Drug and Alcohol Rehab Center Break-Even Analysis: $188K/Month

Fixed costs $154.5K/mo Overhead plus staffing

Contribution margin 82% After variable costs

Break-even revenue $188.4K/mo Monthly target

Break-even timing Month 1 Model crosses early

Break-even calculator

Test whether monthly revenue covers variable expenses and the fixed cost base.

Lean Base Full

Monthly revenue Monthly treatment revenue drives the cash available for overhead. $ Low volume High volume Variable expenses Use direct costs that rise with each treatment month. $ Low direct cost High direct cost

Money available to cover fixed costs $202,052 $243,696 revenue - $41,644 variable expenses

Margin ratio

83%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead your margin must cover. $ Light overhead Heavy overhead

Break-even chart Revenue Total costs

Which rehab center expenses are fixed, and which move with patient volume?

Cost classification

Break-even only works if each expense follows the right driver. Rent and insurance stay flat, patient supplies and acquisition move with revenue, and payroll sits in the middle because licensed coverage is needed before beds fill.

Expense	Cost	Break-Even Treatment	Common Mistake
Facility Lease	Fixed	Use $25,000 per month across Month 1 through Month 60.	Spreading lease by patient count and hiding the true monthly hurdle.
Utilities	Semi-fixed	Start with $4,500 per month, then test step-ups as occupancy and operating hours rise.	Making every utility dollar variable with revenue.
Insurance	Fixed	Use $3,000 per month as a fixed operating load.	Reducing insurance when census dips, even though coverage still runs.
Clinical and support payroll	Semi-variable	Model a staffed floor first, then add full-time equivalents as census grows: $116,667 per month in the first year to $253,333 per month in Year 5.	Treating licensed staff like pure variable labor when minimum coverage exists before census fills.
Medical Supplies & Pharma	Variable	Apply as 5.0% of revenue in the first year, tapering to 4.0% by Year 5.	Entering supplies as a flat monthly budget and missing patient-volume pressure.
Client Food & Provisions	Variable	Apply as 3.0% of revenue in the first year, tapering to 2.5% by Year 5.	Ignoring meals and provisions when residential census increases.
Marketing & Client Acquisition	Variable	Apply as 8.0% of revenue in the first year, improving to 6.0% by Year 5.	Calling acquisition fixed and overstating margin at low census.
Specialist Consultations	Variable	Apply as 2.0% of revenue in the first year, declining to 1.5% by Year 5.	Forgetting outside clinical consults tied to patient mix and case load.

How does break-even shift from a lean launch to base scale and full capacity for this rehab center?

Scenario table

Break-even gets safer as revenue grows faster than fixed payroll and facility costs. Lean is the tightest setup, base is the lender case, and full capacity gives the widest cushion.

These are planning assumptions, not guarantees; occupancy, payer mix, and staffing can move break-even fast.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean launch case	$326,600	$58,788	$154,467	82%	$113,345	Tightest cushion; a small volume miss can pressure break-even.
Base scale case	$1,169,794	$187,167	$211,758	84%	$770,870	Best fit for lender planning because the cushion is solid.
Full capacity case	$2,335,020	$326,903	$291,133	86%	$1,716,984	Strongest cushion, but it needs fuller beds and heavier staffing.

What pressure points can break the break-even plan for a rehab center?

Stress test

Year 1 still has room, but slower admissions, denials, overtime, higher rent, or reimbursement lag can shrink it fast. Cash is a separate watch item: minimum cash still falls to $779,000 in Month 6.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$188,400	$138,200 cushion	Healthy starting cushion, but not immune to volume or cost drift.
Revenue shortfall	Revenue falls 15% to $277,610.	$188,400	$89,200 cushion	Lower admissions cut the safety margin fast.
Fixed-cost pressure	Fixed costs rise 10% to about $169,900.	$207,200	$119,400 cushion	Higher rent or overtime pushes break-even up quickly.
Margin pressure	Variable expenses rise from 18% to 23%, so contribution margin drops to 77%.	$200,600	$126,000 cushion	Fee or supply pressure raises the revenue needed to cover overhead.
Combined pressure	Revenue falls 15%, fixed costs rise 10%, and variable expenses rise to 23%.	$220,700	$56,900 cushion	The cushion gets tight, and profit can slip if reimbursement slows.

Can you prove the rehab center clears break-even before you sign the lease?

Founder checklist

Before you sign the lease or open admissions, prove the center can cover its fixed load and still hit break-even. Here’s the quick math: $37.8K in monthly fixed costs, about $326.6K in monthly revenue, and a $779K cash trough in Month 6.

1Lease Load$37.8K/mo

Verify the $25,000 lease plus the other fixed costs stay at $37,800 a month, because that is the floor you must clear before the center can breathe.

2Year 1 Staff15 FTE

Verify you can staff 3 detox nurses, 5 residential counselors, 4 individual therapists, 2 family counselors, and 1 medical doctor in Year 1; without that mix, the service model slips.

3Revenue Test$326.6K/mo

Verify referral sources and payer mix can support about $326,600 a month in revenue, because that is the sales level the model needs to look real.

4Margin Load82% CM

Verify medical supplies, food, marketing, and specialist consults stay at 18% of revenue, so contribution margin (what is left after variable costs) stays near 82%.

5Cash Cushion$779K

Verify launch cash can absorb the $779,000 minimum cash point in Month 6 and the $635,000 of one-time capital spend, or the runway breaks before volume arrives.

6Launch StackGo-live first

Verify licensing, accreditation, insurance, security, EMR, admissions workflow, meals, supplies, and transport are ready before you spend on marketing, and do not jump to Year 3 staffing until census proves it.