Tulsa Memorial Hospital $-$ Break$-$even analysis $-$ Case $4.$ With these points in mind, Nicole thought that a break$-$even analysis

would be useful in making the final decision. Specifically, she wanted to

develop answers to the following questions posed by Brandon:

$$ What is the projected profitability of the urgent care center for

the entire year if volume continues at its current level?

$$ How many additional visits per day would be required to break

even without the expanded marketing?

$$ How many additional visits per day would be required to break

even, assuming that marketing is expanded?

$$ How many additional daily visits would expanded marketing

have to bring in to make it worthwhile, regardless of the overall

profitability of the urgent care center?

In addition, Nicole wondered if the urgent care center could $$inflate$$ its

way to profitability; that is$,$ if volume remained at its current level, could the

urgent care center be expected to become profitable in$,$ say, five years, solely

because of inflationary increases in revenues? Finally, Nicole was concerned

about whether the analysis was giving the urgent care center full credit for its

financial contributions to Tulsa. She did not want to change the spreadsheet

at this late date, but she did want to make sure that any additional financial

value was at least considered qualitatively. Overall, Nicole must consider all

relevant factors$$both quantitative and qualitative$$and come up with Historical Financial Data:

Monthly Averages

CY $2021$ Jan $2022$ Feb $20222021$ Jan$/$Feb$22$ Combined

Number of visits $14,5221,3651,3351,2101,3501,230$

Net revenue $$548,747$ $$55,028$ $$54,748$ $$45,729$ $$54,888$ $$47,037$

Salaries and wages $$154,250$ $$13,540$ $$13,544$ $$12,854$ $$13,542$ $$12,952$

Physicians fees $192,00018,00018,00016,00018,00016,286$

Malpractice insurance $31,4403,2153,2152,6203,2152,705$

Travel and education $5,365538665447602469$

General insurance $8,112843843676843700$

Subscriptions $1890016014$

Electricity $11,8201,1241,0299851,077998$

Water $1,260135142105139110$

Equipment rental $1,260105105105105105$

Building lease $155,74512,50012,50012,97912,50012,910$

Other operating expenses $103,7798,1527,9238,6488,0388,561$

Total operating expenses $$665,220$ $$58,152$ $$57,966$ $$55,435$ $$58,059$ $$55,810$

Operating income $($loss$)($$$116,473)($$$3,124)($$$3,218)($$$9,706)($$$3,171)($$$8,773)$

Operating margin $(\%)-21\mathrm{.}2\%-5\mathrm{.}7\%-5\mathrm{.}9\%-21\mathrm{.}2\%-5\mathrm{.}8\%-18\mathrm{.}7\%$

Pro Forma Average Month:

Number of visits $0$

Net revenue $$0$

Salaries and wages $$0$

Physicians fees $0$

Malpractice insurance $0$

Travel and education $0$

General insurance $0$

Subscriptions $0$

Electricity $0$

Water $0$

Equipment rental $0$

Building lease $0$

Other operating expenses $0$

Total operating expenses $$0$

Operating income $($loss$)$ $$0$a

recommendation regarding the future of the urgent care center. Incremental Monthly Costs:

Number of Additional Visits per Day

$01-1011-2021-3031-40$