We have being losing an average of $11,500 per month at our primary care clinic.

Question

We have being losing an average of $11,500 per month at our primary care clinic. We cannot continue with these significant losses. We have an idea to expand our hours into the evening and staff the clinic with only Nurse Practitioners. What do we know? • The existing operation is losing money: cost per visit is $52.00 and revenue per visit is $50.00. • The added visits will generate only $44.00 per visit. • We will generate an additional 2,875 visit per month. • With plan the revenue per visit is equal to only $48.00. • Our variable expenses will increase to the following: o Nurse salary and benefit $180,047 o Non-nurse expenses $233,942 o Support staff salaries $100,000 o Support staff benefits $21,353 o Information Services $7,504 o Laboratory $12,938 o Imaging $3,319 o Medical/Surgical supplies$15,999 o Promotion and Mgt. $ 5,700 o Recruiting $ 8,900 o Other Op. Expenses $ 4,097 • All other Costs (Fixed) remain the same Opening the night clinic appears to make the loss worse! Will it?

Explanation / Answer

Assuming all salaries and benfits are given in Yearly term and converting those in monthly term. Cost Benefit of Night Clinic. Details Rate /Unit Amt $ No of visits expected per month                                           2,875 Revenue from visits                      44                                       126,500 Less Varaiable costs per month Nurse salary & Benefit                                         15,004 Non Nurse expense                                         19,495 Support staff salaries & benefits                                         10,113 Information service                                           7,504 Laboratory                                         12,938 Imaging                                             3,319 Medical & Surgical supplies                                         15,999 Promotion & Management                                           5,700 Recruiting                                             8,900 Other expenses                                           4,097 Total Variable Expenses per month                                       103,069 Net Income                                           23,431 As other fixed costs remains the same, the   night clinic is profitable and will not make the loss worse

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