Statistical Report
The volume of patient visits: Assumptions – It is assumed an average of 20 patient visits per day in the first year will increase by 5% annually in the next two years. Revenues:
- Medicare – It is assumed to have a reimbursement rate of 85% from Medicare, per industry standards.
- Medicaid – It is assumed to have a reimbursement rate of 80% from Medicaid, per industry standards.
- Commercial Insurance – It is assumed a reimbursement rate of 90% from Commercial Insurance, as per industry standards.
It is assumed a 10% self-pay rate, with patients paying upfront for services. Expenses:
- Labor – It is assumed a total labor cost of $200,000 in the first year will increase by 5% annually in the next two years. This cost includes salaries for one physician and a support staff of 2 people.
- Equipment – It is assumed a total equipment cost of $100,000, which includes examination tables, medical Equipment, and software.
- Supply – It is assumed a total supply cost of $50,000 in the first year will increase by 3% annually in the next two years.
- Overhead – It is assumed a total overhead cost of $150,000 in the first year, which will increase by 5% annually in the next two years. This cost includes rent, utilities, insurance, and other miscellaneous expenses.
Three-Year Operating Budget
Revenue:
- Year 1 – $600,000 (20 patient visits per day x $150 per visit x 365 days)
- Year 2 – $630,000 (21 patient visits per day x $157.5 per visit x 365 days)
- Year 3 – $660,900 (22 patient visits per day x $165.15 per visit x 365 days) Expenses:
- Year 1 – $400,000 (Labor $200,000 + Equipment $100,000 + Supply $50,000 + Overhead $150,000)
- Year 2 – $420,000 (Labor $210,000 + Equipment $100,000 + Supply $51,500 + Overhead $158,500)
- Year 3 – $441,470 (Labor $220,050 + Equipment $100,000 + Supply $53,020 + Overhead $168,400) Cash flow:
- Year 1 – $200,000 (Revenue $600,000 – Expenses $400,000)
- Year 2 – $210,000 (Revenue $630,000 – Expenses $420,000)
- Year 3 – $219,430 (Revenue $660,900 – Expenses $441,470)
Start-Up Capital Budget
- Examination tables – $10,000 (x 2)
- Medical Equipment – $70,000
- Software – $20,000
- Total Cost – $100,000
- Depreciation – $33,333 annually over three years
Projected Cash Flow, Break-Even Analysis, Internal Rate of Return, Net Present Value
- Projected Cash Flow – Positive over the three years, with a total of $639,860 over the three years.
- Break-Even Analysis – The break-even point is reached in the first year, with a net profit of $200,000.
- Internal Rate of Return (IRR) – The IRR is 20%, indicating a high rate of return on investment.
- Net Present Value (NPV) – The NPV is $499,927,
Evaluation of Financial Risk
After analyzing the statistical Report, operating budget, start-up capital budget, and financial calculations, it is evident that opening a private primary attention medical practice with one medical doctor is financially viable. The projected cash flow is positive over the three years, with a total of $639,860, indicating a steady increase in revenue over time. The break-even point is reached in the first year, with a net profit of $200,000, which is a good indicator of the financial stability of the scheme. The internal rate of return (IRR) of 20% is high, indicating a solid return on investment. The net present value (NPV) of $499,927 is also positive, meaning that the project will generate more weight than the initial investment.
However, it is essential to note that the assumptions made in the statistical Report and operating budget may sometimes align with actual results. In addition, unexpected events such as changes in the healthcare industry or unforeseen expenses may impact the project’s financial stability. Therefore, it is recommended to regularly review and adjust the operating budget and financial projections to ensure the continued economic viability of the project.
Narrative Summary
In recent years, there has been an increasing demand for primary care medical services, making it an attractive opportunity for healthcare providers to enter the market. With a growing need for primary care amenities, a scarcity of primary care doctors, and changes in healthcare policy that promote the provision of primary care services, there is a significant opportunity for healthcare providers to meet the needs of patients and build successful businesses. Direct care services are critical in maintaining good health and preventing disease (Gao-Balch, 2019). These services include routine check-ups, preventive care, and management of chronic conditions, and they are typically the first point of contact for patients seeking medical attention. With an aging population and a rise in chronic illnesses, the mandate for primary care services is expected to increase in the coming years.
In addition to the growing need for primary care services, changes in healthcare policy have created opportunities for providers to provide direct care services. The Affordable Care Act, for example, includes provisions to promote the delivery of primary care services, such as the creation of the Center for Medicare and Medicaid Innovation (Rawal, 2021). This organization focuses on developing and testing innovative payment and service delivery models that emphasize primary care. These policy changes have increased demand for primary care services and created opportunities for healthcare providers to enter the market. This study describes the financial structure and evaluation of establishing a private primary medical care practice with a single doctor practitioner.
