Week 5 Assignment: Break-Even Analysis
Chamberlain College of Nursing
Nicole Riddick
August 12th, 2020
Break-Even Analysis Case Study
This study source was downloaded by from CourseH on :10:31 GMT -05:00
You and several of your colleague business partners have decided to establish an outpat...
, You 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 patients visits annually will need to occur 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, 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- 310 days/year
Projected patient visits per year: 7480
Patient charges by patient acuity category:
o Simple (10%)------------$2000/visit
o Moderate (70%)--------$6500/visit
o Complex (20%)---------$10,000/visit
Break-even Analysis Data Table
Acuity Percentage Charge Visits Charges Visits Charges per Contribution
Category % per per per Year per Day Margin
Visit Year Day
Simple 10% $2000 748 $1,496,000 2 $4,000 $3,000
Moderat 70% $6500 5,236 $34,034,000 17 $110,500 $102,000
e
1. Describe your approach to this case study. In addition to the numbers given, what do you need to
know before you can calculate the break-even analysis?
This study source was downloaded by 100000840275362 from CourseHero.com on 06-05-2022 15:10:31 GMT -05:00
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