What Goes In General Office Overhead?

Hi Jerry,

I was reading your 9/15 article on staff bonuses and wanted to know what you considered General Office Overhead?

Would that be just office expenses or include repairs, telephone, utilities, etc.? What about fixed expenses like janitorial, legal, advertising etc.?

Thanks!

Dr. Mike Cooper

Escondido, CA

Dear Mike,

Great question! My apologies for not elaborating.

The first question is why do I, or should you, care about the breakdown of your practice overhead?

I’ve been told the first law of statistics is: “Whatever you measure, you improve”. And, I have certainly found that to be the case over many years of consulting with optometrists.

So, I encourage ODs to track their expenses by category as a way to increase practice profitability by improving overhead control.

General Office Overhead

The Hayes 7 Key Expense Areas include the following general categories for practice overhead in no particular order:

1. General Office Overhead, or GOO, is a catch all category for expenses that do  not logically fall in one of the following:

2. Staff

3. Cost Of Goods

4. Marketing

5. Patient Care Equipment

6. Occupancy Costs

7. Doctors’ Salary And Practice Net Income

Janitorial and repairs for your office would fall under occupancy costs.

Repairs for equipment would fall under patient care equipment.

Legal would fall under GOO. Advertising would fall under marketing.

Let me know if that clears things up?