RE: Re: Running the numbers

[Guest guest]

You need to firm up these numbers, they don't look right and you won't be

able to do the math with soft numbers.

Look at the average expenses in the FPM article:

http://www.aafp.org/fpm/20070900/20thei.html

Make sure to do a careful job getting good numbers (go to

www.IMPCenter.org and go through the pages on business plan).

As always, be sure to challenge assumptions based on the typical model of

practice.

Do you really need legal help at $125/mo?

You have one time or annual fees listed as monthly expenses (Business

License/Tax)

Internet $2500 per month would buy a line big enough for an entire

hospital.

Do you really need to spend $$ on marketing?

Gordon

At 05:17 PM 12/4/2007, you wrote:

My 8K overhead assumes the

following (now I do admit that few are

high - but that is to play safe). If I cut out the fat, I could

probably shave another 500. The 2.5K interest expense is to cover the

startup cost of 75K. Am I overbudgeting in any of the areas???

Rent 1,667 (800 sq ft @ psf 25)

Utilities (Gas/Electricity) 150

Cell Phone 150

Land Phone 75

Internet 75

Cleaning/Sanitation/Bio 100

Prof Svcs - Accouting 125

Prof Svcs - Legal 125

Scheduling 20

Medical History 50

Charting 50

Billing & Coding 75

Malpractice Insurance 300

Bldg/Liability Insurance 100

Business License/Tax 250

CME 350

Marketing/Advertising 200

Interest Expense 2,500

Medical Supplies 750

Office Supplies 250

Misc 500

> >

> > Hi Folks,

> >

> > I have been crunching some numbers for going solo but I don't

> > understand how several messages posted on this group claims

that

> one

> > can break even in 8-9 months and get to a point within the

first

> year

> > that one stops accepting new patient.

> >

> > Assuming the monthly overhead is 8K, I would need about 100

visits

> > per month (with reimbursement rate of 80 per visit) to break

even

> or

> > 1200 visits/year = 400 patients/yr (presuming 3

visits/yr/patient

> and

> > also assuming that the 400 patients all signed up on the very

first

> > day). If I need to make, let's say 144K, I would need 3000

visits

> =

> > 1000 patients. Now, getting 1000 patients in 3 yr seems

reasonable

> to

> > me. Does that mean I would not be able to make my desired

salary

> > until the 3rd year? Or does it mean that I am overestimating

the

> > time needed to get 1000 patients? Thoughts? Suggestions??

> >

> > Note: The overhead assumes about 2.5K of finance charges

(loan).

> >

> > Dr. Shyam

> >

>

[Guest guest]

Our first year, we were solo+1. (female provider)

After the first year, we were averaging 8 patients a day.

We of course did not average 8 patients a day that year. Maybe 4/day over 233 workdays.

We spent extravagantly, cause we had a sweetheart recruitment deal that paid the bills.

Cap-X costs are not figured into monthly expense, but were paid for out of the recruitment deal funds.

Therefore no debt at the end of year 1, and 70k of assets in the practice.

Income from seeing patients, 80k (at $80/visit)

Expenses 160k, of which 52k was doctor salary.

(if money was borrowed for the assets, we would be 70k in debt)

So expenses - doctor salary divided by 12 equals 9000/month.

Subract the +1 person, expenses are 8000/month

Our office as example, is the IMP patient care philosophy, but on a NON-IMP expense curve.

8000 per month is right on, for a non-IMP expense style startup.

-tom

-----Original Message-----From: [mailto: ] On Behalf Of brenthrabikSent: Tuesday, December 04, 2007 4:55 PMTo: Subject: Re: Running the numbers

