LOV (Low Overhead Volume) vs. HOV (High Overhead Volume) numbers - VERY INTEREST

[Guest guest]

Hello all. I am preparing to give a grand rounds presentation in NY state later

next month

to inspire the latest grads in the LOV (Low Overhead Volume) model vs. the HOV

(High

Overhead Volume) model. I guess I LOVE the LOV model! The numbers crunching I

did

today really highlighted the differences in a visceral way for me.

Low Overhead Volume (LOV) vs. High Overhead Volume (HOV)

Ultralight Practice Assembly line medicine

Low Volume practices in the news --> Housecall MD, Boutique practices

my personal real life comparisons

OR... How I saved 26.5 K/month in overhead

2005-current 2000-2002

LOV (Low Overhead Volume) HOV (High Overhead Volume)

Self Employed Employee with partnership potential

Part Time Full Time

3 half days/ week 4 full days/ week

$130 K/ yr $130 K/ yr (base 110K plus bonus)

10 K / yr OH (overhead) 330K/ yr OH (overhead)

<1K mo OH 27.5 K mo OH

What does an ultralight overhead look like?

My LOV OH (excluding 3K start up expense) recurring expenses

in order of cost

rent @ 300/mo 3600/yr

Personal health insurance 2200/yr (spouse, me)

malpractice 1st yr 1230 (at 50%)

Medical supplies 700/yr

Phone cell + land 700/yr

Office liability insurance 500/yr

Hospital/society Dues 600/yr

Office supplies 300/yr

9830 = 819/mo

Compare % OH (overhead) LOV & HOV models

My LOV Revenue 2500-3000/wk = 130K- 156K (call it 130K)

% OH/TOTrevenue 9830/130,000 =>> 7.6 % is overhead

HOV OH in practice 330K/yr or 27.5K/mo

so I brought in 460K/yr with 130K salary

% OH/TOT revenue 330K/460 K=>> 71.7% is overhead

(MGMA 60% average OH for HOV in 2002)

How many days will I have to work to pay my OH?

LOV part time to pay overhead at 10K/yr? < 1 month

3.3 weeks

@ 3 half days week

= 10 half days

making $1000 per 1/2 day

HOV full time to pay my portion of OH? 8.6 months

37.2 weeks

@ 4 full days/wk

= 148.8 full days

making $2218 per full day

How many patients seen per year to pay overhead ??

Pts/wk (at 25/wk) x 3.3 wks to pay part time OH LOV = 83 patients

@ $118/pt collected

Pts/wk (112/wk) x 37.2 wks to pay full time OH HOV = 4166 patients

@ $79.21/pt collected

Collection rate AR 30,60, 90 days?

LOV no cash collections/bad debt department -

all cash pts pay in full at time of service

insurance payments received 14-21 day average, no AR 60,90 accounts

HOV pts sent to collections, billing dept tracking unpaid accounts

uninsured pts not accepted or cash pts with unpaid balances at visit

insurance payments with larger 30,60,90 ARs to track, denials to follow

Lack of data on LOV in medical literature

Recruiters, MGMA, medical organizations give statistics based on HOV practices

LOV practices were the norm 50 years ago, but most docs are not exposed to

LOV data in training, journals or elsewhere and are heavily marketed with HOV

" opportunities "

So I am open for comments and most appreciative for your thoughts. This is just

the

financial portion of my presentation. I like it because it highlights the

differences in a

dramatic real life way. By the way the 130K/yr is extrapolated into the first

12 months at

capacity at my " LOVe " practice. I reached capacity 2-3 montsh ago and the #s

have

supported my figures above since. The first 6-8 months were " start-up " months

and not

typical of the future numbers.

Thanks!

Pamela

Pamela Wible, MD

Family & Community Medicine, LLC

3575 st. #220

Eugene, OR 97405

roxywible@...