Break even units

*Setting Dialysis Treatment Prices: How many dialysis treatments do you need to break even if annual cost is $10,000,000 when providing 30,000 dialysis treatment if 20,000 treatments were Medicare paying $250 per treatment? And if you need to make a $500,000 profit, what do you charge the other 10,000 Managed Care treatments if they want a 20% discount?
Sales
Annual cost $ 10,000,000 Target profit $ 500,000 Medicare @ $ 250 20,000 $ 5,000,000
Remaining @ (80%*250) $ 200 10,000 $ 2,000,000
Total 30,000 $ 7,000,000
Weights Medicare 20,000/30,000 *100% 67%
Remaining Dialysis 10,000/30,000 *100% 33%
Weighted price = (price of Medicare x weight) + (price of the remaining x weight)
Medicare @ 67%*250 $ 166.67
Remaining Dialysis @ 33%*200 $ 66.67
Weighted price $ 233.33
Breakeven number of treatment = Total annual cost + Target Profit/Weighted price
Number of Treatment = ($10,000,000+$500,000)/233.33 = 45,000
*Setting ASC Pricing: If you are required to make a profit of $400,000 & annual cost of the ASC are $4,000,000, while Medicare pays $550 per surgery & Medicare patients are ½ of the 7000 procedures done per year, & managed care is the other half and wants a 29% discount off charges, then what do you have to charge per surgery? What is your breakeven number of surgeries?
Sales
Annual cost $ 4,000,000 Target profit $ 400,000 Medicare @ $ 550 3,500 $ 1,925,000
Other Care @ (71%*$550) $ 391 3,500 $ 1,366,750
Total 7,000 $ 3,291,750
Weights Medicare @ 3,500/7,000 *100% 50%
Remaining @ 3,500/7,000 *100% 50%
Weighted price = price of Medicare x weight + price of other care x weight
Medicare @ 50%*550 $ 275.

00
Other Care @ 50%*391 $ 195.25
Weighted price $ 470.25
Breakeven number of Surgeries = Total annual cost + Target Profit/Weighted price
Number of Surgeries = ($4,000,000+$400,000)/233.33 = 9,357