As with part 1 on financial know-how, this is a piece where I was more an editor than a writer. Along with my boss, Stephen, we edited an hour-long conversation on understanding a clinic’s bottom line into two separate blog posts. The first focused on why business owners should understand the finances of their company. The second, excerpted below, looks more at how this can be achieved.
How to calculate your cost of doing business: A Q&A with Michael Weinper, PTPN CEO and President, part 2
We recently sat down with PTPN CEO and President Michael Weinper, PT, DPT, M.P.H., to discuss calculating the cost of doing business. Michael is also the owner of Progressive Physical Therapy, a private practice with four locations in Southern California. In part 1, published two weeks ago, we discussed why you should know the cost of doing business in your clinic. Today’s post looks at how to calculate your cost of doing business.
What is the most important cost that an owner of a clinic should know?
You need to know the basic cost per visit you need to cover in order to stay in business. The basic cost could be defined as taking all of your expenses that you have in a year, and dividing them by the number of visits during the year. This is crude, but it’s also very easy to calculate. It can be done by any period of time — week, month or year.
Your cost per visit can vary month-to-month, and it will, because if you treat more patients while your other expenses (labor, rent, etc.) stay constant, your cost per visit will go down during that month. On the other hand, if you have fewer visits, your cost per visit will go up.