Physician True Hourly Rate Calculator
Also known as: “What is your time really worth?” Enter your numbers, see the receipt print, then see exactly which lever — collections, overhead, or admin load — would move your paycheck the most.
Your Numbers
Where to focus first
Three realistic moves, ranked by annual dollar impact — so you know which fight is actually worth having.
Delegate or do it yourself?
Price a recurring task at your true hourly rate versus what it costs to hand off — this is the math behind every “should I hire for this” decision.
Most physicians can tell you their collection rate. Fewer can tell you what an hour of their own time is actually worth after that revenue passes through overhead, denials, and the hours nobody bills for. Run the numbers using the calculator above and the answer is almost always lower than expected — often by 30% to 50%.
That gap isn’t a rounding error. It’s the difference between what a claim is billed for and what a practice actually keeps once collections, overhead, and unpaid administrative time are accounted for. Understanding it changes real decisions: which prior authorizations are worth fighting, what a fair employment contract looks like, and which tasks are actually cheaper to delegate than to do yourself.
This article walks through the math behind the calculator above, using current CMS and MGMA benchmarking data, so you can sanity-check your own number and know what to do with it once you have it.
What Does “True Hourly Value” Actually Mean for a Physician?
True hourly value is net income — what’s left after overhead — divided only by the hours actually spent on billable patient care. It deliberately excludes documentation, inbox messages, and prior authorization calls from the denominator, because that’s unpaid time, not billable time.
That’s different from how most physicians instinctively estimate their own value, which is usually net collections divided by total hours worked, admin time included. The calculator above labels that the “naive rate,” because it quietly assumes every hour in the office generates revenue — which isn’t how a billing cycle actually works.
How Do You Calculate Your True Hourly Rate?
The formula behind the calculator is deliberately simple, built from five inputs most practices already track:
- Gross charges billed — total charges submitted to payers before adjustments
- × net collection rate — the percentage actually collected after contractual write-offs and denials
- − overhead — staff, rent, EHR, malpractice, supplies, and billing/RCM costs
- = net income, divided by
- billable hours — total hours worked minus the share spent on unbillable administrative work
Every input matters, but the third and fifth steps are where most physicians’ assumptions break down — overhead usually eats more than expected, and admin time usually eats more hours than anyone tracks on a calendar.
What Counts as Billable Time?
Billable time is time spent on activity that generates a claim: the visit itself, and directly related clinical documentation tied to that encounter. It does not include prior authorization calls, portal message triage, chart chasing for referrals, or the general administrative overhead of running a practice — all real hours, none of them billed to a payer.
Why Is the Number Almost Always Lower Than Physicians Expect?
Three forces compound against the naive estimate, and each one is a lever in the calculator’s “Where to focus first” section.
Net collections are a fraction of gross charges, not the full amount. Between contractual adjustments, denials, and undercoding, the gap between what’s billed and what’s actually collected can be substantial — which is exactly why a denial code lookup and a routine revenue leakage check are worth running before assuming a low collection rate is simply “how it is” for your specialty.
Overhead consumes more of collections than most physicians budget for. Support staff compensation alone commonly runs around a quarter of total practice revenue, and once physician or advanced practice provider pay is folded into total labor costs, that figure can reach 50% to 60% or more of total operating expenditures, according to MGMA benchmarking data. Billing and revenue-cycle-management costs — whether in-house or outsourced — typically add another 5% of collections on top of that. And the trend isn’t flattening: MGMA Stat polling found nine in ten medical groups reported higher year-over-year operating costs in 2025, with an average increase of 11%.
Unbillable administrative time is larger than most physicians realize. Prior authorization alone consumes an average of 13 hours of physician and staff time per week, according to the American Medical Association’s 2025 Prior Authorization Physician Survey — and that’s before documentation, callbacks, and inbox management are added in. Ninety-four percent of physicians surveyed said prior authorization contributes directly to burnout.
What Is a Typical Net Collection Rate — and Why Does It Vary So Much?
