Profitability & Margin

“Revenue keeps growing, but what ownership keeps does not.”

A practice can add patients, providers, and services while its margin stays flat or shrinks. These articles look at where the difference goes: product cost, labor, discounting, and an owner who is quietly working for free.

Common root causes

Labor and product cost growing faster than revenue
Discounting and comps eroding realized prices
Profitable and unprofitable services blended into one revenue line
Owner clinical work that never shows up as a cost

Metrics that expose it

Gross margin: Total net revenue minus cost of goods sold ÷ Total net revenue
EBITDA margin (owner-normalized): Earnings before interest, taxes, depreciation and amortization, after a market-rate salary for any clinical or management role the owner performs ÷ Total net revenue
Total payroll as % of total revenue: All staff compensation (provider and administrative wages, commission, bonuses) plus employer payroll taxes ÷ Total net revenue (services plus retail, after discounts and refunds)
Cost of goods sold as % of total revenue: Product and supply cost consumed in treatments plus cost of retail products sold (including waste and expired product written off) ÷ Total net revenue
Realized-price leakage: Menu-price value of services delivered minus revenue actually collected for them (discounts, comps, promotions, package and membership pricing below menu) ÷ Menu-price value of services delivered