You and several of your colleagues business partners have decided to establish an outpatient fertility clinic in your service area. All of you are very familiar with this patient population base, have completed an extensive market analysis that demonstrated a great need for the service, and are comfortable with setting up a business and the costs associated with this special group of patients. The outpatient fertility clinic will have a fixed cost of $9,788,000 start up costs, hiring of specialty physicians, anesthesiologists, advanced practice nurses and staff nurses, salaries, purchase of high technology fertility equipment, and other miscellaneous items. The fertility clinic will be open Monday through Saturday; 312 days per year. The fertility outpatient clinic has variable costs of $500 per patient visit-fertility medical equipment, oxygen supplies, and other miscellaneous items. Each patient will be charged the following per visit based on patient acuity categories: 1. Simple 15% = $2,000 2. Moderate 60% = $6,500 3. Complex 25% = $10,000 The projected patient visites per year are anticipated to be 7,488 visites. Hoe many patients would the clinic have to provide ser services for to break even, and at what point would this occur? What is your interpretation of the break even analysis? Is this project a variable and profitable service? Does the break even analysis support moving forward with this business? Why, or why not?
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