Can someone realistically break down the price of overhead?

[hyperbaricoxy]

Hi everyone! I have been thinking endlessly about this for months and need your advice. I currently work as an independent contractor at 40% of what I bring in (no other perks). I have worked in 3 different offices, my first office I worked at 27%, my 2nd at 35%, and finally got an offer for 40%. I am happy with this in terms of my income, but I am unhappy in the sense that many things are beyond my control. For example, if my “boss” was to suddenly get greedy he could lower me to 25-30% which I would refuse and then he would simply replace me with someone who would. And I don’t like the fact I am so reliant on another person for my job security. And lastly, I dislike the fact that I am required to work 35-40 hours a week because I would like to spend more time with my family and kids and engage in other hobbies and would like to work part time which he won’t allow (and this is understandable).

So there is a new opportunity another podiatrist is offering. And could those who have their own practice breakdown the overhead for my specific situation.

For sake of simplicity let’s ONLY consider the costs of working one day a week for one month. In reality I will only be working 2-3 days a week here.

Key notes: I do not do any surgery! So I do not need a surgical scheduler which I think saves a good amount.
Here is what I have so far (for working ONCE a week for one month):

• Let’s say the one day I choose to work on is a Monday. I get two rooms. The podiatrist renting this space to me is charging $800 a month for one day a week (this price also includes electricity/water/internet/cleaning/etc AND use of his x-ray machine and ultrasound at no additional fee).

• I will need an MA. I will pay $15 an hour. So an 8 hour workday=$120 a day thus $480 a month.

• I will need my own phone number and a front desk person. Again, $15 an hour=$120 a day thus $480 a month. A phone line I am not sure but let’s say $40 a month.

• I will need my own EMR. This can be as low as $40-50 a month such as officeally or upwards of $300-500 a month. Let’s say I go with a decent one around $350 a month. If I choose to have billers they will take ~6% of what I bring in, BUT I am a damn good biller with few errors so MAYBE I won’t need this?

• I will obviously pay someone in the beginning to get me on all the insurance panels which could take upwards of a year. I will not include this in the costs.

• I’m sure I’m missing a lot so could someone fill me in? Perhaps an office manager or could my front desk person handle this? Again, let’s say I do need one and let’s just say (though would be little higher) $15 an hour= $120 a day thus $480 a month.

• My advertising will vary but I won’t stress it too much as most of my patients will choose to see me at my new place. But just for the hell of it let’s say I spend $150 a month on advertising.

• Let’s add in another $200 a month for miscellaneous.

So, in total I am up to: $2980 a month for one day a week at this office.

NOW ONTO THE PROFIT:

Let’s say I see 20 patients a day, and let’s say the average reimbursement to be $85 per patient. Again, I’m just throwing these numbers out there. This would be $6800 in profit a month, and let’s subtract $2980 for overhead and my total profit working once a day would be $3820 a month, which is great! And theoretically if I was to work 5x a week at this price I would be making significantly more than what I do now as an employee/independent contractor AND I would be my own boss!

What else am I missing here? The most valuable thing about this situation is it teaches me to fish instead of me being given a fish. So no matter what happens in my career I will learn and know how to rent an office space and run a practice. The downside is the headache of running your own practice, so please feel free to chip in if running your own practice and renting space is worth it vs being employed or an independent contractor under someone.

Thanks in advance.

---

Members don't see this ad.

 

[air bud]

are you doing this in a different city? Aren't you already on insurance panels?

Also, great not that hard to get 20 patients a week and cram them all in one day. What makes you think that scales linearly to 5 days? What about customer acquisition costs? Unless you are in very underserved area I don't see how you do that any time soon all on your own without significant costs.

 

[hyperbaricoxy]

are you doing this in a different city? Aren't you already on insurance panels?

Also, great not that hard to get 20 patients a week and cram them all in one day. What makes you think that scales linearly to 5 days? What about customer acquisition costs? Unless you are in very underserved area I don't see how you do that any time soon all on your own without significant costs.

Because I work under a group and a group NPI. If I opened up my own office I would need get under the insurance panels with my business NPI.

With regards to scaling linearly to 5 days it won't be an exact linear relationship ofcourse, there will be ups and downs and what not it is all an estimation. Hence me saying things like "theoretically", "for sake of simplicity", "estimation", and "I'm just throwing these numbers out there." The point is I feel I would make more money on my own, but I could be completely wrong hence me posting on this forum to ask for help calculating overhead to see if it indeed would be worth it. More importantly I mentioned I only plan on working twice (maybe 3x) a week. Not 5x a week.

Regarding "customer acquisition costs" as I mentioned in my post my patients from my current office will be more than glad to go to my new office location (which is outside the non compete clause mileage). Not to mention getting a packed schedule of patients for just 2 days a week is not hard.

