Community Clinic Business Plan
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Strategy planning and opportunity assessments for a community health clinic
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Community Clinic Business Plan
- 1. Business Plan for the Community Health Clinic (CHC) at 2BWell, Inc. CONFIDENTIAL AND PROPRIETARY Any use of this material without specific permission is strictly prohibited Template adapted from McKinsey & Co report to OHSU, 2011 Master of Science in Healthcare Management | 1
- 2. Master of Science in Healthcare Management | 2 Community Health Clinic Project Charter Problem Statement: 2BWell, Inc. and founder, Siamak Shirazi, have a desire to give back to the under and uninsured population of Portland through a community health clinic. To achieve the current clinic’s need to increase patient volume, the CHC must investigate options for a self-sustaining model. Objectives • Increase patient volume and revenue • Identify target market for community health clinic • Create solution for CHC operations Goal/Target: To operate a financially self-sustaining community clinic separate from 2BWell, Inc. by year 5. Project Sponsor: Siamak Shirazi Faculty Advisor: Ron Sakaguchi Start Date: 01/03/13 Anticipated Completion Date: 05/31/13 Project Team T Timbreza Rebecca Hancock Madeline Stilley In Scope Out of Scope • Exploring community clinic options and partnerships • Assessing competitors • Assessment of target market • Develop marketing opportunities for 2BWell, Inc. • Instigate a change in culture • Plan clinic implementation
- 3. Industry Analysis SOURCE: Interviews, industry press releases, annual reports Social Technological Environment Political Economic Master of Science in Healthcare Management | 3 • Expansion of ND schools in US and Oregon, which adds greater awareness • National demand and acceptance of acupuncture • Rise of herbal medication prescriptions • Movement within ND medicine to co-manage patients with MD/DO/ND/NP and PCP in coordinated care setting • NDs were included in an advisory group to the Oregon Health Authority, but their recommendations were not adopted. Oregon SB 1509 and the Affordable Care Act Section 2705 stipulate that insurers and CCOs may not discriminate against provider types in coverage or reimbursement. • Challenges for CCOs to include ND billing and coding in their package as it is not synonymous with traditional standards but are open to standardizing billing with NDs Conclusions – With current legislation and reform and the recognition of naturopathic medicine as a viable healthcare opportunity, the time is right for a successful clinic. • Electronic medical record legislation requires EHR/EMR in health clinics by 2014 • NDs are beginning to install free EMR software to better communicate with hospitals and clinics - no investment needed • CCOs potentially covering “natural” therapies and standardized modalities for coverage • Competing clinics have significantly higher operational costs • Non-profit receive federally funded grants and financial assistance • Increase in number of acupuncturists and naturopathic services creates economic pressure (new Central City Concern building) • Trend towards adding wellness centers to malls/gyms and being associated with higher income and upscale care. National and regional trends provide criteria for assessing the opportunity for a community clinic.