Where do you come up with an overhead of 8000 on a micropractice? Rent 900Phone200Med mal 500Medical informatics on cheap side 100Misc. 1000 Loan payment for stuff you just thought you had to have 500-1000. This is roughly 150 dollars a day or two patients. The other 8 are left for you 8x75 =600 a day if at full capacity. 3000 a weekCome on now, 10 a day not too difficult. It does take 3 years generally to grow a practice from the beginning unless in high demand area or being female provider Brent>> Hi Folks,> > I have been crunching some numbers for going solo but I don't > understand how several messages posted on this group claims that one > can break even in 8-9 months and get to a point within the first year > that one stops accepting new patient.> > Assuming the monthly overhead is 8K, I would need about 100 visits > per month (with reimbursement rate of 80 per visit) to break even or > 1200 visits/year = 400 patients/yr (presuming 3 visits/yr/patient and > also assuming that the 400 patients all signed up on the very first > day). If I need to make, let's say 144K, I would need 3000 visits = > 1000 patients. Now, getting 1000 patients in 3 yr seems reasonable to > me. Does that mean I would not be able to make my desired salary > until the 3rd year? Or does it mean that I am overestimating the > time needed to get 1000 patients? Thoughts? Suggestions?? > > Note: The overhead assumes about 2.5K of finance charges (loan).> > Dr. Shyam>

[Guest guest]

Doh. nadanna moment.

So why $2500 in interest payments? That's a killer. That's

more than my total monthly expenses when I opened.

G

At 10:28 PM 12/4/2007, you wrote:

Hee hee. Gordon, that $2500 is

for " interest. " That said, that's one

whopping loan. Is that all really business expense?

I don't think you can see enough patients to cover these expenses

without staff, and I don't see any staff expense. I know I can't

handle 1000 patients without staff.

My total expenses are around $33K/yr. I didn't do any real

advertising, broke even in 3 months, and expect to close at around a

year, with about 30 hours of work per week, and commensurate lower

income.

Haresch

> >Rent 1,667 (800 sq ft @ psf 25) - more space than 1 person

needs

> >Utilities (Gas/Electricity) 150 - mine is included in rent,

but

this seems high

> >Cell Phone 150 - I pay $60 for a whole-family plan

> >Land Phone 75

> >Internet 75

> >Cleaning/Sanitation/Bio 100 - I do this myself

> >Prof Svcs - Accouting 125 - I do this myself

> >Prof Svcs - Legal 125 - I do this myself - LOL

> >Scheduling 20

> >Medical History 50

> >Charting 50 - is this EMR support?

> >Billing & Coding 75 - is this clearinghouse? seems good

> >Malpractice Insurance 300 - see discussions of ways to lower

this

> >Bldg/Liability Insurance 100 - seems high

> >Business License/Tax 250 - seems way high

> >CME 350 - way more than I spend, including AAFP dues and

UpToDate

> >Marketing/Advertising 200 - I maybe spent this for 2 months,

then

nothing

> >Interest Expense 2,500 - wow

> >Medical Supplies 750 - I don't come anywhere near this.

vaccines?

> >Office Supplies 250 - I'm way lower here, too

> >Misc 500 - ?

> > > >

> > > > Hi Folks,

> > > >

> > > > I have been crunching some numbers for going solo but

I don't

> > > > understand how several messages posted on this group

claims that

> > > one

> > > > can break even in 8-9 months and get to a point

within the first

> > > year

> > > > that one stops accepting new patient.

> > > >

> > > > Assuming the monthly overhead is 8K, I would need

about 100

> >visits

> > > > per month (with reimbursement rate of 80 per visit)

to break even

> > > or

> > > > 1200 visits/year = 400 patients/yr (presuming 3

visits/yr/patient

> > > and

> > > > also assuming that the 400 patients all signed up on

the very

> >first

> > > > day). If I need to make, let's say 144K, I would need

3000

> >visits

> > > =

> > > > 1000 patients. Now, getting 1000 patients in 3 yr

seems

> >reasonable

> > > to

> > > > me. Does that mean I would not be able to make my

desired salary

> > > > until the 3rd year? Or does it mean that I am

overestimating the

> > > > time needed to get 1000 patients? Thoughts?

Suggestions??

> > > >

> > > > Note: The overhead assumes about 2.5K of finance

charges (loan).

