Break Even Analysis

Y​‌‌‌‌‍‌‍‌‍‌‌‌‍‌‍‌‍‍‌​ou and several of your colleague business partners have decided to establish an outpatient fertility clinic in your service area. All of you are very familiar with this patient population base, have completed an extensive market analysis that demonstrated a great need for the service, and are comfortable with setting up a business and the costs associated with this special group of patients. As part of the business plan, you and your partners will need to convince stakeholders that this new service endeavor will be viable. They will want to know how many patient visits will need to occur annually and how long it will take for the service to be at least cost neutral or profitable. To provide them​‌‌‌‌‍‌‍‌‍‌‌‌‍‌‍‌‍‍‌​ with this information you will perform a break-even analysis. Use the following data and conduct the analysis accounting for the contribution margin of each patient acuity category. • Fixed Costs: $9,788,000 (start-costs, specialty physicians, anesthesiologists, APNs, staff nurses and other staff salaries, specialty equipment, other miscellaneous) • Variable costs: $500/patient visit (specialty equipment, oxygen supplies, other miscellaneous) • Clinic days: Monday–Saturday—312 days/year • Projected patient visits per year: 7488 • Patient charges by patient acuity category: o Simple (15%)------------$2,000/visit o Moderate (60%)--------$6,500/visit o Complex (25%)-------​‌‌‌‌‍‌‍‌‍‌‌‌‍‌‍‌‍‍‌​--$10,000/visit