PRACTICE CALCULATOR FOR THE START-UP HEALTHCARE PRACTICE
This practice calculator will help you calculate the following:
Your Initial One
Time Cost to Open Your Practice
Break Even Point
Your Practice Cost
per Patient Visit (CPPv)
You Should Sign Up with an HMO
per patient visit
This practice guide
is useful to evaluate financial decisions concerning your practice. Use
it when opening your office, whether it is renting space from an establish
practitioner or space sharing with others or doing it on your own. It
will help you decide if you should sign up with an HMO.
It is recommended
that you consult a professional accountant and financial advisor to get
a true financial picture of your new practice.
I Sign Up with an HMO? Read the
Should I Sign Up with an HMO article in the CEU/PDA section
Compare the A)
cost per patient visit and B) your desired profit margin to what the
HMO is paying.
If the HMO fee
schedule is less than your cost per patient visit, DO NOT SIGN UP. You
will go out of business.
If the HMO fee
schedule does not provide an adequate profit for your services, DON'T
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.
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.
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.
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.
If you are opening a practice with no patient base, then you will need
an outside source of income to pay for your home and practice expenses.
Your practice should support itself and your salary at 30 patient visits