What is a healthy overhead percentage for a practice?

The figure quoted most often for a lean solo practice is overhead under about 32 percent of revenue. Group practices normally run higher, sometimes quite a bit higher, once associate clinicians and administrative help are on the books. Treat those numbers as current guidance worth verifying, because published benchmarks shift and different sources draw the line in different places.

The math itself is simple. Add up what the practice spent on operating costs for the month and divide that by the revenue that came in during the same month, then multiply by 100. Overhead for most mental health practices covers rent, your EHR or practice management subscription, professional liability insurance, phone and internet, website and scheduling tools, merchant processing fees, continuing education, license renewals, and any administrative support.

The choice that decides whether your percentage means anything is where clinician pay goes. In a solo practice, what you pay yourself usually sits outside overhead, since it is the return on your clinical hours. In a group practice, associate compensation is commonly treated as the cost of delivering care, though plenty of owners fold it into overhead instead. Either approach works fine as long as you pick one and stay with it. A month that includes associate pay compared against a month that leaves it out will tell you nothing useful.

Here is where a benchmark stops helping. It cannot see your lease. A counselor paying for a suite in an expensive market and a telehealth practice run from a spare bedroom can both be perfectly healthy at very different percentages. The same goes for a psychologist buying testing materials or an ABA practice carrying a staff-heavy team. Bookkeeping for mental health professionals gets useful right at this point, because your own number tracked over time says more than any published average.

Look at the trend across several months rather than one snapshot. An annual insurance premium, a conference, or a new laptop all land in a single month and make that month look rough. Three, six, and twelve month views smooth that out and show whether your percentage is genuinely climbing. If it is rising while revenue holds steady, that is your cue to go through the subscription stack and see what nobody remembers signing up for.

Most practice owners have never seen this number at all. There is rarely time to build it by hand between sessions. When transactions are categorized consistently and accounts are reconciled every month, the percentage falls right out of the profit and loss statement without anyone doing extra work. That is a big part of what full-service bookkeeping is meant to give you.

If you would like to know what your own overhead percentage is and what it has been doing over the past year, book a consultation with Aretha and she will walk through the numbers with you.