- 4. Market Analysis Target Patients 2BWell Patients CHC Patients2BWell Patients Profile • Middle aged, middle- to higher-income employed patients • Previous Lake Oswego patients • Groupon referred patients • NP/DO/MD referred patients • Private insurance or cash payers • See contracted providers and pay full price Services/Location/V isibility • Comfortable with décor • Consider 2BWell services as important to their well-being • Make time for regular appointments • Are satisfied with current providers and needs are met • Concerns regarding safety in location after dark and proximity to Union Gospel mission. There is frequent contact with indigent population next to physical location. • Parking not provided for patients • Front of building lacks visibility Master of Science in Healthcare Management | 4
- 5. Market Analysis Target Patients 2BWell Patients CHC Patients CHC Patients Profile • Under- or uninsured middle to low income population with some health issues • Could benefit from wellness based medicine • Range of ages • Live in downtown or NW Portland area • Visit emergency department when necessary • No primary care provider Services/Location/ Visibility • Lacking community clinic environment, spa-like features might make CHC patients uncomfortable • Do not see value in $25 fee, higher than community clinic competitors • May not be familiar with benefits of acupuncture • Student providers give the clinic a community clinic feel • Location is convenient • Easily accessible via public transportation but not visible • 2BWell does not provide parking Master of Science in Healthcare Management | 5
- 6. Market Analysis Related Health Centers SOURCE: Market databases, team primary research Conclusion: Numerous naturopathic and wellness clinics throughout Portland offer acupuncture to underinsured and uninsured population but most are serving working class populations. 6 Portland Competitors to Consider Master of Science in Healthcare Management | 6 An Hao Health Clinic Accepts Insurance Central City Concern Sliding scale - $20 and up NCNM Clinic Sliding scale - $20 and up Working Class Acupuncture Sliding scale - $15-$35 CHC @ 2BWell $25 per visit Center for Natural Medicine Sliding scale - $10-$40 White Phoenix Acupuncture Sliding scale - $20-$30
- 7. Market Analysis Pricing Analysis & Marketing Options Pricing Marketing • Sliding scale fee structure of competitors is less than CHC’s $25 flat fee and more appealing to patients • CHC must lower its price point compared to surrounding providers or have a significant differentiator in order to attract more patients • No marketing budget • 80-90% patients are obtained primarily through word-of-mouth • Plans to install 2BWell signage on the front of the building • Website lacks clear information regarding services offered to CHC patients • Confusion of services allocated to CHC • Marketing outreach should be separated between 2BWell and CHC Conclusion: The CHC should lower their price to be competitive with community clinics in the surrounding area. Word-of-mouth is the most effective way to attract this demographic. Master of Science in Healthcare Management | 7
- 8. Master of Science in Healthcare Management | 8 Research to Develop Analysis Interviews • Siamak Shirazi, Owner & Entrepreneur, 2BWell, Inc. • Lara Jones, Administrator, 2BWell, Inc. • Lisa Rohleder, Co-Owner, Working Class Acupuncture • Gary Collins, Outreach Coordinator, Central City Concern • Maya Burton-Severson, Community Clinics Supervisor, NCNM • Jacqueline Chandler, Operations and Member Support Manager, Coalition of Community Clinics • NCNM Students Internet Research • Industry Analysis • Market Analysis • Health reform policies • Health IT news • CAM Clinic Competitors • Portland demographic information • Union Gospel Mission • Crime data from Portland Maps • IRS guidelines for non-profits • NCNM website • American Association of Naturopathic Physicians
