Operating Expenses

Let’s begin by understanding our operating expenses.

To understand what your operating expenses are, you will need to work with your doctor to determine this number. For this number to be figured, the formula is: gross profit after cost of goods sold – total overhead = total operating expenses. As a side note, if you want to get the true chair cost, you would then subtract any loans as an expense and your doctor's salaries, but your chair cost can be calculated either way. ​

To determine the number of comprehensive exams, you will need to look at your office production report for the time period of which you are trying to calculate your chair cost. At Williams Group, we determine a comprehensive exam to be that of a 92004, 92014, 99204, 99205, 99214, and 99215, and if you use S Codes, add your S0620 and S0621. Then add the total number of these services together to determine your total comprehensive exams for that time frame.

To calculate your chair cost, you will now take the total operating expenses divided by the total number of comprehensive exams​. There you go! Once you have completed that formula, you now have your chair cost.

As a reminder, if you want to get the true chair cost, make sure you subtract any of those loans as an expense as well as your doctor's salary, but you can calculate it with or without this information.

You can calculate your chair costs for any period of time, but you must ensure you are using the same date range when calculating and pulling all of the values within the chair cost formula.