Finance and valuation
Overhead percentage
The overhead percentage is total practice expenses divided by collections, shown as a percentage, and it tells an owner how much of each collected dollar goes to costs.
The ADA defines overhead as the ratio of your expenses to your collection, expressed as a percentage. A practice that collects 100 dollars and spends 62 dollars has an overhead percentage of 62. ADA News (March 2022) said industry-wide practice overhead averages around 62 percent, and it quoted a consulting firm's target of 59 percent for general practices. A target from one firm is not a standard. Sources may count owner pay, depreciation or rent differently, which changes the result. Before comparing with a benchmark, confirm what each side includes. Use collections as the base unless the source says otherwise. See also overhead.