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Business Essentials
Practice Calculator

PRACTICE CALCULATOR FOR THE ESTABLISHED HEALTHCARE PRACTICE

This practice calculator will help you calculate the following:

  • Your Recurring Monthly Costs
  • Overhead
  • Break Even Point
  • Practice Growth Projection
  • Monthly Profit or Loss
  • Your Practice Cost per Patient Visit (CPPv)
  • Assess Whether You Should Sign Up with an HMO
  • Average collections per patient visit

This practice calculator is useful to evaluate financial decisions concerning your practice. Use it to assess your practice health, make business decisions, try different scenarios. It will help you decide if you should sign up with an HMO. It can be used whether you are renting space from an establish practitioner or space sharing with others or doing it on your own.

It is recommended that you consult a professional accountant and financial advisor to get a true financial picture of your new practice.


STEP 2: Determine Your Monthly FIXED and VARIABLE Operating Costs

  • OPTION 1 Use operating cost tabulator below; use the TAB key to move between fields.
  • OPTION 2 Print operating cost worksheet to work off-line. Return to website and enter information.


Enter the $ Amount You Pay Monthly for Each of the Following FIXED Expenses
These remain consistent over time

 

Office Rent
$
Disability Insurance
$
Your Salary
(amount from STEP 1)
$
Business/General Liability Insurance
$

Employee Salaries
(including employer taxes such as FICA)

$
Professional Liability/Malpractice Insurance
$

Equipment Leases & Loans

$
Workers' Compensation
$

Advertising
(yellow pages, network dues, etc.)

$
State Association Dues
$
Pager
$
National Association Dues
$
Service Contracts
(copiers, computers, software, x-ray machine)
$
Dues - Other
$
Practice License
$
QME Fees
$
Other
$
 
     

 

Total FIXED Expenses
$
       

Enter the $ Amount You Pay Monthly for Each of the Following VARIABLE Expenses
These change with patient volume

Telephone
$
Taxes
(city business, county, property, etc.)
$
Cellular Phone
$
Attorney Fees
$
Utilities
$
Bookkeeper/Accountant
$
Medical Supplies
(acupuncture needles, cotton, etc.)
$
Books & Subscriptions
$
Office Supplies
(pens, pencils, paper, etc.)
$
Continuing Education Fees
$
Postage
$
Continuing Education Travel
$
Bottled Water
$
Other
$
 

 

Total VARIABLE Expenses
$
   

STEP 3: Determine Your OVERHEAD (Total Monthly Expenses)
Sum of FIXED & VARIABLE Expenses

 

Overhead
$
 

STEP 4: Determine AVERAGE FEE Collected per Patient Visit
Monthly gross collection divided by patient visits

 

Enter Your Average Gross Collection per Month
$
Average Number of Patient Visits per Month
   
Average Fee Collected Per Patient Visit
$
   

STEP 5: Determine the COST PER PATIENT VISIT (CPPv)
Overhead divided by # patient visits per month

 

Cost Per Patient Visit
$
   

STEP 6: BREAK EVEN Analysis
Overhead divided by average fee collected per patient visit

  • This is when your income equals your expenses (Income = Expenses)
  • Income depends on the Patient Volume and the Average Fee Collected
  • It is recommended that your practice be able to support you and itself at 30 patient visits per week
Average Number of Visits per Week to Break Even
   

STEP 7: Determine Practice GROWTH PROJECTION/PROFIT or LOSS
Number of patient visits per month multiplied by the average fee collected per patient minus the overhead

 

Growth Projection
$
   
   
A Positive number means you are making money, also called PROFIT.
A Negative number means you are loosing money.
   

 

Should I Sign Up with an HMO?
Read the Should I Sign Up with an HMO article in the CEU/PDA section

  1. Compare the A) cost per patient visit and B) your desired profit margin to what the HMO is paying.

  2. If the HMO fee schedule is less than your cost per patient visit, DO NOT SIGN UP. You will go out of business.

  3. If the HMO fee schedule does not provide an adequate profit for your services, DON'T SIGN UP.

  4. There are only two option to make a profit with the HMO. Increase patient volume and/or decrease expenses. Read the Should I Sign Up with an HMO article in the CEU/PDA section for details. You can get CEU/PDA credit.

  5. If the HMO says you will make up the lost revenue in patient volume, then recompute the Fixed expenses with the additional office employee to assist with HMO paper work. The go to #1 above and reassess.

  6. If the HMO tells you that they will increase the fees later, don't believe them. Due to market pressure, your fees will remain there until doctors drop off the panels and the HMO needs to increase the fees to keep the doctors on the panels. This is a common ploy to get doctors to sign up.

  7. ALERT: If your State or National Professional Association president or board member is a Consultant to the HMO's (e.g. receiving a consulting fee to help the HMO expand their network within the profession; inform the HMO of the Association activities in conflict with the interest of the HMO, etc.) the association members should demand to have him/her removed for conflict of interest. When the Association has a vote concerning the HMO's is he/she going to vote on behalf of the membership or the HMO and their consulting fees. Hiring Professional Association Presidents and Board members as a consultant is a common tactic by the HMO to get the association membership to join and expand its market share.
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