Unit economics for a clinic or practice, by the hour

Clinics, dental and physiotherapy practices, veterinary hospitals, optometry and wellness businesses across BC share a financial shape. Revenue is capped by the hours providers and rooms are available, costs are mostly fixed, and the gap between a full schedule and a patchy one is the whole profit. Unit economics in a clinic is the discipline of measuring that gap and closing it.

Here is how we build the model with practice owners, using the scheduling and billing data they already have.

Define the unit

There are usually two scarce units: provider hours and room or chair hours. For each, you want to know the revenue it generates, the direct costs that follow it and the contribution that is left to cover rent, administration and profit. Pull a month of billing data by provider and by room from your practice management system. Pull the schedule for the same month to see hours available, hours booked and hours actually delivered.

Most practice management systems can export this by provider and by room in a few minutes. If yours cannot, a month of appointment data in a spreadsheet, with the fee and the provider on each row, is enough for the first pass. The purpose is to see the shape of the practice: which hours are full, which are empty and which services fill them.

Contribution per provider hour

For each provider, take fees billed and collected for the month. Subtract the provider's compensation for those hours, whether salary, hourly or a percentage of billings, plus associated payroll costs. Subtract consumables and lab or supply costs tied to their treatments and any merchant or billing fees. Divide by the hours the provider was scheduled, not just the hours they treated. The result is contribution per scheduled hour, and it already includes the cost of empty slots.

Compare providers with care. Different services carry different fees and consumables. The purpose is to understand the model, not to rank people.

The cost of an empty slot

No-shows, late cancellations, short bookings and gaps between appointments are the largest hidden cost in most practices. Measure them monthly: the number of scheduled hours that produced no revenue, multiplied by the average contribution per delivered hour. Put that number in front of the front desk team. It changes reminder practices, waitlist handling and cancellation policies faster than any instruction.

The same arithmetic applies to rooms. A treatment room that sits empty because a provider's schedule is not full is rent being paid for nothing.

Model compensation before signing

Associate agreements and provider compensation decide the margin of the practice. A percentage of billings that looks normal can leave the clinic with too little to cover the room, the equipment and the staff that support that provider. Before agreeing a model, run it through the unit economics: at the expected hours and fee mix, what does the clinic keep per hour after the provider is paid and the direct costs are covered. Adjust the percentage, the base or the mix until the number works for both parties.

Compensation agreements have employment and regulatory dimensions, so the final document is reviewed with your lawyer and your CPA.

Manage the schedule as the budget

Once contribution per hour is known, the monthly budget is simply hours available multiplied by target booked rate multiplied by contribution per hour, less fixed costs. The person who manages the schedule is managing the budget. Give them the numbers: target booked hours per provider, actual booked hours, no-show cost and the services that contribute most per hour. Review it weekly.

Set the targets with the team rather than for them. A front desk that has helped decide the booked rate target and understands the cost of an empty hour will protect the schedule far more effectively than one that has been handed a number. Review the targets each quarter as providers, hours and services change.

Decisions this model supports

• Whether to add a provider, a room or extended hours, and which comes first
• How to set fees for services that take more room time or consumables than the fee reflects
• Which services to promote, because they contribute most per hour
• Whether a hygiene, treatment or recall program is paying for itself
• What a practice is worth to a buyer, since contribution per hour and booked rate are what they will model