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Wellness Check is entering into a relatively new market when compared to the rest of the United States health care system. The retail clinic, also known as convenient care clinic, sector of healthcare did not begin to rise until the year 2000. Over the past 18 years, large corporations have made wonderful advancements in providing affordable and convenient access to care. Although the operational structure of retail clinics such as Wellness Check may appear simple, the expenses incurred during the initial start-up stages can be demanding. These pioneering corporations such as CVS MinuteClinic have paved the road for future retail clinics such as Wellness Check to use as a roadmap for success.

Assumptions for Expenses

The start-up costs for a retail clinic depends on multiple factors such as the services that will be provided and the level of equipment required to carry out the provided procedures. The current average start-up cost for a retail clinic is approximately $50,000. A clinic with a start-up cost of $50,000 can provide all the basic services expected at a retail clinic while utilizing electronic health record (EHR) software for effective patient encounter charting. Actual costs for opening a retail clinic can range from $25,000 for a barebones operation to $145,000 for a well-equipped clinic with multiple patient rooms. Saint Alphonsus based in Idaho has opened multiple clinics each with a price tag of $110,000 for the complete build out. In addition to the $110,000 utilized by Saint Alphonsus they allocate an additional $30,000 per location to purchase high-tech equipment such as self-registration computer kiosks and an electronic medical record system. The bulk of the $30,000 is ultimately spent on EHR software that in the end proves to be a worthwhile investment especially given recent Medicare and Medicaid stipulations which require electronic record keeping.

Start-up Costs for a Retail Health Clinic

Wellness Check understands that its first retail clinic location will have higher start-up costs when compared to secondary sites that will be developed in the future. The initial start-up costs will be used for EHR implementation that will later be used by multiple sites, along with legal fees for initial business agreements and staff proposals.

Wellness Check has selected Medical Transcription Billing Corporation (MTBC) as its EHR of choice due to the ease-of-use and integrated billing services. Utilizing a single third-party provider to implement both EHR and billing will improve efficiency while also reducing the likelihood of billing errors. The transparent pricing plan for MTBC’s services consists of a $995 setup fee followed by 5% of practice collections. Although a 5% fee may limit the gross income of Wellness Check, it will allow the first retail clinic sites to grow naturally without worrying about hidden fees or increased costs. With the early stages of development for Wellness Check, MTBC has proven to be the most affordable and effective EHR option. In addition to basic EHR and billing services, MTBC includes an end-to-end revenue cycle management software to allow Wellness Check to monitor its business practices. Additionally, MTBC offers mHealth Smart Apps which may be utilized by patients to view their medical records, schedule appointments, and update their initial registration information prior to arriving at the clinic.

Fees

As stated prior, Wellness Check is aware that its first operation will accumulate higher legal fees than that of future clinic sites. For this reason, Wellness Check has assumed expenses of $25,000 for legal fees. This $25,000 figure has been derived from an average hourly legal fee of $150 to $325 per hour which is the most common fee for small business lawyers. Wellness Check has assumed an average cost of $200 per hour which has been factored into the $25,000 total allocation of funds. Furthermore, healthcare business lawyers often provide a flat fee of $500 to $2,000 for completing tasks such as business associate agreements (BAA). Due to the expected complexity of Wellness Check’s initial BAAs, the business has assumed an average cost of $2,000 per BAA and other business contracts or filings.

Other common business expenses include registration of a fictitious business name (FBN) with the Orange County Recorder’s Office and a new business license fee filed in the city of Westminster, California. The current cost to register a FBN, in this case, Wellness Check, is $23 and $7 for each additional registrant after two. Included in this cost is the certification of fictitious business name statement which is required when submitting the FBN application. The initial new business license fee for the city of Westminster is $237. After the first year, an annual renewal fee for the business license will be based on the business’ sales gross receipt which will be later discussed with the annual expenses.

Annual Expenses

As a retail clinic, Wellness Check, has many annual expenses that must be paid for to remain operational. These annual expenses include a Drug Enforcement Agency (DEA) registration of the clinic, Department of Health clinic permit, clinical staff license renewal fees, and web hosting costs. As Wellness Check develops, the business is prepared for any additional annual expenses that may arise during the start-up phase such as additional permits or licenses that may be required as federal, state, county, or city regulations change.