 

[dtrack22]

What else am I missing here?

payroll taxes, credentialing (you admit you'll need help with it so you should include the couple thousand $s that will cost), I think you're underestimating marketing costs, insurance for the business and yourself, dues to various boards and academic organizations, state license fees, malpractice, etc.

Also, "profit" and "revenue" are two very different things.

Because I work under a group and a group NPI. If I opened up my own office I would need get under the insurance panels with my business NPI.

There's no such thing as a business NPI, I think you are confusing NPI with tax ID or EIN. You also have to be aware of the fact that (at least in some instances) you cannot start the process to join an insurance network while still contracted under your own NPI even if the EIN will change. I think it's important to know whether or not you are currently billing patient's under your own "name" or NPI.

Regarding "customer acquisition costs" as I mentioned in my post my patients from my current office will be more than glad to go to my new office location (which is outside the non compete clause mileage).

Even though you are practicing outside of the noncompete you may still have to be careful about soliciting patients from your old practice.

I think there are a lot of people who would be willing to help you. There's a group on facebook for podiatry practice owners that would be beneficial. I already do a lot of free work for a podiatrist so I'm gonna go ahead and bow out of this one and wish you good luck! I think its great that you are done working for another podiatrist.

 

[hyperbaricoxy]

payroll taxes, credentialing (you admit you'll need help with it so you should include the couple thousand $s that will cost), I think you're underestimating marketing costs, insurance for the business and yourself, dues to various boards and academic organizations, state license fees, malpractice, etc.

Also, "profit" and "revenue" are two very different things.


There's no such thing as a business NPI, I think you are confusing NPI with tax ID or EIN. You also have to be aware of the fact that (at least in some instances) you cannot start the process to join an insurance network while still contracted under your own NPI even if the EIN will change. I think it's important to know whether or not you are currently billing patient's under your own "name" or NPI.


Even though you are practicing outside of the noncompete you may still have to be careful about soliciting patients from your old practice.

I think there are a lot of people who would be willing to help you. There's a group on facebook for podiatry practice owners that would be beneficial. I already do a lot of free work for a podiatrist so I'm gonna go ahead and bow out of this one and wish you good luck! I think its great that you are done working for another podiatrist.

Thanks for the response. I realize the difference b/w profit and revenue, I know I say "20 patients at $85 blah blah blah" Reality is I will be scheduling 25 or so, there will be know shows, there will be denials etc. But I have to make SOME attempt at estimating the profit and this has seemed to be a decent way.

There IS such a thing as a business NPI. Right now I work for a group and we bill out as a group NPI (my individual NPI is with them). I do nursing homes once a week on my own and created my own business and business NPI solely for this as it is seperate from my group I work with. IF I was to leave and rent space and develop my own practice I would bill under my own business numbers.

I am not concerned about soliciting patients. I would only work 2 (maybe 3 days max) at this new place. I am currently working 5x a week with a packed schedule. If the patients want to leave to go to my new practice, they have absolutely every right. I am not forcing or persuading but simply informing them. The decision is up to them which many would like to come.

 

[dtrack22]

I realize the difference b/w profit and revenue

Let’s say I see 20 patients a day, and let’s say the average reimbursement to be $85 per patient. Again, I’m just throwing these numbers out there. This would be $6800 in profit a month

Again, revenue and "profit" are not the same

I do nursing homes once a week on my own and created my own business and business NPI solely for this as it is seperate from my group I work with. IF I was to leave and rent space and develop my own practice I would bill under my own business numbers.

You have no need for an type 2 NPI (assuming that's what you mean). If you applied for a type 2 NPI because you formed an LLC you likely wasted some money (though some states punish you more than others). There is no reason for you to have separate billing and rendering NPIs given your proposed set up.

 

[G0dFather]

Great breakdown! good for you...thats the way to go.... take control of your own hard work and life, what you have there is pretty accurate, the more you spend on appropriate/targeted marketing will pay itself back in dividends. 9/10 pods take advantage of others and dont think about investing in their associate for the long run... i dont blame you for trying to break out of that, if you need more help feel free to PM me

 

[Creflo]

A few items I may have missed in your post: malpractice insurance, laptops, instruments and sterilization packets, Injectables, paper towels, syringes, post op shoes, fracture boots, otc orthotics inventory, topical antifungal inventory, pads/splints, gauze, website hosting, email hosting, local business tax, continuing education expenses, apma dues, self employment taxes, accounting fees, general liability insurance, workers compensation insurance, hospital staff dues, printer, toner, printer drum replacement, printer paper, board certification dues, state license renewal fees, postage, business cards. This said, there is nothing like being self employed if that's what drives you.