We have being losing an average of $11,500 per month at our primary care clinic.
ID: 2727972 • Letter: W
Question
We have being losing an average of $11,500 per month at our primary care clinic. We cannot continue with these significant losses. We have an idea to expand our hours into the evening and staff the clinic with only Nurse Practitioners.
What do we know?
1. The existing operation is losing money: cost per visit is $52.00 and revenue per visit is $50.00.
2. The added visits will generate only $44.00 per visit.
3. We will generate an additional 2,875 visit per month.
4. With plan the revenue per visit is equal to only $48.00.
5. Our variable expenses will increase to the following:
Nurse salary and benefit $180,047
Non-nurse expenses $233,942
Support staff salaries $100,000
Support staff benefits $21,353
Information Services $7,504
Laboratory $12,938
Imaging $3,319
Medical/Surgical supplies $15,999
Promotion and Mgt. $5,700
Recruiting $8,900
Other Op. Expenses $4,097
6. All other Costs (Fixed) remain the same
Opening the night clinic appears to make the loss worse! Will it? Please explain.
Excel Spreadsheet Information.
Current Revenues $ 287,500.00 Billable Patient Visits 5,750.00 Revenue Per visit $ 50.00 Nurse Salary and Benefit $ 120,030.00 Total Non-Nurse Expenses: $ 178,970.00 Support Staff Salaries $ 75,296.00 Support Staff Benefits $ 15,353.00 Information Services $ 5,003.00 Laboratory $ 8,625.00 Imaging $ 2,214.00 Medical/Surgical Supplies $ 10,666.00 Building and Occupancy $ 32,000.00 Furniture and Equipment $ 6,578.00 Adminstrative Supplies and Equip. $ 6,268.00 Insurance Premiums $ 5,175.00 Outside Professional Fees $ 2,616.00 Promotion and Marketing $ 2,150.00 Other interest $ 719.00 Health, Business, and Property Ins. $ 776.00 Recruiting $ 2,800.00 Other Operating Expenses $ 2,731.00 Total Expenses $ 299,000.00 Net Income $ (11,500.00) Cost per visit $ 52.00Explanation / Answer
Solution.
New revanue = $287,500 + ( 2,875 x $48 ) = $425,500
New Expense = = $413,989
Profit = $11,511
Particulars Current Visit Per Visit Proposed Revenues 287,500 5,750 50.00 Billable Patient Visits 5,750 8,625.00 Revenue Per visit 50 48.00 Nurse Salary and Benefit 120,030 5,750 20.87 180,047.00 Total Non-Nurse Expenses: 178,970 5,750 31.13 233,942.00 Support Staff Salaries 75,296 5,750 13.09 100,000.00 Support Staff Benefits 15,353 5,750 2.67 21,353.00 Information Services 5,003 5,750 0.87 7,504.00 Laboratory 8,625 5,750 1.50 12,938.00 Imaging 2,214 5,750 0.39 3,319.00 Medical/Surgical Supplies 10,666 5,750 1.85 15,999.00 Building and Occupancy 32,000 5,750 5.57 32,000.00 Furniture and Equipment 6,578 5,750 1.14 6,578.00 Adminstrative Supplies and Equip. 6,268 5,750 1.09 6,268.00 Insurance Premiums 5,175 5,750 0.90 5,175.00 Outside Professional Fees 2,616 5,750 0.45 2,616.00 Promotion and Marketing 2,150 5,750 0.37 5,700.00 Other interest 719 5,750 0.13 719.00 Health, Business, and Property Ins. 776 5,750 0.13 716.00 Recruiting 2,800 5,750 0.49 8,900.00 Other Operating Expenses 2,731 5,750 0.47 4,097.00 Total Expenses 299,000 5,750 52.00 413,989.00 Net Income (11,500) 5,750 -2.00 Cost per visit 52Related Questions
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