When most therapists think about their practice finances, they focus on revenue.
How many sessions you’re doing.
What you’re charging per client.
Maybe even how many new referrals are coming in.
But what about private practice therapy overhead costs?
Overhead is the silent partner in your practice. It’s the rent, the software, the liability insurance, the utilities, the subscriptions. It’s what keeps your practice running in the background, and it has a big impact on how much money you actually get to keep.
So what does “healthy” overhead look like for therapy practices? What should you be aiming for? Let’s walk through it together.
What Overhead Really Means
Overhead is simply the cost of running your practice that isn’t directly tied to your client sessions. You don’t bill for it, but you still have to pay it.
Typical examples include:
- Rent or office sublet
- Utilities like internet and phone
- Malpractice and liability insurance
- EHR or scheduling software
- Marketing costs
- Admin help if you hire support
Once you know what overhead looks like, you can measure it against your revenue. Most therapy practices aim to keep overhead between 20 and 30% of revenue, but the exact number depends on how you’re set up.
Solo Practices: Leaner and Flexible
If you’re running a solo practice, you have the most control. Your overhead might just be a few essentials like insurance, your EHR system, and maybe rent for a single office.
Many solo therapists who work fully remote keep overhead as low as 10 to 15 percent. A good internet connection, a HIPAA-compliant telehealth platform, and professional insurance could be your main costs.
If you prefer in-person work, your biggest overhead driver will be rent. Even then, many solo therapists lower costs by renting office space by the hour or sharing a suite with other practitioners.
Takeaway: the more you can simplify and the more flexible you are with space, the leaner your overhead will be.
Group Practices: Higher Costs, Bigger Payoff
Group practice owners usually see higher overhead, often in the 50% range. Rent for multiple offices, payroll for staff, more robust software, and higher insurance costs all add up quickly.
But the flip side is that you’re bringing in more revenue. A well-run group practice can support higher overhead because the volume of client sessions balances it out.
The challenge is making sure those extra expenses don’t eat away all of your margin. Group owners who track overhead closely and make intentional choices about staffing and space often end up with stronger long-term profits than those who simply expand without running the numbers.
Takeaway: Group practices cost more to run, but with solid systems and planning, they also create more opportunities to scale.
Why Going Remote Matters
One of the biggest shifts in recent years is how much overhead you can save by offering telehealth. If you don’t need a physical office – or only need it a few days a week – your rent drops dramatically.
Instead of paying thousands each month for a full-time office, you can keep overhead lean and reinvest that money into things like marketing, training, or even paying yourself more consistently.
Here’s a simple example:
If your practice brings in $10,000 a month and your overhead is 25%, that means $2,500 goes to overhead and $7,500 is left before taxes and owner pay.
If you can bring overhead down to 15% by working remote or cutting unused subscriptions, you’d keep $1,000 more every month without seeing a single extra client.
That’s the real power of tracking and managing overhead. It gives you options without adding hours.
How to Keep Overhead in a Healthy Range
Here are a few simple steps to make sure overhead stays manageable:
- List every recurring expense. Subscriptions, insurance, office rent, and even the “small” tools. Seeing the full list often highlights costs you can cut.
- Calculate your overhead percentage by dividing total overhead by total revenue. Check it every quarter so you spot trends early.
- Use tech wisely. A solid EHR can save you hours of admin time and prevent you from needing to hire extra staff too soon.
- Revisit your space needs. If you don’t use your office five days a week, consider subletting or downsizing.
Solo vs Group: Quick Snapshot
To sum it all up:
- A lean solo practice, especially remote, often runs with overhead in the 10 to 20% range.
- A group practice usually runs closer to 50% overhead, but also generates more revenue to cover those costs.
Neither is “better”; they just require different strategies to stay profitable.
Using Overhead as a Tool
At the end of the day, overhead isn’t a bad thing. It’s what allows your practice to operate smoothly. The goal is to keep it in check so you can actually take home more of the income from your practice.
And if you’re not sure what a healthy overhead percentage looks like for your practice, that’s exactly where we can help.
At Traktion, we work with therapy practice owners to make sense of their numbers, track overhead, and create systems that actually support their goals.
If you’re ready to get clarity around your costs and feel confident about where your money is going, schedule an introductory call with us.
We’ll help you make overhead work for your practice, not against it.
Until next time!