Benchmark Reference
Every figure on this page comes from the 2024 Physician Practice Information Survey, the dataset CMS uses in Medicare Physician Fee Schedule rate setting. We have added the calculations and the operating commentary. We have added no estimates of our own.
Sample: 18,086 physicians across 831 departments. Figures are expressed per hour of direct patient care.
Most published overhead benchmarks state cost as a percentage of collections. That number moves when payer mix moves, so two practices with identical cost structures can report overhead twenty points apart. The Physician Practice Information Survey avoids the problem by measuring expense against a physical unit: one hour of direct patient care.
Direct expense covers clinical staff, supplies, and equipment tied to patient care. Indirect expense covers administrative staffing, occupancy, information technology, and everything else that keeps the practice open. Physician work and liability insurance are reported separately and together with practice expense form the Medicare Economic Index expense per hour.
Across all specialties, practice expense is $133.61 per hour against $334.87 of total expense, so practice expense accounts for 39.9 percent of the cost of a physician hour. In the Medicare Economic Index weighting used for rate setting, practice expense carries 37.0 percent, split 11.3 percent direct and 25.7 percent indirect.
Sorted from highest total practice expense to lowest. The final two columns are our calculations from the survey figures: practice expense as a share of total expense per hour, and annualized practice expense using each specialty's reported direct patient care hours.
| Specialty | Direct | Indirect | Total PE | Total expense | PE share | Annual PE ($000) |
|---|---|---|---|---|---|---|
| Ophthalmology | $96.83 | $200.36 | $297.19 | $513.08 | 57.9% | 539 |
| Dermatology | $103.82 | $146.63 | $250.46 | $486.80 | 51.5% | 410 |
| Hematology and Oncology | $109.62 | $132.38 | $242.00 | $464.91 | 52.1% | 427 |
| Cardiology | $77.55 | $132.00 | $209.55 | $458.15 | 45.7% | 475 |
| Vascular Surgery | $87.96 | $117.35 | $205.32 | $431.70 | 47.6% | 510 |
| Radiology | $58.79 | $118.12 | $176.91 | $464.85 | 38.1% | 315 |
| Office-Based Proceduralist | $63.03 | $110.95 | $173.98 | $419.23 | 41.5% | 378 |
| Gastroenterology | $54.31 | $117.02 | $171.34 | $426.42 | 40.2% | 347 |
| Obstetrics and Gynecology | $61.57 | $101.05 | $162.62 | $362.15 | 44.9% | 335 |
| Orthopaedic Surgery | $41.65 | $113.50 | $155.15 | $400.25 | 38.8% | 372 |
| Otolaryngology | $47.91 | $100.44 | $148.35 | $422.14 | 35.1% | 341 |
| Primary Care | $48.55 | $97.14 | $145.70 | $290.74 | 50.1% | 270 |
| Pulmonary Disease | $41.00 | $92.44 | $133.43 | $320.49 | 41.6% | 271 |
| Office-Based Medicine | $34.60 | $75.32 | $109.92 | $300.54 | 36.6% | 203 |
| Hospital-Based Surgery | $32.54 | $62.39 | $94.93 | $341.01 | 27.8% | 232 |
| Pathology | $19.13 | $46.79 | $65.92 | $238.82 | 27.6% | 134 |
| Hospital-Based Medicine | $6.61 | $56.52 | $63.13 | $274.32 | 23.0% | 112 |
| Psychiatry | $9.25 | $28.84 | $38.10 | $249.51 | 15.3% | 54 |
| All specialties | $42.56 | $91.04 | $133.61 | $334.87 | 39.9% | 259 |
Source: 2024 Physician Practice Information Survey, Table 1. Direct, indirect, total practice expense, and total expense per hour are reported figures. Practice expense share and annualized practice expense are calculated by Practice Management Consultants.
Want the full table in a spreadsheet, including the indirect expense breakdown by category?
