Break-Even Analysis in a Nurse-Managed Center


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Abstract

Executive SummaryWhile nurse-managed centers have proven effective in providing lower cost care than physician-managed centers, they have often failed due to inadequate reimbursement mechanisms, low patient volumes, and/or poor business management.The author outlines the steps necessary to perform a basic break-even analysis of an ambulatory center for the dual purpose of evaluating future feasibility and managing daily operations.The analysis utilizes estimates of fixed and variable costs as well as visit charge and visit volume.A weighted contribution margin is also discussed as a means to accurately depict reimbursement based upon factors such as payer mix and visit complexity.By manipulating variables in the equation, a manager can better visualize opportunities to reduce fixed cost, move fixed costs to variable costs, increase volume, or improve contribution margin in order to maintain fiscal stability.

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