Annual Expenses Table

The most important annual fee incurred by Wellness Check is the DEA registration that would allow the clinic to prescribe and administer medications to patients. The application fee for DEA registration is currently $731 for a registration period of 3 years, which includes a Department of Health clinic permit. During the application submission, Wellness Check must also register all members of the clinic including the clinic owner, administrator, physician, and nurse practitioners.

To remain competitive and ensure that Wellness Check’s employees maintain active licensure, the business will be offering reimbursements for clinical license renewals for all appropriate staff. During the initial start-up stage, Wellness Check will staff a single physician and cover the physician’s license renewal fee of $820 which lasts for two years. This fee is inclusive of a $37 fee of which $25 is provided to the physician loan repayment program and $12 for the Controlled Substance Utilization Review and Evaluation System (CURES) also known as the Prescription Drug Monitoring Program (PDMP). If the physician fails to renew his license within 30 days a delinquent fee of 10% is added to the original $820 fee. Furthermore, if the physician is over 90 days delinquent, then an additional 50% delinquent fee is added to the original $820 fee. Wellness Check expects all staff to maintain licensure and will only reimburse the original fee of $820, making the physician in question liable for any additional fees such as delinquency.

The current nurse practitioner (NP) license renewal fee is $150 if timely and remains valid for 2 years. If delinquent, the NP license renewal fee increases to $225; of which Wellness Check will only reimburse the original $150 fee. The initial Wellness Check clinic will staff two full-time and one part-time NP, of which Wellness Check will cover the renewal fee of all staffed NPs. Although most health care organizations may not provide reimbursements for part-time staff, Wellness Check believes that its clinical team should focus on patient care and allow the business to assist with them maintaining an active license.

Wellness Check will provide all staffed NPs with medical malpractice insurance which costs an average of $7,500 annually per full-time NP. Furthermore, Wellness Check has estimated that the part-time NP medical malpractice insurance will only be 25% of the full cost due to the limited hours worked by this clinical staff member. All medical malpractice insurance costs have been broken down and allocated into monthly expenses which will be further detailed in the next section. Wellness Check NPs are not expected to carry their own private medical malpractice insurance; however, may do so in addition to the coverage provided by Wellness Check if they wish to.

To maintain an online presence and be easily accessible by potential patients, Wellness Check will develop an easy to navigate webpage. Wellness Check after reviewing multiple web hosting providers has selected Square Space Web Hosting as its provider of choice. The current cost for this service is $12 per month when paid annually for a total cost of $144. Square Space will provide Wellness Check with unlimited pages, galleries, blogs with unlimited bandwidth and storage. Additionally, Square Space offers a mobile-optimized website, website metrics, and 24/7 customer support at no additional cost.

Lastly, as discussed in assumed expenses for initial start-up costs, Wellness Check will be prepared for the fees associated with the business license renewal. For the city of Westminster, California the business license renewal fee is not a flat rate; but, rather based off the gross sales receipt of the business. Information as to whether this fee is based on a block schedule of gross sales filing Wellness Check into a category like tax rates or a percentage-based fee is currently unavailable. To mitigate these costs, Wellness Check will set aside additional funds in anticipation of a higher business license renewal fee than that of the initial business registration fee of $237. After the first renewal fee, Wellness Check can then better plan for future business license renewal fees and allocate funds accordingly.

Monthly Expenses

Monthly expenses incurred by Wellness Check include the lease of retail space in Westminster Mall, staff salaries, along with payment for services such as cleaning, general maintenance, communications, and marketing. Wellness Check does not expect monthly expenses to change drastically month-to-month as all services will be set on a contracted rate and all employees wages will be salary based rather than hourly based. However, all monthly expenses will be included in a balance sheet and will be adjusted as needed to ensure business throughput and survivability.

Monthly Expenses Table

Wellness Check intends to open its first location at Westminster Mall operated by Simon Malls and located in Westminster, California. The average base rent for retail space with Simon Malls is $41.05 per square feet per year. The retail clinic is expected to require a 500 square foot space which totals $20,525 annually or $1,710 per month. Due to the number of vacant retail spaces at Westminster Mall, Wellness Check hopes to negotiate for a better rate. However, all business calculations will be completed with the average rate of $41.05 per square foot per year to account for worst case scenario expected costs.