- 9. Master of Science in Healthcare Management | 9 Conclusions – 2BWell moved into a new building and began focusing on attracting patients while implementing the CHC. The timing of implementing and operating both created confusion. It may not be sustainable for 2BWell to continue to support the clinic without quick growth or an operational change. Summary of Primary Research Interviews Category Description Summary of Findings 2BWell providers & staff • CHC operates as a social enterprise model • Mission to provide wellness that is accessible to all • Increase the number of NCNM clinic days • Hesitancy to continue CHC due to high operational costs and low patient volume. Also had concerns with the organizational culture barriers of operating two very different clinics. Community partners • Positive relationship with 2BWell • NCNM clinic locations have a higher patient volume than the CHC • Takes up to a year to build significant volume • NCNM receives fees from some clinics but not all • Students choose clinic placement • 3 primary students and one preceptor per clinic • Draw to NCNM clinics are the primary provider and/or clinic location Interviews with competing clinics to identify marketing strategy, operations, financial status, and overall culture • Community clinics do very little marketing • Goal to provide a service to those in need • Patient referrals • Operate on skeleton finances, do not seek a profit • Mixture of contracted providers and employees on payroll • Community-oriented culture
- 10. Master of Science in Healthcare Management | 10 CHC Revenue and Expenses April 2012 – December 2012 During initial 9 months of operations, 2BWell, Inc. lost $10,278 in revenue from other aspects of the business to operate the CHC. -$1,500 -$1,000 -$500 $0 $500 $1,000 $1,500 $2,000 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Expenses $1,478 $1,478 $1,478 $1,478 $1,478 $1,478 $1,478 $1,478 $1,478 Revenue $400 $175 $150 $275 $175 $375 $625 $425 $425 Net Income -$1,078 -$1,303 -$1,328 -$1,203 -$1,303 -$1,103 -$853 -$1,053 -$1,053 CHC Financial Performance April 2012 - December 2012
- 11. Identified Opportunities • Status Quo • Associateship practice for Recent Graduates • Donate Space to NCNM • Saturday CHC • Integrate CHC Patients into Private Paying Practice Master of Science in Healthcare Management | 11
- 12. Master of Science in Healthcare Management | 12SOURCE: Interviews; Team analysis Key Assumptions • Capacity • Demand • Expenses • Hours of Operation • Patient Fees • Personnel • Revenue • Supplies
- 13. Master of Science in Healthcare Management | 13 Opportunity 1 Status Quo Description: Operations would continue to be a for-profit with co-mingled financials between 2BWell, Inc. and CHC. CHC services would be provided with the current structure and pricing with no additional capacity or marketing. Impact: At the $25 price point, only a limited number of individuals would be willing to pay for these services as cheaper comparable services are available elsewhere. 2BWell will continue to have minimal benefit from providing the clinic and their bottom line will continue to be negatively impacted. Feasibility: This does not require additional effort on behalf of 2BWell and from a logistical standpoint, is feasible. Sources of Revenue: Patient payments and self-funding.
- 14. Financial Analysis Status Quo Status Quo Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Patient Visits $4,033 $4,436 $4,880 $5,368 $5,905 Total Revenue $4,033 $4,436 $4,880 $5,368 $5,905 Expenses Payroll $780 $803 $828 $852 $878 Payroll Taxes $60 $61 $63 $65 $67 Medical Supplies $276 $304 $334 $367 $404 Mortgage $14,400 $14,400 $14,400 $14,400 $14,400 Office Supplies $228 $228 $228 $228 $228 Utilities $744 $744 $744 $744 $744 Janitorial Service $408 $408 $408 $408 $408 Total Operating Expenses $16,896 $16,948 $17,005 $17,065 $17,129 Net Income ($12,863) ($12,512) ($12,125) ($11,697) ($11,224) Master of Science in Healthcare Management | 14 Year 1 Year 2 Year 3 Year 4 Year 5 Annual Net Income -$12,863 -$12,512 -$12,125 -$11,697 -$11,224 Cumulative Net Income -$12,863 -$25,375 -$37,500 -$49,197 -$60,421 -$70,000 -$60,000 -$50,000 -$40,000 -$30,000 -$20,000 -$10,000 $0 Status Quo Net Income
- 15. Master of Science in Healthcare Management | 15 Opportunity 2 Associateship Practice for Recent Graduates Description: 2BWell, Inc. would hire 2 recent ND graduates and put them on payroll at an hourly rate. They would see CHC acupuncture patients two days per week for 8 hours each day. This associateship practice clinic would allow for a lower visit price of $15. Supervision will be provided by Dr. Shirazi. Impact: This opportunity would allow 2BWell to continue to give back to the community in a very visible way, creating additional word of mouth marketing opportunities. Feasibility: This would provide a recent graduate an opportunity to practice right out of school as well as an opportunity to build relationships and a reputation. 2BWell would be able to provide regular clinic services concurrently. Sources of Revenue: Patient payments and 2BWell.
