FTE Measurement:  The How To and the Value
*This article was written by the Governing Council for the Retina Practice Administrators Section 

As a result of working in an environment with ever-shrinking reimbursement dollars, it is increasingly important to pay attention to expense categories that consume income. Labor is our most expensive resource; therefore, it is essential to track labor to better manage its cost.

Technology has the potential to raise or lower our labor cost. If we are implementing technology that should reduce labor, we need to verify we have accomplished the goal with data and objective measures. 

The measure used most frequently to assess our human resource utilization is the number of full-time equivalents (FTEs) dedicated to a physician, office, or department. One FTE is equal to 1 full-time employee working 2080 hours per year. FTEs can also be expressed in percentages, e.g., 50% of an FTE means the employee is working 1040 hours per year.

FTE analysis can be used to decide on the number of full-time or part-time employees a practice expects to use in opening an office or adding a new physician.

While we’ve been led to believe that technological advances create opportunities to reduce personnel, measuring how many FTEs required to complete our practice tasks is important in determining true costs. The comparative benchmarking data also allows us to determine whether we are maintaining costs within a standard range or if our practice costs have room for improvement.

For example, Tulsa Retina Consultants, PLLC, has recently expanded into 2 additional geographic areas of Oklahoma. In establishing the breakeven calculation based on the number of patients who must be seen, we can use the FTE information to be certain we are properly staffed. We can also use FTE data to provide a forecast based on the number of patients scheduled to make certain we aren’t overstaffed while the new location is ramping up. If we know our staff costs should not exceed a specific percentage of net income, what our average staff wage is, and what our average patient collection is, we can easily calculate the number of FTEs necessary to make certain we are not overstaffed.

How are FTEs calculated?

The standard number of hours for a full-time employee is 2,080 hours a year, or 40 hours per week for 52 weeks. FTE values can be calculated for 1 worker or a group of employees.

To calculate the FTE for 1 employee, determine the total hours paid in a year and divide by 2080. If an employee is paid for 2080 hours a year, that worker is 1.0 FTE. If an employee is paid for 1040 hours in a year, that person is 0.5 FTE. Include all paid time in the calculation rather than actual worked time. The paid time should include holiday, vacation, sick days, PTO, etc. 

Assume a practice has 2 locations with the following employees and paid time for the year:              














Bedrock Total





















Metropolis Total






Total Hours


To calculate the total FTE for the practice, divide 16,441.56 by 2,080 to get 7.90 FTE. Find the FTE for each location by taking the total hours for that location and dividing by 2080. In this example, Bedrock has 3.93 FTE and Metropolis has 3.97 FTE. Note that even though Metropolis has 5 employees, there are just under 4 FTEs because only 1 of them is considered a full-time employee.  

Once a practice has calculated the FTE for the practice and location, these numbers can be used for analysis and benchmarking. Here are some ways to use the FTE calculation: 

  • Staff FTE per physician
  • Visits per FTE (staff or physician)
  • RVUs per physician FTE
  • Charges posted per billing FTE 

Things to keep in mind when calculating FTE:

  • If you have a shorter time frame, make certain you are using the correct denominator in your calculations. 
  • Be consistent in the calculations so that period-over-period comparisons are correct. 
  • Consider creating a department for nonproductive time such as training or special projects.
  • Watch for possible instances of “gaming the system” if the benchmarks are shared between locations.
  • Comparing data with other practices may be problematic unless they use the same calculation methodology. 

The ASRS Governing Committee has created an easy-to-use Microsoft Excel FTE calculation tool for large practices with many doctors, multiple locations, and a significant employee base. The Business of Retina Meeting in March will include a presentation designed to expand knowledge on this subject and to explain how to use the tool to provide necessary routine feedback.

(Published March 2019)

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