A medical practice spends $133.61 for every hour a physician spends with patients, according to the American Medical Association's 2024 Physician Practice Information Survey. The AMA's table splits that into $42.56 of direct cost and $91.04 of indirect cost per hour (the two parts differ from the total by $0.01 because of rounding in the table).
Those averages come from 831 practices and departments that together represent 18,086 physicians. The spread by specialty is wide, from $38.10 per hour in psychiatry to $297.19 in ophthalmology.
What the AMA measured and how many practices answered
The AMA hired Mathematica, an independent research firm, to run the Physician Practice Information Survey in 2024. In a January 29, 2025 letter to the Centers for Medicare & Medicaid Services, the AMA said the effort was fully funded by the AMA and endorsed by more than 170 organizations. The AMA also said the data could inform how CMS builds the practice expense part of the Medicare fee schedule.
Usable data came from 831 practices and departments, covering 18,086 physicians and 18 specialty groups. The AMA had hoped to report on more than 30 Medicare specialties. It could not, because response counts were small for some specialties and because many practices do not track costs at that level. In 99 of the 831 responses, or 12.0%, the practice reported several specialties as one combined cost.
The survey also collected data on nurse practitioners and physician assistants from about 10% of the responding practices. The AMA warned that most of those practices could not assign costs directly to those clinicians, so the figures for them carry more uncertainty.
Every figure below is expense per hour of direct patient care. That means the cost of the practice divided by the hours a clinician spends in contact with patients, not hours in the building.
Direct and indirect cost for the average practice
Across all specialties, a physician spent 1,936 hours a year in direct patient care, per the AMA table. Each of those hours carried $133.61 in practice expense. Indirect cost made up 68.1% of that total, based on $91.04 of $133.61.
Direct cost is $42.56 per hour. Clinical labor is the largest piece at $33.02, which is 77.6% of direct cost. Supplies add $6.77 and equipment adds $2.77.
Indirect cost has four parts in the AMA table. Administrative cost is $29.30 per hour. Overhead is $24.29. Information technology costs $6.55. A category the AMA labels other costs $30.91, the largest single indirect line.
Administrative cost alone, at $29.30, is 32.2% of the $91.04 indirect total. For a practice manager, that is the line that billing, front desk and management staff land in.
The AMA table also lists physician work at $194.32 per hour and professional liability insurance at $6.95 per hour. Adding practice expense, physician work and liability gives the table's grand total of $334.87 per hour.
Cost per hour by specialty
Ophthalmology has the highest total practice expense at $297.19 per hour. Its indirect cost is $200.36, and administrative cost alone is $77.30 per hour. Overhead is $73.59. Psychiatry has the lowest figure in the table at $38.10 per hour, with $9.25 direct and $28.84 indirect.
| Specialty group | Direct care hours per physician per year | Direct cost per hour | Indirect cost per hour | Total practice expense per hour |
|---|---|---|---|---|
| Ophthalmology | 1,812 | $96.83 | $200.36 | $297.19 |
| Dermatology | 1,636 | $103.82 | $146.63 | $250.46 |
| Hematology/Oncology | 1,763 | $109.62 | $132.38 | $242.00 |
| Cardiology | 2,265 | $77.55 | $132.00 | $209.55 |
| Radiology | 1,781 | $58.79 | $118.12 | $176.91 |
| Primary care | 1,851 | $48.55 | $97.14 | $145.70 |
| Office-based medicine | 1,849 | $34.60 | $75.32 | $109.92 |
| Psychiatry | 1,407 | $9.25 | $28.84 | $38.10 |
| All specialties | 1,936 | $42.56 | $91.04 | $133.61 |
Source: American Medical Association, Table 1, Results from the 2024 Physician Practice Information Survey (831 practices and departments, 18,086 physicians).
Direct and indirect cost do not move together. Dermatology and hematology/oncology spend $103.82 and $109.62 per hour on direct cost, mostly clinical labor and supplies. Cardiology spends $77.55 direct but $132.00 indirect. Ophthalmology spends nearly as much direct as dermatology ($96.83) and $200.36 indirect.
What the hourly figures add up to in a year
The AMA reports hours and cost per hour separately. Multiplying them gives a rough annual practice expense per physician. This is arithmetic on the AMA's figures, not a number the AMA published.
- All specialties: 1,936 hours at $133.61 comes to about $258,669 a year.
- Primary care: 1,851 hours at $145.70 comes to about $269,691.
- Office-based medicine: 1,849 hours at $109.92 comes to about $203,242.
- Cardiology: 2,265 hours at $209.55 comes to about $474,631.
- Ophthalmology: 1,812 hours at $297.19 comes to about $538,508.
- Psychiatry: 1,407 hours at $38.10 comes to about $53,607.
Primary care has a higher cost per hour than office-based medicine ($145.70 against $109.92). Its indirect cost is $97.14, of which administrative cost is $31.32 and the other category is $34.39. The primary care group covers 2,348 physicians in 149 departments.
Annual direct patient care hours also differ. Vascular surgery logs 2,486 hours, orthopaedic surgery 2,397 and psychiatry 1,407.
Nurse practitioners and physician assistants
For nurse practitioners the AMA reports 1,509 direct care hours a year and $79.97 of practice expense per hour. Direct cost is $38.03 and indirect is $41.94. For physician assistants the figures are 1,583 hours, $82.18 total, $32.59 direct and $49.59 indirect.
Both are well below the $133.61 physician average. Multiplying hours by cost gives about $120,675 a year for a nurse practitioner and $130,091 for a physician assistant. The AMA warned that most practices could not assign costs directly to these clinicians, so treat the figures as estimates. The AMA also noted that CMS does not currently use nurse practitioner and physician assistant claims in its practice expense method.
Physician work per hour shows a similar gap. The AMA lists $194.32 for physicians, $83.49 for nurse practitioners and $96.50 for physician assistants.
Using the figures against your own books
A practice can build the same ratio from its own ledger. Take total non-physician operating cost for a specialty line and divide by the hours clinicians spend with patients. If the result sits well above the table figure for your specialty, the indirect lines are the first place to look, since they hold 68.1% of the average.
Compare line by line. For a primary care group, the table gives $31.32 for administrative cost, $24.37 for overhead and $7.06 for information technology per direct care hour. Those three lines add to $62.75 of the $97.14 indirect total. The remaining $34.39 sits in the other category, which the AMA does not break down in this table.
The AMA table is a national average that blends large systems and small groups. A small independent practice with a different payer mix or space cost can reasonably sit above or below it.
Sources
- American Medical Association, Table 1. Results from the 2024 Physician Practice Information Survey
- American Medical Association, Letter to CMS on the Physician Practice Information Survey, January 29, 2025
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