- 16. Financial Analysis Associateship Practice for Recent Graduates Associateship Practice for Recent Graduates Profit and Loss Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Visits $22,464 $30,975 $40,260 $48,312 $57,960 Total Revenue $22,464 $30,975 $40,260 $48,312 $57,960 Expenses Payroll $31,980 $31,980 $32,939 $33,928 $34,945 Marketing/Promotion $200 $200 $200 $200 $200 Payroll Taxes $2,446 $2,446 $2,519 $2,595 $2,673 Medical Supplies $1,180 $1,652 $2,147 $2,576 $3,091 Office Supplies $120 $120 $120 $120 $120 Utilities $372 $372 $372 $372 $372 Janitorial Service $204 $204 $204 $204 $204 Total Operating Expenses $36,502 $36,974 $38,502 $39,995 $41,605 Net Income ($14,038) ($5,999) $1,758 $8,317 $16,355 Master of Science in Healthcare Management | 16 Year 1 Year 2 Year 3 Year 4 Year 5 Annual Net Income -$14,038 -$5,999 $1,758 $8,317 $16,355 Cumulative Net Income -$14,038 -$20,037 -$18,279 -$9,962 $6,393 -$25,000 -$20,000 -$15,000 -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 Associateship Practice for Recent Graduates CHC
- 17. Master of Science in Healthcare Management | 17 Opportunity 3 Donate Space to NCNM Description: Donate CHC space to NCNM two evenings per week after 2BWell closes. Development of a community clinic that appeals to downtown population and in donating space, allow NCNM to assume all logistical and financial responsibilities for staffing and supplies. Impact: Possibility of penetrating the socially conscious insured and self-pay patient population who might otherwise be turned off by the clinic location. Ability to allow the clinic to continue without a continued risk of significant financial loss. Feasibility: This would require very little effort on the part of 2BWell. If willing to make the financial investment, this is a very viable opportunity. 2BWell could also leverage this space donation to NCNM in its marketing efforts and draw in socially conscious insured and self-pay patients. Sources of Revenue: 2BWell
- 18. Financial Analysis Donate Space to NCNM No tax write off for partial space donation. Master of Science in Healthcare Management | 18 Donate Space to NCNM Year 1 Year 2 Year 3 Year 4 Year 5 Expenses Utilities $372 $372 $372 $372 $372 Janitorial Service $204 $204 $204 $204 $204 Total Operating Expenses $576 $576 $576 $576 $576
- 19. Master of Science in Healthcare Management | 19 Opportunity 4 Saturday CHC Description: 2BWell providers alternate running a half-day CHC on Saturdays. 2 providers would staff each Saturday and would see patients for $15/visit. Impact: Aligns with social mission that 2BWell desires. Requires little commitment and investment from 2BWell providers and 2BWell can market itself as a clinic that gives back to community at lower fee. This would allow for greater separation between the CHC and 2BWell. Small environment changes can be made to achieve an appropriate, inviting community clinic feel. Feasibility: Would require a change in expectation and culture at 2BWell as existing and new providers would need to commit to staffing Saturday clinics at various times throughout the year and working for a reduced rate during clinic shifts. Sources of Revenue: Patient payments and self funding.
- 20. Financial Analysis Saturday CHC Saturday CHC Profit and Loss Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Patient Visits $5,610 $7,854 $10,210 $12,252 $14,703 Gross Revenue $5,610 $7,854 $10,210 $12,252 $14,703 Expenses Office Asst. Payroll $780 $780 $803 $828 $852 Marketing/Promotion $200 $200 $200 $200 $200 Payroll Taxes $60 $60 $61 $63 $65 Medical Supplies $299 $419 $545 $653 $784 Office Supplies $120 $120 $120 $120 $120 Utilities $372 $372 $372 $372 $372 Janitorial Service $204 $204 $204 $204 $204 Total Operating Expenses $2,035 $2,155 $2,305 $2,440 $2,598 Net Income $3,575 $5,699 $7,905 $9,812 $12,105 Master of Science in Healthcare Management | 20 Year 1 Year 2 Year 3 Year 4 Year 5 Annual Net Income $3,575 $5,699 $7,905 $9,812 $12,105 Cumulative Net Income $3,575 $9,275 $17,179 $26,991 $39,096 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 Saturday CHC
- 21. Master of Science in Healthcare Management | 21 Opportunity 5 Integrate CHC into Private Payer Operations Description: Integrate community clinic patients into current private payer operations. Clinic evolves to intentionally serving both populations, rather than catering to only private payer patients. Impact: Unique from competitors in that they serve two different populations in the same space. Opportunity to reach wider net of patients. Can compete with Working Class and other CAM clinics. Feasibility: Requires a change in culture and a commitment to that change. Contracted providers may not be open to providing charity care. They would continue to face the challenge of seeking to cater to two different groups. Due to costs, would not be revenue generating in first five years. Sources of Revenue: Patient payments and 2BWell.
