Why your P&L can't tell you if a clinician is making money

Open your profit and loss statement. It tells you whether the practice made money last month. Useful at tax time. Close to useless for the decision you're actually trying to make.

The decisions in a group practice aren't about the practice. They're about people. Can I afford a sixth clinician? Is the comp split I set up last year still working? Why did a strong month barely move my bank balance? Your P&L answers none of those, and it was never built to.

A P&L adds everyone together. Revenue in one line, payroll in another, rent and software and admin stacked underneath. That's how your accountant needs it. It's not how you run the place. So a clinician who loses money every month disappears into the total. Their shortfall gets covered by everyone else's surplus, and the bottom line still looks fine.

Say a clinician bills $8,000 in a month. Looks like a strong producer. Now add up what they actually cost you: gross pay, your half of payroll taxes, benefits, supervision time, and a fair slice of the admin and overhead it takes to keep them in front of clients. You might land at $8,400. That clinician isn't carrying the practice. They're costing you $400 a month. Your P&L will never tell you, because three other people are covering the gap.

That $8,000 example is the tidy version. The first time we ran the numbers on a real clinician, it was anything but.

One of our clinicians wrapped up a two-year fellowship, and we finally sat down to work out what they'd been worth to the practice. We expected somewhere between a little profitable and very. They'd carried a full caseload almost the whole time and kept their admin hours lean.

Pulling the numbers together took a week and a half. What's a fixed cost versus a clinician cost? What share of the overhead should they carry? Then there were the 401k match and health contributions to fold in. It was almost all by hand, so it wasn't repeatable and we didn't fully trust the result.

We re-ran it a few times anyway. Same answer every time: they'd actually been running at a loss. The supervision we were providing, plus benefits our comp plan had never accounted for, put them at break-even at best. Add a few slow weeks and the occasional sick day and they were slightly underwater, about $300 a month in the red.

Two weeks of stolen evenings to learn that, and only for one clinician. We still hadn't reached the harder question: how do you make the next one profitable?

Most of those evenings went into the method itself: we had no template, so we had to decide what even counted, then re-run it until we trusted the answer. You don't have to invent that part. Pick one clinician. Roughly what do they cost you? Roughly what did they collect, not what they billed? If the gap is obvious, you've already learned something your P&L would never tell you. The close calls, like ours, take more digging, and that's most of what we write about here. Run it for one person and you'll want to run it for everyone.

That per-clinician number is the ground floor for almost every call you make: who to hire, how to pay them, whether a comp model still works, what you can take home. We'll get into each in the issues ahead.

Your P&L isn't wrong. It's answering a different question than the one you're asking. Start looking at the practice one clinician at a time, and the decisions that used to be guesses start to have real answers.

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