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Omega System Services, a member of the Omega Health Foundation operates a free-standing ambulatory care center that averages $60 in charges per patient. Variable costs are approximately $10 per patient, and fixed costs are about $1.2 million per year. Using this data, how many patients must be seen each day, assuming a 365-day operation, to reach the break- even point?

  • math -

    annual income= 365*patientsperday*60

    annual costs= 365*patientsperday*10+1,200,000

    set the annual costs equal to annual revenue, and solve for patientsperday.

    This is a very old problem, looking at the costs and billing numbers, maybe they were valid in 1930.

  • math -

    X = The # patients per day.
    365X = The # of patients per year.

    Income = 365x Pat./yr * $60/pat.
    Income = 21,900x.

    Costs=365x pat./yr * $10/pat + 1.2M,
    Costs = 3650x + 1.2*10^6.

    To break-even:
    Income = Cost,
    21,900x = 3650x + 1.2*10^6,
    21900x - 3650x = 1.2*10^6,
    18250x = 1.2*10^6,
    X = 66 Patients per day.

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