> > > >

> > > > Dr. Shyam

> > > >

> > >

> >

> >

>

[Guest guest]

I won't take apart each figure, but a few thoughts:1) Is this your building? If not, my 5 year lease included a build out to my specs. (Don't put 32,000 into someone else's building!!)That lease started, however, in the second half of my first year - I started renting a room for the first 6 months until I grew out of it. I don't recommending setting up twice in your first year, but I'm proof it can be survived : )2) Furniture? Go cheap - Used gear, our most comfortable waiting room chairs are cool outdoor cheapos.  They look good, though. 3)  How many people are going to use the 10,700 in computers and software? (Start small, build a network gradually)I started with 2 peer-peer Dells, no server. Software total costs, in today's prices: 2,000. The rest is monthly (about $60./month) and I now have a 4 computer peer-peer network. Budget in 2-3  hours of IT specialist to help you link the 2 computers if you're uncomfortable with it.  Internet backup is now the cheapest option. No exchangable hard drives offsite, no tape back ups. 4) Network Printer/fax/copier - $500, Scanner - $500. Extra laser printer next to the 2nd computer - $150.I started my practice with $10,000 in savings and a couple of "no-interest" credit cards that we paid off with my earnings before any interest ever came due. Remember each new patient visits at least once, so all you need is 25-30/week to start. That will give you plenty to do. They will all see you right away when they establish, so you don't need to start out with 1,000 new patients (in fact, if you did, you'd be suicidal).  Each new patient can be a lot of work. Marketing needs will very much depend on PCP needs in your community. The cheaper you make it at start up, the more likely you are to survive. Keep it cheap now, then you can grow it later. Albuquerque Okay folks, first of all thanks a lot (really, I mean it) for pokingholes on my assumptions - that's why I posted on the group at thefirst place..So now let me counter-argue some of the statements:$2500 in interest is basically 70K loan as the startup costs and hereis what's in it :Build Out 32,000 ($40 TI psf)Computers/Software 10,700 (EMR,computers etc.)Furniture 4,175 (Chairs, exam table etc)Office Equipment 2,000 (printer, fax, shredder etc)Medical Equipment 16,835 (main ones - Dexa Scan, EKG Machine etc)Initial Medical Supplies 5,000 Initial Office Supplies 500 Initial Marketing 2,000 Deposits 2,000 Now, I do agree that we can reduce some build out and medicalequipment cost and hence the loan should be around 50K-60K. With 8%interest rate, your payment for a 50K loan is going to be around 2K.Now tell me how do you avoid this cost? Yes, if you can find aphysician space to rent out so you won't spent on build-out etc...butthat's a big IF....Gordon asked why the marketing is 200/month....the article youreferred me to have marketing costs of 80...and remember that's anaverage...so I give that 200 is may be too much and I can get awaywith may be 150 or 100....but how do I attract patient....i need 1000new patient (panel)....what patient panels do you have and are happywith it?Gordon also questioned the accounting/legal fees....surely one needsto get audited yearly right...and isn't one time accountant/legalcosts about 1500-2000???Another question from was you can't see 1000 patient w/ostaff...correct me if I am wrong but I am talking about 1000 patientpanel with 3 visits/yr/patient = 3000 visits/yr...with 250 days a yearworkday that comes out to 12 visits per day....surely one can do 12visits per day if one is working 8 hrs and each visit is 30minutes...can't one?I mean (from the article), the average expense is around 5402(excluding employee expense)....which is what I have if you take outmy interest expense....so I am not way off...am I?

[Guest guest]

I, too am confused about some of you numbers. some would appear to be yearly

costs, like the interest, tax and license, some monthly. Here is a spreadsheet

that sould help you, if you understand excel. plug in some numbers and you will

your answers.

I started with an overhead of 60K/year tow years ago including interest payment.

Broke even in 6 months and am doing about 180 + benes a year in profit seeing

1557 patients a year, ave reimbursement is 121/patient. I can't figuer what you

are buying for an interest payment of 2500/month, is this really correct?

________________________________

From: on behalf of roopamshyam

Sent: Tue 12/4/2007 3:17 PM

To:

Subject: Re: Running the numbers

My 8K overhead assumes the following (now I do admit that few are

high - but that is to play safe). If I cut out the fat, I could

probably shave another 500. The 2.5K interest expense is to cover the

startup cost of 75K. Am I overbudgeting in any of the areas???

