financial analysis for the new practice dr. patrick bodnar
TRANSCRIPT
Introduction
• Many small businesses face unexpected challenges due to underfunding
• Underfunding can occur when the proper financial estimates of a practice are not calculated
• Need a realistic financial understanding of what it costs to start a practice and what it costs to run a practice
Introduction
• To properly estimate funding needs for the new practice it is necessary to analyze:– Project Costs– Operating Budget– Break-Even Point– Financial Projections
Project Costs
• The financial resources necessary to start a practice
• Need to consider:– Equipment / Service– Office / Supplies– Inventory– Build Out– Deposits– Licenses– Professional services– Marketing / Advertising– 6 to 12 months of operating expenses
Calculating Costs on Equipment / Service
• Equipment purchases– Healthcare and Office– Ex: Adjusting table, resistance equipment, electric
modalities, x-ray equipment…
• Classes and certifications• Reusable and disposable supplies for e / s
– Ex: face paper, ultrasound gel, electrodes, refrigerant spray, film, gowns, development chemicals, surface sanitizer…
Calculating Costs on Office / Supplies
• Any items needed to support your operation– Ex: Copy paper, brochures, forms, pens, pencils,
calculators, hole punch, logo design, letter head, business cards …
• Furnishing purchases– Ex: Signage, office furniture, computers, phones, fax
machine, printers, copier, plants…
Calculating Costs on Inventory
• Items for sale– Ex: Topical analgesic, hot/cold packs, pillows,
supports, braces, nutrition, electrodes, homeopathy / herbal therapy, exercise balls, resistance kits…
Calculating Costs on Buildout
• Construction work or repairs to office space
• Customized improvements– Ex: Cabinetry, counters, storage, water
lines…
Calculating Costs on Deposits
• What front money is required– Ex: Rent deposits, initial lease payments and
deposits, phone, water and sewage, electricity, gas…
Calculating Costs on Licenses
• Chiropractic license– Exam fee and required travel
• Assumed name certificates
• Facility registration
• X-ray registration
Calculating Costs on Professional Services
• Attorney fees for contracts
• Accountant fees on financial reports and business materials
• Engineer reports on x-ray equipment
• Architect design on floor plan
Calculating Costs on Marketing / Advertising
• Determine costs of your initial advertising programs based on analysis of your market – targeting, defining needs / service development, sourcing, and connecting
What is an Operating Budget?
• An annual estimate of the total value of resources required for the performance of your mission
• Broken down monthly
• Includes estimated revenue and expenses organized by categories
Revenue
• Money coming in– NP Cash Collections– EP Cash Collections– Insurance Collections– Supply Sales– Equipment Sales– Nutrition Sales
Expense
• Money going out– Staff
• Wages• FICA• Professional Development• Misc. Expense
– Financial• Bank Fees• Credit Card Processing
Expense
– Office• Rent• Office Supplies• Office Equipment• Healthcare Equipment• Healthcare Supplies• Equipment Maintenance• Telephone• Gas/Electric• Water/Sewage• Insurance• Patient Education Material
Expense
– Advertising/Marketing• Print• Cable• Directories• Care Class• Web
– Printing/Graphic Artist– Postage– Travel– Cost of Goods Sold
Break-Even Point
• Analysis of the level (volume) of sales/service at which a project's revenues equal its expenses.
• The point where money in equals the cost to do business.
Break-Even Point
• Need to know:– Monthly Operating Budget– Average Patient Collections
• Want to know:– How many patient visits needed each
month to pay operating costs.
Break-Even Point
• EquationEstimated or current yearly operating
budget / Average patient collections per visit / number of business weeks per year
– $216,000/yr / $100.00 = 2160 pv’s/yr– 2160 / 45 wks = 48 pv’s/wk
Break-Even Point
– $216,000/yr / $75.00 = 2,880 pv’s/yr– 2880 / 45 wks = 64 pv’s/wk
– $216,000/yr / $50.00 = 4,320 pv’s/yr– 4320 / 45 wks = 96 pv’s/wk
– $216,000/yr / $25.00 = 8,640 pv’s/yr– 8640 / 45 wks = 192 pv’s/wk