Cost Per Patient and Practitioner Quality of Life

Friday, July 24, 2009
Posted in: Practice Management

By Jason Luban, L.Ac.
Founder and Chief Developer, Trigram Software LLC 

As a practitioner, I know that it’s often difficult to know how much is enough--just how much revenue is enough to feel comfortable that you are actually practicing medicine for a living.  There are many ways of figuring out what you need to be earning, the most common being a simple totalling up of all of your expenses and making sure you earn at least that much.  In my opinion, it’s not only important to simply know how much you need to break even, you should also know how much is enough.  By "enough," I do not mean how much is necessary for you to pay your bills.  Assume for a moment that you are able to pay them.  How much do you need to make beyond that to be content.  When I ask other practitioners this question, what I most often hear is, "As much as possible."  But that begs the question.  The point is, if you don’t know how much is enough, you will always feel like you are behind.

In my own practice, I have calculated that I need to gross a certain amount per week to pay all of my expenses at home and at work, pay taxes, and put money into my SEP IRA and savings account.  I’ve also calculated that, if I work with a full patient load on Tuesday, Wednesday, and Thursday, as well as every other Saturday, I will have enough, and can have three or four days per week ‘off’ to simply enjoy my life and pursue other interests.  Doing this requires that  I have a concept of how much I need, how much is enough, and that, though I could work more hours and make more money, it’s not necessary.  In fact, it would negatively impact my quality of life.  And isn’t maintenance of quality of life supposed to be what we’re helping our patients to attain?

One useful method of drilling down to knowing how much you’re making versus how much you ‘need’ is to figure out your cost per patient (CPP).  Given a certain volume of patients per week that you currently see on average, how much of the money you collect is going to paying expenses, and how much do you make beyond expenses?  Kevin McNamee, from whom I’ve learned much about medical practice management, has an excellent free article on his website about calculating cost per patient.  Check it out here. 

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