- Use net revenue, encounters or procedures, capacity, contribution, adjustments, denials, collections, A/R aging, labor, and forecast cash, segmented where useful by provider, service, payer, and location. Add normalized operating profit and owner transactions so distributions are not confused with clinical compensation or cash generation.
Sources
- U.S. Census Bureau. Selected Sectors: Sales, Value of Shipments, or Revenue Size of Firms for the U.S.: 2022. EC2200SIZEREVFIRM, NAICS 6211, 6212, and 6213. 2025-04-24. Period: 2022 receipts and payroll; March 12 employment. Population: U.S. employer firms operating all year; selected $1M–$24.999M revenue bands. Metric type: Estimate. Accessed September 2, 2026. Bennett calculations use aggregate values and keep practice categories separate. The top band exceeds Bennett's market ceiling.
- U.S. Census Bureau. 2022 Economic Census Information Sheet: Professional, Scientific, and Technical Services and Selected Service Sectors. Sales, Receipts, or Revenue; Employment and Payroll definitions. 2022. Period: 2022 Economic Census. Population: Taxable establishments in covered service sectors. Metric type: Not applicable. Accessed September 2, 2026. Healthcare reports net patient revenue after contractual adjustments and charity care; capitation is included. Defines employment and payroll exclusions.
- U.S. Census Bureau. Health Care and Social Assistance: Revenue by Type of Payer for Employer Firms in the U.S.. AIES62TYPEPAYER, NAICS 6211, 6212, and 6213. 2026-02-26. Period: Reference year 2023. Population: U.S. private nonfarm employer firms; all sizes and tax statuses. Metric type: Estimate. Accessed September 2, 2026. Bennett payer shares are ratios of published aggregate estimates, not average or median practice shares.
- U.S. Census Bureau. 2023 Annual Integrated Economic Survey Methodology. Sampling, estimation, response, and reliability methodology. 2026-02-26. Period: Reference year 2023. Population: U.S. private nonfarm employer companies in AIES scope. Metric type: Not applicable. Accessed September 2, 2026. Documents weighted estimation, imputation, response measures, sampling error, and nonsampling error.
- U.S. Census Bureau. Annual Integrated Economic Survey (AIES) Instruction Manual for Respondents. Health Care and Social Assistance Industries, net patient care revenue definitions. Period: 2023 AIES reference year. Population: U.S. private nonfarm employer companies reporting health care and social assistance industry content. Metric type: Not applicable. Accessed September 2, 2026. Defines net patient care revenue for Medicare fee-for-service Parts A, B, and D; Medicaid fee-for-service; private insurance including Medicare Part C and Medicaid managed care; and patient out-of-pocket payments including deductibles and coinsurance.
- American Medical Association. Alternative Payment and Delivery Models: A Decade in Review Shows Stagnant Growth Between 2014 and 2024. 2024 Physician Practice Benchmark Survey payment-method results. 2025-09-26. Period: Survey fielded in 2024. Population: Nationally representative survey of 5,000 eligible physicians; physician-level responses. Metric type: Survey response. Accessed September 2, 2026. Revenue shares are respondents' estimates; roughly 20% who did not know fee-for-service share were excluded. This is model mix, not payer mix or performance.
- Internal Revenue Service, Statistics of Income. Corporation Income Tax Returns Complete Report, Publication 16, Tax Year 2022. Table 1, Returns of Active Corporations—Offices of Physicians. 2025-09. Period: Tax year 2022 accounting periods ending July 2022 through June 2023. Population: Estimated active U.S. corporate income tax returns; all receipt sizes. Metric type: Estimate. Accessed September 2, 2026. Bennett's 4.7% physician-office ratio is receipts weighted and tax defined. Dental and other-practitioner income fields were suppressed.