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Your Two Costs: Variable and Fixed

Reading Time - 2 min


Why you should spend 2 minutes reading this:

You will fail to make sound financial decisions without understanding your cost-structure



Every business has two types of costs: variable and fixed

Some expenses do not fall perfectly into a bucket. 


For example, if you need to hire a new physician to handle more patients, their salary might seem variable. Once you hire the physician, if they aren't fully utilized, their salary begins to seem fixed. 


You may be asking yourself: Why should I care about my cost structure? 


A strong understanding of your cost structure will serve as the basis for your contract negotiations , Cost of Loss calculations and many more financial decisions. 


Without an understanding of your cost structure, your ability to make good decisions consistently will be compromised. 


Costs aren't identical for each practice/clinic but we have built models to get you started. Fill out the form below if you'd like to begin using the different models. 


If you'd like a more robust analysis built specifically for your practice/clinic, we can help with that as well. 


High-level actions you can take based on this article:

1. Complete a cost-structure analysis 

2. Update your contract logic based on any changes

3. Update physician compensation if you're over-paying

4. Update your location management processes to included profitability metrics

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