Site finance

Overhead and indirect rates for independent research sites

By TrialNotice · Updated
Billing specialist with a highlighter comparing a printed procedure grid with a spreadsheet on her laptop
Short answerAn overhead or indirect rate covers costs not tied to any single study: rent, utilities, systems, insurance, administration, and management. Academic centers publish theirs, such as the 39% indirect rate Penn applies to industry studies. Independent sites should calculate their own rate from actual costs, divide it across direct study costs, and include it in every budget, because sponsors rarely add it for you.

What does overhead cover?

  • Rent, utilities, and facility upkeep.
  • Systems: CTMS, eRegulatory, phones, and IT.
  • Insurance and licenses.
  • Administration: finance, contracts, HR, and management.
  • Quality and compliance work not billed to a study.

What do institutions charge?

Penn Medicine applies a 39% indirect rate to industry sponsored studies (Penn Medicine). Rates vary by institution, and many academic centers publish theirs. UNC's budget guidance starts from estimating actual costs, then adding institutional rates (UNC TraCS).

How does an independent site calculate its own rate?

  1. Total last year's indirect costs, everything not billed to a specific study.
  2. Total last year's direct study costs: staff time on studies, procedures, and supplies.
  3. Divide indirect by direct. That percentage is your overhead rate.
  4. Apply it to the direct cost lines in every new budget.

Example: $300,000 in indirect costs and $1,000,000 in direct study costs gives a 30% rate.

Why is it getting harder to cover?

About 82% of sites reported operating costs rising 6% or more in 2024 (Bourne Partners, citing SCRS), and 38% saw profits decline in 2023 (SCRS). A rate calculated three years ago likely understates today's costs; recalculate annually.

How do you defend the rate in negotiation?

  • Show the calculation, not just the percentage.
  • Point to published academic rates as context.
  • If a sponsor caps overhead, build costs into direct lines instead.

What makes overhead easier to carry?

Volume. Overhead is mostly fixed, so every additional enrolled patient spreads it thinner. Sites that enroll more patients per study cover overhead from enrollment rather than from margin. See the study P&L model.

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Sources

  1. University of Pennsylvania Perelman School of Medicine, Budget Preparation and Development
  2. UNC TraCS, "An Introduction to Industry Clinical Trial Budget and Contract Negotiation"
  3. Society for Clinical Research Sites, Site Finances White Paper (2024)
  4. Bourne Partners, "Update on the Fundamentals of Clinical Trial Sites" (SCRS Global Site Solutions Summit takeaways, October 2025)

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