The Supply Center

Practice Calculator

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

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 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.

STEP 2: Determine Your Initial Startup, One Time Costs

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

Enter the $ Amount for Your Initial Startup Costs
These are the one time costs to get the practice going

Patient Care/Medical Supplies
Treatment Table	$	Cups	$
Cotton Jar	$	Cold Packs	$
Hazardous Waste Container	$	Hot Packs	$
Alcohol Dispenser	$	Hot Pack Tank	$
Pillow	$	Electro-Stimulation Machine	$
Table Paper	$	Massage Oil	$
Disposable Needles	$	Towels	$
Moxa	$	Gowns	$

Diagnostic Equipment
EENT Diagnostic Kit	$	Reflex Hammer	$
Stethoscope	$	Pin Wheel	$
Blood Pressure Cuff	$	Tape Measure	$
Thermometer	$	J-Mar Grip Strength Dynamometer	$
Thermometer Sheaths	$	Gonemeter	$
Tuning Fork	$	Patient Scale (Height/Weight)	$

TOTAL Patient Care/Medical Supplies			$
Office Supplies/Furniture
Desk	$	Lamps	$
Chairs - Reception Room	$	End Tables	$
Chairs - Your Office	$	Trash Cans	$
Chairs - Treatment Room	$	Plants	$
Reception Room Couch	$	Magazines	$
Stereo	$	Pictures	$
Computer	$	Telephones	$
Printer	$	Telephone Installation	$
Fax	$	Voice Mail/Answering Machine	$
Copier	$	File Cabinet	$
File Folders for Patient Charts	$	Chart Dividers	$
Typewriter	$	Business Cards	$
Stationery	$	Paper for Copies	$
Pens/Pencils	$	Appointment Book	$
Computer Software for Billing	$	Other	$

TOTAL Office Supplies/Furniture			$

Additional Expenses
Security Deposit	$	First Months Rent	$
Deposit to Purchase the Practice (if you are buying a practice)	$	Other	$

TOTAL Additional Expenses			$

TOTAL Initial Set Up Costs			$

STEP 3: Determine Your Monthly FIXED and VARIABLE Operating Costs
These are the costs that are paid every month while you are in business

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 and do not change with patient volume

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

Overhead

STEP 5: 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 6: Determine the COST PER PATIENT VISIT (CPPv)
Overhead divided by # patient visits per month

Cost Per Patient Visit

STEP 7: 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 8: 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

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 SIGN UP.

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.

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.

ADVICE: 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 per week.