Net collection rate depends heavily on payer mix, coding accuracy, and how aggressively a practice pursues denials and underpayments. We’ve covered this in detail before — the difference between a valid contractual write-off and an insurer underpayment that should be disputed, not absorbed, is one of the most common silent drains on collection rate, and it has nothing to do with your fee schedule being too low.
Medicare-indexed contracts add another layer worth checking annually: the CY 2026 Medicare Physician Fee Schedule set conversion factors of $33.57 for qualifying Advanced APM participants and $33.40 for everyone else, both up from $32.35 in 2025. A practice still benchmarking variance calculations against last year’s conversion factor is comparing every claim to the wrong number before the analysis even starts.
Which Lever Actually Moves Your Paycheck the Most?
This is the question the calculator’s “Where to focus first” panel is built to answer, because the honest answer is specialty- and practice-specific — but the pattern generally holds:
- Lifting your collection rate flows straight to net income at whatever your current overhead is, making it usually the highest-leverage single move if your rate is genuinely below your specialty’s typical range.
- Trimming overhead is a close second, and unlike collections, it’s often within a practice’s direct control — a vendor renegotiation, a staffing right-size, or an audit of recurring software fees.
- Reclaiming administrative time is the least direct dollar lever of the three, because it doesn’t add revenue by itself — it only pays off if the freed hours go toward seeing more patients. Delegating prior authorization work is the most common way practices convert this into real capacity.
When Does It Make Sense to Delegate Instead of Doing It Yourself?
The math is straightforward once you know your true hourly rate: compare it against what it costs to pay someone else — staff or an outsourced service — to do the same task. If a 12-minute prior authorization call costs you more of your own time value than it would cost to delegate at $30 to $40 an hour, delegating is a financial win, independent of any burnout reduction that comes with it.
This is exactly the comparison built into the calculator’s delegate-or-DIY section above — plug in a specific recurring task, and it does this math for you against your own true hourly rate rather than a generic assumption.
If your true hourly rate is lower than expected because of denials, undercoding, or credentialing delays rather than overhead alone, that’s a fixable pattern, not a fixed cost of doing business. Get a free billing audit or talk to a specialist to find out which lever applies to your practice specifically.
How Should You Use Your True Hourly Rate in Contract Negotiations?
A true hourly rate reframes an employment or partnership offer in real terms. A base salary or wRVU rate that looks competitive on paper can still translate to a low true hourly rate if the position carries an unusually heavy administrative load, a poor payer mix, or overhead costs that aren’t disclosed up front. Asking a prospective employer directly about expected non-clinical hours per week, and about the practice’s typical net collection rate, turns a vague compensation number into one you can actually compare against your own calculation.
Frequently Asked Questions
It’s net income — collections after overhead — divided only by hours spent on billable patient care, excluding unpaid administrative time like documentation, prior authorizations, and portal messages. It’s almost always lower than the “naive” rate most physicians calculate using total hours worked instead.
Billed charges are the starting point, not the ending point. Net collections reflect what’s actually paid after contractual adjustments and denials, and net income reflects what’s left after overhead. True hourly rate divides that final number by clinical hours only — which is why it’s typically far below gross charges per hour.
It varies by specialty and payer mix, but most office-based practices fall somewhere in the 50% to 65% range of gross charges, with cash-pay-heavy specialties like behavioral health often running higher. A rate consistently below your specialty’s typical range is usually worth auditing for denial management or coding issues.
It varies by specialty and practice model, but support staff compensation alone commonly runs about a quarter of practice revenue, and total labor costs — including physician or advanced practice provider pay — often reach 50% to 60% or more of total operating expenditures in employed-provider settings, per MGMA benchmarking data.
Compare the cost of your own time at your true hourly rate against the hourly cost of delegating to staff or an outsourced service. If delegating costs less than your true hourly rate for the time the task takes, handing it off is very likely a net financial gain — independent of any burnout benefit.
This article is intended for physicians, practice managers, and billing professionals for general educational purposes. It does not constitute financial, accounting, tax, or legal advice, and figures cited from CMS, MGMA, and AMA sources reflect national benchmarking data that may not apply to every specialty, region, or practice model. Consult a qualified accountant, healthcare attorney, or practice management consultant for guidance specific to your practice.