- 22. Financial Analysis Integrate CHC into 2BWell Master of Science in Healthcare Management | 22 INTEGRATION OF CHC (Free Visits) Year 1 Year 2 Year 3 Year 4 Year 5 Revenue 2BWell Visits $62,520 $106,284 $159,426 $207,254 $248,705 CHC Visits $0 $0 $0 $0 $0 Total Revenue $62,520 $106,284 $159,426 $207,254 $248,705 Expenses Contractor Fees $52,100 $88,570 $132,855 $172,712 $207,254 Marketing/Promotion $200 $200 $200 $200 $200 Parking $165 $165 $165 $165 $165 Payroll Taxes $2,446 $2,446 $2,519 $2,595 $2,673 Mortgage $72,000 $72,000 $72,000 $72,000 $72,000 Medical Supplies $1,203 $1,997 $2,950 $3,806 $4,567 Office Supplies $1,122 $1,122 $1,122 $1,122 $1,122 Utilities $5,869 $5,869 $5,869 $5,869 $5,869 Entertianment $676 $676 $676 $676 $676 Janitorial Service $2,053 $2,053 $2,053 $2,053 $2,053 Total Operating Expenses $137,834 $175,098 $220,410 $261,197 $296,579 Net Income ($75,314) ($68,814) ($60,984) ($53,944) ($47,874) Year 1 Year 2 Year 3 Year 4 Year 5 Annual Net Income ($75,314) ($68,814) ($60,984) ($53,944) ($47,874) Cumulative Net Income ($75,314) ($144,128) ($205,111) ($259,055) ($306,929) ($350,000) ($300,000) ($250,000) ($200,000) ($150,000) ($100,000) ($50,000) $0 Integration of CHC into Private Payer Practice
- 23. Feasibility Summary Impact and Finance Master of Science in Healthcare Management | 23 Opportunity Impact Financial Feasibility 1. Status Quo Some community members are seen but the CHC has a very low patient volume. Due to current and predicted continued losses, this is not a fiscally feasible option. 2. Associateship Practice for Recent Graduates Recent ND graduates operate the clinic for lower fees while gaining experience with un- and under-insured patient populations. Possibility of penetrating the socially conscious insured and self-pay patient population who might otherwise be turned off by the clinic location. This has a low financial feasibility due to the initial investment costs. 3. Donate Space to NCNM NCNM offers low fee services and acquires patients through outreach. May have more ability to reach needy patients due to presence in Portland area. Shifting responsibility for supplies and administrative costs to NCNM would significantly reduce the financial investment necessary from 2BWell. 4. Saturday CHC Aligns with social mission that 2BWell desires. This would allow the CHC to operate on a day separate from 2BWell clinic days. Can make small changes to the physical environment for Saturday only clinics. Requires little commitment and investment from 2BWell providers and 2BWell can market itself as a clinic that gives back to community. 5. Integrate CHC Patients into Current Practice Providers would see patients for free which would have a high impact on those individuals but a lower impact on the community as a whole due to a limited number of charity care slots available. Experienced providers could integrate several charity care patients into their established practices but the negative financial impact does not make this a feasible opportunity.
