The short answer
A clinic sells hours: the hours the rooms or chairs are open. The rent, staff and equipment are mostly fixed, so what matters is how many of those hours are used and what each one earns. This tool turns your costs into overhead as a percentage of revenue, cost per available hour and cost per hour actually used, then works backward to the revenue per hour or visit you need for your own pay goal. It works for physicians, dentists, physiotherapists, massage therapists and other practices.
Where to find the numbers
| Number | Where it comes from |
|---|---|
| Revenue | Collected revenue for the year from the income statement (financial statements or your accountant’s report), not the billed amount. |
| Fixed costs | Expenses from the income statement that do not move with patient volume: staff, rent, equipment leases, insurance, college and association fees, software, marketing. Leave out owner pay. |
| Variable costs (%) | Costs that rise with revenue, such as supplies, lab fees and card fees, as a percentage of revenue. |
| Rooms or chairs, hours, weeks | Your schedule: treatment rooms or chairs, hours open per week, and weeks open per year. |
| Utilization and no-shows | The scheduling system’s reports: attended hours as a share of available hours, and the share of booked time lost to no-shows and late cancellations. |
If this happens, then that
| If… | …then |
|---|---|
| Utilization goes up | Fixed costs are spread over more hours, so overhead per hour falls and nearly all the extra revenue reaches the bottom line. |
| No-shows fall | Hours that were lost are used, with no extra rent or staff. Reminders, deposits and cancellation policies help. |
| You add a room or chair | Available hours rise, but so do fixed costs. It pays only if the extra hours are actually filled. |
| Fees rise | Revenue per hour used rises. Check the fee against the needed per-hour figure above. |
| Rent or wages rise | Fixed costs rise, so break-even revenue and the needed hourly revenue rise too. |
For a multi-year view see the Clinic Planner. For BC payroll over $1 million see the Employer Health Tax Estimator and the firm’s EHT guide. GST questions for clinics: GST guide for BC health practitioners.
More free tools for clinics
Want advice for your own situation?
This free tool is a courtesy of HJ Wu & Company Inc. (CPA), a Vancouver CPA firm offering accounting, tax, financial reporting and review assurance. Feedback on the calculators is welcome.