Indirect expense is the line most practices can move. The survey breaks it into four components per hour of direct patient care. Selected specialties shown.
| Specialty | Administrative | Occupancy and overhead | Information technology | Other |
|---|---|---|---|---|
| Cardiology | $40.02 | $31.58 | $10.11 | $50.29 |
| Dermatology | $44.23 | $43.11 | $10.63 | $48.67 |
| Gastroenterology | $32.56 | $18.66 | $9.29 | $56.52 |
| Hematology and Oncology | $53.82 | $28.44 | $8.24 | $41.88 |
| Obstetrics and Gynecology | $33.84 | $28.98 | $7.29 | $30.94 |
| Office-Based Medicine | $28.72 | $22.47 | $6.07 | $18.06 |
| Ophthalmology | $77.30 | $73.59 | $14.07 | $35.40 |
| Orthopaedic Surgery | $41.59 | $45.65 | $11.04 | $15.21 |
| Otolaryngology | $37.88 | $20.51 | $7.88 | $34.17 |
| Primary Care | $31.32 | $24.37 | $7.06 | $34.39 |
| Psychiatry | $14.05 | $5.58 | $2.03 | $7.18 |
| Vascular Surgery | $30.14 | $53.94 | $8.09 | $25.19 |
| All specialties | $29.30 | $24.29 | $6.55 | $30.91 |
Source: 2024 Physician Practice Information Survey, Table 1, indirect expense detail.
At $29.30 per hour across all specialties, administrative cost exceeds occupancy, technology, and every other indirect category. In ophthalmology it reaches $77.30 per hour. Practices attempting to cut overhead usually start with supplies, which is the smaller number and the harder one to move.
Technology averages $6.55 per hour, roughly 7 percent of indirect expense and about 2 percent of total expense per hour. The common assumption that the electronic health record is driving overhead does not hold up against the survey. The cost sits in the people working around the system, not the license.
Reported annual hours of direct patient care range from 1,407 in psychiatry to 2,486 in vascular surgery. Two practices with identical hourly cost structures will produce very different annual totals. Any overhead comparison that ignores hours is measuring the wrong thing.
The CY 2027 Medicare Physician Fee Schedule proposed rule sets conversion factors of $33.17 for qualifying alternative payment model participants and $32.84 for others, both below CY 2026, since the one-year 2.50 percent increase from Public Law 119-21 expires. Cost per hour has to be managed against a lower unit rate, not a flat one.
The same proposed rule begins phasing out the methodology step that anchors specialty practice expense relative value units to practice expense per hour data from 2007 or earlier, replacing it with a stabilizer. Specialties currently benefiting from stale allocators should model the transition rather than wait for it.
Across all specialties in the 2024 Physician Practice Information Survey, practice expense averages $133.61 per hour of direct patient care, against total Medicare Economic Index expense of $334.87 per hour. That puts practice expense at roughly 40 percent of the total cost of delivering a physician hour. Office-based specialties run well above that figure, and hospital-based specialties run well below it because the facility absorbs the cost.
Ophthalmology is the highest in the survey at $297.19 per hour of direct patient care, followed by dermatology at $250.46 and hematology and oncology at $242.00. Ophthalmology also carries the highest indirect burden at $200.36 per hour, driven by administrative staffing and occupancy.
MGMA and similar surveys report overhead as a share of collections. The Physician Practice Information Survey reports expense per hour of direct patient care and does not measure collections. The two are not interchangeable. Expense per hour is the better comparison when payer mix differs between practices, because it removes revenue variation from the calculation.
In the proposed rule issued July 14, 2026, CMS proposes to phase out the step that anchors specialty-level practice expense relative value units to practice expense per hour data from 2007 or earlier, replacing it with a stabilizer that limits year-over-year volatility. CMS also proposes conversion factors of $33.17 for qualifying alternative payment model participants and $32.84 for everyone else, both lower than CY 2026.
Convert your own cost structure to a per-hour basis using physician hours of direct patient care rather than full-time-equivalent counts, then compare the direct and indirect lines separately. A practice above benchmark on indirect expense has a staffing, occupancy, or technology problem. A practice above benchmark on direct expense usually has a supply chain or clinical staffing ratio problem. The two require different remedies.
We will convert your cost structure to a per-hour basis, place it against your specialty, and tell you which line is out of range and what it takes to fix it.
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