Break-Even Analysis Worksheet Conducting a break-even analysis will help you determine your break-even point. Break-even is the point upon which revenue and expenses are equal. Therefore, the break-even point represents the minimum expectations for program revenue. Revenue earned after the break-even point represents program revenue over expenses: Margin / Profit. Please follow the steps below to conduct your break-even analysis: Itemize all of the expenses that you will incur to deliver your program. NCOA has developed a detailed that can help you to determine all of the costs associated with delivering your program. The budget table (page 3) can also be useful in thinking through and understanding the various costs that must be considered in determining the true cost of your program. Review the current Medicare fee schedule price for your service (if applicable). This can be used as a benchmark price for the service. Since Medicare fees are fixed, the only way to increase revenue is to increase the number of service units provided or persons served. If you plan to work with Medicare Advantage Plans or other Health Plans, determine the price for your service. Establish a fair price based on market data and your internal analysis of program expenses. The price should cover your direct and indirect costs, while including margin. If there is an associated Medicare benefit, the Medicare rate can be used as a benchmark for negotiating with a Medicare Advantage Plan. Establish a per person unit price, per encounter rate, and group completer price. Determine how many completers are required to cover the minimum program costs. Determine how many workshops of completers are required to meet the minimum program costs. Use the average workshop completer data, based on your program historical data. This point represents the break-even. The break-even must include a full person/class. For example, your break-even cannot be 20.5 completers, because you cannot have a half person complete. Please always round up in your break-even analysis. Determine if there is enough market demand to meet the break-even projection. This may require developing new partnerships to create the volume that is necessary for breaking even. Organizations may have to look towards non-traditional referral sources to meet the goal. Clinical partnerships can be key to success in reaching the break-even point. Establishing a strong value proposition will be important to help you build your program so that you can break even.
Do you apply a fringe rate to contractors? If so, is the rate the same? When you developed your EB Program budget, did you establish a fringe rate for the staff for budget purposes? What was that rate? Cost Centers Do you have your program budgets separated by cost centers? Does each program represent a separate cost center in your budget? Is your EB Program treated as a separate cost center in your budget? Do you know the cost to deliver an each EB Program? What is the cost of delivering one EB Program class? Can you attribute this cost to the participant level? Can you attribute this cost to the participant level per day versus per completer? Direct Expenses Do you have a breakdown of direct expenses you incur when delivering an EB Program Class? Can you attribute these expenses per class? Per completer? Per participant per day? What are each of the expenses items that you have listed in your Direct costs?