What a Doctor's Percentage Actually Costs You Per Hour
A revenue share looks like a simple number until you divide it by chair time. How to work out what each arrangement really costs, and why the highest-producing doctor is not always the most profitable.
Published
Ask a clinic owner what a doctor costs and you will usually get a percentage. Forty per cent, forty-five, fifty depending on the speciality and the market.
That number is nearly useless on its own. It tells you the split on revenue that arrived. It does not tell you what the arrangement costs against the resource you are actually selling, which is time in a chair.
Reduce everything to cost per clinical hour
The comparison that matters is not percentage against percentage. It is:
Cost per clinical hour versus revenue produced per clinical hour
A doctor on 45% producing 900 per hour costs you 405 per hour and leaves 495 to cover chair, assistant, materials, lab, rent and overhead. A doctor on 35% producing 500 per hour costs 175 and leaves 325. The lower percentage is the more expensive arrangement per hour of chair time, despite looking cheaper on paper.
This is why the highest-producing doctor is not automatically the most profitable one, and why the lowest percentage is not automatically the best deal. Both are only decidable per hour.
Where the arrangement leaks
Paying on production instead of collection
The most expensive mistake in the category. If the share is calculated when treatment is invoiced, the clinic alone carries every unpaid patient balance and every insurance rejection — the doctor has already been paid on revenue that may never arrive.
Paying on collected revenue puts both sides on the same side of the insurance and balances problem. It is a one-line change to an agreement and removes an entire category of quiet loss.
An undefined base
"Forty per cent" is not a complete term. Forty per cent of what?
- Before or after lab fees?
- Before or after materials?
- Before or after discounts?
- On the insurance-approved amount or the invoiced amount?
Almost every commission dispute traces back to this rather than to the rate. Write it down before the first payout — the conversation is much harder once someone has been paid on the other interpretation.
Discounts that only the clinic feels
If a clinician can discount without it affecting their share, discounting drifts upward — not dishonestly, just naturally, because the cost of the concession is invisible to the person making it. Sharing the reduction proportionally keeps the judgement honest without needing an approval step on every case.
Unproductive chair time nobody owns
A doctor booked for eight hours who treats for five has cost you three hours of chair, assistant and room. On a pure percentage arrangement that loss sits entirely with the clinic — the doctor's cost simply scales down with their production.
That is not an argument against percentages. It is an argument for measuring schedule utilisation per doctor, so the conversation is about a visible number rather than an impression.
Percentage versus salary, honestly
| Percentage | Salary | |
|---|---|---|
| Cost behaviour | Variable — scales with production | Fixed |
| Risk to clinic | Low | Carried entirely by the clinic |
| Risk to doctor | Carried by the doctor | Low |
| Quiet chair time | Costs the clinic the overhead | Costs the clinic everything |
| Above break-even | Clinic keeps a fixed share | Clinic keeps all the upside |
| Best when | Demand is variable or unproven | Demand is reliable and high |
A salary is a bet on utilisation. It is cheaper than a percentage above a certain level of production and more expensive below it, and that break-even point is calculable — so the choice can be made on arithmetic rather than on negotiating position.
The four numbers to hold per doctor
- Revenue produced per clinical hour — the production side.
- Cost per clinical hour — commission or salary, divided by hours actually worked.
- Schedule utilisation — what share of booked chair time was sold as treatment.
- Rate change history — who changed a rate, when, and to what.
The fourth sounds bureaucratic and is not. Rates get adjusted for a case, a promotion or a temporary arrangement, and the adjustment quietly becomes permanent. Without an audit trail nobody can say when a rate became what it is now, and the first anyone notices is a payout that looks wrong.
How PDental handles it
PDental calculates doctor rates from the procedures and payments already in the system rather than from a spreadsheet rebuilt each month — the commission is derived from the same records as the invoice, so the two cannot disagree.
The reporting covers both halves of the equation. On production: doctor revenue, doctor productivity, doctor invoices, procedures per doctor and a doctors comparison. On time: doctor working hours and schedule utilisation, which is what converts a revenue figure into a per-hour one. And a dedicated doctor rate audit report records rate changes, so an adjustment made for one case cannot silently become the standing arrangement.
Because payments, insurance claims and outstanding balances live in the same system, paying on collection rather than on production is a configuration choice rather than a monthly reconciliation exercise.
Where to start
Take one month and produce two numbers for each clinician: revenue per clinical hour, and cost per clinical hour.
Most owners doing this for the first time find the ranking differs from their impression — and that the difference is usually driven by utilisation rather than by clinical speed or the rate itself. That single comparison is a better basis for the next rate conversation than any published benchmark.
Frequently asked questions
Should a doctor's percentage be calculated on gross or net revenue?
Define it explicitly, in writing, before the first payout — most disputes come from the definition rather than the rate. The practical question is who absorbs lab fees, materials, discounts and insurance shortfalls. A percentage of gross with the clinic absorbing everything is a very different arrangement from the same percentage after direct costs, even though both are quoted as one number.
How do I compare a percentage doctor against a salaried one?
Reduce both to cost per clinical hour, then set that against revenue produced per clinical hour. A percentage arrangement has variable cost and low risk to the clinic; a salary is fixed and only pays off above a break-even level of production. Comparing the headline rate to the salary figure tells you nothing, because they are not the same unit.
What is the most common mistake in doctor commission arrangements?
Paying on production rather than on collection. If the percentage is calculated when the treatment is invoiced, the clinic carries every unpaid balance and insurance rejection alone, while the doctor has already been paid on revenue that never arrived. Paying on collected revenue aligns both sides with the money actually landing.
Should discounts come out of the doctor's share?
Whoever authorises a discount should feel it. If a clinician can discount freely and the reduction comes entirely out of the clinic's margin, discounting will drift upward. Sharing it proportionally keeps the decision honest without requiring an approval process for every case.