- 24. Master of Science in Healthcare Management | 24 Analysis Matrix Future State Options Very Beneficial Moderately Beneficial Status Quo Saturday CHC Associateship Practice for Recent Graduates Very Beneficial Very Beneficial Not Beneficial Very Beneficial Moderately Beneficial Moderately Beneficial Very Beneficial Very Beneficial Benefit to Community 2BWell Financial Investment Utilization of Excess Capacity Potential Brand Recognition/ Awareness Conclusion – The Saturday CHC is the most beneficial opportunity. SOURCE: Interviews; Team analysis Moderately Beneficial Not Applicable Not Beneficial Moderately Beneficial Not Beneficial Integrate into Current Practice Moderately Beneficial Not Beneficial Not Applicable Not Beneficial Not Beneficial Moderately Beneficial Moderately Beneficial Not Beneficial Moderately Beneficial Donate Space to NCNM
- 25. Master of Science in Healthcare Management | 25 Questions?
Editor's Notes
- Identify community health clinic = CHCProb statement: Insufficient patient volume to generate required revenue to offset expenses for CHCGoal: Make it measureable. Operate financially self-sustaining community clinic in XX years Obj: Identify and describe target patient market characteristics; evaluate supply of care providers; assess financial considerations; assess feasibility of strategies to achieve financial sustainabilityIn scope: survey of surrounding environment; assess fee structure; assess supply of care providers from NCNM; assess org culture and profile
- Important to separate the two target populations.2BWell patients*2Bwell does not provide parking for patients*Mayhave issues with the location – Union Gospel mission and frequent indigent population on the sidewalks next to physical location. New patients might not be able to find the building as it lacks visibility from the street. CHC patients*Most do not see a primary care provider regularly. *May feel out of place in community clinic’s spa-like environment with flat screen televisions and an upscale feel. *May not see value in $25 fee*NCNM residents providing services might give it the community clinic feel but the price does not match the services. Try a two column layout with 2BWell on left and CHC on right
- Important to separate the two target populations.2BWell patients*2Bwell does not provide parking for patients*Mayhave issues with the location – Union Gospel mission and frequent indigent population on the sidewalks next to physical location. New patients might not be able to find the building as it lacks visibility from the street. CHC patients*Most do not see a primary care provider regularly. *May feel out of place in community clinic’s spa-like environment with flat screen televisions and an upscale feel. *May not see value in $25 fee*NCNM residents providing services might give it the community clinic feel but the price does not match the services.
- CONCLUSION: Main competitors go down to $10 fee. Working class sees 900/week at $17, 32% less than what they pat at CHC. *Central City concern is within walking distance of 2BWell and can serve the population of people that live in close proximity to 2BWell. NCNM is also located within the downtown area. While WCA locations are further out, they serve a significant volume of patients. Numerous clinics throughout Portland serving the indigent population with numerous services including care management, substance abuse and addiction treatment, housing, wellness, etc. Non-profit receiving public funding. No fee for services. *Working Class Acupuncture is the primary competitor for the community clinic.Competitor because of a more lenient sliding scale appeals to target market of low income and underinsured working class population who want to try acupuncture or get involved with a movement. Vastly different model as providers are on payroll and all profit is put back into the operations of the clinic. Average price is $17 but will negotiate low to no fee for regular patients who cannot pay. Competitor because of a more lenient sliding scale appeals to target market of low income and underinsured working class population who want to try acupuncture or get involved with a movement. Vastly different model as providers are on payroll and all profit is put back into the operations of the clinic. Average price is $17 but will negotiate low to no fee for regular patients who cannot pay. White Phoenix Acupuncture: Community acupuncture clinic, group acupuncture in a room, sliding scale of $20 - $50. Located in SE Portland. NCNM Clinic: Offers naturopathic and Chinese medicine health to underserved and low income people in the SW community. Staffed by NCNM residents. Charges? 503-553-1551 An Hao Health Clinic (NCNM Partner): Same services offered as CHC, located at NW 23rd and Lovejoy, non-profit organization, takes insurance. Pricing: 503-224-7224 Center for Natural Medicine (NCNM Partner): Located in SE Portland, same services as CHC + numerous PCP services. Community clinic ranges from $10 to $40 for services. Central City Concern: Numerous clinics throughout Portland serving the indigent population with numerous services including care management, substance abuse and addiction treatment, housing, wellness, etc. Non-profit receiving public funding. No fee for services.