Wellness Check will contract with a family or internal medicine physician to begin operations with its first retail clinic. According to the Bureau of Labor Statistics, the average annual salary for a family medicine physician is $230,456 and $247,319 for an internal medicine physician. These annual salaries are based on full-time employment of which Wellness Check will only require a contracted rate for the physician which would not demand full-time equivalent hours. For this reason, Wellness Check will offer its physician a $50,000 annual salary which breaks down to $4,167 monthly. The physician will be expected to consult with Wellness Check on all protocols and be available for NP consultations as needed to provide treatment. The physician will likely maintain their full-time position and provide services for Wellness Check as supplemental income for themselves, of which Wellness Check has no obligations to.

Wellness Check will staff 2 full-time NPs and a part-time NP working approximately 12 hours per week. The annual mean salary for a NP in California is $126,770; however, this figure does not consider specialty of Family Nurse Practitioner (FNP) versus Acute Care Nurse Practitioner (ANP) or a specialist NP. For this reason, Wellness Check analyzed that the average CVS Minute Clinic FNP salary is $97,591. To remain competitive and account for the cost of living in Orange County, California, Wellness Check will offer a $100,000 annual salary to all full-time NPs. The part-time NP hired at the start of operations is only expected to work 25% of the hours of a full-time employee and thus will be paid an annual salary of $25,000. The total annual expense for NP staff will be $225,000 or $18,750 monthly.

Total employee compensation for a physician and the NP clinical team will be $275,000 annually or $22,917 monthly. All Wellness check staff will be given a 3% annual merit raise increase dependent on their employee evaluations and productivity. This leads to an expected annual employee compensation of $283,250 for year 2 of operations and $291,748 for year three. Initially Wellness Check planned to employ a clinic administrator with an annual salary of $60,000 or $5,000 monthly. However, due to initial start-up costs and the lack of need for a clinic manager with only one singular retail clinic, the clinic administrator will not be hired until needed with multiple sites to manage. Due to this, the clinic administrator planned for in the organizational hierarchy will not influence annual employee compensation until a later time as designated by Wellness Check.

Additional monthly expenses that Wellness Check will incur include a cleaning crew that will service the clinic bi-weekly at a rate of $400 per month. The use of the cleaning crew will be to provide deep cleaning in addition to the light cleaning that will be performed by the NP during possible downtime between patients. The current introductory rate for business television, phone, and internet in Westminster, California is approximately $100 per month through Time Warner Spectrum Cable. If rates rise after the introductory period, then Wellness Check will reevaluate their options and either continue with Time Warner Spectrum Cable or seek another provider with better long-term contracted rates. Average marketing expenditures for retail clinics currently hold an annual mean of $16,701, with a minimum of $1,000, and maximum of $50,000 as reported in a survey of retail health clinics. To remain competitive, Wellness Check will allocate $500 per month for marketing expenses which will primarily be online web advertisements, search engine optimization, and advertisements placed strategically at the multiple anchor spots of Westminster Mall.

Assumptions for Revenue

Retail clinics are new to the United States health care system and are still fighting for their share of the market. Due to this, the expected revenue for a retail health clinic such as Wellness Check is difficult to assume. Fortunately, the exposure of retail health clinics has been increasing and has led to a higher yield of patients, thus consistent annual growth.

Across the nation, the average collected revenue per visit at a retail health clinic is $55, with a minimum of $44 and maximum of $72. This revenue can then be connected with number of visits per clinic annually, with a mean of 6,674, minimum of 1,835, and maximum of 28,184. Together these figures lead to an expected average gross revenue of $340,482 per clinic with a minimum of $80,000 and maximum of $765,000 based on current statistics. Due to Wellness Check being in Southern California the business is estimating to achieve the mean of $340,482 annually or $28,374 monthly. With the high growth rate for utilization of retail health clinics, Wellness Check aims to increase monthly revenues by 2% each month. As the organization develops, Wellness Check will then open a second exam room at the flagship location of Westminster Mall; followed by additional sites strategically placed at other community hubs. The consistent growth of Wellness Check through natural growth an expansion will allow the business to maintain a modest growth rate of 2% per month.

Average Collected Revenue Per Visit

Visits Per Clinic Annually

Average Gross Revenue Per Clinic