Article / Overhead
What a small supply-cost gap looks like in dollars.
An expense percentage becomes more useful when you translate it into annual dollars, and then ask what is driving it.
Run the arithmetic first
Suppose a general practice collects $2 million a year and spends 7.4% of collections on supplies. That is $148,000. At 6%, the same line would be $120,000. The difference is $28,000 a year. This is a mathematical comparison, not an assumption that the full amount is recoverable.
For your own practice, divide trailing twelve-month supply expense by trailing twelve-month collections. If a comparison range is relevant, multiply the percentage-point difference by collections to see the scale of the question.
A gap is a question, not a verdict
Higher supply spend can come from purchasing prices, unused or expired inventory, inefficient use of materials, or a procedure mix that legitimately requires more supplies. Those explanations call for different responses. Cutting indiscriminately could damage the work that generates revenue.
- Check pricing and the number of vendors.
- Review inventory and waste before changing clinical choices.
- Account for specialty and procedure mix.