Understand which financial numbers actually matter and how KPIs drive better decisions in your private practice.
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Episode 8 | Watch on YouTube
Finance is the area where most private practice owners feel the least confident. And yet, understanding your financial metrics is not optional, it is the foundation of every strategic decision you make. As MGMA data consistently shows, practices that actively track key financial benchmarks significantly outperform those that do not. In this episode of the Private Practice Survival Guide, Brandon Seigel breaks down the difference between metrics, KPIs, and analytics, and explains how to use each one to run a smarter, more profitable practice.
A metric is simply a measurement. A KPI, or Key Performance Indicator, is a specific, measurable metric tied to a goal. Total phone calls per day is a metric. Five new patient evaluations per week is a KPI. The distinction matters because KPIs drive action. When a KPI is not being met, something in your system needs to change. When a metric is off, it may be informative, but it does not necessarily demand a response.
Brandon encourages practice owners to involve employees in defining KPIs for their own roles. When team members help shape what they are measured on, they feel a sense of ownership rather than surveillance, and performance improves as a result.
Brandon returns to two financial benchmarks that every practice owner should have memorized. First, total people expense, meaning every cost connected to every person who impacts your business, should not exceed 60% of total revenue: 50% for clinical providers, 10% for administrative staff. Second, total facility expense including rent, utilities, and everything that keeps your physical space running should not exceed 10% of the revenue generated in that space, with 4% as the aspirational target.
Together, people and facility costs account for approximately 70% of a well-run practice's expenses, leaving 30% for net profit and other overhead. This framework aligns closely with HFMA guidance on physician practice financial management, and is a practical starting point for any practice looking to get its numbers under control.
Both matter, but for different reasons. Profit is what is left over after all expenses. Cash flow is money in versus money out, and in healthcare, where insurance reimbursements can take 30, 60, or even 90 days, cash flow is often the more immediate concern. Brandon made a deliberate choice with his mother-in-law's practice: he reduced the payer mix to providers who paid within six days, accepting slightly lower reimbursement rates in exchange for dramatically improved cash flow. The result was a practice that could sustain a half-million-dollar monthly payroll without stress.
Brandon also highlights a compelling productivity statistic: healthcare leaders who effectively delegate save an average of 15.5 hours per week and see a 34% increase in team productivity. That is not just time saved. That is strategic capacity freed up to focus on what actually moves the needle. For more on building delegation habits that work, the American Medical Association offers practical frameworks for reducing administrative burden in physician practices.
