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Determining your cost per client -
or how to determine if you want to join an insurance network.

Determining your cost per client will help you decide if you are charging what you need to make a living. Are you making enough to cover expenses and get ahead?  Will you be able to make a living if you join an HMO or PPO?  How much does it cost you to work on each client?  

It will also assist you in determining if you want to register as a provider with local insurance companies. (As far as I know only WA and FL massage therapists are allowed to sign up with a contracted provider at this time.)  If what they pay is less than your cost per client can you afford to sign up with them.  If you want to sign up with them, how can you change your expenses or change the number of client visits.  If your monthly expenses will remain the same and client volume increases, your cost per client and profits increase.  If you join a HMO/Insurance Co. will it increase you expenses?  If so by how much to reconfigure your cost per client.

  1. Compute your office overhead for a month:  You can take the last 12 months and divide by 12.  

 

    Salary                
    Rent
    Other Salaries
    Equipment Leases
    Tables
    Malpractice Insurance
    Licensing Fees
    Lotions/Oils
    Sheets
    Laundry
    Music
    Utilities
    Office Supplies
    Water
    Magazines
    Books
    Copies
    Billing Services
    Association Fees
    Marketing
    Advertising
 

2.  Compute the number of patients for the month. You can use last years patients divided by 12 or estimate the number for this year.

 

3.  Cost per patient = Total monthly expenses____ divided by Total monthly patient visits 

4. Evaluate

If you are planning on joining a HMO or PPO, what is the expected income per treatment.  Is it higher than the cost per patient or less than the cost per patient?

How much will your cost per patient vary when the number of clients increases due to becoming a member?  Will you have an increased volume that will make the cost per client less? Will you get too many clients that you will have to hire office support to do the extra work involved? 

 

 


 

                   

 

 

 

 

 

 
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