Although the clinic has the physical capacity to handle 60 visits per day, it does not have staffing to support that volume. In tact, it the number of visita increased by II par day, another part-tine nurse and physician would have to be added to the clinic’s staff. The Incremental costs associated with increased volume are summarised an Table 2.
Jan. also learned that the building is leased on a long-torn basis. Fairbanks could cancel the lease, but the lease contract calls for a cancellation penalty of three months rent, or 537.500, at the current lease rate. In addition, Jane was startled to read In the newspaper that Baptist Hospital. Fairbanks’s moor conpotiter, had just bought the city’s largest primary care group practice, and Baptist’s CEO was quoted as saying that note group practice acquisitions are planned. Jane wondered whether Baptist’s actions should influence the decision regarding the clinic’s fate.
Finally, in earlier conversations, Todd also wondered if the clinic could “Inflate Its way to profitability: that la. If volute remained at its current level, could the clinic be expected to become profitable In. say. five years, solely because of inflationary increases in revenues? Overall, Jane Must consider all relevant factors–both quantitative and qualitative–and cone up with a reasonable reconnendation regarding the future of the clinic.
Table 1
Better Care Historical Financial Humber of visits Clinic Data Daily Averages CY 2012 Jan/Feb13 41 45 Net revenue 01,524 $1,045 Salaries and Magee $ 428 $ 451 Physician fees 533 600 Malpractice Insurance 87 107 Towel and education 15 0 General insurance 22 20 Utilities 41 36 Equipment leases 4 5 Building lease 400 417 Other operatar4 expenses 288 300 Total operating expenses $1,818 arai /Mat profit aces/ 0 2941