I want to figure out what my volume (Visit volume) target should be in order to cover our full payroll but then I think I should also determine coverage of my entire operating budget.
Anyone have any suggestions on how to do that. I do have a formula to determine break even visit volume for a provider but not sure I should use that same theory.
Carol O’Neill, FACMPE
Executive Director
Westwood-Mansfield Pediatrics
Westwood, MA
Great question- definitely one that has been on my mind… Paulie and Chip have some great calculators posted here- and then also on the PMI website… the quickest calculation is to take last year’s revenue and divide by number of visits- that will give you a (a very blunt) revenue per encounter. That will give you a broad target in the sense that it will tell you if next week you see x number of patients, you can calculate that number by your revenue/encounter number and get a rough estimate of the income you can expect.
What complicates our picture right now is that our Well Visit numbers are so skewed (i.e. in my practice, we are down half of our visits, but the ones that we are seeing are very vaccine-heavy) and then 70% of our visits are telemedicine which has a lower overhead cost than usual and those visits are temporarily getting reimbursed very well without cost sharing that would delay payments)
That’s where the cash flow projection that Paulie and Chip are recommending comes in handy… use your vaccine orders to project when those payments are due- some of the companies- Sanofi for example, have updated new due dates- between payroll and vaccine costs, you should be at 60-70%, maybe even 80% of your costs.
My brother in law ( who is a big corporate executive and former bankruptcy turnaround specialist) helped me shape the 13 week cash flow projection to give me a highly accurate picture- he made me account for expenses under $100, that’s how accurate we are talking.
It is super time consuming and cumbersome to create the 13 week cash flow projection and then keep updating it every week to project out 13 weeks again- BUT, I am sleeping much better 
If it helps, you are not alone- we have had to change our provider capacity and how we are scheduling almost every week for the last 8 weeks, which is a little exhausting, and along with it the staffing- to meet the changing demand for visits- and different types of visits. Break even is going to be a moving target.
What formula are you using for provider break even? We have been using the PMI recommendation that provider compensation should equal 35% of revenue to guage how we are doing in terms of revenue per provider, compensation, as well as how we are doing managing expenses.
Thank you so much. It does feel better to know I’m on the right track. Where can I find those calculators. I’m new to this site and not sure where to find things.
@mishamoore - great assistance there, THIS is why we have this forum!
@coneill - You are definitely on the right track. The math isn’t complex. HOWEVER, you did identify one item in the algebra-verging-on-calculus to consider and that’s the impact of vaccine heavy well visits.
Your actual revenue per visit is likely to CLIMB over the next few months as sick visits stay low and there is a concentration on well visits. However, the MARGIN on a big portion of your well visits - vaccines - is NOT the same as the margin on your sick visits. Depending on the profitability of your vaccine work, you may need to adjust the presumed overhead of your visits. Does that make sense?
My advice is to begin where you have and check your overhead and revenue assumptions periodically to make your predictions more accurate. In your spreadsheet, you can see how turning one of the dials can have a big effect.
I would include the quality measure income in that estimate presuming that you will continue to receive those payments. Do you have any sense of the stability of those payments?