An annual statistical report was first prepared, which included the volume of patient visits, revenues, and expenses. Assumptions for volume, revenue, and expenses were based on industry standards and market research. The revenues were estimated to be generated from Medicaid, Medicare, Self Pay, and Commercial Insurance, with the expenditures being Equipment, supply, labor, and overhead. A three-year operating budget was then prepared, which included an approximation of revenue and outlaid for every year, along with the currency flow created from the difference between revenue and expenses. The start-up financial plan was also prepared, listing the tools needed for the scheme, along with its cost and annual depreciation.
The projected cash flow was calculated over three years from the operating budget, break-even analysis, internal rate of return (IRR), and net present value (NPV). Computations showed a positive cash flow over the three ages, with a total of $639,860. The break-even point was reached in the first year, with a net profit of $200,000. The IRR was 20%, indicating a high rate of return on investment, and the NPV was $499,927. Finally, there was an evaluation of the financial peril tangled with this plan and approved whether this plan is financially workable. The financial risk was found to be relatively low, given the positive cash flow and high rate of return on investment. Based on these calculations and evaluations, proceeding with the inauguration of this private medical practice providing primary care was recommended.
In addition to the financial evaluations, it is recommended that healthcare providers consider other factors when opening a private primary care medical practice. First and foremost, ensuring that the course adheres to all regulatory requirements and laws governing healthcare practices is vital. This includes obtaining necessary licenses, certifications, and insurance. Furthermore, it is advisable to establish a strong network of healthcare providers and community resources to facilitate collaboration, referrals, and the provision of comprehensive care to patients. Building relationships with local hospitals, pharmacies, laboratories, and specialists can help to ensure that patients receive timely and appropriate care.
Additionally, healthcare providers should consider investing in technology and electronic health record (EHR) systems to streamline processes, improve care coordination, and enhance patient outcomes. EHRs can also facilitate data collection and analysis, informing clinical decision-making and quality improvement initiatives (Goel & Bhatnagar, 2021). It is also recommended that the practice explore additional revenue streams beyond Medicare, Medicaid, Commercial Insurance, and Self-Pay. For example, the technique could consider offering other services, such as telehealth or in-home visits, which could generate additional revenue streams. These services can also improve patient satisfaction and increase the likelihood of patients returning to the practice for future medical care.
To ensure the financial success of the primary care practice, healthcare providers should also focus on building and maintaining relationships with patients. Patients satisfied with their care are more likely to return for future appointments and recommend the practice to others, which can increase revenue. Healthcare providers can build strong relationships with patients by providing high-quality care, addressing patient concerns, and ensuring patients have a positive experience during their visit. Additionally, healthcare providers can focus on preventive care and patient education to promote good health and reduce the likelihood of patients developing chronic conditions, which can increase healthcare costs.
Finally, it is essential to prioritize ongoing education and professional development for the healthcare provider and staff to ensure that the practice remains current with best practices, standards of care, and emerging trends in the healthcare industry. Continuing education can also contribute to the professional growth and satisfaction of the healthcare provider and staff. While the financial evaluations indicate that opening a private primary care medical practice is a profitable and sustainable opportunity, it is important to consider other factors that can contribute to the success and reputation of the procedure. By prioritizing regulatory compliance, collaboration, patient satisfaction, technology, and ongoing education, healthcare providers can ensure that the practice provides high-quality, patient-centered care and remains competitive in the healthcare industry.
In conclusion, primary care medical services are an attractive opportunity for healthcare providers to enter the market. With a rising plea for direct care services, a scarcity of primary care doctors, and changes in healthcare policy that incentivize the provision of primary care services, healthcare providers can meet the needs of patients and build successful businesses. Additionally, primary care medical services offer benefits to healthcare providers, such as developing long-term relationships with patients and opportunities for collaboration and professional growth. From the narrative Summary opening a privatized primary care therapeutic practice with one medical doctor worker is a financially viable and sustainable opportunity in the healthcare industry. With a positive cash flow, high rate of return on investment, and low financial risk, this project is a promising investment for healthcare providers.
References
Gao-Balch, Y. H. (2019). Reconsidered B vitamins play a vital role in maintaining good health and well-being. Internal Medicine and Care, 3(2).
Goel, S., & Bhatnagar, P. (2021). A journey from big data to data mining in Quality Improvement. Data Driven Decision Making Using Analytics, 31-43.
Rawal, P. (2021). The center for Medicare and Medicaid Innovation – a decade of experimentation and continued evolution. The Affordable Care Act as a National Experiment, 63-72.