Rent 1,667 (800 sq ft @ psf 25)

Utilities (Gas/Electricity) 150

Cell Phone 150

Land Phone 75

Internet 75

Cleaning/Sanitation/Bio 100

Prof Svcs - Accouting 125

Prof Svcs - Legal 125

Scheduling 20

Medical History 50

Charting 50

Billing & Coding 75

Malpractice Insurance 300

Bldg/Liability Insurance 100

Business License/Tax 250

CME 350

Marketing/Advertising 200

Interest Expense 2,500

Medical Supplies 750

Office Supplies 250

Misc 500

> >

> > Hi Folks,

> >

> > I have been crunching some numbers for going solo but I don't

> > understand how several messages posted on this group claims that

> one

> > can break even in 8-9 months and get to a point within the first

> year

> > that one stops accepting new patient.

> >

> > Assuming the monthly overhead is 8K, I would need about 100

visits

> > per month (with reimbursement rate of 80 per visit) to break even

> or

> > 1200 visits/year = 400 patients/yr (presuming 3 visits/yr/patient

> and

> > also assuming that the 400 patients all signed up on the very

first

> > day). If I need to make, let's say 144K, I would need 3000

visits

> =

> > 1000 patients. Now, getting 1000 patients in 3 yr seems

reasonable

> to

> > me. Does that mean I would not be able to make my desired salary

> > until the 3rd year? Or does it mean that I am overestimating the

> > time needed to get 1000 patients? Thoughts? Suggestions??

> >

> > Note: The overhead assumes about 2.5K of finance charges (loan).

> >

> > Dr. Shyam

> >

>

[Guest guest]

Why would you pay off the loan in 3 years? It's tax deductable expense. I would

run your loan expense for 30 years and you can always pay it off sooner if your

cash flow is good.

________________________________

From: on behalf of roopamshyam

Sent: Wed 12/5/2007 10:23 PM

To:

Subject: Re: Running the numbers

I know my interest expense has stumped many of you. My assumption

that I didn't post earlier was that the loan term is for 3 yrs

only....If I go with 10yrs, the expense would drop down to less than

1000...

Shyam

> > >

> > > Hi Folks,

> > >

> > > I have been crunching some numbers for going solo but I don't

> > > understand how several messages posted on this group claims

that

> > one

> > > can break even in 8-9 months and get to a point within the

first

> > year

> > > that one stops accepting new patient.

> > >

> > > Assuming the monthly overhead is 8K, I would need about 100

> visits

> > > per month (with reimbursement rate of 80 per visit) to break

even

> > or

> > > 1200 visits/year = 400 patients/yr (presuming 3

visits/yr/patient

> > and

> > > also assuming that the 400 patients all signed up on the very

> first

> > > day). If I need to make, let's say 144K, I would need 3000

> visits

> > =

> > > 1000 patients. Now, getting 1000 patients in 3 yr seems

> reasonable

> > to

> > > me. Does that mean I would not be able to make my desired

salary

> > > until the 3rd year? Or does it mean that I am overestimating

the

> > > time needed to get 1000 patients? Thoughts? Suggestions??

> > >

> > > Note: The overhead assumes about 2.5K of finance charges (loan).

> > >

> > > Dr. Shyam

> > >

> >

>

[Guest guest]

Dexa scan.

Is it worth it to have a dexa scan i a low volume practice? What is the breakeven or ROI on it?

Jacques Guillot, MD

..

[Guest guest]

on a real machine with acceptable quality standards

you need at least 20 dexas a month. 70k to get set up,

3k a year maintenance. Average reimbursement 130-150.

Most likely not appropriate for low overhead, low

VOLUME practice. Always check out maintenance Fees!!!!

Beck, M.D.

--- Jacques Guillot wrote:

> Dexa scan.

>

> Is it worth it to have a dexa scan i a low volume

> practice? What is the

> breakeven or ROI on it?

>

> Jacques Guillot, MD

>

> > .

> >

> >

> >

>

________________________________________________________________________________\

____

Be a better friend, newshound, and

know-it-all with Yahoo! Mobile. Try it now.

http://mobile.yahoo.com/;_ylt=Ahu06i62sR8HDtDypao8Wcj9tAcJ