Lets say you have gotten to a certain point where you have contracted 4 providers who each bill 25k/mo. That is 100k/mo in billing that you will be responsible for, and you have a 5% profit margin. So that means that for billing for 100k worth of claims your entire business will only be generating 5k/mo in profit? Am I incorrect here? I am trying to foresee the income potential vs. the sacrifices in time, money, and effort that will be required.
Lets say you are charing 7% on all your accounts. You subtract approximately 2% for expenses such as software, marketing, and other fixed costs which will net you 5% (just an approximation) monthly.
You will also need to consider the specialty that you will be billing and the volume of claims that you will be responsible for. A practice that has a high volume of E&M services (internists, GP's, etc.) will require much more FTE effort to process all of those encounters while giving you a lower net revenue per patient visit. On the other hand, a surgical practice will generally have a lower number of encounters but a much higher net revenue per patient. Before I decide on what type of pricing to charge a practice (net percentage of collections, flat fee per month, per claim, etc.) I make sure I have as much understanding as possible of the volume and work effort involved to get the claims processed while still making a decent profit. I also estimate a reasonable number of claims that can be processed per hour (again, based on the type of practice) so I can get an idea of how much volume I can reasonably process without working 24 hours a day! Hope this helps.....
When generating a business plan how do you calculate the potential revenue/income stream that will be expected?For exmaple: (all figures hypothetical for sake of argument)Lets say you are charing 7% on all your accounts. You subtract approximately 2% for expenses such as software, marketing, and other fixed costs which will net you 5% (just an approximation) monthly.Lets say you have gotten to a certain point where you have contracted 4 providers who each bill 25k/mo. That is 100k/mo in billing that you will be responsible for, and you have a 5% profit margin. So that means that for billing for 100k worth of claims your entire business will only be generating 5k/mo in profit? Am I incorrect here? I am trying to foresee the income potential vs. the sacrifices in time, money, and effort that will be required.Any comments are appreciated. I know this is a bit of an unusual scenario/post. Thanks for looking.