- PRICINGCHC sliding scale payment is $25, which is higher than the most comparable community clinic, Working Class Acupuncture (WCA). WCA has a sliding scale that begins at $15 and goes up to $35. WCA is willing to see existing patients at no cost if they no longer have an ability to pay. The CHC does not see patients for free. Additional clinics, including Central City Concern (located just blocks from the CHC), the NCNM Clinic and White Phoenix Acupuncture all have sliding scales that begin at $20. To be competitive, the CHC must lower its price point or have a significant differentiator in order to attract more patients. MARKETINGNot a significant amount of marketing dollars or efforts to date. 2BWell reports that 80-90% of patients are acquired primarily through word of mouth. Plan to put up 2BWell signage in front of building in July. Website lacks information and accessibility. Confusion over what is offered and to whom. The clinic would benefit from identifying a separate target market for the community clinic, apart from 2BWell.
- Cost to run the clinic on a monthly basis is $1478 and each CHC visit is $25 in revenue. Average patient volumes for the first 9 months were 13 patients per month. During that same time period, the CHC operated at a loss of $10,277 due to insufficient patient volume. Determining true cost of the CHC is challenging because the financials are comingled with 2BWell, Inc.’s PDX location. Continuing to operate in the current state is unsustainable and will result in a loss of over $40,000 over the next 3 years. Cost to run the clinic on a monthly basis is $1478.
- 1. CHC could continue operations as they currently are with efforts to increase patient volume. 2. 2BWell, Inc. could hire 2 recent ND graduates and pay them hourly. They would see CHC acupuncturepatients two days per week.3. Dr. Shirazi could donate clinic space to NCNM during under utilized times (up to 8 hours per week) to allow them to provide sliding scale services to the community. 4. Dr. Shirazi and contracted providers could operate a half day CHC with visit prices being $15. 5.2BWell contracted providers could provide low fee services as a part of their normal practice for a select number of individuals who would otherwise be CHC patients.
- With opportunity 1, the CHC would continue to operate as it has for the last year. There wouldn’t an increase in marketing or clinic capacity and the price point of $25 would remain unchanged. There would be some growth in patient volume as a result of word of mouth marketing. The community clinic coordinator at NCNM stated that it takes approximately one year for a new clinic location to become established within the community. Currently there is enough clinic capacity to allow for the clinic to be financially self-sufficient but not enough patients.
- The current gap between revenue and expenses is significant. Continuing to operate the clinic as is will result in a continued loss of approximately $12,000 per year which is a cumulative net income loss of over $60,000 over the next 5 years.
- Our second opportunity is a CHC run by 2 recent ND graduates who would provide acupuncture in the group treatment room. They would work for $19.23/hour and would work 16 hour weeks. This would allow the graduates to have some steady income while working to establish a practice of their own. The capacity of this clinic would be 96 patients per week and they would be able to offer these services for $15 per visit – a 40% decrease from the existing CHC pricing, making the CHC more of a competitor in the market.
- An associateship practice CHC is feasible at a more competitive price point than the current offering. The first 2 years the CHC operates at an annual net income loss and realizes a positive annual net income in year 3. Breakeven occurs in year 5 when the cumulative and annual net income are both positive. Once 2BWell recoups their initial investment, a lower price point may be possible if patient volumes are high enough. Cost to Achieve and Impact on Cash Flow – The initial investment in the first 2 years of operation is just over $20,000. Not until year 5 does 2BWell recoup their initial investment and start to see a positive return. As a result, this opportunity has a negative net impact on 2BWell’s cash flow for the initial 5 years. Feasibility of Acquiring Investment – While working to build a practice in this new location, the investment costs at this time are significant and the feasibility of investment is dependent upon whether or not 2BWell is willing to fund the CHC activities with earnings from the Lake Oswego practice. 2 ND providers, $19.23/hr CHC operates 2 days/wk, 8 hrs/day Large room utilization – 3 pts per provider per hour CHC capacity – 96 pts per week Visit price - $15 Assuming an initial utilization rate of 30% of capacity with growth of 40% in year 2, 30% in year 3 and 20% for years 4 and 5, The first 2 years operate at a loss and year 3 sees a modest profit. Years 4 and 5 continue to see an increase in profit. Cumulative net income over the 5 years is almost $6,400.
