Do you want to know how much money urgent care clinics make yearly? If YES, here are 5 factors that determine the income & profit margin for urgent care owners. An urgent care centre is more or less where consumers go to seek quick medical treatment.
However, the exact services offered by these centres tend to vary from clinic to clinic, but the concept remains the same: they offer extended hours, treat non-life threatening injuries and illnesses, and accept walk-in patients. Strong customer service is a focal point of all urgent care facilities.
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How Much Does It Cost to Start an Urgent Care?
This is a capital intensive business venture. The cost of starting the business can also vary, depending upon clinic size, services offered, region, and staff size. Business owners who are starting with a blank slate are advised to budget around $750,000 to $1 million. This will cover all start-up costs, as well as operating expenses for the first three months. Three months is the standard time it takes to receive payments from insurance companies.
Owing to changes in the healthcare system, most Americans are now turning to urgent care centres when they require medical treatment and/or advice. Note that this has expanded the target market for urgent care centres to virtually every American, insured and uninsured. The key is to choose a location that lacks this type of facility. Your space should be easily accessible, have ample parking, and stand out to those driving by.
The exact amount an urgent care centre can make will depend on many varying factors. Data is driving all of today’s businesses, and paying attention to specific key performance indicators (KPIs) can not only improve care for patients, but influence the amount of profit an urgent care centre can make. These factors include:
5 Factors That Determine How Much Money Urgent Cares Make a Year
1. Average Reimbursement Per Encounter
Note that the average reimbursement per encounter is one of the clearest overall indicators of a clinic’s financial health. According to industry reports, the average reimbursement per year from 2013–2016 was $123 per visit, and the break-even point for an urgent care clinic is approximately 25 visits per day, so every encounter matters.
Have it in mind that this number is derived from total reimbursement received for visits paid in full, divided by the total number of visits paid in full. However, if average revenue per encounter seems low, this might be a sign of payer contracts, patient mix, or inaccurate coding (potentially because of incomplete documentation).
2. E/M Code Distribution
E/M (evaluation and management) codes are known to show the complexity of urgent care visits and explain the level of reimbursement based on the services provided. In this business, clinical staff needs to fully document the content and complexity of the visit in order to capture the correct E/M code. Note that urgent care reimbursement is lower when documentation is lacking (and vice versa).
Since unethical overcharging occurs if visits are deliberately up-coded, audits by payers check levels of codes used at urgent care clinics to ensure accuracy and compliance. In addition, the distribution of E/M codes can be a clear indicator of inaccurate documentation.
3. Days to Bill and Days in Accounts Receivable
The faster claims are paid, the better. Note that the number of days to bill a claim, and therefore the number of days in AR (Accounts Receivable), can constrict your cash flow and is a direct indicator of issues with billing, payers or staff. Have it in mind that how a patient chart is coded and billed – based on documentation – can lead to unnecessary delays in reimbursement.
However, the general timeframe to bill a clean claim is one to three business days. Also note that keeping an eye on frequent reports that indicate how many claims didn’t pass initial scrubbing (and addressing the causes promptly) is very pertinent to the profit of your centre. To figure out your days in AR, divide your total outstanding AR balance by your average daily charges for the last 90 days.
Also note that more than three days to bill a claim can be a sign of inconsistent clinic procedures. Providers not locking charts, incomplete documentation, or not collecting insurance information are common procedural deficiencies. AR delays can be a sign that billers aren’t submitting claims quickly enough, or that payers are delaying payment for inaccurate claim submission.
4. Front Desk Collection Rate
Simply put, front desk collection rate is the percentage of collections gathered by the front desk from patients before they leave the clinic. This number is typically a reflection of the overall collection percentage per visit. Note that front desk procedures and personnel affect this metric immensely. Enforcing the correct collection of co-pays at patient intake ensures a higher percentage of payments in full.
More commonly in urgent care, the policy is to gather as much as possible at time of service, since the patient is not as likely to be a repeat customer—or may not be insured. Having real-time insurance verification in your software helps staff collect the correct amount. If the patient is cash-pay, personnel should gather 100 percent of the fee at time of service.
5. First-pass Resolution Rates
Notably, first-pass resolution rate is the percentage of claims that are paid without re-submission. Note that this number is calculated as the total number of claims paid (by payers or transferred to patient responsibility), divided by total number of claims submitted. First-pass rates can vary depending on payer, but can be a clear indicator of coding and documentation inaccuracy.
However rejected claims not only cost time and money for biller resubmission, but they also affect cash flow and cost providers money. A high first-pass resolution rate means claims are being documented, coded, and billed correctly the first time. When it comes to claim submission, “Get it right the first time” should be the keyword.
In summary, monitoring these KPIs can help maintain the financial health of urgent care clinics, but they are just a few of the many data points that can indicate the success and profits of an Urgent Care Centre. Data is only valuable if viewed on a consistent basis, the meaning behind the numbers is correctly interpreted, and the necessary actions are taken to correct any issues and get revenue on track.
Estimated Profit Margin for an Urgent Care Centre
Profits margin of urgent care centres are directly tied to the number of patients they see, average fees charged for each client, and operating costs. If the centre has one physician on staff, who sees two patients for a nine hour day, 5 days a week, at $150 per patient: $150 x 2 x 9 x 22 = $59,400 per month. That comes out to approximately $713,000 annually.
To determine profit and the margins thereafter, you must now subtract out clinic costs, including salaries for the physician and staff. Successful clinics report break even numbers of between 12 and 23 patients per day, depending upon the specifics of their business and region, although a profit margin of 15% is considered normal in the industry.
Some centres also offer appealing hours, including weekends and evenings. Offering services such as laboratory tests, X-rays, and on site casting and suturing will help attract more patients and increase profits. Some have even found success offering assistance to local nursing homes. Weight loss programs and substance abuse treatment could also help expand their customer base.