Discover how understanding TPE helps private practices balance profitability and employee value.
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Episode 26
Most practice owners think total people expense is just wages — but that misconception is quietly draining profitability. According to Payor data, 23% of job seekers prioritize better employee benefits, yet the benefits being offered often don't align with what employees actually value. Understanding the true anatomy of your total people expense (TPE) is the first step to fixing it.
TPE is the gross expense connected to all facets related to your people requirements to operate your organization. It goes well beyond base wages. When you hire someone, every variable connected to that person — taxes, insurance, hardware, software licenses, training time, supervision hours, and even business trips — belongs in the TPE bucket.
Brandon Seigel's rule of thumb: if that expense goes to zero when the employee leaves, it belongs in their total people expense. This reframing helps practice owners stop underestimating what each hire truly costs.
Brandon walks through the financial guardrails every private practice needs using the same benchmark KPIs from Episode 16's P&L breakdown. Net profit should hit a minimum of 15% (target 20%, reach 25%). To achieve that, TPE cannot exceed 60% of total revenue. Within that 60%: practitioners should account for 45–50% and administrative staff for 10–15%. The MGMA benchmarking data reinforces why maintaining these ratios is critical for long-term sustainability.
One of Brandon's most powerful recommendations is creating a visual infographic for each employee showing their full expense breakdown: base wages, benefits, PTO, software, supervision time, and more. This fosters honest conversation and helps employees understand the employer's financial reality. He also champions innovative approaches like allowing employees to choose how their TPE budget is allocated — cash out PTO at 1.25x value, swap unused software licenses for wages, or select from benefit tiers.
Transparency around TPE isn't a threat — it's an invitation to co-create solutions. When both parties understand affordability and value, conversations shift from demands to partnership.