- Our third opportunity is that 2BWell could donate space to NCNM during underutilized times at the clinic. An example would be allowing NCNM to run a community clinic on Mondays and Wednesdays from 5pm-9pm each week. This would allow those who work day jobs that are not easy to take time off from to be able to schedule appointments at times that are convenient to them. This also gives 2BWell the opportunity to maximize the hours that they see patients in the clinic.
- Donating space to NCNM for 8 hours per week would cost 2BWell $48 per month for an annual cost of $576. Per IRS publication 526, it is not permissible for 2BWell to write off the in-kind space donation as they still have an interest in the property. If they were to donate the entire clinic space to NCNM, a write off would be allowable. Cost to Achieve and Impact on Cash Flow – Each year will require an investment of $576 by 2BWell for a total of $2,880 in the first 5 years. This has a small negative impact on cash flow. Feasibility of Acquiring Investment –$576 annually is a small investment for the services that could be provided to patients through the work of NCNM and the potential benefit of leveraging this space donation in 2BWell marketing efforts.
- The fourth opportunity is that existing and future 2BWell contracted providers run a half-day CHC on Saturdays. Each week there would be 2 providers and they would alternate the responsibility of staffing the CHC. This opportunity allows for a $15/visit price point and would allow 2BWell to better align with their desire to operate with a social mission. This requires a change in culture at 2BWell, as they would need to see this as a company value.
- A half-day Saturday CHC run by existing contracted providers would be priced at $15/visit. Contracted providers would donate their time. Payroll costs are for office administrative assistance. The clinic will realize a profit of $3,500 in year one. If operating with the goal of breaking even, CHC could lower their appointment fees to as low as $5 in year 2 although they may want to keep prices at $10-15 even as clinic utilization grows in order to be able to reinvest net income back into the clinic (e.g., equipment upgrades, ongoing maintenance, etc.). If you wanted to looking at a slower implementation, you could start with a clinic once per month and add Saturdays as demand grows. Cost to Achieve and Impact on Cash Flow – The investment for the first year is approximately $2,000. 2BWell will recoup their initial investment in that same year and will see a positive net income. The result over the initial 5 years is very positive. Feasibility of Acquiring Investment – While working to build a practice in this new location, the investment costs are moderate and the feasibility of investment is high due to low initial investment costs and first year profitability.
- The fifth opportunity is that the CHC patients will be integrated into the existing practice at 2BWell. Visits would be free and thought of as charity care or financial assistance. 2BWell would see their charity care patients in the same space on the same schedule as their insured and self-paid patients.
- Integrating the CHC patients into the current 2BWell practice would require a very significant financial investment. 2BWell would realize a loss of hey would realize a loss of $307,000 in the first 5 years of operations. This is not at all a financially feasible option. Cost to Achieve and Impact on Cash Flow – The cost to achieve is extraordinary and not a feasible option. Feasibility of Acquiring Investment – With a negative ROI for the first 5 years, the likelihood of acquiring this level of investment is very low.
- Looking at feasibility as it relates to impact and finances, operating in the status quo doesn’t have a lot of positive impact in either category. They will continue to lose money with little to no positive gains. The financial losses would be significant over the next few years. The Associateship Practice, while allowing for a lower price point to allow the clinic to be more competitive in the market, has high initial investment costs making it a risky option. Donating space to NCNM requires very little financial investment and is a simple solution to 2BWell’s desire to utilize their PDX location to provide wellness based medicine to under- and uninsured individuals. The Saturday CHC requires minimal commitment by individual providers and has a positive net income in year one. Looking at all of the opportunities presented, the Saturday CHC is the most viable. Integrating CHC patients is financially a very risky and unwise decision. The losses are too high.